Panaji: The government on Friday slashed the income tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate to 17.01 per cent for new manufacturing firms to boost economic growth rate from a six-year low by incentivising investments to help create jobs. Finance Minister Nirmala Sitharaman said the reduction in tax rates has been done by promulgating an ordinance to an amendment to the Income Tax Act."In order to promote growth and investment, a new provision has been inserted in the Income Tax Act, with effect from financial year 2020. It will allow any domestic company an option to pay income tax at 22 per cent subject to the condition that they will not avail any exemption or incentives," she told reporters here.

After considering surcharges and cess, the effective tax rate will be 25.17 per cent. This compares to 30 per cent corporate tax rate currently, and an effective tax rate of 34.94 per cent. "To attract fresh investment in manufacturing and boost Make In India, new provision has been inserted in the I-T Act, which allows any new domestic company incorporated on or after October 1, 2019, making fresh investment in manufacturing, and starts operations before March 31, 2023, an option to pay income tax at 15 per cent," she said.