Budget
2005-06:Corporate tax rate slashed to 30 per cent
New Delhi: The Finance Minister, P. Chidamabaram,
has aligned the corporate income-tax rate for domestic
companies to the highest marginal personal income-tax
rate of 30 per cent. A surcharge of 10 per cent would,
however, be applicable on domestic companies.
The basic rate of corporate income-tax for domestic companies
was hitherto pegged at 35 per cent. No change has now
been proposed in the Union Budget for 2005-06 on the tax
regime for foreign companies under Income-Tax Act.
Since corporate income-tax rate, the surcharge thereon,
and depreciation are inter-linked, the Government has
now pegged the rate of depreciation for general machinery
and plant at 15 per cent. The initial depreciation rate
has, however, been increased to 20 per cent.
In his Budget speech, the Finance Minister said that the
corporate sector would find the proposed tax structure
as "fair", as it would encourage new investment
and ensure equity among all sections of corporate taxpayers.
Corporates paying minimum alternate tax would also gain
from the Union Budget for 2005-06, as they can now claim
credit under Section 115JB of the Income-Tax Act.
To encourage technological upgradation, the Finance Bill
also proposes to reduce the withholding tax on technical
services from 20 per cent to 10 per cent.
Chidambaram also announced the removal of requirement
of 10 per cent increase in installed capacity for availing
of the benefit of initial depreciation.
Back
to News Review index page
Budget
2005-06: India Inc. to save Rs.9,200 crore from duty cuts
New
Delhi: Oil companies stand to save Rs5,200 crore from
the cut in the import duty on crude from 10 per cent to
five per cent, though on account of the under-recovery
on the prices of petrol and diesel they will continue
to take a hit of Rs475 crore a month.
The
proposed reduction in the peak customs duty rate for non-agricultural
products from 20 per cent to 15 per cent is likely to
reduce the cost of imports of Indian companies by Rs4,000
crore in 2005-2006. Of this, the saving in imports duty
on raw materials will be Rs3,610 crore and on capital
goods imports it will be around Rs390 crore.
The Indian Oil Company (IOC), which imported crude worth
Rs36,170 crore in 2003-2004, stands to save around Rs1,800
crore. Reliance Industries will save Rs1,700 crore, followed
by HPCL at Rs466 crore, MRPL at Rs381 crore, Kochi Refineries
at Rs307 crore, Chennai Petroleum at Rs265 crore and BPCL
at Rs242 crore.
Trading
companies will be the largest gainers from the duty cuts
and the gains are estimated at around Rs453 crore. Diamond
and jewellery exporters stand to gain around Rs292 crore,
steel firms around Rs257 crore, pharmaceuticals Rs226
crore, fertilisers Rs213 crore and IT companies Rs157
crore.
The Steel Authority of India (SAIL) is the third major
gainer with Rs122 crore saving. SAIL imported raw material
worth Rs2,430 crore in 2003-2004.
Back
to News Review index page
|