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India: Tax relief included in tax legislation

India: Tax relief included in tax legislation

Amendments to the Income-tax Act 1961 and the Finance (No. 2) Act 2019 were passed by Lok Sabha on 2 December 2019, and have now been published.


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Read text of the legislation [PDF 677 KB]

The legislation was originally introduced in the Lok Sabha, to replace an ordinance issued by the president in September 2019. The bill, as enacted, replaces that ordinance.

Some of the amendments are briefly summarized below:

  • Tax concession for domestic companies—a tax rate of 22% for domestic companies satisfying certain conditions and including provisions concerning the treatment of loss or unabsorbed depreciation as well as rules for taxpayers with a unit in the international financial services centre.
  • Tax concession for new domestic manufacturing companies—a tax rate of 15% for new domestic manufacturing companies, again subject to certain eligibility requirements and conditions.
  • Reduced minimum alternative tax (MAT) rate—a reduced MAT rate of 15% for the assessment year beginning on or after 1 April 2020 (fiscal year 2019-2020).
  • Surcharge for advance tax—the term “domestic company” replaced with “domestic company except such domestic company whose income is chargeable to tax under Section 115BAA or Section 115BAB of the Income-tax Act”
  • Buy-back of shares—previously enacted law (Finance (No. 2) Act 2019) extended buy-back distribution tax to the buy-back of shares by listed companies on or after 2019. The ordinance provided transitional relief for the buy-back of shares before 5 July 2019. The legislation (as enacted) expanded the transitional relief to the buy-back of shares “on” 5 July 2019 (as well as to those “before” 5 July 2019).


Read a November 2019 report [PDF 324 KB] prepared by the KPMG member firm in India when the bill was introduced to Lok Sabha

Read a December 2019 report [PDF 160 KB] prepared by the KPMG member firm in India when the bill was passed by Lok Sabha

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