By Ramesh Nair, CEO & Country Head – India, JLL
- The measure is expected to bolster growth of industrial real estate development in the country
- Provision on Minimum Alternate Tax (MAT) to support the SEZ developers and promote affordable housing segment
The announcement by honourable Finance Minister, Nirmala Sitharaman proposing to slash corporate tax for domestic companies from 30% to 22% comes at an opportune time when the economy needs a boost in investments.
To give strength to India’s amb itious ‘Make in India’ initiative, the government has proposed a tax rate of 15% for new domestic companies incorporated on or after 1st October 2019 and commences manufacturing by 31st March 2023. The measure is expected to bolster growth of industrial real estate development in the country.
According to the announcement, the total revenue foregone for the reduction in corporate tax rate and other relief estimated is at INR 1,45,000 cr. This quantum of money will act as an incentive to the industry in terms of savings and will result into further investments. Moreover, companies will also have a leeway to pass on the benefit to consumers, thereby reviving demand.
The reduction in Minimum Alternate Tax (MAT) to 15% from the existing 18.5% for companies which do not opt for the concessional tax regime will act as a harbinger of growth. However, there will no MAT applicable for units which will opt for new concessional tax regime. This definitely is a welcome move.
This is likely to help the real estate sector and specifically promote affordable housing. The new proposal will also help in promoting the affordable housing segment. MAT provisions are applicable to the profits of the housing projects eligible for deduction under the clauses of Section 80-IBA. Section 80-IBA grants 100% exemption on profits from affordable housing projects, subject to conditions.
This would specifically support developers operating in special economic zones (SEZ). The real estate sector has been demanding the removal of MAT for SEZ developers. SEZs and their development are keys to the growth of the office segment, logistics & warehousing and manufacturing sectors in the country. Their development has in turn contributed significantly to the overall growth of the neighbouring regions and propelled the housing sector.
Corporate Comm India (CCI Newswire)
