While the big news for the auto sector from the GST council meet is still awaited, the Finance Minister, Nirmala Sitharaman, has made announ...
While the big news for the auto sector from the GST council meet is still awaited, the Finance Minister, Nirmala Sitharaman, has made announcements which are likely to help reviving the struggling automotive sector. Before heading for the GST council meet, the Finance Minister announced reduction in the corporate tax rate to 22 per cent from 30 per cent and eliminated the minimum alternate tax for companies that are not availing incentives under the income tax act. Moreover, new manufacturing companies or companies which are making fresh investments from October 2019 will be taxed at 15 per cent instead of 25 per cent which was charged earlier. The new rates are effective from April 1, 2019 (current financial year) and advance taxes which have been paid will be adjusted in the next payment.
Commenting on the announcement, Rajan Wadhera, President- Society Of Indian Automobile Manufacturers and President- Automotive Sector, Mahindra said, "The reduction of corporate tax to 15 per cent for new companies making fresh investments from 1st October 2019, will support investment and also FDI in the auto sector. This is expected to give a big boost to Make in India for automobile industry."
The Finance Minister has also allowed corporates to expand their CSR expenditure to include public incubation centers and educational institutions like the Indian Institute Of Technology (IIT) for R&D activities. The move will encourage auto companies to work with aspiring professionals and will provide students the opportunity to conduct research activities with sufficient funds which in-turn will help them get hands on training. Carmakers like Toyota and MG Motor are already working with IIT students and the announcement is likely to attract more automakers. Moreover, companies like Maruti Suzuki, Mahindra, Tata Motors, and Bajaj have also been hiring from IIT and other engineering colleges. The move will also help in streamlining the process if students will be working with the companies.
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