The Centre Monday introduced the International Financial Authority Bill, 2019 in the Lok Sabha, which is aimed at establishing an international financial services centres (IFSCs) authority for regulating financial services in all such centres in the country.
The Bill was introduced by the Finance Minister Nirmala Sitharaman in the lower house.
According to provisions of the Bill, once the proposed authority is established, it will exercise the power and functions of financial sector regulators such as Reserve Bank of India, Securities and Exchange Board of India and Insurance Regulatory and Development Authority of India to regulate financial products and services in the IFSCs.
The first international financial services centre has been set up at GIFT City in Gandhinagar, Gujarat.
Further, amid din in the house, Sitharaman also introduced the Taxation Laws (Amendment) Bill, 2019, which is aimed at amending the Income-tax act, 1961, and Finance (No.2) Act, 2019 to give relief in corporate tax.
Taxation Laws (Amendment) Bill, 2019 replaces the Ordinance that was brought in September to cut corporate tax rates for domestic companies to 22 per cent and for new domestic manufacturing companies to 15 per cent.
“It was also noticed that many countries, the world over, had reduced corporate income-tax to attract investment and create employment opportunities, thus, necessitating the need of similar measures in the form of reduction of corporate income-tax payable by domestic companies in order to make Indian industry more competitive. Therefore, it was felt that a fiscal stimulus through reduction of corporate income-tax rate of domestic companies may be provided so as to attract the investment, generate employment and boost the economy of the country,” the Bill stated.
The new effective tax rate, inclusive of surcharge and cess, for domestic companies is now 25.17 per cent and for new domestic manufacturing companies is 17.01 per cent, applicable to companies that forgo the earlier exemptions and incentives. Minimum Alternate Tax (MAT) will not apply to such companies.
For the firms that choose to continue with pre-amended tax rates, their MAT incidence has come down to 15 per cent from 18.5 per cent currently.
The Bill clarified that the benefits of the reduced rates will not apply to the development of computer software in any form or in any media, mining, conversion of marble blocks or similar items into slabs, bottling of gas into cylinder; printing of books or production of cinematograph film; or any other business notified by central government.
The Bill proposes to provide that the total income of the company should be computed without any set-off or allowance of unabsorbed depreciation.
Also, as clarified earlier by the Finance Ministry, companies which opt for the new tax regime will not be allowed to avail accumulated credits of MAT, thus providing a legal backing to the clarification.
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