India’s reduction of corporate tax rates are intended to attract business.

India has considerably reduced corporate tax rates for companies incorporated in that country, effective for fiscal year 2019- 2020.  Companies not claiming any exemptions or incentives will be allowed a rate of 22%, down from 30%.  Companies that elect the lower rate also will not be subject to the alternative minimum tax, which has also been reduced, from 18.5% to 15%. 

New companies engaged in manufacturing will be allowed an even lower rate of 15%, reduced from 25%.  This benefit is available to companies incorporating in India on or after 1 October 2019 that are making new investments in manufacturing, so long as they do not claim exemptions or other incentives, and begin production by 31 March 2023. 

The reductions are estimated to cost India about INR 1.45 trillion (about US $20.3 billion) annually.  However, the government expects revenues from increased business activity to rise by enough to create a net revenue gain.

India has been in an economic slowdown, and the government expects that the new measures will help to interrupt the slide.  The new rates are intended to make India competitive with countries worldwide in respect of the corporate tax burden.