The 2024 tax rules for corporates in India include several key updates and amendments designed to streamline taxation and encourage investment. Here are some of the most significant changes and features:
1. Corporate Tax Rates:
- Existing domestic companies can opt for a lower tax rate of 22% (plus applicable surcharge and cess) if they forgo specific exemptions and incentives. This was introduced in the 2019 tax reform and continues to be a key feature【https://taxguru.in/.../india-new-corporate-tax-regime...】.
- New manufacturing companies incorporated on or after October 1, 2019, and commencing production before March 31, 2024, can benefit from a reduced tax rate of 15% (plus surcharge and cess)【https://taxguru.in/.../india-new-corporate-tax-regime...】.
2. Minimum Alternate Tax (MAT):
- The MAT rate has been reduced from 18.5% to 15% for companies availing of certain exemptions and incentives. This aims to lower the tax burden on companies that do not opt for the new lower tax rates【https://taxguru.in/.../india-new-corporate-tax-regime...】.
3. Withholding Taxes:
- The concessional rate of 5% for interest income earned by non-residents from long-term bonds or rupee-denominated bonds listed on stock exchanges in International Financial Services Centres (IFSC) has ended. Moving forward, this interest income will be taxed at 20%. However, a new 9% tax rate applies to specific long-term bonds issued after July 1, 2023, in IFSCs【https://www.globallegalinsights.com/.../corporate.../india/】.
4. Indirect Taxes:
- Goods and Services Tax (GST) remains a major indirect tax. Businesses can recover GST on input supplies, but certain restrictions apply, such as those on passenger transport and real estate construction activities【14†source】.
- Additional transaction taxes include the Securities Transaction Tax (STT) and a cash withdrawal tax, which imposes a 2% tax on cash withdrawals exceeding certain thresholds【14†source】.
5. Cross-Border Payments:
- Dividends paid to non-residents are subject to a withholding tax of 20%, or the rate specified in the applicable tax treaty, whichever is lower. This regime was reinstated in 2020【15†source】.
- Royalties and interest paid to non-residents are also subject to withholding tax, typically at 20%, though treaty benefits might lower this rate【15†source】.
6. Angel Tax:
- The scope of the 'angel tax' has been expanded to include non-residents. This tax applies to unlisted companies receiving investments exceeding the fair market value of their shares from both resident and non-resident investors. Certain regulated entities from specified jurisdictions are exempt【15†source】.
These updates are part of the ongoing efforts by the Indian government to simplify the tax regime, boost economic growth, and make India an attractive destination for investment. For further detailed information, you can refer to resources such as the [EY Interim Budget 2024 Analysis](https://www.ey.com/.../interim-budget-2024-tax-and...) and the [ICLG Corporate Tax Laws and Regulations Report 2024](https://iclg.com/.../corporate-tax-laws-and.../india).
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