Prime Minister Narendra Modi on Friday lauded the Government’s announcement to cut the corporate tax rate and termed it as “historic”.

Union Finance Minister Nirmala Sitharaman on Friday announced the slashing of corporate tax rate for domestic companies and for new domestic manufacturing companies.

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The government has slashed the effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies.

The Prime Minister, in a tweet, said that the “move will give a great stimulus to Make in India, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians”.

“The announcements in the last few weeks clearly demonstrate that our government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity to make India a $5-trillion economy,” PM Modi tweeted.

In June, while addressing the fifth governing council meeting of the Niti Aayog, Prime Minister Narendra Modi had said that the goal to make India a 5-trillion dollar economy by 2024 is challenging, but achievable with the concerted efforts of all states.

Presenting the Union Budget on July 5, Finance Minister Nirmala Sitharaman had said that India will grow to become a $3 trillion economy in the current year. She further said that India has the capacity to reach $5 trillion in the next few years.

The Ordinance to slash corporate tax rates for domestic companies has been cleared by Cabinet, Sitharaman announced in a press conference in Panaji.

In effect, the corporate tax rate will be 22 per cent for domestic companies, if they do not avail any incentive or concession.

To provide relief to companies which continue to avail incentive or exemptions, the Government has proposed to give a Minimum Alternate Tax (MAT) relief. The MAT rate has been reduced to 15 per cent from the existing 18.5 per cent.

Sitharaman also said that new domestic manufacturing companies incorporated after October 1, can pay income tax at a rate of 15 per cent without any incentives.

Sitharaman said that with this change, the effect tax rate for companies will be 17.01 per cent inclusive of surcharge and cess.

Making the announcement, Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.

In the past few weeks, the government has announced a series of steps to boost growth that had fallen to a six-year low of 5 per cent in June quarter.