auto industry body, Society of Indian Automobile Manufacturers (SIAM) on September 20 has said reduction in corporate tax rate and or anuncements made by Finance Minister Nirmala Sitharaman would help give a boost to local manufacturing in sector. government slashed effective corporate tax to 25.17 percent inclusive of all cess and surcharges for domestic companies. Making anuncement, Sitharaman said new tax rate will be applicable from current fiscal which began on April 1.

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Investment and FDI in auto sector

" reduction of corporate tax to 15 per cent for new companies making fresh investments from October 1, 2019, will support investment and also FDI (Foreign Direct Investment) in auto sector. This is expected to give a big boost to Make in India for automobile industry," Society of Indian Automobile Manufacturers (SIAM) President Rajan Wadhera said in a statement.

Expansion of scope of CSR (corporate social responsibility) expenditure to include incubation centres and R&D (Research and Development) activities will also help with expenditure in automobile sector, he added.

"All se set of fiscal measures are expected to uplift market sentiments and improve demand for automobiles," Wadhera said. 

READ | SIAM reveals bike & car sales slump, makers flag ' production' days

Automobile Industry sees worst month in two decades

India’s passenger vehicles (PV) industry suffered its worst-ever performance in two decades as a demand slowdown showed sign of abating. Domestic sales of passenger vehicles plunged by 31.6% in August, down to 1,96,524 units, from last year, according to data released by Society of Indian Automobile Manufacturers (SIAM). It was 10th straight decline in domestic passenger vehicle sales and worst in history of SIAM’s compilation of monthly sales data since 1997-98. 

READ | SIAM's data indicates a decline in market share of some automakers

Highlights of anuncements made by Nirmala Sitharaman

• corporate tax rate has been slashed to 22 per cent for domestic companies t availing any incentives/exemptions; earlier rate 30 per cent.
• New domestic companies incorporated on or after Oct 1, 2019, making fresh investment in manufacturing can pay income-tax at a rate of 15 per cent; earlier rate was 25 per cent.
• Such companies shall t be required to pay Minimum Alternate Tax (MAT).
• Enhanced super-rich tax on capital gains on sale of share in hands has been removed.
• Revenue foregone for reduction in corporate tax and or relief is estimated at Rs 1.45 lakh crore.
• tax on buyback of shares if companies have made an anuncement regarding it before July 5 2019.
• Scope of corporate social responsibility (CSR) activities have been expanded.

READ | PM Modi hails big corporate tax cut as a 'stimulus to Make in India'

READ | Government: Corporate tax cut to cost exchequer Rs. 1.45 lakh crore

(With Inputs from PTI)