Corporate tax rate cuts: New contract manufacturing units eligible for 15 per cent tax benefit

NEW DELHI: New contract manufacturing outfits can avail of the 15% corporate tax scheme but companies that opt for the 22% tax regime won’t be eligible for accumulated minimum alternate tax (MAT) credit, a senior government official said.

The finance ministry will clearly specify what constitutes reorganisation or reconstruction of an entity and new manufacturing eligible for the 15% rate as part of detailed clarifications on the new corporate tax framework to clear the air on a number of issues that have been raised by industry. Companies that opt for the reduced corporate tax rate of 22% cannot claim any exemption or incentives, including accumulated MAT credit.

“Contract manufacturing will be eligible,” the official said. “Natural meaning of manufacturing that has emerged out of several Supreme Court judgments will apply.”