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The corporate income tax rate for domestic companies will be 30 per cent, and a surcharge of 10 per cent. The rate of depreciation will be 15 per cent for general machinery and plant, but the initial depreciation rate will be increased to 20 per cent. The requirement of 10 per cent increase in installed capacity for availing of the benefit of initial depreciation has been removed.
To encourage technological upgradation, the withholding tax on technical services has been reduced to 10 per cent from 20 per cent. Credit will be allowed for the Minimum Alternate Tax (MAT) paid under section 115 JB of the Income Tax Act. The securities transaction tax (STT) has been raised marginally to 0.02 per cent from the present 0.015 per cent.
The terminal dates on exemptions given for specific purposes have been extended by two years to Marc 31, 2007 in the following three cases:
· Weighted deduction of 150 per cent of expenditure on in-house research and development facilities of companies engaged in the business of biotechnology, pharmaceuticals, electronics, telecommunication, chemicals or any other notified product;
· Deduction of profits of new industrial undertakings in Jammu & Kashmir;
· 100 per cent deduction of profits of companies carrying on scientific research and development and approved by the Department of Scientific and Industrial Research.
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