Budget 2024: Corporate tax rate on foreign companies reduced from 40% to 35%

The government on Friday reduced the corporate tax rate on foreign companies from 40% to 35%.

“To attract foreign capital for our development needs, I propose to reduce the corporate tax rate on foreign companies from 40 per cent to 35 per cent,” she said in her Budget speech.

The pre-budget Economic Survey on Monday made a strong case for seeking foreign direct investments (FDI) from Beijing to boost local manufacturing and tap the export market despite strained relations with China.

As the US and Europe are shifting their immediate sourcing away from China, it is more effective to have Chinese companies invest in India and then export the products to these markets rather than importing from the neighbouring country, the survey had said.

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“Cut in the tax rate for foreign companies from 40 per cent to 35 per cent and the abolition of the 2 per cent equalisation levy was a surprise,” PTI quoted Deloitte India Partner Rohinton Sidhwa as saying.

“These would be replaced with alternative levies in the run-up to implementing Pillar 1 and 2 obligations,” he added.

Sitharaman presented her seventh consecutive budget today, eclipsing the late Moraji Desai’s record of six consecutive budgets, who presented five annual budgets and one interim budget between 1959 and 1964 as finance minister. Desai, however, holds the record of presenting the most numbers of budgets at 10.

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This was the much-awaited full budget for 2024-25, the first under the Modi 3.0 government.

Sitharamam had in February presented the interim budget, which took care of the financial needs of the intervening period until a government was formed after the Lok Sabha polls.

Sitharaman, who will turn 65 next month, was appointed as India’s first full-time woman finance minister in 2019 when Prime Minister Narendra Modi won a decisive second term. Since then, she has presented six straight budgets, including an interim one in February this year.

The budget session of Parliament began on July 22 and, according to schedule, will end on August 12.

With inputs from agencies