Announcing Corporate Tax proposals in the General Budget 2016-17, Finance Minister Arun Jaitley said that new manufacturing companies incorporated on or after 1st March 2016 will be given an option to be taxed at 25% + Surcharge and Cess provided they do not claim profit- linked or investment-linked deductions and do not avail of investment allowance and accelerated depreciation.

He further proposed to lower the Corporate Tax rate for the next financial year for relatively small enterprises i.e., companies with turnover not exceeding Rs.5 crore (in the financial year ending March 15), to 29% +Surcharge and Cess.

Recognizing the importance of start-ups in employment generation and as key partners in Make in India programme, Jaitley proposed 100% deduction of profits for three out of five years for start-ups set up during April 2016 to March 2019 entailing MAT liability.

He also proposed 10 per cent rate of tax on income from worldwide exploitation of patents, developed and registered in India by a resident. In order to get more investment in Asset Reconstruction Companies (ARCs) he proposed complete pass through of Income Tax to securitization trusts including trusts of ARCs.  Securitization Trusts will be liable to deduct tax at source. 

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