Finance Minister Nirmala Sitharaman reduced the corporate tax on companies with a turnover of up to Rs 400 crore to 25 percent in the budget presented on 5 July. This brought down the effective tax rate on over 99 percent of companies to 27.8 percent (corporate tax inclusive of surcharge and education ).For the restless than 1 percent, the effective rate remained at 34.94 (on 30 percent corporate tax rate).The reduced corporate tax rate of 22 percent would apply on domestic entities that don't avail any exemptions and incentives. Also, these companies will not be required to pay any MAT. Effective tax rate, in this case, would be 25.17 percent, including cess and surcharge.Tax experts said the reduction in the corporate tax would benefit large companies, like Reliance, Tata, Vedanta and Adani, more than medium-sized firms.Boost for economyThe new corporate tax cuts are expected to boost economic growth, which slipped to a six-year low of 5% in the April-June quarter.Finance ministry officials have warned that the economic slowdown has led to lower tax collections, and they may have to utilize an extra dividend of nearly 580 billion rupees this year from the central bank to fund budgeted spending.