99% MSMEs to gain by Tax Incentives provided in General Budget 2018-19

Government to Forego ₹ 7,000 Crores due to this incentive

The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley has proposed a reduced rate of 25% to companies that have reported turnover up to ₹ 250 crores in financial year 2016-17. This will benefit the entire class of Micro, Small and Medium Enterprises which accounts for almost 99% of companies filing their tax returns. Accepting ₹ 7,000 crores as the estimated revenue forgone due to this measure during the financial year 2018-19, the Finance Minister, while presenting the General Budget 2018-19 in Parliament here today, said, “This is towards fulfilment of my promise to reduce corporate tax rate in a phased manner.” He further added, “The lower corporate income tax rate for 99% of the companies will leave them with higher investible surplus which in turn will create more jobs.”

The Finance Minister recalled that in the Union Budget 2017, he had announced the reduction of corporate tax rate to 25% for companies whose turnover was less than ₹ 50 crores in financial year 2015-16. This had benefitted 96% of the total companies filing tax returns. The Finance Minister also said that after this measure, out of about 7 lakh companies filing returns, about 7,000 companies which file returns of income and whose turnover is above ₹ 250 crores will remain in 30% slab.

Reduced corporate tax rate expanded to cover nearly all small companies, increasing their investible surplus under the new threshold. A budgetary measure reduces the corporate tax rate to 25% for companies whose turnover did not exceed the prescribed threshold in the relevant financial year, extending the lower-rate bracket to the vast majority of filing companies while leaving only companies above the threshold in the higher-rate slab; the concession is presented with an estimated revenue forgone for the budget year.