New Delhi: Companies with annual turnover of up to Rs 400 crore would attract lower corporate tax of 25 per cent with the Union Budget proposing to extend the benefit to these firms.
Currently, lower corporate tax applies to firms with an annual revenue of up to Rs 250 crore. The move is set to give much-needed relief to the companies, especially MSME firms.
The proposal, however, received mixed reactions from the industry as it expected lowering of corporate tax for all the firms irrespective of their annual turnover.
"Currently, the lower rate of 25 per cent is only applicable to companies having annual turnover up to Rs 250 crore. I propose to widen this to include all companies having annual turnover of up to Rs 400 crore," Finance Minister Nirmala Sitharaman said in her maiden Budget speech.
As a result of this, lower tax would now apply to 99.3 per cent of the companies with only 0.7 per cent of the firms remaining outside the lower rate.
Ficci President Sandip Somany said that while the industry was happy to note the decision to raise the turnover limit from Rs 250 crore to Rs 400 crore for companies that would attract a corporate tax rate of 25 per cent, it had hoped that this rate will be applicable to all firms.
"Given the way tax policies are evolving globally, we need to be competitive if we are to attract and retain investments at a high level," he said.
Sumit Singhania, Partner, Deloitte India, said that widening the net for lower tax rate (25 per cent) underlined progressive tax policy thinking.