Finance Minister Arun Jaitley in Budget 2017 lowered the income tax rate for small companies with an annual turnover of less than Rs 50 crore to 25 percent from 30 percent.
Unveiling the Budget proposals for the financial year 2017-18, Jaitley said micro small and medium enterprises (MSMEs) end up paying more taxes and the government is reducing the income tax rate to make them more viable.
Also Read: Personal Income Tax Rate Reduced To 5% For Those Earning Upto Rs 5 Lakh
Jaitley said 96 percent of Indian companies will get the benefit. He also said that the government will encourage Small Industries Development Bank of India (SIDBI) to provide loans at reasonable rate.
To make the industry move viable and lucrative, the finance minister proposed a big relief for MSME taxpayers in the Union Budget.
Finance Minister also allowed carry-forward of minimum alternate tax (MAT) for 15 years versus 10 years earlier.
MAT was introduced in fiscal year 1998 to address inequity in taxation of Indian corporations. It is currently applied at a rate of 18.5 percent.
Among other proposals, concessional withholding rate of 5 percent for interest received by foreign entities on loans given in India will continue for another three years after June 30, 2016.
Also Read: No Increase In Allocation For Bank Recapitalisation
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