Union Budget 2018: Corporate Tax Rate Cut To 25% For Medium-Sized Corporations
Government extends tax benefits to medium-sized enterprises but leaves out large firms.
After cutting the corporate tax rate for small firms, the Indian government has now extended that benefit to medium-sized enterprises but left out large firms.
In his Union Budget 2018 speech, Finance Minister Arun Jaitley said the government will cut the corporate tax rate to 25 percent from the current 30 percent in case of companies which have an annual turnover of upto Rs 250 crore.
According to Jaitley this would benefit 99 percent of the firms which file taxes. In financial year 2015-16, the government had announced a similar cut for companies with an annual turnover of up to Rs 50 crore, which benefited 96 percent such companies which filed their taxes.
The announcements made today takes the Narendra Modi led government closer to fulfilling its promise of a lower corporate tax rate. In the Union Budget 2015 speech, the government said that it would simplify the corporate taxation regime by eliminating exemptions and deductions and cutting the corporate tax rate from the current statutory 30 percent to 25 percent.
I have a vision of putting in place a direct tax regime which is internationally competitive on rates, is without exemptions, incentivises savings, and does not realise tax from intermediaries.Arun Jaitley, Finance Minister (Feb 2015)
Since then a few tax exemptions have ended and a cut in the corporate tax rate to 25 percent was announced in 2017, for firms with an annual turnover of less than Rs 50 crore. On Thursday, the government extended the benefit to companies with a turnover of upto Rs 250 crore.
While extending the benefit of lower taxes to a large proportion of companies, the government has left out large corporations from this benefit.