Budget 2018: Corporate tax rate reduced to 25% for companies with turnover of up to Rs 250 crore

In a major boost to companies, finance minister Arun Jaitley extended the reduced corporate tax rate for companies with turnover of upto Rs 250 crore in his speech presenting Budget 2018-19 in Lok Sabha.

"Towards fulfilment of my promise to reduce corporate tax in a phased manner, I now propose to extend benefit of reduced corporate tax rate of 25% to companies which have reported turnover of up to Rs 250 crore in financial year 2016-17," said Jaitley.

The announcement, said the finance minister, will benefit the entire micro and small and medium enterprises which amounts for 99% of the companies filing their tax returns.

"The estimates of revenue foregone will be for Rs 7000 crore due to this measure during financial year 2018-19," said Jaitley.

The government had reduced the corporate tax to 25% from 30% in the Union Budget of 2017-18 for companies with a turnover of Rs 50 crore in the financial year 2016-16.

"The measure has benefitted 99% of the companies filing tax returns," said the FM.

The Union Minister reiterated that companies with higher turnover will continue to pay 30% corporate rate tax.

"Out of these 7 lakh companies filing returns, those 7000 companies which will file return with a turnover above Rs 250 crore will remain in 30% tax slab," said the FM.

Jaitley said this will leave the 99% companies which will benefit with the measure with "higher investible surplus which will create more jobs."

However, not all expressed happiness. PwC India, Partner&leader, corporate & international tax, Abhishek Goenka, said in a statement to media, "Corporate tax rate of 25 percent will now be available to companies with turnover of upto Rs 250 crores. Disappointed with no across board reduction and this kind of patch work is unhelpful."