New Delhi: With the budget providing taxrelief to MSMEs, corporates having turnover of over Rs 250 crore have expressed disappointment saying the move will make "India uncompetitive" and the government failed to keep its promise.
Finance Minister Arun Jaitley in the budget for 2018-19 announced lowering of corporate tax rate to 25 per cent for businesses with a turnover of up to Rs 250 crore. However, for businesses having a turnover above Rs 250 crore, the 30 per cent corporate tax remains.
Jaitley said the reduction in the corporate tax rate to 25 per cent "will benefit entire MSME sector which accounts for 99 per cent of companies filing taxes".
Speaking to PTI, Godrej Group Chairman Adi Godrej said: "Although 99 per cent of MSMEs pay their taxes, it, however, accounts for only about 1 per cent of the total corporate tax paid in the country."
He further said the move will make India highly uncompetitive as countries like the US, the UK and China have reduced it to make a healthy investment climate.
"The US and the UK have reduce corporate tax, China has reduced it to 25 per cent, so if India doesn't do the same, it will make the country highly uncompetitive," he added.
Jaitley had promised in the 2015-16 budget that the corporate tax rate would be gradually lowered to 25 per cent from the current 30 per cent over the next four years.
"On the business side, we were expecting a change in corporate taxation for big companies, however, that did not make the cut," Shoppers Stop Ltd Managing Director and Customer Care Associate Govind Shrikhande said.
Experts said with the US substantially cutting corporate tax, it was expected that the finance minister will also follow them to remain globally competitive.
"Its not that the economy runs only with the taxes paid by the MSMEs. In fact, the major contribution is from the tax paid by large corporates which the government failed to consider," said an executive of a leading company on condition of anonymity.
The NDA government on Thursday unveiled its last full Budget before the general elections next year.
