New Delhi: Badly stung by the government’s sudden demonetisation move announced by Prime Minister Narendra Modi on November 9, the critical Micro, Small and Medium Enterprises (MSMEs) sector has been offered major tax relief in Budget 2017-18 by way of a major cut in corporate tax from 30 per cent to 25 per cent. This will be applicable to all firms with annual turnovers upto Rs 50 crore.
Announcing the proposal in his Budget speech, Union Finance Minister Arun Jaitley said: “In order to make MSME companies more viable and also to encourage firms to migrate to company format, I propose to reduce the income tax for smaller companies with annual turnover upto Rs 50 crore to 25 per cent.”
“This will make our MSME sector more competitive as compared to large companies. The revenue forgone estimate for this measure is expected to be Rs 7,200 crore per annum.” Of the 6.94 lakh companies that filed returns in assessment year 2015-16, 6.67 lakh or 96 per cent companies fall in this category. CII director-general Chandrajit Banerjee said: “Reduced corporate income tax rates bring cheer to the large majority of companies with turnover of less than Rs 50 crore.
