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The Union Budget 2018-19 has cut the corporate tax for businesses with annual turnover of up to Rs 250 crore to 25% from the erstwhile 30%.
The tax cut will be specifically advantageous for MSMEs also known as micro, small and medium scale enterprises. The bigger corporations unfortunately would stay aloof from the tax cut benefit.
According to the new tax reform, enterprises with a turnover amounting to less than Rs 250 crore in the financial year 2017 would have to pay corporate tax at 25% in the financial year 2019.
The corporate tax cut will account for 99% of the enterprises filing returns, which will further help create more employment opportunities and stir investments, said Mr. Arun Jaitley, Finance Minister.
The new tax cut rule hints towards a reforming overhaul of the country’s otherwise complex tax structure that is entangled amidst layers of different exemptions, which makes it a challenge to administer.
The government also proposed a repose in norms for startups to enjoy tax incentives in order to encourage budding entrepreneurs. According to the Union Budget’s new amendment, tax benefits would go to startups incorporated up to April 1, 2021, which was earlier available up to April 2019.
The tax cut reform in the MSME and startup sector is welcomed a growth booster by industry experts.
Disclaimer: All the views, opinions and information expressed in this blog are of the authors and their respective web sources and in no way or the other reflect the views, objectives or principles of Sage Software Solutions (P) Ltd.
Source: Moneycontrol, Livemint, & Economic Times