Top companies of India Inc. are not happy with Union Budget 2019 as Finance Minister Nirmala Sitharaman on Friday did not reduce tax rates for them but cheered the struggling Micro, Small and Medium Enterprises (MSME) sector by extending the lower rate of 25 % Corporate Tax to all companies with annual turnover up to Rs. 400 crore.
Currently, this rate is only applicable to companies having annual turnover up to Rs. 250 crore.
“This will cover 99.3 percent of the companies. Now only 0.7 percent of companies will remain outside this rate,” said Finance Minister Nirmala Sitharaman while presenting her maiden budget.
Disappointed with the Budget, Adi Godrej, chairman Godrej Industries said, “I do not think that the budget is growth oriented. The stock market has also come down considerably.”
In 2015, former finance minister Mr. Arun Jaitley had announced the government’s intention to phase out corporate tax exemptions gradually while simultaneously bringing down corporate tax to 25 per cent from the prevalent 30 per cent over four years.
Welcoming the move, Mr. K John Baby, CEO, Funskool India Limited said, “The Government’s move to continue with the policy of phased reduction in Corporate Tax rates, is a welcome step. The widening of Annual Turnover from 250 Cr to 400 Cr will reduce the tax liabilities for a large number of companies and boost profits in the long term. We welcome the Government’s initiative to crack down on nefarious activities and unfair trade practices that have availed undue concessions and export incentives, in the past.
“There is no structural change in corporate tax regime except that now companies up to an annual turnover of Rs.400 crores would qualify for the lower rate of tax of 25% (plus surcharge and cess).” said Dr Suresh Surana, Founder of RSM Astute.
“With an aim to stimulate growth, lower rate of 25% has been expanded to almost 90 % of the companies in India, to be made applicable for companies with a turnover of up to 400 crores. This is a welcome move towards bridging the gap of corporate tax with the ASEAN countries,” said N V Raman, partner, indirect tax, BDO India.
