Union Budget: Income tax for small firms slashed to 25%

New Delhi: Finance Minister Arun Jaitley on Wednesday reduced the income tax for small companies with annual turnover of up to Rs 50 crore to 25 percent with a view to making MSME companies more viable and encouraging firms to migrate to company format.

Unveiling the Budgetary proposals for 2017-18, Jaitley said: "As per the data of assessment year 2015-16, there are 6.94 lakh companies filing returns, out of which 6.67 lakh companies fall in this category. Therefore percentage wise, the 96 percent companies will get the benefit of this lower taxation".

The Finance Minister pointed out that as a result of the move, the companies with annual turnover of up to Rs 50 crore will have to pay 5 percent less tax.

This will make our MSME (micro, small and medium enterprises) sector more competitive as compared to larger companies, Jaitley said, adding that the revenue foregone estimate for this measure is expected to be Rs 7,200 crore per annum.

As per the data of assessment year 2015-16, there are 6.94 lakh companies filing returns, out of which 6.67 lakh companies fall in this category. Therefore percentage wise, 96 percent of India's companies will get the benefit of lower taxation. Imp step This will make our MSME sector more competitive as compared to larger companies. The revenue foregone estimate for this measure is expected to be Rs 7,200 crore per annum.