Corporate Tax Reduce to 25% in Budget 2018

[Ankush Sachdeva]

The finance ministry has a plan to bring companies with ₹ 100-500 crore revenue under the 25% corporate tax bracket from 2018-19.The tax rate for companies with annual turnover of less than ₹ 50 crore a year was reduced to 25% from 30% in the Union Budget for the current fiscal.The government plans to cut the tax rate to make Indian companies globally competitive and attract more investments to the country. A reduced and stable corporate tax rate will facilitate ease of doing  business and give an momentum to Startup India and Make in India initiative.Mr.Arun Jaitley in 2015 first proposed to cut corporate tax from 30% to 25% over the next four years.

This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns for  taxation and make MSME sector more competitive as compared with large companies.The Finance Minister foregone revenue estimate of ₹7,200 crore per annum for this for this measure.the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period.MAT is at present levied as an advance tax.

Apart from above govt also changes the definition of startup under section 80 IAC of the Act to promote the startups which are following –

1.    Tax benefits also available to those startups where incorporation has been done on or before 1^st april 2019 but before 1^st April 2021.

2.    Total turnover of its business does not exceed 250 Million INR would apply to 7 previous year commencing from date of registration.

3.    The definition of eligible business has been enlarged to provide that the benefit would be available if it is engaged in innovation, development or improvement of products or process or service or a scalable business model with a high potential of employment generation or wealth creation.

Even recently the MCA also introduce zero free for the private limited company registration. Its also a good initiative taken by the government under the budget with the launch of name reservation platform. So defiantly budget  2018 is great for the small startups and companies from corporate tax to getting incentive & relaxation in govt fee.