MSMEs welcome cut in corporate tax rate

Vijay C Roy

Tribune News Service

Chandigarh, February 1

The Budget may have disappointed big corporates that were hoping reduction in corporate tax but the micro, small and medium enterprises (MSMEs) in northern region have a reason to smile as the corporate tax rate for companies with an annual turnover of up to Rs 250 crore has been reduced from 30% to 25%. Previously, the companies with turnover of above Rs 50 crore came under this slab.

In Punjab alone, MSMEs contribute 99% of the total working units. So, the move would benefit a significant number of units in this sector and would also increase the compliance rate.

Appreciating the government’s move, Upkar Singh Ahuja, president, Chamber of Industrial and Commercial Undertakings, said the move would create employment opportunities and ease the burden for smaller enterprises. He said easy availability of capital would benefit the MSMEs. 

“The support to MSME sector through lowering of corporate tax rate to 25%, increase in access to finance, and addressing the problem of non-performing assets will help alleviate the stress in the sector,” said Shobana Kamineni, president, CII.

Analysts said it would also motivate more taxpayers to fully comply with the law. 

Nitin Atroley, Office managing partner -North, KPMG in India, said, “The proposal to extend the lower 25% corporate tax rate to companies having a turnover of up to Rs 250 crores is a welcome step and will help in reducing the cost of doing business.”