Budget 2019: Lower 25% Corporate Tax Rate Extended To More Companies
Finance Minister Nirmala Sitharaman announced that a lower corporate tax rate will now apply to a larger number of companies.
The 25 percent corporation tax rate will now apply to all companies with annual turnover of up to Rs 400 crore compared with Rs 250 crore earlier, Sitharaman said in her maiden Union Budget speech in Parliament. “This will now cover 99.3 percent of all companies.”
Corporate tax has been India’s mainstay. These taxes, which account for about a third of the nation’s tax collections, have been growing at an average 10.75 percent annually over the past eight years. While corporate tax growth dipped between 2014 and 2017, it has since bounced back to double digits.
India Inc. has been demanding a corporate tax rate cut for a long time. In 2017, the finance minister had announced 25 percent rate for companies with annual turnover of less than Rs 50 crore. This was then extended to companies with annual turnover of up to Rs 250 crore in 2018. Now that has been enhanced to an annual turnover of up to Rs 400 crore.
Despite calls for a rate cut, the effective tax rate has only gone up over the last two years.