Union Budget 2017 announced the reduction of corporate tax rate to 25% for companies whose turnover was less than Rs 50 crore in financial year 2015-16.
Reduced rate of tax on profits comes at a big gift for the businessmen in India. The Finance Minister Arun Jaitley in his speech delivering budget 2018 proposed to extend the benefit of reduced rate of tax at 25% to companies who have reported turnover up to Rs 250 crore in the financial year 2016-17.
Union Budget 2017 announced the reduction of corporate tax rate to 25% for companies whose turnover was less than Rs 50 crore in financial year 2015-16. This benefitted 96% of the total companies filing tax returns. Today by changing the qualifying norm to turnover of Rs 250 crore the Finance Minister extended it to almost 99% of companies filing their tax returns.
There was a fear that the government will turn populist ahead of the general elections in CY2019. However, the government choose to tread the path carefully. Though the fiscal deficit number has gone up, it will not hurt the interest rates. The target for fiscal deficit for Fy2018-2019 is at 3.3% as compared to 3% expected earlier. Increased fiscal deficit mean increased government borrowings, leading to higher interest rates. However, the numbers do not look that bad. The benchmark 10 year G-sec yield however inched up slightly to 7.58%.
To improve the traceability and trackability the Budget 2018 also proposes a unique identity for the businesses, on the lines of AADHAR.
The government has already identified 372 business reforms with a view to improve the ‘ease of doing business’. States are already working on these, said Arun Jaitley in his budget speech.