Finance Minister Nirmala Sitharaman on Friday said that all companies having annual turnover of Rs 400 crore will now come under the bracket of 25 per cent corporate tax. The announcement would cover 99.3 per cent of the companies operating in the country, Ms Sitharaman said. Corporate tax, also known as corporation tax, is a tax imposed on the net income of the company. Companies, both private and public which are registered in India under the Companies Act 1956, are liable to pay corporate tax.
Currently, the lower rate of 25 per cent is only applicable to companies having annual turnover up to Rs 250 crore. "I propose to widen this to include all companies having annual turnover up to Rs 400 crore. This will cover 99.3 per cent of the companies. Now only 0.7 per cent of companies will remain outside this rate," Ms Sitharaman said while presenting the Budget.
Last year, Former Finance Minister Arun Jaitley had cut the corporate income tax rate to 25 percent for companies with a turnover of up to Rs 250 crore.
"The increase in the threshold for lower corporate tax of 25 per cent to Rs 400 crore annual turnover would encourage higher investment, which would also get a boost from proposals like further liberalisation of foreign direct investment (FDI) norms in sectors like insurance intermediaries and aviation," Harsh Goenka, RPG Enterprises Chairman said.
Meanwhile, an additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to purchase electric vehicles has been proposed to boost use of electric vehicles.
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