Budget 2017: Medium And Small Enterprises Get Tax Relief

In a move that will benefit hundreds of small and medium enterprises, the Budget 2017 has reduced the tax rate to less than 25 per cent for companies with a turnover of less than Rs 50 crore. “This is a big from a startup standpoint. About 96 per cent off all MSMEs will be benefited from this move,” said the FM.

However, there is no tax reduction in overall corporate tax across the board which was expected by corporate India. In his first budget speech, the government had announced that taxes will be gradually bought down in a phased manner to 25 per cent.

For small and medium enterprises, however, the move is a welcome relief. Says Dr Suresh Surana, founder, RSM Astute Consulting Group: “Instead of moving across the board in corporate taxes, the government is moving in a targeted manger. For medium and small enterprises, the tax cut is a welcome move.

The Budget 2017 has also not reduced MAT (minimum alternate tax) levied on companies, instead has increased the window for carry forward for future credit from 10 to 15 years.

Says Abhishek Goenka, Partner, Tax & Regulatory Services , PwC: “There was an expectation that the rate of MAT will be reduced in line with its goal of reducing the headline corporate tax rate to 25 per cent. However, instead of that, the rate has been retained and a higher period of 15 years for carry forward for future credit claim has been provided, instead of the existing 10 year period. While this is welcome, a reduction in the rate should have been made.”