New Delhi: Some taxation proposals for industry that could not be taken up in the February interim budget, including extension of 25 per cent corporate tax to companies above the current threshold of Rs 250 crore, may find way into the full Budget 2019-20 to fight the persisting economic slowdown, Finance Ministry sources said on Wednesday.
The government had assured industry of fulfilling its earlier promise of lowering the corporate tax rate in the full budget in July if it is voted back to power.
“I speak in terms of taxation policies… I’m quite clear in my mind on two issues at least – we had a lot of good fiscal prudence and we brought the rates down. These are two areas, if we are in power we will continue the same glide path,” Finance Minister Arun Jaitley had said at industry chamber CII’s AGM in April.
The official sources here said the government may consider bringing down the corporate tax rate to 25 per cent, from the existing 30 per cent, for corporates having a turnover of between Rs 250 crore and Rs 500 crore, adding that mid-sized companies, particularly, need support. The Ministry sources pointed out that the contours of Budget 2019-20 had been set out already in the interim budgetary allocations.
In the budget for fiscal 2015-16, the government had announced a plan to reduce the corporate tax rate from 30 per cent to 25 per cent within four years to align it with global tax rates.
In the 2018 Budget, corporate tax rate was reduced to 25 per cent for companies with turnover of up to Rs 250 crore. The government had said that this would benefit the entire micro and small and medium enterprises (MSME) segment, which accounts for 99 per cent of the the companies filing tax returns.
The estimates of revenue foregone due to this measure was Rs 7,000 crore during financial year 2018-19.
Currently companies with turnover of over Rs 250 crore continue to pay 30 per cent corporate tax.
“Out of these 7 lakh companies filing returns, those 7,000 companies which will file return with a turnover above Rs 250 crore will remain in 30 per cent tax slab” according to a government estimate dated February 1, 2018.
The interim budget in February had announced a full tax rebate for individual taxpayers having annual incomes up to Rs 5 lakh.
Besides, it was proposed that people with gross taxable income of up to Rs 6.5 lakh would not have to pay tax if they utilise the maximum benefit of Rs 1.5 lakh available under section 80 C.
The standard deduction was proposed to be hiked to Rs 50,000, from the current Rs 40,000, to benefit salaried individuals and pensioners.