New Delhi: The I-T department today said companies that had a turnover of less than Rs 50 crore in 2015-16 will pay tax at the reduced rate of 25 per cent from April 1 even if they cross the threshold in 2016-17 or subsequent years.
Central Board of Direct Taxes (CBDT) chairman Sushil Chandra said the income tax department will come out with a clarification on which companies would be eligible to avail the tax benefit.
In order to boost the SME sector, Finance Minister Arun Jaitley in Budget 2017-18 reduced the income tax for smaller companies with annual turnover up to Rs 50 crore to 25 per cent as against the usual rate of 30 per cent.
"If your turnover in 2015-16 was Rs 50 crore then you will be subject to 25 per cent tax. We will come out with clarification on (applicability of the tax benefit to) new companies," Chandra said.
According to the memorandum to the Finance Bill 2017, in case of domestic company, the rate of income-tax shall be 25 per cent of the total income if the total turnover or gross receipts in the previous year, 2015-16, did not exceed Rs 50 crore.
Concerns have been raised whether a company having breached turnover threshold of Rs 50 crore in 2016-17 or 2017-18 would be entitled to concessional tax rate of 25 per cent.
A Finance Ministry official said that those companies that had total income of less than Rs 50 crore in 2015-16 can continue to avail the tax benefit even if the turnover has been breached in subsequent years.
However, clarity is still awaited on whether the tax benefit would accrue to the new companies which set up business in 2016-17 or in 2017-18.
As per data of Assessment Year 2015-16, there are 6.94 lakh companies filing returns of which 6.67 lakh companies have turnover of less than Rs 50 crore and, therefore, percentage-wise 96 per cent of companies will get this benefit of lower taxation.
"This (decision) will make our MSME sector more competitive as compared to large companies. The revenue forgone estimate for this measure is expected to be Rs 7,200 crore per annum," Jaitley had said earlier....