Corporate tax cut to benefit 1 pc of cos

New Delhi: The steep cut in corporate tax rate will benefit large companies the most as smaller ones were already paying lower rates, the Economic Survey 2019-20 said on Friday. Finance Minister Nirmala Sitharaman had in September last year announced the lowering of the base corporate tax rate to 22 per cent from 30 per cent for companies that do not seek exemptions and reduced the rate for some new manufacturing companies to 15 per cent from 25 per cent. Including surcharges and cesses (levies to raise funds for specific purposes), the effective corporate tax rate will drop by nearly 10 percentage points to 25.17 per cent.

The pre-Budget Survey, tabled in Parliament, said most of the companies (99.1 per cent) have a gross turnover of below Rs 400 crore (say small and medium companies) and are already taxed at the base corporate tax rate of 25 per cent. With surcharge and cess, their tax rate varies from 26 per cent to 29.12 per cent. On the other hand, only 0.9 per cent of the companies i.e. 4,698 companies have a gross turnover of over Rs 400 crore and their effective tax rate varies from 30.9 per cent to 34.61 per cent.