Reduction in tax rate will spur growth in MSMEs: Economists to KNN

New Delhi, Feb 1 (KNN) This is a growth oriented budget and micro, small and medium enterprises (MSMEs) sector will benefit from the announcement of reduction in tax slab, said eminent Economists.

Finance Minister Arun Jaitley announced reduction in tax rate to 25 per cent, but only for the small companies with turnovers of less than Rs 50 crore.

The corporate India was also expecting at least a one percentage point tax cut for all companies.

KNN spoke to Economists and MSME Experts to get their views on the same.

Dr Yerrum Raju, Economist and MSME Lead Consultant with Government of Telangana said, “Union Budget brings opportunities for the small units to widen their growth. This is a growth oriented budget for the MSME sector,” said Yerrum Raju.

Suyash Rai, Senior Consultant, National Institute of Public Finance and Policy, said, “This is a very good move as impact of demonetization would have been the highest for the small sector industries. It is an opportunity for the SMEs to retain their loss as these are the units which are responsible for the employment generation the most.”

Manika Premsingh, Economist and Founder, Orbis Economics, said, “Reduction in the corporation tax will help in the growth of small industries.”

“MSMEs have been benefitted in the first segment of the income tax slabs and that is exceptional. Since we are likely to see a slower growth in the sector so there is a need for more avenues for encouraging consumption as well as encouraging the growth and business,” added Premsingh.

Jaitley in his second Budget speech in February 2015, had announced reduction of the corporate tax rate from 30 per cent to 25 per cent in a phased manner over the next four years starting 2015-16, accompanied by fewer exemptions.

Jaitley had said that the basic rate of corporate tax, which is at 30 per cent in India, was higher than the rates prevalent in the other major Asian economies, which made the domestic industry uncompetitive. (KNN)