New Delhi: Budget 2018 has reduced the corporate tax rate for companies with an annual turnover of up to Rs250 crore to 25%. The announcement was made by finance minister Arun Jaitley in his budget speech in Parliament on Thursday.

This move is expected to benefit the micro, small and medium enterprises (MSMEs) but will disappoint big corporates that were hoping that the corporate tax cut will be across the board, in line with the finance minister’s earlier promise of reducing the tax rate to 25%, accompanied by a complete phasing out of exemptions.

Jaitley, in his budget speech, said the corporate tax cut will help the entire MSME sector and account for 99% of the companies filing tax returns. The government will forego a revenue of Rs7,000 crore.

Also Read: Full text of Arun Jaitley’s budget speech

In last year’s budget, the government had reduced the income tax for small companies with an annual turnover up to Rs50 crore to 25%. This is estimated to have benefited more than 667,000 companies, 96% of all companies filing tax returns, at a cost of Rs7,200 crore to the government.

The government also announced introduction of e-assessment from 2018-19 to minimize interface between tax department and taxpayer.

It also decided to levy long-term capital gains tax on gains from the sale of listed equity shares exceeding Rs1 lakh at 10%. However, it said that gains will be grandfathered till 31 January 2018.

Also Read: Union Budget 2018 live updates

The budget also announced tax sops for senior citizens, including exempting interest on fixed deposits up to Rs50,000. The medical reimbursement and travel allowance limit was also increased to Rs40,000. However, no change was made in tax slabs or in the exemption limit on savings.

Abhishek Goenka, partner and leader, corporate & international tax, PwC India, said the move to reduce corporate tax rates only for companies with a turnover of up to Rs250 crore is disappointing.