H’ble Finance Minister Mr. Arun Jaitley rolled out some good news for the small companies through the Union Budget 2017.
The major attraction is surely the deduction of corporate income tax to 25% gradually. The Finance Minister also addressed the viability of MSME companies. This post details you how small businesses will get affected by this year’s budget. Let us go through the possible impacts of the budget on the small-sized industries.
The medium sized and small sized industries are occupying a large place in the country’s economy. The sector is providing employment to millions of people. This year’s budget needs a special reference in relation to the small-sized businesses. Though not path-breaking, the budget is considered as a tool for healing after the demonetization. It is also seen as a populating tool ahead of the elections.
Highlights of Budge 2017 for Small Businesses:
Here are the major highlights of the union budget. Also, learn how these announcements are going to impact the small and medium sized businesses.
- Income Tax Reduction – Firstly, the major attraction for the small sized business is the income tax deduction. The income tax for the small companies with yearly turnover up to Rs. 50 Crore is reduced to 25%. The reduction significantly brings down the income tax rate by 5%. All small and medium sized companies will benefit from this slash. This step will make the small sized companies competitive against the larger companies.
- Minimum Alternate Tax (MAT) – The carry forward of minimum alternate tax is extended to 15 years as against 10 years. However, there are no plans for elimination of the MAT.
- Reduction in Presumptive Tax – The small businesses with a year turnover of up to Rs. 2 Crore will also enjoy a reduction in the presumptive taxes. The rate of the presumptive tax is reduced to 6% from 8%. This tax is applicable on the digital transactions.
- FDI – The Foreign Investment Promotion Board is abolished now. Further liberalization measures for FDT will be introduced soon.
- Tax Exemptions for the Start-Up Businesses– The income tax exemptions to the start-ups of the last year will continue to exist. The period of profit-linked income tax deductions are extended from the current 5 to 7 years. But tax breaks are applicable on the profits earned by start-up businesses only for first three years.
- Boost to Export Infrastructure – A special scheme to boost export infrastructure in the country is launched. The scheme is known as Trade Infrastructure for Export Scheme (TIES).
Overall, the slashed income tax rates are welcomed by all. However, apart from the income tax reductions, the budget is said to be missing other allocations and schemes.
Post the demonetization, businesses were expecting much more. Also, there is an absence of any measure for funding. The budget has received mixed reactions from the economy. As far as smaller businesses and start-ups are concerned, income tax rates are a big relief.