Budget 2017: Small businesses gets special tax gifts from Arun Jaitley
Small business will now have to pay 5% less income tax, which brings it to the 25% level.
Finance Minister Arun Jaitley had some good news for start-ups and small companies in his Union Budget 2017 speech. For starters, he announced that for small businesses with an annual turnover of Rs 50 crore they will now have to pay 5% less income tax. This brings down their income tax level to 25%.
This Jaitley said was in order to make MSME companies more viable and also to encourage firms to migrate to company format.
As per data of Assessment Year 2015-16, there are 6.94 lakh companies filing returns of which 6.67 lakh companies fall in this category and, therefore, percentage-wise 96% of companies will get this benefit of lower taxation. This 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 further said that for the purpose of carry forward of losses in respect of start-ups, the condition of continuous holding of 51% of voting rights has been relaxed subject to the condition that the holding of the original promoter/promoters continues. Start-ups will also get the profit (linked deduction) exemption available to the start-ups for 3 years out of 5 years is now changed to 3 years out of 7 years
Apart from this, Jailtey proposed to double lending target for small business loans. He said that the government will spend Rs 2.44 lakh crore for small business loans.
Jaitley also said that the government will not to remove Minimum Alternative Tax in 2017-18. “We propose to allow a carry forward of MAT for a period of 15 years as against 10 yrs now,” he added.
"Although the plan for phasing-out of exemptions will kick in from April 1, 2017, the full benefit of revenue out of phase-out will be available to the Government only after 7 to 10 years when all those who are already availing exemptions at present complete their period of availment," he said.
In order to incentivise domestic value addition and to promote Make in India, he proposed to make changes in Customs & Central Excise duties in respect of certain items in his speech. Some of these proposals are also for addressing duty inversion.
Apart from this, he also proposed several other incentives to promote the digital India and increase digitisation in the country.
The Bharat Net Project allocated was Rs 10,000 crore. The Finance Minister said that there was a need to bring digitisation to more rural areas and to get them connected to the world.
With this allocation for the Bharat Net project the optical fibre cables will now be increased to cover over 1.50 lakh gram panchayats from over 75,700 lakh currently.