What’s in Budget for MSME’s. Tax Relief and other Benefits.
While subjecting major reliefs to rural and infrastructure provisions, corporate sector is bound to get a short of space in union budget FY17. Keeping business sector at hold, govt major concessions to this year budget ended up with making some slight changes to reforms of MSMEs and Startup enterprises.
Medium and small scale enterprise are entities which are categorized by their investment criteria. They are powered with a potential to generate employment in both organised and unorganized sector. Praising the sector contribution FM says “As they occupy bulk of economic activities they are not economically strong enough to plan investments and up-till now no major exemptions have been subjected for them yet. Hence they end up paying huge taxes”. While Startups are innovative seeds to business trees , both MSMEs and Startups are presently facing problems in their initial years for getting finance and skilled workforce.
While the present budget declarations can be summarized to be focused on giving some benefit to small and emerging business ideas, it has no mention of any additions done for big businesses spoiling their expectations of receiving new year gifts in budget.
Budget FY17 scripted these major changes for MSMEs .
Tax cut: As per last year figures , direct tax as received from salaried and organised sector is not viable to be compared to indirect tax collections .Out of app. 13 crore companies tax accumulations account for half of total (5.92 cr approx.) companies , out of which more than half of companies show losses or no income reducing down govt tax income .While MSMEs as per figures of FY15-16 are subject to less deductions and exemptions .
1.Thus offering benefit in budget govt changes tax obligation for MSMEs considered to be 25% instead of 30% (having annual income up to 50 lakhs) ,reducing up their cost and rising profit margins.
2.Levying of MAT ( Minimum alternate tax ) to be carried to 15 yrs, cancelling the previous budget figure of 10 yrs.
Schemes and plans
Governmental schemes can be a helping hand to MSMEs and startups for their initial build up ,hence assurance of aid through various new schemes like Mudra Yojana is given.
Helping Digitally: With effect from 31 Dec 2016, Promoting digital agenda of govt payments made by enterprises through digital platforms is subject to be charge by 6% instead of 8% on their presumptive income having a limited turnover of up to 2 cr.
In the Budget too, FM underlined Govt will encourage SIDBI( Small Industries development bank of India) to refinance credit institutions and major allocation would be suggested further to help reviving sick units .
While govt has more broad plans for MSMEs, but the leading track of budget depends on converting every benefit to digital driven , digital transactions and credit balances would help MSMEs to secure easy loans on unsecured basis and their transaction history would help them get better judged by their potential investors .