DSIJ Mindshare

Post Budget : Small firms get big gifts from Jaitley

While the entire country is witnessing a big surge in the startup ecosystem, Union Finance Minister Arun Jaitley too brought up many encouraging news through Budget 2017. Tax exemption, increased carry forward period of Minimum Alternative Tax (MAT), incentivise electronic device manufacturer are among the few major initiatives announced by Arun Jaitley.

The government on Wednesday has announced a reduction in corporate tax from 30 per cent to 25 per cent for companies within the bracket of Rs 50 crore turnover. This move is expected to encourage the sentiment of small scale firms in India. The (MAT) would also be accepted to carry forward for 15 years, which is increased from the existing 10 years in this Budget.

Adding to this, the government has also increased the tenure of profit linked tax exemption from three consecutive years out of five years to three consecutive years out of seven years for companies who register their firms between April 2016 to March 2019. This will be a big relief for startups as they often take time to reach to a point to make profit in their growing stage of business. 

Besides, there is also a proposed reduction of tax deducted at source (TDS) introduced on payments to call centres, which will allow the BPOs to reduce the rate of deduction in TDS from 10 per cent to 2 per cent. This will also be a big positive addition for an improved working capital in hand for BPO companies and help then expand in tier I and tier II cities of the country.

The Finance Minister Arun Jaitley has also increased the budgetary allocation for programs like modified special incentive package scheme (M-SIPS) and electronics development fund (EDF) to Rs 745 crore during the upcoming fiscal year. These schemes incentivise investments in electronics sector and also provide special incentive package to promote large scale manufacturing in this sector.

Overall, this budget has brought a plethora of gifts to encourage more business and growth among the small scale firms.

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