In a big boost for small companies, Union Finance Minister Arun Jaitley today announced to lower the income tax rate for all companies whose turnover is less than Rs 50 crore to 25%. Jaitley noted that around 96% companies in the country have turn over of less than Rs 50 crore. Earlier, companies having less than Rs 50 crore turn over had to pay 30% tax. The Finance minister also exempted capital gains for persons holding land from which land was pooled for creation of state capital of Andhra Pradesh.
Unveiling the Budgetary proposals for 2017-18, Jaitley said: “As per the data of assessment year 2015-16, there are 6.94 lakh companies filing returns, out of which 6.67 lakh companies fall in this category. Therefore percentage wise, the 96 per cent companies will get the benefit of this lower taxation”. The Finance Minister pointed out that as a result of the move, the companies with annual turnover of up to Rs 50 crore will have to pay 5 per cent less tax.
This will make our MSME (micro, small and medium enterprises) sector more competitive as compared to larger companies, Jaitley said, adding that the revenue foregone estimate for this measure is expected to be Rs 7,200 crore per annum. As per the data of assessment year 2015-16, there are 6.94 lakh companies filing returns, out of which 6.67 lakh companies fall in this category. Therefore percentage wise, 96 per cent of India’s companies will get the benefit of lower taxation.
Check out Union Minister for MSME Kalraj Mishra’s tweet
— Kalraj Mishra (@KalrajMishra) February 1, 2017
In a crackdown on illegal funding received by political parties, the Finance Minister also announced that political parties will not receive undeclared donations of more than Rs 2000 from a person.
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— TIMES NOW (@TimesNow) February 1, 2017
According to reports, MSME sector had taken a big hit from demonetisation. The government, however, maintained that things were falling in place slowly despite “initial difficulties”. There were reports that banks were reluctant to disburse loans under the MUDRA Yojana in the wake of demonetisation. Goods and Services Tax (GST) will benefit micro, small and medium enterprises (MSMEs) across the country, the government had said.
After demonetisation the government had tried to soothe concerns of layoff in micro, small and medium enterprises (MSMEs) that employ 80 million people against the backdrop of demonetisation, saying the decision might cause initial problems but will not impact job scenario in the sector.
Notably, the MSME sector, which transacts mostly in cash, accounts for about 20 per cent of GDP and 40 per cent of overall exports.