The Union Budget 2017 has got some good news for small and medium enterprises (SMEs)! As per the managing director, Federation of Kutch Industries Associations (FOKIA), increase in allocation for infrastructure spending will benefit many industries including MSMEs.
Following are the updates on union budget 2017:
Slashed income tax rates
For annual income between Rs. 2.5 lakh to Rs. 5 lakh, there is a reduction of Income tax rate to 5% from 10 %. If annual income is Rs. 3 lakh, then there will be zero liability. The surcharge of 15% remains same for those with income over Rs. 1crore. Whereas, those who are earning between Rs. 50 lakh to Rs. 1 crore, the surcharge is 10%.
Great news SMEs
The government has reduced the Corporate Income Tax on small and medium enterprises. There is a 5% reduction in income tax for companies with revenue up to Rs. 50crores.
Benefits due to demonetization
Demonetization has the potential to generate long-term benefits and one of the biggest benefit is that banks have started reducing the lending rates. It can help SMEs to get loans from banks, whenever there is a need for the same.
For the education sector the Government is planning to introduce market relevant training for youth. This will help in creating more jobs and youth can commence their own businesses.
There is a massive digital revolution going on in India. For example, launching BHIM (Bharat Interface for Money). This app allows you to send and receive money with just one tap. So, once it is successfully launched, one doesn’t have to stand in the bank queues for any financial transactions.
New FDI policy
As per the new FDI policy (which is still under consideration) where PSU firms will be listed under revised procedure. In addition to this, a new exchange traded fund that contains PSU stock will be launched in the year 2017 – 18. Also, to ease out foreign investment, the Government has announced the abolition of Foreign Investment Promotion Board (FIPB). It should help SMEs if they are looking for any foreign investment.
After going through the above-mentioned features, it is proved that the union budget 2017 – 18 has come as a huge breather for the Indian startups as well as the SMEs. But, as per some SMEs players the tax reduction is hardly any relief. Due to rigid norms, the businessmen are unable to avail the schemes that have been introduced by the government in the past. Therefore, it is important that the Government should take some necessary steps to make these norms more lenient for the betterment of SMEs.