Creating a business friendly environment has always been the agenda of NDA Government. The new start ups also expect a level playing field, if they are tax compliant. No-one needs tax surprises in their business. The budget made a move to step closer to your wish list. Lesser changes in taxes and tax rates were made in comparison to earlier budgets. The newspapers this time misses the columns of “what’s dearer what’s cheaper” on first page. This itself helps the entrepreneurs to better understand the tax regime.
Let’s check the main points declared.
- Tax rates slashed for smaller companies having turnover less than Rs 50 crores. This will enable start-ups to better compete with rest of Asian countries.
- Tax rates slashed for small taxpayers. This will help start-ups to minimise manpower cost to some extent, as the tax slab of 10% has been converted to 5%.
- Cash expense limits reduced from Rs 20,000 to Rs 10,000. Restriction on cash transactions above Rs 3 lacs. This will help the honest businessman and would curb on the businesses which evade taxes and will help them towards level play field.
- GST implementation. Though no deadlines were committed by FM sir, but assurance of no major hurdles left were given. The GST is expected to be rolled out by July 2017. This is itself is a major overhaul over Indian taxation regime. As the GST regime is simpler in comparison to current multi tax structures, the words of FM sir are a breather for start-ups.
- Specified startups get two year bonanza to choose tax holiday. Finance minister on Wednesday altered the policy on tax concessions for start-ups and said firms incorporated after 31 March 2016 could now avail of a three-year tax holiday in the first seven years of their existence. The rebate could earlier be availed in the first five years.
- Continued push to digitalisation. As a measure towards promotion of digital transactions in small businesses, it is proposed to lower the existing presumptive tax rate of 8% on the total turnover to 6% on non-cash transactions
- Single AAR to deal with all taxes. Authority for advance ruling provides advance rulings to mitigate tax disputes and uncertainties. A single authority will now deal with both direct and indirect taxes.
- MAT credit period increased from 10 to 15 years.
- Threshold for Book keeping increased from Rs 120,000 to Rs 250,000 in respect of income and from Rs 10 lacs to Rs 25 lacs for turnover.
- Presumptive taxation limits increased to Rs 2 crores from Rs 1 crores earlier for Individual and HUF assessees.
- FIPB to be phased out. More reforms in foreign direct investment policy are being awaited. The government intention to move to a second step after successful e-filling and online processings of applications is applaudable.
Overall, it was good to note, that the Honorable Finance Minister was able to make a right balance between populist and progressive measures.