SMEs Looking For Tax Relaxation in India Budget FY18
Post unprecedented developments such as demonetization, passage of the GST Bill in 2016, Arun Jaitley's Budget for 2017 is most awaited budget for professionals and entrepreneurs in India and overseas.
With elections in up to 5 states round the corner, the budget is expected to play a significant role in positioning India's majority party, the Bhartiya Janata Party (BJP). The disruptive hit on Indian economy post demonetization has stressed the financial diaspora and experts are gunning big expectations from the BJP in terms of tax relaxations and move to uplift the economy to soothe the recent hit from demonetization.
Among soothers from the government is Prime Minister Narendra Modi's speech on th last day of 2016 providing sops to promote small business owners and farmers. Much more is expected on the same lines from the industry veterans and Indian Inc.
Expansion in Finance Providing Schemes
With a view of considering MSME a segment that is in dire need of level playing field with a policy framework, the founder and CEO of Power2SME, R Naryanan told Entrepreneur India that government must focus on the improvement of financial inclcusion for MSME segment.
"The International Finance Corporation (IFC) has recently reported that the MSME sector has a severe capital shortage of Rs. 32.5 trillion along with a debt shortfall of Rs. 26 trillion. Hence, the government should take steps to meet the humungous demand of such loans in the market"
With financial inclusion, R Narayanan also added that Digital transformation for SMEs is also very important. According to him, "the government must advice or mandate bulk raw material manufacturers in the country to allocate certain quantities of their products to be distributed to MSMEs."
A Cut in Minimum Alternate Tax (MAT)
'This 2017 financial budget would be beneficial for SMEs and startup entrepreneurs', said Harpreet Singh Malhotra, CMD at Tiger Logistics. One of the leading providers of end-to-end supply chain solutions, Tiger Logistics is one of the BSE listed SMEs that helps companies by optimizing all activities around information, material and financial flow.
"For small businesses the turnover limit may be increased to 5 crores and the total assets limit may be increased to 10 crores. New ventures/startups that initiate operations between April 2016 and March 2019 got a good deal with complete 100% tax exemption for 3 years on any profits during the first 5 years of their operations, MAT is there but expected up to 20% only".
Easier Access to Licensing and Compliance to SMEs
As there was nothing significant in the budget of 2016 for the Hospitality and tourism industry. The growth of this industry has been tremendous pan India, said Neil Rodrigues, Business Head - Pecos Hotel and Pub Ltd.Neil, Business Head - Pecos Hotel and Pub Ltd.
"A lower tax rate for State and Central taxes would be a great boost to the industry, with easier access to licensing and compliance of statutory requirements"
Curtailment in Corporate Tax Rates after GST
Since the government is likely to announce new incentive schemes in an order to promote the small and medium food processing industry, this is what Tanvi Foods India Ltd’s Managing Director, A Nagveer has to say for FY17 Budget.
“We hope that the new tax regime will be passed and there would be some relaxation in corporate tax rates. Food processing industry will get a profitable outcome once GST is implemented”
As it’s in talks that scheme called Sampada may come under which 35 per cent of the subsidy could be given on the total investments. With 100 per cent FDI in F & B industry, government is on its roll to boost the foreign direct investment in Indian food market.
Promote R&D Benefits for Small Scale Businesses
For benefiting manufacturing & export segments the government should pass out GST to boost economic growth. In order to innovate and come up with new & updated technologies, the government should promote R&D benefits for small scale businesses. 'There is a lot of scope that we can improve on with this budget especially when the government is taking initiative like start-up India, Smart City, Cashless economy, Digital Economy, etc. Because of these initiatives expectation from the Union Budget 2016-2017 is high' told Krishna Singh, the founder and Chairman of Global Space Technologies.
"Demonetisation has barely influenced IT division and it has been persistently developing. With the spending dispatch, we are expecting the adaptability and improvement of the IT and administrations and searching for the new open doors in this part with the assistance of government."