The Budget has given incentives for generating employment in the formal sectors.
The government has announced 100% deduction of profits for 3 out of 5 years for startups set-up during April 2016 to March 2019. The government will also pay for employers’ contribution of 8.33% to the Employee Pension Scheme (EPS) for three years for newly recruited employees of formal sectors.
“Startups generate employment, bring innovation and are expected to be key partners in Make in India programme,” Finance Minister Arun Jailtley said while presenting the Budget.
He proposed to assist their propagation through 100% deduction of profits for 3 out of 5 years for startups set-up during April 2016 to March 2019. The Minimum Alternate Tax will apply in such cases. If major individuals holding majority shares in these companies invest the capital gains in regulated or notified funds, it will not be taxed.
He further proposed to exempt service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by the Ministry of Skill Development and Entrepreneurship.
The Finance minister announced that the government will pay the EPS contribution of 8.33% to all the new employees enrolling in EPFO for the first three years of their employment.
The scheme will be applicable to those with salary up to Rs 15,000 per month. The Budget has provided for Rs 1,000 crore for this scheme.
The Budget also proposes to broaden and liberalise the scope of the employment generation incentive available under the Income Tax Act.
The Finance minister also announced incentives in customs and excise duty to help Make in India program.
These incentives aimed at reducing costs for domestic industries in sectors like Information Technology hardware, capital goods, defense production, textiles, mineral fuels & mineral oils, chemicals and petrochemicals, paper, paperboard & newsprint, maintenance repair and overhauling of aircrafts and ship repair.
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