JOIN USWelcoming the announcement by Finance Minister Arun Jaitley to reduce the Income Tax for small companies with an annual turnover of up to Rs 50 crore to 25%, industry bodies believe that this will help MSMEs and encourage them to migrate to a company format.
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, 96% of companies will get the benefit of this lower taxation.”
Welcoming the Budget, K R Sekar, Chairman (State Taxes Committee), BCIC, said, “We expected corporate tax cut for big companies, but that has not come through despite the government promising to reduce it to 25% in the next two years. However, reduction in the rate of tax for SMEs from the existing 30%, to 25%, is the most welcome measure. This significant change is made to provide the necessary boost to the MSME sector. If MSMEs are able to source lower credit, it will provide the necessary impetus to job creation which is very crucial at this point of time.”
The announcement to double the lending target to Rs 2.44 lakh crore under the Pradhan Mantri Mudra Yojana for 2017-18, will immensely benefit the small entrepreneurs.
Kassia President A Padmanabha said, “This should meet the demands of the MSME sector as far as the income tax is concerned, by giving the necessary encouragement for greater investments, hopefully. The doubling of the allocation under the Mudra Scheme to Rs 2.44 lakh crore is indeed important at a time when the SMEs have to struggle to access affordable funds for their development.”
“The micro and small enterprise sector in particular suffers from inadequate access to finance at affordable rates of interest,” he added.