The 2017 Indian Budget was declared on 1st February, 2017 by the Hon’ble Finance Minister Shri. Arun Jaitley. The biggest spotlight in the 2017 budget was the cutting-out of income tax by 50% for individual tax payers, ban on cash transactions over Rs. 3 lakhs and reduction in holding period to 2 years for capital gains.
In this article, we’ll go through at the highlights of the 2017 Budget regarding to an Entrepreneur or Business Owner in India.
Income Tax Relief
- Individuals who earn between Rs.2.5 lakhs to Rs.5 lakhs; the income tax rate has been released from 10% to 5% for them. Now after rebates, even a person with a Rs.3 lakhs income could enjoy zero tax liability.
- Since, proprietorship businesses are taxed much like individuals, micro corporations having income of less than Rs.5 lakh would benefit from the tax reduction.
- Furthermore, to provide Micro Small and Medium Enterprises a lift, the income tax for those MSMEs with an annual turnover of upto Rs 50 crore has been reduced to 25%. The decrease in income tax would give many MSMEs a 5% reduction in their tax bill.
Tax Break for Startups
- Continuing to build on the previous year’s Budget by stretching special support for Startups, the Finance Minister has increased the period of profit-linked deductions available to Startups to 3 out of 7 years now from the previous 3 out of 5 years.
- However, the tax breaks is only accessible on the gains made by startups for three years and the Startup must be recognized by the DIPP (Department of Industrial Policy & Promotion).
- Also, the carry forward of deficits with regards to start-ups, the condition of continuous pertaining of 51% of voting privileges has been laid back – subject to the condition that the holding of the initial promoter/promoters continues.
Minimum Alternative Tax (MAT) Carry Forward
Inside the 2017 Budget, it’s been declared that businesses would be permitted to carry forward their MAT credit for 15 years from the today’s 10 years.
Reduction in Compliance
- Threshold limit for audit of business entities who chose tentative income structure has been increased from Rs. 1 crore to Rs. 2 crores.
- Similarly, the threshold for maintenance of books for individuals and HUF increased has been increased from a turnover of Rs.10 lakhs to Rs.25 lakhs or income from Rs. 1.2 lakhs to Rs. 2.5 lakhs
- Finally, under the tentative taxation structure for professionals with receipt upto Rs. 50 lakhs per annum, advance tax can be paid in four instalment rather than one.
Stimulating Bank Credit
To stimulate bank credit to businesses, various actions have been declared as follows in the 2017 Budget:
- The allowable provision for Non-Performing Asset (NPA) of Banks has been increased from 7.5% to 8.5% to improve the risk appetite of Banks.
- In line with the ‘Indradhanush’ mission, Rs. 10,000 crores has been allocated in the 2017 Budget for recapitalisation of Banks.
- Lending target under Pradhan Mantri Mudra Yojana hase been increased to Rs. 2.44 lakh crores.
- Priority under the scheme will be given to borrowers from certain backgrounds like Dalits, Tribals, Backward Classes.
Real Estate Business
- The real estate and infrastructure industry contributes a significant share of the Indian GDP. The recent demonetization move has significantly damaged the real estate sector and to give boost to the sector, major declarations have been made.
- Under the scheme for profit-linked income tax deduction for campaign of affordable housing, carpet area rather than built up area of 30 and 60 meters will be considered.
- Furthermore, the 30 square meter limit would apply only in case of municipal limits of 4 metropolitan cities, and for the rest of the country, a limit of 60 square meters would apply.
- For builders who have stock-in-trade, tax on notional rental income would only be relevant after one year of the end of the year – in which completion certificate is received.
- Also, in case a joint development contract is agreed upon for development of property, the liability to pay capital gain tax would arise only from the year the project is completed.
Major Profits Exemption
- There is a decrease in the pertaining period for processing long term capital margins from transfer of immovable property from 3 years to 2 years.
- Also, the calendar year for indexation is suggested to be shifted from 1.4.1981 to 4.2001 for all those classes of possessions including immovable property.