How Budget 2017 Is Important For MSME Segment?
As an engine of inclusive growth, the MSME sector forms the backbone of the Indian economy. Clearly, it is critical to ensure sustainable economic development at the grass root level – and this aspect has been well addressed in this year’s Budget. Further, against the backdrop of demonetisation, this Budget offers a much needed relief while maintaining a fine balance between expectations and reality.
From a sectoral perspective, Budget 2017 was important for the MSME segment. The finance minister has done a stellar job through the following four key enablers, which will prove to be game-changers for the sector:
1. Incremental tax benefits for MSMEs
Undoubtedly, the government’s focus on promoting the MSME sector is reflected through in the incremental tax reduction of 5 percent for companies with annual turnover of less than Rs 50 core (and with profits less than Rs 1 crore). This, in turn will nudge the MSME segment to increasingly shift from proprietary/partnership firms to company structure, thereby improving the financial discipline. Furthermore, for entities with a turnover of up to Rs 2 crore, relaxation in audit norms through returns to be filed based on presumptive income, will have an extremely positive impact and ensure reduced compliance costs for financial reporting.