The Genie Speaks On The Budget

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The Genie Speaks On The Budget
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Remonetizing the country?

• 1st February saw the budget shots being fired.
  After the whole country reeled under the effects
  of demonetization the citizens were expecting
  their grievances to be redressed and an assurance
  that the policy would not have any long term
  impacts.
• For the tax paying citizens of the country, the
  budget seems to be working out in their favor
  with reduction in the taxation percentage for
  different income groups. As far as corporate
  India is concerned, the government is all about
  growth with inclusivity. The budget reflected the
  governments awareness about how an economic
  boost to the companies will mean a boost for the
  countrys economy.

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• A few key budget highlights for the corporate
  sector of the country are listed out below-
• Category 1 and 2 of FPIs are exempted from
  indirect transfer provisions which will provide a
  direct boost to the markets. It also includes
  exemptions from resultant capital gains with
  retrospective effect.
• Small traders and businessmen who have a turnover
  of more than Rs.2 crore will be provided with
  incentives for digitization. Such traders
  receiving payment through digital modes will pay
  a tax of 6 instead of 8.

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• The provisions of MAT will be rationalized in
  tunes with the Indian Accounting Standard which
  needs to be adopted by India Inc. Carrying
  forward and utilization of MAT credit has been
  extended to 15 years from the previous 10 years.
• Incentives have also been given to the investors
  by giving a boost to rupee denominated bonds by
  reducing the rate to 5. Moreover no tax will be
  levied on capital gains arising on transfer of
  RDBs between non-residents.

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• Start-ups
• Taking forward the initiative of Start-up India,
  the budget has given a breather to the early
  stage start-ups. A relaxation has been announced
  for the profit linked deductions available to
  these companies.
• This relaxation is applicable for three out of
  seven years instead of three out of five years.
  It implies that the start-ups now have the option
  of exempting themselves from taxes for any three
  consecutive years during the growing stage.
  However, this is applicable only for the
  start-ups registered between April 2016 and May
  2019.

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• The attempt to increase the digital footprint in
  the country is expected to be directly beneficial
  for the start-ups. Digital entrepreneurs of
  start-ups believe that the allocation of
  Rs.10,000 crore for BharatNet Project will spur
  the rural economy and allow them to penetrate the
  rural markets as well.
• E-commerce sector is expected to be the
  beneficiary as people with access to internet are
  the most likely to buy something to buy online
• Greater access to internet and boost to start-ups
  is expected to go hand-in-hand as new ventures in
  entertainment, consumption, telemedicine and even
  online education is supposed to crop up.
• The aim of the tax exemptions and reductions is
  to help the start-ups compete and not go off the
  radar of the formal economy.

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MSMEs Taxation rates for MSMEs have been reduced
which is expected to benefit at least 96 of the
Indian companies. This reduction in the tax rate
will provide MSMEs with a level playing field
with foreign companies. Limited liability
partnership might be the best route for upcoming
entrepreneurs as they have the lowest rate cut of
34.6. Companies that have a turnover of less
than Rs.50 crore during the 2015-16 financial
year need to pay a tax rate of 28.84 instead of
34.6.
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No matter the almost goodie bag provided to the
start-up and corporate environment in the
country, India still needs to speed up the direct
tax reforms. Moreover, compared to the previous
year, the budget seemed pretty tame for the
start-ups. But one still hopes for the opening
of the gates to a more digital economy which will
be beneficial for the country in the long run.
For any queries on budget 2017, write to us at
info_at_filingenie.com or call us on 869-195-0000.  
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Thank You.