The threshold is twice the previous limit under the Presumptive Taxation Scheme and intends to ‘enable and empower’ small units to expand their production.
“I propose to increase the turnover limit to Rs 2 crore which will bring big relief to a large number of assesses in the MSME category“, said Finance Minister Arun Jaitley whilst announcing the Budget in Parliament.
With the rise in tax exemption margin, the existing 33 lakh MSME benefiters under the Income Tax Act are now persuaded to grow their units to retain the frame of immunity and be exempted from the load of sustaining detailed books of accounts and getting audits done.
The push will spur investments in modern technologies among these small units to compete in the present day market and tackle the increasing dump from China. Hence raise these SMEs to a global standard.
As per industry, MSMEs provide around 10 crore employment and contribute almost 8 per cent to the GDP of country.
The Budget has also proposed to lower the corporate income tax rate to 29 per cent plus surcharge and cess for companies with turnover not exceeding Rs. 5 crore for the next financial year.
Apart from these, a series of policy initiatives in line with StartUp India, Skill India, Make in India and MUDRA scheme have been aimed to ease the hurdles that startups and MSMEs face in the country to ensure a boost to the sector.