Each new fiscal year is an opportunity to be dealt with. We see changes in business environment, taxation, regulatory, forex and largely the overall economy itself. We thought it would be a good idea to bring out the TOP 5 changes for a Business owner / entrepreneur this fiscal. So, be prepared with a bird’s eye view on what to expect this fiscal.
# 1 – Increased Spending in Infrastructure
The government’s thrust on providing efficient, productive infrastructure to have better quality of life will certainly help those related to this sector. It is fair to expect Housing, Construction, Energy, Power, Cement, Steel, Off road vehicles, Construction equipments and such ancillary industries to do better. So if your business directly or indirectly works with the above sub-sectors, expect better orders starting the 2nd or 3rd quarter.
# 2 – Tax Sops for Businesses & Firms
Rejoice if you (1) are an MSME registered company / firm and (2) your profit is less than 50 crores. This enables you to qualify for a lower tax on your profits @ 25% as against 30% earlier. Here you are – 5% direct savings, Better EPS & PAT !
Rejoice further more, if your firms’s turnover is less than 2 crores, income tax under presumptive basis ( Section 44AD ) would be just 6% instead of earlier 8%. Not bad at all.
# 3 – Minimum Alternate Tax (MAT)
In an SEZ eligible zone ? Established your business there because no tax on profits ? Hundreds, if not thousands, join you in this bandwagon. Welcome to Minimum Alternate Tax (MAT), introduced a few years ago.
Currently your business can carry forward MAT credit for 10 years. This is now proposed to be increased to 15 years. A good sign if you are looking to stick in business for long term…
# 4 – Startups & More
The bug that’s bitten many. For good. Such approved startups can now claim profit deduction for 3 out of 7 years instead of 3 out of 5 years. It makes one wonder whether red numbers are valuable than green.
Also, last year government provided tax exemptions to certain approved startups subject to the promoters continue to hold 51% voting rights. This has now been relaxed. If the shareholders having voting rights continues to hold those shares, such start-ups will be eligible to carry forward those losses. In other words, fresh infusion of funds will not obviate start-ups from carry forward of losses. This will be significant advantage to start-ups which are likely to be profitable in say 4 to 5 years’ time frame as this will reduce their tax burden. So everyone including the government is trying to make startups profitable
# 5 – Who doesn’t like a bonus ?
If you earn more than 2.5 Lakhs but less than 50 Lakhs, as an Individual, there’s lower tax for you too. Get a minimum benefit of Rs.12,500. This is because of reduction of tax rate from 10% to 5% for Income between 2.5 Lakhs to 5 Lakhs. Not bad – Great news for founders who toil hard for a better world.
Views expressed are personal of the Author. Many of the stated changes are proposed and shall be applicable only if approved by respective constitutional authority.