Looking to propel digital payments in India, the Union Budget 2017 was more focussed on the segment. While Startup India demands were largely held out, some announcements definitely served as good news to the sector.
Here’s four major takeaways from the Finance Minister’s announcement today:
Carry forward of losses
In respect to start-ups, with the condition of continuous holding of 51% of voting rights has been revised to the condition that the original promoter or promoters must continue to carry forward losses.
Minimum Alternative Tax (MAT)
While startups sought the removal of the Minimum Alternative Tax (MAT), our FM, Arun Jaitley has allowed firms to carry forward their MAT to up to 15 years – from the previous cap of 5 years. Giving companies an addition of 5 years before becoming liable to pay MAT.
Income Tax benefits to MSMEs
The FM has given Micro Small and Medium Enterprises a breather with the proposal of reducing Income Tax for companies with an annual turnover of upto Rs. 50 crore to 25% – i.e a 5% reduction from the current rate of 30%.
The period of profit-linked deductions available to startups has been increased to 7 years, up from the previous of 5 years. This sop is available to startups that are recognised by DIPP (Department of Industrial Policy and Promotion) and is still only available to on the profits made for three years.