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Tamil Nadu’s SMEs to benefit from Jaitley’s Budget announcements
The Budget 2017 was supposed to be a big bang one. While it did not end in a whimper it has not been seen as an exciting one. Nothing can match the drama of demonetisation.
The Budget has many interesting elements in it. The fiscal deficit has been kept under control at 3.2 percent, a surprise to many.
This improves India’s rating among the agencies like Standard & Poor which makes raising finance from abroad easy. The election reform measures have been admired even by those who are not admirers of this government. Anonymous cash donations to political parties will be capped at Rs 2,000. RBI will issue electoral bonds. Cynics doubt whether smart Indians will find a way to circumvent this.
Big corporate houses are not too pleased. Corporate taxes have not been significantly reduced. However the largest job creators in the country, the medium and small scale industries have been given tax reduction and incentives. This is the sector which was badly hit by demonetisation. This cash-based informal segment makes up 90% of all enterprises in the country. The MSME sector is not yet ready to adapt the goods and services tax (GST) which will become reality by September and is likely to add to their problems.
Finance Minister has said that that corporate tax has been reduced from 30% to 25% for those with an annual turnover for less than Rs 50 crore.
For SMEs with turnover up to Rs 2 crore, Jaitley has said that the presumptive tax will be lowered from 8% to 6%, lowering the financial burden. This will be a great help to small traders and tiny businesses. He has also announced an increase in the credit guarantees for this sector from Rs 1 crore to Rs 2 crore. This can be a great benefit to Tamil Nadu.
The writer is a senior business journalist and columnist