On 1st February, 2018- Mr Arun Jaitley, the Finance Minister of India recently announced the budget 2018. As anticipated, the budget was in favour of the SME sector. There were major impacts of budget on SME taxation laws, and new schemes were announced to support the growth of SME sector. Here are a few highlights from the Budget 2018 that every SME owner should know.
Highlights of Budget 2018 in regards to SME Sector
NBFCs were recognised as a better alternative for lending financial support under MUDRA yojana. The Pradhan Mantri MUDRA yojana provides the collateral free credit of up to Rs 1 million to SMEs. Keeping the four-fold increase in the credit record of NBFC in the year 2017, NBFCs were acknowledged as an efficient mode of delivery of loans under MUDRA.
Finance Minister Arun Jaitley expressed his intentions of using 12 different types of NBFCs to meet the demands and deliver SME loans under MUDRA scheme. Now, to calculate the eligibility and gauge the risk associated with loan to SMEs, Mr Jaitley suggested using the data collected through Goods and Service Tax. Adding further he said, Non-Performing assets in SME will be scrutinized to lessen the risk.
Making SME stocks lucrative using Corporate Tax benefits to support the SME sector in India. The corporates with an annual turnover less than or equal to 250 crores in the financial year 2017 will now pay only 25% of the income as Tax. The same was 30% earlier.
10% Tax on long-term capital gains from equity section. If you didn’t know already before the budget 2018 capital gains from long-term investments in equities and stock market were tax-free. This means you didn’t have to pay any tax on income earned through stock market investment, equity, or equity-oriented investments. However, after the introduction of section 112A in the Income Tax Act, 1961, income generated from stocks, and equity-oriented schemes above 1 lakh is taxable.
Conclusion: The SME sector is expecting more number of SME investments in 2018 due to the reduction in corporate tax and advancement in digital lending through fintech (Financial Technology).
