Ease of doing business for MSMEs: Now micro enterprises with a turnover up to Rs 3 crore from earlier Rs 2 crore and certain professionals with a turnover up to Rs 75 lakh from earlier Rs 50 lakh will be eligible to be taxed presumptively.
Ease of doing business for MSMEs: Among tax benefits for MSMEs announced in the budget, finance minister Nirmala Sitharaman on Wednesday enhanced the turnover limits to be eligible for presumptive taxation. Now micro enterprises with a turnover up to Rs 3 crore from earlier Rs 2 crore and certain professionals with a turnover up to Rs 75 lakh from earlier Rs 50 lakh will be eligible to be taxed presumptively provided their cash receipts are not more than 5 per cent of total receipts.
Under presumptive taxation, small businesses and professionals are not required to maintain their books of account and get their accounts audited, providing relief from tedious tax filing exercises. As per the Income-tax Act, businesses are otherwise required to maintain their books. A micro unit or a professional opting for presumptive taxation can declare income at a prescribed rate.
Receipts are written records of payments made in exchange for goods or services.
“Micro enterprises being over 99 per cent of MSME space, it will help the micro entrepreneurs raise their financial wellbeing,” Alok Misra, CEO & Director of the association for microfinance sector MFIN told FE Aspire.
Moreover, to support MSMEs in the timely receipt of payments, Sitharaman also proposed the deduction for expenditure incurred on payments made to them only when payment is actually made. “This means buyers cannot claim a deduction without first paying MSMEs. It will force them to pay in time,” MSME association FISME said.