Government allows carry forward of minimum alternate tax (mat) upto a period of 15 years instead of 10 years
To give boost to banking sector, allowable provision for non performing asset increased from 7.5 % to 8.5%
The basic customs duty on LNG reduced from 5% to 2.5%.
Presenting the General Budget 2017-18 in Parliament today, the Union Minister for Finance and Corporate Affairs Shri Arun Jaitley said that the income tax for smaller companies with annual turnover upto Rs. 50 crore is reduced to 25% in order to make MSME companies more viable and also to encourage firms to migrate to company format. As per data of Assessment Year 2015-16, there are 6.94 lakh companies filing returns of which 6.67 lakh companies fall in this category and, therefore, percentage-wise 96% of companies will get this benefit of lower taxation. This will make our MSME sector more competitive as compared to large companies. The revenue forgone estimate for this measure is expected to be Rs. 7,200 crore per annum.
The Union Finance and Corporate Affairs Minister Shri Arun Jaitley said it is not practical to remove or reduce MAT at present. However, in order to allow companies to use MAT credit in future years, he proposed to allow carry forward of MAT upto a period of 15 years instead of 10 years at present. Minimum Alternate Tax is at present levied as an advance tax. Although the plan for phasing-out of exemptions will kick in from 1.4.2017, the full benefit of revenue out of phase-out will be available to the Government only after 7 to 10 years when all those who are already availing exemptions at present complete their period of availment.
The Government announced several Measures for Stimulating Growth in the budget proposals for 2017-18. A concessional with-holding rate of 5% is being charged on interest earned by foreign entities in external commercial borrowings or in bonds and Government securities. This concession is available till 30.6.2017. The Finance Minister proposed to extend it to 30.6.2020. This benefit is also extended to Rupee Denominated (Masala) Bonds.
The Government gave income tax exemptions to Start-Ups with certain conditions last year. For the purpose of carry forward of losses in respect of such Start-Ups, the condition of continuous holding of 51% of voting rights has been relaxed subject to the condition that the holding of the original promoter/promoters continues. Also the profit linked deduction available to the start-ups for 3 years out of 5 years is being changed to 3 years out of 7 years.
In order to give a boost to banking sector, Shri Arun Jaitely proposed to increase allowable provision for Non-Performing Asset from 7.5% to 8.5%. This will reduce the tax liability of banks. He also proposed to tax interest receivable on actual receipt instead of accrual basis in respect of NPA accounts of all nonscheduled cooperative banks also at par with scheduled banks. This will remove hardship of having to pay tax even when interest income is not realised.
Considering the wide range of use of LNG as fuel as well as feed stock for petro-chemicals sector, the Finance Minister proposed to reduce the basic customs duty on LNG from 5% to 2.5%.
In order to incentivise domestic value addition and to promote Make in India, he proposed to make changes in Customs & Central Excise duties in respect of certain items in his speech. Some of these proposals are also for addressing duty inversion.