Post Budget Quote: Aditya Sesh, Founder and Managing Director of Basiz Fund Service Private Limited

By CA Aditya Sesh, Founder and Managing Director of Basiz Fund Service Private Limited 

· The exemption limit on individual income tax has been raised from 5 lakhs to 7 lakhs. This will save close to 20,000 at 10% tax new tax slab. Each individual will therefore have more money to spend. The GDP impact per person will be an increase in GDP by approximately 80,000 Rs. The overall absolute GDP impact will be Rs. The exemption limits have also been raised to 3 lakhs. The slab for applicability of tax on leave encashment for retirees also has been enhanced to 10 lakhs. Highest tax rate of tax for individuals that are high earners also has been reduced from 42.74% to 39%. In general today IT returns are processed in 16 days as against 90 days earlier and refunds are under a day.This will put a whole lot of money in the hands of individuals which will then spur either savings or consumption.

· A very important proposal for the MSME is that those who take services and goods from an MSME unit will not be able to claim expenditure on such purchases of goods or services unless they pay the MSME. This will result in your faster payments to MSMEs thus improving their cash flows and therefore survival. Another important proposal for the sector is the reduction in the number of compliances. As an example, the permanent account number of the Income Tax Department would be the unique identifier across all compliances for business and specific for the medium and small-scale industries. Digilockers will be promoted for the medium and small-scale industries to store all important identification documents and documents stored in digital lockers will be accepted as valid proof for various forms of applications and incentives. The outlay for the MSME sector has been increased by 9,000 Cr via credit guarantee schemes. This will decrease the cost of financing using borrowing by 1%. Around 3,000 compliances have either been removed or many offenses decriminalized. MSME with a gross total income of Rs 5 cr(2 Cr earlier) and individual professionals with a gross total income up to 75 lakhs(50 earlier) professionals can avail of presumptive taxation which makes compliance simple. Those MSMEs that have disputes with government departments or corporations will now have a standard dispute resolution scheme, this will greatly reduce the uncertainty. While the details are not out, there has been a proposal to get into a result-based financing method. This essentially is similar to PLI scheme where the financing will be based on results in business achieved as an example of reaching certain financial metrics like topline. This will ensure that we move away from balance sheet-based banking. Many MSMEs are auto-ancillary suppliers. The auto scrapping policy will ensure that old cars are scrapped and new ones are bought. This will spur business in the MSME auto ancillary sector.15 % corporate tax rate has been further extended for new manufacturing units commencing production before March 2025. While this is across the board it impacts MSME’s too. The maximum impact of this positive move will benefit the MSME sector. It will unleash animal spirits in the MSME.