Apart from the hike in MAT rate, SME are apparently upbeat about the 2010-11 budget announced by finance minister Pranab Mukherjee.
Certainly, both Prime Minister Manmohan Singh and Indian Industries hailed the budget as ideal that would help the country scale greater heights, however, even SMEs came out in the open to welcome the initiatives. No doubt, the rate of minimum alternative tax (MAT) was increased by 3 percent, from 15 percent it touched 18 percent, nonetheless, the Union Budget, by and large left the small and mid-sized companies in a cheery mood.
According to a leading industry analyst, the budget seems inspiring to both the Indian industries as well as the SMEs alike. The best part being the reduction of tax slabs will help business save money, which in turn can be ploughed back into their businesses.
The increase in the range of taxable amount in the budget, tax rate for income of Rs.5-8 is at 20 percent and for income over Rs. 8 lakh at 30 percent, will particularly benefit the small business entrepreneurs as they could fortify their capital base with substantial savings from tax.
That apart, the finance minister also announced the extension of the existing interest subvention of 2 percent by over a year, covering areas like handicrafts, carpets, handlooms and SMEs. This would indeed boost the growth of the SME sector.
SMEs will also profit from the proposed banking licenses to be given to the Indian Banks’ Association and non-banking financial institutions, as this help ease credit access for them.
In case of Micro, Small and Medium Enterprises, the General Budget 2010-11 has stirred up mixed reaction.
The allocation for this sector has being increased from Rs.1,794 crore to Rs. 2,400 crore for the year 2010-11.
SMEs and MSMEs having turnover of Rs. 60 lakhs (from the present Rs. 40 lakh) need not get their accounts audited, and for professionals upto Rs. 15 lakh (from the present Rs. 10 lakh) for profession.
To facilitate the conversion of small companies into Limited Liability Partnership, transfer of assets will not be subject to capital gains.