Corporate Tax Reduction would Improve the nancial health of Small and Medium Scale Industry

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Read the news on union budget 2017, News topic: Corporate tax reduction and budget over views.

Corporate Tax Reduction would Improve the nancial health of Small and Medium Scale Industry

New Delhi, Feb 1, 2017: The general union budget was presented in Lok Sabha on 1 feb by FM Arun Jaitley. If paper industry aim to take its pie of cake out of the budget announcement, only to get two reduction favorable. Of course, Paper mills those annual turnover are less than to 50 Cr. would be liable to pay only 25 percent corporate tax instead of 30 % in fiscal 2017-18. The Individual Paper Traders not fall in corporate format have reason to cheer of saving Rs. 12,500 in Rs 2.5L to Rs. 5 L tax slab. There has been no announcement or  provision in budget for education sector which is somehow directly connected to paper industry.

The government has not increased any allocation for 'Sarve Siksha Abhiyaan' which send depression for paper. However saving of 5 percent corporate Tax would increase the  wealth of Paper Machine, Chemical and Paper manufacturers by 20 to 25 Lakhs. This additional saving could create magic in little way like spending in Research and Development of paper machine technology, more expense allocation for Branding and advertising of their products and  induction of expensive talent for enhancing the productivity. There weren’t many changes in other taxes as the government hopes to soon roll out a unified goods and service tax (GST) to replace existing indirect taxes such as excise duties, custom duties and service tax. Mr. Jaitely strongly reiterated the new JULY1 dealine for implementing GST. The main focus of the budget, however was on the rural economy and the need to step up publica investment to help overcome the impact of demonetisation and revive growth. He further announced several measures in this regard, but was cautious enough to not let up too much on government spending.

Budget 2017 Overview:

Several measures have been announced in the Budget 2017-18 to provide impetus to commerce and industry. The key initiatives include..

1. A Special Scheme for creating employment in leather and footwear industries is proposed to be implemented, on the lines of the scheme in textile and apparel sector.

2. The long standing demand of startups has been accepted and the profit (linked deduction) exemption available to them for 3 years out of 5 years is changed to 3 years out of 7 years. For the purpose of carry forward of losses in respect of 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.

3. Further liberalisation of FDI policy is under consideration and the Foreign Investment Promotion Board (FIPB) to be abolished in 2017-18.

4. In order to make MSME companies more viable, income tax for companies with annual turnover upto Rs. 50 crore is reduced to 25%. About 96% of companies will get this benefit of lower taxation. This will make our MSME sector more competitive as compared to large companies.

5. MAT credit is allowed to be carried forward up to a period of 15 years instead of 10 years at present.

6. For creating an eco-system to make India a global hub for electronics manufacturing a provision of Rs. 745 crores in 2017-18 in incentive schemes like M-SIPS and EDF. The incentives and allocation has been exponentially increased following the increase in number of investment proposals.

7. Inverted duty has been rectified in several products in the chemicals & petrochemicals, textiles, metals, renewable energy sectors. Duty changes to improve domestic manufacturing of medical devices, those used for digital transactions and capital goods have also been announced.

8. Infrastructure – a key pillar under the Make in India programme has been strengthened with a large budgetary allocation. The total allocation for infrastructure development in 2017-18 stands at Rs. 3,96,135 crores. A specific programme for development of multi-modal logistics parks, together with multi modal transport facilities, to be drawn up and implemented.

9. Tourism is a big employment generator and has a multiplier impact on the economy. Incredible India 2.0 is proposed to be launched to promote tourism andemployment. Five Special Tourism Zone, anchored on SPVs in partnership with the States would be set up.

10. Modernisation and upgradation of identified corridor, railway lines of 3,500 kms will be commissioned, 25 stations are expected to be awarded for station redevelopment and 500 stations will be made differently abled friendly by providing lifts and escalators during 2017-18. These provide large opportunities under the Make in India initiative

11. Initiatives in Skill Development provide essential support for the Make in India sectors to thrive. Launch of SANKALP scheme to provide market relevant training to 3.5 crore youth and STRIVE scheme to improve the quality and market relevance of vocational training.

12. A new and restructured Central scheme with a focus on export infrastructure, namely, Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18.

13. The Government e-market place which is now functional for procurement of goods and services, has been selected as one of the winners of the South Asia Procurement Innovation Awards of the World Bank.

What does Paper Industry Speak?

Nothing about the tax structure has been disclosed in the budget. It is not beneficial for paper mills. Most of the paper industry are having turnover much more than 50 cr. In a overview, this budget could be beneficial for medium scale industry only.

Mr. P. S. Patwari, President, Indian Newsprint Manufacturers Association

We were expecting, the duty free newsprint import will be come under the taxable duty zone but nothing is changed. Reduction in corporate tax could be beneficial for other non-paper industry but not for paper industry. This budget can be seen just a average budget.

- Mr. Pramod K. Agarwal, President Indian Agro & Recycled Paper Mills Association

No discussion over GST and Central Excise Duty. There is no benefit of reduction in corporate tax to the paper mills as most of paper mills are having more than 50 cr. annual turnover. It could beneficial for other medium scale industry in long term only. This budget can be rated as a good budget in overall.

- Mr. Krishna Swamy, President South India Paper Mills Association 

“Nothing has been discussed for Paper market. We are waiting for details. Stock market has given good response to the budget as it will give growth to small and medium scale industry. We were expecting corporate tax reduction should have covered at least those companies also having annual turn over of 100 cr. so I rate it as just a good budget in overall.

- Mr. Samji Karia, President, Federation Of Paper Traders Association of India

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