Start-up units likely to get complete tax exemption

  • Debobrat Ghose, Hindustan Times, New Delhi
  • |
  • Updated: Feb 25, 2013 23:26 IST

Finance minister P Chidambaram in his forthcoming budget is likely to give complete income tax (I-T) exemption for five years to micro and small enterprises (MSE) units, established by first generation entrepreneurs, considering the sector's 19% growth compared with 0.6% of the large enterprises sector.

At present, no such exemption is available to encourage small entrepreneurs, except some provisions to claim exemptions under the I-T Act in some specified zones. It is expected that this exemption will be announced to encourage engineering and management graduates into entrepreneurship and self-employment.

A similar tax exemption to the tune of 200% is expected if a micro, small and medium enterprise (MSME) makes payment to any research organisation or laboratory like Indian Institutes of Technology or Council for Scientific Research or government engineering colleges, as a part of its investment.

http://www.hindustantimes.com/Images/Popup/2013/2/26-02-biz7.jpg

At present deduction is provided under the section 35 of I-T Act on payment made to certain notified institutions at 175% to assessees.

"The exemption may be extended to 200% in order to encourage MSME sector to invest in innovations and research," a government source said.

The budget may also announce a 'self-certification mechanism,' similar to self-filing of income tax returns, to make it easier for MSMEs to comply with various regulations.  

"It may be something like filing of I-T returns by a taxpayer himself, as getting approvals and compliances have been a bottleneck for new entrepreneurs," a source said.

The Prime Minister's Task Force had also recommended the same.     

The MSMEs may also expect to get I-T exemption to the extent of investments for attaining energy efficiency and adopting to clean technologies in their units.

 

also read

Rail budget

No rail fare hike for now but Bansal keeps his options open

blog comments powered by Disqus