If you are a small-scale entrepreneur, there is some good news for you in this year's budget.
In a bid to give a boost to small-scale industries, the government in its budget proposed an investment allowance of 15% to any manufacturing company that invests more than Rs 25 crore towards new plant and machinery in any year.
An investment allowance is a form of tax incentive offered to companies that allows them to deduct a specified percentage of capital costs including depreciation from their annual taxable income.
The benefit under the new scheme would be available for 3 years or up to March 31, 2017 and will run parallel to a similar proposal announced last year that provided incentives to any company that incurs an expenditure of over Rs 100 crore in a year. The tenure of that scheme was extended until March 31, 2015.
"The manufacturing sector is of paramount importance for the growth of our economy," finance minister Arun Jaitley said in his budget speech. "This sector has multiplier effect on creation of jobs. Small and medium enterprises form the backbone of our economy and account for a large portion of our industrial output and employment. India today needs a boost for job creation. Our manufacturing sector needs a push for job creation."
The government also proposed to extend investment linked-deduction to new sectors like slurry pipelines for transportation of iron ore.