Budget 2017, Impact on Businesses

Budget 2017, Impact on Businesses


  1. Cash Payments limit u/s 40A(3) reduced to 10,000/-

Cash Payments exceeding 10,000/- to a single person in a day will lead to disallowance of that expense u/s 40A(3). Earlier this limit was 20,000/-.

2. Capital Expense payments u/s 43 in cash exceeding 10,000 to a single person in a day.

The scope of the expense was earlier only revenue expenses and from this budget the scope has been extended to Capital Expenditure also. Accordingly if a capital expense is paid in cash to a single person in a day exceeding 10,000/-, the capital expenditure is not allowed so that depreciation cannot be claimed on that amount resulting in increased profit & taxes.

3.  Maintenance of Books of Accounts u/s 44AA

The limits u/s 44AA based on which books of accounts is not required to be maintained has been increased from 1,20,000/- income to 2,50,000/- and Turnover from 10,00,000/- to 25,00,000/-.

4. Presumptive Taxation u/s 44AD

The limits of presumptive taxation @ 8% for business was raised to Rs. 2 Crores in 2016 Budget. The 8% profit rate has been reduced to 6% for amounts received through banking or other electronic mediums otherwise than through cash.

5.  Indexation Rate for Capital Gains u/s 48

The base for computing indexation rate has been changed from 1-4-1981 to 1-4-2001

6. Tax Holiday for Start Ups u/s 80IAC

The Period within which a eligible start up can claim exemption for Profits has been increased from 5 years to 7 years.

7. Tax Holiday for Housing Projects u/s 80IBA

The period for which housing projects can avail tax exemption is extended from 3 years to 5 years.

8. MAT Credit u/s 115JAA

MAT credit can be carried forward for next 15 years w.e.f 1-4-18 instead of earlier 10 years

9. Corporate TAX Rate

Income Tax Rate for Small and Medium Corporates with turnover upto 50 Crores have been reduced to 25% against 30% upto AY 17-18.



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