New Delhi, Feb 29 (KNN) In his budget speech today Finance Minister Arun Jaitley, announced raising of the ceiling on eligible turnover limit for presumptive tax.

The move towards simplification will benefit large number of MSMEs especially retailers and shopkeepers, who hitherto neither declared their income in the fear of harassment in the hands of tax officers nor paid any tax.

As announced by the FM the presumptive tax, which is a mechanism of taxing a business assuming a certain net profit rate on the turnover, without asking any question or maintaining detail accounts, was till now available upto a turnover level of R 1 crore per year.

Jaitley has proposed to raise the limit upto R 2 Crore. So any small business, if the turnover is upto R 2 Crore, may just declare the turnover figure and pay 8% income tax on the declared turnover.

Commenting on the step, Anil Bhardwaj, Secretary General, FISME opined that it will be a win – win situation for both Government and the small businesses.

Government will get tax from people many of whom hitherto not in tax net. The step will also encourage people to do business fairly, he said.

Nearly 99% of the 4 crore plus MSME population of India come under 1-2 person enterprises and within a turnover ceiling of R 2 Crore.

According to another expert, the initiative will also go a long way towards financial inclusion of the micro enterprises who are predominantly outside the formal Banking system.

With the simplified process for income declaration and with the assurance of no questions asked, it is expected the vast majority of the micro enterprises will declare their actual business turnover and will emerge in the daylight of formal business ecosystem. (KNN Bureau)