Understanding the New Limit for Tax Audits

Understanding the New Limit for Tax Audits

The government is leaving no stone unturned to promote young entrepreneurs. From launching new schemes to programs, the government is pushing them so they can grow and achieve success. Programs like Startup India Action Plan offers an excellent platform for the innovation laden young business proposals to manifest into successful businesses. While big businesses build up the nation, it is the small and medium business which defines the future of the economy.

Apart from this, the new finance budget 2020 has brought forth great news for medium, small and micro enterprises (MSME) sector by reducing their taxation and compliance burden. The lower rate of interest and new income tax rates slab for individuals, companies, proprietorship firms, local authorities etc have been welcomed with open arms.

The Finance Minister Nirmala Sithraman has also increased the limit for tax audit from the present Rs. 1 crore to Rs. 5 crores. But this increased limit will only be applicable for businesses who conduct only 5 per cent of their business transaction in cash.

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Presently all those businesses which have a turnover of more than Rs. 1 crore have to get their accounts books audited by the accountants. But the new budget 2020 proposes to lower the tax burden on the employees by deferring the tax payment on employee stock options (ESOPs) by five years or till they quit the company or when they sell off their shares.

At the time of initial years of business, the ESOPs are used by the start-ups and businesses to attract and retain their talented employees. As per the present scenario, the ESOPs are taxable as perquisites at the time of exercise. This results in irregular cash flow issues for the employees who do not wish to sell their shares immediately and hold them for a longer duration of time.

Along with it, the eligible start-up businesses with a turnover of up to Rs. 25 crores are allowed deductions of 100 per cent of its profits for three out of seven consecutive assessment years if their total turnover doesn’t exceed Rs. 25 crore threshold.

The turnover limit from the present 25 crores has been extended up to Rs.100 crore as per the new proposed budget.  It also proposes to increase the period of eligibility for a claim of deduction from the present seven years to 10 years.

The proposals stated above will result in immense growth and expansion of new start-ups and will open many more avenues for them. Shopkeepers, retail owners and traders are all likely to get benefitted from the new financial budget. If all goes fine, the coming years will see a drastic change in the façade of the business. With the government encouraging young businesses with schemes like ‘Make in India’ and ‘Startup Action Plan’, the MSME sector is sure to see an upsurge. And with income tax rebates and lower interest rates being proposed, the businesses will also be able to save some money and take advantage of the deductions and exemptions which they were unable to avail earlier.

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With government supporting the businesses in full swing, the business owners can now opt for business loans to manifold their avenues and fund their needs and requirements. Business loans are being offered by all the leading banks and NBFCs at a competitive rate of interest. One can either opt for unsecured small-term loans to meet immediate short term funding requirements or go for secured business loan options to borrow bigger amounts and utilise the same for expanding their business. With so many options available in the lending market, it is imperative for the borrower to compare various lenders for their offerings in terms of rate of interest, loan amount, loan tenure, processing fees, EMI etc and make an informed choice. LoansJagat offers an excellent comparative platform for the borrowers wherein they can compare over 40 key business loan providers and choose the one which best suits their requirements. By simply entering the KYC and income details on our platform, you will be directed to a list of lenders suiting your credentials. You can choose the lender and apply for the loan by filling the application form and submitting the documents. This is the most transparent, convenient and sought after method to avail a business loan.

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