MSMEs turnover threshold for audit increased five times to Rs 5 crore

New Delhi [India], Feb 1 (ANI): To reduce compliance burden on small retailers, traders, shop keepers who comprise the medium, small and micro enterprises (MSME) sector, the Union Budget has proposed to raise by five times the turnover threshold for audit from the existing Rs 1 crore to 5 crore.
However, the increased limit will apply only to those businesses which carry out less than five per cent of their business transactions in cash, Finance Minister Nirmala Sitharaman said while presenting the Union Budget 2020-21 in Parliament.
Currently, businesses having turnover of more than Rs 1 crore are required to get their books of accounts audited by an accountant.
To give a boost to the start-up ecosystem, the Budget proposes to ease the taxation burden on employees by deferring the tax payment on employee stock options (ESOPs) by five years or till they leave the company or when they sell their shares.
The Finance Minister said that start-ups have emerged as engines of growth for the Indian economy. Over the past year, the government has taken several measures to handhold them and support their growth.
During their formative years, start-ups generally use ESOPs to attract and retain highly talented employees. Currently, ESOPs are taxable as perquisites at the time of exercise. This leads to a cash-flow problem for the employees who do not sell the shares immediately and continue to hold the same for the long-term.
Further, an eligible start-up having turnover of up to Rs 25 crore is allowed deduction of 100 per cent of its profits for three consecutive assessment years out of seven years if the total turnover does not exceed Rs 25 crore.
The Budget has proposed to extend the turnover limit from the existing Rs 25 crore to Rs 100 crore. Moreover, the Budget proposes to extend the period of eligibility for a claim of deduction from the existing 7 years to 10 years.
(ANI)