In a move aimed at supporting small and individual-run enterprises, the Finance Ministry of India has announced a set of tax relief measures specifically designed for sole proprietorships. The announcement, made as part of the government’s ongoing efforts to bolster the micro and small business segment, is expected to ease the financial burden on millions of sole entrepreneurs operating across the country. These measures come at a crucial time as many small businesses continue to recover from the economic disruptions caused by recent global and domestic challenges.

Under the new policy framework, sole proprietors will now benefit from increased income tax exemption limits. The threshold for taxable income has been raised, allowing small business owners to retain a larger portion of their earnings. Additionally, the government has expanded the scope of the presumptive taxation scheme under Section 44AD of the Income Tax Act. This revision raises the annual turnover ceiling for eligibility, enabling more businesses to opt for simplified tax compliance and reduced paperwork. This is expected to reduce the compliance burden on individual business owners, many of whom operate with limited financial and administrative resources.

The Finance Ministry has also introduced additional deductions for certain business expenses, including digital payments infrastructure, employee welfare schemes, and capital investment in essential machinery. These deductions aim to encourage modernization and formalization of sole proprietorship operations, especially in rural and semi-urban regions. In a further step to incentivize timely tax filing, a lower interest rate on late payments has been proposed for sole proprietors with a turnover below a specific limit, offering greater flexibility in managing cash flows.

Officials from the Ministry highlighted that these relief measures are aligned with the government’s broader vision of supporting grassroots entrepreneurship and fostering a more inclusive economy. The tax relief package is not only intended to ease financial pressure but also to encourage small business owners to transition into the formal economy and benefit from government-backed credit and welfare schemes. Industry representatives and business associations have largely welcomed the announcement, calling it a timely and much-needed boost to a vital segment of the Indian economy.