The central government has issued a notification that in case of reclassification due to an upward change in terms of investment, an enterprise may continue to take advantage of all non-tax benefits of its prior classification for a period of three years following the date of such an upward change. The investment may be in plant and machinery or equipment or turnover or both.
Benefits from various government programmes pertaining to community procurement law and delayed payments are examples of non-tax benefits. Previously, a business could take advantage of non-tax benefits for only one year following the reclassification.
The move will inspire more micro and small businesses to expand their operations, as they can now continue to take advantage of the benefits for three additional years following the date of the review in their category.