India’s 2017-18 Union Budget provides impetus for an economic recovery after demonetisation.

The new budget announced in February is in line with the agenda to transform, energise and clean (TEC) India, with plans to fight black money, digitise the economy and improve the ease of doing business by reducing the administrative burden.

Here are six key takeaways from the 2017-18 Indian budget for businesses:

1.New taxation system

The new Indian taxation system is a major reform to improve operational efficiency. The Goods and Services Tax (GST) Council has finalised its recommendations on most of the issues relating to the new tax regime, which is expected to take effect from July 2017 with no definite date of enactment confirmed by the regulators yet, as it is pending for regulatory approval from the Parliament. Preparation of the government’s IT systems for GST is on time, and the first promotional activities are due to begin from 1 April 2017.

2.Tax cuts

To stimulate growth and improve the ease of doing business, the government has reduced the corporate tax rate for Small and Medium Enterprises (SMEs), which represent the majority of companies in India.

• Personal income tax is now 5% from 10% for individual assesses between income of Rs. 2.5 lakhs (US$ 3,695) and Rs. 5 lakhs (US$ 7,391) • Income tax for micro small and medium enterprises (MSMEs) with annual turnover up to Rs. 50 crore, which is 25% from 30% • Minimum Alternate Tax (MAT) credit can be carried forward up to 15 years instead of the previous 10 years.

Foreign company earnings from the sale of leftover stocks of crude oil from a facility in India will be exempt from tax, subject to specific conditions.

And the time period for revising a tax return is reduced to 12 months from the completion of that financial year. This puts it on par with the time period permitted for filing of the return. The time allowed for completion of scrutiny assessments is compressed to 18 months (from 21 months) for Assessment Year 2018-19, and will be 12 months for Assessment Year 2019-20 and thereafter.

3.Foreign Direct Investment

To attract or drive direct investments into India, the government may futher liberlise the country’s Foreign Direct Investment (FDI) policy. The Foreign Investment Promotions Board (FIPB), a body that clears proposals envisaging foreign investment up to Rs 5,000 crore (US$ 739m), will be abolished.

4.Infrastructure

A provision of Rs 241,387 crore (US$ 35.7bn) in 2017-18 has been created for the transportation sector as a whole, including funding to improve India’s rail, roads and shipping infrastructure. These budget allocations are intended to help boost the region’s efficiency, productivity and quality of life.

5.Fighting corruption

The Indian government is making a clear intention to fight black money and further digitise its economy. In financial year 2017-18,the amount of cash per transaction for an individual is limited to INR 3 lakh (US$ 4597) and cash donations by an individual to trusts or political parties is capped at INR 2,000 (US$ 31). Companies heavily reliant on cash transactions may feel the effect of this change.

6.Digital economy

The digital economy is another main focus of the budget. The government will launch two new schemes – the Referral Bonus Scheme for individuals and a Cashback Scheme for merchants in the financial year 2017-18 to promote use of the Bharat Interface for Money (BHIM) app. This is a mobile app developed by the National Payments Corporation of India (NPCI) based on the Unified Payment Interface (UPI).

The app has been adopted by 12.5 million people so far, and is available in seven regional languages. It aims to be a one-stop solution for completing digital transactions.

To promote digital India, a Payments Regulatory Board within the Reserve Bank of India will also be created in the financial year 2017-18. It will replace the existing Board for Regulation and Supervision of Payment and Settlement Systems.

As the digital economy brings with it threats of cyber security, a proposal is in place to establish a Computer Emergency Response Team for the financial sector (CERT-Fin), and RAPID – a five point agenda for tax administration called Revenue, Accountability, Probity, Information and Digitisation – to maximise efforts for e-assessment in the coming years. The result of this will be greater accountability for Tax Department officers for the specific act of commission and omission in tax filings and returns.