In the recent budget announcement by Nirmala Sitharaman, some interesting updates related to MSME (Micro, Small, & Medium Enterprises) has taken place. These steps would streamline the process and boost the ease of doing business in India. In comparison to 2022–2023, the entire allocation for the MSME Ministry has increased by almost 42%, from 15,629 crores to 22,138 crores.
The significant updates announced by Finance Minister during the recent budget session to support and encourage MSMEs include:
- CGTMSE Program Revamp: Due to huge demand from MSMEs for cheap credit, the government has announced the implementation of a ‘revamped credit guarantee’ scheme w.e.f 1st April’23, via an infusion of ₹9,000 Cr. in the corpus.
Responding to this, the finance minister said, “This will enable additional collateral-free guaranteed credit of ₹2 lakh crore. Further, the cost of the credit will be reduced by about 1%”. In short, it will increase financial inclusion, spur job growth, and give MSMEs access to financing worth ₹2L crores.
- RAMP & SFURTI: Schemes like RAMP (Raising and Accelerating MSME Performance) and SFURTI (Scheme for Fund for Regeneration of Traditional Industries) will ensure 42% higher allocations of funds for the development of the MSME sector, in comparison to 2022-23.
- Unified Identification: The government has declared that “PAN” would be used as a common identification, which will centralize the administration of financial information. For small businesses that struggle to keep track of numerous records, this will lessen the compliance load while simplifying the KYC process.
- Tax Deductions: Further, Govt said that the tax deductions would no longer be calculated using the traditional accrual basis but rather based on payments made to MSMEs by buyers. As a result, buyers won’t be able to claim ‘conclusion’ without paying MSMEs.
This will force buyers to clear all the dues immediately. It will help boost timely payment to MSMEs, stabilize their cash flow, and strengthen their supply chain. This new policy is expected to lower the slab of MSMEs’ estimated outstanding amount of Rs.10L crores which will be beneficial for them in long term.
- Presumptive Taxation: Previously, professionals with a turnover of about ₹50L and microenterprises with a turnover of about ₹2 Cr. were eligible for the presumptive taxation programme. Now, the bracket has been raised to ₹75L and ₹3 Cr. respectively for all taxpayers with 5% or less in cash receipts.
- Vivad se Vishwas: Under this scheme, MSME suppliers that were unable to complete contracts due to the Covid-19 epidemic would receive 95% of forfeited sums returned from the government.
- Entity DigiLocker: To help MSMEs securely store and exchange documents with various banks, regulators, authorities, and others, the ‘Entity Digilocker’ is to be introduced.
- Unified Skill India Digital Platform: Govt of India has announced to provide formal demand-based skilling to all startups including small, micro, and medium enterprises while enabling them to access different entrepreneurship schemes and connect with employers.
- PM-VIKAS: The purpose of this scheme is to help craftsmen and artisans with skill training, financial support, bridging local and international markets, etc. It will give them the chance to improve the quality of their products and expand the market for their goods.