Low limits for service tax exemption

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: avails services of transporters. The threshold limit proposed is of freight value of Rs 750 per consignment, and therefore, impacts almost all firms. The small businesses term it as unjustified.

Does the issue of delayed payments covered under the proposed Small Enterprises Development Bill? What is the status of the Bill and is there any change from the draft circulated in 2000?

— Gupta Cables Pvt Ltd., Bhubaneswar

The issue of delayed payment does not figure in the Bill. Experts, however, feel that in view of the all-encompassing nature of Bill, it should have addressed the issue of delayed payments. Perhaps, the government does not intend to subsume under the new Bill, the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (further amended in 1998).

Currently, the Bill is in Parliament for consideration. From the draft that was in circulation in 2000, several changes could be expected when the Act gets finally notified. The title itself is expected to be changed from ‘Small Enterprises Development’ to ‘SME Development’.

The Bill is a legislative initiative to bring in policy and development measures under a statutory body: National Small Enterprises Development Board. It attempts to provide some kind of a ‘legal legitimacy’ to the guidelines that the Board would issue on subjects such as registration, finance, public procurement and marketing support. The Bill focuses on reduction of the regulatory burden of labour laws by reducing the statutory reporting and inspections.

There is a fair amount of scepticism with regards to the Bill. First, it is observed that reduction of ‘inspector raj’ is a challenging task through a single Act, as there are powerful central line ministries such as labour and finance, which have their own priorities. Second, it is felt that the reforms have streamlined the processes at the central government level and much of the harassment now is not due to central laws but due to rigidities encountered by SMEs at the level of states. Third, experts express doubts on the efficacy of the Board keeping in view of its large membership at 93, of which 53 are likely to be from the bureaucracy.

It is still seen as a welcome step, no matter how incomplete it is, at this moment.