Budget 2020 India: Ease in GST filing will greatly benefit SMEs even as the GST council has taken several steps to simplify the process over the past couple of years.
Union Budget 2020 India | Ease of Doing Business for MSMEs: Indian MSME sector, which contributes around 29 per cent to the country’s GDP and around 50 per cent to total exports, has been grappling with issues that are known. Complex norms around GST, lack of affordable access to capital, delayed payments issue etc, have been the challenges hindering the growth of MSMEs over past many years. Despite multiple actions initiated by the government to solve these challenges, the situation hasn’t drastically improved for small businesses. Few of India’s leading technology-enabled businesses, which engage with MSMEs as their customers and partners, detail out what government must do to ensure these challenges eat up least amount of time and cost for MSMEs.
Simplified GST: Ease in GST filing will greatly benefit SMEs even as the GST council has taken several steps to simplify the process over the past couple of years. However, “there still exists some lingering issues such as matching of B2B invoices, uploading information on tax returns and compliance burden of SMEs,” said Shashank Dixit, CEO, Deskera. Also, registered small businesses spend a considerable amount of time in obtaining state-wise registration, filing of multiple returns, generation of e-way bills and maintenance of separate books of accounts for each registered entity, said Dixit. Addressing these issues will likely increase transparency in the system and bring accuracy to the return filing process.
Cost and Access to Capital: While India’s financial sector has been revolutionized with the coming of the fintech sector that has made capital accessible for the underserved small businesses, there are challenges with the cost and availability of capital to meet the addressable demand in the market. “To ensure availability, we expect the authorities to make PSBs more inclusive and ease the rating mechanism to drive a greater influx of capital in the market to further meet the demand of SMEs. Also, the cost of capital currently is very high. A supportive policy that enables transmission of rates to NBFCs would help in more credit to SMEs at reasonable rates,” said Alok Mittal, CEO and Co-founder, Indifi.
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Delayed Payments — Managing and controlling delayed payments is posing a threat to the expansion of the MSME sector. Though the government has established MSME Samadhaan to report cases of delayed payments, having a payment act in place would help regulate timely payments to MSMEs by the government and other large companies, said Sampad Swain, CEO and Co-founder, Instamojo. Apart from this, it would also be helpful to have policies/allocate funds introduced for micro-enterprises that are unable to graduate into small size businesses. The other expectations added Swain, of the MSME sector from the Union budget 2020 would include increased employment opportunities, easier GST compliance and allocation of Public Sector Undertakings (PSUs) for the MSMEs in Jammu and Kashmir.
Better Liquidity: Improved liquidity and sector-specific incentives to MSMEs should be the top priorities for the Finance Minister in this year’s budget, according to Rachit Chawla, Founder and CEO Finway. 6.5 per cent GDP growth in the coming fiscal is not a formidable task once liquidity resurges and conditions of MSMEs get improved. There is a strong connection between the health of NBFCs and the health of MSMEs. The financial goals of the latter depend a lot on the financial stability of the former, and their collective growth is an index to economic growth. “IL&FS and DHFL crises bring drastic repercussions on India’s financial markets and MSMEs, the back-bone of Indian economy are still bearing the brunt of reduced liquidity in the market,” Chawla said.