Ease of doing business for MSMEs: Finance and compliance-related measures dominated finance minister Nirmala Sitharaman’s fifth budget speech on Wednesday. There were predominantly four major steps announced by the minister to support MSMEs during this fiscal while others intended to benefit MSMEs as well along with other businesses. Here’s everything that Sitharaman announced in Union Budget 2023 that would directly or indirectly benefit MSMEs:
Infusion of Rs 9,000 crore into the credit guarantee scheme under CGTMSE was announced by Sitharaman, effective April 1, 2023, to enable additional collateral-free credit of Rs 2 lakh crore to MSMEs and reduce the cost of credit by 1 per cent. Importantly, the announcement was actually made in the last budget itself, however, the amount wasn’t disclosed then. Changes made to the scheme in December 2022 were part of this revamp.
Enabling more micro units for presumptive taxation
The turnover limit for micro units and professionals to opt for presumptive taxation was expanded to Rs 3 crore from earlier Rs 2 crore for micro units and to Rs 75 lakh from earlier Rs 50 lakh for certain professionals provided their cash receipts are not more than 5 per cent of total receipts. Under presumptive taxation, small businesses and professionals are not required to maintain their books of account and get their accounts audited, providing relief from tedious tax filing exercises.
Also read: Budget 2023: FM Sitharaman revamps credit guarantee scheme with Rs 9,000 crore in corpus for MSMEs
Addressing payment issue
To support MSMEs in the timely receipt of payments, Sitharaman also proposed the deduction for expenditure incurred on payments made to them by buyers only when payment is actually made to MSMEs. “This means buyers cannot claim a deduction without first paying MSMEs. It will force them to pay in time,” MSME association FISME said. The move is likely to force buyers to clear small businesses’ dues without much delay.
Returning 95 forfeited performance bank guarantee amount
The finance minister announced that MSME suppliers unable to execute contracts during the Covid pandemic will get 95 per cent of their forfeited amount back by the government and government undertakings they were working with. The relief measure announced was under the government’s Vivad se Vishwas scheme, a voluntary initiative for resolving pending direct tax disputes amicably with the taxpayers. The move is expected to benefit those who don’t have access to institutional financing and had their capital blocked as bid fee or performance guarantee to secure government and undertaking tenders due to Covid-related challenges.
An assistance package called PM Vishwakarma Kaushal Samman was conceptualised for traditional artisans and craftspeople to enable them to improve the quality, scale and reach of their products to integrate them with the MSME value chain, Sitharaman said in her budget speech.
“The art and handicraft created by them represent the true spirit of Atmanirbhar Bharat. The components of the scheme will include not only financial support but also access to advanced skill training, knowledge of modern digital techniques and efficient green technologies, brand promotion, linkage with local and global markets, digital payments, and social security. This will greatly benefit the scheduled castes, scheduled tribes, OBCs, women and people belonging to the weaker sections,” the minister added.
Also read: Budget 2023: MSMEs will get 95% of forfeited amount back if they fail to execute contracts during Covid
Digi-sharing of documents
An “Entity DigiLocker”, Sitharaman said will be set up for use by MSMEs apart from large business and charitable trusts for storing and sharing documents online securely, whenever needed, with various authorities, regulators, banks and other business entities.
In order to further expand the digital ecosystem for skilling, Sitharaman said a unified Skill India Digital platform will be launched enabling demand-based formal skilling, linking with employers including MSMEs, and facilitating access to entrepreneurship schemes.
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