Union Budget 2017-18 has brought major relief to the SME sector leading to a cashless and transparent economy.The corporate tax respite from 30% to 25%, for the MSMEs having less than Rs. 50 crore turnovers,will create a positive impact on their revenue chains. This announcement will also lead toa major shift from proprietorship registration to private limited companies/ LLP registered firms.
As highlighted in the infographic shared by Power2SME, the taxation policies and lending facilities announced in the Budget 2017 are expected to benefit the MSME sector at a large. Under section 44AD of the Income Tax Act, existing rate of profit of 8% has beenlowered to 6% provided the gross receipts are received through digital means for businesses with turnover up to INR 2crores.
All these budgetary announcements highlight and reiterate the government’s focus on its flagship campaigns – Make in India and Digital India. These welcome initiatives by the government have led the MSME’s sector to access formal credit easily with quite a relief from tax burden. Also, RBI has lowered the interest rate with an increment in fiscal deficit by 3.2%. Overall, 96% MSMEs will be benefitted with more empowerment of small businesses.
However, there are still areas and arenas that need more governmental focus such as capital investments and lending schemes. A study by Knowledge and News Network shows that larger enterprises collectively owe INR 10,000 crore to the MSME sector. Therefore, to address delayed payments and bounced cheque concerns, speedy legal procedures should be initiated by the government to smoothen business operations of small businesses.
In lieu of this, the GOI has also focused on few measures like:
- Pradhan Mantri Mudra Yojna lending target doubled to Rs 2.44 lakh crore
- Allocation of Rs 745 crore toModified Special Incentive PackageScheme (M-SIPS) and ElectronicDevelopment Fund (EDF)
Furthermore, considering today’s youth arethe future of the nation, special emphasishas beengiven on the education, skills and employment for the youth.Government has allocated INR 4,000 croresunder SANKALP and INR 2200 crore under the STRIVE scheme keeping in mind the huge requirement for skill development and industry-based vocational training, respectively. The setting up of100 India International Skills Centers (IISC) and 590 Pradhan MantriKaushalKendras is also a much awaited move, which will help withthe growth and development of the Indian youth.