‘Send me your inputs so that we can see a Budget which is a Budget like never before, in a way. 100 years of India wouldn’t have seen a Budget being made post-pandemic like this‘ the Hon’ble Finance Minister Nirmala Sitharaman said while addressing the CII Partnership Summit 2020. She also said that to revive growth, support has to be extended to those areas which have been disrupted badly due to the COVID-19 pandemic as well as to those areas which are now going to be the centres for newer demand and newer engines of growth.
The above vision of the Finance Minister has raised the bar of expectation of all the tax payers including Micro, Small & Medium Enterprises (MSME). In past various budgets, schemes and notifications have come up with various schemes and incentives to boost MSME sector, however, there are certain areas aiming on which can bring spurt in the growth of this sector.
- GST: The frequent amendments and compliance requirement with GST law increases time and compliance costs for MSMEs, hence, the Government must come out with more automated and simplified tax laws. Also, the GST tax rate should be reduced for MSMEs so as to enable them to place their products and services at competitive rates in the market.
- Income tax rate: Many MSME’s are run as proprietorship concerns, partnership and under LLP structure. The Government should consider reducing the income tax rates for the partnership and LLP also on similar lines with that done for the manufacturing sector.
- Popularising financing through TReDS:TReDS refers to Trade Receivable Discounting System. TReDS is an online electronic institutional mechanism for facilitating the financing of trade receivables of MSMEs through multiple financiers. The Government is supportive of TReDS since its inception and has taken various initiatives to make it popular, however, more and more steps should be taken to make it more familiar and popular amongst MSMEs so that they can benefit from this facility.
- Modernisation and expansions: Major challenge faced by many companies in the MSME sector is not having access to advanced technology, low production capacity, skilled labour, etc. Due to these, MSMEs are not able to compete in the local and global market in terms of pricing and quality. These issues can be addressed by inviting domestic and foreign large players to invest into MSMEs in the form of technology sharing, knowledge sharing, local product procurement, etc. and to encourage investors by providing incentives.
After bad hit by COVID-19 pandemic, the above measures can bring relief and help MSMEs to revive growth, demand and generate employment.
(The views expressed are personal)