What Does the Budget Hold for MSME Business Owners?
Amit Mittal
Managing Director at MADASKY Consulting | Sr Advisor at McKinsey & Co | Stern - NYU, LSE Alumni | Founder of MADASKY ProXpert | Executive Coach | Expert in Mgmt Consultg and Business Growth Strategy
What Does the Budget Hold for MSME Business Owners?
BY AMIT MITTAL, Business Coach, Consulting & Advisory
Our Hon. Finance Minister Smt. Nirmala Sitharaman presented the Union Budget 2021-22 in the Parliament on February 1. The budget is an extraordinary budget, it is the first paperless budget in Indian history and is tailor-made for the ongoing pandemic. During these difficult times of turmoil, India, like other countries is in an economic slump. Such times require a strong budget to help India get back on its feet again.
The pandemic will continue to pose downside risks to growth in the medium term, so the budget will try to strike a balance between supporting growth and a modest deficit reduction. The Budget 2021 is growth-oriented and proposes to revamp India’s high growth story after the decline due to Coronavirus and the ongoing global recession.
The proposed budget rests on six pillars
- Health and Well-being
- Physical & Financial Capital, and Infrastructure
- Inclusive Development for Aspirational India
- Reinvigorating Human Capital
- Innovation and R&D
- Minimum Government and Maximum Governance
The finance minister lays down the foundation of the budget around the Atma Nirbhar Bharat - where the people are self-reliant and make India the business epicenter of the world. With this, she announced an Atma Nirbhar Bharat – Production Linked Incentive scheme (PLI) for the manufacturing companies to become a part of global supply chains. This scheme is announced for pharmaceuticals, automobiles and auto components, telecom and networking products, advanced chemistry cell batteries, textile, food products, solar modules, white goods, and specialty steel sectors. For this, the government has committed nearly ?1.97 lakh crores, over 5 years starting FY 2021-22. This initiative will help bring scale and size in key sectors, create and nurture global champions and provide jobs to our youth.
Resources to MSME Sector
The budget has allocated ?15,700 crores to MSME for FY 2022. The allocations are proposed to be made to the Emergency Credit Line Guarantee Scheme, entrepreneurship and skill development programs, and the launch of new technology centres for the MSME units. These proposals are directed to aid the MSME sector’s revival.
Government Financial Reforms
The Government is committed to the development of Multi-State Cooperatives and will provide all support to them. To further streamline the ‘Ease of Doing Business’ for Cooperatives, the Finance Minister proposed to set up a separate Administrative Structure for them.
Incentives for Start-ups
In order to incentivize start-ups in the country, the eligibility for claiming tax holiday for start-ups is extended by one more year - till 31st March 2022.
In order to incentivize funding of the start-ups, the capital gains exemption for investment in start-ups is extended by one more year - till 31st March 2022.
In the budget, the threshold of small companies and one person company by increasing their paid-up capital limit and turnover limit which leads to the increasing power of small and medium enterprises. This increase will directly benefit the upcoming startups and innovators.
Exemption from Audit
Earlier if your turnover was more than ?5 crores and carried out 95% of your transactions digitally you were required to conduct a tax audit. To further incentivize digital transactions and reduce the compliance burden, this limit for tax audit has been increased from ?5 crore to ?10 crores.
The government is trying its best to motivate new businesses to build the future of the Indian economy and taking every necessary action to support them. If you're wondering whether this is the right time to start your business - the time is now to start. The government is on our side and is ready to make India Atma Nirbhar. We will help you find your way of starting your business on the right foot.
We at MADASKY Consulting, believe “A journey of a thousand miles begins with a single step.” So if you are a startup or a business on a journey to grow, reach out to us and we will help with your journey and make India Atma Nirbhar.
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