Budget 2023-24: What's there for MSMEs?

Highlights

• ₹ 9000 crore for revamped credit-guarantee scheme to MSMEs
• ₹ 2 lakh crore additional collateral-free credit to MSMEs
• Relief proposed for MSMEs under Vivad Se Vishwas I and II schemes
• Relief to MSMEs, Start-ups and professionals through ease of doing business
• National Financial Information registry to be set up

While presenting Budget 2023, Union Minister for Finance and Corporate Affairs Nirmala Sitharaman proposed to continue the financial sector reforms and innovative use of technology which have led to financial inclusion at scale, better and faster service delivery, ease of access to credit and participation in financial markets.

Credit Guarantee To Msmes

FM announced that the revamped credit guarantee scheme for MSMEs, proposed in the previous Budget, will take effect from 1st April 2023 through infusion of ₹ 9000 crore in the corpus. “This will enable additional collateral-free guaranteed credit of ₹ 2 lakh crore. Further, the cost of credit will be reduced by about 1%,” she said.

Vivad Se Vishwas I – Relief For Msmes 

Giving significant relief to MSMEs, the Finance Minister proposed that in cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings.

Vivad Se Vishwas Ii – Settling Contractual Disputes 

To settle contractual disputes of government and government undertakings, wherein an arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced. This will be done by offering graded settlement terms depending on pendency level of the dispute.

MSMEs and Professionals  

Stating that MSMEs are growth engines of our economy, the Finance Minister said that micro enterprises with turnover up to ₹2 crore and certain professionals with turnover of up to ₹50 lakh can avail the benefit of presumptive taxation. The Finance Minister proposed to provide enhanced limits of ₹3 crore and ₹75 lakh respectively, to the taxpayers whose cash receipts are no more than 5 per cent. Moreover, to support MSMEs in timely receipt of payments, Sitharaman further proposed to allow deduction for expenditure incurred on payments made to them only when payment is actually made.

Nirmala Sitharaman On Startups 

While presenting the Union Budget, the Union Finance Minister said, "Entrepreneurship is vital for a country’s economic development. We have taken a number of measures for start-ups and they have borne results. India is now the third largest ecosystem for start-ups globally, and ranks second in innovation quality among middle-income countries. I propose to extend the date of incorporation for income tax benefits to start-ups from 31.03.23 to 31.3.24. I further propose to provide the benefit of carry forward of losses on change of shareholding of start-ups from seven years of incorporation to ten years."