New Delhi

Stating that MSMEs are growth engines of the economy, Finance Minister Nirmala Sitharaman announced a slew of tax benefits to the sector during the Budget 2023. "Micro enterprises with turnover up to Rs 20 million and certain professionals with turnover of up to Rs 5 million can avail the benefit of presumptive taxation. I propose to provide enhanced limits of Rs 30 million and Rs 7.5 million respectively, to the tax payers whose cash receipts are no more than 5 per cent," she said.

According to Manish Lunia, Co-Founder of Flexiloans.com, presumptive taxation for MSMEs with enhanced limits to Rs 30 million, recognition of expenditure as they occur, will improve compliance further for MSMEs and reduce the time and cost for it, bringing more MSMEs to the formal sector.

In addition, Sitharaman announced that the revamped credit guarantee scheme for MSMEs, proposed in the previous Budget, will take effect from April 1, 2023 through infusion of Rs 90 billion in the corpus. “This will enable additional collateral-free guaranteed credit of Rs 2 trillion. Further, the cost of credit will be reduced by about 1 per cent,” she said.

According to Sribash Dasmohapatra, Executive Director, The Plastics Export Promotion Council (PLEXCONCIL), "The announcement that the Government will bring another dispute resolution scheme under Vivad Se Vishwas-II to settle commercial disputes will help MSME and trade resolve their issue urgently."

The FM has proposed that deduction for expenditure incurred on payments made to MSMEs will be allowed to their buyers only when payment is actually made. “This means, buyers cannot claim deduction without first paying to MSMEs. It will force them pay in time,” said Federation of Indian Micro and Small & Medium Enterprises (FISME) in a release. 

The budget proposes to bring relief to large number of Government MSME suppliers who were inflicted penalties or their bank guarantees were forfeited as the world was adversely affected during Covid. Now, 95 per cent of forfeited amount is proposed to be reimbursed.  

"To the government suppliers another proposition could also spell relief. Budget announces that ‘to settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced’. Graded settlement terms are being worked out depending on pendency level of the dispute," said FISME.