At the GST Council held at the beginning of this year, the Finance Ministry provided relief to small businesses by doubling the limit of exemption from payment of goods and services tax (GST) to Rs 40 lakh and announced that the higher turnover cap of Rs 1.5 crore for availing composition scheme of paying 1 percent tax will be effective from 1 April. However, there are many concerns that still remain unaddressed.
As per a report by KNN, an online media platform dedicated to addressing concerns and achievements in the MSME sector, the industry has many expectations from the upcoming interim budget to be presented on 1 February. In line with the various reforms already made for the sector, ease of doing business and financial challenges remain a concern.
The report listed the expectations of the MSME government already submitted to the Modi-government. These include:
- Credit availability: According to the World Bank, there is a $230 billion gap between demand and supply of credit in the Indian MSME industry. Small business owners fail to get loans especially from public sector banks leaving the industry that makes for close to 40 percent of the country's GDP capital starved.
- Taxes: MSMEs have demanded tax initiatives like lowering of dividend tax. Further, suggestions have been made allow 100 percent tax allowance on CSR activities associated with skill development in industrially backward areas.
- Digital enhancement: Adoption of technology in small business is very low despite being cost-effective. Government initiatives will help in greater acceptance of digitalisation.
- Innovation: The government has taken measures to promote innovation in the past but not much attention has been paid on funding such projects.
An interim budget does not cover the financial allocations for the whole year. This will be the last budget before the forthcoming general elections set for May.