Budget 2023-24 –From MSME perspective

Every year Finance Budget will be placed before the parliament upon its adoption and get assent by President for the year the same will be the Finance Act . Budget 2023-24 is the full budget before the elections 2024. Hon’ble FM has tried to incorporate as many as possible for the overall development and attempted to provide a full meal to the country covering various sectors.

MSME sector is one which is waiting for long time to get some privileges / benefits out of the budget. Let’s see what is available to them being one of the major sector which provides employment to both skilled and unskilled labour.

The below are key issues considered in this budget:

(i) PM Vishwakarma Kaushal Samman (PM VIKAS): The unorganized sector has lot of skills with local artisans, craftsmen who use the traditional tools. So, this scheme has been intellectualized for them so that their products and services are put together to help the MSME sector. Under this scheme not only financial assistance is provided but also training, skill development programs are also conducted so that they can have better standard of living and the art can be protected for the next generations.

(ii) Vivad Se Vishwas – I& II- With regard to Government and Government Undertakings:We all know during the covid times one of the badly hit sector is the MSME sector and it’s still recovering. To provide some relief with regards to the works/services done by them to the government and government undertakings .A proposal is made, in case of failure to execute contracts during the covid time, 95 % of the forfeited amount related to bid or performance will be returned to them. To settle contractual disputes with the government and government undertakings a voluntary settlement scheme will be introduced with standardized terms so that the settlement terms will depend upon the pendency level of the dispute.  

(iii) Digi Locker:Confidentiality and data security is a big challenged in this highly computerized environment. On par with other large business units and charitable trust a Digi locker will be created for MSME also to store and share data online securely with various authorities, banks, financial institutions etc. which helps in reducing duplication .However a one-time activity of helping the MSME to educate them how to use digitally should be done before converting the data so that they will not rely on third parties for the same. 

(iv) Skill India Digital Platform:India has the highest youth population in the world. However appropriate training is required so that the same can help in the economic development of the country. The government is keen on various skill development programs. Having a resource is only half baked utilizing their services effectively makes it complete. In this process Government has identified the importance of the same and provide skill development facilities and syncing the same with the need of the industry not only helps the industrial growth but increase the employment opportunities in the country and help to reduce the brain drain. An eco-system of linking digitally the employer with the skilled youth is now extended to MSME sector so that there is no shortage of skilled resources for the same.  

(v) Credit Guarantee Scheme: Credit Guarantee scheme will take effect from 1st April 2023 by infusion of funds Rs 9000 cr as corpus. This will enable additional collateral free guaranteed credit of Rs 2 lakh crore and reduce interest rate by about 1 % in the cost of credit. The MSME department, banks etc. will play a key role to make this credit available to the end user. 

(vi) Income Tax filing:Micro enterprises with less than Rs 3 cr turnover and having not more than 5 % of cash receipts in the total turnover can file their income tax return under presumptive basis. Earlier the said limit used to be Rs 2 cr only. 

(vii) Deduction of expenditure allowed on payment basis. Clause ‘h’ has been inserted in sec 43B of Income tax act, 1961 which allows any payment as deduction of business expenditure on payment basis. Now the payments made to MSME is included in this which help the MSME sector to get the payments on time as it has threshold of 45 days too.  

(viii) Concessional Basic Customs Duty on copper Scrap:Concessional BCD on copper scarp particularly to MSME of 2.5 % to be continued to ensure raw material availability for secondary copper producers How many rules, regulations we keep in place can be effective only when the same is followed in good spirit and to help the MSME grow.Everyone has a role to play in the same and help each other to achieve the target of $5 trillion economy which directly or indirectly help everyone to have a better standard of living and better opportunities for all.

 PS: The article is written for education purpose only. The author can be reached at Aravinda.garikipati@gmail.com (CA.Aravinda Garikipati)

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Category: Family Business
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