Union Budget 2021 | Simplified GST, lower taxes and more: What MSMEs expect from govt in upcoming budget
Finance Minister Nirmala Sitharaman will present the Union Budget 2021 on February 1 on the second of the Budget Session of the Parliament amid formidable economic challenges posed by the ongoing COVID-19 pandemic. The upcoming budget has been described as a "never before" event by Finance Minister, who recently concluded pre-Budget consultations. Though the government has not given any hint on what it might announce on February 1, it is expected the Micro, Small and Medium Enterprises (MSME) sector, which is facing a liquidity crunch, will get a major boost from the Union Budget 2021. According to the central government, India has nearly 6.8 million Udyog Aadhar registered MSMEs. The Finance Ministry had said that 49.81 per cent of India's exports during the financial year 2019-20 were contributed by the MSMEs, which employs 110 million people in India. Looking at this, the central government had announced a special package for this crucial sector under the Atmanirbhar Bharat package. It later said that Rs 21,000 crores of MSME dues have been paid since May last year by the Central government agencies and Central Public Sector Enterprises (CPSEs). "The highest level of procurement was achieved in October of over Rs 5,100 crores and payment of over Rs 4,100 crores. Going by the reports received in the first 10 days for November 2020, this level of performance is expected to be surpassed as procurement of about Rs 4,700 crores and payment of about Rs 4,000 crores have already been reported," the Finance Ministry had said.
Though the government had announced several schemes and relief packages for the MSMEs, experts in the sector feel that the Centre needs to take more steps to encourage this sector. Experts feel that the Centre should simply GST and reduce its rate from 18 per cent to 5 per cent on professional services to boost MSMEs.
"With every passing day, GST laws are becoming more draconian instead of being simplified. The time limit of allowing GST registration has also been increased with a requirement of physical verification of office address by the GST officer. GST officers have also been provided additional powers to cancel GST registration in several cases," said Alok Patnia, Managing Partner, TaxMantra Global while speaking to Financial Express.
Experts also want the central government to increase the collateral-free loan limit to Rs 5 crore for micro-units, Rs 15 crore in case of small businesses and Rs 35 crore for medium businesses.
It will lead "to better utilisation of money available with banks and needy businesses will benefit," said Chandrakant Salunkhe, President, SME Chamber of India and Startups Council of India told Financial Express.
MSME experts also want the government to ease the Foreign Exchange Management Act, 1999 as it is becoming a roadblock for foreign investments in the country. They also feel that a complete overall is required in the system of foreign exchange inflows and outflows so that MSMEs can work swiftly with global partners.
Budget Session 2021:
The budget session of Parliament will begin from January 29 with Finance Minister Nirmala Sitharaman presenting the Union Budget 2021 on February 1. Lok Sabha Speaker Om Birla had on Friday said that the government has made preparations for it keeping in mind the COVID-19 pandemic.
Speaking to news agency ANI, Birla said that the government has made comprehensive preparations for the budget session of parliament and this session will be duly conducted.
"Our scientists and doctors have worked hard. Regarding the vaccination, decision will be taken by the government. The guidelines given by the government regarding it will be followed," he said when asked whether a COVID-19 vaccination drive will be run for MPs before the session.
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