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On the 5th of July, 2019, India’s finance minister Nirmala Sitharaman presented her first Annual Budget with Budget 2019. It was heartening to note that the budget has several takeaways for the micro, small and medium enterprises sector, some of which we have attempted to summarise in this blog.

Budget 2019 – Key points for MSMEs to note

  • A lower rate of Corporate Tax at 25% has been extended to companies with an annual turnover of up to INR 400 crores, from an earlier cap of up to INR 250 crores.
  • INR 350 crores have been allocated for the financial year 2019-20 under the Interest Subvention Scheme, in order to meet the 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans.
  • A payment platform will be created for MSMEs to enable filing of bills and payment. This will help eliminate delays in payment and give a boost to investment in MSMEs.
  • To bring more participants, especially NBFCs, the non-TReDS platform, an amendment to the Factoring Regulation Act, 2011 will be made. This will allow all NBFCs to directly participate on the TReDS platform.
  • Pension benefits will be extended to about 3 crore retail traders and small shopkeepers whose annual turnover is less than INR 1.5 crores under a new “Pradhan Mantri Karam Yogi Maandhan Scheme”. Enrolment into the Scheme will be kept simple, requiring only Aadhaar and a bank account, while the rest will be on self-declaration.
  • The Stand-Up India Scheme has been extended up to 2025.
  • There is a focus on skill development to focus on new-age skills like – Artificial Intelligence (AI), Internet of Things, big data, 3D printing, virtual reality and robotics.
  • More than INR 3.75 lakh crores are blocked in litigations in Service Tax and Excise (pre-GST regime). A dispute resolution-cum-amnesty scheme, called “Sabka Vishwas Legacy Dispute Resolution Scheme”, has been proposed, that will allow quick closure of these litigations. The relief under the scheme varies from 40% to 70% of the tax dues for cases other than voluntary disclosure cases.
  • To ease the liquidity crisis in NBFCs, it has been decided to allow fundamentally sound ones to continue getting funding from banks and mutual funds without being unduly risk-averse. For the purchase of high-rated pooled assets of financially sound NBFCs amounting to a total of INR 1 lakh crore during the current financial year, the government will provide a one-time six months partial credit guarantee to Public Sector Banks for first loss of up to 10%.
  • “Make in India”, with emphasis on Micro, Small and Medium Enterprises will be one of the major focus areas.
  • Under the Scheme of Fund for Upgradation and Regeneration of Traditional Industries (SFURTI), 100 new clusters will be set up during 2019-20 enabling 50,000 artisans to join the economic value chain. Focused sectors are bamboo, honey and khadi clusters.
  • The Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE) would be consolidated for setting up of 80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators (TBIs) in 2019-20 to develop 75,000 skilled entrepreneurs in agro-rural industry sectors.
  • There will be interchangeability of PAN and Aadhaar to file tax return proposed.
  • There will be 2% TDS on cash withdrawal exceeding INR 1 crore in a year from a bank account to encourage digital payments.
  • Businesses with an annual turnover of more than INR 50 crores, to offer low-cost digital modes of payment. Also, no MDR charges are to be imposed on customers or merchants.

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Pramit Pratim Ghosh

Author: Pramit Pratim Ghosh

Pramit, who has been with Tally since May 2012, is an integral part of the digital content team. As a member of Tally’s GST centre of excellence, he has written blogs on GST law, impact and opinions - for customer, tax practitioner and student audiences, as well as on generic themes such as - automation, accounting, inventory, business efficiency - for business owners.