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BSI - Incentives For MSMEs 2020
BSI - Incentives For MSMEs 2020
BSI - Incentives For MSMEs 2020
SYBBA Sem-3
TOPIC: UNION
BUDGET 2020 INDIA:
INCENTIVES FOR
MSME S
By Fayaz Shaikh & Mudassir Shaikh
Roll No: 122 & 123
UNION BUDGET 2020
• Earlier, any business with an annual turnover of ₹1 CR would have to maintain and
get their books of accounts examined by an external auditor.
• To help reduce the compliance burden and encourage online payments, the
government has raised the threshold to ₹5 CR.
• To ensure the MSME sector has enough funds available for operations, the
government has proposed to launch an app-based invoice financing loan product
that could help small businesses with their cash flow problems.
• What’s more? NBFCs will now be able to offer invoice-based loans to small and
medium enterprises through the TReDS (Trade Receivables Discounting System)
Platform to ensure viability and sustainability.
3. RBI To Consider Extending Debt Restructuring
Scheme Until March 2021:
• The MSME sector was expecting a distressed fund to help bail them out of the dire
financial situation. Sitharaman proposed budget obliged by urging the RBI to extend the
debt restructuring scheme to March 2021.
• According to Sitharaman, over 500,000 MSMEs benefitted from the debt restructuring
scheme, the restructuring was a one-time scheme that allowed defaulting MSMEs to
revise the loan tenure and interest rate for up to ₹25 CR .
• The Government eMarketplace was introduced in the 2019 budget to have a one-stop
platform to procure goods and services for all government needs.
• In budget 2020, Sitharam mentioned there were 3.24 Lakh vendors on the platform that
the government has been sourcing from.
• For this, a hefty sum of ₹27,300 CR has been allocated for the development of GeM
and the businesses onboard the platform.
5. Subordinate Debt Scheme For MSMEs:
• Emphasizing how working capital has always been a problem for small and
medium enterprises in the country, a new debt scheme has been talked about in the
MSME budget 2020.
• Also, a special allocation of ₹1000 CR via the EXIM bank has been made to help
MSMEs in the pharma and auto components sector.
• Speaking of the investment cell, the finance minister said that this would govern
the overall development and ease of business for entrepreneurs in the country.
7. No Tax On Profits For Startups With Turnover
Below ₹100 CR:
• To give the startup community a tax relief, the budget 2020 outlined that any
startup with a turnover of below ₹100 CR will not have to pay tax on profits
for a period of up to 10 years.
• The tax burden also affects cash flow thereby hampering growth and operations
to ease this, the budget 2020 has proposed to defer the payment of ESPOS tax
for 5 years.
9. Aadhaar-Based GST Verification & QR Codes In Invoices:
• While not too many details were disclosed, the finance minister said Aadhaar-
based technology will be used to verify and check fraudulent GST filings.
Thank You !