Empowering MSMEs with News & Insights

FISME lauds announcements for MSME sector in Union Budget

Updated: Feb 01, 2018 10:17:59am
image

FISME lauds announcements for MSME sector in Union Budget

New Delhi, Feb 1 (KNN) The Federation of Indian Micro and Small & Medium Enterprises (FISME), the apex body for MSME associations in the country, has overall welcomed the budget for the MSME sector.

In a major boost to improve Ease of Doing Business in the country, Finance Minister Arun Jaitley in his Budget 2018-19 speech, has extended the fixed-term contract hiring beyond apparels to all sectors. The move would allow employers to hire workers for specific projects on contract for a fixed term.

Reacting on this, Anil Bhardwaj, Secretary General, FISME, said, “Extending the facility of Fix term employment to all sectors is a big labour reform which will encourage MSMEs to hire and create more employment.”

In his Budget Speech, Jaitley acknowledged that the Medium, Small and Micro Enterprises (MSMEs) are a major engine of growth and employment in the country.

Rs 3794 crore has been allocated to the MSME Sector for giving credit support, capital and interest subsidy and innovations. FISME has hailed the provision stating that it will help the credit hit MSME sector.

The government has proposed to onboard public sector banks and corporates on Trade Electronic Receivable Discounting System (TReDS) platform and link this with GSTN.

TReDS is an electronic platform for financing of trade receivables of MSMEs.

On this Bhardwaj said, “If our standing that GSTN data could be used to verify transaction is correct, TReDS could be hugely successful.”

The apex body for the MSME associations has appreciated Government’s acknowledgement that in order to protect domestic value addition and employment Customs Duties need to be revised in certain sectors. The initiative for enhancing Customs Duties for sectors such as Auto, Furniture, Mobile & electronic components.

Jaitley, in his Budget Speech, said the Corporate bonds rated ‘BBB’ or equivalent are investment grade.

“In India, most regulators permit bonds with the ‘AA’ rating only as eligible for investment.  It is now time to move from ‘AA’ to ‘A’ grade ratings.  The government and concerned regulators will take necessary action,” he said.

Welcome allowing BBB rated companies to tap Bond market, Bhardwaj said this would facilitate BBB rated Medium Enterprises to access cheaper funds in range of 8-8.5%.

In the Union Budget, 2017, the Finance Minister had announced the reduction of corporate tax rate to 25% for companies whose turnover was less than Rs 50 crore in financial year 2015-16.

This, he said had benefitted 96% of the total companies filing tax returns.

“Towards fulfilment of my promise to reduce corporate tax rate in a phased manner, I now propose to extend the benefit of this reduced rate of 25% also to companies who have reported turnover up to Rs 250 crore in the financial year 2016-17,” the Minister announced.

FISME has welcomed extending reduced corporate IT rate of 25% to companies having turnover upto Rs. 250 crore.

However, the federation said that the benefit of reduced corporate income tax will be available to only companies and not proprietorship/ partnership firms which constitute 97% of MSME sector.

FISME has welcomed the announcement of contribution of 12% to EPF for new employees for three years by the Government in sectors employing large number of people like textile, leather and footwear.

The measures such as simplification in Import processes under Trade facilitation Agreement and in Income Tax Filing has been appreciated by FISME.

Finance minister Arun Jaitley introduced the much talked about long term capital gains tax (LTCG) on sale of listed securities on gains of over Rs1 lakh.

Jaitley, introduced a long-term capital gains tax of 10 percent if the gains exceed Rs 100,000 without allowing the benefit of indexation. However, all gains till 31st January 2018 will be grandfathered and short term capital gains remains unchanged at 15 percent.

On altering of the risk-reward ratio, FISME said, “People who just invested earned more than by starting business.”

Meanwhile, FISME said that while the massive health care programme announced for poor is welcome, the facility could have been extended to MSME workers too, sparing MSMEs and their workers from ESI gauntlet. FISME in its Budget Memorandum had demanded restricting social security contribution to 10%.

Overall, the Union Budget has been welcomed by the MSME sector. (KNN Bureau)

COMMENTS

    Be first to give your comments.

LEAVE A REPLY

Required fields are marked *