New Delhi, Feb 3 (KNN) The Union Finance Minister Nirmala Sitharam has allocated Rs 7,572.20 crore for the Ministry of Micro, Small and Medium Enterprises (MSMEs) this year- an increase of 8% from the FY 2019-20 figures of Rs 7011.29 crore.
 
In order to reduce the compliance burden on small retailers, traders, shop keepers who comprise the MSME sector, the Union Budget proposed to raise by five times the turnover threshold for audit from the existing Rs 1 crore to Rs 5 crore.
 
"Currently, only businesses having a turnover of more than Rs 1 crore are required to get their books of accounts audited by an accountant. In order to reduce compliance burden on small retailers, traders, shopkeepers who comprise the MSME sector, I propose to raise by five times the turnover threshold for audit from the existing Rs 1 crore to 5 crore," Finance Minister Nirmala Sitharaman said while presenting the Budget in Parliament on Saturday.
 
The Finance Minister said that Start-ups have emerged as engines of growth for Indian economy. Over the past year, the Government has taken several measures to handhold them and support their growth.
 
During their formative years, Start-ups generally use Employee Stock Option Plan (ESOP) to attract and retain highly talented employees. ESOP is a significant component of compensation for these employees. Currently, ESOPs are taxable as perquisites at the time of exercise.
 
This leads to cash-flow problem for the employees who do not sell the shares immediately and continue to hold the same for the long-term.
 
Further, an eligible Start-up having turnover upto Rs 25 crores is allowed  deduction of 100 per cent of its profits for three consecutive assessment years out of seven years if the total turnover  does not exceed Rs 25 crores.
 
In order to extend this benefit to larger start-ups, the Budget has proposed to extend the turnover limit from existing Rs 25 crores to Rs 100 crores. Moreover considering the fact that in the initial years, a start-up may not have adequate profit to avail this deduction, the Budget proposes to extend the period of eligibility for claim of deduction from the existing 7 years to 10 years.
 
The flagship employment generation scheme of the ministry, Prime Minister Employment Generation Programme, has got an all-time high allocation of Rs 2,500 crore for generating self-employment opportunities through establishment of micro-enterprises in non-farm sector by helping traditional artisans and rural/urban unemployed youth.
 
She said a scheme will be introduced to provide subordinate debt to MSME entrepreneurs.
 
Besides, the government has also asked the Reserve Bank to extend the debt restructuring window for MSMEs by a year to March 31, 2021, Sitharaman said.
 
"An app-based invoice financing loans product will be launched. This will obviate the problem of delayed payments and consequential cash flow mismatches for the MSMEs," the finance minister added.

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