PHDCCI presents pre-budget suggestions to Finance Minister for MSME sector

New Delhi [India], December 1 : Industry body PHD Chamber of Commerce and Industry (PHDCCI) presented a set of pre-budget suggestions for the micro, small and medium enterprises (MSME) sector to the Finance Minister Nirmala Sitharaman, seeking easier taxes, cheaper credit and simpler rules for small businesses.

The proposals focused on changes in income tax, bank loans, export support and equity funding so that MSMEs could run their businesses with less cost and delay. The chamber said these steps could help small units grow, pay back loans on time and compete better with firms in other countries.

PHDCCI recommended that, similar to earlier relief for start-ups, investments of capital gains in MSMEs on the sale of residential or other properties should get income tax exemption to give a direct push to this sector.

On the cost of borrowing, the chamber sought the re-introduction of the interest subvention scheme on bank and NBFC credit to MSMEs, with a 2 per cent interest subsidy on new and incremental loans. It said the cost of credit in India stayed higher than in many other countries and argued that such support made MSMEs more competitive and encouraged timely repayment.

For exporters, it called for bringing back the Interest Equalization Scheme on pre and post-shipment export credit, with equalization rates of 3 per cent for MSME manufacturer exporters and 2 per cent for other eligible exporters, and for including service exports under the scheme.

PHDCCI also proposed higher loan ceilings under the Pradhan Mantri MUDRA Yojana, noting that project costs had almost doubled since the scheme began in 2015. It suggested raising the Shishu category limit from Rs 50,000 to Rs 1 lakh, the Kishore category from Rs 5 lakh to Rs 10 lakh, and fixing the Tarun and Tarun Plus category at Rs 20 lakh.

On equity support, the chamber called for separate allocations from the Fund of Funds to provide seed capital to registered start-ups and to subscribe to a small share of SME initial public offerings. It also suggested that MSE Facilitation Councils, which handle delayed payment cases, should cover medium enterprises as well, as current provisions under the MSME Development Act, 2006, applied only to micro and small enterprises. Further, it sought the re-introduction of a capital subsidy for technology upgradation, with the investment limit raised to Rs 2 crore from the earlier Rs 1 crore, to help MSMEs adopt green and eco-friendly technologies.

To cut compliance costs, PHDCCI recommended amending Section 44AB of the Income Tax Act, 1961, so that all businesses with annual turnover up to Rs 10 crore remained fully exempt from mandatory tax audit, saying this would relieve micro enterprises of audit costs in the range of about Rs 75,000 to Rs 1.5 lakh every year and reduce administrative burden.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor