The MSME businesses in India are flourishing at their highest pedestal
right now. Many different newcomers have started exploring the MSME
space and as a result of which there is huge competition in this sector.
MSMEs on upgradation and consequent reclassification can avail a host
of non-tax benefits for up to a period of 3 years from their date of
upward change. This is a monumental change for many of the MSMEs
that are operating within this sector. Any positive change that is
accompanied along with the policies that are in place add extra impetus
to the growth and development of the MSMEs. These businesses are
very forward looking in nature. They identify the key areas of demand
within a sector and try to fulfill that untapped territory. In order to
achieve the sufficient amount of capital requirements and sophisticated
methods of productions, the MSMEs are constantly supported by the
policies set by the Ministry of MSME.
There was a recent announcement by the MSME Ministry regarding the
policy changes for the MSME tax benefits according to which every
MSMEs will continue to avail all the various non-tax benefits for MSME
within their respective categories post re-classification and upgradation
for up to a period of three years. This news that came out recently was
a major relief for the MSME sector. A lot of MSME stakeholders were
involved in the decision making process that led to the undertaking of
this policy change. All the changes that were recently made is
completely in line with the Aatmanirbhar Bharat Abhiyan. It was a
known fact that previously all the MSMEs were entitled to get non-tax
benefits for upto 1 year post the date of upgradation and
reclassification.
It is very important for the policymakers to identify the key
requirements of the MSMEs that are proving to be a hindrance for their
smooth functioning. If the Government can amend some of the policies
and increase the scope of the existing ones, it is observed that MSME
find more opportunities to explore the far edges of their industry. It is
also important for the MSMEs to make good use of the relaxed policy
changes and not misuse this or consider it an opportunity to neglect
essential duties. The MSME regulatory framework is very well designed
so as to support the MSMEs that are doing good work and eliminate
the bad actors.
The term Re-classification includes growing from a ‘micro enterprise’ to
a ‘small enterprise’ or a ‘small enterprise’ to a ‘medium business’. The
non-tax benefits that the MSME could avail for a period of 3 years
includes the benefits of various schemes of the Government, including
public procurement policy, delayed payments and many others. The
MSME Ministry has notified that in case of an upward change in terms
of investment in plant and machinery or equipment or turnover or
both, and consequent re-classification, an enterprise shall continue to
avail of all non-tax benefits of the category it was in before the re-
classification, for a period of three years from the date of such upward
change.
For more information: https://smeventure.com/prominent-role-of-msme-in-shaping-india-economic-future/
MSMEs being the largest source of employment for millions of people
all across the country, it is essential for them to enjoy a host of benefits
for the growth and further development. MSMEs in India have been
addressing numerous issues such as the sub-optimal scope of
operations, outmoded technology, disorganized and inept supply chain,
fund deficiency, alteration in manufacturing strategies, unstabilized
market scenario and rising competition at the domestic and global
markets. GST stands for goods and service tax. It is an indirect tax and
has several benefits for every business entity in India. GST Registration
for MSME can also benefit entrepreneurs in MSME Sector. GST has
replaced several indirect taxes such as excise duty, VAT, services tax,
etc.
The top GST benefits for small businesses include help in receiving
loans for running businesses. These loans help the MSMEs to utilize the
capital for variety of things, like buying raw materials, new equipment,
paying the employee salaries etc. GST also has a very beneficial scheme
for MSMEs or small taxpayers. This scheme is a Composition scheme
and it helps small taxpayers in MSME Sector to get rid of it. This scheme
allows taxpayers to pay GST at a fixed rate of turnover. To avail of the
Composition Scheme, companies need to have a total revenue of less
than Rs 1.5 crore. However, The maximum in the North-Eastern states
and Himachal Pradesh is currently Rs 75 lakh.
Do watch: https://www.youtube.com/shorts/twldv9rGPGo
MSME tds deduction is the current important topic that is being
discussed by the relevant stakeholders and policymakers. The tax
exemption limit is to be increased from the existing Rs. 5 Lakh for small
businesses as per the ongoing conversations. The tax deducted at
source (TDS) mechanism would continue to check tax evasion by
entities using e-commerce platforms to sell goods and services. There is
a new provision that has been introduced in the Budget 20-21 session
in order to make e-commerce transactions tax compliant. This provision
is undertaken to provide relief to small businesses.
It may be very clearly understood that the MSME Ministry is constantly
amplifying their efforts to alleviate the unnecessary pain that the
MSMEs have to undergo. The MSME industry as a whole has already
mentioned to the Government regarding the additional burden on their
businesses due to the tds mechanism as tds would be deducted on
gross sales amount that also include the commission to the e-
commerce platform. Considering these underlying factors, the
Government is taking different steps to avail MSME tds deduction.
It is thus important for all the relevant MSMEs to upgrade and re-
classify their businesses to avail the other Non-tax benefits for MSME
and MSME tax benefits that include Tax holiday expansion for startups,
Stamp duty, Corporate tax, Tax audit and other special provisions with
regards to GST benefits for MSME.