Budget 2019 expectations: MSMEs want 30 per cent investment allowance from Modi government - Will they get?

Budget 2019 expectations: The micro and small medium enterprises (MSMEs) in India have urged the Finance Minister Arun Jaitley to consider their age-old demand for giving investment allowance up to 30 percent when he stands in Lok Sabha to present the Union Budget this February 1. The MSMEs were of the opinion that investment allowance up 30 percent is available for other than MSMEs. So, it won't be any problem if the sop is extended to the MSMEs too. They said it would help MSMEs to sustain in this demanding situation when their funding has almost dried up from the public sector banks and NBFCs.

Rajeev Chawla, Chairman, IamSMEofIndia — a platform that fights for the cause of the MSMEs in India — told Zee Business online, "The Indian government is giving Income Tax exemption up to 30 percent to those firms which have an annual turnover of Rs 25-crore or above.

My only say here is why not this exemption is extended to the MSMEs too. In fact, this exemption would be huge for the MSMEs in comparison to those who are availing this exemption right now because they don't have a funding crisis that MSMEs in India are facing."

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He said that raising fund has become a problem for the MSMEs. And even if they manage it from self-resources, there are taxes that put a hurdle in the sustainability of MSMEs.

For example, if one buys a home after selling one of his properties, one need not pay capital gain tax. But, in case of MSMEs the need to pay capital gain tax if they raise money for their firm by selling out their property. 

Pointing out problems in the expansion of business and lack of proper availability of the credit line for micro and small-sized entrepreneurs, Rajeev Chawla fo IamSMEofIndia demanded from the Narendra Modi led government at the Centre to exempt from capital gains for those MSMEs who have sold out their property to invest in their firm.

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It would make an investment in the MSME sector as smooth and hassle-free as it has been for the SMEs.

Agreeing with the views expressed by Rajeev Chawla of the IamSMEofIndia; Amit Aggarwal, Director, Priyanshu Agrotech Private Limited told Zee Business online, "For last few years, NBFCs have been major credit line providers to the MSMEs and post Il&FS crisis, credit line for the MSMEs from the NBFCs have almost dried up, hence if their demand is met in the coming budget (even though it would be a vote on account), it would be a huge relief for the MSME sector throughout India."