Budget 2019: Nirmala Sitharaman proposal on corporate tax may boost MSMEs, jobs creation
Budget 2019: The industry insiders are of the opinion that the move would bring some relief to MSMEs.
Budget 2019: Nirmala Sitharaman's proposals in her maiden 'Bahikhata' tabled in Parliament have gone down well with the MSMEs. Her proposal to increase the limit to Rs 400 crore from Rs 250 crore for 25 per cent corporate tax cap would leave only around 0.7 per cent companies outside its purview and this means the demand for decreasing the corporate tax has been met for around 99.3 per cent Indian companies, say, industry insiders. They are of the opinion that if giant companies pass-on this benefit to their MSMEs vendors in the same tune, the job market is definitely going to register a huge boost in FY20.
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Speaking on the corporate tax proposal helping the MSMEs Rajiv Singh, CEO Stock Broking said, "Currently, 25% corporate tax rate is applicable to companies with an annual turnover of up to Rs 250 crore, Finance Minister has proposed to increase the limit to Rs 400 crore. After this only 0.7% of companies will remain outside of this 25% rate. This will act as the major financial boost for the MSME sector. We believe that the government will keep on increasing the threshold for 25% tax in steps in the future as well."
Commenting on the corporate tax proposals Rajeev Chawla, Chairman, IamSMEofIndia said, "MSMEs are the major job creators in the manufacturing sector. The corporate tax proposals would definitely bring some breathing space into the MSME sector that would finally lead to the rise in further job creation by the sector, that works as a vendor to the majority of the giant companies that will be the major beneficiary of this proposal. If these giant companies pass-on this benefit to their vendors in the same tune, the job market is definitely going to register a huge boost in FY20."
Sampad Swain, CEO & Co-Founder, Instamojo said, “With India set to become a $3 trillion economy this year, the first union budget by the Modi 2.0 government has introduced several benefits for the MSME sector. Over the years, MSMEs have been battling to get loans, given their inability to produce relevant assets as evidence. In fact, the current gap between the demand and credit supply within the Indian MSME sector is about $230 billion. The introduction of the 1 crore – 59 minute MSME loan brings great relief to small business owners, making easier accessibility and processing of loans through a single portal. This, in turn, will translate into the stability and growth of the sector, with the sustenance of existing business and birth of new ones. Also, the pension programme for 30 million retail traders is an encouraging move, keeping in mind that the Indian retail space is still majorly driven by small business owners and traders. This not only brings a long-term life plan for these traders but also helps towards the gradual formalizing of this majorly unorganized sector.”
On his part, Sudhir Singh, Managing Director, Marg ERP Ltd, said, "SMEs and MSMEs will play the most significant role in achieving India's ambitious target of becoming a $5 trillion economy by 2025. To give a positive push and create a productive environment for this segment to flourish, there is a need for perfect ease of doing business environment, nurturing a demand-based skilled manpower and wide adoption of technological advancements in SME and MSME sector. Allotment of Rs 350 Crore for 2 percent interest subvention for all GST-registered MSMEs under the interest subvention scheme is a step in the right direction."
He added, "The Budget has also given a boost to the Nation’s entrepreneurial spirit by extending Standup India scheme till 2025, setup of 80 Livelihood business incubators and 20 technology business incubators to develop 75,000 skilled entrepreneurs in agro-rural industries, encouraging women entrepreneurs and several other measures to streamline labour laws, education, and rental housing segment which will have a direct impact on startups in the country."