The unveiling of Union Budget 2020 on February 1st by Nirmala Sitharaman came at the time when Indian economy is facing its biggest slump since 2008. It talked about a three-pronged approach- focusing around aspiration, economic development and compassion, not leaving behind the entrepreneurship and development and bolstering MSMEs and Startup sector in India.
Here are the key highlights of Sitharaman’s MSME budget’s speech for 2020.
- Businesses with annual turnover of up to INR 5 Crore will not have to undergo an external audit examination, eliminating the policy of book auditing of any business with a turnover of INR 1 Crore.
- Ensuring enough funds for the operations of the MSME sector, government has proposed to launch an app-based invoice financing loan product, helping small businesses with cash flow problems.
- The budget urged the RBI to extend the debt restructuring scheme to March 2021 to help bail MSME sector out of the dire financial situation.
- A hefty sum of INR 27,300 Crores will be invested in the development of the Government eMarketplace which was launch with the 2019 budget aiming at a one-stop platform to procure goods and services for all government needs. An estimated 3.2 Lac vendors are on the platform that the government has been sourcing from, was cited by Sitharaman during Budget 2020.
- Special hand-hold allocation of INR 1000 Crore via the EXIM Banks has been made in the pharma and auto components sector deferring the problem of working capital faced by the MSME in the country.
- Proposal for seed funding for the new and early-stage startups, allowing them to access the funds to grow.
- Relieving the startup community from the tax burden, the budget stated that businesses with a turnover below INR 100 Crore will not have to pay taxes on their profits for up to 10 years. Earlier this timeline was for 7 years.
- The budget 2020 proposed deferring the payment of ESPOS or employee stock options tax for 5 years or till the employee leaves the company or sells his shares, whichever is earlier.
- The budget stated details about the use of Aadhaar-based technology to verify and check fraudulent GST filings. Moreover, a mention of availability of dynamic QR codes in GST invoices for customers to make online payments was also made.
- A proposal to form an Investment Clearance Cell to expedite business licensing.
- In order to make MSMEs competitive, the budget released a National Logistics Policy.
- NBFC eligibility for SARFAESI Act was brought down to INR 100 Crore from INR 500 Crore.
- To minimize corruption, Taxpayer charter will become a part of the law.
- A corporate tax of 15% will be levied on new manufacturing and power generation companies.
- An Online portal will be formed to facilitate faster clearances for businesses at a state & central level.
In the Digital Sphere, the budget enumerated a few significant ideas.
- Allocation of INR 6,000 Crore under the BharatNet Program and policy to enable the private sector to build Data Centre parks throughout India. Both aim towards driving better data connectivity and digital experience for users.
- Outlay of INR 8,000 Crore over five years for the National Mission on Quantum Technologies & Applications.