Responding to the demand for cheap credit from the micro, small and medium enterprises (MSMEs), the government has decided to implement a revamped credit guarantee scheme from April 1, 2023, through the infusion of ₹9,000 crore in the corpus.
“This will enable additional collateral-free guaranteed credit of ₹2-lakh crore. Further, the cost of the credit will be reduced by about 1 per cent,” Finance Minister Nirmala Sitharaman said in her Budget speech on Wednesday.
The FM had first announced the revamped scheme in last year’s Budget. India has as many as 63.39 million MSMEs, according to the 73rd round of the National Sample Survey (NSS).
Tax benefits
To provide further relief to the sector, the government has also decided that in cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security will be returned to them, the FM said.
Budget 2023-24 also offers tax benefits to MSMEs. “Micro enterprises with turnover up to ₹2 crore and certain professionals with turnover of up to ₹50 lakh can avail the benefit of presumptive taxation. I propose to provide enhanced limits of ₹3 crore and ₹75 lakh, respectively, to the tax payers whose cash receipts are no more than 5 per cent,” Sitharaman said.
Moreover, to support MSMEs in timely receipt of payments, the Budget proposes to allow deduction for expenditure incurred on payments made to them only when the payment is actually made.