Finance Ministry may consider interest rate subvention, lower taxes for MSMEs in upcoming Budget
The sectors identified for higher budgetary allocations are textiles, leather, food processing, gems and jewellery, handicrafts, footwear and tourism.
For the upcoming Budget 2019-20, the Finance Ministry led by Nirmala Sitharaman may consider fiscal incentives such as interest rate subvention and lower tax rates for up to certain turnover threshold for key MSME sectors, IANS reported, adding that the ministry is also keen on boosting employment and exports for MSMEs.
IANS sources said the PMO is supportive of higher budgetary allocations or other fiscal support to these sectors because of their dual potential of pushing exports and creating more employment.
Some of the sectors identified under this are textiles, leather, food processing, gems and jewellery, handicrafts, footwear, and tourism.
Piyush Goyal, while presenting the Interim Budget earlier this year, had said that MSMEs with an annual turnover under Rs 40 lakh would be exempted from GST. The GST Council earlier doubled the exemption limit from Rs 20 lakh to Rs 40 lakh.
He announced an interest subvention scheme for MSMEs and added that interest relief would be calculated at two percent points per annum for loans up to Rs 1 crore.
Last November, Prime Minister Narendra Modi had announced loans of up to Rs 1 crore in 59 minutes to GST-registered MSME units which would get two percent rebate in interest on new or incremental loans.
Now, the Budget could be seen offering a new incentive of refunding of all unrebated central and state taxes and levies on inputs used in exports of these units, the sources said.
"The identified sectors will be given fiscal incentives based on what the industry seeks and what the nodal departments have suggested in each of these sectors," the source added. The other fiscal boosters like cheaper finance of lower interest rates and interest rate subvention could also be part of the incentives.
The Budget is widely expected to take steps to bolster consumption and job creation.
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