QuickTake: MSMEs get GST exemption, interest subvention from Budget 2019
“Effective steps are being undertaken to strengthen MSME sector and provide special benefits to small businesses,” said Union Finance Minister Piyush Goyal while presenting the Interim Budget on Friday.
Goyal recapped the measures announced to enhance credit access and boost employment for MSMEs. He said that the government had launched a portal for small enterprises to avail loans of up to Rs 1 crore in just 59 minutes. During his speech, the minister also mentioned that PSUs would have to procure at least 25 percent of their purchases from MSMEs, and out of this, three percent had to be procured from women-led MSMEs.
Commenting on India's growth in entrepreneurship, he said India had become the second largest hub of MSMES and startups. He added that a National Artificial Intelligence Portal would be developed soon, and nine priority areas had been identified. He added, “Over 1 crore youths have been trained under skill training programmes of the government.”
A small tailoring unit operating out of a shed on the road to Madurai, Tamil Nadu
The National Mission on Government eMarketplace (GeM) was also discussed during the Interim Budget speech. “GeM has transformed public procurement by making it fully transparent, inclusive, and efficient. MSMEs have an opportunity to sell their products through GeM. Transactions of over Rs 17,500 crore have taken place, resulting in average savings of 25 to 28 percent,” he said. “The GeM platform is now being extended to all CPSEs.”
GST and related schemes
Goyal said MSMEs with an annual turnover under Rs 40 lakh would be exempted from GST after the GST Council earlier this month 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.
The interest subvention scheme aims to encourage manufacturing and service enterprises to increase productivity. It provides incentives to MSMEs to get onboard the GST platform.
Goyal said small businesses with turnover of up to Rs 1.5 crore have been provided a composition scheme where they would pay only one percent flat rate and had to file one annual return only. He added, “Small service providers with turnover up to Rs 50 lakh can now opt for composition scheme and pay GST at six percent instead of 18 percent.”
In 2017, the GST Council increased the threshold for composition scheme to Rs 1.5 crore. It also decided to amend the law to increase the statutory threshold to Rs 2 crore.
Further, businesses with over 90 percent of GST payers would be allowed to file quarterly returns. He added, “Now, SMEs with earnings below Rs 5 crore need to file GST only once in three months.”
Goyal also said most daily use items would be in the zero to five percent GST category. This could mean lower shelf prices for a range of products and boost sales for small businesses.
