Giving significant boost to MSMEs, the Union Budget 2023-24 has proposed to continue the financial sector reforms and innovative use of technology which have led to ease of access to credit and participation in financial markets.
Finance Minister Nirmala Sitharaman on Wednesday announced that the revamped credit guarantee scheme for MSMEs, proposed in the previous Budget, will take effect from April 1, 2023 through infusion of Rs 9,000 crore in the corpus.
"This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of credit will be reduced by about 1 per cent," she said.
Aiming to provide relief to MSMEs, the Finance Minister proposed 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 by government and government undertakings.
To settle contractual disputes of government and government undertakings, wherein an arbitral award is under challenge in a court, a voluntary settlement scheme with standardised terms will be introduced. This will be done by offering graded settlement terms depending on pendency level of the dispute.
Stating that MSMEs are growth engines of our economy, the Finance Minister said that micro enterprises with turnover up to Rs 2 crore and certain professionals with turnover of up to Rs 50 lakh can avail the benefit of presumptive taxation. She also proposed to provide enhanced limits of Rs 3 crore and Rs 75 lakh respectively, to the tax payers whose cash receipts are no more than 5 per cent.
Moreover, to support MSMEs in timely receipt of payments, Sitharaman further proposed to allow deduction for expenditure incurred on payments made to them only when payment is actually made.
The Finance Minister also announced setting up of a National Financial Information Registry to serve as the central repository of financial and ancillary information. "This will facilitate efficient flow of credit, promote financial inclusion, and foster financial stability," she said.
Sitharaman added that a new legislative framework will govern this credit public infrastructure, and it will be designed in consultation with the RBI.