New Delhi, Feb 1 (PTI) Finance Minister Arun Jaitley today announced a series of measures for MSMEs, lowering the corporate tax rate to 25 per cent for businesses with a turnover of up to Rs 250 crore and setting a target of Rs 3 lakh crore for lending under the MUDRA scheme in 2018-19.
Also, he said the government will come out with road map to effectively tackle the issue pertaining to non-performing assets and stressed accounts of micro, small and medium enterprises.
Unveiling the budgetary proposals for 2018-19 in Parliament, Jaitley said the reduction in the corporate tax rate to 25 per cent "will benefit entire MSME sector which accounts for 99 per cent of companies filing taxes".
The estimate of revenue foregone due to this measure is Rs 7,000 crore in 2018-19, Jaitley said in his budget speech, adding that the lower corporate tax will leave businesses with investable surplus and create more jobs.
However, for businesses having a turnover above Rs 250 crore, the 30 per cent corporate tax remains. The slashing of corporate tax rate is in line with the finance ministers promise in the 2015-16 budget, wherein he had said that the corporate tax rate would be gradually lowered to 25 per cent from the current 30 per cent over the next four years.
Presenting the last full-year budget of the BJP-led NDA government before the general elections next year, Jaitley said the government will soon announce measures to effectively address the non-performing assets and stressed accounts of micro, small and medium enterprises, a move which will considerably ease the cash flow challenges faced by them. He said the online loan sanctioning facilities for MSMEs will be revamped for prompt decision-making by banks.
Announcing that a provision of Rs 3,794 crore has been provided in the Budget 2018-19 for MSMEs, Jaitley said this has been done to provide credit support, capital and interest subsidy and innovations to this sector. Pointing out that MSMEs can become a very powerful vehicle for delivering the loans under MUDRA scheme, Jaitley said "refinancing policy and eligibility criteria set up by the MUDRA will be reviewed for better refinancing of the MSMEs".
"It is proposed to set up a target of Rs 3 lakh crore for lending under MUDRA in 2018-19 having successfully exceeded the target in all previous years," Jaitley said. According to Jaitley, the MUDRA Yojana launched in April 2015 has led to a sanction of Rs 4.6 lakh crore in credit to some 10.38 lakh MUDRA loans. About 76 per cent of the loan accounts are of women and more than 50 per cent belong to scheduled caste, scheduled tribe and OBCs.
The Pradhan Mantri MUDRA Yojana is a scheme launched by the prime minister on April 8, 2015 for providing loans up to 10 lakh to the non-corporate, non-farm small and micro enterprises. These loans are classified as MUDRA loans.
"The government will soon announce measures to effectively address the non-performing assets and the stressed accounts of MSMEs. This will enable a larger financing of MSMEs and also considerably ease the cash flow challenges faced by them," said the finance minister, presenting the first budget after the GST rollout in July last year.
Observing that mass formalisation of business of MSMEs is taking place in the country after the demonetisation and the introduction of GST, Jaitley said, "It is proposed to onboard public sector banks and corporates on the trade electronic receivable discounting system platform and link this with the GSTN (goods and services tax network)."
He said the mass formalisation is generating an enormous amount of financial information database of the MSME business and finances.
"This big database used for improving the financing of MSMEs and the requirement including the working capital," said the finance minister.
He also highlighted that non-banking financial companies stepped up financing of the MSMEs after demonetisation. Asserting that use of fintech in financing space will help growth of the MSMEs, Jaitley said a group in the Ministry of Finance is examining the policy and the institutional development measures needed for creating the right environment in the fintech companies to grow in India. PTI RSN MKJ