Finance Minister Arun Jaitley just announced the Union Budget 2018-19. While the complete details of the MSME budget will be discussed in Part-B of the budget (expected to be announced later in February), here are some key highlights of the SME Budget 2018.
Key Takeaways from the MSME Budget 2018
Mr. Jaitley only touched on the forward-looking points for small businesses in the budget announcement today. As expected, this budget focuses heavily on improving credit options for MSMEs and promoting the Digital and Startup India campaigns.
Here are excerpts from the budget that all small businesses should pay attention to:
1. “Rs. 3,794 crore to MSME Sector for giving credit support, capital and interest subsidy”
Budget Highlight for #MSMEs: Govt. to give out 3 LAC CR under MUDRA Loans and improve financing for working capital needs of small businesses in 2018-19.
— instamojo (@instamojo) February 1, 2018
In April 2015, the MUDRA (Micro Units Development and Refinance Agency) bank sanctioned about 4.6 lakh crore loans to small businesses of which 76% accounts were of women! The government is aiming at granting 3 lakh crore in loans to small businesses in 2018-19. Non-Banking Finance Companies will be major facilitators of the MUDRA loans.
Take a look at some awesome loans granted by the Government.
2. Online loan sanctioning facility for MSMEs via the GSTN
The government will be using the GST Network to sanction loans. Public and Private sector banks will operate via the Trade Electronic Receivable Discounting System (TReDS) platform linked to the GSTN.
3. “Use of Fintech in financing space will help growth of MSMEs”
Budget Highlight for #MSMEs: Fintech to be at the forefront.
— instamojo (@instamojo) February 1, 2018
The government seems to be upbeat about Fintech companies and is keen on promoting the growth and development of tech in finance. The Finance Minister asserted that a new policy will soon be formulated to help fintech companies grow in the country.
4. Building the “Startup India” Program
Budget Highlight for #MSMEs: Launching the all new "Startup India Program" for extensive funding opportunities.
— instamojo (@instamojo) February 1, 2018
Startups in the country, rejoice! The government is all set to strengthen the investment and VC sector in the country to help startups grow. The finance minister said they will be “building a very robust alternative investment regime in the country and rolling out a taxation regime designed for the special nature of the VCFs and the angel investors.”
5. Corporate Tax Case
Budget Highlight for #MSMEs: Threshold to claim benefits of the reduced corporate tax rate of 25% extended to companies with an annual turnover of Rs.250 CR.
— instamojo (@instamojo) February 1, 2018
As more businesses shift towards using the GST network, the government gets access to more financial data of small businesses. “The Government will soon announce measures for effectively addressing non-performing assets and stressed accounts of MSMEs. This will enable larger financing of MSMEs and also considerably ease cash flow challenges faced by them,” Arun Jaitley said in the Budget.
The threshold for 25% corporate tax has also been extended to companies that report an annual turnover of Rs.250 Crore.
Instamojo’s Take: This Budget is a 7.5/10
Take it right from our CEO, Sampad Swain:
For me #Budget2018 is 7.5/10. Was expecting @FinMinIndia to make 🇮🇳 MSMEs globally competitive by dropping tax rate to 18%, instead of existing 25%. Although, Rs 250 Cr T/O is a good move to cover 99% surface area. But super excited about online loan facility via GSTN 🙌🏽
— Sampad Swain (@sampad) February 1, 2018
How close were our predictions? Pretty! In case you missed it, check out our budget forecast for this year while waiting for Part B of the Union Budget 2018.
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