Union Budget 2023-2024: Announcements for MSME Sector

Finance Minister presented the Union Budget 2023 on February 1, 202. There were predominantly four significant steps announced by the Minister to support MSMEs during this financial year, while others intended to benefit MSMEs as well, along with other businesses. One of the important announcements is the revamp of the CGTMSE program. The current article highlights the Announcements for MSMEs in Union Budget 2023-2024. For more details on Budget 2023-2024 Updates, click here.

Credit Guarantee for MSMEs

CGTMSE for MSME to be revamped; it's another essential announcement for MSME Sector during the Union Budget 2023-2024. Credit guarantee trust for small micro-enterprises scheme will be revamped with a required infusion of Rs 9,000 crore, effective April 1, 2023. It dramatically supports MSMEs, facilitating additional credit of Rs 2 lakh crore for MSMEs, reducing the cost of credit by 1 percent, and expanding employment opportunities. This announcement was made in the 2022 budget itself. However, the amount wasn't disclosed. Changes to the CGTMSE scheme in December 2022 were part of this revamp. For more details on Union Budget 2022-2023: Announcements for MSME Sector, click here

Enabling more micro units for Presumptive taxation

MSME is the growth engine of our economy. The presumptive taxation scheme was previously available to micro-enterprises with a turnover of up to Rs.2 crore and professionals with a turnover of up to Rs.50 lakh. The Union budget 2023 increased the limits to Rs.3 crore and Rs 75 lakh, respectively, for taxpayers with less than 5% cash receipts. The FM has also proposed allowing a deduction for expenditures incurred on payments only when the payment is made to support MSMEs to receive payments on time.

Addressing payment issue

To support MSMEs to receive payments on time, the Union Budget 2023-2024 proposed deducting expenditures on payments made to them only when payments were made to them by buyers. "This means buyers cannot claim a conclusion without first paying MSMEs. The initiative will likely force buyers to immediately clear small businesses' dues.

Vivad se Vishwas Scheme – Relief for MSMEs

According to the Union Budget 2023-2024, MSME suppliers unable to execute contracts during the Covid-19 pandemic will receive 95% of their forfeited amounts back from the Government. This relief measure was announced under the Vivad se Vishwas scheme. This scheme is a voluntary initiative of the Government to peacefully resolve pending direct tax disputes with the taxpayers. Due to Covid-related challenges, those without access to institutional financing and whose capital was blocked as a bid fee or performance guarantee will benefit from the initiative.

Entity DigiLocker

FM announced that An Entity called DigiLocker would be set up for MSMEs apart from prominent business and charitable trusts for storing and securely storing and sharing documents online, whenever needed, with various regulators, banks, authorities, and other business entities.

Skill India Digital Platform

While presenting the Union Budget 2023, FM proposed launching a unified Skill India digital platform. This platform will focus on the following:

Enabling demand-based formal skilling.
Linking with employers, including MSMEs
Facilitating access to entrepreneurship schemes.

PM-VIKAS package for artisans and craftsman

Finance Minister Nirmala Sitharaman announced a package of assistance for artisans and craftspeople while presenting the Union Budget 2023-24. The newly-conceptualized Pradhan Mantri Vishwakarma Kaushal Samman (PM-VIKAS) scheme will enable the artisans to improve the quality, and reach of their products, integrating them with the Micro, Small, and Medium-scale Enterprises' value chain. The Minister highlighted some of the critical components of the new scheme.