Budget 2021 has also given a breather to the investors by extending tax holidays
Budget 2021 was presented after almost a year-long battle with the global pandemic outbreak. It was important to pay heed to the demands of all the sectors reeling under the financial breakdown due to Covid-19. With a clear focus on overall economic development and recovery, the government has laid impetus on sectors like infrastructure, health, MSMEs, and startups.
Along with shoring up the economy, the provisions in Budget 2021 for the MSMEs and startups also pave the way to strengthen the government’s vision of Atma Nirbhar Bharat, Startup India, Standup India.
To benefit the startups and strengthen the startup ecosystem, the One-Person-Companies (OPCs) have been allowed to grow without restrictions on paid-up capital and turnover. This has been coupled with the conversion of the OPCs into other types of companies at any time. This will not only help in increasing the number of startups but will also help in generating ample employment with more and more companies coming up.
The Budget has also given a breather to the investors by extending tax holidays. The proposed extension of eligibility for claiming tax holidays for the startups along with capital gains exemption will give a great push to the startup investment in the country and help in gradual recovery from the Covid induced economic slump.
The allocation for the MSME sector has also been doubled in the Budget as the FM has proposed to increase it to Rs 15,700 crore as compared to Rs 7,572 crore from the last Budget. This will come as a great relief for the MSME sector which has been badly hit by the economic downfall. This allocation can also be used to induct manpower in the sector which will help a lot of people struggling from unemployment, therefore, resulting in the holistic growth of the country.
In addition to the increased allocation, the Budget also lays impetus on the promotion of domestic manufacturing. This will benefit the locals of every stratum of the society and result in a prolonged benefit for even those who had to return to their native places as they can get employment in the vicinity.
Rationalising the duties on import of duty-free items and slashing down the duty on steel scrap till March 2022 shows the intent of the government towards strengthening the Atma Nirbhar Bharat mission. Rationalisation of duties in the import of duty-free items will give breathing space to the exporters of garments, handicrafts, copper recyclers and promote the domestic manufacturing sector, thus, increasing a lot of opportunities for them as well as probable employees.
All the proposed announcements along with a special framework for debt resolution for MSMEs will enable greater participation, growth, and employment for them in the country.
One of the major proposals in the Budget that will be highly welcomed by the sector is the announcement of revision in the definition of small companies. Increasing the threshold for paid-up capital from Rs 50 lakh to Rs 2 crore and turnover from Rs 2 crore to Rs 20 crore will benefit almost two lakh companies in the country. This will also help in easing out the compliance norms while taking a big leap in ease of doing business.
All these measures will not only help the MSMEs and small-scale industries but also the startups that are emerging in the field of health, education, ed-tech, digital and financial services as these will help in increasing the commercial volumes.
The impetus on Atma Nirbhar Bharat and PLI (Production Linked Incentive) Schemes will go a long way in proliferating many domestic manufacturing/processing industries and MSME ecosystems that are linked with them in the value chain.
The author is Managing Director and Co-Founder - Wonderchef