Budget 2021 is the first paperless budget by Finance Ministry. There has been many initiative taken to strengthen SME and Startup sector. Here’s Key highlights for SME and Startup, FM Nirmala Sitharaman announced in the first digital budget.
- Incentivising OPC Setup:
To benefit startups in setting up one person companies (OPCs), FM announced OPCs to grow without any restrictions on paid capital and turnover. FM the conversion of One Person Company into any other form of a company at any time and reduced the residency limit for an Indian citizen to set up an OPC from 182 days to 120 and also allow NRIs to incorporate OPCs in India.
- Budgetary Allocation:
The budget allocated Rs 15,700 crores to the MSME sector, quite double from Rs 7,572 crore from the preceding budget.
- Extending Tax Holiday:
For boosting startup investments in the country, the budget proposed an extension of eligibility for claiming tax holidays for startups besides the capital gains exemption for investment in startups till March 31, 2022, to incentivise funding.
- Insolvency Resolution:
Sitharaman said that the National Company Law Tribunal (NCLT) framework will be strengthened, the e-courts system will be implemented, and alternate methods of debt resolution and new special framework for MSMEs will be introduced for faster resolution of cases
- Customs Duty Slashed:
FM proposed to reduce customs duty uniformly to 7.5 % on semis, flat, and long products of non-alloy, alloy, and stainless steels to help MSMEs and other user industries that have been severely hit by a recent increase in iron and steel prices. The minister conjointly declared exempting duty on steel scrap for a period up to March 31, 2022 to provide relief to metal recyclers, mostly MSMEs. The minister also proposed an increase in duty from 10% to 15% on steel screws and plastic builder wares to benefit MSMEs.
- Digital Payments Boost:
Sitharaman declared earmarking 1,500 crores for financial incentive to promote digital modes of payment.
- Withdrawing Exemption on Imports:
The budget proclaimed retreating exemption on imports of ‘certain’ kinds of leathers as they’re domestically made in good amount and quality, mainly by MSMEs, as per Sitharaman.
- Revising Definition within the small firms:
FM planned a revision in the small firm’s Definition within the budget by increasing thresholds for paid capital from 50 lakh to 2 crores and turnover from 2 crores to 20 crores. “This can profit quite 2 lac firms in easing their compliance necessities,” the minister said.
- Startup funding made easy via GIFT City-IFSC route:
To help international funds relocate to India and avail tax exemptions, the budget proposed new tax incentive for units under the International Financial Services Centre (IFSC), at GIFT City Gandhi Nagar.
- Fin-tech hub in GIFT City, Gujarat:
The aim is to “support the development of a world-class Fin-tech hub” at GIFT City that’s designed to double up as a multi-service finance hub in Gujarat.