Last Updated on July 8, 2021
Budget 2021 is the first paperless budget by the Finance Ministry. There have been many initiatives taken to strengthen SME and Startup sector. Here’s Key highlights for SME and Startup, Nirmala Sitharaman announced in the first digital budget.
Table of Contents
- Incentivising OPC Setup
- Budgetary Allocation
- Extending Tax Holiday
- Insolvency Resolution
- Customs Duty Slashed
- Digital Payments Boost
- Withdrawing Exemption on Imports
- Revising Definition within the small firms
- Startup funding made easy via GIFT City-IFSC route
- Fin-tech hub in GIFT City, Gujarat
1. 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. The conversion of One Person Company into any other form of a company and reduced the residency limit for an Indian citizen to set up an OPC from 182 days to 120 and allow NRIs to incorporate OPCs in India.
2. Budgetary Allocation:
The budget allocated Rs 15,700 crores to the MSME sector, double from Rs 7,572 crore from the preceding budget.
3. Extending Tax Holiday:
For boosting startup investments in the country, the budget proposed an extension for claiming tax holidays for startups for investment till March 31, 2022, to incentivise funding.
4. Insolvency Resolution:
Sitharaman proposed that the National Company Law Tribunal (NCLT) framework will be strengthened, and will also implement the e-courts system. Furthermore, Sitharaman proposed an introduction of alternate debt resolution methods and a new special framework for MSMEs for faster resolution of cases.
5. 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 industries that have been severely hit by a recent increase in iron and steel prices. The minister proposes an exemption of duty on steel scrap till March 31, 2022, and an increase in duty from 10% to 15% on steel screws and plastic builder wares to provide relief to metal recyclers, mostly MSMEs.
6. Digital Payments Boost:
Sitharaman announced Rs. 1,500 crores for financial incentive to promote digital modes of payment.
7. Withdrawing Exemption on Imports:
The budget proposed retreating exemption on imports of ‘certain kinds of leathers’ as they’re domestically produced in good quantity, mainly by MSMEs.
8. Revising Definition within the small firms:
FM planned a revision in 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 benefit almost 2 lac firms in easing their compliance necessities,” the minister said.
9. Startup funding made easy via GIFT City-IFSC route:
To help international funds relocate to India and avail tax exemptions, the budget proposed a new tax incentive for units under the International Financial Services Centre (IFSC), at GIFT City Gandhi Nagar.
10. 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.