FM to continue financial sector reforms and innovative use of technology
Minister for Finance and Corporate Affairs Nirmala Sitharaman says the revamped credit guarantee scheme for MSMEs, proposed in the previous Budget, will take effect from 1st April 2023 through infusion of Rs.9,000 crore in the corpus.
“This will enable additional collateral-free guaranteed credit of Rs.2 lakh crore. Further, the cost of credit will be reduced by about 1%,” she said in the Union Budget 2023-24 in Parliament on 1 Feb 2023.
Giving significant relief to MSMEs, the Minister proposed that in cases of failure by MSMEs to execute contracts during the Covid period, 95% of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings.
To settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced. This will be done by offering graded settlement terms depending on pendency level of the dispute.
Stating that MSMEs are growth engines of the Indian economy, the Minister said that micro enterprises with turnover up to Rs.2 crore and certain professionals with turnover of up to Rs.50 lakh can avail the benefit of presumptive taxation.
Sitharaman also proposed to provide enhanced limits of Rs.3 crore and Rs.75 lakh, respectively, to the tax payers whose cash receipts are no more than 5%.
Moreover, to support MSMEs in timely receipt of payments, Sitharaman further proposed to allow deduction for expenditure incurred on payments made to them only when payment is actually made.
She has proposed to continue the financial sector reforms and innovative use of technology which have led to financial inclusion at scale, better and faster service delivery, ease of access to credit and participation in financial markets.
While presenting the Union Budget, the Minister said, “Entrepreneurship is vital for a country’s economic development.
“I propose to extend the date of incorporation for income tax benefits to start-ups from 31 March 23 to 31 March 24. I further propose to provide the benefit of carry forward of losses on change of shareholding of start-ups from seven years of incorporation to 10 years.”
The Minister also announced setting up of a National Financial Information Registry to serve as the central repository of financial and ancillary information. “This will facilitate efficient flow of credit, promote financial inclusion and foster financial stability,” she said.
Sitharaman added that a new legislative framework will govern this credit public infrastructure, and it will be designed in consultation with the RBI.
To enhance business activities in GIFT IFSC, Budget 2023-24 proposes a slew of initiatives viz. delegating powers under SEZ Act to IFSCA to avoid dual regulation, single window IT system for registration and regulatory approval, permitting acquisition financing by IFSC banking units of foreign banks, establishing subsidiary of EXIM Bank for trade re-financing, recognizing offshore derivative instruments as valid contracts.
In order to meet the needs of Amrit Kaal and to facilitate optimum regulation in the financial sector, the Minister proposed to incorporate public consultation, as necessary and feasible, to the process of regulation-making and issuing subsidiary directions.
Sitharaman added that financial sector regulators will be requested to comprehensively review existing regulations to simplify, ease and reduce cost of compliance.
“For this, they will consider suggestions from public and regulated entities. Time limits to decide the applications under various regulations will also be laid down,” she said. fiinews.com
