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Govt measures to ensure MSMEs become growth engine: DFS Secy

Monday, February 12, 2018

A slew of recent measures, including tax concessions in the budget, for micro, small and medium enterprises (MSMEs) has been taken with an aim to transform such enterprises worth Rs 6.33 crore into a growth engine for 'New India', a senior government official has said.

These initiatives will bring down the tax burden on enterprises with an annual turnover of up to Rs 250 crore and also lower the interest burden, leaving more surplus for investment and growth of the MSME sector which is the backbone of the country's economy in terms of output, exports and employment generation.

The RBI on its part too announced various measures for MSMEs hit by the implementation of Goods and Services Tax (GST) by giving them additional up to 180 days to clear their dues to banks. "All these measures are aimed at making the 6.33-crore MSME enterprises growth engine for new India," Financial Services Secretary Rajiv Kumar told PTI.

Multiple initiatives are trying to address various issues inhibiting the growth of the sector, which is the largest job creator, he said.

First and foremost, the recapitalisation of the banks to enable them to enhance their lending capacity by Rs 5 lakh crore, a substantial chunk of this would go towards the MSME sector.

Besides, Finance Minister Arun Jaitley in his Budget speech lowered the corporate tax rate to 25% from 30% for companies with a turnover of up to Rs 250 crore, benefiting the entire MSME sector, he said. As part of alignment with the new taxation regime, the Union Cabinet last week also approved the change in criteria for classifying MSMEs from 'Investment in Plant & Machinery' to annual turnover.

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