Union Budget 2021-22: What Do MSMEs Have in It?

The Union Budget 2021-22 was presented by Nirmala Sitharaman, the Union Finance Minister of India, on the 1st of February 2021. This budget was looked upon to address the various financial hardships faced by individuals and businesses due to the ongoing COVID-19 pandemic. 

The Budget 2021-22 saw the Finance Minister allocated Rs 15,700 crore for the Ministry of Mirco, Small and Medium Enterprises (MSME). This year’s budget allotment towards the MSME sector is nearly twice as last year’s. The Finance Minister said that the government has come up with several steps to support the MSMSE sector. 

To ensure that the cases are resolved faster, the Finance Minister said that the NCLT framework would be strengthened. The e-Courts system will be implemented to facilitate this, and other ways of debt resolution and a distinctive framework for MSMEs will be brought in place. 

Industries, particularly MSMEs, have been hit hard by a steep rise in iron and steel prices. The budget proposed to reduce the customs duty uniformly to 7.5% on flat, semis, and long products of alloy, non-alloy, and stainless steel. Besides, the duty on steel scrap has been made exempt until the 31st of March 2022 to provide relief for metal recycles, who mostly happen to be MSMEs. 

Apart from that, the Anti-Dumping duty (ADD) and Countervailing Duty (CVD) on some steel products are being revoked. The duty on copper scrap is now reduced to 2.5% from 5% to provide relief to copper recyclers. The textiles sector is creating numerous employment opportunities and contributing enormously to the economy. 

This calls for rationalisation of duties on raw materials tailored for humanmade textiles. The government has decided to bring the nylon chain on the level with polyester and other similar fibres to facilitate this. The BCD rates on caprolactam, yarn, nylon and nylon chips are now uniformly reduced to 5%. This move is expected to help MSMEs, textile industries and exports. 

The government proposed some more changes that are expected to benefit MSME enterprises. The duty on steel screws and plastic builder wares is increased from 10% to 15%. For prawn feed, it is raised from 5% to 15%. 

To incentivise exporters of leather, handicraft products and 36 garments, the Finance Minister said that the government is rationalising exemption on importing duty-free items. Most of these products are being made by domestic MSMEs. 

The exemption provided to importing specific kinds of leather is getting revoked as they are produced in excellent quality and quantity by domestic MSMEs. The customs duty on the finished synthetic gemstones is being raised to encourage domestic processing. 

For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.in

You May Also Like

IT: Conditions attached with the LIC premium deduction under Section 80C

The Income Tax Act provides tax benefits if you pay the premium…

GSTN issues fresh clarification on the reporting of HSN codes in GST invoices

The GST Network (GSTN) has issued a new clarification on 12th April…

How Can Employees Update the Date of Exit on EPF Portal?

The Employees’ Provident Fund Organisation (EPFO) has been coming up with more…

Should You Invest in a Single ELSS or Multiple?

Are you looking for a tax-saving mutual fund? Do you want an…