The Finance Minister, Smt. Nirmala Sitharaman announced the Union Budget 2022-23 today. The Budget 2022-23 provides ease of doing business for the startups and Micro, Small and Medium Enterprises (MSMEs). The key announcements in the Union Budget 2022-23 for MSMEs and startups are provided below:
Union Budget 2022 Announcements for MSMEs
- The Udyam, NCS, e-Shram, and ASEEM portals will be interlinked, and their scope will be widened to perform as portals containing live, organic databases providing B2C, G2C and B2B services. These services will relate to skilling, credit facilitation and recruitment to further formalise the economy and enhance entrepreneurial opportunities for all.
- There will be an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023, and its guarantee cover will be expanded by Rs.50,000 crore to a total cover of Rs.5 lakh crore focusing on hospitality and related enterprises.
- The Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme will be revamped with the infusion of the required funds. It will facilitate additional credit of Rs.2 lakh crore for micro and small enterprises and expand employment opportunities.
- The Raising and Accelerating MSME Performance (RAMP) programme will roll out with an outlay of Rs.6,000 crore over five years. The RAMP will help the MSME sector become more competitive, resilient and efficient.
Union Budget 2022 Announcements for Startups
- The startups will be promoted to facilitate ‘Drone Shakti’ through varied applications for Drone-As-A-Service (DrAAS). In this regard, the required courses for skilling will commence in select ITIs in all states.
- Defence R&D will be opened up for startups, industry and academia with 25% of the defence R&D budget earmarked.
- A fund with blended capital will be facilitated through NABARD, raised under the co-investment model to finance startups for agriculture and rural enterprises relevant to the farm produce value chain. The activities for these startups will include machinery for farmers on a rental basis at the farm level, support for FPOs and technology, including IT-based support.
Taxation Benefits Provided to Startups in Union Budget 2022
- Eligible startups established before 31.03.2022 had been provided with a tax incentive for three consecutive years out of ten years from its incorporation. Given the COVID pandemic, the Finance Minister proposed extending the period of incorporation of the eligible startup by one more year, i.e., up to 31.03.2023, to provide such a tax incentive.
- The government had introduced a concessional tax regime of 15% tax for newly incorporated domestic manufacturing companies to establish a globally competitive business environment. The Finance Minister proposed extending the last date for commencement of production or manufacturing under Section 115BAB by one year, i.e. from 31.03.2023 to 31.03.2024.
- There is an extension of customs duty exemption by another year given by the government to steel scrap last year to grant relief to MSME secondary steel producers.
For any clarifications/feedback on the topic, please get in touch with the writer at mayashree.acharya@cleartax.in
I am an Advocate by profession. I interpret laws and put them in simple words. I love to explore and try new things in life.
