Page 55 - Plastics News February 2023

IN THE NEWS

What is New for MSMES in New Budget Proposals

SMEs are the backbones of in- to pay tax at a concessional rate of PROMOTE TIMELY PAYMENTS
Mdustrial development in any 15% for a new co-operative society TO MSMES
country. These MSMEs are the main established on or after 01/04/2023, The Budget 2023 proposed to include
source of generation of employment commencing production or manufac- payments made to MSMEs within the
and act as key supporter to various ture by 31/03/2024 and does not avail ambit of Section 43B of the Income
types of big industrial houses and enti- of any specified deduction or incen- Tax Act, 1961, to promote timely
ties. tive subject to compliance of terms payments to MSMEs. Thus, a deduc-
MSMEs play a key role in economic and conditions given in the Rules. tion for such payments will only be al-
development. The sector accounts RELIEF TO STARTUPS IN CAR- lowed when it is actually paid. It will
for over 80% of businesses and RYING FORWARD AND SET- be allowed on an accrual basis only
contributes to more than half of the TING OFF LOSSES when the payment is made within
employee share. The share of the The Budget 2023 provided relief to the time prescribed under the Micro,
formal MSME sector in the GDP is startups by giving the benefit of car- Small and Medium Enterprises Devel-
up to 40% in emerging economies. ry forward of losses on a change of opment Act.
The importance of the sector in In- shareholding of startups from seven CHANGES IN BUDGET RELAT-
dia's economic growth cannot be years to ten years. The condition ED TO MSMED ACT, 2006
over-emphasized. With the presence of continuity of a minimum of 51% Deduction for payments to Micro and
of over 63 million MSMEs employing shareholding to set off of carried- small suppliers will now be on actual
over 110 million people staggered forward losses is relaxed for eligible payment basis and not on payable ba-
across services, manufacturing sector startups if all company shareholders sis as per amendment to Section 43B
contributes nearly 30% to the GDP. continue to hold those shares. of the Income Tax Act,1961 in this
Maharashtra has about 48 lakh MSME DATE OF INCORPORATION OF Budget.
accounting for about 8% of the total STARTUPS EXTENDED FOR
MSMEs in the country. The ambitious TAX EXEMPTION A new clause has been added effective
target of $5 billion economy with a from 1.4.2024 the following clause
25% contribution from the manufac- Certain startups are eligible for tax has been inserted in section 43B of
turing sector will require the MSME benefits if they are incorporated be- the Income Tax Act.
sector to play a pivotal role. fore 01/04/2023. The period of incor- "(h) any sum payable by the assessee
TAX BENEFITS PROVIDED TO poration of such eligible startups for to a micro or small enterprise beyond
receiving tax benefits is extended by
MSMEs AND STARTUPS IN- one more year, i.e. 01/04/2024. the time limit specified in section 15
CREASE IN THRESHOLD LIM- of the Micro, Small and Medium En-
ITS UNDER THE PRESUMPTIVE EASE IN CLAIMING AMORTISA- terprises Development Act, 2006,";
TAXATION SCHEME TION DEDUCTION OF PRELIMI- Further the proviso in the section has
The threshold limits for the presump- NARY EXPENDITURES been amended as follows :
tive taxation scheme are increased At present, the assessee or a concern in the proviso, after the words "noth-
from Rs.2 crores to Rs.3 crores for approved by the Board should carry ing contained in this section", the
eligible businesses to promote non- out the activity of an enterprise for brackets, words and letter "[except
cash transactions and ease compli- claiming amortisation of certain pre- the provisions of clause (h)]" shall be
ance. This increased limit will apply liminary expenses. To simplify the inserted; Thus, a combined reading
only in the case the aggregate of the process of claiming amortisation of of the above amendments means that
amounts or amounts received in cash preliminary expenses, Budget 2023 any overdue amount to Micro and
during the year does not exceed 5% proposed to remove the condition Small enterprises, by any assessee as
of the total gross turnover/receipts. of a concern approved by the Board on 31st March of a year should have
CONCESSIONAL TAX TO NEW to carry out the activity in connection been paid on or before 31st March
with these expenses. The government
MANUFACTURING CO-OPERA- will prescribe the format for reporting i.e. the amount outstanding as payable
TIVE SOCIETIES such expenses by the assessee. should not be beyond the due date as
The Budget 2023 provides an option in Section 15 of MSME Act.

PLASTICS NEWS 57
February 2023