31 Jan 2020, 12:06 — 7 min read
Industry expectations are high from the Union Budget to be announced by Finance Minister Nirmala Sitharaman on 1 February 2020. GlobalLinker spoke to some members on the platform to find out what they expect from the upcoming budget and the inherent optimism of the MSME sector shines through. Here’s what they said.
Ritul Patwa, a chartered accountant who has the benefit of being aware of the real bottom-lines of so many different SMEs, says, “We believe that this time the Prime Minister has been directly involved in the budget-making process and as such expect some proactive and innovative steps to boost the economy,” He explains that though the last few years have been witnessing a downward spiral - especially in old generation businesses - there was some positive growth in new generation businesses like IT and ecommerce. “The impact on the banking system of the country, however, has been negative. In the past six months we have seen some steps being taken to balance that out. These should definitely continue. With specific reference to SMEs, the kind of corporate tax rate benefits announced last year, should be extended to cover the SMEs as well,” he says.
We expect some proactive and innovative steps to boost the economy. The kind of corporate tax rate benefits announced last year, should be extended to cover the SMEs as well. - Ritul Patwa (Chartered Accountant)
He further says that SMEs would greatly benefit if they are given preference by the big government buyers so as to help them deal with the competition from bigger corporates which have the ability to benefit from the economy of scale.
These views of Mr Patwa are echoed by Arun Kumar Vankadavath, who is in the garment sector, “The government does help SMEs with providing a market-place by organising exhibitions. They should take it one step further by incentivising or funding participation. A lot of the SMEs are unable to participate because of lack of extra funds.”
Hena Mehta, who runs a startup in the personal finance sector being the CEO of an investment platform, says, “Running a startup, I would like to see benefits that support the startup economy. The corporate tax rate cuts that have been recently announced could benefit us once there are implemented While there is a supportive investor environment for startups, there are also those entrepreneurs who need access to funds to get off their feet in the form of loans and other debt. The angel tax issue has seen some resolution and look forward to more reforms and clarity for us as a growing contributor to India's economic story."
While there is a supportive investor environment for startups, there are entrepreneurs who need access to funds to get off their feet. The angel tax issue has seen some resolution and we look forward to more reforms and clarity on this. - Hena Mehta (Personal finance startup owner)
Sowjanya Bonda, of AND Business Consultancy, agrees, saying that though the government policies are sound, the implementation needs to be improved. “The policy for the MSME 45 day payment rule is in place, but if you ask around, you will realise that hardly anyone gets paid within the stipulated 45 days. MSMs suffer from a problem of liquidity. They cannot afford to wait for payments and even though they have a larger number of government buyers, their payments are hardly ever on schedule. So maybe the government can think along the lines of allocating funds to different departments to ensure that they are able to meet the 45 day payment rule. Or they could include penal provisions to prevent delay in payments,” she says.
Sanchit Taksali, who is into wealth management, believes that given the economic situation, this budget should offer relief in individual taxation to benefit the largest group of income-tax payees. “We are hoping for relief in individual taxation slabs and rebate for people who are paying off loans or benefits for those paying insurance premiums.”
Mr Taksali further says that the government policy on capital gains taxation also needs to be rationalised. “Long term capital gains tax needs to be reduced from the present 10% rate. Even short-term capital gains tax can be reduced. This would encourage people to invest and bring in money into the market. In fact, the overall multiple taxation that exists on investments greatly needs to be simplified,” he adds.
Even though we are doing a lot of activities to boost sales, our corporate sales have reduced. We need the government to do something to ensure that this liquidity crunch that we are seeing goes away. - Bharat Haria (Retail store owner)
Bharat Haria, who is in the retail space, has been feeling the brunt of the economic slow-down. “Over the past few years, we have just stopped seeing the kind of footfalls that we would like. Even though we are doing a lot of activities to boost sales - everyone is having year-round sales - the results are not there. Our corporate sales have been reduced. We are facing stiff competition from ecommerce platforms. We need the government to do something to ensure that this liquidity crunch that we are seeing goes away,” he says.
Dipika Jaikishan, CIO of an investment platform aimed at women investors, says, “I look forward to this budget as there is an urgent need to revive consumer demand. Working on a start-up and being focused on consumer centricity, hopefully, the budget is a win-win. Economic growth is a by-product of consumption and we need to see that movement. What we hope for are better tax benefits especially for the middle-class earning 5 lakh to 10 lakh a year, this will contribute to consumer spending as well. If there are infrastructure or other bonds that can be reintroduced as additional tax breaks. There has also been a visible drop in foreign investments that have impacted all businesses and India has to look like a lucrative investment story soon. Entrepreneurs and small business owners need simplified compliances especially related to taxes. With the recent dark story of NBFCs tighter compliance measures can change the narrative.”
Image source: shutterstock.com
Disclaimer: This article is based solely on the inputs shared by the featured members. GlobalLinker does not necessarily endorse the views, opinions & facts stated by the members.
Posted byGlobalLinker Staff
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