MSME adds to large share for the development of the country. It is not unusual to know that the service sector contributes the highest percentage to the GDP of the country.
As MSME embrace lots of opportunity for the country, It is equally necessary to take steps for MSMEs betterment, and the same finance ministry is trying to bring. Now there is no section of manufacturing and service limit.
New MSME criteria say investment up to 1 crore, and turnover of less than Rs 5 crore will be known as micro-units. For small units, 5-10 crores investment limit set and turnover less than 50 crores. The medium enterprises come in the category of investment up to 20 crores and turnover less than 100 crores.
4 ways to ease and a boost of MSME with the current taxation system. There are four ways to do it, and they are –
- Reduction of the corporate tax rate – The corporate tax for new companies in the manufacturing sector has reduced to 15 percent to boost investment in small and medium industries.
- Relief from the tax audit – Now limit has been pushed to Rs 5 Crore provided cash transactions do not exceed 5 percent of total transactions for a tax audit instead of an enterprise was required to go through an audit when the turnover crossed Rs 1 crore.
- Goods and Service Tax – Simplification of GST returns, Aadhaar-based verification of taxpayers, electronic invoicing to facilitate compliance, etc. have made GST compliance multifold easier for MSMEs.
- Tax holiday expansion for start-ups – The tax benefit structure is also changed for start-ups. The new limit is Rs 100 crore instead of 25 crores, and the benefit has been extended to be allowed for three years out of the first 10 years instead of seven years.
The MSME not only contributes to GDP but also brings a lot of opportunities for various segments like employment, generation of potential innovation and creativity, and many more.