17 March 2012
Budget Reactions: GST
By Mr. Dinesh Agarwal, Founder & CEO, IndiaMART.com
"We welcome the Union Budget 2012-13 presented by the Hon'ble Finance Minister (FM) today.
While the FM called for speedy reforms today, the Budget did not indicate much in that direction. The key highlight, however, was 'GST' which is now expected to be operational by August 2012. We hope that this timeline is met as it would certainly help address the multiple taxation issue faced by the MSMEs currently. We had also expected some effective mentions to simplify taxation and also consolidate multiple departments to allow better compliance by MSMEs. This still remains to be looked at by the government.
Another positive for MSMEs in this budget was allocation of Rs 5,000 cr to SIDBI for venture fund which would enhance equity availability to MSMEs. Exemption of capital gains tax from sale of property when proceeds are used for investment in SME would also help augment funds for SMEs to a certain extent.
The fillip to handloom, powerloom and leather clusters is seen as a positive move for growth of small enterprises in these sectors.
With the manufacturing sector facing deficit in skilled manpower, the FM's proposal to provide weighted deduction for expenditure on skill development will help bridge some gap.
Also, the move to raise the turnover limit for compulsory tax audit for SMEs to Rs. 1 crore from Rs. 60 lakh would also bring relief to many SMEs. We believe that there was a scope for bolder announcements for MSMEs which could have brought a sea-change in their productivity and growth by eliminating the challenges faced by them."