Expert Speak: Budget Analysis for SMEs & Business Owners

Expert Speak: Budget Analysis for SMEs & Business Owners

Economy

Ritul Patwa

Ritul Patwa

75 week ago — 5 min read

My assessment of Union Budget 2023 is that it is highly progressive and the government has clearly defined a transition from a Savings Economy to a Market based Economy. There is emphasis on Go-Local, infrastructure and building new generation businesses and skills in India.

 

Overall Direction of Budget

  • Financial discipline – fiscal deficit at 5.9% of gdp
  • Migration from savings to market economy
  • Consistency in tax policy
  • Benefit for all classes including super rich, middle class and low income group
  • Ease of doing business for MSMEs and solving their problems

 

Major Benefits for MSMEs in Budget 2023

1. Ease in Recovery of Dues

Any payment due to an MSME beyond 45 days (prescribed time limit under Section 15 of MSMED Act, 2006) as at the year end, shall be allowed as an Expenditure (deduction) in the Books in the year of Payment.

2. Increase in Presumptive Tax Slab

For small businesses -Section 44 AD (Not applicable on LLPs, professions referred u/s 44AA(1), commission/ brokerage income & agency business)

Turnover up to Rs 200 Lakhs [Rs 300 Lakhs - if the Cash Receipt is up to 5% of Gross Receipts]

Deemed Profit –

  • 6% of Gross Receipts received by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account or such other electronic mode as may be prescribed during the previous year or before   the due date specified in sub-section (1) of section 139 in respect of that previous year.

  • 8% of Gross Receipts other than those covered in paragraph above.

 

3. Composition Scheme for Seller of Goods in Ecommerce

Section 10 – Seller of “Goods” (not Services) on Ecommerce Portal are now allowed to opt for Composition Scheme under GST.

 

4. GST ITC to Be Paid in Cash On Non-payment to Supplier

Section 16 – Second Provision

It has been provided that where the Recipient of Goods/Services has taken an ITC Credit and the payment for the same is not made to the supplier within 180 days, the assessee has to make the payment of such ITC along with interest to the Government.

 

Sectors Benefitted by Budget 2023

Sectors

Reason

Agriculture Sector

Warehousing Facilities, Agri Tech Startups Incubation, Credit, Insurance, Crop Protection etc

Infrastructure

30% increased allocation to Infrastructure Sector will benefit Cement, Steel and Capital Goods Companies.

Fintech

Simplified KYC Process and access to Digi Locker and emphasis on Digital India and 5G.

Domestic Tourism

Special Package for Domestic and International Tourism for Select Cities along with higher TCS of 20% on outbound international travel packages will boost Local Tourism.

Education & Skill Development

Heavy allocation and new programmess for Education, Skill Development and R&D by way of setting up new institutions, focus on new generation skills like Coding, Artificial Intelligence etc.

 

Sectors Not Benefitted by Budget 2023

SECTORS

REASON

Life Insurance

Return on Insurance Premium above Rs. 5 Lakhs p.a. made taxable and benefit of 80C in Tax removed under new scheme.

Silver Jewellery & Articles

With higher Customs Duty of 10% cost of Silver is going to increase. (earlier 7.5% and 6.1%)

Imported Cars

Custom Duty increased from 60% to 70%

 

You can access my complete assessment of Union Budget 2023, along with analysis of Income Tax Proposals here.

I have also prepared an Income Tax Ready Reckoner, which you can access here.


To analyse the impact of Union Budget 2023 from the lens of SMEs & Business Owners, I conducted a webinar for GlobalLinker members. Watch the highlights below. 

 

 

At GlobalLinker we believe that every small business has a big potential. So we provide the most powerful network, tools & resources to help you reach that potential.

 

Image source: Canva

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker. 

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