Budget 2020

Budget 2020: MSMEs turnover limit for audit increased

It will apply only to businesses which carry out less than 5% of transactions in cash

In a major relief to small retailers, traders and shopkeepers forming the Medium, Small and Micro Enterprise (MSME) sector, the Budget has proposed to raise by five times the turnover threshold for audit from the existing ₹1 crore to ₹5 crore.

Union Finance Minister Nirmala Sitharaman said that to boost the less cash economy, the increased limit would apply only to those businesses which carried out less than 5% of their transactions in cash.

Currently, businesses having a turnover of more than ₹1 crore are required to get their books of accounts audited by an accountant.

Cheap imports

To ensure that the labour-intensive sectors, critical for employment generation, are not impacted by low-quality imports, the Budget has proposed to increase customs duty on items like footwear and furniture. The rate of duty for footwear is being raised from 25% to 35%, and for “parts of footwear” from 15% to 20%. The rate for specified furniture goods is being raised from 20% to 25%.

NBFCs will be allowed to extend invoice financing to MSMEs through TReDS and measures have been announced for debt recovery.

The government has also announced a ₹1,000 crore scheme to help mid-sized companies in export development, R&D and technology upgrade.

“The scheme will help the component sector remain relevant and competitive. Being significantly dominated by MSMEs, measures to extend invoice financing to MSMEs and creating access to working capital through a new scheme are a welcome step...,” said Deepak Jain, president Automotive Component Manufacturers Association of India (ACMA).

Meghna Suryakumar, Founder & CEO, Crediwatch, said, “The focus on enabling growth for MSMEs is encouraging.” Since NBFCs could extend invoice financing to the MSMEs through TReDS, it should enhance opportunity to fuel the economy, she said.

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Printable version | Feb 18, 2020 11:38:37 AM | https://www.thehindu.com/business/budget/budget-2020-msmes-turnover-limit-for-audit-increased/article30715386.ece

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