Tanstia asks centre to reduce I-T for state MSMEs

 C Shivakumar @ Chennai:

Ahead of Union Finance Minister Nirmala Sitharaman's Budget presentation on Saturday (February 1), Tamil Nadu Small and Tiny Industries' Association (Tanstia), the apex body of all district associations, Industrial Estate Associations, and Product  Manufacturers' Associations of the state, has sought from the centre reduction of income tax (I-T) for small and medium enterprises and low premium insurance to safeguard the industry and entrepreneurs from all kinds of risk.

Tanstia president C  K Mohan told TNIE that in case of risk due to natural disasters, there is no separate clause for industry under the national disaster fund as such, so the government should look at ways to support Micro, Small and Medium Enterprises (MSMEs).

A provision could be introduced under I-T where industries could be compensated during natural disasters. "This will result in more compliance to the tax regime," said Mohan.

Similarly, he rued that there is no exit policy for small and medium enterprises unlike large companies which have National Company Law Tribunal (NCLT) as the adjudicating authority under the Insolvency and Bankruptcy Code. So, the NCLT threshold limit for initiating insolvency process should be reduced to Rs 2 lakh instead of Rs 1 crore, he suggested.
Tanstia has also sought for increasing the rate of depreciation for plant and machinery to 40% so as to encourage small industries to undertake modernisation.  
"The total  depreciation for research and development and technology upgradation should be 1.5 times of the capital value," said Mohan.

The FM had announced a new mechanism for facilitating continuation of bank credit to MSMEs during their stress period while being in the special mention account (SMA) stage for reason beyond their control, but "till date no guidelines have been given on this", he said.

Under the procurement policy for small and medium enterprises, he said the existing limit (25%) reserved for small and micro industry from central public sector units shall be increased to 35%. Tanstia has also suggested setting up export facilitation centres, providing access to international markets, and increasing export subsidies. This can help MSMEs grow globally. The export subsidies shall be 10% on value of  exports.

Tanstia also urged the Union government for simplication of forms and returns. "The government had made frequent modifications in forms and returns which are not easy to understand by the stakeholders.  If there is any unintentional clerical mistake, the stakeholders face huge levy of taxes, interest and penalty. So, simplification of forms and returns is needed," he said.