Indian minister of finance Nirmala Sitharaman unveiled the Union Budget 2021 on 1 February this year. Union Budget 2021: How will it Affect on Small Businesses, The budget possesses a strong specializes in digital transformation and economic growth after the market recession caused by COVID-19. resembling the increasing focus of the state on Indian Startups and SMEs on this year’s budget we will safely call the budget 2021 for small businesses. Nirmala Sitharaman, the union minister of finance, allocated Rs. 15,700 crores to the Micro, Small, and Medium Enterprises (MSME) sector – almost double the past year’s fund allocations of Rs. 7,572 crores.
Union Budget 2021: How will it Affect on Small Businesses
India’s minister of finance Nirmala Sitharaman granted the Union Budget 2021, he also abandoned the bahi khata that had become a serious point during the longest budget speech ever last year and finished with a ‘Made in India’ tablet. Giving her budget address, the FM projected a financial lack of 6.8% of gross domestic product for 2021-22. the present year was expected to finish with a lack of 9.5%, she said, a sharp rise from the 7% required earlier. Despite this, the FM was bullish about the recovery of the Indian economy.
- Support to MSMEs – The government has proposed several changes to benefit micro, small, and medium enterprises (MSMEs). To promote domestic MSMEs, the government aims to set aside Rs 15,700 crore for MSMEs in FY 2022. Further, the Ministry of Finance plans to extend the duty on steel screws and plastic builder wares from 10 percent to fifteen percent, and rationalize the exemption on import of duty-free items. This has been done to incentivize exporters of clothes, leather, and handicraft items since most of them are made by MSMEs.
- Tax Holidays Extension for Startups – Sitharaman offered an extension of tax holidays for start-ups to a different year during his Union Budget 2021 address. it’ll be valid till March 31, 2022. Also, she announced that the government is proposing to increase the duration of eligibility to demand an exemption from capital gains for investments made by another year until 31 March 2022 to market investment in start-ups.
- Expansion of SME working capital credit – The latest Union Budget announced the addition of various business credit actions launched by the Centre in 2020. This move will help SMEs gain business finance more quickly, and speed up the sector’s post-pandemic recovery. One such government action to give cash flow help to SMEs includes the (Public and Private Sector Banks) PSB loan.
- Improvement of digital modes of payment – Digital payments are transforming the way India shops and spends. In its effort to boost digital payments in the country, the government has set aside Rs 1,500 crore for the improvement of digital payments. However, it is yet to be seen how this collection would be spent. The pandemic and after lockdowns have seriously impacted the country’s economy and a major reason was needed to shape an economic recovery. With these statements in the budget, the government has shown a clear focus on supporting domestic businesses to survive this phase and ultimately succeed.