Besides, the industry body also flagged concern over tax-related issues faced by the MSMEs and urged the government to establish a dedicated MSME coordination council to streamline scheme implementation and address inter-state issues as well.
Leading industry body Assocham in collaboration with Egrow Foundation, conducted an in-depth study on 'MSMEs facing challenges with a quantitative data of 150+ companies from the survey with qualitative feedback from around 120 industry stakeholders and made a strong case for establishing centralised grievances portal for MSMEs, similar to the Reserve Bank of India's (RBI's) Ombudsman system, to raise issues related to various departments and state governments, according to Assocham in a statement.
In the study report, the industry body underscored the need for innovative financial solutions, urging banks to improve transparency in loan approval processes and eliminate unused credit charges. Among a slew of demands, it also called for reducing the TDS burden on MSMEs by limiting tax deduction requirements to only salary payments and payments to non-residents, and establishing a combined taxpayer unit to address both direct and indirect tax needs for MSMEs.The report said that MSMEs are a cornerstone of India's economy, contributing nearly 30 percent of GDP, 45 per cent of manufacturing output and 46 per cent of exports in FY24. "The report lays out a strategic plan and roadmap for the MSMEs on India's path to become a developed country by 2047... Our strong base of formal and informal entrepreneurs would need strategic support from the government -- Centre and states, banks and conglomerates to be a critical partner in realising the national aspirations," Assocham president Sanjay Nayyar said.
The report, however, suggested that the corporate income tax rate for MSMEs should be reduced to 15 per cent from 25 per cent, further suggesting a simplified goods and services tax (GST) system to ease procedures for compliance. Noting that MSMEs face difficulty in lodging complaints and seeking resolutions, the report also suggested establishment of a centralised grievances portal similar to the RBI's Ombudsman system.The report further said the government can streamline the GST registration and compliance process. "This includes reducing the frequency of amendments and providing clear guidelines and support to MSMEs as the MSMEs face strict penalties for delays in GST payments or return filings, even when delays are justifiable. The government should introduce a tiered penalty structure that takes into account the severity of the delay and the reasons for it.," the report said.
Commenting on the report, Assocham secretary general Deepak Sood also said that realising the goal of Viksit Bharat would require structural changes in India's business paradigm and MSMEs have to be part of this structural transformation. "A developed India would have a vibrant role for the MSMEs. Our study underscores this point emphatically," he said.
