Increase in threshold limits under the presumptive taxation scheme

The threshold limits for the presumptive taxation scheme are increased from Rs.2 crores to Rs.3 crores for eligible businesses to promote non-cash transactions and ease compliance.

This increased limit will apply only in the case the aggregate of the amounts or amounts received in cash during the year does not exceed 5% of the total gross turnover/receipts.

However, if the cash receipts is more than 5% of the total receipts, the old limits of the Rs 2 cr (20 Million)will be applicable.

Concessional tax to new manufacturing co-operative societies

Budget 2023 has Inserted new section 115BAE to support and give a boost to newly established manufacturing cooperative societies that start operations between April 1, 2023 and March 31, 2024.

This section replaces the previous 115BAD, which provided a tax rate of 22% (+10% surcharge) for manufacturing cooperative societies, but only a lesser rate of 15% (+10% surcharge) for new manufacturing companies.

A request was made to Ministry of finance to ensure fairness between new manufacturing cooperative societies and new manufacturing companies by applying the same tax rate of 15% to both.

Promote timely payments to MSMEs

Section 43B of the Income Tax Act of 1961 is proposed to be amended in Clause 13 of the Finance Bill 2023 to Disallow deduction for transactions with Micro and Small Enterprises where timely payments are not made.

As a result, a new clause (h) is proposed in section 43B to provide that any sum payable by the assessee to a micro or small enterprise after the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006 shall be allowed as deduction only on actual payment.

Section 15 of MSMED Act

Liability of buyer to make payment.

Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:

Provided that in no case the period agreed upon between the supplier and the buyer in wriing shall exceed 45 days from the day of acceptance or the day of deemed acceptance.

It is also proposed that the proviso to section 43B not apply to payments to micro and small businesses. (Proviso to section 43B allows accrual based deduction if the amount is paid by the due date of filing the income tax return).

Extension of Credit Guarantee Scheme for MSMEs

• Credit to micro, small and medium enterprises (MSMEs) will get a boost with the continuation of the credit guarantee scheme.
• The revamped scheme will take effect from April 1, 2023, through infusion of ₹9,000 crore in the corpus. This will enable additional collateral-free guaranteed credit of ₹2 lakh crore,