Union Budget 2020 | Turnover threshold for audit of accounts raised, subordinate debt to entrepreneurs; what govt offers MSME

New Delhi | Jagran Business Desk: The government on Saturday unveiled measures aimed at facilitating growth of the country's micro, small and medium size enterprises (MSMEs) including raising the turnover threshold for audit of their accounts to Rs 5 crore and a scheme to provide subordinate debt to MSME entrepreneurs.

As of now, businesses having a turnover of Rs 1 crore are required to get their books of accounts audited by an accountant.

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"In order to reduce compliance burden on small retailers, traders, shopkeepers who comprise the MSME sector, I propose to raise by five times the turnover threshold for audit from the existing rupees one crore to five crore," said while presenting the budget 2020-21.

The scheme will be introduced to provide subordinate debts to MSME entreprenuers.

Besides raising the turnover threshold, Sithraman said that the government has asked the Reserve Bank of India to extend debt restructuring window for MSMEs by a year to March 31, 2021.

The Finance Minister added that an app-based invoicing financial product would be launched to obviate the problem of delayed payments and consequential cash flow mismatches for MSMEs.

She said, necessary amendments will be made to the Factor Regulation Act 2011 to enable non banking financial companies (NBFCs) to extend invoice financing to the MSMEs through TReDS, thereby enhancing the economic and financial sustainability.

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"Working capital credit remains a major issue for MSMEs. It is proposed to introduce a scheme to provide subordinate debt for entrepreneurs of MSMEs. This subordinate debt to be provided by banks would count as quasi equity and would be fully guaranteed through the Credit Guarantee Trust for the Medium and Small Entrepreneurs," Sitharaman observed.

TReDS is an institutional mechanism to facilitate the trade receivable financing of micro, small and medium enterprises (MSMEs) from corporate buyers through multiple financiers.

(With PTI inputs)

Posted By: James Kuanal