FICO urges FM and PM to take immediate steps to boost MSMEs

Ludhiana, September 21, 2019: Federation of Industrial and Commercial Organizations (FICO), Ludhiana has welcomed the announcements made by Union Finance Minister Nirmala Sitharaman.
In a statement here today, K.K. Seth and Vipan Mittal, chairman and acting president, respectively, of FICO added the announcements such as corporate tax rate to be 22% without exemptions, inclusive of surcharge and cess; No Minimum Alternate Tax (MAT) applicable on such companies; effective corporate tax rate after surcharge to be 25.17 percent; to attract investment in manufacturing, local companies incorporated after October 2019 will pay tax at 15 percent; that effective tax for new companies shall be 17.01 percent, including cess and surcharge; Companies enjoying tax holidays would be able to avail concessional rates post the exemption period; to give MAT relief for those opting to continue paying surcharge and cess. MAT has been reduced to 15 percent from 18.5 percent for companies who continue to avail exemptions and incentives; To stabilize flow of funds into the market the enhanced surcharge announced in Budget 2019 will not apply on capital gains arising on sale of any security, including derivatives by foreign portfolio investors (FPI); For listed companies which made announcement for public buyback before July 2019 it is provided that tax on buyback on shares of such companies will not be charged; Total revenue foregone by undertaking these measures is Rs 1.45 lakh crore per year.
They added the announcements are a welcome step but at the same time, the MSME Sector (Backbone of the Indian Economy) has totally been neglected.
Adding, they said FICO demanded the immediate action of the government on the following points to boost the MSME Sector:
• MSME Investment Limit has not been increased, as it has been a long time demand by the MSME Sector to change the definition of MSME Sector from ‘investment in plant & machinery/equipment’ to ‘annual turnover’ based. The same has been announced couple of years back, but has not been notified yet.
• Any new domestic manufacturing company incorporated after 1 October, 2019 has option to pay 15 percent tax. This is also applicable to companies which don’t avail any exemptions. But the said benefit is not applicable for the existing companies, which will create competition within the country, rather than competing with other countries like China, this will not create a healthy work environment.
• The government slashed the corporate tax on domestic companies to 22 percent, but the same benefit has not been passed to the MSME Sector (the backbone of Indian economy). MSME sector is the biggest employment generator in the country, we need to boost the MSMEs to stabilize the struggling economy of the country. Neither this benefit has been passed on to the Proprietorship, partnership firms.

• Double depreciation has been allowed for auto sector, but at the same time the bicycle Industry has totally been neglected, from such benefits.
• No Package for Bicycle industry, which is the mother industry of Punjab, as India is the second largest manufacturer of Bicycles in the world.
• Technology Upgradation Fund, has not been sanctioned for the MSME Sector, which is the backbone of the Indian Economy.