Context:
The Government of India is considering incorporating Section 27 of the MSMED Act, 2006 into the proposed Jan Vishwas Bill 2.0, aiming to decriminalize minor offences related to non-disclosure of business information by Micro, Small and Medium Enterprises (MSMEs).
Key Highlights:
- Objective
- Reduce compliance burden and decriminalize petty economic offences to promote ease of doing business.
- Plug financial leakages faced by MSMEs due to minor penalties.
- Background
- Jan Vishwas Bill 2.0 was announced in the FY26 Budget by Finance Minister Nirmala Sitharaman.
- It will decriminalize 100 more laws, following the first Jan Vishwas Bill (2023) that decriminalized 180 provisions.
- Focus on MSMEs
- India has over 65 million registered MSMEs, contributing:
- 30% to GDP
- 45% to exports
- MSMEs often face penalties for minor non-compliance, which can impact capital flow and growth.
Section 27 of the MSMED Act
- Provision: Penalizes MSMEs for non-disclosure of business-related information to central or state authorities.
- Penalty structure:
- ₹1,000 for failure to furnish required information.
- Fines range from ₹1,000 to ₹10,000 depending on the nature of non-compliance.
Policy Impact
- Reduces fear of prosecution for small businesses.
- Promotes trust-based governance and voluntary compliance.
- Frees up resources for MSMEs to focus on operations and innovation.
