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Source: TOI
Context:
A high-level committee chaired by NITI Aayog member Rajiv Gauba has proposed 17 reforms aimed at reducing regulatory and financial pressures on micro, small, and medium enterprises (MSMEs).
The reforms focus on credit access, compliance simplification, tax procedures, dispute resolution, and CSR obligations, with timelines for implementation under review by ministries.
Key Recommendations
Credit Access
- Expand CGTMSE (Credit Guarantee Fund Trust for Micro & Small Enterprises) to include manufacturing medium enterprises.
- Extend credit guarantee cover to receivables on TReDS to ensure faster payments.
Dispute Resolution & MSME Protection
- Strengthen pre-appeal deposit provisions under the MSME Development Act for government entities:
- Mandatory pre-deposit of 75% of arbitral award value.
- Partial release of at least 50% of dues after six months to micro and small suppliers.
- Allow appointment of a sole arbitrator to accelerate arbitration.
Corporate Compliance Reforms
- Exempt micro and small companies from mandatory CSR obligations.
- Reduce mandatory board meetings from two per year to one.
- Remove auditor appointment requirement for companies with turnover < ₹1 crore.
Tax & GST Reforms
- Raise tax audit exemption limit for companies with >5% cash receipts from ₹1 crore to ₹2 crore.
- Reduce GST penalties for small errors by micro enterprises and lower interest rates.
- Decrease frequency of GST return filing for MSMEs.
Expected Impact
- Simplified regulatory compliance for micro and small companies.
- Faster access to credit and improved cash flow through TReDS and CGTMSE.
- Reduced financial burden, including lower taxes, penalties, and audit requirements.
- Quicker resolution of payment disputes, enhancing business sustainability.