BANGALORE, INDIA: The Union Budget for the year 2012-13 presented by the Finance Minister Pranab Mukherjee, by and large, is an average one. Though the government has taken measures to uplift the sector by allocating more funds to the sector, it was disappointing when it comes to service tax and Income tax.
All the SME units and business lobbies that CIOL contacted have hailed the Budget, though, they say, some announcements in the Budget are disappointing. They are highly satisfied with the decision to allocate Rs.. 5,000 crore Venture Funds to MSMEs and infusion of Rs. 1,000 crore to the National Skill Development Fund. But they are disappointed with the raising of Income Tax level to just Rs. 2 lakh from the current Rs. 1.8 lakh. It should have been raised at least to Rs.. 3 lakh, they say.
They are also disappointed with the rising of Service Tax from 10 per cent to 12 per cent, which they said, would affect their businesses.
“The Union Budget, by and large, is a very progressive one. The decision to allocate Rs.. 5,000 venture fund for MSMEs is certainly a welcome move. However, the finance minister let us down by not increasing the Income Tax level to at least Rs.. 3 lakh from the current Rs.. 1.8 lakh,” said Vasucky KN, the CEO of Megha Imaging, a Bangalore-based small enterprise.
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Sainul Abideen N of Calicut-based Cybrosys Technologies echoed a similar view. “I expected the government to raise the Income Tax level to Rs.. 3 lakh. But it is still a very good move as the government has raised IT slab to Rs.. 2 lakh. It will benefit a lot of salaried professionals in the country.”
“However,” he pointed out, “the increasing of service tax to 12 per cent from the current 10 per cent will impact the start-ups like ours at a time foreign IT firms are largely looking at Indian companies to outsource their services.”
J.R. Bangera, president, FKCCI, has a different take altogether. “MSMEs could not have asked for more, as the government has already taken some measures to uplift the sector earlier. Anyways, I don’t find it a very good Budget. But still, there are some good moves like the decision to increase the compulsory tax audit to Rs.. 1 crore from the current Rs.. 60 lakh and the allocation of Rs.. 5,000 crore to the SIDBI and RBI for boosting the sector.”
Jacob Crasta, former president, FKCCI, said, “I feel this Budget is reformist one. It gives me a lot of satisfaction since the FM has mentioned the sector at least seven times in his Budget speech. Previous finance ministers never talked about MSME sector in their Budget speech. The allocation of Rs.. 5,000 crore Venture Funds to MSMEs and earmarking of Rs.. 1,000 crore to the National Skill Development Fund are a music to the ears,” he added.
Dinesh Agarwal, founder and CEO, IndiaMART.com, said. “We welcome the Union Budget 2012-13. While the FM called for speedy reforms today, the Budget did not indicate much in that direction.”
“The key highlight, however, is ‘GST’ which is now expected to be operational by August 2012. We hope that this timeline is met as it would certainly help address the multiple taxation issue faced by the MSMEs currently.
He also added that with the manufacturing sector facing deficit in skilled manpower, the FM’s proposal to provide weighted deduction for expenditure on skill development will help bridge some gap.
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