MSME & COVID-19
Written by Vaibhav Bansal Dt. April 29th, 2020
We, at G.K.KEDIA & CO., being the Reliable CA firm in India, are here to provide you all the necessary information you want to know regarding the incentives given by the government in order to provide financial stability to businesses and especially the MSME’s (Micro,Small & Medium Enterprises).
Amidst the worldwide situation on outbreak of coronavirus pandemic, the Business houses have been taking a hit due to Covid-19 lockdown .The markets are behaving bearish ,lower imports & all over disruption in supply chain.
In all this, the MSME’s are receiving the biggest blow because of the Tight Liquidity situation and the risk of losing their workers they are facing .And we, being the Top CA firm are with you to consult & advice you to how to go through this tough times.
Challenges for the MSME sector:-
According to a recent survey , about one-fourth of businesses which were involved disclosed that their trading activities of sales and purchases have reduced as the effect of the outbreak of virus pandemic. MSMEs are facing many problems like lack of workforce as the daily wage workers had shifted back to their villages.
Businesses that are in production sector are also facing problems as the situation for the international trade still remains unpredictable. The tertiary sector is also not working properly as people are following social distancing.
Following are the steps taken by the Government and the Central Bank i.e. The Reserve Bank Of India to provide incentives to the MSME’s :-
- As the RBI is pumping more liquidity into the economy through the route of banking sector, or relieving the MSMEs of EMI’s is a good move.
- In addition, Union Finance Minister, Nirmala Sitharaman, had also announced the extension of the last date of filing belated Income Tax Return of all businesses for the Financial Year 2018-19 from Mar 31,2020 to June 30,2020.The deadlines for GST returns filing for March, April and May have also been shifted to June 30,2020.
- In the recent press note dated:- 08th april,2020,with a view to provide immediate relief to the business entities & individuals in the context of COVID-19 situation, government has decided to issue all the pending income tax refunds upto Rs.5 lacs immediately which would benefit around 14 lacs Taxpayers. It has also been decided to issue all the GST & Custom refunds which would benefit around 1 lakh business entities in which MSME’s are included.The total refund granted amounts near Rs. 18000 crores.
The incentives discussed above provide hope to the SME sector, still there are a few more steps that can be taken to ensure relief to the sector :-
SMEs have been playing an important role in Indian economy and their role will be much more significant in the months to come by after the coronavirus pandemic is controlled. To ensure that they remain resilient and strong when our economy hits the restart button, MSMEs should consider the following:-
- SMEs should make efforts to keep their key employees during these times. Benefits and incentives can be structured based upon the period of service to safeguard the human resource.
- Inventory management needs to be done properly in regard to how much sources of the entity can be kept in the position of inventory amidst raw material stock, work-in-progress stock & finished goods stock should be maintained. Generally, in an ideal situation, in case of manufacturing entities it should not be more than 35% of their sources, on the other hand, trading entities should keep this percentage at 50%.
In our firm, at G.K.KEDIA & CO.,being the expert Tax consultants, we are here to provide you all the necessary guidance you need in order to avail the benefits of the incentives provided by the government.