Interest Subvention Scheme for MSMEs: 4 Key Changes and Its Impact

The government of India had launched Interest Subvention Scheme for Micro, small and medium enterprises (MSMEs) in November 2018. Under the scheme, all the GST registered MSMEs were eligible to acquire 2% interest subvention on fresh or incremental loans. The aim of the scheme was to help MSMEs expand their operations through the availability of cheap credit.However, as remarked by industry experts, financial institutions, and other concerned authorities, there were a few aspects hindering a proper rollout of the projects. Multiple entities that actually needed the benefits could not take part in the scheme announced. The government recognised the agony faced by the MSMEs made changes in its scheme.

1. Relaxation on UAN Requirements

Earlier an entity needed to have a valid UAN (Udyog Aadhaar Number) and a valid GSTN Number to be eligible to receive the benefits. However, these requirements kept multiple units on the bay from taking part in the scheme.Keeping the above in mind, the government has removed the necessity of UAN for those that are eligible for GST. Also, if GST is not required for an entity, they can submit their Income Tax PAN. If not, then they need to have their loan account recognised as an MSME by the financial institutions.

2. Easy Settlement of Claims

Under the changes, a unit can submit a statutory auditor certificate by 30th June 2020. While for the time being, the claims are to be settled based on internal or the concurrent auditor certificate. Since payments constitute a crucial part in keeping the operations thriving, the MSMEs can now acquire their payments without any hassles.

3. Extension in Claims Date

The government has further extended the last date in the submission of the claims for the half-yearly period. This is a golden opportunity for those MSMEs who had earlier missed their filling date.

4. Relaxation in Trading Norms

Also, the government has further allowed the units to take part in trading activities without the requirement of UAN number. This will further boost these MSMEs to take part in national trading and growing their business freely.

The MSME sector nearly employs 120 million individuals. The expansion of the sector will further open job employment opportunities in the country. Since a key agenda of Interest Subvention scheme for MSME is to get the them on-board GST horizon, the relaxation can get this task done in a much better way. More and more eligible units can now expand their businesses through the government's aid and contribute to the national economy.Also, once on-board the GST platform, these units will become eligible to take part in any future aid pertaining to GST slabs. There are speculations that the changes will further strengthen the availability of Indian products in the market.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.