The central excise and service tax tariff hike is affecting SME’s heavily. The reason is it got introduced as ‘stimulus package’ during recessionary days but then now it may lead to overall inflationary pressure. Service tax hike can hit the domestic software service market and hurt Indian IT SMEs. Service tax increase from 10% to 12% has been proposed in this budget.

There is confusion among SME owners on how things are going to work when there arises need of government assistance to operate business. The President of Karnataka Small Scale Industries Association (KASSIA), Prakash N Raikar, further adds to the confusion as he says that SME entrepreneurs should no longer depend on Government and its schemes. SMEs now have to look for their own skills and depend on their expertise to run their enterprise without friction.

But then the budget also has its own bright sides. There is the proposal of the ‘Goods and Services tax’ (GST) to be introduced by August 2012. This will help in building up momentum in overall performance of the SME sector. Launching the ‘GST Dispute Settlement Authority’ is also a positive step toward filing returns. It is going to bring change and will help to streamline tax compliances and other SME functions. SMEs can find a better work place, uniformity in tax payments, and will not have to bother for multiple tax point any more. The National Skill Development Corporation will receive more funds from Rs 1000 crore to Rs 2500 crore. This will definitely employ more skilled labour.

Exemption of excise duty is estimated to increase to 25 crore. “Start-up companies should get proper support from banks and financial institutions to convert brilliant, innovative and potentially viable ideas into commercial ventures,” according to President SME Chamber of India, Chandrakant Salunkhe.

For companies oriented toward exports, the excise duty exemption limit should be enhanced to Rs 25 crore. Last year has been a period of struggle for textile industry as cotton prices hiked and ‘Technology Up gradation Fund Scheme’ ended. In the current year, textile companies are demanding reduction in customs duty and machinery under the export promotion capital goods (EPCG) scheme.

Auto part makers primarily want to have proper infrastructure sector in this budget.  Power is very crucial for auto industry and availability often falls short as opposed to that of what is required. Survey reveals announcement of tax breaks for employment intensive units during this current budget.

Mr. Mukerjee said, “Though there is some tightening of monetary policy by the RBI we do not expect banks to raise the lending rates. The banks are aware of the actual liquidity position. They (banks) seem to have adjusted their lending plans accordingly.”

In the recent monetary policy unveiled by RBI on July 27, it is found that for commercial banks short-term borrowing and lending rates (repo rate and reverse repo rate) have been heightened. This is done to adjust the excess liquidity in the money market. With such hikes there is apprehension that banks will raise lending rates as cost of borrowing has increased. Lending rates of PSU banks such as Punjab National Bank and Union Bank of India have increased. SBI so far did not make hikes in lending or deposit rates.

O P Bhatt, SBI Chairman, present in the meeting, said, “RBI is always sensitive enough to see that liquidity level is always maintained at reasonable level to meet the fund requirements of banks.” When asked what could be the possible hike in rates, Bhatt said, “It will differ from bank to bank depending on individual bank’s business strategy. But we think if at all there will be any hike it will be marginal—much less than 75 basis points.”

Reviewing the performance of PSU banks, Mukherjee appealed to banks to step up credit disbursements to sectors of the economy like agriculture and industry especially the job oriented SMEs. The minister also urged banks for issuance of Kissan Credit Cards (KCDs) by 20 per cent increase in the current fiscal.

Revival of income tax concessions under 80 HHC, service tax exemptions, resolution of VAT-related issues, lowering of credit costs and upgrading infrastructure are the issues covered in the plan.

Businesses with an annual turnover of less than Rs 40 lakh have the option to not maintain their books of accounts and pay a fixed income tax of 8 percent of their revenue, said the SME Times.

Other positive reforms include doing away with the fringe benefit tax, income tax surcharge and the commodity transaction tax, which could make raw materials cheaper for small business owners.

The introduction of an 8 percent excise duty on man-made fiber and yarn was a surprise hit to small businesses. However, there is an extension of the interest subvention for the textile industry has been extended to March 2010. массаж интим с выездом к клиенту

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Eleven of 17 industry groups showed a positive growth in April, compared to the same time last year.

The furniture and fixtures sector showed the highest growth at 31.4 percent, followed by wool, silk and man-made fiber textiles, with a 12.6 percent growth rate, said the International Business Times.

On the other hand, food product production showed a negative growth of 34.4 percent, followed by a 12.4 percent decline in leather and fur products.

Specifically, MSME wants tax holiday extensions for export-oriented units (EOUs) and software technology parks (STPs), benefits under Section 80-IA, and giving infrastructure status to social sectors such as health and education, according to a senior tax professional from Ernst & Young.