“We will eliminate the “angel tax” and all other exploitative tax schemes that inhibit investment in new micro and small companies and innovative startups,” says Congress
Ahead of crucial general elections, the Congress party, India’s main opposition in its manifesto has proposed a tax relief on micro, small and medium enterprises (MSMEs) owned by individuals and partnership firms.
Amid the delayed payments and debt faced by MSMEs, the Indian National Congress (INC) in the manifesto said, “Congress will lessen the burden of tax on MSMEs owned by individuals and partnership firms.”
A report by GAME with Dun & Bradstreet (D&B) and Omidyar Network India highlighted that payment delays to MSME suppliers have remained endemic and an intractable problem in India for more than 15 years.
Notably, an estimated 5.9 per cent of the gross value added (GVA) in the Indian economy— Rs 10.7 lakh crore is locked up in delayed payments from buyers to MSME suppliers. While talking about the causes of payment delays, the report stated that fundamentally, payments are delayed because of a power asymmetry between smaller suppliers and large buyers.
“Congress will enact a direct taxes code that will usher in an era of transparency, equity, clarity and impartial tax administration of direct taxes. We will eliminate the “angel tax” and all other exploitative tax schemes that inhibit investment in new micro and small companies and innovative startups,” it added.
India’s 64 million MSMEs have had a major role to play in supporting domestic demand growth with a steady supply of goods and services to various major industries. Despite the challenges, it continues to remain one of the biggest sources of employment and it contributes about 29 per cent to the gross domestic product (GDP).
Indian MSMEs are a major contributor to the forex reserves and in FY23, they contributed 44 per cent of India’s exports, at USD 200 billion. The data from the first half of FY24 showed that the share of MSMEs in exports has risen to 46 per cent. While this is still not as much as the pre-pandemic levels of 50 per cent, experts said that there are other encouraging signs.
