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The government has increased the cash credit limit for micro, small and medium enterprises (MSMEs) to 30 per cent of turnover from the existing 20 per cent to encourage such ventures conduct businesses digitally, Minister of State for Finance Arjun Ram Meghwal said on Friday.
"We have taken the decision that the CC (cash credit) limit be increased to 30 per cent of turnover from existing 20 per cent," he said while explaining some salient features of the 2017-18 budget.
"They (banks and financial institutions) are calculating the CC limit on the basis of turnover. We have decided that if you do your (MSME) business digitally then you can get the cash credit limit up to 30 per cent. It is a big move," he said at a function organised by Madras Management Association.
By taking up digital transaction, the balance sheet of companies would be "clean" and MSMEs would get loans from banks.
"Take your balance sheet. Banks and financial institutions will sanction loans up to 30 per cent of your turnover. That is a good move towards ease of doing business".
On the calculation of taxes for MSMEs, Meghwal said the government was at present calculating it at 8 per cent for revenue of up to Rs 2 crore.
"If you do business digitally, then the tax liability will be reduced from 8 per cent to 6. Truly speaking, we have reduced the tax liability by 25 per cent. That is also a very big relief to MSMEs," he said.
"It is a big gap. We have to bridge that gap. We want the country to grow. We want the country to be a superpower. That is our target in the 20th century. And that is why we want to meet the global parameter in cash-GDP ratio. That is why we have to move towards digital transaction and cashless society," he said.
On the theme of the conference "India 2017 - Winning in the New Age", he said, "India will definitely win the new age because of demonetisation, move towards digital transaction and third, we are implementing GST this year. All of them will definitely move towards empowering the country.