Supporting MSMEs & Furthering Make in India

The Union Budget 2025 introduces key measures to support MSMEs and promote Make in India. MSME classification limits for investment and turnover have been increased. The tax benefits for eligible start-ups under Section 80-IAC are extended to those incorporated before April 1, 2030. A ₹5 lakh credit card is proposed for micro-enterprises on the Udyam portal and a new loan scheme will support first-time entrepreneurs, including women and SC/ST applicants. Credit guarantee coverage for MSMEs, start-ups and exporter MSMEs has also been expanded to boost financial access. In this article, we have provided detailed information on each measure. 

Revision in classification criteria for MSMEs

Extension of timeline for tax benefits to start-ups

Section 80-IAC of the Act, inter alia, provides for a deduction of an amount equal to hundred   percent of the profits and gains derived from an eligible business by an eligible start-up if it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2025. It is proposed to amend the above section so as to extend the benefit for another period of five years, i.e. the benefit will be available to eligible start-ups incorporated before 01.04.2030.

Credit Cards for Micro Enterprises

Customised Credit Cards with a Rs 5 lakh limit is proposed to be issued for micro enterprises registered on Udyam portal. In the first year, 10 lakh such cards will be issued. 

Scheme for first time Entrepreneurs

For 5 lakh first-time entrepreneurs, including women, Scheduled Castes and Scheduled Tribes, a new scheme, to be launched, to provide term loans up to Rs 2 crore during the next 5 years.

Significant enhancement of credit availability with guarantee cover

Learn more: Credit Guarantee Scheme for Startups

Are you still having questions about the MSME updates? Connect with IndiaFilings experts today for personalized guidance and support!

 Get Expert Help!

FAQs 

1. What is the revised classification criteria for MSMEs ?

The revised criteria increased the investment limit by 2.5 times and the turnover threshold doubled for micro, small and medium enterprises (MSMEs), providing better growth opportunities.

2. What are the new investment limits for micro enterprises?

The investment limit for micro enterprises has been increased from ₹1 crore to ₹2.5 crores.

3. What are the updated turnover limits for small enterprises?

Small enterprises now have a revised turnover limit of ₹100 crores, up from ₹50 crores.

4. How has the classification of medium enterprises changed?

The turnover limit for medium enterprises has been revised to ₹500 crores and the investment limit has increased to ₹125 crores.

5. What tax benefits are extended to start-ups?

The tax benefits under Section 80-IAC for eligible start-ups have been extended by five years, from 2025 to 2030.

6. Who qualifies as an eligible start-up under Section 80-IAC?

Start-ups incorporated on or after April 1, 2016 and before April 1, 2030, are eligible for 100% tax deductions on profits.

7. Who will benefit from the new loan scheme for first-time entrepreneurs?

The scheme will benefit 5 lakh first-time entrepreneurs, including women and SC/ST entrepreneurs, offering term loans up to ₹2 crore.

8. How will the credit guarantee coverage for MSMEs change?

The credit guarantee cover for MSMEs will increase from ₹5 crores to ₹10 crores, enhancing access to financial resources.

9. What is the revised credit guarantee cover for start-ups?

The credit guarantee cover for start-ups has been increased from ₹10 crores to ₹20 crores.

10. What changes have been made to the credit guarantee cover for exporter MSMEs?

Exporter MSMEs will now have a credit guarantee cover for term loans up to ₹20 crores.

11. How many credit cards will be issued to micro enterprises in the first year?

In the first year, 10 lakh customized credit cards will be issued to micro enterprises registered on the Udyam portal.

13. What is the purpose of increasing the credit guarantee cover for MSMEs and start-ups?

The increase aims to provide greater financial support and improve access to credit for MSMEs and start-ups, boosting their growth potential.

About the Author