Ease of Doing Business for MSMEs: Small businesses will not have to prepare money flow statements and shall provide particulars of only the aggregate quantity of remuneration drawn by directors in their annual return as an alternative of what directors and crucial managerial personnel drew from April 1. The advantages are a “direct consequence of the revised definition,” the Corporate Affairs Ministry stated on Wednesday. Commerce Minister Nirmala Sitharaman in her price range speech on Monday had proposed to revise the definition of modest businesses below the Companies Act, 2013 by growing the threshold for paid-up capital from Rs 50 lakh to Rs 2 crore and for turnover from Rs 2 crore to Rs 20 crore. The revision will come into force in the coming monetary year.
Among other advantages for modest businesses incorporated mandatory rotation of auditor will not be needed, the auditor will not have to report on the adequacy of the internal monetary controls and its operating effectiveness in the auditor’s report, enterprises will have to hold only two board meetings annually, firm secretary (CS) will be permitted to sign the annual return of the firm and in the absence of a CS, a single director will be in a position to sign the similar. The revision of the definition will also lead to lesser penalties and filing charges for modest businesses, the ministry stated in a statement.
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“Raising the threshold for the qualification of small companies will enable more companies to take benefit of lesser compliance such as fewer number of mandatory board meetings, rotation of statutory auditors, exemption from the preparation of cash flow statements, etc. thereby facilitating ease of doing business in India,” Anish Shah, Associate Partner – Transaction Tax, BDO India had told TheSpuzz Online.
Importantly, the government had revised the MSME definition final year as aspect of the measures taken to enable enterprises recover from the Covid effect. For micro-enterprises, the limit for investment and turnover was improved to Rs 1 crore and Rs 5 crore respectively although for modest enterprises, the investment and turnover limit was improved from Rs 1 crore and Rs 5 crore respectively to Rs 10 crore and Rs 50 crore. Similarly, for medium enterprises, the limit for investment was improved to Rs 50 crore and for turnover, the limit was improved to Rs 250 crore.