Recent government schemes for finance for sme’s

1. Recent government schemes for finance for sme’s Devang and Associates Chartered Accountants Vadodara 9586555997, 9979702302, 0265-2412159 Devang@cadevang.com www.cadevang.com

2. Respected, • Managing committee of WIRC OF ICWAI, All Seniors in the profession • Thanks to the management for calling me all the way from Vadodara. • Briefing you all about Start up, Mudra , stand up, 59 minute loan and Women Entrepreneur scheme of Maharashtra. • Question/ Answers, you can note it down and will be taken up at the end. • Opinion given by me are my personal, you may or may not concur. • We are understanding the scheme of Government. Hence, I refrain myself to advertise in favour of any of the Government.

3. Index • Start Up India Scheme. • Maharashtra State Innovative Start up Policy 2018 • Mudra Loan Scheme. • Stand Up India Scheme. • 59 minute Loan Scheme. • CGTMSE • DIC (Various schemes ). • Women Scheme in Maharashtra. • Qualities for becoming a good Entrepreneur.

4. Start up- scheme • Office website for GoI for start ups:- • https://www.startupindia.gov.in/ • Office website for Maharastra state for start ups:- • http://mahaudyog.in/ • Brief about the scheme • Start-up India Scheme is an initiative of the Indian government, the primary objective of which is the promotion of start-ups, generation of employment, and wealth creation. It was launched on the 16th of January, 2016 by Prime Minister of India at, New Delhi. • An investment of Rs 5,000 crore will be disbursed to Startups by the Maharashtra state cabinet, under the ambitious "Maharashtra State Innovation and Start-Up Policy," which also encompasses setting up incubators in order to foster an over all conducive environment for the startup ecosystem. • The policy, prepared by the Government of Maharashtra’s skill development and entrepreneurship department, states that the amount will be dispensed fully by 2022, in the hope of establishing 10,000 startups, thus generating 500,000 direct and indirect jobs

5. Eligibility of start up • The company to be formed must be a private limited company or a limited liability partnership or registered partnership firm. • It should be a new firm or not older than Seven years (Bio Technology and social sector – 10 years ) , and the total turnover of the company should be not exceeding 25 crores. • Maharashtra State Innovation Society to launch online protal on internet and mobile app to create a single point of contact for entire start up ecosystem and enable knowledge exchange. It will the state level nodal agency for implementing, monitering and evaluation of this policy. • The state will support development of PPP MODE (Public, Private or Public-Private Partnership. • The firm should have obtained registration from the Indian patent and Trademark Office. • It must have a recommendation letter from Incubation Centre. • Capital gain is exempted from income tax under the Startup India campaign. • The firm must provide innovative schemes or products. • Angel fund, Incubation fund, Accelerators, Private Equity Fund, Angel network must be registered with SEBI ( Securities and Exchange Board of India).

6. start up • Please read page 24 of State Government Policy and newly formed list f sta • Also refer SSIP of Gujarat. • SSIP is an “ Intellectual love towards Students.” • Few Innovations noticed as a jury member yesterday :- • Belgium Wafels. • Deep • Drainage system. • Water harvesting system from Humidity. • Bearing fault detector. • Clothes on Rent. • Cement Plaster machine- Mason work. • Smart Chair. • Smart Mirror • Leaf Disease Detector. • Salted Land remover. • Oxy rich... • Robots for car cleaning...Rs. 150000 • Army protections. • Bicycle with accelerator and battery.

7. SSIP • Following is the grant available. www.cadevang.com Devang@cadevang.com

8. Income tax exemptions for start ups • Sec 54EE- Exemption from Long Term Capital Gains (Sect 54EE) • Section 54GB - Tax exemption to Individual/HUF on investment of long-term capital gain in equity shares of Eligible Startups u/s 54GB. , if an individual or HUF sells a residential property and invests the capital gains to subscribe the 50% or more equity shares of the eligible startups, then tax on long term capital will be exempt provided that such shares are not sold or transferred within 5 years from the date of its incorporation.—Matching concept. • A startup has to obtain two approvals, one for eligible startup and another certificate for tax benefits for eligible business. The certificate of eligible business is granted by the inter-ministerial board of certification ( Also, a startup needs to bear in mind that only those will get tax benefits which have been incorporated after April 1, 2016.) • Under Section 80JJAA, deduction in respect of employment of new workmen is granted @ 30 per cent of additional wages paid to the new regular workmen employed. The wage of workmen should not exceed Rs.25,000 per month.

9. Mudra (Micro Units Development and Refinance Agency Limited )Loan • Brochure of the scheme is attached. • Loan available unto 10 lakhs Depending on the category. Sishu-50k, Kishor – upto 5lcas and Tarun- 10 lcas. • Available to New entrepreneurs. • Without security. • Available for working capital and acquiring capital assets. • All Nationalised banks are having targets. • Also refer www.mudra.org.in • Also, check the exposure... • 2018 budget have targeted a total lending of Rs 3 lakhcrore to womens under Mudra Yogna to encourage them to start new ventures. as huge percentage, as much as 76% of Loan Accounts are of women.

10. Stand up india scheme • Available to SC/ST and women (Above 18 years ). • Also, available to those enterprise, where 51% share is of SC/ST or women. • Finance available from 10 lacs to 1 crore. • For, those who want to stand up (start up a new business) • No Security required. • Available to Greenfield project. Meaning of Greenfield project is first time venture in manufacturing, service or trading sector. • Refer www.standupmitra.in • My experience FCA Devang Sadrani

11. 59 minutes loan scheme • Official webiste https://www.psbloansin59minutes.com Following are the criteria :- • You must be registered with GST • You must be filing your Income Tax returns. (XML file to be ready ) • Last 6 months bank statements. • KYC of Partners or Directors. • Maximum you get 1 Cr. • No need for collateral Security. They fetch the data from Income Tax and GST returns and give you in principal sanction. You have to select your Banking partner and get the loan disbursed from the Bank. CA Practice :- Banks will now have to give the reason and clarification, if they deny the loan.

12. Need of an hour • The accompanying chart shows the steep fall in real (after adjusting for inflation) growth in bank credit to micro, small and medium enterprises (MSMEs) during the last four years. Real credit growth by banks to these units started tapering off from 2015, went into negative territory in the beginning of 2016 and then was practically driven into a coma by demonetisation. Thereafter, it limped along, before starting to recover from the beginning of this year, aided by a low base and a rebound from the travails induced by the introduction of the goods and services tax (GST). • In recent months, however, growth in bank credit to the sector seems to have picked up. Why then the angst in government circles? After all, during the disruption in the aftermath of demonetisation, when the sector was crying out for relief, their appeals fell on deaf ears. • After four years of tepid growth, why the sudden concern for small enterprises now? • One reason is the worry that the impact of the Infrastructure Leasing and Financial Services Ltd’s (IL&FS) contagion will inhibit lending by non-banking financial companies (NBFCs) to the sector. A bigger reason is the proximity of the elections and the rather belated realisation that the sector is a major source of jobs. It is probably also a nagging concern that credit growth real rates to MSMEs are nowhere near the levels they were at the time

14. 59 minutes loan • New Delhi: Prime Minister on Friday gave a Diwali gift to the micro, small and medium enterprises (MSME) sector. The PM unveiled 12 initiatives for growth of MSMEs, but the one that stood out was the announcement of a dedicated digital platform to enable MSMEs to secure in principle approval of loans up to Rs 1 crore in just 59 minutes. The initiative is aimed at promoting automation, reducing the lengthy loan approval process and frequent visits to bank branches. • Details of the loan: • The loan amount will be between Rs 10 lakh and 1 crore. The rate of interest (RoI) starts from 8%. After the approval in principle of the application, the loan amount will be disbursed in 7-8 working days. • There is no mandatory requirement for collateral as the online portal is directly connected to the Credit Guarantee Fund Trust for Micro and Small Enterprises scheme. • For registration, the borrower does not need to make any payment. A borrower whose proposal matches the products of lenders and who wants to receive an approval in principle will be required to make a nominal payment of Rs 1,000 plus applicable taxes. • There is no fee for the registration, but once the applicant’s proposal matches the bank’s products, the borrower will have to be submit a fee of Rs 1,000 plus taxes.

15. 59 minutes loans • Documents you require: • Bank account details: A six-month bank statement is required to be submitted in PDF format. • e-KYC paper: A digitized version needs to be uploaded. • Income tax details: Income tax returns for three years are required in XML format. Income tax codes and e-filing details are are also required. • GST details: The applicant will be asked to provide his GST ID username and password. • Ownership details: Applicants will be required to furnish ownership papers of their ventures. Applicants will also be required to furnish personal and educational details.

16. Step by step guidelines • 1. Go to official website • The applicant will have to go to the official website, www.psbloansin59minutes.com. First, complete the sign-up process. Type in your name, email-id and mobile number. After this, click “Get OTP”. • 2. OTP • Type the OTP sent to your number. Tick the ‘I agree..’, box then click ‘Proceed’. • 3. Basic questions • You will be prompted to answer a few basic questions on the next screen. After ticking all the boxes, select “I am a registered MSME and I agree with the above selected point’ and click ‘Proceed’. • FCA Devang Sadrani

17. 59 minutes – step by step gudielines • 4. GST details • On the next screen enter your GST details, like number, username and password. Next, you can provide your tax returns in XML format or login with your ITR details like PAN and date of incorporation. • 5. Bank statements • You have two options: either you can upload bank statements or log in with your net banking credentials. You will be asked about the directors’ details. Fill the company’s address and then proprietor’s details.

18. Sanction letter of 59 minutes

19. Msmedefination

20. CGTMSE- credit guarantee fund trust for micro and small enterprise. • Official website : • https://www.cgtmse.in/About_us.aspx www.cadevang.com Devang@cadevang.com

21. cgtmse • Any collateral / third party guarantee free credit facility (both fund as well as non fund based) extended by eligible institutions,   to new as well as existing Micro and Small Enterprise, including Service Enterprises, with a maximum credit cap of of200lakh (Rupees Two Hundred lakh only) are eligible to be covered. Recently, guarantee coverage made eligible to select NBFCs and Small Finance banks. • The guarantee cover available under the scheme is to the extent of 50%/ 75% / 80% & 85% of the sanctioned amount of the credit facility. The extent of guarantee cover is 85% for micro enterprises for credit up to 5 lakh. The extent of guarantee cover is 50% of the sanctioned amount of the credit facility for credit from 10 lakh to 100 lakh per MSE borrower for retail trade activity. www.cadevang.com Devang@cadevang.com

22. Cgtmse- COVER www.cadevang.com Devang@cadevang.com

23. CGTMSE – FEE STRUCTURE www.cadevang.com Devang@cadevang.com

24. cgtmse • Study the report on page no. 13 of NCGTC • Study the report on page no. 37 of CGTMSE.

25. Maharashtra subsidy and schemes The Maharashtra Government provides assistance to entrepreneurs and small scale industries through various subsidies and schemes operated by state government departments or corporations. In this article, we cover three schemes operated by the Maharashtra State, Directorate of Industries namely the Prime Minister’s Employment Generation Programme (PMEGP), Seed Money Scheme (SMS) and District Industries Centre Loan Scheme.

26. DIC Official website :- https://di.maharashtra.gov.in Various schemes available at DIC are as follows :- • Prime Minister Employment Generation Scheme. • Seed Money Scheme. • District Industrial Centre Loan Scheme.

27. Prime minister employment generation scheme. • Under the Prime Minister’s Employment Generation Programme, manufacturing project with an investment of upto Rs.25 lakhs and service projects with an investment of upto Rs.10 lakhs are provided financial assistance as loans from public sector banks, regional rural banks or IDBI. Upto 90% of project cost is provided as loan for most entrepreneurs and entrepreneurs who are SC /ST / OBC /minority/woman/ex-ervicemen/physically handicapped are provided loan of upto 95% of project cost. Project cost will include capital asset cost + working capital. Any individual above the age of 18 years is eligible for this scheme, provided they have atleast passed class VIII standard.

28. Application form path of pmegp • https://di.maharashtra.gov.in/_layouts/15/doistaticsite/english/pdf/PMEGP_Application_Form.pdf

29. SEED MONEY ASSISTANCE • Equity or seed money is provided in the form of soft loans to encourage unemployed persons to become entrepreneurs and meet part of the margin money requirement for availing bank loan. To be eligible for this scheme, an un-employed entrepreneur must have plans for establishing an industry or service business with a project cost of upto Rs.25 lakhs in the state of Maharashtra. In such cases, seed money assistance of 15% of project cost for all Entrepreneurs and seed money assistance of 20% of project cost for Entrepreneurs who are SC/ST or OBT/NT/VT/Handicapped is provided. The maximum amount of seed money provided is Rs.3.75 lakhs and the rate of interest on the seed money extended is 6% per annum with a holiday period of 3 years. To be eligible for availing seed capital under this scheme, the entrepreneur must be unemployed, domiciled in the state of Maharashtra for the last 15 years, between the age group of 18 to 50 years and passed atleast class VII.

30. Application form for seed capital • Path • https://di.maharashtra.gov.in/_layouts/15/doistaticsite/english/pdf/DIC_Seed%20Money%20Scheme_%20Application%20Form.pdf

31. District Industries Centre Loan Scheme • The District Industries Centre Loan Scheme provides financial assistance in the form of margin/seed money for the promotion of tiny industries in semi-urban and rural areas with a view to generate employment opportunities including self employment. Under this scheme, • Margin money is provided for those units where investment in plant and machinery does not exceed Rs.2 lakhs.  • All towns and rural areas having population of less than 1 lac are covered under the Scheme. • Assistance of upto 20% of the total investment or a maximum of Rs.40,000 is provided to Entrepreneurs belonging to the general category. • In case of entrepreneur belonging to scheduled caste & scheduled tribe, assistance of upto 30 % of total fixed capital investment or a maximum of Rs. 60000/- is provided. • The assistance provided in the form of loan must be repaid back to the State Government with a 4% interest rate within 7 years.

32. DISTRICT AWARD SCHEME. • In order to encourage entrepreneurs establishing small scale ventures and also to acknowledge them for their success and achievements, the State Government has started honouring such entrepreneurs with District Award Scheme at the district level. Proprietors / Partners / Directors of enterprises who have obtained EM registration with the concerned District Industries Centre at least three years earlier and in production for continuous two years are eligible for the award. The entrepreneur is selected by the District Advisory Committee at the district level. The factors and parameter upon which the entrepreneurs are selected for the award are pace of development, indigenousness, self-reliance, use of technology, location of the unit, quality control, export market, management, etc. Extra marks are awarded to select entrepreneurs from scheduled caste / scheduled tribe category. First award ₹ 15000/- and momentoes and second award ₹ 10000/- and momemtoes. • As per the provisions of GR No.SSIP-2013/C.No.202/IND-7, dated 27th January, 2015 the District Award function will be held on the occasion of “VishwakarmaJayanthi Day” and celebrated as Udyog Divas. On this day the function will be organised as follows: • The products of the entrepreneur will be displayed for exhibition and for sale. • Workshop and discussions will be organised. • As per the provisions of GR No. SSIP-2005/(8392)/IND-7, dated 18th September, 2006, noteworthy/significant performances of entrepreneurs from MSME sector will hence forth be felicitated every year on “Udyog Divas”.

33. Application form • Path • https://di.maharashtra.gov.in/_layouts/15/doistaticsite/english/pdf/DIC_%20Dist.%20Award%20Scheme_Application%20Form.pdf

34. SPECIAL POLICY FOR WOMEN ENTERPRENEURS. • The policy,was aimed at creating more women entrepreneurs. While Maharashtra is India’s most industrialised state, it has a poor women participation rate of 9 per cent in the MSME sector. The corresponding national average is around 13.8 per cent • Under the policy, cleared by the state cabinet, first-generation women entrepreneurs who set up micro, small or medium enterprises (MSMEs) in the state will be entitled to a capital subsidy of up to Rs 1 crore, depending on location of the unit. “ • There is another mandatory clause that 50 per cent of the employees in such units must be women for availing the benefits.

35. Special policy for women entrepreneurs • The policy for women also aims at giving a push to investments in industrially backward belts. Women setting up enterprises in Naxal-infested districts in Vidarbha would be entitled to a capital grant equal to 35 per cent of the unit’s capital cost, or up to Rs 1 crore. Those setting up units in other backward districts in Marathwada and Vidarbha will be offered a 25 per cent capital grant, or up to Rs 50 lakh. • While no incentives are offered for units in developed industrial belts such as the Mumbai Metropolitan Region and Pune, the state has made an exception for women enterprises, who would be entitled to 15 per cent capital grant or Rs 20 lakh. • While units already availing benefits under various central, state, and PSU-run schemes would also be eligible for the benefit, the government has capped the overall capital grant that could be availed to 50 per cent.

36. Special policy for women entrepreneurs • Women-run businesses would also be offered an additional concession of Rs 1-Rs 2 per unit in electricity tariff, based on location. • A 5 per cent interest subsidy in loans availed for running the unit would be offered. The government has further said • 50 per cent of the cost these enterprises spend on their share of the employees provident fund and similar labour welfare initiatives. • Financial assistance of up to Rs 1 crore will be offered for branding initiatives over these five years, while grants up to Rs 10 lakh would be provided towards cost of participating in various exhibitions to promote products. • The Women and Child Development department will set up a venture capital of Rs 50 crore for financing women entrepreneurs.

37. Role and OPPORTUNITES in practice • Wholesome approach. • Questionnaire • Before starting the work take CIBIL • Fees for interest subsidy should be agreed on agreement. • Start Charging FPF and FKF. www.cadevang.com Devang@cadevang.com

38. Slok of Geetaji • सर्वस्य चाहं हृदि सन्निविष्टोमत्त: स्मृतिर्ज्ञानमपोहनं च |वेदैश्च सर्वैरहमेव वेद्योवेदान्तकृद्वेदविदेव चाहम् || 15|| Bhagvad  Gita Chapter  9: Verse 22 I am seated in the hearts of all living beings, and from Me come memory, knowledge, as well as forgetfulness. I alone am to be known by all the Vedas, am the author of the Vedānt, and the knower of the meaning of the Vedas.

39. Devang and Associates Chartered Accountants Vadodara Mob : 9586555997, 9979702302, 0265-2412159 Email :Devang@cadevang.com Web : www.cadevang.com