Raising the limit for arrests and prosecution in tax evasion cases from Rs 5 lakh to Rs 20 lakh is likely to help the big sharks among tax evaders more than small and medium enterprises (SME), though Indian Customs claims this is meant to save SMEs from harassment. But SME sources say most of them don’t bring such high-value goods and if they do so, it is against export obligations. It might be more helpful if the government implements some other SME demands that are long overdue.
For instance, they have sought upgrading of the SME limit from the existing Rs 10 lakh, but this bill is gathering dust in Parliament. Engineering SMEs, that contribute 20 per cent to overall exports (which has now been reduced due to the global slowdown and Chinese competition), have sought a technology upgradation fund for two years, but besides verbal assurances, nothing has happened.
The interest subvention proposal sent a year ago by the commerce minister, though cleared by the Cabinet, appears to have been rejected by the PMO. The reasoning is they get low interest rates and are helped by rupee depreciation. This may be true overall, but SMEs barely get loans from banks. The government has, meanwhile, also come out with a draft paper proposing a stable and transparent tax and duty structure for the capital goods sector to help the “Make in India” programme that has been languishing for some time.
