MSMEs Current Affairs
Parliament has passed Insolvency and Bankruptcy Code (Amendment) Bill, 2018 to bring relief to home buyers and Micro, Small and Medium Enterprises (MSMEs). The Bill replaces ordinance promulgated in this regard and amends Insolvency and Bankruptcy Code, 2016.
Key Features of Bill
The Bill recognises home buyers as financial creditors in the real estate project and giving them due representation in the Committee of Creditors (CoC), thus providing significant relief to home buyers. It will allow home buyers to invoke Section 7 of IBC, 2016 against errant developers.
This will allow financial creditors to file application seeking insolvency resolution process. As financial creditors, home buyers will be able to participate in decision-making process when developers are declared bankrupt under IBC, 2016. The bill also proposes to reduce minimum voting threshold for Committee of Creditors (CoC) to 66%, from 75% for key decisions.
Besides, the Bill also benefits Micro, Small and Medium Enterprises (MSME) sector from IBC. It allows promoter of MSME to bid for their own enterprise undergoing the insolvency resolution process as long as they are not wilful defaulters.
The IBC, 2016 provides time-bound process to resolution of insolvency among companies and individuals. Insolvency is situation where individual or company is unable to repay their outstanding debt. Government in November 2017 had set up Insolvency Law Committee to review IBC and identify issues in its implementation and suggest changes. The Committee had made several recommendations such as exempting MSMEs from certain provisions of IBC, treating allottees under real estate project as financial creditors, reducing voting thresholds of committee of creditors (CoC), among others. Subsequently, President had promulgated Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 in June 2018 after approval of Central Government.
The GST (Good and Services Tax) council in its 29th meeting held in national capital New Delhi has approved cash incentives to promote Digital transactions. The GST Council meeting was chaired by Interim Finance Minister Piyush Goyal. It has announced 20% cashback for digital transactions paid on business-to-consumer transactions using RuPay and BHIM platforms, subject to cap of Rs 100 per transaction.
Pilot Programme to promote digital transactions
GST Council also decided to start pilot programme to promote digital transactions. The pilot programme will be implemented in any state on voluntarily basis. Maharashtra, Gujarat and Bihar will be the first few states to incentivise digital payments. Incentivising of digital payments would help in maintaining a better database by government, thus formalization of the economy.
GST Council also focused on concerns and suggestions of Micro, Small and Medium Enterprises (MSMEs). It also formed Group of Ministers (GoM) headed by Minister of State (MoS) for Finance Shiv Pratap Shukla to address various issues faced by MSMEs. It will examine all proposals regarding tax relief for MSME and make recommendations to GST Council. The group will submit its report in the next six weeks.
GST Council has been established as per Article 279A of the Constitution. It is joint forum of the Centre and the States to make recommendations on important issues related to GST. Union Finance Minister is Chairperson of the council. Besides, Union Minister of State (MoS) in-charge of Revenue of finance and Minister In-charge of taxation or finance or any other Minister nominated by each State Government are its Members.