Do you run a small or medium business in India and often find it hard to access funding, keep up with regulations, or invest in new technology? If yes, the Finance Act 2024 might be the turning point you’ve been waiting for.
India’s latest Finance Act isn’t just another legislative update—it’s a strong step forward toward strengthening the MSME sector. While MSMEs form the backbone of India’s economy, they’ve long struggled with structural and financial constraints. This Act aims to change that.
Let’s break down what the Finance Act 2024 means for you, what changes it introduces, and how it can truly empower Indian MSMEs to thrive.
What is the Finance Act 2024?
The Finance Act 2024, enacted on July 23, introduces a host of reforms aimed at boosting India’s Micro, Small, and Medium Enterprises (MSMEs). Rather than just a fiscal update, it’s a policy reorientation that addresses long-standing challenges faced by these businesses, from limited financing options to outdated technologies.
The new law introduces tax breaks, easier access to loans, simplified compliance, and incentives for adopting greener, smarter practices
What does it mean for MSMEs?
At its core, the Act acknowledges MSMEs as powerful engines of economic development and job creation. Whether you’re a local manufacturer, service provider, or an early-stage startup—these provisions could directly impact your business operations, sustainability, and long-term growth.
Key provisions of the Finance Act 2024
1. Enhanced Tax Incentives
Increased Deductions: MSMEs can now deduct up to 30% of their profits from taxable income, up from the previous 20%.
Extended Tax Holiday: Manufacturing MSMEs will enjoy a 7-year tax holiday instead of 5, giving them more breathing space during the formative years.
2. Facilitated Access to Credit
Interest Subsidy: Loans up to ₹50 lakhs now come with subsidized interest rates to reduce borrowing costs.
Expanded Credit Guarantee: The coverage under CGTMSE rises from ₹2 crore to ₹5 crore, encouraging banks to lend more freely to small enterprises.
3. Support for Technology Upgradation
Bigger R&D Grants: R&D grants now cover 15% (up from 10%) of eligible expenses.
Digital Tool Incentives: Tax credits for MSMEs investing in automation, digital solutions, and tech upgrades.
4. Simplified Compliance Requirements
Streamlined Reporting: MSMEs earning under ₹1 crore annually now have reduced reporting frequency and simplified documentation norms.
Single-Window Clearance: A digital one-stop portal for MSME approvals and registration will cut down bureaucratic delays.
5. Boosting Export Competitiveness
Export Credit Insurance: MSMEs now get better protection from trade risks like payment defaults and global instability.
Expanded Duty Drawback Scheme: More product categories are eligible, improving cost-efficiency for exporters.
6. Encouraging Green Practices
Green Loans: If you're adopting eco-friendly technologies, green loans with favorable terms are available.
Energy Efficiency Grants: Financial support for those improving energy use—whether through solar power or optimized manufacturing systems.
How these changes empower MSMEs
With tax breaks, easier loans, and fewer regulatory headaches, MSMEs can now:
Reinvest profits into growth
Upgrade their tech and infrastructure
Tap into global markets with confidence
Operate more sustainably
Save time and money through easier compliance
Best initiatives for growth and support
If you're looking to make the most of these reforms, keep an eye on:
CGTMSE Portal – For enhanced credit guarantee applications
Udyam Registration – To avail tax benefits and compliance relaxation
MSME Champions Portal – For guidance, mentorship, and grievance redressal
SIDBI Green Loan Schemes – For funding sustainable transitions
Expert tips to navigate the new policies
Stay Updated: Follow notifications from the Ministry of MSME and local chambers of commerce.
Consult Financial Advisors: Especially when navigating tax changes and credit schemes.
Go Digital: With incentives now aligned, this is the best time to digitize your operations.
Train Your Team: Ensure staff is equipped to handle new compliance and reporting standards.
