Lok Sabha Question No. 1612 (UNSTARRED), answered on 2025-03-10
Subject: Launch of Mutual Credit Guarantee Scheme for MSMEs
Ministry: FINANCE
Asked by: Shri Balabhadra Majhi, Shri Trivendra Singh Rawat, Shri Damodar Agrawal, Shri Khagen Murmu, Shri Pradeep Kumar Singh, Shri Arun Govil, Shri Anurag Sharma, Shri Kota Srinivasa Poojary, Shri Yogender Chandolia

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 1612

ANSWERED ON MONDAY, 10 TH  MARCH, 2025/PHALGUNA 19, 1946 (SAKA)

## LAUNCH OF MUTUAL CREDIT GUARANTEE SCHEME FOR MSMEs

## 1612.   Shri Anurag Sharma:

Shri Damodar Agrawal:

Shri Trivendra Singh Rawat:

Shri Arun Govil:

Shri Pradeep Kumar Singh:

Shri Kota Srinivasa Poojary:

Shri Yogender Chandolia:

Shri Balabhadra Majhi:

Shri Khagen Murmu:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  proposes  to  introduce  Mutual  Credit  Guarantee  Scheme  for MSMEs;
- (b) if so, the details of the eligibility criteria and implementation mechanism for the scheme;
- (c) the details of the measures taken by the Government to check the misuse or fraudulent claims under the MSME Mutual Credit Guarantee Scheme;
- (d) whether the Government is likely to introduce specific simplification in the new Income Tax Act to reduce the compliance burden for small businesses and individual taxpayers; and (e) if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a):  Mutual Credit Guarantee Scheme for MSMEs (MCGS- MSME) has been launched for providing 60% guarantee coverage by National Credit Guarantee Trustee Company Limited

(NCGTC)  to  Member  Lending  Institutions  (MLIs)  for  credit  facility  upto  Rs.100  crore sanctioned to eligible MSMEs under MCGS-MSME for purchase of equipment / machinery.

(b): The eligibility criteria for borrowers under Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) is as below:

- i. It should be an MSME with valid Udyam Registration Number;
- ii. It should not be an NPA with any lender;
- iii. Minimum cost of equipment /machinery is 75% of project cost;

The Scheme is being implemented by National Credit Guarantee Trustee Company Limited (NCGTC), a wholly owned company of Department of Financial Services, Ministry of Finance, Government of India. The MLI shall sanction loans to eligible borrowers and then submit details of the loan account on the portal of NCGTC along with payment of fees, whereupon the MLI shall get a confirmation of loan being guaranteed under the Scheme.

(c): Validation shall be put by NCGTC to enable only the eligible borrowers under the Scheme. Prior  to  settlement,  claims  shall  be  verified  by  the  NCGTC  to  ensure  compliance  to  the guidelines and that only the eligible get the desired support.

(d)  and  (e):  Various  measures  pertaining  to  direct  taxes  as  discussed  below  have  been undertaken recently  by  the  government  for  reducing  the  compliance  burden  for  smaller businesses and individual tax payers:-

- i. Provisions for presumptive taxation for businesses under Section 44 AD and Section 44 AE of the Income-tax Act, 1961 (the Act).
- ii. Provisions for tax audit for businesses under Section 44 AB of the Act.
- iii. Provision  for  reduction  in  compliance  burden  by  omission  of  TCS  on  sale  of specified goods under Section 206C of the Act.
- iv. Rationalization of tax deducted at source (TDS) rates under various provisions of the Act.
- v. Simplification of the Income-tax Act is proposed.

The new Income-tax Bill 2025 proposes to make the direct tax provisions concise, lucid, easy to read and understand. Redundant provisions have been eliminated and the drafting style of the new Bill is straightforward and clear.

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