Lok Sabha Question No. 1015 (UNSTARRED), answered on 2025-02-10
Subject: Simplification of Business Registration Process
Ministry: CORPORATE AFFAIRS
Asked by: Shri Parbhubhai Nagarbhai Vasava, Dr. Lata Wankhede

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 1015 ANSWERED ON MONDAY, FEBRUARY 10, 2025 MAGHA 21, 1946 (SAKA)

## SIMPLIFICATION OF BUSINESS REGISTRATION PROCESS

## QUESTION

1015. Shri Parbhubhai Nagarbhai Vasava:

Dr. Lata Wankhede

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a)  the  major  schemes  and  the  steps  being  taken  by  the  Government  to simplify the Business Registration Process to reform corporate sector and strengthen  the  economy  of  the  country  along  with  the  impact  of  these schemes on businesses;
- (b) the manner in which the Government is addressing the delays in obtaining business licenses and permits;
- (c) the measures implemented to streamline tax compliance for businesses;
- (d)  whether  the  Government  has  any  plan  to  reduce  regulatory  overlap between Central and State Agencies; and
- (e) the measures taken/being taken by the Government to improve access to
- credit for small businesses?

## ANSWER

THE MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND MINISTER  OF  STATE  IN  THE  MINISTRY  OF  ROAD,  TRANSPORT  AND HIGHWAYS

[ SHRI HARSH MALHOTRA]

- (a) & (b) Steps taken by the Government for simplification of the business registration process are as under:
- The Ministry of Corporate Affairs has deployed a Web Form called SPICe+ which  along  with  a  linked  form  called  AGILE  PRO-S  provides  eleven starting business related services through a single integrated web form.

- Central  Registration  Centre  (CRC)  was  established  on  22.01.2016  for name reservation and incorporation of companies to ensures uniformity, consistency, and faster processing of the  applications.
- The latest Business Reform Action Plan (BRAP 2024) edition introduces a  new  wave  of  reforms  like  Reducing  Compliance  Burden  (RCB), Decriminalization,  and  B-READY.  Industry  consultations  have  been pivotal in identifying areas for simplification, leading to the introduction of  BRAP  Plus  (BRAP+),  which  adds  70  new  reforms,  and  addresses specific  industry  challenges  to  improve  the  business  climate.  The updated BRAP 2024 now includes a total of 344 reforms ensuring the framework  remains  relevant  and  effective  in  the  evolving  business landscape.
- Reducing Compliance Burden (RCB): The RCB initiative has resulted in over 42,000 compliance reductions nationwide.
- As per Rule 12 of Companies (Incorporation) Rules, 2014, the companies do not have to obtain approvals/permits from sectoral regulators for the purpose  of  incorporation.  Only  a  declaration  that  necessary  approval shall be obtained at the time of commencement of business is required to be attached.
- (c)  The  Government  has  taken  number  of  measures  to  streamline  tax compliance for businesses of which some of the significant ones are as under:

## GST Compliance Measures:

- Stricter Return Filing:  To enforce timely and accurate filing of Goods and Services Tax (GST) returns. This includes restrictions on filing FORM GSTR-1  (outward  supply  details)  if  the  taxpayer  has  not  filed  FORM GSTR-3B
- Sequential Filing: The system now mandates sequential filing of FORM GSTR-I before filing FORM GSTR-3B. This aims to ensure accuracy in reporting.
- Input Tax Credit (ITC) Limitations: Amendments have been introduced to  restrict  Input  Tax  Credit  (ITC)  availment  to  the  extent  that  the supplier has declared the details of the supply in FORM GSTR-1 and that this information is reflected in the taxpayer's FORM GSTR-2B.
- System-Based Intimations: To encourage self-compliance, the system will  generate an automated notification to taxpayers when there is a difference in liability reported between FORM GSTR-1 and FORM GSTR3B, giving them an opportunity to rectify the discrepancy or provide an explanation.

## Customs Streamlining:

- Digital Initiatives: The document emphasizes digital transformation in customs  procedures  over  the  past  five  years,  including  "Faceless Assessment" and paperless procedures such as web-based registration of  goods,  automated  clearance  of  certain  goods  and  risk  based inspections.
- Preferential  Duty  Rates:  Introduction  of  Customs  (Administration  of Rules of Origin under Trade Agreements) Rules allows importers to claim preferential duty rates effectively.
- Exchange  Rate  Automation:  Automation  of  exchange  rates  reduces manual processes.
- (d) Government has taken measures to address regulatory overlaps between Central  and  State  governments  through  the  Business  Reform  Action  Plan (BRAP)  and  Regulatory  Compliance  portal.    The  portal  helps  to  streamline regulatory processes across states and union territories.
- (e) The Government has taken several initiatives to support Micro, Small, and Medium Enterprises (MSMEs) to improve the flow of credit to small businesses. Some of the important initiatives  are as follows:
- Multiple  Schemes  for  Funding:  The  Government  has  implemented various  schemes  like  the  Prime  Minister's  Employment  Generation Programme  (PMEGP),  Special  Credit  Linked  Capital  Subsidy  Scheme (SCLCSS),  and  the  Credit  Guarantee  Scheme  for  MSEs  to  facilitate access to finance. These programs offer subsidies, collateral-free loans, and credit guarantees to encourage lending to MSMEs.
- Credit  Guarantee  Enhancements:  The  Credit  Guarantee  Scheme  has been  boosted  with  significant  infusions  of  funds  to  enable  additional credit flow at reduced costs. Moreover, the scheme now offers enhanced guarantee coverage for women-owned enterprises.
- Mudra Loans: The limit for Mudra Loans has been increased from Rs. 10 lakh  to  Rs.  20  lakh  to  provide  greater  financial  assistance  to  microenterprises.
- Udyam Assist Platform (UAP): The UAP was launched to bring informal micro-enterprises into the formal sector, enabling them to access the benefits of Priority Sector Lending.
- Trade Receivables Discounting System (TReDS): TReDS is an electronic platform to facilitate the discounting of MSME trade receivables, thereby addressing the issue of delayed payments. The threshold for buyers to onboard the TReDS platform has been reduced from Rs. 500 crores to Rs. 250 crores.
- Collateral  Requirements:  Scheduled  Commercial  Banks(SCBs)  have been mandated  not  to  require  collateral  for  loans  up  to  ₹10  lakh extended to MSE sector units.

- Streamlining  Credit  Flow:  Banks  are  advised  to  adjust  their  lending policies  to  the  MSME  sector  to  allow  for  additional  working  capital limits,  mid-term  reviews  of  regular  working  capital  limits,  and  set timelines  for  credit  decisions  to  ensure  timely  and  adequate  credit availability.
- Timelines  for  Credit  Decisions:  For  loans  up  to  ₹25  lakh  to  MSE borrowers, the SCBs have been advised that timeline for credit decisions should not exceed 14 working days.
- Priority Sector Lending Status for Factoring Transactions: 'With recourse'  factoring  transactions  by  banks,  where  the  assignor  is  an MSME,  are  eligible  for  priority  sector  classification  under  the  MSME category. Factoring transactions through TReDS also qualify for priority sector classification.
- Interest  Rates  on  Loans  to  MSMEs:  Banks  have  been  advised  to  link loans to Micro and Small Enterprises to an external benchmark since October 1, 2019. Loans to Medium Enterprises have also been linked to external benchmarks since April 1, 2020. The reset clause for loans has been reduced to three months. Under the external benchmark system, Banks have been advised to offer existing borrowers a switchover option to the external benchmark-based interest regime.
- Regulatory  Retail  Portfolio:  The  threshold  for  the  Regulatory  Retail Portfolio for a single counterparty was increased from ₹5 crore to ₹7.5 crore. Banks may assign a lower risk weight of 75%  exposure to MSME entities with the counterparty exposure up to ₹7.50 crore.
- CoLending by Banks and NBFCs: The 'Co -Lending Model' allows banks and NBFCs to collaborate to improve credit flow to underserved sectors, including MSMEs.
- Regulatory Sandbox (RS): The RBI has opened a Regulatory Sandbox for MSME  lending  to spur innovations through technology and data analytics.
- Account  Aggregator  (AA)  Framework:  The  RBI  has  facilitated  the  AA framework to enable secure and efficient sharing of financial information.  This  includes  the  onboarding  of  GSTN  as  a  Financial Information Provider (FIP) for MSME lending.

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