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Strategic Finance for MSMEs: Insights from the IamSMEofIndia Seminar
Indeed, staying updated with the latest fiscal policies is the cornerstone of a successful manufacturing business. On March 24, 2022, during a high-impact seminar organized by IamSMEofIndia, I had the privilege of sharing strategic ideas on Taxation and Finance tailored specifically for the Indian MSME sector.
1. Unlocking the Power of Section 80JJAA -Taxation and Finance Strategies for MSME
Initially, many manufacturers overlook the significant savings available through Section 80JJAA of the Income Tax Act. Specifically, this section provides a deduction of 30% of additional employee cost for three years.
Key takeaway: If you are a manufacturing MSME hiring new staff, this incentive can substantially reduce your tax liability. Admittedly, proper documentation of the “additional employee” status is critical to claim this benefit successfully.
2. Tax Advantages of a New Pvt Ltd Company – Taxation and Finance Strategies for MSME
Furthermore, for those looking to expand or start a “Make in India” initiative, the tax landscape has never been more favorable. Notably, new manufacturing companies incorporated on or after October 1, 2019, can opt for a significantly lower base tax rate (15% plus surcharge and cess).
By choosing the right corporate structure, MSMEs can:
Lower Tax Outgo: Retain more profits for reinvestment into machinery and technology.
Global Competitiveness: Align with global tax standards to attract international partners.
Financial Discipline: Transition toward a system-driven management model.
3. Empowering MSME-DI and the “Make in India” Mission
Ultimately, the goal of our session was to align local manufacturing strengths with national objectives. In partnership with MSME-DI (Micro, Small & Medium Enterprises Development Institute), we discussed how financial discipline and strategic tax planning act as the digital engine for growth.
Proudly, as a member of IamSMEofIndia, we continue to provide a platform where small and medium enterprises can learn, network, and grow 10x by adopting top-notch financial technologies.
Conclusion: Start Implementing Today
To conclude, the ideas shared in these 45 minutes are designed to be actionable. Whether you are a seasoned manufacturer or a new startup, the path to profitability is paved with better financial governance. Indeed, as the landscape of Indian manufacturing evolves, staying compliant and informed is no longer a choice—it is a competitive advantage.
Did you know ? You can help your staff “age” with grace… give them safety of regular Pension in Private sector too. ( at No cost to you)
You run a private sector company. + Your staff does not get any pension, after they retire…..
💐
What if their kids don’t take care of them, when they get “Old age”.
🤔
How about giving them the net of pension safety ?
Did you know ? You and they can Save More Income tax than you currently do ? On the “additional Rs 50,000” u/s 80CCD(2).
Many Clients of Finsys have already started this Innovative Scheme of Govt of India, and getting good tax benefits for self and other staff.
This is called NPS
One can save tax in three ways via NPS. First, NPS investments are eligible for deduction under Section 80C. ( LIC, School Fee, Housing Loan instalment etc)
If one has already exhausted the Rs 1.5 lakh ceiling under Section 80C, one can claim an additional deduction of up to Rs 50,000 under Section 80CCD(1b). Lastly, up to 10% of the basic salary put in the NPS can be claimed as deduction under Section 80CCD(2).
Even, those very close to retirement, can claim more tax benefits if their company offers the NPS benefit. Under Section 80CCD(2), up to 10% of the basic salary put in the NPS by the company on behalf of the employee is tax free.
Point to note: The entire amount withdrawn will not be tax free. Though there is no reference to this in the tax laws, one can reasonably assume that 60% of the withdrawn amount will be tax free while the balance 40% will be taxed at the normal rate.
This is actually an intelligent, simple and user friendly deferment of tax
So, instead of paying a big 30% tax now
you can deposit now, Save tax.
on the top of it, earn 5% p.a. to 20% p.a. cumulatively on that …. based on your investment profile ( Shares vs Private Debt vs Govt Debt )
You may pay the tax (if any) when you retire
Of course , Old age income ke liye ke liye saving to karni hi Chahiye
Note : By that time the tax exemption limits might have reached Rs 20 lakh or maybe Rs 30 lakhs…. and all your NPS pension money might be tax free after all Section 80CCD(2) NPS Tax Benefits 2026
National Pension System (NPS) – Section 80CCD(2) NPS Tax Benefits 2026
This scheme has been introduced by Pension Fund Regulatory and Development Authority (PFRDA) to promote old age income security to all citizens of India including workers of the unorganized sector.
NPS is a voluntary, defined contributions retirement savings scheme & is administered / regulated by PFRDA. It is operated with the participation of Central Record Keeping Agency (CRA) – NSDL e-Governance Infrastructure Limited & KFin Technologies Private Limited.
Resident or Non- Resident Indian between age group of 18 to 70 years; salaried or self employed can join this scheme.
The people within age group 60-70 can also join/re-join NPS.
Account can be opened by Individual and Corporate.
Every individual subscriber will be issued a Permanent Retirement Account Number (PRAN) card having 12 digit unique numbers.
Under NPS account, two sub-accounts – Tier I & II are provided. Tier I account is mandatory and the subscriber has option to opt for Tier II account opening and operation. Tier II account can be opened only when Tier I account exists.
Account can be opened Online and Offline through authorized branches.
Flexible: The employer can have the option to select the investment choice for all its employees or may give the option to the employees. The employees have the option to choose from an assortment of asset classes (Equity, Corporate Debt, Government Securities and Alternate Investment Fund) and have the freedom to choose one of the registered Pension Fund.
Online Access– 24 X 7 X 365: Riding on a highly efficient technological platform NPS provides online access to accounts to the subscribers.
Regulated: The funds are managed by professional Pension Funds regulated and actively monitored by PFRDA, the Regulator set up through an Act of Parliament.
Portable: The NPS account (PRAN) can be operated from anywhere in the country even if one changes the job location or the job itself.
Tax Incentives: Tax benefits are available on both employee and employer contributions.
Salient features of these sub-accounts are mentioned below :
Tier-I account: A retirement and pension account which can be withdrawn only upon meeting the exit conditions prescribed under NPS. The applicant shall contribute his/her savings for retirement into this account. This is the retirement account and applicant can claim tax benefits against the contributions made subject to the Income Tax rules in force. Initial amount while opening NPS account is Rs. 500/- with Minimum Yearly Contribution is Rs. 1000/-. There is no upper limit for the maximum contribution.
Tier-II account: This is a voluntary investment facility. The applicants are free to withdraw his/her savings from this account whenever he/she wishes. This is not a retirement account and applicant can’t claim any tax benefits against contributions to this account. Minimum amount per contribution is Rs 250/- & no upper limit for the maximum contribution.
Funds will be invested in 4 different classes:Equity, Government Securities, Corporate Debts & Alternate Investment Fund (A). The investor has 2 Investment options for managing the fund: Auto and Active.
Active Choice: – Under this option, subscribers are free to allocate the investment across the asset class provided E/C/G/A. Subscriber decides allocation pattern amongst E, C, G and A as mentioned below.
Asset Class
Cap on Investment
Equity (E)
75% (Upto age 50)
Corporate Bonds (C)
100%
Government Securities (G)
100%
Alternate Investment Fund (A)
5%
Active choice – This is the default option under NPS and wherein the management of investment of fund is done automatically based on the age profile of the subscriber.
Age (In Years)
Asset Class (E)
Asset Class (C)
Asset Class (G)
Upto 35
50%
30%
20%
36
48%
29%
23%
37
46%
28%
26%
55 and Above
10%
10%
80%
Type of Auto Life Cycle Fund LC50/ LC25/ LC 75:
LC 75– It is the Life cycle fund where the Cap to Equity investments is 75% of the total asset (Aggressive)
LC 25– It is the Life cycle fund where the Cap to Equity investments is 25% of the total asset (Conservative)
LC 50– It is the Life cycle fund where the Cap to Equity investments is 50% of the total asset (Normal/ Moderate)
National Pension System (NPS) is a retirement benefit Scheme introduced by the Government of India to facilitate a regular income post retirement to all the subscribers. PFRDA (Pension Fund Regulatory and Development Authority) is the governing body for NPS.
National Pension System (NPS) is based on unique Permanent Retirement Account Number (PRAN) which is allotted to every subscriber. In order to encourage savings, the Government of India has made the scheme reassuring from security point of view and has offered some attractive benefits for. NPS account holders.
An NPS Account offers the following benefits:
Regulated: NPS is regulated by PFRDA (Pension fund regulator under Ministry of Finance, Govt. of India.) which ensures transparent norms governing the activities. NPS Trust ensures adherence to the guidelines through regular monitoring.
Voluntary: It is a voluntary scheme for all citizens of India. You can invest any amount in your NPS account and at anytime.
Flexibility: You have the flexibility to select or change the POP (Point of Presence), investment pattern and fund manager. This ensures that you can optimize returns as per your comfort with various asset class (Equity, Corporate Bonds, Government Securities and Alternate Assets) and fund managers.
Economical : NPS is one of the lowest cost investment products available.
Portability: NPS account or PRAN will remain same irrespective of change in employment, city or state.
Superannuation Fund transfer: NPS account holders can transfer their Superannuation funds to their NPS account without any tax implication. (Post approval from relevant authorities)
Tax Benefits: NPS offers triple tax benefits which are as follows:
Tax benefits for Salaried Individual
Tax Benefits for Self Employed Individual
You can claim tax exemption upto Rs. 50,000 under section 80CCD (1B). This benefit is over an above limit of Rs. 1,50,000 under section 80C.
You can claim tax exemption upto Rs. 50,000 under section 80CCD (1B). This benefit is over an above limit of Rs. 1,50,000 under section 80C.
You may invest upto 10% of your basic salary + dearness allowance and claim tax exemption on the invested amount under section 80CCD(1). This tax exemption is subject to a limit of Rs. 1,50,000 under section 80C of Income Tax Act, 1961.
You may invest upto 20% of your gross annual income and claim tax exemption on the invested amount under section 80CCD(1). This tax exemption is subject to a limit of Rs. 1,50,000 under section 80C of Income Tax Act, 1961.
*Employer contribution benefit is capped upto 7.5 lakhs for NPS, PF & Superannuation
National Pension System (NPS) is a defined contribution pension system introduced by the Government of India as a part of Pension Sector reforms, with an objective to provide social security to all citizens of India. It is administered and regulated by PFRDA. Section 80CCD(2) NPS Tax Benefits 2026
Features of NPS scheme – Section 80CCD(2) NPS Tax Benefits 2026
Tier II – Investment account (Optional A/C – No tax benefit but corpus is withdrawable anytime) Rs. 50,000/- in a Financial Year.
Minimum Contribution during A/C opening is Rs.500 for Tier I
Minimum Contribution during A/C opening is Rs.1,000 for Tier II
Minimum total contribution in a year Rs.1,000 (Min. amount per contribution Rs.500) for Tier I
Minimum total contribution in a year N.A. (Min. amount per contribution Rs.250) for Tier II
A very low-cost product with Fund Management Charges of 0.01%.
Attractive market linked returns
Flexibility of Investments– Subscriber may select a Pension Fund Manager (PFM) of their choice. Subscriber is allowed to change PFM once during a Financial Year. Subscribers may also define their asset allocation, which may be changed twice in a given Financial Year.
Portable across jobs and geographies.
24 X 7 X 365 through Web & Mobile App of Central Recordkeeping Agency (CRA)
One-time shift to NPS- Existing corpus under Superannuation can one-time be transferred to NPS without any Tax Incidence
This is one of the rare Deductions that is available in the “New Regime of Income tax also“…
Employer Share can get Income tax deduction u/s 80CCD(2)
Revolutionizing Finance: Automated Accounts Vouchers via QR Codes
Indeed, manual data entry in the accounts department is one of the biggest bottlenecks in manufacturing today. Recently, the Finsys development team introduced a “Game-Changer” solution. Specifically, we have enabled the creation of a Purchase Voucher by scanning a QR code. This technology bridge between the store and accounts ensures that hours of bill booking are reduced to mere seconds.
How the QR-Based Voucher System Works
Initially, when materials arrive at the factory gate, the store team generates an MRR (Material Receipt Report) or SRB (Store Receipt Bill) slip. Notably, Finsys ERP automatically prints a unique QR code on this document.
The Accounts Workflow is now simplified:
Select Voucher Type: The accountant opens the purchase voucher screen in Finsys ERP.
Scan to Populate: Instead of typing item codes or quantities, the user simply scans the QR code from the store slip.
Instant Data Entry:As a result, the system pulls all relevant data including the Purchase Order (PO) number, item rates, approved quantities, and applicable GST.
Eliminating Errors and Discrepancies – Accounts Voucher using QR code
Admittedly, manual entry often leads to mismatches between the PO rate and the final bill. Fortunately, with QR-based automation, the system ensures 100% data integrity.
The system automatically verifies the following:
PO Values: It cross-references the agreed rate in the Purchase Order.
Quantity Pass: Only the quantities approved by the Quality Control (QC) team are pulled into the voucher.
Tax Calculations: It ensures the correct GST application based on the HSN code and vendor location.
Strategic Benefits for the Finance Department – Accounts Voucher using QR code
Ultimately, this “One-Click” voucher creation is about more than just speed. Furthermore, it allows your senior accountants to focus on financial analysis rather than clerical data entry.
Key Advantages include:
Massive Speed Gains: Turn “Hours into Minutes” for high-volume bill booking.
Digital Audit Trail: Every voucher is linked directly to the store receipt and PO, providing a perfect audit trail.
Real-Time Payables: Management can see accurate vendor payables and stock values instantly.
Conclusion: Digitalizing Your Top Floor
To conclude, Finsys ERP continues to revolutionize the manufacturing sector by integrating physical movements with digital accounting. By adopting QR and Barcode scanners for accounts, you ensure that your financial data is as agile as your production line.
Indeed, the plastic manufacturing sector in South India is embracing a new era of digitalization. Recently, Finsys ERP was awarded a significant contract to implement its specialized manufacturing software at a leading Blow Moulding plant in Karnataka.
Initially, this partnership marks a strategic step for the Karnataka-based company to streamline its high-volume production using the robust, Oracle-based Finsys platform.
The Art of Blow Moulding: Why Specialized ERP is Essential
Admittedly, the blow moulding process is unique. It is specifically designed to manufacture high-volume, one-piece hollow objects like bottles and containers with uniform, thin walls. Consequently, managing the complexities of this process requires an ERP that understands the “Shop Floor First” logic.
How Finsys ERP Powers Blow Moulding Efficiency:
Shot Weight & Parison Control: The cost to produce a blow-moulded product is based on the weight of the plastic shot used. Finsys tracks this at a granular level.
Machine-Wise OEE: Monitor machine performance and down-time reasons specifically for blow moulding cycles.
Regrind & Scrap Tracking: Efficiently manage polymer scrap and “lumps” to ensure zero material leakage.
Tooling & Mould Lifecycle: Track the life of your moulds to ensure preventive maintenance before quality dips.
Strategic Advantages of Blow Moulding
Furthermore, it is important for academic and industrial learners to note the distinct advantages of this manufacturing method:
Lower Production Costs: Blow moulding costs are typically lower than injection moulding.
Economical Machinery: Initial capital expenditure on blow moulding machinery is often more accessible.
Complex Shapes: The “one-piece construction” eliminates the need for connecting part halves, allowing for shapes that injection moulding simply cannot achieve.
Why Leading Plastic Manufacturers Choose Finsys – ERP for Blow Moulding Plant Karnataka
Ultimately, Finsys ERP has been a trusted partner for the plastic and engineering sectors since 1992. Notably, with over 900 successful installations, our software is tailored to manage everything from Purchase and Planning (MRP) to Quality Control and GST-compliant Accounting.
By choosing Finsys, our new Karnataka-based partner will benefit from:
Ready-to-Use Vertical Solutions: No need for expensive, time-consuming customizations.
Mobile Connectivity: Access production reports and approve POs directly from Android and iOS devices.
Batch-wise Traceability: Full “Gate-to-Gate” tracking of raw materials to finished products.
Conclusion: A Growing “Finsys Parivaar” in Karnataka
To conclude, we congratulate our team and our new partner in Karnataka. Indeed, this project reinforces Finsys’s position as a leader in specialized ERP software for the plastic industry. Together, we are making “Made in India” more systematic and globally competitive.
This is actually an intelligent, simple and user friendly deferment of tax
Note : By that time the tax exemption limits might have reached Rs 20 lakh or maybe Rs 30 lakhs…. and all your NPS pension money might be tax free after all Section 80CCD(2) NPS Tax Benefits 2026
