New SME Policy: Government Offers Rs 10 Million Unsecured Loan


The federal government announced the Small and Medium-Sized Enterprises (SMEs) Policy 2021-25 which would allow small businesses to borrow up to Rs 10 million under Assan financing programs without placing their assets as collateral.

The government also announced new turnover tax rates for small and medium-sized businesses in the country.

The policy was announced by Federal Minister of Industry Khusro Bakhtiar who was joined at the press conference by Federal Minister of Information Fawad Chauhdry.

Bakhtiar said loans of up to Rs 10 million will be given without any collateral for the creation of 30,000 new businesses.

He said 78% of jobs are in the SME sector, but under old policies, SMEs were required to obtain many No Objection Certificates (NOCs) to start a business. The new policy has divided SMEs into three levels and there is no CNP requirement for small businesses, the minister said.

Bakhtiar said the government has also introduced a self-declaration system. “There will only be 2% inspection of self-reported businesses and that would end corruption, intimidation and rigging,” he said.

In addition, the government will offer Rs23 billion in loans to the million manufacturing units operating in the country without any collateral requirement.

He said 4,200 acres of land had been allocated to SMEs across the country.

Women will benefit from a 25% tax exemption for small businesses, the minister said.

Turnover tax rate

Bakhtiar said the turnover tax rate has been set at 1.25% but the tax rate for annual turnover below Rs 100 million will be 0.25%.

He said that a fixed tax of 0.5% would be applicable on the annual turnover of Rs100 million to Rs250 million. There is a separate option for income tax and 7.5% income tax would be applicable on turnover of 100 million rupees, the minister said.


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