Highlights
of the mega stimulus package: Resurging India (higher take-home pay, TDS cut by 25%, easier
loans for MSMEs)
Union
Finance Minister Nirmala Sitharaman on Wednesday presented the details of the Rs 20 lakh-crore economic stimulus package,
announced by Prime Minister Narendra Modi on Tuesday, to help businesses
recover from the debilitating impact of the coronavirus pandemic, to boost
growth and to help build a self-reliant (aatma-nirbhar) India.
—In
the first of the series of press briefings planned to announce how the stimulus
package would be disbursed, Finance Minister Sitharaman reiterated that the
package was based on five economic pillars — economy, infrastructure,
tech-driven systems, demography and demand.
Sitharaman
announced tax reforms as part of the first phase of the stimulus package to
revive the economy. The government has cut TDS (tax deduction at source) rates
by 25 per cent for non-salaried section.
In
a bid to provide support to the struggling micro, small and medium enterprises
(MSME) sector, the government announced collateral-free automatic loans worth
Rs 3 lakh crore.
It
also changed the definition of MSMEs by revising upwards the investment limit,
and bringing in an additional criteria of turnover size of the company.
Further, global tenders for government procurement of up to Rs 200 crore will
no longer be allowed.
Following
are the highlights of the Wednesday's announcements by the finance minister:
Date
of filing Income Tax returns for FY 19-20 extended"Date of filing
Income Tax returns for FY 19-20 extended
Direct
Tax Measures announced
All
pending refunds to charitable trusts and non-corporate businesses &
professions including proprietorship, partnership, LLP and Co-operatives shall
be issued immediately.
Due
date of all income-tax return for FY 2019-20 will be extended from 31st July,
2020 & 31st October, 2020 to 30th November, 2020 and Tax audit from 30th
September, 2020 to 31st October, 2020
Date
of assessments getting barred on 30th September, 2020 extended to 31st
December, 2020 and those getting barred on 31st March, 2021 will be extended to
30th September, 2021.
Period
of Vivad se Vishwas Scheme for making payment without additional amount will be
extended to 31st
EPF
relief"EPF relief
In
order to provide more take home salary for employees and to give relief
to employers in payment of Provident Fund, EPF contribution is being reduced
for businesses and workers for 3 months, amounting to a liquidity support of Rs
6,750 crores.
EPF
relief for all establishments with Rs 2,500 crore liquidity support. The
Government of India will provide both employer and employee 12% contributions.
Extending
support for another three months from March-May 2020 to June-August 2020 as
well. Nearly 3.6 lakh establishments benefit, 72.22 lakh employees will
benefit.
This
support will be extended by another three months to salary months of June, July
and August 2020
This
will provide liquidity relief of Rs 2500 cr to 3.67 lakh establishments and for
72.22 lakh employees
Rs
50,000 crores liquidity through TDS/TCS rate reduction"Rs 50,000 crores
liquidity through TDS/TCS rate reduction
To
provide more funds to the taxpayers, the rates of Tax Deduction at Source (TDS)
for non-salaried specified payments made to residents and rates of Tax
Collection at Source (TCS) for the specified receipts shall be reduced by
25% of the existing rates.
Payment
for contract, professional fees, interest, rent, dividend, commission,
brokerage, etc. shall be eligible for this reduced rate of TDS.
This
reduction shall be applicable for the remaining part of the FY 2020-21 i.e.
from tomorrow to 31st March, 2021.
This
measure will release Liquidity of Rs. 50,000 crore.
Extension
of Registration and Completion, COVID-19 as an event of ‘Force Majeure’ under
RERA"Extension of Registration and Completion, COVID-19 as an event of
‘Force Majeure’ under RERA
Date
of Real Estate Projects under RERA has been extended
Ministry
of Housing and Urban Affairs will advise States/UTs and their Regulatory
Authorities to the following effect:
Treat
COVID-19 as an event of ‘Force Majeure’ under RERA.
Extend
the registration and completion date suo-moto by 6 months for all registered
projects expiring on or after 25th March, 2020 without individual applications.
Regulatory
Authorities may extend this for another period of upto 3 months, if needed
Issue
fresh ‘Project Registration Certificates’ automatically with revised timelines.
Extend
timelines for various statutory compliances under RERA concurrently.
These
measures will de-stress real estate developers and ensure completion of
projects so that homebuyers are able to get delivery of their booked houses
with new timelines.
Relief
for real estate sector: Extension of registration and completion date
certificates by 6 months"Relief for real estate sector: Extension of
registration and completion date certificates by 6 months
Urban
development ministry will issue advisory to states/ UTs so that COVID-19 period
events can be treated as a force majeure. Extension of registration and
completion date certificates may be extended by six months (expiry as of March
25, 2020).
Relief
for Contractors: Here’s what the FM said: "Relief for
Contractors: Here’s what the FM said:
Extension
of up to 6 months (without costs to contractor) to be provided by all Central
Agencies (like Railways, Ministry of Road Transport & Highways, Central
Public Works Dept, etc)
All
GoI agencies, such as Railways, highways or central public works, will give
three to six months extension to all contractors without extra costs. This will
cover construction work and goods and services contracts, completion of works
and intermediate milestones, and also concessional period in PPP contracts.
To
facilitate greater liquidity, government agencies will partially release bank
guarantees to the extent of the completed contract so that cash flow improves.
Covers
construction/ works and goods and services contracts
Covers
obligations like completion of work, intermediate milestones etc. and extension
of Concession period in PPP contracts
Government
agencies to partially release bank guarantees, to the extent contracts are
partially completed, to ease cash flows
Real
estate sector"Real estate sector"
Among
other measures, Due date of all income-tax return for FY 2019-20 will be
extended from 31st July, 2020 & 31st October, 2020 to 30th November, 2020
and Tax audit from 30th September, 2020 to 31st October,2020. #AatmaNirbharBharatAbhiyan
—
PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
The
Urban Development Ministry shall issue advisories to states and UTs to treat
the COVID-19 period as an ‘Act of God’ and thus allow force majeure.
Fresh
project registration certificates can be issued and, registration and
completion date can be extended suo moto for up to six months for projects
registered on or after March 25, 2020.
DISCOM
payables to Power Generation and Transmission Companies is currently Rs 94,000
cr
PFC/REC
to infuse liquidity of Rs 90,000 cr to DISCOMs against receivables
Loans
to be given against state guarantees for exclusive purpose of discharging
liabilities of Discoms to Gencos
Linkage
to specific activies/reforms: Digital payments facility by Discoms for
consumers, liquidation of outstanding dues of state govts, plan to reduce
financial and operations losses
Central
Public Sector Generation Companies shall give rebate to Discoms which shall be
passed on to the final consumers (industries)
Rs
30,000 crore special liquidity scheme for investment in primary and secondary
markets"Rs 30,000 crore special liquidity scheme for investment in
primary and secondary markets
NBFCs,
HFCs and MFIs: Rs 30,000 crore special liquidity scheme for investment in both
primary and secondary markets to buy investment quality debt papers. Fully
guaranteed by GoI.
NBFCs,
HFCs and MFIs: Rs 30,000 crore special liquidity scheme for investment in both
primary and secondary markets to buy investment quality debt papers. Fully guaranteed
by GoI.
Government
to infuse Rs 50,000 crores liquidity by reducing rates of TDS, for non-salaried
specified payments made to residents, and rates of Tax Collection at Source for
specified receipts, by 25% of the existing rates. #AatmaNirbharBharatAbhiyan
—
PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
Rs
2,500 crore EPF support for business and workers for 3 more months"Rs
2,500 crore EPF support for business and workers for 3 more months
As
businesses continue to face financial stress, the government has extended its
payment of EPF contributions
Under
Prandhan Mantri Garib Kalyan Package, payment of 12% of employer and 12% of
employee contributions was made into EPF accounts of eligible establishments
This
support will be extended by another three months to salary months of June, July
and August 2020
This
will provide liquidity relief of Rs 2500 cr to 3.67 lakh establishments and for
72.22 lakh employees
MSMEs
Next
step for MSMEs, global tenders in government procurement will be disallowed for
up to Rs 200 crore or less. This will allow MSMEs a chance to supply for these
big projects. Small units can be part of government purchases and now
Self-reliant India can Make in India.
Sixth
step for MSMEs is that post COVID, since trade fairs and exhibitions will be
difficult, we will provide e-market facilities. GoI and CPMEs where there are
receivables - all will be cleared within 45 days.
Finance
Minister Nirmala Sitharaman announced a corpus of Rs 10,000 crore though
mother-fund and daughter-fund framework.
For
MSMEs needing handholding, a Rs 50,000 crore ‘fund of funds’ through ‘mother
fund - daughter fund’ framework is being created, to expand their capacity and
to get listed on markets which they choose.
Govt to redefine MSMEs
The
definition of MSMEs is being changed for their advantage so that they can grow
in size and get benefits. Investment limit which defined MSMEs have been
revised upwards. Additional criteria being brought in is turnover size -
earlier differentiation between manufacturing and service MSMEs will be
categorised similarly.
All
receivables of MSMEs will be cleared by govt and PSUs in 45 days.
E-Market
linkage for SMES since trade fairs and exhibitions may not be held post-Covid.
All receivables of MSMEs will be cleared by GoI and PSUs within next 45 days.
New
definition of MSMEs
Low
threshold in MSME definition have created fear among MSMEs of graduating out of
the benefits and hence killing the urge to grow
The new definition is:
Manufacturing
and services are now one classification.
Micro:
Investments less than Rs 1 crore and turnover of less than Rs 5 crore
Small:
Investment less than Rs 10 crore and turnover less than Rs 50 crore
Medium:
Investment less than Rs 20 crore and turnover less than Rs 100 crore
The earlier definition was:
Manufacturing
enterprises:
Micro:
with investments less than Rs 25 lakh
Small:
with investments less than Rs 5 crore
Medium
with investments less than Rs 10 crore
Services:
Micro
with investments less than Rs 10 lakh
Small
with investments less than Rs 2 crore
Medium
with investments of less than Rs 5 crore
Global
tenders to be disallowed upto Rs 200 cr
Indian
MSMEs and other companies have often faced unfair competition from foreign
companies.
For
government procurement, tenders upto Rs 200 crore will no longer be under
global tender route. Big benefit to MSMEs, which used to get disqualified, and
disallowed from participation.
Rs 3 lakh crore for
collateral-free loan for MSMEs
Rs
3 lakh crore will be made available for collateral free loan for those MSME
units which have Rs 25 crore outstanding loan payments or Rs 100 crore
turnover. These loans will be available with a 4-year tenure and a moratorium
of 12 months. The move is expected to benefit 45 lakh units.
Finance
Minister Nirmala Sitharaman will hold daily pressers, starting today, to detail
govt’s steps on restructuring economy.
Prime
Minister has laid out a vision after several discussions at various levels.
Inputs obtained were given due consideration. This is to spur growth and built
a self-reliant India. This initiative is called Athma Nirbhar Bharat Abhiyan.
The
financial package announced by Prime Minister Narendra Modi essentially aims to
spur growth and build a very self reliant India.
To
build the ‘Atma Nirbhar India’, India has DBT, Ujjawala Yojana, AWAS Yojana,
Swaccha Bharat Abhiyan and Ayushman Bharat. Several schemes which benefitted
poor were reform driven.
Not
to look inwards and be isolationist, but an India that can be confident and
contribute to the growth. We have the enterprise to build such capabilities and
help the world.
FM Nirmala
Sitharaman lists 5 pillars of ‘Atmanirbhar Bharat’
‘’The
finance minister lists the five pillars of an ‘Atma-nirbhar Bharat’:
1.
Economy
2.
Infrastructure
3.
Technology
driven system
4.
Demography
5.
Demand
What the govt is planning for businesses, MSMEs
Businesses/MSMEs
have badly been hit due to Covid-19 and they need additional funding to meet
operational liabilities built up, buy raw material and restart business.
Emergency
credit line to businesses/MSMEs from banks and NBFCs up to 20% of entire
outstanding credit as on February 29, 2019.
Borrowers
with up to Rs 25 crore outstanding and Rs 100 crore turnover are eligible
Loans
to have 4 year tenor with moratorium of 12 months on principal repayment
Interest
to be capped
100%
credit guarantee cover to banks and NBFCs on principal and interest
Scheme
can be availed till 31 October 2020
*
No guarantee fee, no fresh collateral
45
lakh units can resume business activity and safeguard jobs
MSME
package: Rs 3 lakh crore collateral free loan, for those with Rs 25 crore
outstanding loan or Rs 100 crore turnover. Loans with 4-year tenure, moratorium
of 12 months. 100% credit guarantee to banks and NBFCs on principal and
interest. To benefit 45 lakh units."MSME package: Rs 3 lakh crore
collateral free loan, for those with Rs 25 crore outstanding loan or Rs 100
crore turnover. Loans with 4-year tenure, moratorium of 12 months. 100% credit
guarantee to banks and NBFCs on principal and interest. To benefit 45 lakh
units.
For
MSMEs, collateral free automatic loans worth Rs 3 lakh crore will be provided.
This is for 4 year tenure and is 100 percent guaranteed. No principal repayment
for 12 months. This will last till October 21, 2020. It will benefit 45 lakh
units, allowing them to resume activity and safeguarding jobs
The
stressed MSMEs need equity support. The government will facilitate provision of
Rs 20,000 crore as subordinate debt, which will benefit 2 lakh MSMEs.
Functioning MSMEs, which are NPA or are stressed will be eligible. The
government will provide support of Rs 4,000 cr to CGTMSE.
Loan
is for 4 year tenure and is 100 per cent guaranteed. This will last till
October 21, 2020. It will benefit 45 lakh units, allowing them to resume
activity and safeguarding jobs.
FM then lists business reforms: public sector bank clean up, recap, FDI liberalisation, Ease of Doing, IBC, GST, and NHAI TOT, power sector reforms, privatisation of airports, cleaning up of coal mining sectors.
Rs
52,606 crore transferred to 41 crore Jan Dhan account holders, Rs 18,000 crore
grain transfers; Ujjwala, divyang and old age also benefited.
FM
to announce 15 measures: six for micro, small and medium enterprises, PF, HFCs
and MFIs, discoms, contractors, real estate and three tax measures.
Rs
18,000 crore of refunds to I-T taxpayers, drawbacks also given, 14 lakh
taxpayers benefited.
Within
hours of the first lockdown, Rs 1.7 lakh crore were issued under PM Garib
Kalyan Yojana.
Insurance
cover of Rs 50 lakh per health worker
80
crore poor given ration
Front
loaded Rs 2,000 paid to farmers under existing PM Kisan scheme
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