Changes and Reliefs in various sectors, taxation and Analysis of Finance Minister Speech on 20 lakhs crore relief package

On 13.05.2020, PM Narendra Modi while addressing nation, announced 20 lakhs crore relief package to various sectors of the economy keeping in view the Aatam-nirbhar Bharat mission.

Thereafter, FM Nirmala Sitharaman announced relief package which is meant for various sectors including cottage industry, MSMEs, labourers, middle class industries and among others

♦ For MSME:

1. Classification of MSME for manufacturing and Services (Revised):

(i) Micro — Investment limit up to Rs.1 crore or Turnover up to Rs.5 crore

(ii) Small – Investment limit up to Rs.10 crore or Turnover up to Rs.50 crore

(iii) Medium – Investment limit up to Rs.20 crore or Turnover up to Rs.100 crore

2. Rs. 3 lakh crore Collateral – Free Automatic Loans for Bussiness, including MSMEs – Credit to Business/MSMEs from Banks and NBFCs upto 20% of entire outstanding credit as on 29.02.2020:

  • Who is eligible: Borrowers with up to Rs. 25 crore outstanding and Rs. 100 crore turnover
  • Period of Loan: 4 years tenor period of loan with moratorium of 12 months on Principal Repayment. Interest to be capped
  • Scheme can be availed up to 31st Oct 2020
  • No guarantee fee and collateral fee.

3. Rs. 20,000 cr. Subordinate Debt for Stressed MSMEs:

  • Who is eligible: Functioning MSMEs which are NPA or are stressed
  • will provide a support of Rs.4,000Cr. to CGTMSE, CGSTMSE will provide partial Credit Guarantee support to Banks.

4. Rs. 50,000 cr. Equity infusion for MSME through Funds

5. For government procurement tenders upto Rs. 200 crore, global tenders will be disallowed to benefit MSME to increase their business which they were facing unfair competition from foreign companies.

6. E-market linkage, for MSME be promoted as a replacement for trade-fairs and exhibitions

7. Government has been continuously monitoring on settlement of dues to MSME vendors from Government and Central PSUs

8. Receivables from Government and CPSEs to be released in 45 days

♦ For EPFs

  • Statutory PF Contribution of both employer and employee will be reduced to 10% each from existing 12% each for all establishments covered by EPFO for next 3 months (June, July and August 2020)
  • CPSEs and State PSUs will however, continue to contribute 12% as employer contribution.
  • This scheme would be applicable for workers who are not eligible for 24% EPF support under PM Garib Kalyan Package and its extension. And eligible for those organizations of up to 100 employees and 90 % of employees earning salary upto Rs. 15,000 pm.

Government will launch a 30,000 crore Special Liquidity Scheme for NBFCs/HFCs/MFIs and securities will be fully guaranteed by Government.

♦ For Real Estate Projects under RERA:

  • Extension of Registration and Completion date by 6 months suo-motu for all registered projects expiring on or after 25th March, 2020.
  • Regulatory Authorities may extend this for another period of up to 3 months, if required
  • Timeline for various statutory compliances also extended under RERA concurrently.

♦ For TDS/TCS:

  • The rates of TDS for non-salaried specified payments made to residents like, payment to contractor, professional fees, interest, rent, dividend, commission, brokerage etc, shall be reduced by 25% of the existing rates
  • The rates of TCS for the specified receipts shall be reduced by 25% of the existing rates
  • Applicability: This reduction shall be applicable for the remaining part of F.Y. 2020-21i.e. from 14.05.2020 to 31.03.2021.
  • There shall be no reduction in the rate of TDS/TCS, where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN i.e. it shall be deducted @ 20% under section 206AA.

♦ Other Direct Tax measures:

  • Due date of Income Tax return for FY 2019-20 has been extended up to 30th November, 2020
  • Due date of Tax Audit has been extended up to 31st October, 2020.
  • Due Date of assessments getting barred on 30th September, 2020 had been extended up to 31st December, 2020
  • And due date of assessments getting barred on 31st March, 2021 has been extended up to 30th September, 2021
  • The last date of opting Vivad to Vishwaas Scheme without paying additional 10% of the disputed tax shall be extended up to 31st December, 2020.

♦ Other measures:

  • Extension of ESIC Coverage: Applicable to pan-India to all districts and all those establishments employing 10 or more employees as against those in notified areas/districts only.

Extension of ESIC Coverage to employees working in establishments with less than 10 employees on voluntary basis

Mandatory ESIC coverage through notification by the Central Government for employees in hazardous industries with less than 10 employees.

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Company: Kratika Maheshwari & Co
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March 2021