FM started by stating that our Prime Minister has always been on the side of reform for better ease of living in the country. She added that the 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 i.e. ‘Atma Nirbhar India’. Then she highlighted that to build the ‘Atma Nirbhar India’, India already has Direct Benefit Transfer Scheme, Ujjawala Yojana, AWAS Yojana, Swaccha Bharat Abhiyan, and Ayushman Bharat. She explained that ‘Atma Nirbhar India’ doesn’t mean to look inwards and isolationist, but India that can be confident and contribute to the growth. India has the enterprises to build such capabilities and help the world. The vision and thought of Atma Nirbhar Bharat have brought India together in these tough times. India has emerged better than others in these times. We are also helping other countries by supplying drugs.
FM said that the present Government is a responsive and sensitive Government and has responded countless times to calls. Within hours of the lockdown announced by the PM, the Garib Kalyan Yojana was announced.
There are 14 different measures announced by FM Today. Of these, 6 are for MSMEs, 2 are for EPF, 2 for NBFCs and MFIs, 1 for Discoms, 1 for Contractors, 1 for Real Estate Sector, and 1 Tax Measures. The brief overview of such measures is highlighted hereunder:
Six steps for MSMEs
- For standard MSMEs, collateral-free automatic loans worth Rs 3 lakh crore will be provided which would be for a 4-year tenure and 100 percent guaranteed. No principal repayment would be required for the first 12 months and the scheme will last till October 21, 2020. This scheme would benefit 45 lakh units.
- The government will facilitate the provision of Rs 20,000 crore for stressed MSMEs which would benefit 2 lakh MSMEs. Even NPA or stressed MSMEs are eligible for the scheme. The government will provide Rs 4,000 crore to CGTMSE who will provide a partial guarantee to banks. Banks would provide loans to Promoters of MSMEs who would infuse them in their Unit.
- Funds of fund will infuse Rs 50,000 crore equity for those MSMEs who have potential and are viable but faces shortage of equity. Corpus of the fund would be Rs 10,000 crores which would help expand capacities and help them get listed.
- The definition being changed for MSMEs in their benefit so that they can grow in size and still get benefits. Manufacturing and Services are now one classification. Investment limit which defined MSMEs revised upwards. Additional criteria being brought in is turnover size.
Micro: Investments less than Rs 1 cr and turnover of less than Rs 5 cr
Small: Investment less than Rs 10 cr and turnover less than Rs 50 cr
Medium: Investment less than Rs 20 cr and turnover less than Rs 100 cr
- Since Indian MSMEs and other Companies have faced unfair competition from foreign players, the next step for MSMEs is to disallow global tenders in government procurement up to Rs 200 crore or less. This will allow MSMEs a chance to supply for these big projects and would boost Self-reliant India as well as Make in India.
- The sixth step for MSMEs is to promote and provide e-market facilities and also ensuring that all the dues of MSMEs are cleared by the Government within 45 days.
- EPF relief for all eligible establishments with Rs 2,500 crore liquidity support. Government will provide both employer and employee contributions for another three months i.e. June to August 2020 as well. This would boost liquidity for 3.6 lakh establishments and 72.22 lakh employees.
- To increase take-home salaries for those not covered in EPF benefit, the statutory PF contribution is being reduced from 12 percent to 10 percent. For state PSUs – the employers will continue to pay 12 percent. This would provide liquidity of Rs 6,750 cr to employers and employees.
NBFC-HFC & MFI Reforms
- The government proposed to launch Rs 30,000 crore special liquidity scheme where the government will buy investment-grade debt papers of NBFCs, HFCs, and MFIs. These securities will be fully guaranteed by the Government. These NBFCs, which do not have high-quality debt papers, can now support the MSMEs dependent on them.
- Also proposed Rs 45,000 liquidity infusion through a partial guarantee scheme which will cover commercial papers and borrowings. The first 20 percent loss will be borne by Government. Double AA-rated paper and unrated papers will all be eligible.
- The one-time provision by PFCs and RECs to infuse Rs 90,000 crore liquidity for DISCOMS against receivables. This will be a state-issued guarantee and rebate will be provided to those DISCOMS that pass the benefit to the end-customer.
- Extension of up to 6 months (without costs to the contractor) to be provided by all Central Agencies (like Railways, Ministry of Road Transport & Highways, Central Public Works Dept, etc) which would cover construction/ works and goods and services contracts. However, Government agencies to partially release bank guarantees, to the extent contracts are partially completed, to ease cash flows.
- 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. Thus, 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.
- In order to provide more funds at the disposal of 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 the 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 the Liquidity of Rs. 50,000 crore. Other Direct Tax Measures:
- All pending refunds to charitable trusts and noncorporate 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 December, 2020.