SYNOPSIS OF FM SPEECH dated 13th May 2020 - Atmanirbhar India - Part 1: Businesses including MSMEs*
Below are the snapshots from the Hon’ble FM’s speech announcing the Economic Relief Package Of INR 20 Lac Crores - Part 1.
A. TAXATION
1. All pending refunds of the charitable trust, non-corporate business & professions including proprietorship, partnership, LLPs and cooperatives shall be issued immediately.
2. Due date of all I-T returns for FY19-20 extended from July 31, 2020 and October 31, 2020, extended till November 31, 2020. Tax audits extended from September 30, 2020, till October 31, 2020.
3. The date of assessments getting barred as on September 30, 2020 is extended till December 31, 2020. Those getting barred on March 31, 2021, are being extended till September 31, 2021.
4. Vivad se Vishwas scheme is being extended till December 31, 2020, without any additional amount.
5. Reduced TDS and TCS rates by 25 percent. This is applicable to all non-salaried specific payments made to residents - contracts, professional fees, interest, rent, dividend, commission, brokerage, etc. This will be enforced from tomorrow till March 31, 2021. This reduction will release Rs 50,000 crore in the hands of people: Sitharaman.
B. EPF
1. To ease financial stress as businesses get back to work, the government decides to continue EPF support (I.e. 12% of employer and 12% employee contribution) for business and workers for 3 more months to salary months of June, July and August 2020 providing a liquidity relief of Rs 2,500 crores, says finance minister.
2. Statutory PF contribution of both employer and employer will be reduced to 10% each from existing 12% each for all establishments covered by EPFO for next 3 months. Central PSEs and State PSUs will however continue to contribute 12% as employer contribution. This scheme will be applicable for workers who are not eligible for 24% EPF support under PM Garib Kalyan Package and it’s extension as mentioned in point 1. above. This will provide liquidity of Rs 6,750 Crores, says FM.
C. MSMEs:
1. "The sixth step for MSMEs is that post COVID-19, since trade fairs and exhibitions will be difficult, we will provide e-market facilities. The Government of India and Central Public Sector Enterprises (CPSE) will honor every MSME receivable in the next 45 days," says Sitharaman.
2. "Indian MSMEs and other companies have often faced unfair competition from foreign companies. Therefore, global tenders will be disallowed in Govt procurement tenders up to Rs 200 crore. Necessary amendments of General Financial Rules will be effected. This will be a step towards self-reliant India and support Make in India. This will also help MSMEs to increase their businesses," says FM.
3. Global tenders to be disallowed in government procurement up to Rs 200 crores. This will make self-reliant India, will also then be able to serve 'Make in India', says Finance Minister Nirmala Sitharaman.
4. "The definition of MSMEs is being changed for their advantage so that they can grow in size and get benefits. The investment limit which defined MSMEs has been revised upwards. Additional criteria being brought in is turnover size - earlier differentiation between manufacturing and service MSMEs will be categorized similarly," says Sitharaman.
5. "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," says FM.
6. The stressed MSMEs need equity support. The government will facilitate provision of Rs 20,000 crore as subordinated 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.
7. Finance Minister Sitharaman announces Rs 20,000 crore loan for stressed MSMEs.
8. "This loan is for 4-year tenure and is 100 per cent guaranteed. This will last until October 21, 2020. It will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs."
9. The finance ministry announces a 3 Lakh Crore collateral-free automatic loan for MSMEs. This will have a 4 years tenure with 12 months moratorium
D. NBFC:
1. Rs 45,000 crore partial credit guarantee scheme 2.0 for NBFCs. Existing PCGs scheme to be extended to cover borrowings such as primary issuance of bonds/CPs, First 20 percent of loss will be borne by the guarantor that is the government of India, This scheme will result in liquidity worth Rs 45,000 crore.
2. Rs 30,000 crore special liquidity scheme for NBFCs/HFCs/MFIs. Govt will launch a Rs 30,000 crore special liquidity scheme. Under this investment will be made in both primary and secondary market transactions in investment-grade debt paper of NBFCs/HFCs/MFIs. Will supplement RBI/govt measures to augment liquidity. Securities will be fully guaranteed by govt of India, This will provide liquidity support.
E. DISCOMs:
1. Rs 90,000 Cr Liquidity Injection for DISCOMs. Unprecedented cash flow problem accentuated by demand reduction, DISCOM payables to power generation and transmission companies is currently close to Rs 94,000 cr. PFS/REC to infuse liquidity of Rs 90,000 to DISCOMs against receivables. Loans to be given against state guarantees for the exclusive purpose of discharging liabilities of Discoms to Gencos
F. Contractors:
1. In a relief to contractors, the finance ministry announces extension of up to 6 months to be provided by all central agencies like Railways, Ministry of Road Transport and Highways, Central Public Works Dept.
2. This will cover construction work and goods and services contracts, completion of works and intermediate milestones, and also a concessional period in PPP contracts.
3. To facilitate greater liquidity, government agencies will partially release bank guarantees to the extent of the completed contract so that cash flow improves.
G. Real Estate:
1. Extension of Registration & Completion Date of Real Estate Projects Under RERA. Ministry of housing and urban affairs will issue advisories where Covid-19 can be treated as an Act of God. Extend the registration and completion sou moto by 6 months for all registered projects expiring on or after 25 March 2020. Issue fresh project registration certificates automatically with revised timelines. These measures will de-stress real estate developers and ensure the completion of projects.