Revival of Business Including MSMEs
- A day after Hon’ble PM Narendra Modi raised a clarion call for self-reliant India, Finance Minister Smt. Nirmala Sitharaman announced measures focused on Getting back to work, that include enabling:
- Employees and employers to resume work
- Businesses, especially MSMEs, to get back to production
- Workers get back to gainful employment
- Other efforts announced by the Government include:
- Strengthening of Non-Banking Finance Institutions (NBFCs), Housing Finance Companies (HFCs), Micro Finance Sector and Power Sector
- Tax relief to business, relief from contractual commitments to contractors in public procurement
- Compliance relief to real estate sector
FINANCIAL STIMULUS TO MSMES
- Measures including financial assistance announced in the economic package include the following:
- INR 3 lakh cr collateral-free automatic loans for businesses, including MSMEs
- INR 20,000 cr subordinate debt for two lakh MSMEs which are NPA or are stressed
- INR 50,000 cr equity infusion through MSME Fund of Funds which shall be operated through a Mother and a few Daughter funds
- Revision in definition of MSMEs by raising the investment limit and introducing an additional criterion of turnover
- E-market linkage for MSMEs will be promoted to act as a replacement for trade fairs and exhibitions
- General Financial Rules (GFR) of the Government will be amended to disallow global tender inquiries in procurement of Goods and Services of value of less than INR 200 cr
EMPLOYEES PROVIDENT FUND SUPPORT
- Employees Provident Fund (EPF) support for business and organized workers to provide liquidity relief of INR 2500 cr to 3.67 lakh establishments and 72.22 lakh employees.
- Statutory PF contribution of both employer and employee reduced to 10% each from existing 12% each for all establishments covered by EPFO for wage months of May, June and July 2020. This move is intended to provide relief of INR 6750 cr to about 6.5 lakh establishments covered under EPFO and about 4.3 cr such employees.
SECTOR SPECIFIC SUPPORT
- INR 90,000 cr liquidity injection in two equal instalments for Power Distribution Companies (DISCOMs) to pay their dues to Transmission and Generation companies.
- All central agencies like Railways, Ministry of Road Transport and Highways and CPWD will give an extension of up to 6 months for completion of contractual obligations.
- Relief to Real Estate Projects by considering COVID-19 as an event of Force Majeure and extending registration and completion date for all registered projects by 6 months.
TAX RELIEF TO BUSINESS
- Pending income tax refunds to charitable trusts and non-corporate businesses and professions including proprietorship, partnership and LLPs and cooperatives shall be issued immediately.
- 25% Reduction in Rates of ‘Tax Deduction at Source’ and ‘Tax Collected at Source” for the remaining period of FY 20-21 to provide liquidity of about INR 50,000 cr.
- The due date of all Income Tax Returns for Assessment Year 2020-21 shall be extended to 30 November 2020. The tax audit due date shall be extended to 31 October 2020.