Nirmala Sitharaman on Rs 20 lakh crore package: MSMEs to be given Rs 3 lakh crore collateral-free automatic loans, TDS, TCS rates slashed by 25%

Finance Minister Nirmala Sitharaman on Wednesday held a press conference detailing the Rs 20 lakh crore economic package aimed at creating an ‘Atmanirbhar’ or self-reliant India. The package was announced by Prime Minister Narendra Modi on Tuesday, in his fifth address to the nation on the coronavirus situation in the country. [caption id=“attachment_8364611” align=“alignleft” width=“380”] FM Nirmala Sitharaman addressed a press conference on the economic package on Wednesday. ANI[/caption] On Wednesday, Sitharaman started by saying that she and her team will hold daily press conferences to inform people about a number of responses the Centre has prepared with the aim of bringing the economy back on track. Click here for LIVE updates on coronavirus outbreak “Beginning today, I shall come with this entire team before you to put out details of the prime minister’s vision. We will come with tranches beginning today. We have responsibility towards poor, needy, migrant and divyang (differently-abled),” Sitharaman said. She added that Wednesday’s tranche has 14 measures, of which six are for MSMEs, two are for EPF, two for NBFCs and MFIs, one to discoms, one to contractors, one real estate, three tax measures.

MSMEs

Sitharaman announced that 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 four-year tenure and a moratorium of 12 months. The move is expected to benefit 45 lakh units. “This loan is for a four-year tenure and is 100 percent guaranteed. This will last till 21 October, 2020. It will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs,” Sitharaman said. She added, “The government will provide stressed MSMEs with equity support by facilitating the provision of Rs 20,000 crores as subordinate debt.” Additionally, Sitharaman also said that the Centre will redefine the definition of MSMEs and that the investment limit will be revised upwards to Rs 1 crore. “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,” said Sitharaman. She also said that Rs 50,000 crore worth of equity infusion will be granted to MSMEs through ‘Fund of Funds’. “…to be operated through a Mother Fund and few daughter funds. This will help to expand MSME size as well as capacity,” she added. Seamless e-market linkages across the board will be provided to MSMEs, considering their inability to participate in trade fairs due to the COVID-19 pandemic, Sitharaman said, adding, “Government of India and Central Public Sector Enterprises will honour every MSME receivable in the next 45 days.”

TDS and TCS rates cut by 25 percent, ITR due date extended

The Centre will infuse Rs 50,000 crore 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 percent of the existing rates.

TDS/TCS rates to be reduced by 25% till March 31, 2021: FM pic.twitter.com/kRdS7yG3T9

— ANI (@ANI) May 13, 2020

Sitharaman also said that the due date for income tax returns (ITR) for the year 2019-2020 have been being extended from 31 July and 31 October to 30 November 2020. The last date for Vivad se Vishwas one-time tax settlement scheme has also been extended till 31 December, she added. With inputs from agencies

Govt disallows global tenders in govt procurement upto Rs 200 crore

Sitharaman said that global tenders will not be allowed in government procurement up to Rs 200 crore. “This will address unfair competition being faced by MSMEs, and enable them to participate actively in government purchases,” she added. She also said that the move to curb global tenders in government projects “will make self-reliant India, will also then be able to serve ‘Make in India’”, which is one of Modi’s flagship intiatives.

Govt to continue EPF support for 3 more months

To ease financial stress as businesses get back to work, the Centre has decided to “continue EPF support for business and workers for three more months providing a liquidity relief of Rs 2,500 crores,” Sitharaman also said in Wednesday’s presser. Meanwhile, the EPF contribution from businesses and employees will be reduced from 12 percent to 10 percent for the next three months, PIB reported, adding that the move is “in order to provide more take home salary for employees and to give relief to employers in payment of PF”. This reportedly amounts to a liquidity support of Rs 6750 crores. This means that government will pay the employer’s share for firms with a staff of 100, earning less than Rs 15,000, till August. Nearly 3.6 lakh establishments are expected to benefit by this. The plan was first announced as a part of the Centre’s PM Garib Kalyan Yojna to provide economic relief during the COVID-19 pandemic.

In order to provide more take home salary for employees and to give relief to employers in payment of PF, EPF contribution is being reduced for Businesses & Workers for 3 months, amounting to a liquidity support of Rs 6750 crores. #AatmaNirbharBharatAbhiyan pic.twitter.com/VSysfvk4KU

— PIB India (@PIB_India) May 13, 2020

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The Centre also launched a Rs 30,000 crore Special Liquidity Scheme for NBFCs/HFCs/MFIs.

Government announces Rs 90,000 crore liquidity injection for DISCOMs

Keeping in view that the earnings of the Power Distribution companies had plummeted, the government has provisioned for loans for them against state guarantees. This will be done exclusively for the purpose of clearing the dues of power generation companies, Sitharaman said. She also said that the Centre has launched a Rs 30,000 crore special liquidity scheme for non-banking financial companies, microfinance companies, housing finance companies. In addition to this, the Centre announced a Rs 45,000 crore liquidity infusion through a Partial Credit Guarantee Scheme 2.0 for NBFCs.

Public sector units to extend deadlines for contractors

In order to provide relief to contractors, the finance ministry announced an extension of up to six months by all central agencies like Railways, Ministry of Road Transport and Highways, Central Public Works departments. 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. “In a major relief to contractors, all Central agencies to provide an extension of up to six months, without cost to contractor, to obligations like completion of work covering construction and goods and services contracts,” Sitharaman said. Meanwhile, Sitharaman said that Ministry of Housing will advise states and union territories and their regulatory authorities to extend registration and completion date suo-moto by six months for all registered projects expiring on or after 25 March, 2020 without individual applications. “Treat COVID-19 as an event of ‘Force Majeure’ under RERA,” she added.