No global bidding for government procurement up to Rs 200 crore
Rs 30,000 crore special liquidity scheme for NBFCs, HFCs and MFIs
Deadline for Income Tax return for FY20 extended to November 30
Centre widens definition of MSMEs, raises investment limits
Vivad se Vishwas scheme extended till December 31, 2020
EPF support for business and workers for 3 more months
Rs 3 lakh crore collateral free automatic loan for MSMEs
TDS and TCS rates cut by 25% till 31st March 2021
Measures to support several other sectors announced
Major relief to real estate developers
Lifeline for discoms
NEW DELHI: Finance Minister Nirmala Sitharaman on Wednesday announced 15 new and some enhanced measures to revive and support businesses, and workers under the mega stimulus package — Self-Reliant India Movement — which was announced by Prime Minister Narendra Modi last evening.
Accordingly, the Minister announced a slew of fiscal and regulatory measures for MSMEs, real estate, NBFCs, power distribution and general businesses.
Attempts have also been made via these measures to decrease the regulatory burden on companies, while increasing the take-home pay of employees. But the big takeaways were for the MSME sector which is considered the backbone of economic activity.
Referring to the Rs 20 lakh crore economic stimulus package as announced by Prime Minister Narendra Modi on Tuesday, Finance Minister Nirmala Sitharaman on Wednesday said it will come in various tranches. She announced major concessions as part of the first tranche. The Union Finance Minister said, "I shall come out beginning today to come out and discuss various tranches that will be a part of the plan laid out by the Prime Minister," making it clear that the stimulus package will come in various parts for various industries.
Addressing a press conference, Finance Minister Nirmala Sitharaman said, 'The plan is to make India confident in its abilities not isolate India from the world. We have the ability to contribute to the world as we have seen recently." She added that the integration to global value chain is a part of the plan laid by the Prime Minister.
"After the July Budget we met several times and we made sure to address the needs of various sectors that were felt should be addressed," Finance Minister Sitharaman said, adding that the aim of the government has been to address issues of various sectors since it has come to power.
Focus is on ease of doing business, ease of compliance, and regulation the Finance Minister said. She added that India will look to build brands and take them to the global level. She clarified that India will not become isolationist. To recall the success of Modi government, the Union Minister highlighted 'Direct Benefit Transfer' based on 'Jan Dhan Yojana' account; PM Awas Yojana; Ujjwala Yojana; Swacch Bharat Abhiyan; PM Fasal Bima Yojana; PM Kisan Yojana, and other schemes.
In a series of tweets on Tuesday after the Prime Minister's speech, the Finance Minister said, "This shall not be just a financial package, but a reform stimulus, a mindset overhaul, and a thrust in governance."
"Indian economy has acquired strength in its various dimensions. Now, we can confidently engage with the world. We aim at overall transformation and not incremental changes. We shall convert the pandemic challenge into an opportunity. 'Aatmanirbhar Bharat' will integrate; not isolate," Sitharaman had tweeted.
Here are the highlights of the announcements made by Finance Minister Nirmala Sitharaman today:
MSME SECTOR: Among the significant announcements for this sector, the Finance Minister declared collateral free automatic loans for businesses including MSMEs (Micro Small & Medium Enterprises) up to Rs 3 lakh crore.
The Union Finance Minister detailed six measures for supporting the MSME sector under the Centre's massive stimulus programme. Accordingly, the investment limit for defining MSMEs has been revised upwards, said the FM. Besides, she highlighted that additional criteria such as turnover has been considered for defining MSMEs.
As per the new classification of 'Manufacturing and Servies', Micro enterprises: investment less than Rs 1 crore and turnover of less than Rs 5 crore; Small enterprises: Investment less than Rs 10 crore and turnover of less than Rs 50 crore; and Medium enterprises: Investment less than Rs 20 crore and turnover of less than Rs 100 crore.
The Centre has also decided not to go in for global bidding for government procurement for tenders up to Rs 200 crore, thereby, promoting the participation of MSMEs, she said.
In addition, e-market linkage for MSMEs will also be provided and that CPSEs will pay all receivables to MSMEs within 45 days.
Under the new measure, borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover would be eligible for the special collateral free loan.
The loan will have a 4 year term with moratorium of 12 months on principal repayment and the interest will be capped.
There will be a 100 per cent credit guarantee cover to banks and NBFCs on principal and interest. The initiative can be availed till October 31, 2020, and no guarantee fee and fresh collateral would be required.
On the back of the scheme, 45 lakh units can resume business activity and safeguard jobs.
The move is part of the Rs 20 lakh crore economic package announced by Prime Minister Narendra Modi on Tuesday evening.
Addressing the media here, Finance Minister Nirmala Sitharaman said the additional criteria of turnover has also been introduced for recognition of an MSME.
Further, the government has also done away with the distinction of services and manufacturing MSME.
As per the new changes, businesses with investment of less than Rs 1 crore and turnover of Rs 5 crore would be classified as micro enterprises. Under the existing criteria, a company with investment of less than Rs 25 lakh in the manufacturing sector and less than Rs 10 lakh in the services sector were considered micro enterprises.
The investment limit of small enterprises has been increased to Rs 10 crore, and the companies would have to have turnover of less than Rs 50 crore.
Further, the investment limit for medium enterprises has been increased to Rs 20 crore and the turnover limit has been kept at Rs 100 crore.
Sitharaman said that the necessary amendments to laws will be brought about to give effect to the changes.
GOVERNMENT PROCUREMENT: Global tenders to be disallowed in government procurement up to Rs 200 crore. This will make India self-reliant and will also boost the make-in-India initiative. Necessary amendments will be made to the General Financial Rules to this affect, curbing the unfair competition that Indian MSMEs face from foreign firms.
EPF SUPPORT: Besides, liquidity of Rs 2,500 crore EPF support for business and workers for 3 more months has been announced due to which over 72 lakh employees are expected to be benefitted. Finance Minister Nirmala Sitharaman said on Wednesday that the Centre will provide Rs 2,500 crore EPF support for businesses, workers for three more months.
The scheme was provided earlier for the salary months of March, April and May. Consequently, this support will be extended by another three months for the salary months of June, July and August.
Under the Pradhan Mantri Garib Kalyan Package (PMGKP), the Finance Minister said that payment of 12 per cent of employer and 12 per cent of employee contributions was made into the EPF accounts of the eligible establishments.
The scheme will provide liquidity relief of Rs 2,500 crore to 3.67 lakh establishments, benefitting 72.22 lakh employees.
Furthermore, the Minister announced that statutory PF contribution of both employer and employee has been reduced to 10 per cent from the existing 12 per cent across all establishments covered by the EPFO for the next three months.
CPSEs and State PSUs will, however, continue to contribute 12 per cent as employer contribution.
The scheme for lower EPF contribution will be applicable to workers who are not eligible for 24 per cent EPF support under the PM Garib Kalyan Package and its extension.
This scheme is estimated to provide relief to about 6.5 lakh establishments covered under the EPFO and benefit about 4.3 crore such employees. It will provide liquidity of Rs 6,750 crore to employers and employees over three months.
INCOME TAX: In a major relief for taxpayers amid the coronavirus pandemic, the Centre on Wednesday announced the extension of the due date for filing income tax returns for the financial year 2019-20. The due date of all income tax returns for FY 2019-20 will be extended from July 31, 2020, October 31, 2020 to November 30, 2020 and tax audit from September 30, 2020 to October 31, 2020. Further, the government has extended the date of assessments getting barred on September 30, 2020 to December 31, 2020 and those getting barred on March 31, 2021 to September 30, 2021.
VIVAD SE VISHWAS SCHEME: The provision of Vivad se Vishwas scheme has also been extended till December 31, 2020.
DISCOMS: To give a fillip to DISCOMs (or electricity distribution companies of India) with plummeting revenue and facing an unprecedented cash flow problem, Government has announced Rs 90,000 Crore as Liquidity Injection for DISCOMs. With demand reduction, DISCOMs are facing an unprecedented cash flow problem.
REAL ESTATE: In today's announcement, major relief has also been provided to real estate developers and suo moto extension of 6 months have been provided for the projects registered on or before March 25. Extension of registration and completion date of real estate projects under RERA. The Ministry of Housing and Urban Affairs will advise States/UTs and their Regulatory Authorities to extend the registration and completion date suo-moto by 6 months for all registered projects expiring on or after 25th March, 2020 without individual applications.
TDS & TCS: 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. The move will result in Rs 50,000 crore liquidity, said the Finance Minister Nirmala Sitharaman in her speech.
NBFCs, HFCs & MFIs: The Finance Minister announced a Rs 30,000 crore special liquidity scheme for non-banking finance companies (NBFCs), housing finance companies (HFCs) and micro-finance institutions (MFIs).
Sitharaman noted that these finance institutions are finding it difficult to raise money in debt markets and many institutions have not been able to take advantage of the recent relaxations given by the government and the Reserve Bank of India.
Under the scheme, investments will be made in both primary and secondary market transactions in investment grade debt paper of these institutions. She said that the scheme will support the previous initiatives of the government and the central bank to boost liquidity.
The securities under the scheme will be fully guaranteed by the Central government.
As per the government, the scheme would provide liquidity support to mutual funds along with NBFCs, HFCs and MFIs and create confidence in the market.
Further, the government has also announced Rs 45,000 crore partial credit guarantee scheme for NBFCs.
Under the scheme, first 20 per cent loss will be borne by Cenre, and even unrated papers will be eligible for investment, enabling NBFCs to reach out even to MSMEs in far-flung areas.
The step has been taken as NBFCs, HFCs and MFIs with low credit rating require liquidity to do fresh lending to MSMEs and individuals.
The measure is a part of the Rs 20 lakh crore economic package announced by Prime Minister Narendra Modi on Tuesday evening. (Agencies)