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Economic Package on 13.5.2020 by Finance Minister Nirmala Sitharaman
- 3 lakh crore Collateral-free Automatic Loan,
- Rs 20,000 crore loan for stressed MSMEs,
- Rs 50,000 crore ‘fund of funds’ to get listed on markets for MSMEs,
- definition of MSMEs altered
- Global Tenders to be Disallowed Upto Rs 200 Cr for MSMEs and
- e-market facilities for MSMEs.
- Rs 30,000 Cr Special Liquidity Scheme for NBFCs/HFCs/MFIs,
- Rs 45,000 Cr Partial Credit Guarantee Scheme 2.0 for NBFCs,
- Rs 90K Cr Liquidity Injection for DISCOMs,
- 6 months Extension of Registration & Completion Date of Real Estate Projects Under RERA,
- Non Salary TDS/TCS Rates Reduced by 25%,
- All pending refunds of charitable trust, non-profit business, cooperatives and small partnerships, shall be issued immediately,
- Due date of all I-T returns for FY19-20 from July 31, 2020 and October 31, 2020 extended till November 31, 2020,
- Tax audits extended from September 30, 2020 till October 31, 2020,
- Date of assessments getting barred as of September 2020 is extended till December 2020, Those getting barred on March 31, 2021 are being extended till September 31, 2021
Today’s tranche has 14 different measures.
- Six of these are for MSMEs,
- Collateral-free Automatic Loan for MSMEs | The finance ministry announces 3 lakh crore collateral-free automatic loan for MSMEs. This loan is for 4 year tenure and is 100 per cent guaranteed. This will last till October 21, 2020. It will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs. All terms and conditions should be satisfied which are as under:-
- Top up loan of 20% to outstanding loan as on 29.02.2020 to
- those MSME having Loan upto 25cr and
- turnover upto 100cr
- This loan will be for 4 Yrs with a Moratorium of 12 Months.
- Rs 20,000 crore loan for stressed MSMEs. The stressed MSMEs need equity support. The government will facilitate provision of Rs 20,000 crore as subordinate 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.
- Equity to standard MSME:-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,
- 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, Definition of MSMEs gets a revision, Investment limit to be revised upwards, additional criteria of turnover also being introduced. Now manufacturing and service MSME will be of 3 below categories:-
- Micro Units- Investment limit increased to 1Cr from 20Lakh. And Turnover can be upto 5Cr. Other changes are also done.
- For Medium Enterprise the limit increased to 10 Cr Investment and turnover 50Cr. 20Cr and 100Cr
- Global Tenders to be Disallowed Upto Rs 200 Cr |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. Indian MSMEs and other companies have often faced unfair competition from foreign companies. Therefore, global tenders will be disallowed in Govt procurement tenders upto 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,
- E-market facilities : 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 honour every MSME receivable in the next 45 days.
- two are for EPF, Rs 2500 Cr EPF Support |To ease financial stress as businesses get back to work, government decides to continue EPF support for business and workers for 3 more months providing a liquidity relief of Rs 2,500 crores, says finance minister.
- EPF Payment was previously paid by Govt for Mar, April and May now Extended by another 3 Months. 12%+12% will be paid by Govt of India.
- Contribution reduced from 12% to 10% for those organisation having more than 100 employee is done now
- two for NBFCs and MFIs,
- Rs 30,000 Cr 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
- Rs 45,000 Cr 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 per cent 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.
– Even unrated papers will get money under this scheme.
- one to discoms,
Rs 90K 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 exclusive purpose of discharging liabilities of Discoms to Gencos
- Relief to Contractors – extension of upto 6 months
Finance ministry announces extension of upto 6 months to be provided by all central agencies like Railways, Ministry of oad Transport and Highways, Central Public Works Dept. 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.
- Relief to real estate
6 months 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 completion of projects
- Tax Relief / measures,
- Non Salary TDS/TCS Rates Reduced by 25% |Reduced TDS rates by 25 percent. This is applicable on all payments – interest, rent, brokerage, supply, etc. This will be enforced from tomorrow (14.5.2020) till March 31, 2021. This reduction will release Rs 50,000 crore in hands of people, says Sitharaman.
- All pending refunds of charitable trust, non-profit business, cooperatives and small partnerships, shall be issued immediately.
- Due date of all I-T returns for FY19-20 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
- Date of assessments getting barred as of September 2020 is extended till December 2020. Those getting barred on March 31, 2021 are being extended till September 31, 2021.
- Vivad se Vishwas scheme is being extended till December 31, 2020 without any additional amount
- Rs 50,000 Crore Liquidity Through TDS/TCS Rate Reduction
Banks are not shying away from disbursing loans, but many customers are saying that they will avail loans after end of lockdown, this is one reason why sanctioned loans are not being released