FM Nirmala Sitharaman speech HIGHLIGHTS (Economic Packages)

Posted by CA Pankaj Kumar Vats
On 13 May 2020

It is the Finance Minister speech today on 13th May 2020 and lots of facts and figures have been provided in this speech. So it makes difficult to understand that what all are the points out of the detailed speech, that helps and relates to the businesses.
Therefore, we have identified all the important points and have complied them at one place for more clarity.

Be it an extension of due dates of tax filings, schemes of loans for MSME and others, here is all information in simple words, Finance Minister said in her press briefing:-

1) The New Financial support maybe around 60% or Rs. 12-13 lakh crore of the offer of Rs. 20 lakh. And it will cater to various sections including cottage industry, MSMEs, laborers, middle class, and others.

2) Rs. 3 Lakh crore Collateral -Free Automatic Loans for Businesses, including MSME:

  • Businesses/MSMEs have been badly hit due to COVID 19, need additional money to meet the business requirements of operative liabilities and working capital.
  • Emergency Credit Line to Businesses/MSMEs from Banks and NBFCs up to 20% of the entire outstanding credit as on 29th Feb 2020
  • Borrowers with up to Rs. 25 crore outstanding and Rs. 100 crore turnover, are eligible to get this benefit
  • Loans to have a tenor of 4 years with a moratorium of 12 months on Principle repayment.
  • Interest also to be capped
  • 100% credit guarantee cover to Banks and NBFCs on Principle and Interest 
  • The last date to avail the benefit of this scheme is 31st Oct 2020
  • No Guarantee Fee and no fresh collateral 

3) Rs. 20,000 crore liquidity to Stressed MSME through the subordinate debt-based scheme. Govt to provide Rs. 4,000 crore to CGTMSE for this.

4) Rs 50,000 crore equity infusion for MSMEs through Fund of Funds. It will be operated through a Mother Fund and few daughter funds. This will help to expand MSME size as well as capacity. Fund of Funds with a corpus of Rs. 10,000 crore will be set up. This fund will provide equity funding for MSMEs with growth potential and viability. Fund of Funds will be operated through a Mother Fund and a Few daughter funds. This will help MSMEs to expand capacity and eventually get listed on the stock exchange.

5) The definition of MSME has been changed. The new definition is as follows:-

Classification: Manufacturing and Services 

Micro: Investment < Rs. 1 crore And Turnover < Rs. 5 crore
Small: Investment < Rs. 10 crore And Turnover < Rs. 50 crore
Medium: Investment < Rs. 20 crore And Turnover < Rs. 100 crore

6) Global tenders to be disallowed up to Rs. 200 crore. Now global tenders will be disallowed in Govt procurement tenders up to Rs. 200 crore. This will help MSMEs to increase their business. It is a step towards self-reliance India and support make in India.

7) MSME receivables from Govt and CPSEs to be released in 45 days.

8) Statutory PF contribution of both employer and employee will be reduced to 10% each from the existing 12% each for all establishments covered by EPFO for the next 3 months.

9) Under PMGKP, payment of 12% employer and 12% employee contribution towards EPF account for the eligible establishment has been extended further for the next three months.

10) Extension of up to 6 months (without cost to the contractor) to be provided by all Central Agencies (like Railway Ministry of Road Transport, Central Public Work Dept, etc). Further Govt agencies to partially release the bank guarantees, to extent contracts are partially completed to ease the cash flows.

11) Extension of Registration and Completion Date of Real Estate Projects under RERA.

12) The rates of Tax Deduction at Source (TDS) for non-salaried specific 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. These reduced rates of TDS and TCS will be applicable for the remaining part of the Financial Year and will end on 31st March 2021. The example of specified payments is payment for contracts, professionals fee, interest, rent, etc.

13) All pending refunds to Charitable Trust and Non-Corporate businesses & Professionals including proprietorship, partnership, LLP, and Co-operatives shall be issued immediately.

14) The due date for all income tax returns for FY 2019-20 will be extended from 31st July 2020 & 31st Oct 2020 to 30th Nov 2020.

15) The due date for Tax Audit will be extended from 30th Sept 2020 to 31st Oct 2020

16) Date of Income Tax assessment getting barred on 30th Sept 2020 extended to 31st Dec 2020 and those getting barred on 31st March 2021 will be extended to 30th Sept 2021

17) Period for Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st Dec 2020

Conclusion: The Major benefits have been given to the MSMEs, So the eligible business must take the benefits provided by the Govt of India to MSMEs. Tax Filing due dates have been extended to Nov 2019. TDS, TCS & EPF compliance has to be done carefully because of the change in rates.

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