The Rs 20 lakh crore stimulus package announced by Prime Minister Narendra Modi had its first day of revelation today. This part one of the next four to five days of announcement revealed the package covered the MSMEs, EPF, NBFCs, HFCs and Micro Finance, discoms, contractors, real estate and tax. Here are the highlights of the announcement:
MSME
1. Three lakh crore package for MSMEs in the form of collateral-free automatic loans to companies with a Rs 25 crore loan outstanding and Rs 100 crore turnover. The loan will have a tenure of four years with 12 months of moratorium. The loans will be disbursed by banks and NBFCs and will be backed by 100 per cent credit guarantee by the government of India.
2. Subordinate loans of Rs 20,000 will be provided to stressed MSMEs or those classified as NPA.
3. Fund of funds of Rs 50,000 crore to be created to provide equity infusion to MSMEs for capacity building and expansions.
4. Change in the definition of MSMEs to include a larger universe and to eliminate the issue of MSMEs not outgrowing their limits to avail benefits. Additional criteria of turnover included.
5. Government procurement tenders up to Rs 200 crore to disallow global tender offers. This will allow local players to participate in these tenders.
6. Help in e-linkage and participation in trade fairs. All PSUs to release all receivables due to MSMEs within 45 days.
EPF
1. Extension of EPF support for another three months. Rs 5,000 crore EPF support to be given to business establishments with less than 100 employees and 90 per cent of them drawing less than Rs 15,000. The employer and employee contribution of 12 per cent each will be paid by the government.
2. Statutory PF contributions which are not covered in the above contribution will now be only 10 per cent instead of 12 per cent. This will provide a liquidity of Rs 6,750 crore.
NBFCs, HFCs and Micro Finance
1. A liquidity scheme of Rs 30,000 crore to be provided to low rated (investment graded) NBFCs, housing finance companies and microfinance institutions through primary and secondary market transactions. The securities will be fully guaranteed by GoI.
2. To provide Rs 45,000 crore liquidity through partial credit guarantee scheme. This is an existing scheme of which the scope will be increased. The first 20 per cent loss will be covered by the government.
Discoms
Emergency liquidity injection of the discoms of Rs 90,000 crore against all the receivables. This will be done through REC and PFC. Loans to be given against state guarantees for exclusive purpose of discharging liabilities of Discoms to power generating companies.
Contractors
1. Upto six months extension to the contractors for the contract execution without any penalty.
2. Government agencies will release partial bank guarantees up to the work finished to provide liquidity to contractors.
Real estate
The Ministry of Housing and Urban Affairs will issue advisories to respective regulatory bodies, so that they can treat the COVID-19 period as an event of force majeure clause. Covid-19 will be considered as an act of god. Through this, project registration and construction deadline will be increased for six months for all registered projects expiring on or after 25th March, 2020 without individual applications.
Tax related proposal
1. 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 per cent of the existing rates. This will provide a relief of Rs 50,000 crore and will be applicable till March 31, 2020.
2. All pending refunds to charitable trusts and noncorporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately
3. Due date for all income-tax returns for FY 2019-20 will be extended from 31st July, 2020 & 31st October, 2020 to 30th November, 2020 and Tax audit from 30th September, 2020 to 31st October, 2020.
4. Date of assessments getting barred on 30th September, 2020 extended to 31st December, 2020 and those getting barred on 31st March, 2021 will be extended to 30th September, 2021.
5. Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December, 2020.
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