FM Nirmala Sitharaman Press Conference Highlights (May 13, 2020)
16 Key Announcements by Union Finance Minister Nirmala Sitharaman, on 13th May, on a slew of measures to help businesses, including MSMEs are discussed in this article. Rs.20 Lakh Cr stimulus package was announced by Prime Minister Narendra Modi to recover from the economic impact of the coronavirus pandemic, to spur growth and to help build a self-reliant India.
16 Key Announcements by FM Nirmala Sitharaman (May 13, 2020)
Lets discuss the key announcements by Nirmala Sitharaman, Finance Minister, India in the Press Conference held on May 13, 2020.
Relating to MSMEs
1. Eligibility Criteria of MSME has been Revised
2. Global Tenders will be disallowed in Government Procurements up to Rs. 200 Crores. This step will enable MSMEs in India to supply to the Big Projects in India and it will give a chance to Small and Medium size units to compete with the other big suppliers. This will also promote the ‘Make In India’ Project.
3. Post COVID, Trade-Fairs, Exhibitions are going to be very difficult. Therefore, E-markets linkage is provided across the board for all the MSMEs to enable them to find their market. In case of all the Government Projects and the projects of CPMEs, where the amounts are payable to the MSMEs, shall be cleared within next 45 days.
4. Collateral Free Automatic Loans of Rs. 3 Lakhs Crores is provided for MSMEs. This will benefit 45 Lakhs of small businesses. This loan will have 4 year tenure and 12 months of Moratorium Period.
5. Rs. 20,000 Crores subordinate debt will be provided for the Stressed MSMEs. This would benefit around 2 Lakhs businesses.
6. Fund of Funds shall be created for MSMEs, which will infuse Rs. 50,000 crores equity in MSMEs with Growth Potential.
Relating to EPF
- 7. Considering the COVID-19 impact, Government of India decided to bear the total EPF burden of the establishments (both employee and employer contribution)
- Having not more than 100 employees AND
- 90% employees of such establishment earning salary of less than 15,000
- Earlier, this burden was decided to be borne for 3 months i.e. March 2020, April 2020 and May 2020.
- Due to this announcement, around 3.60 Lakhs establishments were benefited.
- Now, Government has decided to extend this support for further 3 months starting from June 2020 to August 2020.
- This will bring infusion of around Rs. 2,500 Crores in EPF Scheme. And 72.22 Lakh employees will be benefited.
8. EPF Contribution % of the employees who are not covered in the above scheme, is reduced from 12% to 10%.
- This is applicable to the contribution of Employer as well. Therefore, now the total contribution of 24% per month has been reduced to 20% per month.
- This relaxation is given for next three months i.e. June, July and August 2020. It means the in-hand salary of employees will increase and also, it will bring the liquidity of Rs. 6750 Crores.
- However, this relaxation is not applicable for Central Government Employees and State Government Employees. Their EPF contribution shall remain 12% per month as before.
Relating to NBFCs and MFIs
9. For NBFC, Housing Finance Corporations and Micro Finance Institutions
- A Special Liquidity scheme of Rs.30,000 Crore has been introduced for NBFCs, HFCS and Micro-Finance Institutions (MFIs).
- These institutions are finding it difficult to raise money in the debt market and not able to take benefit of the relaxations provided by RBI and Government of India.
- Under this scheme Investment, investment will be made in both Primary and Secondary market transactions in investment grade Debt Papers of the above institutions.
- This will provide help to struggling NBFCs. (Specially to NBFCs having access to MSMEs.) Also, the Securities will be fully guaranteed by Government of India.
10. Rs. 45,000 Crores Partial Credit Guarantee Scheme
- This is an existing scheme which has expanded its scope.
- Under this scheme, AA rated papers and below that, and even unrated papers will all be included for investment. Also, first 20% loss will be borne by Government of India
Relating to DISCOMs
11. Government of India will provide a liquidity of Rs. 90,000 crore to Fund-Starved Electricity Distribution Companies (DISCOMs). This will be one time infusion. Power Finance Corporation (PFC) and Rural Electrification Corporation. REC will infuse this liquidity by raising an amount from the market and against the receivable of the DISCOMs. This infusion will help the DISCOMs in clearing their dues. FM highlighted that, the benefit should be passed on to the end consumer.
Relating to Contractors
12. Contractors are given an extension of 6 months to complete their on-going projects of Railways, Roads and PWD Contracts. This will also cover Goods and Services Contracts.
Relating to Real Estate Sector
13. FM Announced that, the contractors in the real estate sector can treat COVID-19 as ‘Act of God’ and to that extent be flexible about the execution of contract signed. If the expiry of the project is on or after 25th March 2020, then the date of completion shall be extended by 6 months on suo-moto basis. The revised project registration certificate and completion certificate shall be issued accordingly.
Relating to Direct Taxes
14. All the TDS and TCS rates are reduced by 25% up to 31st March 2021. If TDS was deductible@10%, then now it will be deductible only @ 7.5% .
- This provision is effective from 14th May 2020. This amendment will bring approximately Rs.40,000 Cr of liquidity.
- Also, FM announced that the Pending IT Refunds of Charitable Trusts, Professionals, Proprietors, Partnership Firms, LLPs and other Non-Corporate Entities shall be paid immediately.
15. Finance Minister announced an extension in the due dates for FY 2019-20 and accordingly.
- All the Due Dates of all income tax returns ending on 31st July 2020 are extended to 30th November,2020. Due date for Tax Audit is extended from 30th September 2020 to 31st October 2020.
- Also, it may happen that the last date of hearing or assessment may get barred and therefore, if the due date of assessment is 30th September, 2020, now it has been extended to 31st December 2020. Also, the due dates which are getting barred on 31st March 2021, are extended up to 30th Sept 2021.
Relating to Indirect Taxes
16. Last date of Vivaad Se Vishwas Yojana has been extended from 30th September 2020 to 31st December 2020. This extension will take effect without any additional payment on the part of the assessee.