Rs 20 Lakh Crore Economic Stimulus by FM: A bird’s eye view

Last Updated at: May 14, 2020
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Rs 20 Lakh Crore Economic Stimulus by FM_ A Bird's Eye View

In a sequel to yesterday’s announcement by Honorable Prime Minister, FM Nirmala Sitharaman has announced the first set of details regarding Rs 20 lakh Crore’s economic stimulus in a press conference today. She called it the “Aatma Nirbhar Bharat” (Self-reliant India) package, with a special focus on the middle-class, laborers, MSMEs, and industry. 

The key takeaways from the announcements made today are as follows-

For MSMEs

  • Collateral free automatic loans for MSMEs with a turnover of more than Rs 100 Crore and up to Rs 25 Crore outstanding. The tenure of such loans will be for 4 years and no principal repayment is required for the initial 12 months on economic stimulus. This will benefit 45 lakh MSME units to start afresh and safeguard jobs.
  • A subordinate debt of Rs 20,000 crore to benefit stresses MSMEs/NPAs. It is expected to benefit about 2 lakh MSMEs.
  • Equity infusion of Rs 50,000 Crore through Mother Fund-Daughter Fund. It will include a fund of funds worth Rs 10,000 Crore to help MSMEs to expand capacity.

The new definition of MSMEs

  • Micro units- Investment limit up to Rs 1 crore, turnover limit up to Rs 5 Crore
  • However, small units- Investment limit up to Rs 10 crore, turnover limit up to Rs 50 Crore
  • Medium units- Investment limit up to Rs 20 crore, turnover limit up to Rs 100 Crore
  • Moreover, government contracts below Rs 200 Crores will no longer be placed under the global tender route
  • E-market linkages will be ensured across the board to cover for non-participation in trade fairs because of the pandemic situation. All receivables pending with the PSUs and Govt of India will be cleared within 45 days

For employees

  •  A liquidity relief of Rs 2500 crore to benefit over 72 lakh employees across EPF establishments. Govt. of India will pay the EPF contribution for 3 months till August.
  • Moreover, the Statutory EPF contribution for all private organizations and their employees has been reduced to 10% from the existing 12% for the next 3 months

For NBFCs

  •  A special liquidity scheme of Rs 30,000 Crore for investing in grade debt paper of NBFCs. These NBFCs would include those who are also investing in SMEs.
  • A partial credit guarantee scheme worth Rs 45,000 crore. The initial loss of 20% will be borne by the Govt. of India, which is also the guarantor. 

get Legal Advice

For DISCOMS

  • A one-time emergency infusion of liquidity worth Rs 90,000 crores to all DISCOMS against all the receivables.
  • Additionally, the States will be the guarantor and the benefits will be passed to the consumers.

For contractors

  • All central Govt. agencies will provide an extension of up to 6 months (with no additional cost to the contractor) to comply with the contract conditions.
  • A partial release of Bank Guarantee, depending on the progress of work

For real estate

  • The Ministry of Urban Development will issue advisory to the States/UTs to treat COVID 19 as a Force Majeure condition
  • Additionally, for the projects expiring on or after 25th March 2020, the regulators can extend the dates of registration/completion by another 6 months.

Proposals related to tax rates

  • The existing rates of TDS ( Tax Deducted at Source) and TCS ( Tax Collection at Source) will be reduced by 25% from tomorrow till the end of this Financial Year.
  • Moreover, this is expected to release Rs 50,000 crores

Dates are extended for

  • All Income Tax return filings for FY 2019-20 from 31st July to 30th November 2020.
  • Vivaad se Vishwas scheme till 31st December 2020, with no additional payment
  • Additionally, assessment getting barred from 30th Sept to 31st December 2020
  • Assessment getting barred from 31st March 2021  to 30th September 2021

Other important points

  • IT refunds worth Rs 18,000 crore have been expedited to improve liquidity
  • All IT refunds for LLPs, Pvt Ltd, partnerships, proprietorships, charitable trusts and so on will be processed immediately 

The FM concluded by saying that the overall focus will be to build an “Aatma Nirbhar Bharat “based on land, labor, liquidity, and law. Therefore, she said that she will come up with more details about the Economic Stimulus and package in the next few days.  

 

 

 

0

Rs 20 Lakh Crore Economic Stimulus by FM: A bird’s eye view

339

In a sequel to yesterday’s announcement by Honorable Prime Minister, FM Nirmala Sitharaman has announced the first set of details regarding Rs 20 lakh Crore’s economic stimulus in a press conference today. She called it the “Aatma Nirbhar Bharat” (Self-reliant India) package, with a special focus on the middle-class, laborers, MSMEs, and industry. 

The key takeaways from the announcements made today are as follows-

For MSMEs

  • Collateral free automatic loans for MSMEs with a turnover of more than Rs 100 Crore and up to Rs 25 Crore outstanding. The tenure of such loans will be for 4 years and no principal repayment is required for the initial 12 months on economic stimulus. This will benefit 45 lakh MSME units to start afresh and safeguard jobs.
  • A subordinate debt of Rs 20,000 crore to benefit stresses MSMEs/NPAs. It is expected to benefit about 2 lakh MSMEs.
  • Equity infusion of Rs 50,000 Crore through Mother Fund-Daughter Fund. It will include a fund of funds worth Rs 10,000 Crore to help MSMEs to expand capacity.

The new definition of MSMEs

  • Micro units- Investment limit up to Rs 1 crore, turnover limit up to Rs 5 Crore
  • However, small units- Investment limit up to Rs 10 crore, turnover limit up to Rs 50 Crore
  • Medium units- Investment limit up to Rs 20 crore, turnover limit up to Rs 100 Crore
  • Moreover, government contracts below Rs 200 Crores will no longer be placed under the global tender route
  • E-market linkages will be ensured across the board to cover for non-participation in trade fairs because of the pandemic situation. All receivables pending with the PSUs and Govt of India will be cleared within 45 days

For employees

  •  A liquidity relief of Rs 2500 crore to benefit over 72 lakh employees across EPF establishments. Govt. of India will pay the EPF contribution for 3 months till August.
  • Moreover, the Statutory EPF contribution for all private organizations and their employees has been reduced to 10% from the existing 12% for the next 3 months

For NBFCs

  •  A special liquidity scheme of Rs 30,000 Crore for investing in grade debt paper of NBFCs. These NBFCs would include those who are also investing in SMEs.
  • A partial credit guarantee scheme worth Rs 45,000 crore. The initial loss of 20% will be borne by the Govt. of India, which is also the guarantor. 

get Legal Advice

For DISCOMS

  • A one-time emergency infusion of liquidity worth Rs 90,000 crores to all DISCOMS against all the receivables.
  • Additionally, the States will be the guarantor and the benefits will be passed to the consumers.

For contractors

  • All central Govt. agencies will provide an extension of up to 6 months (with no additional cost to the contractor) to comply with the contract conditions.
  • A partial release of Bank Guarantee, depending on the progress of work

For real estate

  • The Ministry of Urban Development will issue advisory to the States/UTs to treat COVID 19 as a Force Majeure condition
  • Additionally, for the projects expiring on or after 25th March 2020, the regulators can extend the dates of registration/completion by another 6 months.

Proposals related to tax rates

  • The existing rates of TDS ( Tax Deducted at Source) and TCS ( Tax Collection at Source) will be reduced by 25% from tomorrow till the end of this Financial Year.
  • Moreover, this is expected to release Rs 50,000 crores

Dates are extended for

  • All Income Tax return filings for FY 2019-20 from 31st July to 30th November 2020.
  • Vivaad se Vishwas scheme till 31st December 2020, with no additional payment
  • Additionally, assessment getting barred from 30th Sept to 31st December 2020
  • Assessment getting barred from 31st March 2021  to 30th September 2021

Other important points

  • IT refunds worth Rs 18,000 crore have been expedited to improve liquidity
  • All IT refunds for LLPs, Pvt Ltd, partnerships, proprietorships, charitable trusts and so on will be processed immediately 

The FM concluded by saying that the overall focus will be to build an “Aatma Nirbhar Bharat “based on land, labor, liquidity, and law. Therefore, she said that she will come up with more details about the Economic Stimulus and package in the next few days.  

 

 

 

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