Key Updates on Relief Measures Announced by our FM


Key Updates on Relief Measures Announced by our FM

FM ANNOUNCED SPECIAL RELIEF AND CREDIT SUPPORT TO ECONOMY DATED 13.05.2020

आत्मनिर्भर भारत अभियान (Self-Reliant India Movement)

Hon’ble Prime Minister Shri Narendra Modi yesterday announced a Special economic and comprehensive package of Rs 20 lakh crores – equivalent to 10% of India’s GDP.

Key Highlights:

  • Rs. 3 lakh crore Emergency Working Capital Facility for Businesses, including MSMEs
  • Rupees 20,000 crore Subordinate Debt for Stressed MSMEs
  • Rs 50,000 crore equity infusion through MSME Fund of Funds
  • New Definition of MSME and other Measures for MSME
  • No Global tenders for Government tenders of upto Rs 200 crore
  • Extending the Employees Provident Fund Support for business and organized workers for another 3 months for salary months of June, July and August 2020
  • EPF Contribution to be reduced for Employers and Employees for 3 months to 10% from 12% for all establishments covered by EPFO for next 3 months
  • Rs. 30,000 crore Special Liquidity Scheme for NBFC/HFC/MFIs
  • Rs. 45,000 crore Partial credit guarantee Scheme 2.0 for Liabilities of NBFCs/MFIs
  • Rs 90,000 crore Liquidity Injection for DISCOMs
  • Relief to Contractors given by extension of up to six months for completion of contractual obligations, including in respect of EPC and concession agreements
  • Relief to Real Estate Projects the registration and completion date for all registered projects will be extended up to six months.
  • Tax relief to business as pending income tax refunds to charitable trusts and non-corporate businesses and professions to be issued immediately
  • Reduction in Rates of ‘Tax Deduction at Source’ and ‘Tax Collected at Source” by 25% for the remaining period of FY 20-21
  • Due Dates for various tax related compliances extended

Following measures in details were announced today:-

1. Rs 3 lakh crore Emergency Working Capital Facility for Businesses, including MSME

To provide relief to the business, additional working capital finance of 20% of the outstanding credit as on 29 February 2020, in the form of a Term Loan at a concessional rate of interest will be provided. This will be available to units with upto Rs 25 crore outstanding and turnover of up to Rs 100 crore whose accounts are standard. The units will not have to provide any guarantee or collateral of their own. The amount will be 100% guaranteed by the Government of India providing a total liquidity of Rs. 3.0 lakh crores to more than 45 lakh MSMEs.

2. Rs 20,000 crore Subordinate Debt for Stressed MSMEs

Provision made for Rs. 20,000 cr subordinate debt for two lakh MSMEs which are NPA or are stressed. Government will support them with Rs. 4,000 Cr. to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE). Banks are expected to provide the subordinate-debt to promoters of such MSMEs equal to 15% of his existing stake in the unit subject to a maximum of Rs 75 lakhs.

3. Rs 50,000 crores equity infusion through MSME Fund of Funds

Govt will set up a Fund of Funds with a corpus of Rs 10,000 crore that will provide equity funding support for MSMEs. The Fund of Funds shall be operated through a Mother and a few Daughter funds. It is expected that with leverage of 1:4 at the level of daughter funds, the Fund of Funds will be able to mobilise equity of about Rs 50,000 crores.

4. New definition of MSME

Definition of MSME will be revised by raising the Investment limit. An additional criteria of turnover also being introduced. The distinction between manufacturing and service sector will also be eliminated.

5. Other Measures for MSME

e-market linkage for MSMEs will be promoted to act as a replacement for trade fairs and exhibitions. MSME receivables from Government and CPSEs will be released in 45 days

6. No Global tenders for Government tenders of up to Rs 200 crores.

General Financial Rules (GFR) of the Government will be amended to disallow global tender enquiries in procurement of Goods and Services of value of less than Rs 200 crores

7. Employees Provident Fund Support for business and organised workers

The scheme introduced as part of PMGKP under which Government of India contributes 12% of salary each on behalf of both employer and employee to EPF will be extended by another 3 months for salary months of June, July and August 2020. Total benefits accrued is about Rs 2500 crores to 72.22 lakh employees.

8. EPF Contribution to be reduced for Employers and Employees for 3 months

Statutory PF contribution of both employer and employee reduced to 10% each from existing 12% each for all establishments covered by EPFO for next 3 months. This will provide liquidity of about Rs.2250 Crore per month.

9. Rs 30,000 crores Special Liquidity Scheme for NBFC/HFC/MFIs

Government will launch Rs 30,000 crore Special Liquidity Scheme, liquidity being provided by RBI. Investment will be made in primary and secondary market transactions in investment grade debt paper of NBFCs, HFCs and MFIs. This will be 100 percent guaranteed by the Government of India.

10. Rs 45,000 crores Partial credit guarantee Scheme 2.0 for Liabilities of NBFCs/MFIs

Existing Partial Credit Guarantee scheme is being revamped and now will be extended to cover the borrowings of lower rated NBFCs, HFCs and other Micro Finance Institutions (MFIs). Government of India will provide 20 percent first loss sovereign guarantee to Public Sector Banks.

11. Rs 90,000 crore Liquidity Injection for DISCOMs

Power Finance Corporation and Rural Electrification Corporation will infuse liquidity in the DISCOMS to the extent of Rs 90000 crores in two equal instalments. This amount will be used by DISCOMS to pay their dues to Transmission and Generation companies. Further, CPSE GENCOs will give a rebate to DISCOMS on the condition that the same is passed on to the final consumers as a relief towards their fixed charges.

12. Relief to Contractors

All central agencies like Railways, Ministry of Road Transport and Highways and CPWD will give extension of up to 6 months for completion of contractual obligations, including in respect of EPC and concession agreements

13. Relief to Real Estate Projects

State Governments are being advised to invoke the Force Majeure clause under RERA. The registration and completion date for all registered projects will be extended up to 6 months and may be further extended by another 3 months based on the State’s situation. Various statutory compliances under RERA will also be extended concurrently.

14. Tax Relief to Business

The pending income tax refunds to charitable trusts and non-corporate businesses and professions including proprietorship, partnership and LLPs and cooperatives shall be issued immediately.

15. Tax related measures

Source: News / Press Conference & Twitter

https://twitter.com/FinMinIndia

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IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION.

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cslalitrajput

Lalit Rajput is a qualified Company Secretary and graduate with 5+ years’ experience in handling Secretarial and Compliance management. Working as Proprietor at Lalit Rajput &Associates, Company Secretaries and Compliance Head at EDUXGURU. Key areas include handling Compliances related to Secretarial, Start-ups, SEBI, FEMA, Labour Laws, GST, NCLT, IPR, MCA/ROC, RTA etc. He has started his career in Adventz Group with one of leading EPC Company, Kalindee Rail Nirman - A Div. Of Texmaco Rail & Engineering Limited (erstwhile known as Kalindee Rail Nirman (Engrs.) Ltd.) and after that worked with Outcome Solutions & Services LLP, a Risk Advisory firm and S. Srinivasan & Co.,Leading Company Secretaries firm in Mumbai and Chennai. He is also an active blogger/Author at many platform and has written various articles on: Taxguru, Compliance Calendar LLP, Studycafe, Caclubindia, Casansaar, theTaxTalk, Lawyer’s Connect, IPleaders, Governance Professionals, Lawyers club India, Dealout Professionals and many more. He has also blogger at ENLIGHTEN GOVERNANCE and contributed articles in ICSI E-Corporate Manager published by ICSI Ahmadabad Chapter.

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