Govt introduces Vivad Se Vishwas Scheme for Covid Relief to MSMEs; Application invited till 30th June

As stated in the Union Budget 2023-24, the Central Government has introduced the Vivad Se Vishwas Scheme to provide relief to Micro, Small, and Medium Enterprises (MSMEs) for the FY 2019-20. The deadline for submitting claims under the plan is June 30th, 2023.

The Ministry of Finance’s Department of Expenditure initiated the processes required to implement the MSMEs assistance programme. The scheme ‘Vivad se Vishwas I – Relief to MSMEs’ was introduced by the department.

In 2020, the Government of India announced the “Vivad se Vishwas” scheme to resolve unsettled tax disputes between taxpayers and the Income Tax Department. The scheme’s main goals are to resolve tax difficulties promptly and affordably, to avoid litigation, and to generate revenue for the government.

The central finance minister, Nirmala Sitharaman, included a relief plan for MSMEs in the Union Budget 2023. In the budget speech, the minister indicated that if MSMEs fail to complete contracts throughout the COVID period, the Government and Government undertaking will pay them for 95% of the forfeited money owing to bid or performance security.

The department of expenditure published an order outlining the scheme’s broad structure on February 6, 2023. The programme began on April 17, 2023.

The ministries are to reimburse the performance security, bid security, and liquidated damages forfeited or deducted as a result of the COVID outbreak. MSMEs prohibited for contract execution default during the COVID pandemic also enjoyed certain benefits.

Following benefits will be provided through the scheme to MSMEs affected during pandemic:

• 95% refund of Performance security forfeited.
• 95% refund of Bid security.
• 95% refund of liquidated damages refunded.
• 95% refund of Risk purchase amount realised.
• MSMEs’ debarment and revocation as a result of late contract execution.

Additionally, no interest shall be paid on such refunded amount.

Claimants may file claims through the Government e-Marketplace (GeM) website created specifically for the scheme. Only GeM will be used to process eligible claims.

The following criteria is mandatory for an MSME to receive the relief:

• MSME shall be registered as per relevant scheme of Ministry of MSME on the date of claim by the contractor/supplier.
• The original delivery and completion dates specified in the contract should be from February 19, 2020, to March 31, 2022.

During the COVID-19 pandemic, the Central Government launched many measures to provide financial help and relief to the MSME sector, including the Emergency Credit Line Guarantee Scheme (ECLGS), Subordinate Debt Scheme, Atmanirbhar Bharat Abhiyaan, Late Fee Waiver, PM SVANidhi Scheme, and others.