New Delhi: FM Nirmala Sitharaman Wednesday gave the details of the combined Rs 20-lakh crore stimulus package announced Tuesday night by Prime Minister Narendra Modi to help cushion Covid-19 blow.
The FM announced a facility of Rs 3 lakh crores collateral-free automatic loans for business, including micro, small and medium enterprise (MSMEs).
“The move will enable 45 lakh MSME units to resume business activity and also safeguard jobs,” FM Sitharaman said while announcing the first tranche of booster measures along with her deputy MoS Finance Anurag Thakur.
The finance minister reiterated the importance of “self-reliant India” (Atmanirbhar Bharat). She said the announcement of the Rs 20 lakh crore economic package for ‘Atmanirbhar Bharat’ is to spur growth in the country.
Here are the other key announcement made by FM Sitharaman.
Rs 3 lakh crores collateral-free automatic loans for businesses, including MSMEs
- Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover eligible
- Loans to have 4-year tenor with a moratorium of 12 months on principal repayment
- Interest to be capped
- 100 per cent credit guarantee cover to banks and NBFCs on principal and interest
- Scheme can be availed till 31st October 2020
- No guarantee fee, no fresh collateral
- 45 lakh units can resume business activity and safeguard jobs
Rs 20,000 crores subordinate debt for stressed MSMEs
- Stressed MSMEs need equity support. Two lakh MSMEs are likely to benefit’
- Functioning MSMEs which are NPA or are stressed will be eligible
- Govt will provide a support of Rs 4,000 crore to CGTMSE
- CGTMSE will provide partial credit guarantee support to banks
- Promoters of MSMEs will be given debt by banks, which will then by infused by promoter as equity in the unit.
Rs 2500 crore EPF support for Business and workers for 3 more months
- Under Pradhan Mantri Garib Kalyan Package, payment of 12% of employer and 12% employee contributions was made into EPF accounts of eligible establishments
- This was provided earlier for salary months of March, April and May 2020
- This support will be extended by another 3 months to salary months of June, July and August 2020
- This will provide liquidity relief of Rs 2500 crore to 3.67 lakh establishments and for 72.22 lakh employees.
Rs 50,000 crores liquidity through TDS/TCS rate reduction
- In order to provide more funds at the disposal of the taxpayers, 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% of the existing rates.
- Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS.
- This reduction shall be applicable for the remaining part of the FY 2020-21 i.e. from tomorrow to 31st March, 2021.
- This measure will release Liquidity of Rs. 50,000 crore.
Other Direct Tax Measures
- All pending refunds to charitable trusts and noncorporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately.
- Due date of all income-tax return 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.
- 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.
- Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December, 2020.
PM Modi, during his address to the nation, had said the economic package that is worth 10 per cent of GDP would play an instrumental role in the ‘Atmanirbhar Bharat Abhiyan’ (Self-reliant India campaign) and position the country for the post Covid-19 world. He had said that announcements made by the government over Covid earlier, decision of RBI, and the now announced package amounts to Rs 20 lakh crore, which would help every section including workers, farmers, middle class and industrial units.
PM Modi had said self-reliance would be based on five pillars— an economy that takes quantum jumps, not incremental gains; modern infrastructure; a technology-driven system; vibrant demography; and a demand and supply chain.