Much awaited and hyped economic stimulus - “Atmanirbhar Bharat” - would provide INR 5.94 lakh crore liquidity support for various sectors with special focus on MSMEs. This mammoth support came to the lamp light on Wednesday when it was revealed by the Finance Minister Nirmala Sitharaman.
The Prime Minister’s announcement of this special economic package, titled ‘Atmanirbhar Bharat Abhiyan’ will be providing ₹20 lakh crore and is projected to be almost 10 percent of India’s GDP.
Besides MSMEs, Sitharaman highlighted the first portion of measures comprising 16 steps for real estate, contractor, direct tax assesses, employees-employer, power distribution companies (DISCOMS).
Sitharaman has also projected that this package will help almost 45 lakh units to resume business activity and safeguard jobs. Also, she has listed six measures for MSMEs that include easier credit and equity and redefining these units.
There will be a Fund of Funds (FoF) in order to provide equity funding for MSMEs with growth viability and potential which is said to be operated through a Mother Fund with few of its daughter funds. Aiding to expand MSME size as well as capacity, INR 50,000 crore of funds would be available at daughter funds level. Thus, this initiative will boost MSMEs and help them get enlisted on the mainstream board of Stock Exchanges.
Government is also on a mission to end the difference between services and the manufacturing sector. They have carried out a mission to change the basic definition of MSME itself. For instance, units which will have investment of less than INR 1 crore with turnover less than INR 5 crore would be defined as Micro units. Same way, units which will have investment between INR 1 crore to INR 10 crore with turnover of about INT 5 crore and turnover less than INR 50 crore would be categorised as Small Enterprises. And lastly, units with the investment of INR 10 crore to INR 20 crore with turnover between INR 50 crore to INR 100 crore would be now called as Medium Enterprises.
Sitharaman has also stated that all the units with upto 100 employees, where 90 percent are getting a salary of INR 15k would continue to get Government’s support for the payment of 12 percent of employer and 12 percent employee contributions. Moreover, according to Pradhan Mantri Garib Kalyan Package (PMGKP), all the payments of 12 percent of employer and 12 percent of employee contributions is made into EPF accounts of eligible establishments. It will now be for June, July and August and earlier it was provided for the months of March, April and May.
While, for other industrial units, both employer and employee statutory PF contribution will be reduced to 20 percent each from the existing 12 percent (each for all establishments covered by EPFO for the next three months). However, this will not be applicable for Central and States PSUs.
Sitharaman has also said that there will be two kinds of funds for NBFCs so as to provide liquidity support to them, i.e., INR 45,000 crore partia; credit scheme and 30,000 crore Special Liquidity Scheme. She expects that this will significantly benefit MSMEs as their credit flow will dramatically improve. And for power distribution companies (DISCOMS), they have decided to offer INR 90,000 which would be provided by Rural Electrification Corporation and Power Finance Corporation against receivables.
When it comes to taxpayers, TDS (Tax Deduction at Source) for non-salaried specified payments made to residents and rates of TCS (Tax Collection at Source) for the specified receipts will be reduced by 25 percent out of the existing rates. She also added that this will be applicable on payment of professional fees, interest, rent, dividend, commision, brokerage, contract, among others for FY2020-21.
While, it has also been decided that the due date of all income-tax return for FY 2019-20 (Assessment Year 2020-21) will be extended to November 30 from July 31 (individual) October 31 for businesses.