Crucial Announcements by FM Nirmala Sitharaman to Provide Relief to SMEs/ MSMEs

Indian Prime Minister Narendra Modi, in his style, on 12 May 2020  declared a humongous relief amount, which promised to go beyond giving quick help against coronavirus affected people, to make India a confident financial powerhouse in the decade to come. PM on Tuesday suggested vocal for local and said India had arranged a comprehensive relief package of Rs 20 lakh crore or 10 percent of the Gross Domestic Product (GDP), including those effectively declared by the Reserve Bank of India and Government earlier. Finance Minister Nirmala Sitharaman shared insights concerning the critical improvement of the Relief package reported by PM Narendra Modi to restore the economy. Here are the updates shared by FM Nirmala Sitharaman to support & give help to MSMEs.

Highlights of Relief Package

• Collateral-free automatic loans worth Rs 3 lakh crore
• TDS and TCS reduced by 25 percent, with effect from May 14, 2020, to March 21, 2021.
• Two Lakh MSMEs are likely to benefit
• Rs. 4,000 Cr. support to  CGTMSE
• ‘Atmanirbhar Bharat Abhiyan’ will be based on five pillars — economy, infrastructure, technology-driven system, vibrant demography, and demand. 
• Rs 50,000-cr equity infusion through ‘Fund of Funds’ for MSMEs
• The FoF scheme proposes to buy up to 15 percent equity in MSMEs, with a high credit rating.
• Rs. 90,000 Cr. Liquidity injection for DISCOMs
• Rs. 45,000 Cr. Partial-Credit guarantee scheme 2.0 for NBFCs
• Rs. 30,000 cr. special liquidity scheme for NBFCs/ HFCs/ MFIs

The revised definition of MSMEs

Disallow the Global tender up to Rs 200 crores 

Indian MSMEs and different organizations have regularly confronted unreasonable rivalry from remote organizations. Consequently, Global tenders will not be allowed in Government acquirement tenders up to Rs 200 crores. Necessary amendments to General Financial Rules will be modified. This will be a move towards reinforcing Make in India & Self-Reliant India, helping MSMEs increment their business. 

Other interruption for MSMEs 

• MSMEs at present face issues of showcasing and liquidity due to COVID. e-advertise linkage for MSMEs to be elevated to go about as a swap for exchange fairs and displays 
• Fintech will be utilized to upgrade exchange based loaning using the information produced by the e-commercial market place
• The government has been persistently observing settlement of duty to MSME sellers from Government and Central Public Sector Undertakings. 
• MSME receivables from Gov and CPSEs to be discharged in 45 days

Rs. 2500 crore EPF support for business and employees for 3 additional months 

Organizations are proceeding to confront financial issues as things get standardized. In this manner, under Pradhan Mantri Garib Kalyan Package (PMGKP), payment of 12% of manager and 12% representative commitments was made into EPF records of qualified foundations. While this was given before to compensation long stretches of March, April, and May 2020, it presently will be reached out by an additional 3 months to pay a very long time of June, July, and August 2020. This will give liquidity alleviation of Rs 2500 cr to 3.67 lakh foundations and for 72.22 lakh workers 

EPF contribution reduced for business and employees for 3 months-Rs 6750 crores liquidity support 

• Legal PF contribution of both business and worker will be reduced to 10% each from existing 12% each for all foundations secured by EPFO for the next 3 months 
• CPSEs and State PSUs will anyway keep on contributing 12% as business commitment 
• This plan will be appropriate for employees who are not qualified for 24% EPF support under PM Garib Kalyan Package and its augmentation 
• This will give alleviation to about 6.5 lakh foundations secured under EPFO and about 4.3 crore such workers 
• This will give liquidity of Rs 6750 Crore to businesses and workers more than 3 months

Rs 30,000 crore special liquidity Scheme for NBFCs/HFCs/MFIs 

NBFCs/HFCs/MFIs are thinking that it’s hard to fund-raise in the debt markets. The government will dispatch a Rs 30,000 crore Special Liquidity Scheme. Under this plan in both primary & secondary market investments will be made against grade debt paper of NBFCs/HFCs/MFIs. 

Rs 45,000 crore partial credit guarantee scheme 2.0 for NBFCs 

• NBFCs, HFCs and MFIs with low FICO score expect liquidity to do crisp loaning to MSMEs and people 
• Existing PCGS plan to be stretched out to cover borrowings, for example, essential issuance of Bonds/CPs (obligation side of accounting reports) of such substances 
• First, 20% of misfortune will be borne by the Guarantor for example Administration of India. 
• A paper and underneath including unrated paper qualified for venture (esp. applicable for some MFIs). For about Rs 45,000 crores liquidity will be provided under this scheme

Rs. 90,000 Cr. liquidity injection for DISCOMs 

• Incomes of Power Distribution Companies (DISCOMs) have dropped. Extraordinary income issues complemented by demand reduction. DISCOM payables to Power Generation and Transmission Companies is at present ~ Rs 94,000 cr 
• PFC/REC to mix liquidity of Rs 90,000 cr to DISCOMs against receivables 
• Advances to be given against State ensures for the select motivation behind releasing liabilities of Discoms to Gencos 
• Linkage to explicit exercises/changes: Digital payments office by Discoms for purchasers, liquidation of the remarkable contribution of State Governments, plan to lessen money related and operational misfortunes 
• Focal Public Sector Generation Companies will offer a discount to Discoms which will be given to the last purchasers (enterprises)

Relief to Contractors

• Extension of as long as a half year (without expenses to the temporary worker) to be given by every Central Agency (like Railways, Ministry of Road Transport and Highways, Central Public Works Dept, and so forth). This spreads development/works and products and enterprises contracts, commitments like finishing of work, halfway achievements and so forth and augmentation of concession period in PPP contracts 
• Government offices to partially release bank guarantees, to the extent contracts are mostly finished, to ease incomes 

Expansion for Real Estate project under RERA 

• Unfavorably impact due to COVID and projects stand the danger of defaulting on RERA courses of events. Ministry of Housing and urban affairs will suggest states and UTs and their administrative experts in the accompanying impact in the following ways: 
• Treat coronavirus as an occasion of ‘power majeure’ under RERA 
• Issue new venture enrollment authentications consequently with reexamined courses of events 
• Broaden the enrollment and fulfilment date suo-moto by a half year for every single enlisted venture terminating on or after 25 March without singular applications 

Rs 50,000 crores liquidity through TDS/TCS rate reduced

• So as to give more assets at the disposal of the taxpayer, the rates of Tax Deduction at Source (TDS) for non-salaried indicated payments made to occupants and rates of Tax Collection at Source (TCS) for the predefined receipts will be diminished by 25% of the current rates. 
• Payment for the contract, proficient charges, intrigue, lease, profit, commission, business, and so forth will be qualified for this decreased pace of TDS 
• This decrease will be appropriate for the rest of the piece of the FY 2020-21 for example from tomorrow to 31 March 2021 

Other direct assessment measures 

• Every pending discount to charitable trusts and noncorporate organizations and callings including ownership, association, LLP and Co-agents will be given right away 
• Due date of all annual expense form for FY 2019-20 will be extended from 31 July 2020 and 31 October 2020 to 30 November 2020 and Tax review from 30 September 2020 to 31 October 2020 
• Date of assessments getting barred on 30 September 2020 extended to 31 December 2020 and those getting barred on 31 March 2021 will extend to 30 September 2021 
• Time of Vivad se Vishwas Scheme for making payment without extra sum will extend
•  to 31 December 2020