COVID-19 Relief Package for India: Summary and Latest Updates

COVID-19 Relief Package for India: Summary and Latest Updates  Amidst the ongoing lockdown 3.0 where survival has become very crucial for small businesses, our Honorable Finance Minister Nirmala Sitharaman shared the first instalment of the Rs.20 lakh crore Aatmanirbhar Package keeping focus on MSME Sector. 

It has been conveyed that this package intends to build the local brands and make them global by considering significant factors of production such as Land, Labour, Liquidity, and Law. 

In all 15 Steps have been announced in today’s tranche which comprise of:

Major Steps for MSMEs

Step 1: Collateral Free Automatic Loans made available for business with MSME registration in India. This loan shall be given for a tenure of 4 years with a moratorium of 12 months along with a 100% credit guarantee.

Step 2: Sub-ordinate debt provision of Rs.20,000 crore has been announced for stressed or NPA MSMEs at this moment, benefitting nearly 2 lakh MSMEs.

Step 3: Infusion of Rs.50,000 crore equity has been done for MSMEs having the potential to grow. Support for expansion in capacity and getting listed in markets shall be provided through Corpus of Rs.10,000 crore- Mother fund and Daughter Fund.

Step 4: Definition of MSME has been changed by adding the criteria of Turnover and increasing the Investment Limit. The differentiation between Manufacturing and Service MSMEs has been removed. Here is the revised definition of MSME:

Classification Micro  Small Medium
Manufacturing & Services Investment  < Rs. 1 crore Investment  < Rs. 10 crore Investment  < Rs. 20 crore
Turnover < Rs. 5 Crore Turnover < Rs. 50 Crore Turnover < Rs. 100 Crore

Step 5:
Global Tenders disallowed for Government Contracts up to Rs. 200 crore.

Step 6: All the PSUs and the Government of India shall clear the receivables due to MSMEs within the next 45 days. Owing to non-participation in trade fairs due to CoVID-19, e-market linkages shall be provided.

Steps for Employers and Employees

Step 7: Contribution to Provident Fund, including Employer’s share and Employee’s share shall be paid by the Government for another 3 months starting from June 2022 till August 2022. Check out how to withdraw accumulated provident funds to access your funds online and get it transferred to your account.

Step 8: The rate for Statutory PF has been reduced from 12% to 10% for the next 3 months, thereby enabling the employees to get more take-home salary. The government organizations shall continue to pay Employer’s share of Provident Fund at 12% only.

For NBFCs & Housing Finance Companies 

Step 9: To help the NBFCs and HFCs to support MSMEs dependent on them, the Government has launched an Rs.30,000 crore liquidity scheme where it will buy investment debt papers from NBFCs, HFCs, and MFIs. These securities shall be fully guaranteed by the Government.

Step 10: Rs.45,000 crore partial credit guarantee scheme declared for NBFCs where the Government of India shall bear the first 20% loss.

For Discoms

Step 11: To ease the cash flow problems of Discoms, a one-time emergency liquidity infusion of Rs.90,000 crore has been done. This shall be 100% guaranteed by the States and on passing the benefit to end-customer rebate shall be provided to the discoms.

For Contractors:

Step 12: An extension of three to six months shall be given to the contractors without any extra cost by the Government Agencies, including Railways, Highways and Central Public Works. To further facilitate higher liquidity, the Government shall release bank guarantees to the extent the work has been completed as per the contract.

For the Real Estate Sector:

Step 13: The period of CoVID-19 shall be treated as “Act of God,” and hence force majeure shall be made allowable. Fresh Registration Certificates shall be issued and completion date shall be extended up to six months for projects registered on or after 25th March 2022.

For Direct Tax Measures:

Step 14: The rates of TDS and TCS have been dropped by 25%, thereby increasing the liquidity for self-employed, professionals and senior citizens earning interest income or rental income. The revised rates shall be made applicable from 14th May 2022 till 31st March 2022.

Step 15: Due Date for IT Returns of FY 2019-20 due on 31st July 2022, and 31st October 2022 has been extended to 30th November 2022. The due date for tax audit under section 44AB shall be extended to 31st October 2022 instead of 30th September 2022. The last date for opting Vivad se Vishwas Scheme without paying 10% of disputed tax shall be extended till 31st December 2022. All pending refunds to Charitable Trusts, Non-Profitable Business, Co-operatives and professions shall be released soon. 

Final Thoughts:

Having declared such drastic steps towards the benefits of MSME sector of the society, the reduced rates of Provident Funds for Employers and Employees and the extension of due dates for filing Income Tax Returns shall help the enterprises to meet the operational liabilities and shall also provide support in expanding their size as well as capacity. This package shall also help protect any job losses and also address the challenge of credit aversion being seen in lenders. COVID-19 Relief Package for India: Summary and Latest Updates