PM’S COVID-19 ECONOMIC PACKAGE

Special Economic Package

The Prime Minister on 12th May 2020 announced Rs. 20 lac crore special Economic Package relief to overcome the financial crunch the country is facing due to Corona virus (COVID 19).

The Finance Minister announced the first tranche of the government’s economic package to fight the coronavirus pandemic. Aimed at all sections of the society, which included the middle-class, SMEs, labourers, farmers and the industry.

Further details about the stimulus measures being taken by the Government will be announced in the next few days.  Now let us go through the package details.

  • Banks are not shying away from disbursing loans, but many customers are saying that they will avail loans after end of lockdown, this is one reason why sanctioned loans are not being released, explains.
  • The change in definition of MSMEs is to allow inclusion of more businesses into MSMEs
  • Vivad se Vishwas scheme deadline extended till 30 December, 2020
  • Tax audit deadline has been extended from 30th September, 2020 to 31st October.
  • Due date for filing income tax returns (ITR) extended from July 31 to November 30: -All pending payments shall be issued immediately.
  • The TDS reduction will infuse liquidity of ₹50,000 crore
  • The TDS rate cuts will apply for all purposes. It comes into force from tomorrow
  • Till 31 march 21, TDS, TCS rates by 25%
  • In a major relief to contractors, all Central agencies to provide an extension of up to 6 months, without cost to contractor, to obligations like completion of work covering construction and goods and services contracts
  • The urban development ministry will ask state governments to treat Covid as force majeure and be flexible about execution of real estate projects.
  • ₹45,000 crore liquidity infusion, first 20% loss will be borne by govt. of India, even unrated papers will be eligible for investment, enabling NBFCs to reach out even to MSMEs in far-flung areas
  • ₹90,000 crore liquidity injection for Power Distribution Companies (DISCOM)
  • Partial credit guarantee scheme for NBFCs. ₹30,000 crore liquidity scheme through debt papers, HFCs and micro-finance institutions
  • The reduction of statutory EPF contribution will increase take home pay and also increase liquidity
  • CPSEs will continue to maintain EPF at 12%: FM
  • The statutory PF contribution is being reduced from 12% to 10% for 3 months: Sitharaman
  • Govt of India will pay for EPF for another 3 months. 72 lakh employees will benefit from it: FM
  • Liquidity relief is being given for all EPF establishments. 12% of contribution which is paid by employer, and 12% by employee is now extended for another 3 months.
  • Global tenders to be disallowed in government procurement up to ₹200 crores. This will make self-reliant India, will also then be able to serve ‘Make in India’
  • The new MSME definition address MSMEs’ fear of losing benefits due to outgrowing the MSME definition. Now, MSMEs need not worry about growing in size, they can continue to receive MSME benefits.
  • ₹50,000 cr. equity infusion for MSMEs through Fund of Funds; to be operated through a Mother Fund and few daughter funds; this will help to expand MSME size as well as capacity
  • Definition of MSMEs being revised
  • Borrowers with upto ₹25 crore outstanding and ₹100 crore eligible for collateral-free automatic loans
  • 45 lakh units can resume business activity and safeguard jobs due to relief package
  • Also the FM anounces subordinate debt schemes for stressed NPAs which will enable 45 lakh MSME units to resume business activity and also safeguard jobs
  • Collateral-free loan for MSMEs upto ₹3 lakh crore
  • 6 major steps for SMEs
  • 15 measures to be announced today – EPF, small sector enterprises, MFIs, discoms, contractors, real estate and tax measures.
  • Income tax refunds of ₹18,000 crore expedited to improve liquidity
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