Ministry of Finance announces major relaxation measures for the MSMEs ; 25% Reduction in TDS/ TCS
DELHI: In the press conference on Wednesday, the Union Finance Minister Nirmala Sitharaman along with Minister of State, Anurag Singh Thakur unveiled the details of the Rs 20 lakh crore economic package which was announced by Prime Minister Narendra Modi a day before.
The Finance Minister, Nirmala Sitharaman stated that she would be elaborating the details of the package along with her team through similar sessions for the next few days, beginning from today.
The Finance Minister too focused on the PM’s idea of ‘Atmanirbhar Bharat Abhiyan’. She said that India’s self-reliance will be based on five pillars : Economy, Infrastructure, Technology driven system, Vibrant Demography and Demand. She further stated that the self-reliant India is not a self centered idea but is about a Confident India which is self dependent & self-sufficient but is also capable of contributing globally.
The FM listed reforms by the Centre so far including major steps like Direct Benefit Transfer, the Jan Dhan, Aadhaar, PM Awaas Yojana, Ujjwala Yojana, Microfinance schemes, Swachh Bharat, Ayushman Bharat and the digitalisation which has been a great support system during the time of crisis.
She listed the measures taken by the government during Covid lockdown. She said that Rs 1.7 lakh crore were issued under PM Garib Kalyan Yojana along with distribution of grains to the poor worth Rs 80 crore. An insurance cover of Rs 50 lakh per health worker was done along with transfer of Rs 2,000 to farmers under PM Kisan Scheme. An amount of Rs 52,606 crore was transferred to 41 crore Jan Dhan account holders.
According to the latest reforms, the government has classified manufacturing and services in one category and changed the definition of MSMEs according to investment limit & turnover size. The new definition of the services:
Micro: Investments less than Rs 1 cr and turnover of less than Rs 5 cr.
Small: Investment less than Rs 10 cr and turnover less than Rs 50 cr
Medium: Investment less than Rs 20 cr and turnover less than Rs 100 cr
The MSMEs have been badly hit due to Covid-19 and they need additional funding to meet operational liabilities, buy raw material and to restart business. As a support package, she announced Rs 3 lakh crore collateral free loan for MSMEs, for those with Rs 25 crore outstanding loan or Rs 100 crore turnover. Loans with 4-year tenure, moratorium of 12 months with 100% credit guarantee to banks and NBFCs on principal and interest with an aim to benefit 45 lakh business units.
Finance Minister Nirmala Sitharaman said, “Government to provide stressed MSMEs with equity support; Government will facilitate the provision of Rs. 20,000 Crores as subordinate debt.” The Centre will infuse Rs 50,000 crore as equity for MSMEs which are viable businesses and need hand holding.
In a major relief to the contractors, all Central agencies will be providing 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 issue advisory to states/ UTs so that Covid-19 period events are treated as a force majeure. Extension of registration and completion date certificates may be extended by six months (expiry as of March 25, 2020).
Government releases liquidity of Rs. 50,000 crore 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.
FM Nirmala Sitharaman said, “Will release Rs 50,000 crore in the hands of people.” She further added that reduced TDS and TCS rate by 25%, will apply to all payments and last till March 31, 2021.
Meanwhile, the period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December,2020.
The date of filing Income Tax returns for Financial Year 2019-20 has been extended and new Direct Tax measures were also announced by the Finance Minister.