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FM Sitharaman announces booster dose for MSMEs

New Delhi: Finance Minister Nirmala Sitharaman on Wednesday announced a booster dose for MSMEs including Rs 3 lakh crore collateral free automatic loan for businesses.

This will benefit 45 lakh small businesses, she said detailing parts of the Rs 20 lakh crore economic stimulus package.

The loan will have 4 year tenure and will have 12 month moratorium, she said.

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Also, Rs 20,000 crore subordinate debt will be provided for stressed MSMEs, she said adding this would benefit 2 lakh such businesses.

The Finance Minister said a fund of funds for MSME is being created, which will infuse Rs 50,000 crore equity in MSMEs with growth potentials.

Also, MSME definition has been changed to allow units with investment up to Rs 1 crore to be called micro units in place of Rs 25 lakh now.

Also units with turnover up to Rs 5 crore to be called micro units, she said, adding a turnover based criteria is being introduced to define small businesses.

The investment and turnover limits for small and medium businesses have likewise been raised to allow them to retain fiscal and other benefits, she said.

Global tenders will be banned for government procurement up to Rs 200 crore, she said, adding this would help MSMEs to compete and supply in government tenders.

Speaking on the Employees Provident Fund, Sitharaman said, contribution given by Govt of India will be extended for 3 more months for June, July & August; move to benefit 3.67 lakh estabishments & 72.22 lakh employees

Statutory PF contribution for both employers & employees is reduced from 12% to 10% for all establishments covered under EPFO for next 3 months however for CPSEs & State PSUs, employer contribution to remain 12%, she said.

Sitharaman also announced Rs 90,000 crore liquidity injection for power distribution companies (DISCOMs).

In order to provide more funds for the tax payers, the rates of TDS for non-salaried specified payments made to residents shall be reduced to 25% of the existing rates, informed Sitharaman.

In a major relief for the tax payers, the due date of all income tax return for financial year 2019-20 will be extended from 31st July 2020 and 31st October 2020 to 30th November 2020.

Important points of the Press conference of Union Finance Minister:

? Six major steps for MSME
1. Collateral Free Automatic Loan to MSME. No guarantee required for the Period of four Years. No principal repayment for 1 year.
2. Stressed MSME: Subordinate Debt Rs 20,000 crore
3. MSME doing viable business: Rs 50,000 crore equity infusion for expansion
4. Definition of MSME changed:

a. Micro:Limit revised upward Investment up to 1 crore or Turnover up to 5 crore
b. Small:Limit revised upward Investment up to 10 crore or Turnover up to 50 crore
c. Medium:Limit revised upward Investment up to 20 crore or Turnover up to 100crore
d. No difference in manufacturing and service sector for Micro Enterprises

5. Government Tenders: Global tenders will be disallowed up to Rs 200 crore

6. E market linkage for MSME. All payments will be made to MSMEs within the next 45 days .

? EPF for June, July and August will be paid by Government (72,22,000 employees will be benefited). Total Rs. 2500 crore benefit

? EPF: Statutory PF deposit limit for employers and employees reduced from 12% to 10% for next 3 months. (6,750 cr.) (except employer’s contribution in case of CG and PSU’s)

?NBFC, HFC & MFI: Rs. 30,000 cr. Special liquidity scheme

?Partial credit guarantee scheme for NBFC: Rs. 45,000 cr package for NBFCs. 100% credit guarantee cover to banks and NBFCs on principal and interest

? Discom: Rs. 90,000 cr. infused for improving liquidity crises. This amount will be paid by PFC and REC.

? Contractors: Extension up to 6 months to comply with contract conditions.

? Real Estate: Covid 19, an event of ‘Force Majeure’. Registration and Completion extended for 6 months for all projects expiring on or after 25.03.2020

? Direct tax: TDS rates reduced by 25% of existing rates from tomorrow to 31.03.2021(Non salaried to residents and TCS) Payment for – VSVS extending up to 31.12.2020.

– Pending refunds of charitable trusts, non corporate business, proprietorship, partnership, LLP and society will be issued immediately

– Due dates of Income Tax return for financial year 2019-20 extended till 30.11.2020

-Tax Audit due date extended till 31.10.2020

– Date of assessment extended till 31.12.2020

Self-reliant India does not mean we will look inwards, or become isolationist country: Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Wednesday sought to clear the air around Prime Minister‘s self-reliance call, saying it does not mean that India will look only inwards and become an “isolationist” country.

She said that the call talks about a confident India which can rest on its strengths and also contribute to the globe.

India has the capability and entrepreneurship to built capabilities and help the world, the minister added.

“Certainly when he (Prime Minister) says ‘aatmanirbhar’ Bharat, it is not to look inwards and cut India to become an isolationist country.

“It certainly talks about a confident India which can rest on its strengths and also be able to contribute to the globe, the way in which the Prime Minister rightly pointed out the production of PPEs (personal protective equipment), and masks and also ventilators has rapidly grown within these 40 days to an extent,” she said, while addressing reporters here about Rs 20 lakh crore economic package.

Modi on Tuesday announced a Rs 20 lakh crore economic stimulus package on Tuesday and urged citizens to “buy local” to make India self-reliant.

His call was seen as a turn towards protectionism. Sitharaman also said the Rs 20 lakh crore economic package is to spur growth and build a self-reliant India.

The package was finalised after consulting various stakeholders.

(With Agency Inputs)

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