FM Provides First Instalment Of Economic Package, Focuses On MSMEs

Finance Minister Nirmala Sitharaman has outlined the first tranche of the contours of India's massive Rs 20 lakh crore fiscal stimulus announced by Prime Minister Narendra Modi. FM Sitharaman said the announcements will be made in tranches.
MSME sector:
Finance Minister announces collateral-free loan for MSMEs upto Rs 3 lakh crore. For stressed MSMEs, Subordinate debt provision of Rs 20,000 crore has been announced for 2 lakh MSMEs. FM provides Rs 50,000 cr. equity infusion for MSMEs through Fund of Funds; to be operated through a Mother Fund and few daughter funds.
FM says definition of MSMEs is being revised. The new MSME definition address MSMEs' fear of losing benefits due to outgrowing the MSME definition. Borrowers with upto Rs 25 crore outstanding and Rs 100 crore are eligible for collateral-free automatic loans. FM announced subordinate debt schemes for stressed NPAs.
Global tenders to be disallowed in government procurement up to Rs 200 crores. This will make self-reliant India, will also then be able to serve Make in India.
PF Contribution:
The statutory PF contribution is being reduced from 12% to 10% for 3 months. Govt of India will pay for EPF for another 3 months. 72 lakh employees will benefit from it. The reduction of statutory EPF contribution will increase take home pay and also increase liquidity.
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.
NBFCs/HFCs/MFIs
FM announces Rs 30,000 crore special liquidity scheme for investing in investment grade debt paper of NBFCs, HFCs and MFIs. These NBFCs are those that are also funding MSMEs. These will be fully guaranteed by government of India. FM also announces Rs 45,000 crore partial credit guarantee scheme 2.0 for NBFCs. The first 20% loss will be borne by the guarantor that is government of India.
Power Discoms
FM announces Rs 90,000 crore liquidity injection for Power Distribution Companies (DISCOM).
Other Announcements:
FM notifies an extension of up to 6 months (without costs to contractor) to be provided by all Central Government Agencies like Railways, Ministry of Road Transport & Highways, Central Public Works Dept.
For real estate, urban development ministry will issue advisory to states/UTs so that the regulators can invoke force majeure. The regulators can suo moto extend completion/registration dates for six months for projects expiring on or after March 25, 2020.
A reduction of 25% of existing rates of Tax Deducted at Source (TDS) & Tax Collection at Sources (TCS) from tomorrow till March 31, 2021. This will release Rs 50,000 crores.
FM noted that due date of all IT Return filings extended from July 31 to November 30. Vivaad se Vishwas scheme extended till December 31, 2020. Date of assessments getting barred as on Sep 30, 2020 extended to December 31, 2020 and date of assessments getting barred as on March 31, 2021 extended to September 30, 2021
All pending refunds to charitable trusts and non-corporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately.

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