[blackwasp]

Finance minister Nirmala Sitharaman today shared the first instalment of the mega Rs 20 lakh crore package with the focus today being on the relief to the MSME sector. Note this announcement only covers a part of the entire package, with remaining details expected in the upcoming days.

For the MSME sector:
1. Collateral free loan of Rs 3 lakh crores for MSMEs. This will benefit 45 lakh units so that they can resume work and save jobs.

2. For stressed MSMEs, Subordinate debt provision of Rs 20,000 cr has been announced for 2 lakh MSMEs. It will benefit those which are NPAs or stressed MSMEs.

3. Rs 50,000 crore equity infusion through Mother fund-Daughter fund for MSMES that are viable but need handholding. A fund of funds with corpus of Rs 10,000 crore will be set up to help these units expand capacity and help them list on Markets if they choose.

4. Definition of MSMEs has been revised to allow MSMEs to aim for expansion and not lose benefits. Also, there'll be no distinction between manufacturing & services sector MSMEs.

New definition: Micro units with investment till Rs 1 cr, turnover up to Rs 5 crore. Small units with investment till Rs 10 cr, turnover up to Rs 50 cr. Medium units with investment till Rs 20 cr, turnover up to Rs 100 crore.

5. Global tenders will be disallowed up to Rs 200 crore for government contracts.

6. Will ensure e-market linkages are provided across the board in the absence of non-participation in trade fairs due to Covid. Govt of India and PSUs will clear all the receivables in next 45 days.

For Employees:
7. A liquidity relief of ₹2,500 crore EPF support is being given to all EPF establishments, EPF contribution will be paid by Govt. of India for another 3 months till August and will benefit more than 72 lakh employees.

8. Statutory EPF contribution for all organisations and their employees covered by EPFO has been reduced to 10% from 12% earlier. This doesn't apply to govt organisations. This will infuse Rs 6,750 cr liquidity into these organisations.

For NBFCs/HFCs/MFIs
9. 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.

10. 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.

11. For Discoms, a one-time emergency liquidity injection of Rs 90,000 crore against all their receivables. The states will guarantee it.

Other Details
12. 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.

13. On 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.

14. 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.

15. 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. 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.



Source

[Fordlover88]

The pdf file with above details.

[GTO]

I welcome the move, but was hopeful of a reduction in GST rates. That would have stimulated spending in a big way.

Would have loved a 5% cut in income tax rates as well.

[hothatchaway]

While "automatic loans" of 3 lakh crores appear a grand sum, I wonder how this will be implemented. Will it be an overdraft with the bank a particular small business has an account with where the credit will be made available? Will banks have any discretion in the matter? If yes then who is to ensure that there is no unnecessary conservatism.

Also, with job losses underway, how are small units expected to survive with demand destruction? Just payroll support by covering PF contribution for a handful of units will do nothing to stoke demand

[DigitalOne]

Originally Posted by GTO

I welcome the move, but was hopeful of a reduction in GST rates. That would have stimulated spending in a big way.

Would have loved a 5% cut in income tax rates as well.

GST rates have to be decided by the GST council. Center cannot decide on its own. Given current situation I don't expect any consensus on reduction of GST rates by the center and states.

[Turbanator]

I don’t see any actual benefits and why does the Government add the amount of loans as relief? Do they expect everyone to default and will Banks actually give loans at the first place? Similarly 25 % reduction TDS/ TCS - this amount is always adjusted against final IT and so does the refunds that the minister has promised. How can these be part of the package?

Can someone mention the actual benefit to a common salaried employee or a small business owner?

[Shreyans_Jain]

I am disappointed by the announcements made by the finance minister today. Indian industry is anyway reeling under debt and providing more debt is no solution. How will MSMEs replay their loans when you haven’t addressed the basic requirement of creating demand? Economy ticks on demand. And demand will only be created by putting money into people’s pockets. Throwing debt into a stalled economy without creating demand is creating a bubble which will only burst.

There is nothing on reducing GST rates. There is nothing on reducing income tax rates or modifying slabs. There is no moratorium on EMI payments for some time without any additional penalty or added interest in fine print. Ditto for utilities - we haven’t received electricity bills for April and May but meters are ticking. I expect a combined bill the day lockdown is lifted, and in typical fashion they will demand payment within a week or threaten disconnection. There is nothing on rationalising fuel prices. No direct cash transfer to employees or to the poor either. All of this was crucial, it would have put money into people’s pocket and resulted in creating immediate demand so that industry and trade could be jump started.


Also, FM promises refunds. Sorry ma’am, I haven’t received mine.

[Samurai]

This is not a bailout or relief package. It sounds more like a timeout.

The Government is still taking all the money it is owed, but with a slight delay. True relief would have been taking less money from the people by reducing tax rates. Instead it is taking the usual amount with a little delay and is trying to distribute it somewhat differently. How is that a stimulus? Who will be stimulated by this? Surely not the economy.

[bluevolt]

It's just marketing. How sweetly they have combined multiple sources without any substance beneath it, is really surprising. People love numbers and here we got 20 lakh crores. But for real?

https://www.youtube.com/watch?v=OwSVD766OLQ

[Warwithwheels]

One quick question regarding the EMI moratorium for the common man; Is it being extended for another 3 months?

[warrioraks]

I understand these are austere times for everyone including the government and funds are tight. So what is the need to make this stimulus a pomp and show excercise?

Honestly I do not know how good or bad this package is and how well it will be implemented. It is too complex for me to understand on first go. But the hype forces me to look for something for myself. And not finding any immediate relief just leads to disappointment.

Reminds me of the 15 lacs DhanRashi (funds) I am still waiting for.

[OrangeCar]

Originally Posted by GTO

I welcome the move, but was hopeful of a reduction in GST rates. That would have stimulated spending in a big way.

Would have loved a 5% cut in income tax rates as well.

As mentioned already, GST council has to meet and take a call. States have an equal say. Fun part - states have suffered huge GST losses and Central government is yet to compensate them for this. So, a GST reduction seems highly improbable, how much ever it would help the economy.

Income taxes - reduction by 5%? I am very nervous. Why? During the FM’s press conference giving out stimulus details, one question that came across was - ‘How is the government going to finance this large stimulus expenditure?’ The government had recently announced planned borrowings increase from 7.2L crore to 12L crore, i.e., about 4.8L crore more. Remaining? FM gave a cryptic answer that she will let everybody know soon.

In the interim budget presented in 2019, the then FM announced increasing 0% tax slab to 5L. Loud cheers in parliament. Employees happy, even though net tax gain was going to be 2,500/- per year! Then comes the details, that 0% tax rate slab is applicable only if your net taxable income was 5L or under. Such is the mindset of the finance ministry. 2,500/- tax relief is considered too much to give away. All excitement drowns. Remember, that FM was the same person as the previous leader of opposition in Rajya Sabha had demanded 0% tax rate slab be raised to 5%.

I am just worried that this FM will make all announcements, supposedly sweet deals, and finally say there will be a marginal income tax increase to support these programs. And that will be termed as the responsibility of the haves to help in times of difficulty. Just hoping tax rates are not increased, let alone reduced.

Also, do not forget there was a ‘quantum jump’ and not marginal raise in taxes on fuel. 10/- on petrol, 13/- on diesel, less than a week ago!

Point is - if taxes remain where they are, its a huge relief.

[MegaWhat]

Another bland book with a catchy cover.
Felt like a mixed bag, with quite a few options for MSMEs, but nothing to spur demand. The administration with the RBI has been trying to ease access to credit for more than a year now, and with no positive returns as such, from industry or consumers.
I'm not sure how more loans is going to help us become self-reliant. I surely hope the paperwork isn't tedious enough that people start walking all the way home instead of taking an express train (figuratively speaking). I thought it was now time to put more money into the hands of people who buy.
As a salaried employee, if my statutory PF is going to be less, I know I'll have to invest it somewhere else, or give up a part of it as tax - however minuscule that may be.

[Durango Dude]

There no rabbits to pull out of the hat!! Where's the Rs. 20,00,000 cr going to come from that will come from more direct and indirect taxes, so those dreaming of tax sops will have to wake up from their sweet dreams. If the IT dept doesn't ask for an "advance/loan" be happy. Business is going to be tepid and stuttering in the short term. All ambitious projects would be on hold and on going one's delayed, labor scarce (those who have gone home would be scared to return), capital would be even scarcer. State and Centre would be hard put to give tax sops in these trying times: they have a humongous number of people on their payroll. Most of the Govt's income goes only to pay salaries of it's burgeoning employees than any developmental work.

[karan0009]

PF amount is deducted from my own salary. The same amount is paid by the employer also as PF contribution. If my PF is reduced by 2% (12% - 10%), the employer will also contribute 2% less PF in my PF account, which by the way is my own money. Just trying to figure out how this 2% reduction in pf is beneficial for me