Financial Assistance Package announced by Government of India on 15.05.2020

Financial Assistance Package announced by Government of India on
15.05.2020

  1. Rs 3 lakh crore Emergency Working Capital Facility for Businesses,
    including MSMEs
    To provide relief to the business, additional working capital finance of 20% of
    the outstanding credit as on 29 February 2020, in the form of a Term Loan at
    a concessional rate of interest will be provided. This will be available to units
    with up to Rs 25 crore outstanding and turnover of up to Rs 100 crore whose
    accounts are standard. The units will not have to provide any guarantee or
    collateral of their own. The amount will be 100% guaranteed by the
    Government of India providing total liquidity of Rs. 3.0 lakh crores to more
    than 45 lakh MSMEs.
  2. Rs 20,000 crore Subordinate Debt for Stressed MSMEs
    Provision made for Rs 20,000 cr subordinate debt for two lakh MSMEs which
    are NPA or are stressed. The government will support them with Rs 4,000
    crore to Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
    Banks are expected to provide the subordinate-debt to promoters of such
    MSMEs equal to 15% of his existing stake in the unit subject to a maximum
    of Rs 75 lakhs.
  3. Rs 50,000 crores equity infusion through MSME Fund of Funds
    The government will set up a Fund of Funds with a corpus of Rs 10,000 crore
    that will provide equity funding support for MSMEs. The Fund of Funds shall
    be operated through a Mother and a few Daughter funds. It is expected that
    with leverage of 1:4 at the level of daughter funds, the Fund of Funds will be
    able to mobilise equity of about Rs 50,000 crores.
  4. New definition of MSME
    Definition of MSME will be revised by raising the Investment limit. An
    additional criterion of turnover also being introduced. The distinction between
    manufacturing and service sector will also be eliminated.
  5. Other Measures for MSME
    e-market linkage for MSMEs will be promoted to act as a replacement for
    trade fairs and exhibitions. MSME receivables from Government and CPSEs
    will be released in 45 days
  6. No Global tenders for govt tenders of up to Rs 200 crore
    General Financial Rules (GFR) of the Government will be amended to disallow
    global tender enquiries in the procurement of Goods and Services of the
    value of less than Rs 200 crores
  7. EPF support for business and organised workers
    The scheme introduced as part of PMGKP under which Government of India
    contributes 12% of salary each on behalf of both employer and employee to
    EPF will be extended by another 3 months for salary months of June, July
    and August 2020. Total benefits accrued is about Rs 2500 crores to 72.22
    lakh employees.
  8. EPF contribution to be reduced for employers, employees for 3
    months
    Statutory PF contribution of both employer and employee reduced to 10%
    each from the existing 12% each for all establishments covered by EPFO for
    the next 3 months. This will provide liquidity of about Rs 2250 Crore per
    month.
  9. Rs 30,000 crores Special Liquidity Scheme for NBFC/HFC/MFIs
    The government will launch Rs 30,000 crore Special Liquidity Scheme,
    liquidity is provided by RBI. The investment will be made in primary and
    secondary market transactions in investment-grade debt paper of NBFCs,
    HFCs and MFIs. This will be 100 percent guaranteed by the Government of
    India.
  10. Rs 45,000 crore Partial credit guarantee Scheme 2.0 for Liabilities of
    NBFCs/MFIs
    Existing Partial Credit Guarantee scheme is being revamped and now will be
    extended to cover the borrowings of lower-rated NBFCs, HFCs and other
    Micro Finance Institutions (MFIs). Government of India will provide 20
    percent first loss sovereign guarantee to Public Sector Banks.
    11.Rs 90,000 crore Liquidity Injection for DISCOMs
    Power Finance Corporation and Rural Electrification Corporation will infuse
    liquidity in the DISCOMS to the extent of Rs 90000 crores in two equal
    instalments. This amount will be used by DISCOMS to pay their dues to
    Transmission and Generation companies. Further, CPSE GENCOs will give a
    rebate to DISCOMS on the condition that the same is passed on to the final
    consumers as a relief towards their fixed charges.
    12.Relief to contractors
    All central agencies like Railways, Ministry of Road Transport and Highways
    and CPWD will give an extension of up to 6 months for completion of
    contractual obligations, including in respect of EPC and concession
    agreements
    13.Relief to Real Estate projects
    State governments are being advised to invoke the Force Majeure clause
    under RERA. The registration and completion date for all registered projects
    will be extended up to 6 months and may be further extended by another 3
    months based on the State’s situation. Various statutory compliances under
    RERA will also be extended concurrently.
    14.Tax relief to business
    The pending income tax refunds to charitable trusts and non-corporate
    businesses and professions including proprietorship, partnership and LLPs
    and cooperatives shall be issued immediately.
    15.Tax-related measures
    A- Reduction in Rates of ‘Tax Deduction at Source’ and ‘Tax Collected at
    Source” – The TDS rates for all non-salaried payment to residents, and tax
    collected at source rate will be reduced by 25 percent of the specified rates
    for the remaining period of FY 20-21. This will provide liquidity to the tune of
    Rs 50,000 crore.
    B- The due date of all Income Tax Returns for Assessment Year 2020-21 will
    be extended to November 30, 2020. Similarly, tax audit due date will be
    extended to 31 October 2020.
    C- The date for making payment without additional amount under the “Vivad
    Se Vishwas” scheme will be extended to December 31, 2020.

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