India’s 20 lakh crore Stimulus Package

India’s 20 lakh crore Stimulus Package announced by the finance ministry focusus on Five pillars of AtmanirbharBharat – Economy, Infrastructure, System, Vibrant Demography and Demand. The Package will cater to various sections including cottage industry, MSMEs, labourers, middle class, industries, among others.

The first tranche of this stimulus package benefits the below;

Measures Announced for MSME

1. Collateral free loans totaling 3 lakh crore for MSME with outstanding loan of 25 crore and 100 crore turnover. These will be 4 year loans and will come with moratorium of 12 months. These loans will be 100% guaranteed by the union government. Scheme can be availed till 31st Oct 2020
2. 20,000 crore sub-ordinate debt for stressed MSMEs. Will benefit about 2 lakh crore MSMEs. Functioning MSMEs which are NPA or are stressed will be eligible. Govt. will provide a support of Rs. 4,000 Cr. to CGTMSE. CGTMSE will provide partial Credit Guarantee support to Banks
3. Fund of Fund of 10,000 crore for eligible MSMEs in the form of equity infusion via mother and daughter fund.
4. Change in definition of MSMEs
   1. Investment limit for MSMEs redefined. Example – Limit for Micro MSME raised to 1 crore.
   2. Turnover limit now raised. Example – Limit for Micro MSMEs raised to 5 crore from 1 crore.
   3. Differentiation between service and manufacturing MSMEs removed.

• Global tenders disallowed for government tenders up to 200 crore
• E-market linkage and support for MSMEs to participate in trade fairs. All MSMEs due payables by the government will be paid within the next 45 days.

Measures for EPF based Liquidity

1. Liquidity relief for all employers in the form of 12% contribution will now be contributed for 3 more months by the government. This is applicable for employee with less than monthly salary of ₹ 15,000/-. Will benefit 72.22 lakh employees.
2. For employees not covered above, statutory EPF contributions for employers reduced from 12% to 10% for the next 3 months for private sector employees. Will infuse 6,750 crore per month among employers.

Measures for NBFC, HFC and Micro finance

1. 30,000 cr special liquidity scheme through primary and secondary markets in investment grade debt instruments. Fully guaranteed by the Gov.t of India.
2. 45,000 cr partial credit guarantee scheme will now cover AA and below rated instruments. First loss up to 20% will be guaranteed by the Gov.t of India

Measures for Discoms

1. Emergency liquidity infusion of 90,000 cr against receivables. Loans to be given against State guarantees for exclusive purpose of discharging liabilities of Discoms to Gencos.

Measures for Contractors

1. All Gov.t of India agencies like railways, Ministry of Road Transport & Highways, Central Public Works Dept etc will allow additional time of up to 6 months to contractors to comply with contract conditions. These will be applicable for construction of goods and implementation of services.
2. Partial bank guarantee to the tune of pending works will be released to infuse liquidity.

Measures for Real Estate

1. Urban development department will issue advisory so that force major can be invoked and extend the registration and completion date by 3 months for all registered projects expiring on or after 25th March, 2020 without individual applications
2. TDS reduced by 25% proportionately from the existing rate till 31^st March 2021 for all applicable transactions. Will infuse 50,000 crore extra liquidity.

Measures for Direct Taxes

1. All pending income tax refunds due to charitable institutions, sole proprietorships, partnership firms, non-corporates will be released immediately.
2. Due date of all income-tax return for FY 2019-20 will be extended from 31st July, 2020 & 31st October, 2020 to 30th November, 2020 and Tax audit from 30th September, 2020 to 31st October 2020
3. Date of assessments getting barred on 30th September,2020 extended to 31st December,2020 and those getting barred on 31st March,2021 will be extended to 30th September 2021
4. Vivad Se Vishwas Scheme will now be extended up to 31^st Dec 2020 without any penalty.

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