Story of INR 20000000000000

Background

"A special economic package is being announced to make India self-reliant," Modi said in his third address to the nation over COVID-19 pandemic. "This package, taken together with earlier announcements by the government during COVID crisis and decisions taken by RBI, is to the tune of Rs 20 lakh crore, which is equivalent to almost 10 per cent of India's GDP."

Most economic activity in the country had come to a standstill after the government imposed a 21-day nationwide lockdown beginning March 25 to check the spread of coronavirus. The lockdown has since been extended twice through May 17, with some relaxations to allow the resumption of economic activity.

The package, he said, will focus on land, labour, liquidity and laws. It will cater to various sections, including cottage industry, MSMEs, labourers, middle class, and industries.

BRIEF STORY

The blue-print of INR 20000000000000 economic package has been presented by Honorable FM of India which states following;

1. Rs 20,000 crore will be infused through subordinate debt for stressed MSMEs who have equity problems. This liquidity line will benefit 2 lakh MSMEs. All NPA' or stressed MSMEs are eligible for scheme. Government will provide Rs 4,000 crore to CGTMSE who will provide partial guarantee to banks who will then give benefit to stressed MSMEs.

2. For MSMEs, collateral free automatic loans worth Rs 3 lakh crore will be provided. This is for 4 year tenure and is 100 percent guaranteed. This will last till October 21, 2020. It will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs.

3. Definition being changed for MSMEs in their benefit. So that they can grow in size and get benefits. Investment limit which defined MSMEs revised upwards. Additional criteria being brought in is turnover size - earlier differentiation between manufacturing and service MSMEs will be categorised similarly.

4.Funds of fund will infuse Rs 50,000 crore equity for those MSMEs who have potential and are viable. Corpus of Rs 10,000 crore - through mother fund and daughter fund we will provide support. This will help expand capacities and help them get listed in markets of choosing.

5. Next step for MSMEs, global tenders in government procurement will be disallowed for up to Rs 200 crore or less. This will allow MSMEs a chance to supply for these big projects. Small units can be part of government purchases and now Self-reliant India can Make in India.

6.Sixth step for MSMEs is that post COVID, since trade fairs and exhibitions will be difficult, we will provide e-market facilities. GoI and CPMEs where there are receivables - all will be cleared within 45 days

7. EPF relief for all establishments with Rs 2,500 crore liquidity support. GoI will provide both employer and employee - 12% contributions. Extending support for another three months from March-May 2020 to June-August 2020 as well. Nearly 3.6 lakh establishments benefit, 72.22 lakh employees will benefit.

PERCENTILE AND DUE DATES

1. New EPF rate 10% instead 12%

2. Due date of all income-tax return for FY 2019-20 will be extended from July 31, 2020 & October 31, 2020 to November 30, 2020 and Tax audit from September 30, 2020 to October 31, 2020.

3. Date of assessment getting barred as on September 30, 2020 is now being extended to December 31, 2020. And, those getting barred as on March 2021 is being extended to September 30, 2021

4. May 14 to March 31, 2021 TDS and TCS rate has been reduced by 25% of the existing rate and is applicable to all payments

5. Government announces Rs 3 lakh crore collateral free loans for MSMEs, having a 4 year tenure and moratorium of 12 months. These loans will be available till October 31, 2020 and will be 100 per cent credit guaranteed. This will help 45 lakh units to resume activity and safeguard jobs

6. Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December,2020

CONCLUSION

The economic package came rightly when the economic alarms of recession were ringing all around. As this is the biggest economic reform package of all time, its implementation is not going to be very easy. So we all are looking forward to see how it works.

Any comments, Suggestions and compliments are welcome.      -CA Mukesh Yadav