Atmanirbhar Bharat FM Nirmala Sitharaman speech on India Mega Economic Package on 13.05.2020

Atmanirbhar Bharat: FM Nirmala Sitharaman speech on India Mega Economic Package

Part – 1: Business including MSMEs

  1. MSME

1. Total Rs. 3 lakh crore Collateral free automatic loan for 45 lakh units of business including MSME. Borrowers with turnover upto 100 crores and borrowings upto 25 crores would be eligible for this benefit. Loans to have a 4 year tenure with moratorium of 12 months on Principal repayment. Interest to be capped

2. Subordinate debt for stressed MSME – Total Rs. 20,000 crore will be infused as Subordinate debt for stressed MSME. 2 lakh MSME would be benefitted from this. Further, the government would provide 4,000 crore to CGTMSE trust.

3. MSME with viable business– Fund of funds with corpus of Rs. 10,000 crores will be set up. This would provide equity funding for MSMEs and fund structure will help leverage 50,000 crores of funds at Daughter funds level. This will help MSME to expand in size as well as capacity and further encourage MSMEs to get listed on the main board of Stock Exchanges.

4. Definition of MSME: Definition of MSME has been changed. Investment Limit which defines a MSME is changed. Now turnover criteria is also introduced in the definition. Further, the difference between manufacturing and service MSME is also removed.

The new criteria are as follows:

(i) Micro – Investment limit upto Rs. 1 crores and turnover upto Rs. 5 crores

(ii) Small – Investment limit upto Rs. 10 Crores and turnover upto 50 crores

(iii) Medium – Investment limit upto Rs. 20 Crores and Turnover upto Rs.   100 Crores

5. Tenders upto Rs. 200 Crores relating to Government procurement will not be Global Tenders any more. MSME will get benefit out of it

6.  E-Market Linkage will be Provided to all MSME due to less possibility of Trade fares. All Central Government outstanding will be cleared within 45 Days by Govt Help of all MSME.

  1. Direct Tax   
  • The rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates. This reduction shall be applicable for the remaining part of the FY 2020-21 i.e. from 14th May, 2020 to 31st March 2021.
  • All refunds to charitable trust and non- corporate business and professions such as proprietorship, partnership, LLP and co-operative societies will be issued immediately.
  • Due date of all income-tax returns 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.
  • 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.
  • Period of Vivid se Vishwas Scheme for making payment without additional amount will be extended to 31st December 2020.

3. NBFC

  • Special 30000cr Liquidity window will be given. Government will buy debt papers of these institutions even if investment grade. These will be fully guaranteed by Government of India.
  • 45000cr Liquidity will be given to NBFC. First 20% Loss will be born by Govt of India. Even unrated papers will get money under this scheme.
  • Discom are not able to pay the power generation companies. Hence 90000cr Special fund will be created to pay all outstanding dues of Power Generation Companies. PFC and REC will infuse liquidity.
  • 6 Month extension will be given to all Government contractors of Railways, Roads and other departments. Government Agencies will partially release Bank Guarantees to the extent of work completed.
  • Covid-19 can be treated as act of God. Using the Force Major Clause the project registration will be extended by 6 Month automatically. Completion dates of existing projects to be extended automatically by 6 Months by Government authorities. 
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CA Vidhan Shah

Vidhan Shah is Chartered Accountant and holds Bachelor Degree in commerce from Narsee Monjee College of Commerce and Economics, Mumbai University. He has also completed company secretary from ICSI. An astute professional with exposure in fields of Direct and Indirect Taxation, Statutory Tax Audit, Internal Audit and Company Law Compliances. He has worked on clients ranging from Listed Companies, Banks, manufacturing and trading companies and service sectors. With the growing start-up culture in India, He can help incorporate new start-ups and help them get the benefits provided by the government. M: +91 9619040702 | +91 7977815047 | T: 022 28021099

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