MSMEs to get Rs. 3 lakh crore collateral-free loan: Sitharaman
Union Finance Minister Nirmala Sitharaman addressed the media on Wednesday, a day after Prime Minister Narendra Modi announced Rs. 20 lakh crore package to help the economy, which is suffering due to coronavirus. Asserting that this package takes a holistic approach, she said it will help India grow. Here are the highlights from her address.
Details about the collateral-free loan
"Today's tranche is about 15 different measures, six of them about MSMEs, two relate to employee provident fund, two to HFCs and MFIs, one to discoms, one contractors, and one real estate," she said. Sitharaman said MSMEs will get collateral-free automatic loans up to Rs. 3 lakh crore. The time of re-payment will be four years and a moratorium of 12 months.
Here are more details
Definition of MSMEs changed by Centre
For MSMEs that are doing viable business and want to expand, the government set a Rs. 50,000 crore "Fund of Funds" to infuse equity into them. In a big move, the Centre changed the definition of MSMEs. Hereon, investment up to Rs. 1 crore and turnover of Rs. 5 crore will be considered a micro-unit, as opposed to Rs. 25 lakh investment earlier.
Global tenders will be disallowed for tenders of Rs. 200cr
Further, a company with Rs. 10 crore investment and Rs. 50 crore turnover will be seen as a small unit, and one having Rs. 20 crore investment and Rs. 100 crore turnover will be seen as a medium unit. "Global tenders to be disallowed in government procurement up to Rs. 200 crore. This will make self-reliant India," Sitharaman went on.
Stressed MSMEs will get subordinate debt: Sitharaman
Employee and employers' EPF contribution reduced to boost in-hand salary
Sitharaman said the government of India will extend support to employee and employer contributions for the next three months. Earlier, the government announced it will be financing EPF sum for companies having less than 100 workers if 90% employees earned less than Rs. 15,000. This was valid for March-May 2020. The EPF contribution was also reduced from 12% to 10%, except for government employees.
Cash-strapped DISCOMs got liquidity injection
Further, noting that DISCOMs are facing a huge cash crisis, Sitharaman announced, "An emergency liquidity injection to the tune of Rs. 90,000 crore will be done to all DISCOMs against all the receivables that they have." Meanwhile, contractors working on projects of Railways, road transport, etc., will be given a six-month extension to complete their projects. This covers construction, goods, and services contracts.
TDS rate reduced by 25% from tomorrow
To put money in the pockets of the individuals, the government decided to reduce TDS rates by 25% starting tomorrow. "The tax deduction at source (TDS) for non-salaried specified payments made to residents and rates of tax collection at source to be reduced by 25% for 2020-21 and it will release liquidity of Rs. 50,000 crore," she added.
Due dates of tax filings extended
"The due date of all Income Tax Returns for Assessment Year 2020-21 will be extended to 30 November 2020. Similarly, the tax audit due date will be extended to 31 October 2020," Sitharaman added.
This package will make India stronger: PM Modi
To recall, last night, PM Modi said the package will help India become more self-reliant and help it emerge as a stronger nation. "This package will give new impetus to the development journey of the country in 2020 and a new direction to the self-reliant India campaign," he said. Land, labor, liquidity, and laws have been emphasized in the package, he explained.