New Delhi: Finance Minister Nirmala Sitharaman on Wednesday announced a cut in the tax deducted at source (TDS) by 25 per cent and a collateral free automatic loans for businesses including MSMEs up to Rs 3 lakh crore, while elaborating on the economic package announced by Prime Minister Narendra Modi the day before.
"Rs 20 lakh crore is a stimulus booster shot for economy aimed at improving land, labour, liquidity and laws," she said.
Key Takeaways
•TDS cut by 25%
Tax deducted at source (TDS) and collected at source (TCS) cut by 25% for non-salary payments to residents. The new rates are applicable from May 14 till March 31, 2021. This shall also apply to all payments for contracts, interest, rent, dividend, commission or brokerage.
Due date of income tax returns for 2019-20 extended from July 31 and October 31 to November 30. Vivad Se Vishwas scheme for direct tax dispute resolution has been extended by six months till December 31, 2020.
•Rs3 lakh crore loans for MSMEs
Rs 3 lakh crore collateral-free automatic loans MSMEs is included in the economic package. The MSMEs will get a 100 per cent credit guarantee. This will benefit 45 lakh small businesses. The loan will have a 4 year tenure and 12 month moratorium.
- MSME definition has been revised to motivate their growth in size and profits. The investment limit has been revised upwards and turnover has been introduced as a new criteria in the definition. Units with turnover up to Rs 5 crore to be called micro units.
- Rs 20,000 crore subordinate debt will be provided for stressed MSMEs. This would benefit 2 lakh such businesses.
- Global tenders can no longer participate in tenders upto Rs200 crores.
- Rs 50,000 cr equity infusion through MSME Fund of Funds; to provide support to growth potential MSMEs
•EPF contribution cut to 10%
EPF contribution to be reduced for businesses and workers for 3 months to 10 per cent from the statutory limit of 12 per cent. EPF will help 72 lakh employees and 3.67 units. The government will continue EPF support for business and workers for three more months, providing a liquidity relief of Rs 2,500 crore. The measures are for companies with up to 100 employees and where 90 per cent of the staff is paid up to Rs 15,000 a month.
•Rs45,000 crore liquidity infusion for NBFCs
Rs 30,000 crore special liquidity scheme for non-banking financial institutions to provide credit support to the sector amid the coronavirus crisis. Rs 45,000 crore partial credit guarantee scheme 2.0 was also unveiled for non-banking financial companies (NBFCs), housing finance companies (HFCs), and microfinance institutions (MFIs) with low credit rating to help them extend loans to individuals and MSMEs.
•Rs 90,000 crores for power discoms.
•Six months extension for government contractors
The extension of up to six months without cost to contractor is to be provided by all central agencies like Railways, Ministry of Road Transport & Highways and Central Public Works Department. This covers construction works and goods and services contracts besides obligations like completion of work, immediate milestones etc and extension of concession period in contracts on public private partnership.
In a big push to revive the COVID-hit economy, Prime Minister Narendra Modi on Tuesday announced massive new financial incentives on top of the previously announced packages for a combined stimulus of Rs 20 lakh crore, saying the coronavirus crisis has provided India with an opportunity to become self-reliant and emerge as the best in the world.
Apart from the Reserve Bank of India (RBI) assistance, the government had last month announced a Rs 1.74 lakh crore to provide benefits to the poor, including cash transfers, Rs 50 lakh insurance cover and steps to ensure food security.
According to the Union Health Ministry, the COVID-19 death toll in India rose to 2,415 and the positive cases climbed to 74,281 on Wednesday. The number of active cases rose to 47,480 while 24,385 people have been cured and one person migrated.
