20 Lakh Crore Package Details: TDS Rate Cut, Boost to MSMEs and More
After Prime Minister Narendra Modi announced the economic stimulus of Rs. 20 lakh crore package, people were eagerly waiting about the details. In a press conference, Finance Minister Nirmala Sitharaman laid out a road map for the package including TDS cuts and ITR filings. From common people to mega estates, the Atmnirbhar economic package is set to benefit all.
Below are major points you need to know about the 20 lakh crore package:
- Nirmala Sitharaman said that a liquidity relief of Rs. 2500 crore will be given to all EPF establishments. Under this, more than 72 lakh employees will get the benefit as EPF contribution will be given by the government for the next 3 months.
- In addition to this, the Central government is set to cut the rate of mandatory PF contribution for both the employee and the employer. The new rate will be 10 per cent, changed from 12 per cent. This step will provide more liquidity of around Rs. 6,750 to the employees and employers as well.
- The government has also announced that Tax Deducted at Source (TDS) for a period up to March 31, 2021, has been cut by 25 percent. This will release Rs. 50,000 crores.
- In addition, the due date for Income Tax Returns for the year 2019-2020 has been extended from July 31 and October 31 to November 30, 2020.
For MSME sectors
- MSMEs can now get collateral-free automatic loans of worth Rs. 3 lakh crore. These loans will have a tenor of 4 years and will be valid until October 21, 2020.
- MEMEs in stress will be provided equity support of Rs. 50,000 crore through Mother fund-Daughter fund. A fund of funds with a corpus of Rs. 10,000 crore will also be set up to provide support in the expansion of these units and get them listed on Market.
- A subordinate debt provision of Rs 20,000 crore has also been announced for NPAs or stressed MSMEs.
- In a big change, the definition of MSMEs has also changed. New definition: Micro units with investment till Rs 1 crore, turnover up to Rs 5 crore. Small units with investment till Rs 10 crore, turnover up to Rs 50 crore. Medium units with investment till Rs 20 crore, turnover up to Rs 100 crore.
- To make India self-reliant and focus on ‘Make in India’, the government has decided to disallow the global tenders in government procurement up to Rs 200 crore.
- The Government of India and PSUs will clear all every MSME receivable in the next 45 days. MSMEs will also be connected to e-markets.
For NBFCs/HFCs/ MFIs
- A special liquidity scheme worth Rs. 30,000 crore has been announced for investing in investment-grade debt paper of NBFCs, HFCs and MFIs. These NBFCs are those that are also funding MSMEs.
- As far as Discoms are concerned, the government will offer one-time emergency liquidity injection of Rs 90,000 crore against all their receivables.
- Sitharaman also announced Rs 45,000 crore partial credit guarantee scheme 2.0 for NBFCs. In this, about 20% of the loss will be borne by the government.
- For the contractors, all the Central agencies will be given an extra six months for the completion of projects.
- For real estate, the date of registration and completion of projects under RERA has been extended.
These are some key announcements made by Sitharaman. The brief came a day after PM Modi announced the economic package worth Rs. 20 lakh crore. This package is almost 10% of India’s GDP and is set to help various sectors related to land, liquidity, laws to support the people in the times of coronavirus outbreak.