Economic measures will help MSMEs, other businesses and taxpayers in the country

In commensurate with Prime Minister Narendra Modi announced Rs 20 lakh crore stimulus package, considered as the highest ever package since Independence, Finance Minister Nirmala Sitharaman on Wednesday announced a slew of economy related measures.

Giving succor to the worst affected micro, small and medium enterprises, she announced Rs 3 lakh crore collateral free loans for businesses, including MSMEs. These loans will have as many as four-year tenure with moratorium of 12 months on principal repayment. It will benefit 45 lakh small businesses in the country.

The Finance Minister further announced Rs 20,000 crore to the stressed MSMEs, which will, in turn, give direct benefits to two lakh businessmen across the country.

She also talked about her ministry’s decision to infuse Rs 50,000 crore in MSMEs for their expansion and growth and consequent encouragement for their listing on main board of stock exchange.

To save MSMEs and other companies from facing unfair competition from foreign companies, the Finance Minister announced disallowing global tenders for up to Rs 200 crore. E-market linkage for MSMEs will be promoted to act as a replacement for trade fairs and exhibitions.

It was also announced that Fintech will be used to enhance transaction based lending using the data generated by e-marketplace. Finance Minister Sitharaman also announced Rs 2500 crore EPF support for business and workers for 3 more months. It should be noted that under Pradhan Mantri Garib Kalyan Package (PMGKP), payment of 12% of employer and 12% employee contributions was made into EPF accounts of eligible establishments.

This was provided earlier for salary months of March, April and May 2020. This support will be extended by another 3 months to salary months of June, July and August 2020

Also, EPF contribution has been reduced for business and workers for 3 months. Since, it is necessary to provide more take home salary to employees, there is also relief for employers in payment of Provident Fund dues.

Therefore, statutory PF contribution of both employer and employee will be reduced to 10% each from existing 12% each for all establishments covered by EPFO for next 3 months.

CPSEs and State PSUs will however continue to contribute 12% as employer contribution.

This scheme will be applicable for workers who are not eligible for 24% EPF support under PM Garib Kalyan Package and its extension. This will provide relief to about 6.5 lakh establishments covered under EPFO and about 4.3 crore such employees.

In terms of relief to salaried and non-salaried middle class, the Finance Minister announced Rs 50,000 crores liquidity through TDS/TCS rate reduction.

In order to provide more funds at the disposal of the taxpayers, 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, the Finance Minister said.

Also payment for contract, professional fees, interest, rent, dividend, commission, brokerage will be eligible for this reduced rate of TDS. “This reduction shall be applicable for the remaining part of the financial year 2020-21 i.e. from tomorrow to 31st March, 2021,” she said.

Besides, she also announced extension of due date of all income-tax return for 2019-20. It has been extended from 31st July, 2020 and 31st October, 2020 to 30th November, 2020 and Tax audit from 30th September, 2020 to 31st October,2020.