India’s Prime Minister Narendra Modi in a big push to revive the economy and keeping that in view, he announced a Rs 20 lakh crore package as the nation suffers due to the lockdown situation amidst coronavirus pandemic. This package aims towards supporting key sectors as well as the measures rolled out by the Reserve Bank of India (RBI).
Post announcement, Finance Minister Nirmala Sitharaman unveiled the Tranche I & II of this mega economic stimulus package that would uplift the economy battered country. Here are 10 key highlights that you should know about.
1. Effective from May 14 till March 31, 2021, TDS/TCS (tax deducted at source/tax collected at source) is reduced by 25% of the existing rate. This will be applicable to all payments. This step would release Rs 50,000 crore in the hands of the people instead of paying them as taxes.
2. The due date of all income-tax return for FY 2019-20 has been revised and extended from July 31, 2020 (& October 31, 2020) to November 30, 2020. The due date for tax audit has been revised from September 30, 2020 to October 31, 2020.
3. The Government of India in order to help 45 lakh units resume activity and safeguard jobs announced Rs 3 lakh crore collateral-free loans for MSMEs, having a 4-year tenure and a moratorium of 12 months. These loans are available till October 31, 2020 with 100 per cent credit guaranteed. Furthermore, the government will facilitate a provision of Rs 20,000 crore as subordinate debt to provide stressed MSMEs sector with equity support. It has also changed the definition of MSMEs to help them avail the benefits.
4. Providing liquidity relief of Rs 2,500 crore, the EPF support for business and workers has been extended for the next 3 months. Moreover, statutory PF contribution for those not covered earlier has been reduced to 10 per cent from 12 per cent, however, this reduction is not for Central government.
5. The government has launched a special liquidity scheme of Rs 30,000 crore for NBFCs/HFCs/MFIs to buy even investment-quality debt papers and ease the flow of credit.
6. To help relieve contractors, all Central agencies are to provide an extension of up to 6 months, without any cost to contractors. Ministry of Housing and Urban Affairs to bring flexibility in contract enforcement will also issue an advisory to states and UTs enabling invocation of force majeure / Act of God measure during COVID-19 period. This will be applicable for all registered real estate projects expiring on or after March 25, 2020.
7. Bringing a big relief and liquidity support to farmers and rural economy, 63 lakh loans accounting for Rs 86,600 crore have been approved in agriculture between March 1 and April 30, 2020. Along with, the government has refinanced Rs 29,500 crore provided by NABARD to cooperative banks and regional rural banks in March 2020, and sanctioned working capital limit of Rs 6,700 crore for procurement of agriculture produce to state government entities since March 2020.
8. The central government has also extended its support to self-help groups who have been successful at producing 3 crore masks and 1.20 lakh litres for sanitizers. This will be instrumental in providing employment opportunities to the urban poor.
9. The government through MNERGA will be supporting migrant workers who have returned home by creating work for them. As of May 1, 14.62 crore person-days of work has been generated by the government. About 1.87 lakh gram panchayat has offered work to 2.33 crore wage seekers yesterday to help them earn their livelihood. The government has also permitted states, to reach out to the urban poor, to utilise the State Disaster Response Fund (SDRF) for setting up shelters for migrant labourers and provide them with food and water.
10. The prime focus of the package is to spur growth and enhance demand, thus creating an “atmanirbhar” (self-reliant) India. The PM laid out this comprehensive vision after wide consultations with several sections of the society. The five pillars of a self-reliant India will be economy, infrastructure, system, demography and demand intending to make local brands and take them to a global level.