Nirmala Sitharaman Unveils First Set Of Measures Under Covid-19 Relief Package
Finance Minister Nirmala Sitharaman announced on Wednesday the first set of relief measures under the government’s Atmanirbhar Bharat Abhiyan—India’s Rs 20 lakh crore Covid-19 economic package. Small businesses, non-bank lenders and power distribution companies formed the central agenda of today’s announcements.
Here are the key highlights:
- Collateral-free loans, backed by the central government, of up to Rs 3 lakh crore have been introduced for MSMEs.
- Up to Rs 20,000 crore liquidity support through subordinate debt for stressed MSMEs.
- A fund of funds of up to Rs 50,000 crore for equity support to MSMEs with growth potential.
- Definition of MSMEs has been revised.
- EPFO support provided by central government has been extended for another three months till August.
- A special liquidity scheme of up to Rs 30,000 crore has been announced for NBFCs, housing financiers and microfinanciers.
- Partial credit guarantee scheme for NBFCs has been expanded.
- Power distributor companies will be given a liquidity injection of Rs 90,000 crore to pay off their dues to power generation firms.
- Real estate developers allowed to invoke ‘force majeure’ clause and extend registration and completion dates by six months.
- Rates for tax deducted at source and tax collection at source have been reduced.
- Due date for filing income tax returns have been extended.
Read further for more details on each announcement.
Due Date For Income Tax Returns Extended
The due date of all income tax returns for FY20 will be extended to Nov. 30, 2020 from July 31 and Oct. 31 earlier. Due date for tax audit will be extended to Oct. 31 from Sept. 30 earlier.
Date of assesments getting barred on Sept. 30, 2020 has now been extended to Dec. 31, 2020. Those getting barred on March 31, 2021 will be extended to Sept. 30, 2021.
TDS, TCS Rates Reduced: Rs 50,000 Crore Tax Relief
The government has reduced the rates of tax deduction at source for non-salaried payments made to residents and tax collection at source for specified reciepts will be reduced by 25 percent of the existing rate.
Sitharaman said that if the tax was Rs 100 earlier then it would now be Rs 75.
This reduction will come into effect from May 14 and will last till March 31, 2021.
The payment of contract, professional fees, interest, rent, dividend, commission and brokerage shall all be eligible for the reduced rate.
Real Estate Can Use Covid-19 As Force Majuere
The government has said that developers can now invoke a Force Majuere clause under the Real Estate Registration act.
By invoking Force Majuere they can extend their registration and completion date suo-moto by six months for all projects that were expiring on or after March 25. Fresh project registration certifications will be issued automatically with new timelines.
Government Gives Relief To Its Contractors
All contractors to central agencies like railways, road ministry, central public works department can be given an extension of up to 6 months without any additional costs.
This covers construction works and goods and services contracts.
It will cover obligations including completion of work, intermediate milestones and extension of the concession period.
Rs 90,000 Crore Liquidity Boost For Discoms
The finance minister has announced a Rs 90,000 crore liquidity injection for power distribution companies, where revenues have plummeted.
The liquidity will be infused by the Power Finance Corporation and Rural Electrification Corporation, Sitharaman said.
The loans will be given against state guarantee for exclusive purpose of clearing of discoms’ liabilities to the power generators.
Central Public Sector Generation companies will give rebate to discoms which will be passed on to the customers.