Boost for MSMEs, TDS reduction: FM announces first of series of economic measures

Sandeep Dikshit
Tribune News Service
New Delhi, May 13

Detailing Prime Minister Narendra Modi’s Rs 20-lakh crore economic stimulus package, Union Finance Minister Nirmala Sitharaman announced a 25 per cent cut in the tax deducted at source (TDS), a two per cent interest subvention for PF contributions and a Rs 3.7 lakh crore loan package for micro, small and medium enterprises (MSMEs).

As part of a series of press conferences that will detail the fine print of the prime minister’s stimulus package, Sitharaman also announced infusion of Rs 90,000 crore in cashless electricity distribution companies and Rs 75,000 crore for non-star performers among non-banking financial companies, housing-finance companies and micro-finance institutions.

In all, the first tranche of the package unveiled by the Finance Minister amounts to over Rs 6 lakh crore, of which about Rs 540 lakh crore will be loans from banks, Rs 50,000 crore in deferred tax and about Rs 21,000 crore from the Central Government. The amount foregone due to Centre’s contribution to six months of PF for small companies was not available.

Sitharaman said several components of the package were directed at the mission of making India self reliant (“Atma Nirbhar Bharat”), a phrase she translated in several Indian languages for the benefit of those who do not understand Hindi.

“This is a phrase you will hear quite often,’’ she said in her opening remarks. Minister of State Anurag Thakur paraphrased Sitharaman’s remarks in Hindi.

The Rs 90,000 crore liquidity infusion in discoms would help them pay the power generating companies, which she said, was an example of “Atma Nirbhar Bharat”. Another example was the government’s decision to stop issuing global tenders for its purchases of less than Rs 200 crore.

While radically revising the definition for MSMEs, Sitharaman said the loans will be under three heads—Rs 3 lakh crore for 45 lakh completely shut MSME units, Rs 20,000 crore via a trust to stressed units and a Rs 50,000 crore fund for viable but shaky units. The Finance Ministry’s contribution will be Rs 14,000 crore.

The Government decided to bear both PF contributions of 3.6-lakh small companies for another three months and will pay two per cent PF in certain establishments that would cost the Exchequer Rs 6,750 crore.

The Government also extended the Vivaad se Vishwas income tax amnesty scheme till December 31 with no penalties. It also extended the due date for income tax returns to November 30, tax audits to October 3 and the barring of assessments to December 31.

For the real estate sector, the Urban Development Ministry will write to states to invoke the Force Majeure clause for ongoing contracts.

Highlights

Assessment dates barred on September 30, 2020, extended to December 31, 2020.

Dates barred on March 31, 2021, extended to September 30, 2021

25% cut in TDS to yield Rs. 50,000 crore

Loans for MSMEs: Rs. 3.70 lakh crore

Liquidity injection of Rs. 90,000 crore for Discoms

Loans of Rs. 75,000 crore for NBFC, HFCs, MFIs

Two per cent PF subvention for employers and employees

No global tenders for Govt purchases up to Rs 200 crore

Regulatory extensions for Vivad se Vishwas, IT returns and audit

Six-month project extension for Govt contractors

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