Major stimulus package for MSMEs and other sectors announced
Part of: GS Prelims and GS-III – Economy
Several relief measures and packages were announced for MSMEs, salaried workers, contractors recently as part of Atma-Nirbhar Bharat Abhiyaan.
- ₹3 lakh crore collateral free loan schemes for businesses, especially MSMEs.
- For 2 lakh NPAs/stressed MSMEs, ₹20,000 crore as subordinate debt will be facilitated.
- A ₹50,000 crore equity infusion through an MSME fund of funds with a corpus of ₹10,000 crore.
- The definition of an MSME is being expanded to allow for higher investment limits and the introduction of turnover-based criteria.
For salaried workers and taxpayers
- Income tax returns for financial year 2019-20 have been extended with new due date being November 30, 2020.
- The rates of tax deduction at source (TDS) and tax collection at source (TCS) have been cut by 25% for the next year.
- Statutory provident fund (PF) payments have been reduced from 12% to 10% for both employers and employees for the next three months.
NBFCs, housing finance companies and microfinance institutions
- ₹30,000 crore investment scheme fully guaranteed by the Centre.
- Partial credit guarantee scheme worth ₹45,000 crore. First 20% of losses will be borne by the Centre.
- ₹90,000 crore liquidity injection
- 6 month extension from all Central agencies
- Partial bank guarantees to ease cash flows
Registered real estate projects
- 6-month extension, with COVID-19 to be treated as a “force majeure” event
Employee Provident Fund
- EPF provided to low-income organised workers under the PMGKY will be extended for another three months.
- Mandatory EPF contributions are also being reduced from 12% to 10% for both employees and employers in all other establishments.
Important value additions:
Employee Provident Fund
- It is a scheme for providing a monetary benefit to all salaried individuals after their retirement.
Tax deduction at source (TDS)
- As per the Income Tax Act, any company or person making a payment, is required to deduct tax at source if the payment exceeds certain threshold limits.
Tax collection at source (TCS)
- It is the tax payable by a seller which he collects from the buyer at the time of sale.
- It means a property or something valuable that one agrees to give to somebody if he/she cannot pay back money that he/she has borrowed.
- It is debt which ranks after other debts if a company falls into liquidation or bankruptcy.
- Such debt is referred to as ‘subordinate’, because the debt providers have subordinate status in relationship to the normal debt.
Statutory provident fund
- It is meant for employees of Government or Universities or Educational Institutes affiliated to University.
- It is the value of the shares issued by a company.
Image source: The Hindu