EPF for employees, relief for MSME for businessmen, read 10 big announcements of Finance Minister Nirmala Sitharaman

By Shivani Reddy On May 14, 2020

To bring back the slowed economy due to Corona virus and to turn this crisis into an opportunity, Rs.3 lakh crore of collateral free loan will be given to MSMEs out of an economic package of Rs 20 lakh crore. With this, the definition of MSME has been increased to Rs 100 crore for medium enterprise business.

Finance Minister Nirmala Sitharaman and Minister of State for Finance Anurag Thakur today announced the first phase of the economic package. He said that packages for various sectors are being announced under the Self-Reliant India Campaign. Announcements will now be made for different regions continuously.

Finance Minister Nirmala Sitharaman’s 10 big announcements under the Self-Determined India Campaign:

1. Under this campaign, a provision has been made to provide collateral free loan of Rs 3 lakh crore to MSMEs. This loan will be for four years and the principal will not have to be repaid for the first year. Under this, MSMEs with a turnover of Rs 100 crores will get loans up to Rs 25 crores. 100% guarantee cover will be available for banks and NBFCs. The scheme will be available till 31 October 2020.

2. Along with this, the definition of MSME has been changed. Under the new definition of MSME, micro enterprises can be invested up to Rs 1 crore and its business limit will be Rs 5 crore. Similarly, an investment of Rs 10 crore can be made in a small enterprise and its total annual turnover will be Rs 50 crore. The medium enterprise will have an investment of up to 20 crores and its total business will be up to 100 crores.

3. A provision of 20 thousand crores has been made to help the stressed MSMEs. This will benefit such MSMEs who are NPAs or non-beneficiaries. This will benefit more than two lakh MSMEs. 50 thousand crore rupees will be invested in MSMEs which are doing better business. A fund of 10 thousand crore rupees will be set up for them. This will help in listing the MSMEs in the stock market.

4. The period of all income tax returns to be filled up to 31 July 2020 and 31 October 2020 has been extended till 30 November 2020. Along with this, the period of the audit report has also been extended to 31 October by filling up by 30 September.

5. All pending refunds up to five lakh rupees are being issued. More than 14 lakh refunds have been issued so far. The assessment date up to 30 September has been extended to 31 December 2020 and 31 March 2021 to 30 September 2021.

6. The government has reduced the contribution to the Employees Provident Fund (EPF) for the next three months with a view to providing more money in the hands of employees working in private enterprises. 12 percent of the salary of employees is deposited in EPF. Also, the employer also deposits the same amount in EPF. Now the contribution of private employers and employees has been reduced from 12-12 percent to 10-10 percent. Instead of 24 percent of the employee’s EPF account, an amount equal to 20 percent will have to be deposited.

7. Organizations up to 100 employees, in which 90 percent of the employees’ salary is less than Rs 15,000, the exemption period given to them has been extended by three months. Earlier, the government had said that the government would submit the contribution of March, April and May to be given by both the employees and employers of such institutions. Its duration has also been extended till August. This will benefit 72.22 lakh employees working in 3.67 lakh enterprises and add liquidity of Rs 2,500 crore to the economy.

8. Finance Minister Nirmala Sitharaman on Wednesday announced a special cash scheme of Rs 30,000 crore for non-banking financial companies (NBFCs) and micro-lending institutions (MFIs) in this difficult phase. The objective of this step is to provide assistance through loans to the region amid Corona virus crisis.

9. Giving relief to the construction sector, the Finance Minister said that all government agencies will extend the deadline of six months for all contractors to complete construction and goods and services contracts.

10. The finance minister also announced a special cash scheme of Rs 30,000 crore for non-banking financial companies (NBFCs), housing finance companies (HFCs) and micro-lending institutions (MFIs) in this difficult phase. Apart from this, a Partial Credit Guarantee (Partial Credit Guarantee) Scheme 2.0 for Rs. 45,000 crore was also announced for NBFCs, Housing Finance Companies (HFCs) and Micro Finance Institutions (MFIs) having low credit. The objective of this initiative is that these companies can give more loans to individuals and units of MSME (micro, small and medium enterprises) sector.