Union Finance Minister Nirmala Sitharaman on Wednesday presented the details of the INR 20 lakh-crore economic stimulus package, announced by Prime Minister Narendra Modi on Tuesday, to help businesses recover from the debilitating impact of the coronavirus pandemic, to boost growth and to help build a self-reliant (aatma-nirbhar) India.
In the first of the series of press briefings planned to announce how the stimulus package would be disbursed, Finance Minister Sitharaman reiterated that the package was based on five economic pillars — economy, infrastructure, tech-driven systems, demography and demand.
Sitharaman announced tax reforms as part of the first phase of the stimulus package to revive the economy. The government has cut TDS (tax deduction at source) rates by 25 per cent for non-salaried section.
In a bid to provide support to the struggling micro, small and medium enterprises (MSME) sector, the government announced collateral-free automatic loans worth Rs 3 lakh crore.
It also changed the definition of MSMEs by revising upwards the investment limit, and bringing in an additional criteria of turnover size of the company. Further, global tenders for government procurement of up to Rs 200 crore will no longer be allowed.
Following are the highlights of the Wednesday’s announcements by the finance minister:
Date of filing Income Tax returns for FY 19-20 extended
Direct Tax Measures announced
All pending refunds to charitable trusts and non-corporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately.
Due date of all income-tax return for FY 2019-20 will be extended from 31st July, 2020 & 31st October, 2020 to 30th November, 2020 and Tax audit from 30th September, 2020 to 31st October, 2020
Date of assessments getting barred on 30th September, 2020 extended to 31st December, 2020 and those getting barred on 31st March, 2021 will be extended to 30th September, 2021.
Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st
In order to provide more take home salary for employees and to give relief to employers in payment of Provident Fund, EPF contribution is being reduced for businesses and workers for 3 months, amounting to a liquidity support of Rs 6,750 crores.
EPF relief for all establishments with Rs 2,500 crore liquidity support. The Government of India will provide both employer and employee 12% contributions.
Extending support for another three months from March-May 2020 to June-August 2020 as well. Nearly 3.6 lakh establishments benefit, 72.22 lakh employees will benefit.
This support will be extended by another three months to salary months of June, July and August 2020
This will provide liquidity relief of Rs 2500 cr to 3.67 lakh establishments and for 72.22 lakh employees
Rs 50,000 crores liquidity through TDS/TCS rate reduction
To provide more funds to the taxpayers, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates.
Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS.
This reduction shall be applicable for the remaining part of the FY 2020-21 i.e. from tomorrow to 31st March, 2021.
This measure will release Liquidity of INR 50,000 crore.