Atmanirbhar Bharat Abhiyan: A Booster Shot for MSME's

CS Muhammed Sahal
Director, Company Secretary

15-May-2020

The impact of the coronavirus (COVID-19) is being felt by all businesses around the world. Most of the countries declared various business stimulation packages to boost their respective economy which has been terribly effected due to this global pandemic. Last day our Hon. Prime Minister also declared “Atmanirbhar Bharat Abhiyan” (Self-reliant India Mission), a relief package to Indian business community and especially for Micro, Small and Medium enterprises (MSME’s). As per the Finance ministry press note, Government shall be pledging total spending of Rs. 20 Lakh Crore through different means to boost the economy and overcome the present unprecedented situation. This will attribute close to 10 % of Indian GDP and interestingly a fairly good block is being allotted to Business people especially MSME's. Here I am trying to provide an overview various schemes and relaxations declared by the Government of India for MSME's

1. What are the different packages our Hon. Finance Minister Announces under “Atmanirbhar Bharat Abhiyan” ?

Broadly Finance Minister announces 15 different financial packages across following sectors;

• Micro Small & Medium Enterprises (MSMEs)     - 6
• Employees' Provident Fund                               - 2
• Non-banking finance companies (NBFCs           - 2
• Housing finance companies                               - 2
• Micro-finance institutions                                   - 2
• Distribution Companies (Power & Energy)         - 1
• Real Estates Industry                                        - 1
• Tax Measures                                                   - 1

2. What is the new definition of MSME’s who can avail these packages under this scheme?

There has been a long-pending demand for revision in the threshold for recognising a business as an MSME. The new announcement by the Finance Ministry shall facilitate more entities to be included in the definition of MSME and thereby avail many of the schemes and benefits announced for MSME’s. 

Here is the revised definition of MSME’s based on its turnover and Investment applicable for both manufacturing and service industries:

• Micro Enterprises : Investment< Rs. 1 cr. and Turnover < Rs.5 cr. 
• Small Enterprises: Investment< Rs. 10 cr. and Turnover < Rs.50 cr. 
• Medium Enterprises: Investment< Rs. 20 cr. and  Turnover < Rs.100 cr.

3. What are details of loans declared under this scheme to MSMEs?

A. Total Earmarked Loan Amount:

• Rs. 3 Lakh Crore loan to be pumped through banks & NBFC.
• Government provides 100% credit guarantee cover to Banks and NBFCs on principal and interest.

B.    Who can avail this loan facility?

• All the business and service sector falls under above categorised MSME’s & borrowers with up to Rs.25 Cr. outstanding and Rs.100 Cr. turnover

C. Criteria or maximum limit of loans?

• Emergency Credit Line to Businesses/ MSMEs from Banks and NBFCs upto 20% of entire outstanding credit as on 29.2.2020

D. Tenure and interest rate ?

• 4-year tenure with moratorium of 12months on Principal repayment  
• Interest rate yet to be announced

E. Collateral or guarantee requirement ?

• No collateral or guarantee requirement to avail loan under this scheme

F. Scheme open period ?

• Till 31st October 2020

4. What are the various benefits provided to the employees under various govt schemes?

Eligibility: If your establishment having up to 100 employees with 90 % or more of such employees’ monthly wages is less than 15,000/-.

Benefit: Under Pradhan Mantri Garib Kalyan Package [PMGK], payment of 12% of employer and 12% employee contributions was made into EPF accounts of eligible establishments. This was provided earlier for salary months of March, April and May 2020.

Eligibility: For establishment other than above

Benefit: PF Contribution of both employer and employee will be reduced to 10% each from existing 12%. for all establishments covered by EPFO for next 3 months.

5. What are the other major interventions or relaxation provided specifically to MSME Sector?

• Based on the growth potential and viability, Govt will provide equity support through Corpus and daughter funds and expected to support with total of Rs. 50,000 Cr. 
• E-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions. 
• Government will be continuously monitoring settlement of dues to MSME vendors and MSME receivables from Gov and CPSEs (Central Public Sector Enterprises) will be released in 45 days

6. What are the various tax relations and extensions provided under this scheme? 

• Tax Deducted at Source (TDS) and Tax Collection at Source (TCS) is reduced by 25% from the existing rate for the specified receipts and payments till 31st March 2021. Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS.
• All pending refunds to charitable trusts and non-corporate businesses &professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately.
• All income-tax return for FY2019-20 will be extended from 31stJuly ,2020 &31st October,2020 to 30th November,2020 and Tax audit from 30th September,2020 to 31st October, 2020.
• Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December,2020 
• Mandatory Board meetings to be conducted by the Companies as per the Companies Act, 2013 has been extended by 60 days till 30 September,2020. 
• Conducting of Extra General Meeting (EGM) through video conferencing. And e-voting facilities were allowed for the Companies. 

Conclusion: 

By announcing one of the major finance package ranking after Japan,  US, Sweden, Australia and Germany even though it includes various existing packages from RBI and the Government of India since this Covid-19 era the business house and the entire country is having great expectation and looking for a bright future from these revival and boostage packages. However, the whole success lays in the hands of implementation and execution stage which government should give at most consideration. As our previous governor Mr. Raguram Rajan rightly said "Tracking down every penny to the last beneficiary that stands in a bank que without middle-man should matter of concern, numbers are irrelevant until the end use is verified."

Quick Enquiry

First name*

Last name*

Company*

Your Location*

Email

Phone number*

Do you want to leave us a message?*

Submit

Thank you! Your message has been sent successfully

Error, please retry. Your message has not been sent