India went under a total lockdown on March 24. What previously was treated as a 21-day break soon turned into a new way of life. At present the number of days we have spent in our Lockdown is nearly 50. But Just when public opinion started shifting from ‘Pro-lockdown’ and ‘Restart the Economy’ PM Modi did it again. On May 12, he addressed the nation in his classic 8 PM addressing style. A gargantuan Stimulus Package of INR 20 Lakh Crore was announced along with Lockdown 4.0.
For quite some time, another Economic package was long called for from renowned Economists like Nobel laureate Abhijit Banerjee and ex-RBI Governor Raghuram Rajan. India’s chief economic adviser K.V. Subramanian cited the steep recovery of the world economy after the Spanish flu of 1918-19. He further claimed that India Inc too could witness a ‘V-shaped’ recovery. Worth noting that the world wasn’t forced in a Lockdown during the Spanish Flu and most Economic Activities were allowed.
On May 13, 2020, Finance Minister Nirmala Sitharaman gave the details of the Stimulus Package in a press conference.
Atmanirbhar Bharat Direct Tax Update
- The rates of Tax Deducted at Source(TDS) and rates of Tax Collection at Source(TCS) for the specified receipts shall be reduced by 25%.
- Freelancers/Professionals, TDS Rates on professional fees (194J – 10%) & contract payments (194C – 1% & 2%) slashed by 25% for remainder of FY 2020-21.
- Investors/traders, TDS rates on dividend u/s 194 (Equity) & 194K (Mutual Funds) slashed by 25% (i.e from 10% to 7.5%) for remainder of FY 2020-21.
Income Tax Update
- Due Dates for Income Tax return Filing for FY 2019-20 (AY 2020-21) extended from 31st July to 30th November.
- Due Dates for Tax Audit Report for FY 2019-20 (AY 2020-21) extended from 30th September to 31st October.
Other Direct Tax Measures
- All Pending refunds to non-profit businesses and professions including Proprietorship, Partnership, LLP, and Co-operatives shall be issued immediately.
- Period of Vivad see Vishwas Scheme for making payment without additional amount will be extended to December 31, 2020.
- Date of assessment getting barred on September 30, 2020, and March 31, 2021, shall be extended up to December 31, 2020, and September 30, 2021 respectively.
Other Important Measures
- INR 2500 crore worth EPF Support for Business & Workers for 3 more months. 72 Lakh employees and 3.67 businesses to be benefited.
- Statutory PF contribution of both employer and employee reduced to 10% from 12%.
- INR 3 lakh crores worth Collateral-free Automatic Loans for Businesses, including SMEs. Loans to have a 4-year tenor with a moratorium of 12 months on Principal repayment.
- INR 20,000 crores worth Subordinate Debt for Stressed SMEs. Nearly 2 Lakh MSMEs are likely to be benefited.
- INR 50,000 crores worth Equity infusion for MSMEs through Fund of Funds.
- Global tenders to be disallowed up to INR 200 crores.
- INR 30,000 crore for Special Liquidity Scheme for NBFCs/HFCs/MFIs.
- INR 45,000 crore worth Partial Credit Guarantee Scheme 2.0 for NBFCs.
- INR 90,000 crore Liquidity Injection for DISCOMs.
- Revised criteria for MSMEs.
Stay tuned for further updates on the Atmanirbhar Bharat Economic Stimulus Package.