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Announcements by FM in Wake of COVID-19

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India is facing a huge decline in government revenues and growth of the income as coronavirus hits economic activities of the country as a whole. A fall in investor sentiment impacts privatization plans, government, and industry. To improve the economy, few steps were required to be taken thus the Indian government announced many reforms with a package of 20 Lakhs crores to again put the economy on its track.

Government has announced various new schemes and benefits for the revival of Micro, Small and Medium Enterprises sector from the impact of COVID 19, which are mentioned below:

  • The government announced a collateral free loan package of 3 lakhs crores for MSMEs. Any MSME which has an existing loan (up to INR 25 crores) and turnover less than 100 crores with any bank or NBFC can avail more loans, without the need for any security, because the government will guarantee such loans completely. Additional working capital finance of 20% of the outstanding credit as on 29 February 2020, in the form of a Term Loan at a concessional rate of interest shall be provided.
  • MSME receivables from the government of Indian and CPSEs will be released in 45 days. E-market linkage for MSMEs are going to be promoted to act as a replacement for trade fairs and exhibitions.

Revised limit for eligibility to register as MSME

(Amount in Crores)

Enterprises Micro Enterprises Small Enterprises Medium Enterprises
Manufacturing and Service enterprises Investment – up to 1 and Turnover – up to 5 Investment – up to 10 and Turnover – up to 50 Investment – up to 20 and Turnover – up to 100
  • The government announced Rs.20,000 crore sub-ordinate debts for stressed MSMEs or MSMEs declared as NPA.
  • 50,000 crore equity infusion via Mother fund-Daughter fund for MSMEs that are viable but need handholding. A fund of funds with a corpus of Rs.10,000 crore is going to be set up to assist these units increase capacity and help them list on Markets if they choose.
  • Non-allowance of global bidders in government procurement tenders schemes up to INR 200 crores to support fair competition to MSME.

Employees Provident Fund

  • In March, the finance minister had announced that the government will take care of EPF contribution that of both the employer and the employee (12 percent each) for the next three months in wake of coronavirus outbreak. The total contribution government will pay for 3 months is 24 percent. This is for all those establishments who have up to 100 employees and 90 percent of the employees earn less than Rs.15,000.
  • The government said that to provide more take-home salary for employees and to give relief to employers in payment of PF, EPF contribution is being reduced rate from 12% to 10% for Businesses & workers for 3 months.

Tax Deducted and Tax Collected at Source
The government also announced a reduction in the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) rates by 25 percent on non-salaried payments between 13th May 2020 to 31st March 2020. 

Income Tax
Due date of all Income Tax Return filings extended from July 31 to November 30. Vivad se Vishwas scheme extended till December 31, 2020. Date of assessments getting barred as on Sep 30, 2020, extended to December 31, 2020. Date of assessments getting barred as on March 31, 2021, extended to September 30, 2021.

Other Reliefs

  • 45,000 crore partial credit guarantee scheme 2.0 for NBFCs. The first 20% loss shall be borne by the guarantor that is the government of India.
  • 30,000 crore special liquidity scheme for investing in investment-grade debt paper of NBFCs, HFCs, and MFIs. These NBFCs are those that are also funding MSMEs. These will be fully guaranteed by the government of India.
  • An additional time of 6 more months shall be allowed to newly incorporated companies for filing declaration for Commencement of Business.
  • Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Companies Act, will not be treated as a violation.
  • The last date for filing March, April, and May 2020 GST returns extended to June 30, 2020. The due date for any compliance and documentation by taxpayers, including for investment instruments, extended to June 30, 2020. Companies with less than Rs.5 Crore turnover, no interest or late fee or penalty will be charged for the late filing of GST return. For bigger companies, the penalty will be charged at a reduced rate of 9% p.a.
  • Threshold triggering insolvency proceedings raised to Rs.1 crore from Rs.1 lakh.
  • The requirement to create a deposit reserve of 20 percent of deposits maturing during the financial year 2020-21 before April 30, 2020, has been allowed to be complied with till June 30, 2020, while the requirement to invest 15 percent of debentures maturing during a particular year in specified instruments before April 30 may be done so before June 30, 2020.
  • Applicability of Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-2021 instead of from 2019-2020 notified earlier.

At AJSH, we assist our clients in dealing with various corporate matters (Company incorporations, statutory audits, ROC Compliances, Company winding up), ITR Filings, TDS Compliance, and related services by providing them adequate support and guidance from our end. If you have any questions or wish to know more about recent changes in compliances, kindly contact us.


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