Relaxations Provided to Employers, Employees, Real Estate and Contractors: Covid-19 Relief Package

Deepti Shikha

05 Jan, 2021

Finance Minister Nirmala Sitharamanan has announced direct tax measures as part of the Covid-19 relief package. Prime Minister Mr. Narendra Modi had already promised and economic package centered around land, law, labour and also liquidity to boost the country’s economy.

The main aim through this economic package is to build a self-reliant India, also called as Aatma Nirbhar Bharat Abhiyan^[1].

Key Points of the Covid-19 Relief Package

The key points of the Covid-19 relief package announced for businesses, employers, employees, Real Estate and contractors have been listed below:

• Emergency Working Capital for Businesses, which includes the MSME’s of Rs. 3 lakh crore.
• Up to the amount of Rs. 200 crore-No Global Tenders for Government Tenders.
• To extend the Employees Provident Fund Support for business and Organised workers for another 3 Months for salary in the months of June, July, and August 2020.
•  The contribution of employees in EPF to be reduced for both the Employers and Employees for a period of 3 months to 10 % from the current 12 % for all the establishments covered by EPFO for the coming 3 months. 
• For DISCOMs, a liquidity injection of Rs. 90,000 crore.
• Relief for Contractors-An extension of up to 6 months is given to contractors for completion of contractual obligations, which also includes EPC and concession agreements.
• Relief to Real Estate Projects-The Registration and completion date of the Real Estate projects will be extended up to 6 months.
• Tax relief provided to business as the pending income tax refunds made to charitable trusts and non-corporate firms and professions to be issued immediately.
• With Regard to Tax Deduction at Source or TDS and Tax Collected at Source or TCS, a reduction in rates by 25% for the remaining period of the Financial Year 20-21.
• Due dates for various Tax-related compliances also extended.

Details of Measures Announced in the Covid-19 Relief Package

Emergency Working Capital of Rs. 3 lakh crore for Businesses, Including the MSMEs

• To provide relief to the businesses, an additional working capital finance of 20% on the outstanding credit as on 29^th February, 2020 is provided. This amount will be provided as a Term Loan at a concessional rate of interest.
• This relief will apply to units with up to Rs. 25 crore outstanding and having a turnover up to Rs. 100 crore having standard account.
• The eligible units will not have to provide any guarantee or collateral of their own.
• This amount is 100% guaranteed by the Government of India, providing a total liquidity of Rs. 3 lakh crores to more than Rs. 45 lakh MSMEs.

Government Tenders up to Rs. 200 crores need not Provide Global Tenders

The Government’s General Finance Rules (GFR) will be amended to bar any global tender enquiries in the procurement of Goods and Services of value less than Rs. 200 crores.

Employees Provident Fund Support for business and organised workers

This scheme was introduced as part of the PMGKB under which the Government contributes 12 5 of the salary on behalf of both the employer and the employee to EPF. These is extended for another 3  months for salary in the months of June, July, and August 2020. The total benefit that is accrued through this scheme is Rs. 2500 crores to 72.22 lakh employees.

EPF Contribution to be reduced for both the Employers and Employees for 3 months

The statutory PF contribution of both the employer and the employee to be reduced to 10 % from the existing 12 % for all the establishments that are covered by EPFO for another 3 months. This will provide an estimated liquidity of about Rs. 2250 crore.

DISCOMs to get Rs. 90,000 crore Liquidity Injection

In two equal installments, the Power Finance Corporation and Rural Electrification Corporation will inculcate liquidity in the DISCOMs of the total amount of Rs. 90,000 crores.

DISCOMs can use this amount to pay off their dues to the Transmission and Generation Companies.

CPSE GENCOs will also provide a rebate to DISCOMs on the condition that it must be passed on to the final consumers as relief towards their fixed charges.

Relief to Contractors

All the Central agencies like the Ministry of Road Transport and Highways, Railways, and CPWD will provide an extension of up to 6 months for the completion of contractual obligations also including EPC and the concession agreements.

 Relief to Real Estate Projects

• All the State Governments have been advised to invoke the Force Majeure clause under RERA.
• The registration and also the completion date for all the registered projects will be extended up to 6 months, which can also be extended further to 3 more months based on the situation of the state.
• Various other statutory obligations under the RERA will also be extended simultaneously.

Tax Relief to Business

The pending income tax refunds made to charitable trusts and also non-corporate businesses and professions, including the partnership, proprietorship, and LLPs and cooperatives, will be issued immediately.

Tax-related measures

• Reduction in the Rates of TDS and TCS-The TDS rates with regard to all the non-salaried payments to residents and also TCS will be reduced by 25% of the specified rates for the remaining period of 2020-2021. This will provide liquidity of up to Rs. 50,000 crore.
• The due date of all the Income Tax Returns with regard to Assessment year 2020-21 is extended up to 30 November, 2020.
• The tax audit due date has also been extended till 31^st October, 2020.
• With regard to Vivad se Vishwas Scheme, the due date has been extended till 31^st December 2020.

Takeaway

The Government, through this announcement, has tried to bring relief to the employers, employees, Real Estate, Contractors, NBFCs, HFCs, MFIs, and MSMEs. These measures will bring massive relief to businesses and will also play an essential role in increasing the cash flows as beneficial rates, which will be available till the end of the financial year 2020-2021. As the lockdown gets extended, this announcement with regard to Covid-19 Relief package will bring huge relief to businesses, and all other related persons.