The government is looking at borrowing as one of the measures by which it would finance the Rs 20 lakh crore Covid-19 economic relief package.
"It is one of the ways we are also expecting to finance the Rs 20 lakh crore," Finance Minister Nirmala Sitharaman said during a press briefing.
On May 8, the government had announced an increase in the estimated gross market borrowing for FY 2020-21 to Rs 12 lakh crore from Rs 7.80 lakh crore as per Budget Estimates (BE) 2020-21.
The government had said the revision in borrowings was necessitated on account of the COVID-19 pandemic.
Track this blog for highlights from the FM’s press meet
A day after Prime Minister Narendra Modi announced a Rs 20-lakh-crore relief package to tackle the economic fallout of the pandemic, Finance Minister Nirmala Sitharaman explained the contours of the package.
The minister announced certain tax measures as part of the relief package. Sitharaman announced a reduction of 25 percent in the rates of the tax deducted at source (TDS) for non-salaried specified payments made to residents and rates of tax collected at source (TCS) for 2020-21.
Payment for contract, professional fees, interest, rent, dividend, commission and brokerage shall be eligible for this reduced rate of TDS, Sitharaman said. This reduction would be applicable for the remaining part of the FY 2020-21, from May 14 to March 31, 2021.
The move is expected to release liquidity worth Rs 50,000 crore, the finance minister said.
“The reduction of TDS rates for the remainder of the year is welcome and will have a positive impact in terms of creating liquidity amongst taxpayers. One however expects big ticket announcements on the tax front in the days to come," said Abhay Sharma, Partner, Shardul Amarchand Mangaldas & Co.
The minister also announced that the due date for filing of all income-tax returns for FY 2019-20 would be extended to November 30, 2020 from July 31, 2020 and October 31, 2020.
The tax audit deadline has been extended to October 31, 2020 from September 30, 2020.
She also announced that the period for Vivaad se Vishwas Scheme for making payment without additional amount has also been extended to December 31, 2020.
“The extension of the Vivaad se Vishwas scheme without additional payment to December 2020 will allow assessees and the department alike adequate time to process the claims to reduce litigation,” said Rohinton Sidhwa, partner, Deloitte India.
The minister made a host of announcements for the micro, small, and medium enterprises (MSMEs). The minister announced a Rs 50,000-crore equity infusion through fund of funds for MSMEs.
MSMEs are facing a severe shortage of capital. The fund of funds will be set up with a corpus of Rs 10,000 crore.
"The fund of funds will be operated through a mother fund and a few daughter funds. The government will provide equity funding for MSMEs with growth potential and viability," said Sitharaman.
Sitharaman also announced a Rs 30,000- crore special liquidity scheme for non-banking finance companies (NBFCs), housing finance companies (HFCs) and micro-finance institutions (MFIs).
She also announced an extension of the partial credit guarantee scheme worth Rs 45,000 crore under which the first 20 percent loss in debt papers will be borne by the government. AA and below rated and unrated papers will be eligible for this investment, she said.