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Last Updated : Mar 25, 2020 05:26 PM IST | Source: Moneycontrol.com

Relief measures taken so far good, but need of the hour is financial package: Experts

Santosh Meena feels the ultimate trigger for the bulls will be any positive news in front of novel coronavirus.

Sunil Shankar Matkar

The central government, along with all regulators, has been working hard to help every section of the economy as there has been a lockdown in the country to limit the spread of novel coronavirus.

The virus has already rattled equity, currency and commodity markets as recession fears are looming large on the global economy.

Companies across the country have shut down their offices and plants following the government order. As a result, not only small but even large companies will take a big hit on their financials.

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To address those concerns, Finance Minister Nirmala Sitharaman announced a relief in compliance-related issues for the taxpayers and corporates which is a welcome step, experts feel.

"Amidst the lockdown, an extension of deadlines and relaxation of norms brings in great relief to the taxpayers and businesses in the country. The relaxation on bank charges is also a welcome step," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services told Moneycontrol.

"The waiver of charges on cash withdrawal from ATMs will be helpful for citizens. Removal of minimum balance on bank accounts will be helpful particularly for the poor sections. Raising the threshold for IBC to Rs 1 crore is a succor for the struggling MSMEs," he said.

On the front of Insolvency & Bankruptcy Code (IBC) rules, the threshold for default under IBC has been raised to Rs 1 crore from Rs 1 lakh earlier.

"We are raising default threshold to prevent triggering of IBC for MSMEs. If the situation does not improve till April 30, we can suspend Section 7, 9 and 10 for 6 months," FM said while addressing video conference.

There would be no minimum balance requirement fee imposed by banks and ATM withdrawal from any bank would be free for the next 3 months, she added.

The last date for filing IT returns has also been extended to June 30, 2020 for FY18-19, and the last date for filing March, April and May 2020 GST returns also extended to June 30.

"On delayed deposit of TDS, the interest rate would be 9 percent against 18 percent at present, and for delayed payment up to June, interest rate will be reduced to 9 percent from 12 percent," FM said.

"There is a relaxation of up to 60 days for holding board meeting for next 2 quarters," she added.

"There is no move to impose financial emergency as was claimed by some reports," Sitharaman said, adding there is no interest, no late fee & no penalty for companies having turnover up to Rs 5 crore. "There will be only interest, but no late fee and penalty for bigger companies."

"First of all this press conference has bought confidence in the markets that the ministry is concerned and has cleared dilemma about many compliances. There are many welcome steps taken by the finance minister in the press conference specifically regarding extension of timelines in income tax, GST, MCA. Specifically regarding IBC, there are steps which are very promising," Nitin Shahi, Executive Director, Findoc Financial Services Group said.

Experts feel these are insufficient measures as far as the market is concerned as the financial package is the need of this hour and any progress on the drug to control Covid-19 can boost confidence among investors.

FM has promised to give more financial relief sooner than later and cleared that RBI, Ministry of Finance and regulators are watching market three times a day.

"FM made some announcements regarding relaxation on compliance-related issues which will be beneficial for public as well as for the companies but it won't have any meaningful impact on the market while announcement regarding any economic package will have a significant impact on the market and FM has tweeted that economic package will be announced soon," Santsoh Meena, Senior Analyst at TradingBells told Moneycontrol.

He feels the ultimate trigger for the bulls will be any positive news in front of novel coronavirus.

According to Vijayakumar, more measures including cash transfers are expected in the coming days. "The focus should be on the low-income earners, as they are the worst hit from the lockdown."

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Mar 25, 2020 05:26 pm
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