India is readying an economic package to help deal with crisis

Resmi Sivaram/Agencies

Finance Minister Nirmala Sitharaman on Tuesday said her ministry was readying an economic package to help the industry deal with the coronavirus crisis.

The Indian government may come up with an economic package to prevent the COVID-19 pandemic from causing major harm to the economy.

Finance minister Nirmala Sitharaman said as a first step they were addressing the compliance related issues and an economic package covering issues of concern to the industry would be announced separately later.

The Indian economy that had already slowed down before the outbreak of coronavirus, is in for a more difficult period in the coming months with businesses almost coming to a standstill. The finance ministry and the RBI have taken several steps to ensure that liquidity in the system remains intact. But Industry has called for more stimulus measures to fight depression like conditions setting in the economy.

“The economic package is going to be announced soon,” Sitharaman said while announcing a set of compliance related issues including extension of dates for filing IT and GST returns.

“Since we are in March, we need to address certain statutory and regulatory issues,” Sitharaman said.

Analysts were hoping for the Finance Minister to announce an economic package to soften the blow from the lockdowns in several parts of the country.

“We are readying an economic package to help us through the corona lockdown (on priority, to be announced soon), specifically on statutory and regulatory compliance matters Via video conference,” said the tweet of the finance minister.

In a major relief for small and medium enterprises, the central government has raised the threshold for default under the IBC to Rs1 crore from the current Rs1 lakh.

Addressing the media through videoconferencing on Tuesday, Union Finance Minister Nirmala Sitharaman said that the decision has been taken to prevent triggering of insolvency proceedings against MSMEs.

She assured that the government will keep a watch on the situation and if the situation remains the same beyond April 30, the government may consider suspending Sections 7, 9, and 10 of the Insolvency and Bankruptcy Code (IBC) for six months.  This will prevent companies from being forced into insolvency proceedings in such force mejuere causes of default.

Finance Minister Nirmala Sitharaman on Tuesday quashed media reports that the Centre could impose financial emergency under Article 360 of the Constitution to tackle the economic crisis impacted by Covid 19.

She revealed to the media a number of steps that the government has decided to take for the economy.

Sitharaman said the government will also bring an economic bailout package to help the coronavirus-hit sectors. “Work is going on and we are very close to coming up with an economic package that will be announced sooner rather than later.”

The government has waived the minimum bank charges for savings bank accounts to help citizens deal with the lockdown, said Sitharaman.

Withdrawal from any other bank ATM allowed free of charge for debit card holders for three months.

Sitharaman also announced that the last date for filing of income tax return for 2018-19 has been extended to June 30. Interest rate on delayed payment has been cut to 9 per cent from 12 per cent.

She also announced that the government has decided to extend the last date for linking PAN with unique biometric ID Aadhaar to June 30 from March 31.

The government has also decided to extend the deadline for filing GST returns for March-May to June 30, said Sitharaman while adding that on late filing of GST returns, no late fee, penalty or interest will be charged for companies with turnover of up to Rs 5 crore.

For companies with more than Rs5 crore turnover, no late fee and penalty will be charged on GST return filed by 15 days. A reduced interest rate of 9 per cent will be charged, she said.

The decision comes amid the coronavirus scare and total lockdown across 30 states and union territories in India.

Businesses across the country have been severely hit and are likely to face financial losses due to the lockdown. Micro, Small and Medium Enterprises are likely to the more affected due to limited capital reserves.

The Minister also announced that the extension of the deadline for filing returns of goods and services tax (GST) for March, April and May 2020 till June 30. She also announced extension of the deadline for filing income tax returns for the financial year 2018-19 till June 30, 2020 in a bid to provide relief amid the coronavirus crisis.