The havoc of CoronaVirus created so much mishap in everyone’s life across the globe. Like every other country, Indians are also facing hard times because of the pandemic. The series of lockdowns in India started from 24 March, 2020 and it’s still ongoing.

COVID-19 literally took over this year’s excitement, and the extension of lockdowns made it more disappointing. When everyone is compelled to sit home, some of the businesses are trying to manage their operations from home only. However, it is not possible for every business niche! That’s why companies are cutting off the cost by layoffs and restructuring the hierarchy.

We know that’s not fair, but there are hardly any choices left.

When everything is sinking, the AatmaNirbhar Bharat scheme’s announcement gave a lot of relief to all citizens. The relief package of Rs. 20 lakh crore, which is said to be 10% of India’s GDP, primarily focuses on MSME, tax relief, EPF support, amendments in widely adapted terms and definitions. The plan adds benefits for all grades of people. Here, we will be talking about MSME businesses only.

If you are an online business that started a venture before a year or more, you may be thinking about managing your credits and cash flow. By checking your company’s eligibility, as per the amended definitions of MSME, you can avail of the emergency credit line.

In which MSME criteria does your business fall?

Unlike the old definition of MSME, now, both initial investment, as well as turnover, is taken into account to classify the type of MSME. The updated slab is described as follows:

Emergency Credit Line Guarantee Scheme (ECLGS)

The Government issued the fund of Rs. 3 lakh crore for asset-free loans given to MSMEs as emergency credit funds. The amount that can be availed as emergency credit is 20% of the MSMEs outstanding credit value latest by 29 February, 2020.

The loans will be issued for 4 years, and principal repayment must be made within 1 year. The official guidelines and eligibility standards for different businesses can be read here.

You need not worry about the collateral as well as existing loans unless you are a bank defaulter or have any ongoing fraud case on your name. The interest rate will be capped for now banks, NSFCs will bear the credit guarantee for a principal amount as well as interest rates, as they are capped for now.

If you have an existing loan with 75% of the principal amount paid, you can opt for an emergency credit loan. Further, you can check on the official website and connect with the bank officials to get the approval of the amount as per your business size.

For your online business, we recommend you to check with your chartered accountant to get the cumulative report of your investments and turnover. Since most online retailers are selling their products on multiple channels, it can be tricky to anticipate the right figures for turnover. This will give you more clarity about your business’s condition and factors that you must consider before availing for emergency credit.

Value addition with EPF

Considering the gravity of the situation, the Government took certain valuable decisions regarding the Employee Provident Fund (EPF).

The good news for small scale businesses is, the Government decided to relax EPF contributions to the companies with a team size of 100 workers or less. The scheme was already working previously and is extended until August 2020. This is further adding the relief of Rs. 2500 crore for 3.67 lakh businesses out there.

Now that ecommerce platforms have started functioning, you must be resuming your business as well. If your company’s team size is 100+, you can benefit from the reduced EPF contribution. In contrast to the old policies, your share, and that of your employee for EPF are now reduced to 10% for the next 3 months. Like 6.7 lakh businesses around, you can save this 2% of all employees. Thus, you will have more funds to maintain cash flow for your business.

Updates on direct tax

By now, you have already got the update of the extension of the tax audit for your business. The Government’s best decision is about the refund of all pending tax amounts for small businesses, professionals, and charitable trusts.

For now, the final audit date, as well as the income tax return filing date, is extended to 30 November 2020 for FY 19-20. The tax audit forms can also be filled by 31 October 2020.

Relief to debtors

Another significant relief for the MSME debtors under the AatmaNirbhar plan is the additional limit of Rs. 20000 crores. To promote the local business and make India self-reliant, CGTMSE will give the partial credit guarantee for NPA accounts to the bank. Leveraging the benefit of this scheme, if the debtor has deposited 25% of the principal amount, then with 25% dues, can check for the eligibility for emergency credits and resume the business operations.

Also, the Government announced to offer equity funding to MSMEs. This will refine the growth of small businesses and hone their potential with the stock exchange.

That’s the brief of the Government’s economic package for self-reliant India for MSMEs. There are undoubtedly numerous clauses and conditions applicable for different cases. Stay tuned with the updates. You can join the community forums to connect with the like minds to get a better idea about things you can get benefited with.