With unprecedented financial uncertainty grappling India’s economy due to the Covid-19 outbreak the government has enlarged a Covid-19 relief package worth rupees 20 Lakh crore, alleged to be an amount equal to about 10% of the India’s GDP Size.
The economic package certainly has many reformative and supportive approaches to help the employees, business houses, MSMES etc. The relief package and relaxation are made keeping in mind the concept of ‘Atmanirbhar Bharat’ (roughly translates to ‘self-reliant India’) projected by PM Modi. This article will talk about the relaxation provided to the employees, real estate and contractors under the aforesaid relief Covid-19 relief package.
Employees
‘Employee’ being the majority and the largest group of persona combining majorly ‘middle-class’ population of India was under dire stress since the starting of this pandemic and lockdowns with it. They are at verge of losing their jobs and weren’t even sure that they will get their salaries or not. Though the government in March 2020 by an order[1] made it compulsory for all workspaces to provide their employees salary but that too was struck down by the Supreme Court on 15th may 2020 in the judgement of Nagreka Exports Limited v Union of India[2]. The relief and relaxation provided to the employee will certainly help them to regain them their financial and job stability in post-Covid times.
The relaxation provided under the relief package to employees is as follows:
1. Government extended the Employees Provident Fund (EPF) Support for business and Organised workers for 3 Months, i.e., for the salary in the months of June, July, and August 2020. The benefit from these as alleged by the government is worth of rupees 2500 crores to 72.22 lac employees.
2. Further, government order for reducing the contribution of employees and employer in EPF for a period of 3 months, from the current 12 % to 10 % for all the establishments covered by EPFO for the coming 3 months. This decision will increase the cash flow of about 2250 crore in the market.
Real estate
Real estate India’s one of the biggest sectors providing employment is also one of the worst hit sectors due to this lockdown. Halting of work since the very first day of lockdown and migration of workers which constitutes nearly 80 percent of real estate sector’s workforce to their villages in deficiency of food and money has created difficult situation for the sector. It is certain that even after the ending of lockdown with very little workforce and capital real estate will take months to get in its full-fledged form. Therefore, it’s the sector which was expecting and was in dire need of relaxation by government.
The relaxation provided to real estate is as follows:
1. Under the relief package all the State Governments have been urged to invoke the Force Majeure clause under RERA for the stalled real estate project, this will help the real estate to get an extension under various contract and will foreclose their liability for the non-performance of the contract due to lockdown.
2. Further, the registration and also the completion date for all the registered projects based on the position in state will be extended up to 6 months, which further can be extended to 3 more months.
3. The timeline of completion of project under RERA will also be extended and relaxation to the builders will be given for the same.
4. The government has suspended the initiation of Insolvency under Insolvency and Bankruptcy code for one year. This came as a huge relief to the real estate sector as since the home buyers are allowed to proceed under IBC against builder it opened a floodgate of applications and certainly the recent lockdown would have increased even more cases of the same. This suspension will reduce the fear of the sector and help it to stand on its feet gain.
5. The government has also decided to decrease the rates of Tax Deduction at Source (TDS) and Tax Collected at Source (TCS), by 25% for the remaining period of the Financial Year of 20-21
6.The Government has extended the Credit Linked Subsidy Scheme (CLSS) till March 2021 for the affordable housing sector, this will lead to an investment of rupees 70,000 crore by the government. This will certainly help the real estate sector engaged in providing affordable houses to middle income group as it will encourage middle income group people to buy houses.
7.Government extended date for filing of all income tax returns for FY2019-20 from July 31 and October 31 to November 30 2020. This will help all the business house be it of real estate sector or any other sector.
Contractors
Contractors are essentially one of the most important persons to look at for achieving the objective of ‘Atmanirbhar Bharat’. They suffered a great backlog for their present projects due to the lockdown and non-availability of raw materials.
For Contractors the following relaxations are extended under the relief package as pronounced by Finance Minister of India:
1. The Government said to amend the General Finance Rules (GFR) barring global companies to render a tender in the procurement of Goods and Services of value less than rupees 200 crores. This will certainly help the local contractors and will promote the concept of ‘Atmanirbhar Bharat’ as envisaged by the government.
2. Further, the construction contractors engaged with the National Highways Authority of India and other such agencies will be granted an extension of up to six months to complete the construction obligations. This indeed came as a relief for the construction contractors who were running back of their schedule due to the nationwide lockdown imposed.
Key takeaway
Government by this COVID-19 relief package has tried to give huge relief to Businesses, Contractors, employers, employees and certainly this relaxations and relief will come a huge calming breath to them. However, it certainly has also disappointed people who had high hopes with the relief package as there is nothing in this package which can be said as remarkable move by the government. Though, it is still good to get something than nothing.
[1] Ministry of Home Affairs Order No. 40-3/2020-DM-I(A).
[2] Writ Petition (Civil) No. 471 of 2020.
Comments