CAIT SEEKS STIMULUS PACKAGE FOR TRADERS & SMALL BUSINESSES
The Confederation of All India Traders (CAIT) has requested the Central Government to release a stimulus package for trading community to mitigate the impact of Cvid-19. In a communication sent to Union Finance Minister Smt. Nirmala Sitharaman, the CAIT has advocated a slew of steps including a Covid Cash loan program, insurance cover to traders & their employees engaged in supply of essential goods across the Country, Government subsidy in paying salary & wages to the workers, increase in capping of Mudra loans from Rs.10 lakh to Rs.25 lakh, waiver of interest for three months from April on Bank Load, CC and OD limits, strengthening Non Banking Finance Companies and Micro Finance Institutions to provide loans to traders on minimal rate of interest and other various reliefs as a part of stimulus package.
Currently, the Country is under a lockdown till 14th April,2020 which has given a strong blow to trade & commerce activities led to shut down of about 7 crore business establishments of the traders which are employing about 40 crore people in the Country.
In its communication to Mrs Sitharaman, the CAIT has said that the traders may be allowed for 30-60 days grace period in utility and statutory payments below a threshold without impacting credit history. traders & MSMEs across the board should be given a interest rate subvention at 3 per cent, on standard loans, Renewal of any license falling due in April / May June should be made automatic renewal for at least 1 month without penalty, EMIs and interest on working capital be deferred till 30th September,2020, COVID Loan Program for SMEs (without interest and no fee), Can be MUDRA loans with a relaxed tenure for repayment.The Mudra loan capping should be increased from Rs. 10 lakhs to Rs.25 Lakhs. Instead of Banks, the disbursal of MUDRA loans should be]given to NBFCs and MFIs, as was the original scheme announced by the Hon’ble Prime Minister and the Banks should be directed to provide capital as per norms to NBFCs and MFIs, Provide income support to small traders for their employees through DBT (INR 2000pm) to employees for next 3 months, NBFCs be given license to issue cards to the traders. These cards can provide a ready source of revolving credit, Provide business insurance policies and coverage at nominal premium in the event of a significant business disruption., Providing a 60 days extension for payment of all taxes including Income Tax, GST, etc. due in the months of April, May and June, Allow deducting “loss” from income (i.e. loss from 2020 from 2019 tax return) -merchants will be able to deduct the loss from business activity during the corona virus crisis from the income achieved in the next five years. The traders should be granted ad hoc term loan limit to the tune of 10% of their sales during financial year 2019-20. This Term Loan should bear interest of 5%. It should be recovered in 60 monthly equal installments starting from January 2021. This work can be executed through various branches of SIDBI. This should again be guaranteed by Credit Guarantee Corporation of India. The traders should not be asked for any other Collateral security.
The CAIT has further asked thatthe importers have issued bank Letter of Credit for purchases of good from foreign countries. These consignments are stuck up either at port of origin or inland. In many cases due dates of Letter of Credit are fast approaching without receipt of material. Even if material has been received they are not sold or sales proceeds have not been received. It is suggested that the due dates of exiting L/cs be extended by 90 days. All exporters whose materials are custom cleared at the customs warehouses, be released as soon as possible, so that the goods can be brought into supply chain and Govt should not charge any demurrage charges including banks to waive off interest on EPCs with 90 days pay off back to banks since exports have been affected badly. The NPA norms should be relaxed up to 30th September, 2020. Employer’s Contribution to the PF/ESIC payment be deferred for a period of around 6 months without interest. Other Statutory dues dates may also be kindly be extended for 180 days. All recovery pressure by the Tax officials of direct & Indirect Tax be kept on hold for a period of 6 months. Many borrowers are presently SMA 1 or 2 ( i.e., on the verge of becoming NPA). The Banks may be directed to give special package of 25% additional limit and that additional limit must not be used for clearing the existing over-dues. It should be separately made available to borrowers & overdue amount be converted into Working capital term loan -WCTL repayable over a period of 12 months as FITL without interest. This restructuring should not be considered for credit rating. If not done so, on one hand borrower may get a package & on the other side, due to poor credit rating he will have to pay higher interest rate. Banks may be instructed either not to charge or charge a very nominal processing fee for restructuring or any liberal credit scheme as mentioned above. Power Bills : only actual consumption must be charged. No fixed charges to be levied for period of lockdown and for next 3 months.
The CAIT has requested that Payments of wages/salaries of employees should be paid out of ESI (as its a lockdown due to medical emergency), for the lockdown period. Even those, employees not covered under ESI, their wages to be paid out of Labour Welfare Board funds. Condition of force majeure: Application of a condition of force majeure if it includes COVID-19, will resolve a number of fears of business, including but not limited to demurrage at the ports for ships that remain docked or are in sand heads waiting to be docked and also for Railway Racks waiting either for loading or unloading. Rent Capping : Similar to Salaries, Residential and Commercial rents be capped at between 10-25% during this period, to allow landlords the ability to see through such period and yet allow individuals and businesses to see through the period of no revenues or low salaries. It is suggested that an Economic Revival Committee at each District level should be constituted comprising of Government officials and representative of trade to monitor growth and development of trade in respective District.
On the taxation front, the CAIT has requested that Condition for payment within 180 days with respect to ITC, may be relaxed for inputs received from February.The new rates of 18% on mobiles which will be applicable w.e.f 1.4.2020 may be kept to 12% only. All types of norms pertaining to ITC should be relaxed , genuine Buyers fulfilling all the conditions namely Genuine transactions i.e. material or services received , payment made and holding GST invoices , credit should not be denied . Compliances with regard to E way bills should be relaxed. In view of relaxation given in filing GST returns (specially to small assessee’s), 10% ITC limit should be removed as most of small business will not file returns causing hardship to recipient by way of denial of credit.No interest should be charged even from large tax payer for late payment of GST.GST on rental services may kindly be exempted or reduced to 5%
The CAIT has also requested for deferment of Interest on such Metal Gold Loans by 90 days to 30th June in line with Working capital limits as Metal Gold loan is given as a working capital Loan only. Since the RBI has not clarified on this product hence banks are going to hit jewellers with it. Also allow subvention of 5% to domestic MSME jewellers as to exporters. Export Gold which is taken by Exporters has to be exported in 90 days , due to the current scenario it is going to be highly impossible for export shipments to happen in next few months so a moratorium is required of 180 days extension on this, export obligations to be stayed for period starting from 1 march.Lot of Karigars/artisans will be on verge of migrating to other Industry or will face challenge of survival in doom days hence we request to add them in schemes of government through which they are providing DBT to poor.