Special Economic Package or AatmaNirbhar Bharat: 5th Phase

Hello friends, Today I’m going to explain the topic "Special Economic Package or AatmaNirbhar Bharat: 5th Phase"

You can read my previous Blogs on Special Economic Package or AatmaNirbhar Bharat

• Special Economic Package or AatmaNirbhar Bharat: 1st Phase
• Special Economic Package or AatmaNirbhar Bharat: 2nd Phase
• Special Economic Package or AatmaNirbhar Bharat: 3rd Phase
• Special Economic Package or AatmaNirbhar Bharat: 4th Phase

The Union Finance Minister Smt Nirmala Sitharaman announced the 5th Phase of the Economic Relief Package following the Public Address of the Prime Minister on 12th May 2020. The Prime Minister, announced a special economic package of around Rs 20 lakh crores, amounting to 10% of India’s GDP during his speech to Spur growth, and to build "AatmaNirbhar Bharat"

7 Measures Comprising 

• MGNREGA
• Health Reforms
• Educational Reforms
• Insolvency Bankruptcy Code (IBC)
• Companies Act, 2013 – Relaxation
• Ease of Doing Business for Corporates
• Public Sector

1.  MGNREGA

• Rs 40000 crores additional allocation is being made for the generation of employment in addition to the budget allocation of Rs 61000 crores.

2.  Health Reforms

• Public expenditure on health institutions will be increased. Investment in grass route levels will be ramped up, in Health and Wellness Centres in tier II and tier III cities.
• All districts will have infectious disease Hospital Blocks.
• Lab networks will be strengthened. Integrated Public Health Labs will be set up in all Block levels in each district to enable India to face this Pandemic or any other Pandemic.
• The National Institutional platform for one health by ICMR will be encouraged.
• National Digital Health Mission Blueprint will be implemented.

3.  Educational Reforms

• Towards delivering Technology-driven education, One Nation One digital platform to be launched.
• One earmarked TV channel to be made available for each class. Extensive use of radio, community radio, and podcasts will be made. Special e-content for hearing impaired and visually impaired children will be created.
• Top 100 universities will automatically be allowed to start delivering their courses online.
• Initiative for psychological support. for students, teachers, and families will be launched.

4.  Insolvency Bankruptcy Code (IBC)

• Many businesses have been severely affected due to the COVID-19 pandemic. Any debt incurred or defaulted because of COVID-19, they shall not be included in the category of default.
• Suspension of fresh insolvency proceeding up to 1 year depending on the pandemic situation. This was previously extended to 6 months in March 2020.
• For MSMEs a special insolvency framework will be notified under section 240A of the IBC. One major benefit will be an increase in the minimum threshold to initiate insolvency proceeding from Rs 1 lakh to Rs 1 crore. This will come as an ordinance immediately.

5.  Companies Act, 2013 – Relaxation

• During the COVID-19 compliance, the burden was a concern, and timely action was taken to reduce the compliance burden. Companies could conduct board meetings, EGM, AGM through Video Conference, and even rights issues can be done by leveraging on technology.
• Further, prior to the lockdown, the deadlines under Companies Act, 2013 were extended, to put all at ease. Now minor technical and procedural defaults under the Companies Act, 2013 will be Decriminalised (such as inadequacies in Board report, shortcomings in CSR reporting, filing defaults, or delay in holding AGM).
• 40 compoundable section to be shifted to Internal Adjudication Mechanism (IAM) and powers of Regional director for Compounding will be enhanced, to reduce harassment faced by the Companies. Now 58 sections will be dealt with under the internal adjudication mechanism as compared to 18 which was earlier.
• The Amendments will de-clog the criminal courts and National Company Law Tribunal (NCLT).
• 7 compoundable offenses altogether dropped and 5 to be dealt with under the alternative framework.

6.  Ease of Doing Business for Corporates

• Indian Public Companies can Directly list their securities in permissible foreign jurisdictions.
• Private companies that list their Non-Convertible debentures (‘NCDs’) on the stock exchange will not be regarded as Listed companies.
• Provisions of Part IX-A on producer companies of Companies Act, 1956 will be brought in the Companies Act, 2013.
• Power to create additional/specialized benched for NCLAT will be brought in the Companies Act, 2013.
• Lower penalties for defaults for small companies, one-person companies, Producer companies & Start-ups.

7.  Public Sector

• The Finance Minister mentioned that Public sector enterprise policy needs to be coherent with PM’s ambition for Atmanirbhar Bharat.
• All sectors will be open for the Private sector, and Public sector enterprises will play a very crucial role.
• The government will announce new policy, whereby, List of Strategic sectors requiring the presence of PSUs in Public interest will be notified.
• In such sectors at least 1 PSU will be present. Whereas private will also be allowed to play their role in it.
• Not more than 4 PSUs will be there in any such notified sector. If there are more, then they will be merged or dealt with to avoid mushrooming of PSUs in these sectors.

Thanks for reading friends, I will bring more such interesting topics related to Taxation & Updates regarding COVID-19 Impact on various Business Sector as well as Tax implications or Tax Announcements due to COVID-19

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