Prime Minister Sri Narendra Modi emphasized the importance of a ‘Self Reliant India’ in fighting the COVID-19 crisis during his speech on May 12^th, 2020.

The Core focus of his speech was “Go Local”, “Be Vocal” and “Make it Global”. He announced a recovery package of Rs. 20 lakh core which approximates 10% of India’s GDP. The package is targeted to cater to various sections including cottage industry, MSMEs, laborers, farmers & middle class.

His vision for a Self-Reliant India will stand on the following five pillars:

1. Economy - Which brings quantum jumps and not incremental jumps
2. Infrastructure -Which should become the identity of India
3. System - Which are based on 21^st century technology
4. Vibrant Demography - Which is our source of energy for a Self Reliant India
5. Demand - Whereby our demand and supply chain should be utilized to full capacity

Let’s look at how you can benefit from the Rs. 20 lakh Crore package:

1. Financial aid for the MSME sector:

The MSME Sector has been selected to receive the lion’s share of help, and rightly so as they need it the most, and we need them the most. Separate classifications for manufacturing and service sector are to be removed, and composite criteria for their definitions were identified as follows –

1. Micro – Investment <1 Cr & Turnover <5 Cr
2. Small – Investment <10 Cr & Turnover <50 Cr
3. Medium – Investment <20 Cr & Turnover <100 Cr

With these new definitions for MSMEs, there will hopefully be more registrations and a reduced fear among businesses to not qualify within the criteria. MSMEs are going to be the direct benefactors of financing and liquidity provisions, offered in the form of –

Subordinate Debt for Stressed MSMEs – Rs. 20,000 Crores

Stressed MSMEs in need of equity support will receive a net amount of Rs. 20,000 cr as subordinate debt from the Govt. Any functioning MSMEs that are NPA or are stressed will be eligible, and an estimated 2 lakh businesses are expected to benefit. The Govt. will also release a support of Rs. 4000 Cr to CGTMSE, to be provided to banks as partial Credit Guarantee support. The banks will give debts to promoters of MSME, to infuse as equity in the units.

Collateral-Free Automatic Loans for Businesses including MSMEs – Rs. 3,00,000 Crores

There has been a massive shutdown of MSMEs and businesses unable to meet their operational liabilities or raw material costs. Banks and NBFCs are to now provide an Emergency Credit Line to Businesses/MSMEs of up to 20% of the entire outstanding credit as on 29.02.2020. This scheme is to remain available till 31.10.2020, and carry no guarantee fee or fresh collateral. The Government hopes that this scheme will allow approximately 45 lakh units to resume business activity and safeguard jobs. The details of the loan terms are -

1. Borrowers with upto Rs. 25 Cr outstanding and Rs. 100 Cr turnover will be eligible
2. Loans will have a 4 year tenor with a moratorium of 12 months on Principal repayment
3. The interest is to be capped
4. 100% credit guarantee cover will be given to Banks and NBFCs on principal and interest

Equity Infusion for MSMEs through Fund of Funds – Rs. 50,000 Crores

To address the severe shortage of equity faced by MSMEs, a Fund of Funds with a Corpus of Rs. 10,000 Cr will be set up. The FOF will be operated through a Mother Fund and a few daughter funds, helping to leverage Rs. 50,000 Cr at the daughter fund level. This funding will be for MSMEs with growth potential and viability, and hopes to expand MSME size as well as capacity, encouraging MSMEs to get listed on the main board of Stock Exchanges.

Along with the financial support offered by the scheme to MSMEs, there are a few provisions designed to benefit their chances of recovery and survival by boosting the market demand and delivery capability of the MSMEs –

1. Global tenders of upto Rs. 200 Cr to be disallowed – to ensure that Indian MSMEs can find sufficient market demand and not face unfair competition from foreign companies
2. E-marketing linkage for MSMEs is to be promoted as a replacement for trade-fairs, exhibitions and other forms of marketing that have been banned due to COVID-19
3. All receivables for MSMEs from the Govt. and CPSEs are to be released within 45 days
4. FinTech will be used to enhance transaction based lending using the data generated by the e-marketplace

Our comments:

Based on above, it seems that MSMEs, who have never availed any loan so far which not be able to get the support under this scheme. The purpose of this scheme may get lost. Government must clarify on this point. Further, the point of contention of funds of fund will always be valuations. Government must come up with the guidelines for the valuations in such cases. The only way for MSMEs at large seems to be through promotor route where promotor will take personal loan and put into MSME as equity.

2. Employees' Provident Fund Support:

The Employees’ Provident Fund Organization (EPFO) has announced that the government will support employees and businesses with a combined amount of Rs. 2500 crore and Rs. 6750 crore Liquidity Support. Extending earlier support, and making new provisions for benefits to be applicable to about 6.5 lakh establishments covered under EPFO and about 4.3 crore such employees, the scheme stated –

1. Under the Pradhan Mantri Garib Kalyan Package (PMGKP), payment of 12% employer and employee contribution will be made into EPF accounts of eligible establishments for another 3 months – June, July and August 2020 (applicable for Employee having salary less than Rs. 15,000 and upto 100 employees)
2. Statutory PF contribution for employer and employee to be reduced to 10% (from existing 12%) for all establishments for 3 months (i.e. till August 2020)
3. 5 crore workers registered under the EPFO scheme are to get non-refundable advance from their account which will be the lower of 75% of the total amount or three months of wages
4. CPSEs and State PSUs to continue to contribute 12% as employer contribution

Our comments:

This can be some relief the MSMEs where 24% cost can be saved on their payroll cost for employees whose salaries are less than Rs. 15,000. Larger MSMEs can save upto 4% of salary cost from this provision. However, most of the companies work on CTC model and this may not directly benefit to the company unless the companies announces a salary cut.

3. Direct Tax Measures:

In order to provide more funds at the disposal of the taxpayers, and release Liquidity of Rs. 50,000 crores, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates through the entire FY 2020-21 i.e. till 31^st March 2021. This reduced rate will be applicable to payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. Refer our blog on Revised TDS rates for New TDS rates.

Additionally, several due-dates have been revised, such as –

1. Tax audit due date has been extended till October 31^st, 2020 ( from existing September 20^th)
2. Due date for filing of income tax returns has been extended till November 30^th, 2020 ( from existing July 31^st and October 31^st)
3. Assessments getting barred on September 30^th, 2020 extended till December 31^st, 2020, and those getting barred on March 31^st, 2021 extended till September 30^th, 2021
4. Period of ‘Vivad se Vishwas Scheme’ for making payment without additional amount will be extended to December 31^st, 2020
5. All the pending income-tax refunds up to INR 5 lakh to charitable trusts and non-corporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately

Our comments:

This provision will definitely give some liquidity in the market. However, there will not be any immediate benefit on the same because most of the companies are delaying their payments to their suppliers. Considering the current situations, where most of the MSMEs may go into red, Government shall come out a Zero TDS auto approval scheme for all MSMEs where they can apply a Zero TDS certificate and it can be auto approved for FY 2020-21 (AY 2021-22). This can be a breather to MSMEs.

Immediate Tax refunds to MSMEs is definitely a great relief. Many MSMEs has already received this refund. Extending the due date is not a relief as such because the Indian business are very much used to due date extensions in the past and this doesn’t have any financial relief. Government must differentiate between the financials relief and procedural relief under Covid.

4. Support for NBFCs/HFCs/MFIs:

Amidst the difficulties faced by NBFCs/HFCs/MFIs in raising money in debt markets, the Govt. will launch a Rs. 30,000 crore Special Liquidity Scheme, to make investments in both primary and secondary market transactions in investment grade debt paper of NBFCs/HFCs/MFIs. The securities will be fully guaranteed by the Govt. and RBI/Govt. measures will be supplemented to augment the liquidity.

Furthermore, those NBFCs/HFCs/MFIs whose credit rating is too low, will be given liquidity to do fresh lending to MSMEs and individuals via the extension of the PCGS to PCGS 2.0 whichwill also cover borrowings such as primary issuance of Bonds/CPs of such entities. The Govt. will bear the first 20% of the losses. This is estimated to release liquidity of up to Rs. 45000 Crore.

Our comments:

This measure is expected to have some impact on MSMEs getting funds form NBFCs/HFCs and MFIs.

5. Support for DISCOMs:

Power Distribution Companies (DISCOMs) are also at a very low point due to plummeting revenues and unprecedented cash flow problems. Currently, the DISCOM payables to Power Generation and Transmission Companies (Gencos) are ~ Rs 94,000 crore. The Govt. will inject liquidity of Rs.90,000 crore to DISCOMs against receivables through loans given against State guarantees for the exclusive purpose of discharging liabilities of Discoms to Gencos.

The DISCOMs will be required to perform specific activities/ reforms in linkage to these loans, such as –

1. Digital payments facility by Discoms for consumers
2. liquidation of outstanding dues of State Governments
3. Plan to reduce financial and operational losses

Central Public Sector Gencos will give a rebate to Discoms, which shall be passed on to the final consumers (industries).

Our comments:

Government should have looked into giving some direct relief to MSMEs in terms of waiving fix load charges for next 6 months. That could have benefited the MSMEs directly in lowering their outflow.

6. Miscellaneous support actions:

Various other measures to help support the industry, especially MSMEs and small businessmen, are being arranged for, including –

7. Relaxation in Statutory and Compliance Matters:

Statutory regulations and compliance requirements are getting temporarily relaxed to encourage economic recovery –

1. Extending last date for Income Tax Returns to June 30^th, 2020
2. Extending filing GST returns to end of June 2020
3. 24*7 custom clearance till 30^th June, 2020
4. Relaxation for 3 months for debit cardholders to withdraw cash free from any ATMs, etc
5. Allowing payment before 15^th May, 2020 for Motor Vehicle and Health Insurance Policies
6. Mandatory Board meetings extended by 60 days till 30^th September
7. Allowing Extraordinary General Meetings through Video Conference with e-voting/simplified voting facility

Our comments:

No financial relief. These are just procedural relief and not going to have any implications on MSME survival.

8. Measures taken by the RBI:

The Reserve Bank of India has been requested by the Govt. of India to provide relied for the economy, and has raised the Ways and Means advanced limits of States by 60% and enhanced the Overdraft duration limits. Additionally, the following measures were also taken –

1. Moratorium of three months on payment of installments and payment of Interest on Working Capital Facilities in respect of all Term Loans
2. Easing of Working Capital Financing by reducing margins
3. Reduction of Cash Reserve Ratio (CRR) has resulted in liquidity enhancement of Rs. 1,37,000 crores
4. Targeted Long Term Repo Operations (TLTROs) of Rs. 1,00,050 crore for fresh deployment in investment grade corporate bonds, commercial paper, and non-convertible debentures
5. TLTRO of Rs.50,000 crore for investing them in investment grade bonds, commercial paper, and non-convertible debentures of NBFCs, and MFIs
6. Increased the banks’ limit for borrowing overnight under the marginal standing facility (MSF), allowing the banking system to avail an additional Rs. 1,37,000 crore of liquidity at the reduced MSF rate
7. Announced special refinance facilities to NABARD, SIDBI and the NHB for a total amount of Rs. 50,000 crore at the policy repo rate
8. Announced the opening of a special liquidity facility (SLF) of Rs. 50,000 crore for mutual funds to alleviate intensified liquidity pressures
9. For loans by NBFCs to commercial real estate sector, additional time of one year has been given for extension of the date for commencement for commercial operations (DCCO)

Our comments:

These measures are expected to solve liquidity issues in the market, which is essential in the current scenario. However, there is no direct benefits to MSMEs in the country.

9. Relief measures for Contractors:

Certain relief measures are being put into place for contractors to ensure that construction stays alive and begins recovering example

1. Extension of up to 6 months (without costs to contractor) to be provided by all Central Agencies (like Railways, Ministry of Road Transport & Highways, Central Public Works Dept, etc.) This will cover construction/works and goods and services contracts and obligations like completion of work, intermediate milestones and extension of concession period in PPP contracts
2. Government agencies to partially release bank guarantees, to the extent contracts are partially completed, to ease cash flows

Our comments:

These measures are expected to help a lot of MSMEs who had given bank guarantees on government projects. Bank guarantee also cost money to MSMEs and this will help them to reduce their cost.

10. Relief measures under RERA:

The adverse effects of the COVID-19 lockdown and quarantines put projects in risk of defaulting on RERA timelines, and timelines need to be extended. These measures taken by the Ministry of Housing and Urban Affairs will de-stress real estate developers and ensure completion of projects so that home buyers are able to get delivery of their booked houses with new timelines, by advising States/UTs to –

1. Treat COVID-19 as an event of ‘Force Majeure’ under RERA
2. Extend the registration and completion date suo-moto by 6 months for all registered projects expiring on or after 25^th March, 2020 without individual applications
3. Regulatory Authorities may extend this for another period of upto 3 months, if needed
4. Issue fresh ‘Project Registration Certificates’ automatically with revised timelines
5. Extend timelines for various statuary compliances under RERA concurrently

Our comments:

Since its enactment, RERA has given hard times to Builders. This interim relief will help real estate segments some breather in not falling into trap of RERA. However, real estate expected much significant government support to boost the demand. Considering the existing level of real estate inventory in the country, if immediate steps are not taken by government to boost real estate demand, it will be a challenging situation for this sector.

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Covid has left the entire world in a panic situation. Government is announcing bunch of measures to pump liquidity in the market.

Through Press release on Revised TDS rates post Covid on May 13^th, 2020, CDBT announced Revised TDS rates and TCS for certain sections. Please do note that all sections rates are not reduced.

For the benefit of our readers, we have summarized complete revised TDS Rates applicable for FY 2020-21 (AY 2021-22) effective May 14^th, 2020. (COVID TDS Rates).

New TDS Rates For Assessment year 2021-22:

Further a flat 25% reduction in TCS rates has also been done.

Refer our separate discussion on TDS on Non-residents or write an email to our expert at Info@tya.co.in for free analysis of your TDS on non-resident queries.

In case you wish to automate your TDS compliances, you can subscribe to automated E-Procurement Software. As a support to MSMEs in this difficult time, TYASuite is offering 6 months free subscription to their E-Procurement Software. Avail the Free Subscription today.

Among the adverse effects of the COVID-19 pandemic on the global economy, one of the worst-hit components has been the supply chain. The worldwide cessation of transport and logistics facilities has left the supply chain destroyed, and procurement processes have been consequently affected by it as well. For the economy to recover, and businesses to resume their production, procurement must first be re-instated with haste.

Major Adverse Impacts

Due to the worldwide transportation, logistics and human-to-human contact limitations, the supply chain has suffered multiple blows, and the major impacts have been -

Overcrowding in warehouses

With a lack of road, sea and air transport, warehouses have been overcrowded, and massive losses have been suffered due to the expiration and damage of goods that have been in storage for too long.

Projected costs of transportation are rising

The projected costs of transportation post the lockdown are rising as the lockdowns are extended, with transport and logistics companies looking to recover the losses suffered during the lockdowns. With rising transportation costs, the overall procurement cost will also have to rise for vendors to balance their sheets.

Vendor interests are waning

Due to the severe disruptions in the supply chain, many smaller vendors are looking for different modes of income, and the overall interest in the role of being a vendor is waning. Many vendors have had to resort to finding other modes of income simply to maintain their livelihoods, and the prospect of the future difficulties in vendor activity is discouraging potential vendors from joining the trade.

How Improved Procurement Can Save the Day?

The role of advanced procurement processes and methods is critical in the near future for the recovery of the economy worldwide. With suitably designed procurement processes, such as digital Procurement Software, businesses will be able to ?

Identify potential risks in Inventory Management

Companies, especially in the manufacturing sector, will need to urgently identify which of their inventory items and raw material requirements are at the greatest risk of unavailability. High-risk items such as hardware, electronics, construction materials, chemical ingredients, etc. will have to be sourced with great care. With digital Procurement to Pay software and automated Inventory Management Software, they will be able to access unified data structures that provide analysis tools and reports that will help them identify the risks.

Gain real-time awareness of the entire procurement cycle

Businesses that have a multifaceted procurement process, dealing with multiple vendors and inventory, will need to make sure that they are always aware of each moving part. Only such constant awareness will help them ensure that their inventory is always sufficiently stocked, and sudden or unexpected shortages or missing components don?t halt their manufacturing or service processes. With cloud-based digital Procurement to Pay Software, Vendor Management Software and Inventory Management Software, they can gain this awareness through mobile surveillance of inventory, vendor activity and real-time notification/alert systems.

Fill in the gaps made by the lockdown

With an e-procurement solution, companies can ensure that the lockdown-related social distancing and quarantine rules don?t interrupt their procurement cycle. With the ability to raise PRs and POs, facilitate multi-level approvals, track the GRN and IRN flows and finalize payment procedures all from one cloud-based platform, managers will be able to ensure productivity from their laptops or smartphones during the lockdown or quarantine conditions.

Shifting Your Procurement from Manual to Digital - The TYASuite e-Procurement Solution

There needs to be a worldwide shift from manual procurement processing to a digital cloud-based solution for these steps to be taken. This requires a lot of awareness and education when it comes to small businesses, start-ups and other players in the MSME sector. The only way to ensure that the world economy will revitalize the global supply chain is by making them aware of the importance of going digital and helping them through the process. The TYASuite cloud ERP solutions are designed for this very purpose.

With an affordable, scalable and flexible suite of ERP software, the TYASuite ERP solution can help these small businesses transform their procurement to suit the post COVID-19 requirements. The TYASuite P2P module can help automate, streamline and digitalize the procurement to pay process, boosting productivity, efficiency and profitability within weeks of implementation.

The COVID-19 outbreak incident surfaced in Dec 2019 and the condition has continued to evolve throughout after April 30^th, 2020. The lockdown has eased in certain parts of the country based on the zone ratings. However, the overall risk remains high.

Finance & accounting along with internal auditing will have to undergo a sea of changes to keep up with this pandemic. This publication covers key areas to be considered during and after the pandemic by CFOs and Internal Audit professionals.

1. Pandemic risk not covered as part of Enterprise Risk Assessment

Your Company is not the only one who has not covered the pandemic as part of the Enterprise Risk Assessment. However, you must need to response faster now. Below are the key actionable strategies for such a scenario:

• Customer engagement should be the priority. Clear and factual communication should be established with customers on a regular basis. Inputs/queries from the customers should be responded to in time with clear facts.
• Workforce protection will ensure that employees are taken care of. Clear and precise communication should be maintained with all employees on dos and don'ts during this time while explaining what the company is doing to take good care of them. Further, every employee's needs, health and safety, and fears should be addressed in a consistent manner.
• Supply chain should be stabilized by connecting with the existing suppliers while identifying alternate sources/suppliers and minimizing the lead time for supplies.
• Stress testing of financials will be important to understand how long the company can survive and what can be done to improve the situation. Different scenarios with a mix of revenue, receivables-collections, Govt. rules/ guidelines, credit period, fixed cost, variable cost and commitments need to be considered.
• A single source of truth from the company is going to be a major binding factor. The employees, the customers, the suppliers, and other parties are going to rely on it and assess the company's situation during these trying times.

2. SOX/ IFC/ ICFR program adjustments

• Reassess scoping based on the Q4 2019-20 no. and consider the impact of COVID-19 on estimates.
• Business Continuity coverage of financials and relevant data should be assessed.
• Delegation of authority (DOA) should be re-assessed and steps should be taken to flatten it.
• Reduced staff availability should be factored into the planning.
• Outsourced service provider (OSP) SOC reports are to be reviewed thoroughly. Pass on key concerns on COVID-19 with OSPs.
• Reassess controls as to whether they can be performed from different geographies.
• Remove single-person dependency.
• Recording control activities (like covering meetings, and reviews) with the right individuals as audit evidence. This should be done after considering the company?s policies and the law of the land.
• Move from paper-based entry to digital entry and digital approval (date, name of the reviewer and time). If required implement some automation tools for your business process with Procurement to Pay software, Project Management Tools, Compliance Management Tools, Vendor Management Software and others.
• SOD conflicts may arise due to business needs but audit trail should be present. Good cloud ERP will be handy in these conditions.
• Management override checks should be monitored frequently.

3. Contract compliance, modification and termination

• Review whether a tracking mechanism for contract compliance is in place and operating effectively. There are many compliance management software in the market and you can take the advance of the same to manage your contract compliance.
• Reassess contract clauses for relief during this time (like termination rights, disaster recovery and business continuity, notice, force majeure, insurance).
• Analyze contracts which can be modified to meet:
• Revised business plan,
• Govt. guidelines (like delay in rent collection, salary deductions and employee termination).

4. Business continuity and disaster recovery

• Tone at the top covering communication with customers, employees, supply chain vendors, local communities and law enforcement authorities.
• Business plan will need revision considering reduced staff, business trends and flattening of DOA.
• Reassess customer/business trends cutting down on production; re-forecast your capacity and resource requirements.
• Manuals/SOP to be updated with relevant BCPDR steps and the same should be easily accessible. Many Cloud ERP software has inbuilt function of managing SOPs at user role level.
• Use space on the local drives/shared drive/cloud to store daily work of all employees. Project Management software can be very useful in these moments.

5. IT security and automation opportunities

• User access control - request and use of such controls to be monitored. Your ERP must have option to monitor and approval process to change any user role and track those changes.
• Constant communication for cyber awareness, threat detection, practical examples and responses to promote proactive identification of malicious activity.
• Security of Company data while using hand-held devices should be assessed.
• Data security and integrity during transit.
• Adequacy of licenses and third party applications should be done periodically.
• Assessment and action on automation opportunities.
• Financial transformation processes should be activated and tested now.

6. HR management

• Remote working will require clear guidelines and reliable technology. Cloud Software has become an item is necessity now.
• Flexible working hours should be incorporated in day-to-day work.
• Absenteeism/productivity will need a new definition and new set of rules.
• Contract employees are going to be a new norm among companies who need a specific skill set only for a particular period during the year.
• Employee goals, manpower-budget and hiring policies will need revision. Candidates with an aptitude to work remotely will be preferred.
• Communicate effectively and often with employees.

7. Adjustment to internal audit plan

• Internal audit plan to be revised wherein new items which are now relevant w.r.t. COVID 19 will be scoped in and items not relevant now will be scoped out/ frequency will be adjusted.
• Plan the audit calendar with fewer employees.
• Use of technology, data analytics and electronic work paper has to be incorporated.
• Develop steps which reduce interactions/inputs from Business personnel.
• Consider adopting an agile internal audit plan wherein a short term plan is developed for key risk areas with tight schedules. This will help the company match their pace with the fast changing risk environment.

8. Compliance management

• Tracking of changes to Finance Act 2020 and other relevant acts (like indirect tax, local laws, relief provided by Govt., SEC) should be done on a real time basis.
• Tracking compliance with all laws and regulations and non-compliance should be highlighted.
• Tracking correspondence with Govt./regulatory officials and fixing responsibility.
• Ensuring timely action.
• Compliance Management Tools will be a savior in this time.

9. Supply chain management

• Identifying alternate source/suppliers with lead time for supplies.
• Arrange for requisite Govt./local admin permissions for supplies/resources.
• Review the current stock/capacity and lead time to assess the ability to meet the revised business plan.
• Identify potential disruptions in the supply chain and ways to address it.
• Ensure compliance with relevant laws of the land (like OFAC, Govt. guidelines) when dealing with overseas/new vendors.

10. Treasury management

• Revisit working capital requirements considering revised cash flow projections and new set of assumptions.
• Constant co-ordination will be required with all departments to identify priority and non-priority payments.
• Identifying, assessing and acting on the Govt. stimulus/credit support and its long term implications.
• Reassess all short term investments in light of the current economic scenario.
• Evaluate various financial positions taken (like hedge, put option).

11. Effective and timely book closure

• Book closure checklist should be detailed with names of doer, reviewer and timelines. The same should be updated on a real time basis to capture all changes.
• The doer and the reviewershould have access to data and systems/applications.
• A Platform should be developedwhich provides access to the reviewer of the data prepared by the doer, proposed entries, reconciliation and supporting documentation. The entry be pushed to the ERP/accounting software once the same is approved.
• Approval documentation should be saved for control testing.

12. Post lockdown suggestions

• Develop a business plan with a conservative approach towards customer's expectations and future economic scenario. At the same time, explore new markets and products.
• Take a hard look at all the contracts which made the company bleed during the pandemic and devise ways to safeguard company's interest in the future.
• Revising the operating model to adjust to new safety expectations from the client, employees and vendors.
• Revisit the supply chain and move operations from offshore locations.

a. To near the production site, or

b. At the production site.

• Invest in technology which can ensure.

a. Reduction in human-to-human interaction,

b. Remote working,

c. Data security, and

d. Data encryption facility during transit.

• Re-assess long term capital commitments.
• Revise resource management with a fresh look at contract work force across all levels.
• Reduce manual work to the maximum extent possible and move from a person/individual driven to a process driven working environment.

If you are not sure how to proceed in the current circumstances, you can reach out to the author Mr. Ravi at Ravi.k@tya.co.in for free guidance and consultations.

TYASuite is giving various performance improvement and remote management software for FREE. You can avail any of the software and improve efficiency and manage risks while fighting the COVID-19. Procurement to Pay Software, Compliance Management Software and Project Management Software has been in high demand since Covid-19 outbreak. What best is that you can go live in 7 days with our Plug and Pay ERP.

MSMEs are the lifeblood of the Indian economy, and experts across the globe have agreed that they will be instrumental in the recovery of the country's economic health from the COVID-19 financial crisis. They are also the sector that has been worst affected by the economic downturn of the global pandemic, as they lack the financial cushion required to weather such a violent storm of losses due to the lockdown.

The Ministry of Micro, Small and Medium Enterprises (MSME), Govt. of India, has formulated several new schemes to help Indian MSMEs survive this crisis, and here is a quick summary of those benefits-

1. Priority refund of GST and Income tax upto Rs. 5 lakhs with immediate effect

2. Notification regarding Taxation - GST and TDS relaxations - Relaxations have been made by the Income Tax Department regarding tax compliance timelines extending timelines to 30^th June for the filing of belated/revised tax returns for FY 2018-19. Furthermore, any delayed payment of self-assessment tax made between 20^th March 2020 to 30^th June 2020 would attract reduced interest rate of 9% per annum (p.a.) instead of 12% p.a.

The payment of TDS for the month of March 2020 has also been addressed and delay of payment will attract a reduced rate of interest at 0.75% per month (instead of 1.5%). The filing of TDS returns for the FY 2019-20 has been granted extended timelines to 30^th June. The deadline for the Aadhar-PAN linking has been extended from 31^st March to 30^th June, 2020.

3. Notification about the "Companies Fresh Start Scheme, 2020" - The ministry of corporate affairs has introduced the ?Companies Fresh Start Scheme 2020? and revised the ?LLP Settlement Scheme, 2020? to provide relief to law-abiding companies and LLPs during the COVID-19 crisis. The new amendments will allow companies and LLPs much longer timelines to comply with various requirements under the Companies Act 2013 and the LLP Act, 2008. Further, it allows a one-time waiver of additional filing fees for delayed filings during the period starting of 1^st April to 30^th September, 2020, offering companies and LLPs an opportunity to make a ?fresh start?. If any MSMEs has not filed their ROC annual or other return, they can file the same now without any late fee or penalties. If you need any assistance on the same, or you want to know more about the same, you can reach out to our expert team at CS@tya.co.in.

4. Notification on Amendment in the EPF Scheme - The Ministry of Labour and Employment announced an amendment in the EPF scheme to allow withdrawal of non-refundable advance by EPF members. Field offices have been directed to process all such claims promptly. All members of the EPF scheme are eligible for these benefits, and permitted to withdraw upto the amount of basic wages and dearness allowance for three months, or upto 75% of the amount standing to the member's credit in the EPF account, whichever is lesser.

5. Delinking ECR Return with Payment (under PF) - This is a significant step. Currently, companies were not allowed to file the PF returns without payment. Non-filling of PF return had severe consequences. The Companies now can file the ECR return without payment and can pay the amount later and also avail the benefit of extended due dates for payments. Further, the due date for March 2020 has been extended to May 15^th, 2020.

6. EPF Contribution by Government on behalf of Companies - The labour ministry notified the special scheme wherein the government will contribute 24% of the employee and employer provident fund share per month for three months to PF accounts of employees earning less than Rs 15,000 to tide over the impact of Covid-19 on small establishments. Refer to detailed guidelines at https://www.epfindia.gov.in/site_en/covid19.php.

7. Extension of Professional tax Return for April 2020 and annual renewals - Karnataka government has extended the due date for monthly return for March 2020 and now the returns can be filled till May 20^th, 2020 without any interest or penalty. Similar extension has also been given to annual enrolment renewal which was due on April 30, 2020. The same can be done now by May 30^th, 2020.

8. Introduction of Covid 19 Start-up Assistance Scheme (CSAS) - This scheme will provide assistance to innovative startups that have demonstrated the ability to adapt to the economic impact of Covid-19 and ensured its employees safety and financial stability.

9. Extension of Interest Subvention scheme for MSMEs - Government 2% interest subvention scheme was supposed to end on March 31^st, 2020, however, Government has decided to extend the same to April 2020 as well.

10. Change on MSME definition - Government is working to update the definition of MSME, to include a much larger base of companies to avail various benefits designed for MSMEs.

11. Launch of SAFE, SAFE- Plus and SMILE Schemes by SIDBI - The special scheme will help MSEs to acquire equipment, plant and machinery and other assets including raw materials required for production or delivery of services. It will also help meet additional emergencies to ramp-up supplies of these essential products.

12. Notification about Movement of Essential Goods & Services - The Ministry of Home Affairs has demanded that unhindered movement of essential goods and services is to be ensured nation-wide during the lockdown. This has been conveyed in writing to all states and UTs, who have also been advised to set up 24x7 control rooms to help protect essential service providers from unwarranted stigmatization and harassment.

The Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, has also set up a control room for real-time monitoring of the status of transportation and delivery of goods, manufacturing and delivery of essential commodities to the common man and the difficulties being faced by various stakeholders during the lockdown period.

13. Notification by the Ministry of Food Processing Industries on Task Force - Union Food Processing Industries Minister Smt. Harsimrat Kaur Badal assured industry representatives that a dedicated Task Force had been established to resolve all problems being faced by the food processing industry, consisting of all senior officials of the food processing industry as well as Invest India members. This task force will be addressing problems regarding manufacture and movement of food products, including factory shutdowns, permissions to operate warehouses, personnel movement and logistic disruptions.

14. Notification regarding CIRP Regulations - The Ministry of Corporate Affairs said that the IBBI has amended CIRP Regulations to provide relief in corporate insolvency resolution process due to the COVID-19 outbreak. The Insolvency and Bankruptcy Board of India (IBBI) stipulated that the period of lockdown imposed by the central govt. shall not be counted as part of the timeline for any activity that could not be completed in relation to a corporate insolvency resolution process. The amended regulations can be found at www.mca.gov.in and www.ibbi.gov.in.

15. Information portals set up - The GoI has set up special portals for the dissemination of COVID-19 related information, as follows -

· Invest India Business Immunity Platform (BIP) portal at  investindia

· List of Various existing MSME Schemes can be obtained at https://my.msme.gov.in/MyMsme/Scheme.aspx

Armed with these facts, MSMEs and small businesses can take the full aid of the Indian Government to survive the COVID-19 economic fallout, and recover their losses in the times to come once the lockdown ends. Making use of these newly afforded benefits, MSMEs must now re-plan their business strategies, and adapt accordingly. Invest India's BIP has been specially designed to help this particular effort, and MSMEs must take the full advantage being given to them.

This is the beginning of the digital age for small businesses, and new-age affordable cloud ERP solutions are being designed to help them transition to the digital formats. At TYASuite Software Solutions, we have designed a plug-and-play ERP software that is affordable, flexible and scalable to fit the needs of small businesses, startups and MSMEs. Visit our website for more details, and sign up for a Covid Special 6-month FREE DEMO designed specially to help you survive the COVID-19 pandemic.

India had initially declared a nationwide 21-day lockdown to counter the spread of the CoVid-19 pandemic. To curtail it further, India brought Lockdown 2.0! Many people around the world are commending this as a great step against the spread of the virus. While this may be true, it is also true that the implementation of the lockdown has left much to be wanted, and one of the biggest victims has been the Indian economy. All businesses, from MSMEs to industry giants, are now at a loss as to how to survive the business downturn. Business owners must now take drastic steps, or they simply will not make it through this.

Many analysts are convinced that the overall global losses are in danger of surpassing the combined losses during WWI and WWII! The National Statistical Office (NSO) calculated that the current job-market was at its worst, and unemployment had peaked to the max in 45 years.Barclays has theorized that the lockdown could bring the country’s growth down to 2.5% from the earlier estimate of 4.5%.

Here’s a more detailed look at the situation, sector-wise, of India’s industrial health –

1. Manufacturing Sector – Most of India’s major manufacturing companies have entirely shut down their operations or significantly reduced them – including Tata Motors, Aditya Birla Group, Larsen and Toubro, UltraTech Cement, Thermax, Grasim Industries and Bharat Forge.

Manufacturers such as Dabur India, ITC and Hindustan Unilever have also closed all factories not directly related to essential products.

2. Essential Goods and Services – The essential service industry, including food, healthcare, power and communications, though least affected, have also recorded all-time lows due to the massive disruption in the supply chain.

3. Services Industry – The services industry is also among the worst victims of the lockdown, with the logistics sector taking the brunt. Even the e-commerce sector, expected to be the least affected, has been brought down to its knees by the lack of logistics and transport facilities. E-commerce giants like Amazon and Flipkart have all closed their operations barring only essential consumables. Industries like Travel and tourism, Hospitality and Restaurant etc are the worst hit and may take years to bounce back.

There is a global reaction of maintaining normalcy, as much as is possible, through the implementation of work-from-home options, automation and cloud -based technology to deal with the situation.

To figure out how to survive the corona aftermath, the most easily estimated steps that the Indian industries will probably follow once the lockdown has ended are –

1. Generalized Cost-reduction – most sectors of industry have already begun to experience the general tendency of cost-reduction during the lockdown. Global downsizing will increase and motivate Indian business-owners to lay off all employees that aren’t critically essential to the survival of their businesses.

2. Increases in automation – while dealing with a reduced staff, most companies are going try increasing the amount of automation in their business processes. All functions that can possibly be automated without high investment will be done so with great haste. Cloud ERP and other Cloud business Software like E-Procurement software (cloud procurement to pay software), Project Management Software, Inventory Management Software, cloud Compliance Management Software etc. will be in great demand. It will become essential for survival. Till the time there is a cure for Covid-19, business will never want to take risks again and will plan to move for cloud platforms.

3. Prioritize their products and clients – companies are going to have to focus on their strengths, and may remove products from the market, prioritizing their most demanded and profitable products and clientele with only the more revenue creating ones kept in the books. It is very critical to monitor your projects, clients and products profitability and remove non-profitable products/clients and projects at the earliest. Project Management software can help you seamlessly track the profitability of your customers and projects.

4. Reform business strategy – According to a recent set of recommendations by KPMG^[1], companies will have to assess their short term liquidity to meet operational payments, make necessary adjustments to their capital structures, defer non-essential capex and explore potential disposal of non-core assets to make balance sheets lean.

This is when the industry must find the key solutions towards their survival post the lockdown. Since downsizing will mostly become the easiest way to cut back on company expenditure, affordable automation of business processes must be ensured. Fortunately, the modern market is full of opportunities for small businesses to automate their process.

We at TYASuite have a product range that has been automating business process and helping companies reduce their costs while increasing their profitability for many years now, and we believe that we can be a big part of the solution that MSMEs will need to survive the post-lockdown crisis.With the TYASuite Plug and Play Business Software product, you can:

1. Streamline and automate your procurement function: Our Procurement to Pay Software is designed to automate your procurement process seamlessly. With guaranteed reduction in operation time and cost of your procurement function and accounting function by more than 80%. TYASuite E-Procurement software can be your savior in this difficult time.

2. Optimize your Finance function – Make your finance function efficient with our Plug and play finance automation tools, such as Automated Accounting Software, Automated FAR Software (Fixed Assets Register) , Expense and Time management software, and reporting tools. Once you automate your finance function, you can rest easy and let the software do the work while you supervise and analyze the data we provide. Our automated TDS and GST tools are the best in the industry to ensure that your managers can spend more time on non-routine analysis work.

3. GST Related Compliances - With our Multi-location-GST function, your finance team can automate all GST related filings with a click. If you are a multi-location company and still using traditional accounting software with single GST location, it is high time for you switch to our Multi-location GST Software and reduce your team hours significantly. With our Multi-location GST Software, your team can seamlessly raise multi-location Sales Invoices and file multi-state GST returns with a click, and enjoy many more time saving functionalities.

4. Customer and Project Profitability - Our Project Management Software will make it easy for you to manage your projects digitally, and help your employees fulfill their functions remotely. Set tasks, manage priorities, track project progress, meet deadlines and collaborate with the entire workforce in real-time from the comfort of your computer or smartphones. Further, the Project Management software will help you to monitor client profitability and project profitability with a click helping you to take timely decisions and plug your cash burn.

5. Inventory Management - Our Inventory management software will ensure streamlined inventory holding costs, helping you identify your slow-moving inventory and re-use or liquidate the slow-moving items quickly. Further, with real time inventory and sales report at your fingertips, you can reduce your overall inventory cost and improve your profitability.

6. Compliance Management - When the world is looking for cost savings and survival, it would be dangerous to lose money due to non-compliances. As a CFO or founder, our Compliance Management Software will make it easy for you to make sure that your company does not violate any of the applicable regulations and you can monitor and manage all compliances with a single click. It is a must have tool for working in a multi-location environment.

In the times to come, it is imperative to ensure that the MSMEs of India stay afloat, as they are the ones at the greatest risk of insolvency and imminent bankruptcy. While the government is making many promises to help them in as many ways as they can, the onus is on the companies themselves to adapt and transform in the required ways to handle the onslaught of post CoVid problems they have never prepared for. The only way to have a fighting chance is to turn to digital technology, and make sure that the companies, and the people who are in it, stay safe, healthy and protected.

To help MSMEs, TYASuite is helping companies to adopt these must have technologies for MSMEs at an affordable price. Avail a Special extended No-obligation Free Demo for all of our product ranges during this global economic crisis.

As an Indian Company, TYASuite is committed to help Indian MSMEs in surviving the CoVid Epidemic and consequent financial crisis.

[1] - https://home.kpmg/in/en/home/insights/2020/04/navigating-the-covid-19-crisis.html