The National Association of Software and Service Companies (NASSCOM) has asked the government to provide immediate relief to ensure the survival of start-up and small-medium enterprises(SMEs) as the COVID-19 outbreak has put high stress on the industry. In an opening statement, the association said, “We request that the government consider rental subsidy for workspaces used by start-ups which are regulated, owned or managed by government agencies.”
The association has proposed a host of measures to the government ranging from extension of tax payment deadline to temporary refund of GST collected as loan. Furthermore, the body requested the government to suspend the deadline for tax payment and filing for a minimum period of four weeks post the 21 days lockdown period.
Speaking about the current situation at hand, NASSCOM said, “Start-ups are facing severe time loss and project delays due to the prevailing circumstances; this has contributed to financial pressure on start-ups. We request that the government consider rental subsidy for workspaces used by start-ups which are regulated/owned/managed by government agencies.”
To deal with the liquidity crunch and ensure that employees are paid salaries on time, the body has suggested that banks should facilitate an overdraft facility and equity convertible funding to start-ups. NASSCOM said that the facilities should cover for an equivalent to three months’ salary for a maximum period of two years without any collaterals. Moving on to provident funds (PF), the association wants a one-time PF opt-out option for start-ups for the financial year 2020 to 2021 which will enable start-up employees with low-scale salaries to receive all contributions directly which will increase their take-home pay.
Furthermore, NASSCOM urges the government to introduce the Interest Subvention Scheme, which will help all start-ups to avail a reduced interest rate of 3 to 5 per cent for all working capital loans. The body concluded saying, “The government should request public sector undertakings to acquire 40 per cent of the required software products from the domestic companies which will give a boost in the revenue.”
