ACMA wish list for PM task force to tide over the corona crisis

New Delhi: The Automotive Component Manufacturers Association (ACMA) has recommended a slew of measures to the government including deferral of GST return filing and tax payment, deferral of TDS payment, permission for 10% additional overdraft on sanctioned limits to ensure working capital support to auto parts makers to tide over the crisis stemming from the outbreak of coronavirus.

“With cautious buying sentiment domestically and lockdowns in major export markets, component manufacturers’ working capital to convert to revenues is estimated to touch 90 days (from 56 days in 2019). This shall render manufacturers’ ability to purchase raw materials and utilities null. The situation shall be worse for medium and small firms whose solvency will be challenged”, ACMA held.

To avoid such a scenario, the industry body has suggested that the government defer Deferral of GST return filing and tax payment – GSTR 1 and GSTR 3B – for at least 90 days (payments on accrual basis), defer TDS payment from March 2020 until September 2020, deferral levy tax collection at source of 0.1% on sale of goods (if sale exceeds Rs 50 lakh in the year) w.e.f April 1, 2020 by at least six months. ACMA has also said the government should look into delayed payments from PSUs, extend credit on Social Welfare Surcharge and treat it as CSR expenses on treatment/welfare of employees for Covid-19.

The industry body also said using current assets to fund operating purchases rather than servicing long term debt will help upstart the cycle of production once business as usual resumes. To ensure a healthy long term debt position for manufacturers, ACMA said, the government should extend six months moratorium on loans to large companies and one year in case of MSMEs, completely pass through the reduction in repo rates to the companies and extend 3% interest subvention for working capital requirements to companies with turnover less than Rs 250 crore.

To practice all essential requirements such as social distancing, avoiding large gatherings and working from home wherever possible amid this pandemic, ACMA said the government should defer all scheduled hearing for three months and fix no new hearings. It also said that the government should extend the deadline for filing of results for the year ended March 31, 2020 in case of listed entities, to June 30, 2020.

ACMA further said in this scenario of dipping demand, capacity utilization shall be negatively impacted pushing up unit production costs significantly, impacting the competitiveness in global markets. The industry body suggested the government’s Remission of duties or taxes on export product (RoDTEP) scheme should have benefit equivalent to the existing MEIS or else extend MEIS till Sep 2020, among others.

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