We are a firm of Chartered Accountants who have drafted a proposal for providing stimulus to our entrepreneurs without much compromise on revenue targets set by the Finance Ministry. We have emailed this proposal to Hon. Minister of Finance Smt. Nirmala Sitharaman Ji on 27th April 2020. We are sure that if implemented with right spirit, our countrymen are motivated enough to help kick-start the growth and development of our nation at a desired speed to make it a US$ 5-trillion economy.

1. MGM and Company
Chartered Accountants
Proposed To:
The Hon. Finance Minister
Ministry of Finance,
Government of India,
North Block,
New Delhi – 110001.
Authored By:
CA Mangesh Katariya
CA Krishna Kabra
CA Anurag Innani
CS Amruta Bapat
CA Kadambari Shelke
STIMULUS PACKAGE
PROPOSAL FOR
ENTREPENEURS

2. STIMULUS PACKAGE PROPOSAL FOR ENTREPRENEURS
MGM AND COMPANY, CHARTERED ACCOUNTANTS 2
INTRODUCTION
COVID-19 has been one of the biggest humanitarian challenge the world has faced in recent times. We
are blessed to have visionary leader, PM Shri Narendra ji Modi, whose pro-active steps have been
appreciated across the globe in our fight against this pandemic.
Along with an unprecedented human toll, COVID-19 has also triggered a deep economic crisis. To
understand probable economic ramifications due to COVID-19, MGM took survey of 400+
entrepreneurs from diverse industries and geographical areas. 1
The distress situation in trade and commerce is primarily due to loss of revenue and ever-increasing
burden of fixed costs. This dip in economic output will hurt everyone from casual workers to top
industrialist. The ongoing disruptions can be substantiated with the fact that various agencies, both
global and domestic, have downgraded our GDP growth.2
However, we are optimistic that our agrarian economy with a robust internal consumption dynamic
will continue to grow from strength-to-strength. Hon. Governor of Reserve Bank of India has also
highlighted in his speech that India’s GDP growth estimates are amongst the highest in G-20 nations.3
With China already facing severe fallout due to the pandemic, the world is moving to a new order
whereby all major global corporations are looking to broad base their manufacturing and supply chains
which offers vast opportunity for our dynamic entrepreneurs.
MSMEs have always been the backbone of the Indian economy. The importance of around 65 million
MSMEs, which account for about 120 million jobs and 30% of the country's economic output, can be
established with the fact that it contributes 49% to the exports and 45% to the manufacturing sector
and also responsible for around 30% of total employment generation in India.4
With Corporate tax rates for manufacturing entities already at an all-time low of 15%5 there is
enormous potential to attract global manufacturing industries in India. With stable policy regime, India
is certainly poised to become the world’s manufacturing hub from electronics to automobiles to
pharmaceuticals. We humbly submit that not to increase any taxes or compliance burden in such
challenging times.
Your goodself has already announced relaxations/ extensions of various statutory deadlines including
GST on 24th March, 2020 to assuage the entrepreneurs. Additionally, the package of INR 1.7 lakhs crores
viz. “Pradhan Mantri Garib Kalyan Yojana” was also announced on 26th March, 2020 to mitigate the
hardships of poor and needy. Reserve Bank of India also joined forces with the Government and
announced various Regulatory Package on 17th April 2020 and on 27th March 2020 thereby rescheduling
EMIs, relaxing NPA classification norms and lowering the Repo Rate among many other reliefs.6
We humbly propose the following few novel initiatives to support our Indian entrepreneurs emerge as
global leaders and further boost the economy and other government initiatives like MAKE IN INDIA.

3. STIMULUS PACKAGE PROPOSAL FOR ENTREPRENEURS
MGM AND COMPANY, CHARTERED ACCOUNTANTS 3
A] PROPOSED MEASURES TO GIVE EFFECTIVE STIMULUS PACKAGE
Our proposals are predominantly reliant upon the taxpayers’ historical data, which will ensures support
to wealth creators in these testing time. We propose that option should be given to the entrepreneurs
to choose any one of the following proposal suitable to their requirements:
OPTION 1: Short-Term COVID-19 Loans at Special Rates of Interest;
With no or negligible revenue during lockdown, most enterprises are struggling to cover their Fixed
Costs viz. Employee Costs, Borrowing Costs and Leasehold expenses. Our Survey Results states that
around 55%1 entrepreneurs will be able to overcome the situation if they are provided with a short-
term loan over and above existing Drawing Powers and Eligibility Criteria from financial institutions.
To mitigate the above scenario, we propose that a Government-Backed Credit Facility (similar to
CGTMSE) should be established. The eligibility of the entrepreneur should be based on the following
norms in order to ensure maximum benefit of the said scheme:
S. No. Eligibility Criteria Eligibility Norms
1 3 Years’ Average of Gross Annual Tax Paid by taxpayer
(as per Audited Income Tax/ Indirect Tax Reports)
Government Guarantee should
not exceed this criterion.
2 Fixed Costs Coverage Ratio for preceding Financial Year
{
𝑬𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝑩𝒆𝒇𝒐𝒓𝒆 𝑰𝒏𝒕. 𝒂𝒏𝒅 𝑻𝒂𝒙 + 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕𝒔 𝑩𝒆𝒇𝒐𝒓𝒆 𝑰𝒏𝒕. 𝒂𝒏𝒅 𝑻𝒂𝒙
𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕𝒔 𝑩𝒆𝒇𝒐𝒓𝒆 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒂𝒏𝒅 𝑻𝒂𝒙 + 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕
}
This will help Government and
banks to identify sound & stable
business entities.
3
Quick Ratio as on 31st March, 2020
{
𝑪𝒂𝒔𝒉 + 𝑺𝒉𝒐𝒓𝒕 𝑻𝒆𝒓𝒎 𝑴𝒂𝒓𝒌𝒆𝒕𝒂𝒃𝒍𝒆 𝑺𝒆𝒄𝒖𝒓𝒊𝒕𝒊𝒆𝒔 + 𝑨𝒄𝒄𝒐𝒖𝒏𝒕𝒔 𝑹𝒆𝒄𝒆𝒊𝒗𝒂𝒃𝒍𝒆
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
}
Entities with Quick Ratio > 1
should not be eligible for this
scheme to ensure effective
utilization.
We further propose that such loan tenure should not exceed 2 years with interest rate not exceeding
9% p.a. (to be classified as Priority Sector Loans). We strongly believe that this proposal will be a win-
win situation for all the stake holders.
a) Entrepreneurs: Additional Eligibility will ensure timely payments of fixed commitments and reduce
employee layovers in long-term. Further, it would also stem their belief on Government and will
encourage correct and timely payments of taxes.
b) Banks: Robust business opportunity with Government-Backing will enhance quality of their assets.
This will also ensure much-needed liquidity in the economy.
c) Government: Likeliness of loan-default will be minimum as Guarantee is associated with taxpayers’
history. Liquidity boost will reduce economic distress and create additional employment
opportunities. Such beneficial scheme will encourage many non-taxpayers to pay their taxes on a
timely basis. Recovery in case of default should be as strict as tax recovery.

4. STIMULUS PACKAGE PROPOSAL FOR ENTREPRENEURS
MGM AND COMPANY, CHARTERED ACCOUNTANTS 4
OPTION 2: Deferral of Payment of Taxation for 6-12 months for taxpayers for Small &
Medium Organisations
Envisaging the difficulties of taxpayers, your goodself has already announced the GST payment deferral
of 15 days for large taxpayers and of 2 months for MSMEs.6 These relaxations are being appreciated by
the entrepreneurs; however, we wish to highlight the fact that most of the businesses will have
negligible turnover due to lockdown and these deferrals will not solve their Operating Cash Cycle gap.
We would like to emphasise on the fact that economic impact of COVID-19 outbreak would stretch for
another 6 to 9 months post lifting of lockdown as revenue and cash-inflow will continue to remain
strained with people avoiding spending on non-essential items in order to preserve their cash reserves
for anticipated emergencies.
Considering the situation, we propose that deferring the tax payments by 6 -12 months this would ease
burden on their Operating Cash Cycle. Various State Governments have already implemented the
similar Tax Deferral Model in earlier tax regimes for promoting industrial units in backward areas.
The aforesaid scheme will help the entrepreneurs to sail through the COVID-19 storm and would
further augment the trust of taxpayers in Government.
OPTION 3: Discounting of Tax rates in case of upfront payment of taxes to help
Government managing its cash-flow
Above-mentioned Option 2 proposal would lead to gap in treasury operations of the government and
also discourage those taxpayers who are capable of paying their taxes well-in-time. To counter such
scenario, we propose to allow discounting on upfront payment of Taxes.
This scheme would not only help the government to meet their revenue targets but also augment the
belief of taxpayers in Government’s efforts to revive the economy with all possible means viz. support
to all sections of taxpayers irrespective of their current ability to pay taxes.
The discounting of Taxes should be done at rate of 9% p.a. which is same as the concession rate of
interest on delay payment of GST as declared by your goodself on 24th March 2020.
Illustrative:
Suppose A is liable to pay GST of Rs. 100/- for a particular month. As per Option 2, his extended due
date for payment of his tax liability will be after a period of One Year. As per Option 3, his effective tax
liability after discounting factor of 9% p.a. will be Rs 91.74/- (Rs. 100/ (100+9%)) as against actual tax
liability of Rs. 100/-.

5. STIMULUS PACKAGE PROPOSAL FOR ENTREPRENEURS
MGM AND COMPANY, CHARTERED ACCOUNTANTS 5
B] PROPOSAL TO RAISE FUNDS FOR CREATING US$5-TRILLION ECONOMY
WITH WORLD CLASS INFRASTRUCTURE & ALL-ROUND ECONOMIC
DEVELOPMENT:
Major reforms in India usually happens in crisis, in 1991 we liberalised the economy and now again we
need to take unprecedented strides to reform. We will need to take extraordinary steps to enable GDP
to grow annually at 10-12% p.a. and achieve our Hon. Prime Minister’s dream of US$5 Trillion economy.
GOLD AMNESTY SCHEME
Indians love investing in gold it is estimated by World Gold Council that Indian household may have
accumulated not less than 25,000 tonnes of gold; making us the largest gold holder of the world.
Estimated market value of personal gold holding will be above US$1.6075 Trillion. The value of this
holding is roughly about 40% of India's nominal gross domestic product (GDP) 7
.
Much of this gold holding is unaccounted; gold lying idle does not add any value to the economy hence
we propose the following Gold Amnesty Scheme:
The Government should introduce Gold Amnesty Scheme whereby final opportunities should be given
to all persons (including politicians and public servants) to declare their unaccounted Gold Bullions and
Jewellery. Gold Bullion must be deposited with the government for a period of 5 years. Government
should levy nominal penalty at the rate of 10% to make the holding legitimate.
Persons holding Gold Jewellery must make a pay tax at rate of 30% and also pay a nominal penalty of
10% to make their holding legitimate. Government must give an undertaking that all declarants get
immunity from prosecution and no action will be taken against the declarants.
Since the gold bullion would be deposited with the government for a period of 5 years the declarants
should be allowed to monetize an amount of around 20% to generate cash flow for paying penalty and
other personal needs.
The above proposal will have following advantages:
a) Government: The gold reserve of the country would increase which will enable the government to
print more currency and thereby increase circulation of money in the market which would address
the declining consumption of the country and there by pushing the economy from bleak of
recession towards the progression. Further, it would also increase the tax base of the country which
would lead to generate higher taxes in future years there by help in reducing the taxation rate.
b) Individuals: It would be golden opportunity for the individual for converting all their Black money
to legitimate earnings.

6. STIMULUS PACKAGE PROPOSAL FOR ENTREPRENEURS
MGM AND COMPANY, CHARTERED ACCOUNTANTS 6
FOREIGN CURRENCY DECLARATION
Further, as per one study in March 2018, it was revealed that the amount of Indian black money
currently present in Swiss and other offshore banks is estimated to be ₹300 lakh Crore or US$1500
billion.8 Our government is doing its best to bring back those money by signing memorandums with
such safe havens for Automatic Exchange of Information. We propose that instead of traditional
practice of unearthing the black money the Government should provide a one final opportunity to
legitimatise their holdings. We propose following scheme with two options:
a) To pay taxes at the rate of 30% and pay nominal penalty of 10% or,
b) To deposit these foreign exchanges with the Government for a period of 5 years along with levy of
nominal penalty of 10%. Since the foreign exchange would be deposited with the government for a
period of 5 years the declarants should be allowed to monetize an amount of around 20% to
generate cash flow to paying penalty and other personal needs.
The greatest advantage of this scheme is that since individuals would gain immunity from prosecution
provisions, it would encourage them to come forward and declare their unaccounted money.
Hon. Madam the Government priorities of strengthening the economy, national security, national
identity, rising quality of life and social security, implementing the reforms in education and science
and health care will require money and hence the above proposal should be looked at as a positive
step for the economic revival and development. This will definitely encourage FDI in India which in turn
help in attaining highest rank in the global list of “Ease of doing business”.
REFERENCES:
1. Results on the basis of Independent Survey carried by our team MGM.
2. Revision in GDP growth estimates by various Organisations and Rating Agencies. International Monetary
Fund revised GDP growth estimates from 4.2% to 1.9%, Moody’s from 5.3% to 2.5%, CRISIL from 5.2% to
3.5% among many others.
3. Excerpts from Hon. RBI Governor Statement dated 17th April, 2020.
4. Employment News: Volume-42, 19-25 January 2019 Editorial Articles on MSME Sector by Dr Ranjeet Mehta.
5. Income Tax Rate applicable for domestic manufacturing companies fulfilling the conditions as per Section
115BAB of the Income Tax Act, 1961.
6. Excerpts from announcements by Government and RBI as published on PIB and RBI website respectively.
7. Estimates as released by World Gold Council. https://www.businesstoday.in/current/economy-
politics/indian-households-have-stocked-up-to-25000-tonnes-of-gold-world-gold-
council/story/348598.html
8. "Bring back black money from abroad: Jethmalani". Economic Times. 9 March 2018. Retrieved 13 June 2018.

7. STIMULUS PACKAGE PROPOSAL FOR ENTREPRENEURS
MGM AND COMPANY, CHARTERED ACCOUNTANTS 7
ABOUT US
We are prominent Chartered Accountants firm based in Pune, India; we believe in ethically serving to
the society for over two decades. Our Mission is to deliver highest level of professional service to
business, entrepreneurs & corporates in the best coherent manner. We provide financial advisory
services to diverse segments from HNI Individuals to Multinational Corporates. With the enthusiasm to
contribute towards the National Building we believe that each and every individual plays a vital role in
the economy of the Nation. Our Motto is laid on our belief which states “Integrity, Ethics, Transparency,
and Sincerity as our Customer is our Priority and their Satisfaction is Necessity”. This motto is clearly
reflected in the working style of our Team members who not only work smart but also thrive to provide
Holistic solution to all the problems within a set timeline.
M G M & Company,
Chartered Accountants
Off.: 107-108, First Floor, The Pentagon Building,
Above Axis Bank, Sahakarnagar, Off. Satara Road,
Pune – 411009. MH India
Phone: 020-29802444/24230782 / 24227497
Email: info@ca-mgmco.in
Web: www.ca-mgmco.in
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