The ‘Vivad se Vishwas Scheme’ is a relief initiative aimed at supporting Micro, Small, and Medium Enterprises MSMEs in India. MSMEs often need to make payments to the government or government entities when participating in government tenders. This payment, known as the ‘performance guarantee security’ or ‘bid fee,’ is a customary requirement.
Under the Vivad se Vishwas Scheme for MSMEs, the government and government undertakings have introduced measures to address the challenges faced by MSMEs during the COVID-19 pandemic. Specifically, this initiative involves the refunding of certain fees and securities. It includes the reimbursement of performance security, bid security, and any liquidated damages that were forfeited or deducted during the pandemic.
In cases where MSMEs were unable to fulfil their contractual obligations during the COVID-19 pandemic, the government refunded 95% of the bid fee or performance security that had been forfeited. This measure is designed to provide financial relief and support to MSME registrations that encountered difficulties in executing contracts during this challenging period.
Benefits of Vivad se Vishwas Scheme for MSMEs
The Vivad se Vishwas Scheme for MSMEs offers several significant benefits to Micro, Small, and Medium Enterprises:
1. Access to Institutional Financing:
MSMEs will gain access to institutional financing opportunities through this scheme, which can help them secure the necessary funds for their business operations and growth.
2. Return of Performance Guarantee and Bid Fee:
The scheme allows for the return of the performance guarantee or bid fee that MSMEs paid to secure government or government undertaking tenders. This return of funds can significantly increase the capital available to MSMEs.
3. Enhanced Cash Flows:
With the return of funds from performance guarantees and bid fees, MSMEs can enhance their cash flows. This additional capital can be reinvested into their businesses to support various operational and growth initiatives.
4. Support for MSME Suppliers:
The scheme also provides relief to MSME suppliers who may have faced penalties or forfeited bank guarantees due to challenges stemming from the COVID-19 pandemic.
These benefits aim to alleviate financial burdens, boost liquidity, and support the growth and stability of MSMEs in India.
Eligibility Criteria for Vivad se Vishwas Scheme for MSMEs
Under the Vivad se Vishwas Scheme for MSME, the government extends relief to contracts involving the procurement of services and goods within various government entities, including departments, ministries, attached/subordinate offices, autonomous bodies, Central Public Sector Enterprises (CPSEs), and public sector financial institutions. To qualify for this scheme, MSMEs must meet the following eligibility criteria:
1. MSME Registration: The supplier or contractor should possess valid registration as an MSME with the Ministry as of 31st March 2022.
2. Contractual Timeline: The contract in question must have had an original completion or delivery period falling between 19th February 2020 and 31st March 2022.
By adhering to these eligibility criteria, MSMEs can avail themselves of the benefits offered under the Vivad se Vishwas Scheme while contracting with various government entities.
Reliefs Offered Under Vivad se Vishwas Scheme for MSMEs
The Ministry of Finance has introduced a series of benefits under the Vivad se Vishwas Scheme for MSMEs. These reliefs aim to alleviate the financial burdens faced by MSMEs in their dealings with government entities. The benefits include:
1. Refund of Performance Security: Eligible MSMEs are entitled to a refund of 95% of the performance security that was forfeited.
2. Refund of Bid Security: MSMEs that participated in tenders opened between 19th February 2020 and 31st March 2022 can receive a refund of 95% of the bid security that was forfeited.
3. Refund of Liquidated Damages: MSMEs can avail of a refund of 95% of the Liquidated Damages that were deducted. It’s important to note that the refunded LD cannot exceed 95% of the performance security specified in the contract.
4. Refund of Risk Purchase Amount: Eligible MSMEs are eligible for a refund of 95% of the risk purchase amount.
5. Debarment Revocation: In cases where MSMEs have faced debarment due to default in contract execution, the procuring entity will issue an appropriate order to revoke the debarment. However, if an MSME has been excluded from contract placement during the interim period, no claims for compensation will be entertained.
6. No Interest on Refunds: It’s important to note that interest will not be paid on the refunded amounts, ensuring a straightforward and interest-free process for eligible MSMEs.
Requirements for Applying to Vivad se Vishwas Scheme for MSMEs
To participate in the Vivad se Vishwas Scheme for MSMEs, individuals and businesses must meet certain essential requirements. These requirements ensure that the scheme is applied fairly and accurately. The key requirements are:
1. Valid Permanent Account Number:
Applicants must possess a valid Permanent Account Number, which is a unique identification number issued by the Income Tax Department of India. PAN serves as an essential identifier for tax-related transactions.
2. Date of Incorporation/Registration of Business:
For entities such as companies, partnerships, and proprietorships, applicants must provide the date of incorporation or registration of their business. This date is crucial for determining eligibility and tax liability under the scheme.
3. CIN for Private/Public Limited Companies:
In the case of private or public limited companies, applicants are required to provide their Company Information Number. This unique identifier is assigned to companies and is essential for verifying the legal entity’s status.
4. MSME Registration from Udyam Portal:
MSMEs must have a valid MSME registration obtained from the Udyam portal. This registration serves as proof of their MSME status, and it is essential for availing the benefits and reliefs offered under the scheme.
By meeting these requirements, individuals and businesses can effectively apply for the Vivad se Vishwas Scheme for MSMEs and benefit from its provisions, including the resolution of pending tax disputes and related reliefs.
How to Apply for Vivad se Vishwas Scheme for MSMEs
Applying for the Vivad se Vishwas Scheme for MSMEs involves a streamlined process facilitated through the Government e-Marketplace (GeM). Mentioned below is how MSMEs can apply for the scheme:
Registration on GeM Portal and Listing applicable contracts:
- MSME vendors should begin by registering on the GeM portal through authorised personnel.
- Once registered, the contractor should list the contracts that are eligible for the Vivad se Vishwas Scheme I on the portal.
- The portal will provide a drop-down menu containing the list of procuring entities involved in the contracts. Changes to this list can only be made with the approval of the Department of Expenditure.
- For each contract, provide the following dispute-related details:
- Contact number.
- Contracting authority.
- Paying authority.
- Deducted/forfeited amount.
Verification by Nodal Officers:
- GeM portal will notify the nodal officers of each procuring entity via email regarding the claims made by the MSME vendor.
- Nodal officers are responsible for verifying the claims made by the MSME vendor.
Refund Processing and Tracking pendency:
- Upon successful verification and due diligence, the nodal officer of the procuring entity will update the GeM portal with the following details:
- Refund amount.
- Date of refund.
- Transaction details of the payment.
- The GeM portal will provide reports that allow MSME vendors to track the status of their claims in each procuring entity.
By following this process, MSMEs can apply for the Vivad se Vishwas Scheme I through the GeM portal, ensuring a transparent and efficient resolution of tax-related disputes and refunds.
How MSME Sellers Can Raise a Claim on the GeM Portal
MSME sellers can initiate the process of raising a claim under the Vivad se Vishwas Scheme for MSMEs on the Government e-Marketplace portal. Here are the step-by-step instructions for raising a claim:
Step 1: Log In to the GeM Portal and Complete profile information
- Access the GeM portal by logging in using your seller user ID and password.
- Go to the ‘Account Profile’ page and ensure that your ‘Business Profile’ and ‘Organisation Profile’ are complete.
- Verify and validate your business PAN.
- Enter the date of incorporation for your business.
- Provide your Udyam registration number for MSME validation.
Step 2: Access the Vivad se Vishwas – 1 Dashboard and Create a New Claim Request
- Click on the ‘Vivad se Vishwas – 1’ option in the portal’s menu. This will take you to the Vivad se Vishwas – 1 dashboard where you can view all your claims and their current statuses.
- On the Vivad se Vishwas – 1 dashboard, locate and click the ‘New Claim Request’ button. This initiates the process of raising a claim.
Step 3: Fill Out the Claim Request Form
- Complete the ‘New Claim Request’ form with all the necessary information related to your claim.
- After filling out the form, click the ‘Submit’ button to submit your claim request.
Step 4: Buyer’s Action on Claims
- Buyers who are involved in the contracts associated with your claims will be able to see the claims on their dashboard.
- Buyers can take various actions on a claim by clicking on the ‘Claim ID.’ Actions include approving, rejecting, transferring, or settling the claims.
- Once buyers take action on a claim, the status and details will be reflected on your seller’s dashboard.
By following these steps, MSME sellers can efficiently raise and manage claims related to the Vivad se Vishwas Scheme for MSMEs through the GeM portal, ensuring transparency and effective resolution of disputes and refunds.
Last Date to Apply for Vivad se Vishwas Scheme for MSMEs and Helpline Numbers
The Vivad se Vishwas Scheme for MSMEs commenced on 17th April 2023, and the last date for the submission of claims under this scheme is 30th June 2023. For any inquiries or assistance related to the Vivad se Vishwas Scheme, individuals and businesses can contact the helpline at 011-69095777. This helpline is available to provide guidance and support regarding the scheme’s provisions and application processes.
Final Thoughts
The Vivad se Vishwas Scheme for MSMEs stands as a crucial lifeline for India’s Micro, Small, and Medium Enterprises. By addressing the financial challenges posed by the COVID-19 pandemic, this initiative offers a much-needed reprieve to MSMEs, aiding them in revitalising their businesses. Through a transparent and streamlined process facilitated on the Government e-Marketplace portal, MSMEs can not only resolve pending tax disputes but also regain access to their hard-earned capital. This newfound liquidity can boost their cash flows and fuel growth, promoting a brighter future for these vital contributors to the Indian economy.
