The Novel Coronavirus has affected normal life across the world in an unprecedented manner. The governments are forced to take stringent measures like Lockdown to tackle the Pandemic. Human life is prioritized over the state of the economy across the world. However, the lockdown is presupposed to affect the business activities and thus impacting the income in the hand of various stakeholders from all income level groups.
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Tax Relief by Finance Ministry
Anticipating the hardships by the citizens, the Finance Ministry, Government of India, has taken various tax measures to assuage the brunt during these crisis times. One such relief is given on the Tax front when the Finance Ministry issued Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020. On the Direct Tax front, the good news for the taxpayers has been the extension for making the investments to avail the deduction under Chapter VI A of the Income-tax Act, 1961 till 30th June, 2020. The implication of this extension will be that for the financial year 2019-20, any investments made till 30th June can be availed to claim deduction under section 80C, 80 D, 80 G, etc. Also, the date of filing the original and revised return for financial year 2018-19 has been extended to 30th June. The date of filing the return for the F.Y.2019-20 has been extended to 30th November. Other major steps to provide relief on the indirect tax front, the last date for any compliance under the GST expiring under 20th March to 29th June has been extended to 30th June. That implies the even the last date of filing the returns for the month of March, April and May have been extended to 30th June. Also, the penalty and interest for the enterprises with turnover less than 5 crore has been done away with. However, bigger companies have to pay an interest of 9% without penalty. This has been a huge respite for the small businesses on the procedural side. The last date for filing an appeal, refund applications under Central Excise Act, 1944, Customs Act, 1962, and Service Tax which are due from 20th March to 29th June, 2020 has been extended to 30th June 2020.
Measures to boost Liquidity
The Government has taken a slew of measures to boost liquidity in the system by releasing the stuck tax refunds. Central Board of Direct Taxes has assured of releasing refunds amounting to Rs.5000 crore by processing around 12 lakh refunds by the end of the month of May. The RBI has reduced the reverse repo rate by 25 basis points, which will help in injecting liquidity in the financial markets. The rate of Tax Deduction at Source and Tax Collection at Source has been reduced by 25% on non-salaried payment, will help the taxpayers in retaining more money in their hands. This relief will be applicable from May 14, 2020, till the end of the Financial year 2020-21. This move of the government is expected to provide liquidity of around Fifty thousand Crores in the system. However, it should be remembered that TDS and TCS are not the final tax liability. The step will enable that burden of tax liability is somewhat lessened till the end of the financial year. The Government has also given an extension to the deadline of the ‘Vivad se Vishwas’ Scheme by pushing it to 31st December 2020. The moratorium on fresh filing of insolvency cases, for one year, is a step in the right direction to assuage the bleeding industry reeling under the COVID-19 crisis.
Idea of Self Reliant India
The announcement by Prime Minister of 20 lakh crore economic package will certainly be a booster in medium-term to actualize the goal of “Atma Nirbhar Bharat”. However, the immediate requirement is to boost the demand in the short term. The banks parking the money to safe coffers of Reserve Bank of India despite the reverse repo being lowered is an unfortunate state of affairs. The policy measures need to be trickled down with better execution. The lessons could be drawn from recovery made by the United States after the Great depression of 1930, though there might not be glaring similarities between both the situations. The loosening of purse strings so that citizens from all earning groups should have access to the money. The businesses should be assured of support and credit.
Self-Introspection
The Government should make sincere efforts in enabling the entrepreneurs at the village level. This will also ensure that the migrant crisis of this magnitude should not recur in India again. A compassionate government should find ways that villagers need not move to cities in search of jobs, rather such an economic ecosystem should be created where jobs search its employees in their own places so that we can avoid the humanitarian crises of this magnitude in the future. The fact that most of the items used during the major Indian festivals find their source from China cannot be denied. Similarly, it is unusual to see most of the toys with which our children play are China made. Can’t we, a nation proud of its demographic dividend, manufacture the led bulbs used during Diwali and water-guns of Holi, and toys for our children? Probably when Prime Minister took the call of Self- Reliant Bharat, he was indirectly referring to this aspect only. The efforts of the government should be to create the manufacturing hubs at the village level across the country, to cater to the needs of the citizens.
Conclusion and Suggestion
Atma Nirbhar 6.5 lakh villages in India will empower the way to Atma Nirbhar Bharat. The COVID-19 crisis should also give a cue to the Niti Ayog to chalk out the path India needs to tread after learning its own lessons from the crisis. In these times of Pessimisms when all the rating agencies are predicting dismal GDP figures, the Finance Ministry should restrain itself from making any cosmetic announcements. The jugglery with figures of the economic package will hardly help India. The Government’s actions should be confidence-building among the entrepreneurs in India. The availability of easy credit and supporting the existing businesses with fiscal support can be a step in the right direction. The procedural aspects under Goods and Services Tax could be eased a bit more to make it simpler for the small and medium enterprises to focus on productions. There is no denial in the fact that leadership in India has shown requisite grit during these difficult times. Their persistent efforts with the limited resources of the country are commendable. The novel idea of self-reliant Bharat is nothing short of inspiration for every citizen during this pandemic. We as a nation of 1.30 billion aspirational Indians are confident that with our determination and self-belief we will come out stronger from this crisis.
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