The Covid -19 Pandemic is still on and has moved India up in top five nations to suffer from this virus in terms of people affected. Covid-19 has also and is continuing to adversely affect our lives and economy as well making it difficult for one and all to survive and cope up with its economic after effects.
Lockdown 5.0 or Unlock 1.0 has opened up businesses but not at old normal levels. This may take some more time. However, as the number of new cases throughout the country grow, one can not say with any amount of confidence as to whether further lockdown may be clamped or tightened.
Covid -19 has hit India-economically and demographically Total number of cases now are 4,00,000 plus with 13,000 plus casualties …..and the number is rising. In terms of business, of course May is better than April and June will be further good. How long and how deep this will go is a tough call. As of now, things do not seem to be in control. India is also getting impacted from non-Covid concerns such as expenditure restraint, liquidity and NPA issues, geo-political tension at border with China and Nepal.
India economic growth continues to be of concern amid Covid impact. While it is expected to grow at about 0-3 percent in current fiscal, it is unlikely to recover till next year. With all sectors faring miserably coupled with joblessness, liquidity crunch and not much of liquidity support and demand push, thinking of its bouncing back appears to be a dream for next few months. India’s tax to GDP ratio is now at a 10 years low at 9.88%. This ratio was 10.97% in 2018-19 and 11.22 % on 2017-18. This is due to decline in tax collections.
Fitch, credit rating agency has reduced India rating from stable to negative (BBB). As per ADB, our economy may contract by 4% or so by Financial Year 2020-21.
Economy has started showing some signs of recovery though it is a long way to go to restore pre-Covid position. Compared to April, 2020, consumption of fuel, power, fertilizers etc have gone up. Exports are also up. Toll collections and railway freight collection has also improved. Toll collection in May was about 70% of February 20 level. Railway fright improved by over 25% compared to April, 2020. Even the generation of e-way bills which signifies rolling of economy is a positive sign.
According to OECD, even the world economy is likely to squeeze by 6% in 2020 owing to global recession triggered by Covid. If there is a second wave of Covid, there could be a contraction of 7 percent or above. However, expressing confidence in India’s ability to recoup from the current economic uncertainty, Fitch Ratings expects the economy to clock near double-digit growth next fiscal year. It has projected GDP growth of 9.5 percent in 2021 -22 after a contraction of 5 percent this fiscal year.
CBIC has taken few steps recently to provide ease of compliances under GST. It has rolled out the facility of filing Nil monthly GST 3ZB return through SMS which will help over 22 lakh registered taxpayers to file returns. It has also extended the validity of e-way bills expired on or after 20 March, 2020 to 30th June 2020 as there was lockdown from 25th March, 2020. It has also notified norms for issue of order for notices regarding refund applications. The time limit for issuance of notices has been extended upto 30th June, 2020.
GST Council’s 40th meeting was held via video conference on 12th June, 2020 providing further relief to small businesses on compliance front. Late fee on returns and interest requirements were relaxed. Also, revocation of surrendered registration shall be allowed. The Council may discuss the issue compensation to states in July, 20 meeting.
GST collections during April and May are said to be around 45% only of the normal collection of around Rs. one lakh crore per month.
The issue of transitional credit is doing a pendulum ride between high courts and Supreme Court. Supreme Court has now stayed the high court ruling on transitional credit to open it till 30th June, 2020 to enable assessees to file or revise the return.
Advance rulings are becoming worrisome now- be it on directors remuneration, parotha or interest on personal savings. There is an urgent need to apply logical interpretations.