It is a known fact that the global pandemic of COVID-19 has brought grave losses to humanity as well as the tax collections this year as per the Government reports. However, it may also be considered as a “year of resolutions” as the Union Government has made continuous efforts to improve traditional corporate practices and evolving better systems of governance.
The Parliament on 22nd September 2020 has passed the bill namely Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020, which has the objective to replace the ordinance and bring certain amendments in tax laws (Direct as well as Indirect Tax laws). Likewise, it also seeks to provide various reliefs in terms of compliance requirements for taxpayers amid the coronavirus pandemic.
The Union Finance Minister Mrs. Nirmala Sitharaman had promulgated the Ordinance Bill in March 2020 stating the necessity of the ordinance for said the ordinance for the purpose of deferring various compliance deadlines under the GST and Income Tax (IT) Act at the times of the global pandemic.
What does the Ordinance Bill 2020 propose to introduce?
The new Bill offers introduction & application of the provisions related to faceless assessment in a total of eight compliances under the Income Tax Act, including the collection of information and tax payments including recovery procedures.
It also comprises an extension of deadlines for filing returns and for linking PAN and Aadhaar.
It also seeks to offer tax benefits on the donation made to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) set up in March in the wake of the pandemic.
The bill proposes to replace the Income Tax Act provisions related to providing tax treatment to PM-CARES Fund as available to the Prime Minister’s National Relief Fund.
Further, the bill amends the Finance Act, 2020 to elucidate with regard to the overall limit of the surcharge at 15 percent on dividend income of the Foreign Portfolio Investor also known as FPI.
Finally, the Ordinance Bill also includes amendments in the Companies (Amendment) Bill, 2020; the Bilateral Netting of Qualified Financial Contracts Bill, 2020; and finally the Factoring Regulation (Amendment) Bill.
Here are some of the highlights of the Ordinance Bill-
1. The Taxation And Other Laws (Relaxation And Amendment Of Certain Provisions) Bill, 2020 was introduced in the Lok Sabha on 18.09.2020 seek to replace the older Act and Taxation and further to amend the Income-tax Act, 1961, the Central Goods and Services Tax Act, 2017, the Finance (No.2) Act, 2019, the Direct Tax Vivad se Vishwas Act, 2020and the Finance Act, 2020, controlled by the Department of Revenue through two boards, namely, the Central Board of Direct Taxes and the Central Board of Indirect Taxes. Accordingly, no additional expenditure is expected on the enactment of the Bill.
2. The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (Ord. 2 of 2020) was promulgated on the 31st day of March 2020 which, inter alia, provided relaxations in certain provisions of the specified Acts relating to direct taxes, indirect taxes and prohibition of Benami property transactions.
3. In accordance with various representations received by the Finance Department by the businessmen and other stakeholders’ after the enactment of the Finance Act, 2020, and the need for further rationalization under some of the provisions under certain Acts, further amendments were considered necessary to be incorporated in the proposed Bill replacing the Ordinance due to the global pandemic.
4. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 proposes to replace the said Ordinance, inter alia, offers relaxations like an extension of various time limits for completion or various compliance under the specified Acts and reduction in interest, waiver of penalty and prosecution for the delay in payment of certain taxes or levied during the specified period.
5. Further, the Bill proposes amendments to the Income-tax Act, 1961 which, inter alia, proposes tax incentives for Category-III Alternative Investment Funds located in the International Financial Services Centre (IFSC) for encouraging the relocation of foreign funds to the IFSC, rescheduling of procedures for registration and approval of certain entities introduced through the Finance Act, 2020, providing for tax benefits for donation made to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) and exemption to its income, incorporation of Faceless Assessment Scheme, 2019 therein, authorizing the Central Government to notify schemes for faceless processes under certain provisions by eliminating physical interface to the extent technologically feasible and to provide deduction or collection at source in respect of certain transactions at the three-fourths rate for the period from 14th May 2020 to 31st March 2021.
6. The Bill also recommends amendments in the Direct Tax Vivad se Viswas Act, 2020 to extend the deadline for payments without additional penalty till 31st December 2020 and to authorize the Central Government to provide certain dates relating to filing of declaration and making of the payment.
7. The Bill also suggests authorization to the Central Government to eliminate any difficulty up to a period of two years and provides for repeal and savings of the Taxation and Other Laws Ordinance 2020.
8. Further, Clause 4 of the Bill seeks to alter certain provisions relating to Income-Tax Act, 1961. The proposed amendment to clause (4D) of section 10 provides for the calculation of the income of non-resident in the prescribed manner.
Conclusion:
Thus, it could be understood that the Ministry of Finance and Departments concerned are taking active steps to curb the effects of the pandemic and is working with an intention to provide all measures related to “Ease of Doing Business” and a “transparent” government.
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