COVID-19 effect & relief on Direct & Indirect Compliances

India’s Ministry of Finance announced various relief measures in respect of Direct and  In-Direct Compliances proposed by the government in respect of statutory and regulatory compliance matters in view of the outbreak of COVID–19. Since parliament is not in session, the Indian president has promulgated (Ordinance 2020), published in the official gazette on 31 March 2020, to implement the proposals. Ordinance 2020 has immediate effect, unless specified otherwise. It provides for extensions to a number of tax compliance (other than tax payment) deadlines, and also empowers the central government to further extend the deadlines.

Direct tax

The due date for filing late and revised returns of income for financial year (FY) 2018-19 (relevant to assessment year 2019-20), is extended from 31 March to 30 June 2020.

The due date for individuals with a permanent account number (PAN) to link their Aadhaar number with their PAN is extended from 31 March to 30 June 2020.

The deadline for individuals to make certain payments (including pension contributions, and life and medical insurance premiums) and claim a deduction against total income for FY 2019-20 is extended until 30 June 2020.

The deadline for any compliance obligations under one of the specified acts, that otherwise would fall during the period 20 March to 29 June, is extended to 30 June 2020. These obligations include:

• The completion of any proceedings, the passing of any order, the issuance of any notice, intimation (summary assessment order issued after the submission of an income tax return), notification, sanction or approval, or other similar actions by any authority, commission or tribunal; and
• Filing an appeal, reply, application, report, document, return, statement, or other similar record.

The press release provided that any deadlines expiring between 20 March and 29 June for making investments in savings products, or investments to secure a rollover of capital gains, generally would be extended to 30 June 2020. Ordinance 2020 provides that time limits expiring between 20 March and 29 June for making investments, deposits, payments, acquisitions, purchases and construction of buildings and property, or other similar actions to claim a deduction, exemption, or allowance under sections 54 to 54GB or Chapter VI-A, heading B of the Income-tax Act, 1961 for the FY 2019-20, also are extended to 30 June 2020.

For units of businesses operating in special economic zones approved under the Special Economic Zones Act, 2005 as at 31 March 2020, the deadline to begin manufacturing or provide any services to qualify for the available tax exemptions is extended to 30 June 2020.

Where a tax or levy under one of the specified acts is payable between 20 March and 29 June but is not paid until 30 June 2020, interest will be charged at a maximum of 0.75% per month or part month of delay. No late payment penalties or other sanctions will be imposed.

The date for payment of all charitable donations to claim a deduction from income of FY 2019-20 is extended to 30 June 2020. Taxpayers also now may claim a deduction for the full amount of donations to the Prime Minister Citizen Assistance and Relief in Emergency Situation Fund, and the limit on deductions of 10% of gross total income does not apply to donations to the fund. Donations to the fund exceeding INR 2,000 are deductible only where paid other than in cash. Taxpayers paying tax at the concessional rates for FY 2020-21 making charitable donations before 30 June may claim a deduction under section 80G against income of FY 2019-20, without losing entitlement to the concessional taxation regime on FY 2020-21 income. Generally, taxpayers subject to the low tax rate regime in FY 2020-21 must forego claiming specified tax incentives and reliefs.

The Central Board of Direct Taxes (CBDT) also announced relief for taxpayers whose application for lower or nil deduction of TDS and tax collected at source (TCS) is pending for disposal saying that cases where the application is pending and where withholding tax certificates were issued for FY 2019-20, the validity of the certificates will be extended to June 30.

However, if a business has been impacted by COVID-19, and the taxpayer wants to apply for a rate lower than the one mentioned in the certificate, then a fresh application will have to be submitted. In this case, the validity of the FY 2019-20 withholding certificate will not be extended.

If a fresh application under a new or a different tax deduction account number (TAN) has been submitted, then the extended validity of the certificate for FY 2019-20 will not be considered.

Where a taxpayer opts to withdraw an appeal in accordance with the provisions of the Vivad se Vishwas Act, 2020 (which provides for an alternative means of resolving direct tax disputes), the taxpayer must pay 100% of the disputed tax if paid by 31 March 2020, and 110% of the disputed tax if paid after that date. Ordinance 2020 amends section 3 of the act to eliminate the requirement to pay the additional 10% of the disputed tax, provided the amount is paid by 30 June 2020.

Indirect tax

The deadlines for complying with certain obligations under customs, central excise, and service tax legislation that would otherwise fall between 20 March and 29 June are extended to 30 June 2020. The obligations include completion of any proceedings, or issuance of any order, notice, intimation, notification, sanction or approval, by any authority, commission, or tribunal; and filing an appeal, reply, or application, or submitting any relevant report, document, return, or statement.

With respect to the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (to expedite closure of service tax and excise tax-related litigation) the deadline for payment under the scheme is extended to 30 June 2020. The deadlines for the issuance of various statements by the designated committee are extended as follows:

• Where the amount of tax or duty declared by the taxpayer equals the amount estimated by the designated committee, the deadline is 31 May 2020;
• Where the amount estimated by the designated committee is more than the amount declared by the taxpayer, the deadline is 1 May 2020; and
• The deadline for issuing the statement indicating the final amount of tax or duty payable by the taxpayer is 31 May 2020.

A new provision has been inserted in the Central Goods and Services Tax Act, 2017 (CGST Act) empowering the government (subject to the recommendation of the GST council), to extend the time limit for obligations that cannot be met due to a “force majeure” by issuing notifications. A force majeure includes war, epidemic, flood, drought, fire, cyclone, earthquake, or any other natural disaster affecting the implementation of the CGST Act.

The Indian government has announced relief in GST compliance to relax regulatory distress among the businesses registered in India under GST amid COVID-19 pandemic. The announcement was made through various notifications released by the Central Board of Indirect Taxes and Customs (CBIC). The major announcements included the due date extension of filing GST returns for taxpayers.

Form GSTR-3B

a. For taxpayers having an aggregate turnover of more than Rs 5 crore in the previous financial year, the following extensions has been announced:

b. For taxpayers having an aggregate turnover of more than Rs 1.5 crore and up to Rs 5 crore in the previous FY, the extended due dates are as follows:

c. For taxpayers having an aggregate turnover of up to Rs 1.5 crore in the previous year, the extended due dates for filing GSTR-3B are as follows:

If such returns for the said months are not filed on or before the date mentioned in the notification then interest @18% p.a. will be charged from the due date of return till the date on which the return is filed. In addition to such return, regular late fees will also be charged to the taxpayers.

d. For the month of May 2020, taxpayers having an aggregate turnover of up to Rs 5 crore in the previous FY will have to file GSTR-3B on or before the following dates:

GSTR-1 (Monthly or quarterly)

GSTR-1 for the months of March, April and May 2020 have been extended to the 30th of June 2020. For the taxpayers filing quarterly GSTR-1, the due date for the quarter ended on the 31st March 2020 has also been extended to the 30th June of 2020.

Returns under composition scheme

GSTR-4 for the FY 2019-20 has been extended to the 15th of July 2020 from the 30th of April 2020. Also, the due date of CMP-08 for January to March’2020 quarter has also been extended to 15th of July 2020 from the 30th of April 2020.

Moreover, all composition taxpayers were required to file form CMP-02 for the FY 2020-21 to opt for the scheme by the 31st of March 2020. This date has also been extended to the 30th of June 2020. Similarly, form ITC-03 can now be filed by the 31st of July 2020 for the period FY 2019-20.

Validity of e-way bills

E-Way bills, whose expiry dates were between the 20th of March 2020 to 15th of April 2020, will now be valid till the 30th of April 2020.

Lastly, all other GST compliance due dates falling between the 20th of March 2020 and 29th of June 2020 are now extended till the 30th of June 2020. Kindly note that all the aforementioned dates are subject to further changes based on the spread of COVID-19 pandemic further.