Covid-19 Impact On Taxation, Relaxations By Government And Some Measures Which Need To Be Taken!
The outbreak of COVID-19 across the globe has been unprecedented, with major economies announcing regulatory relaxations amidst lockdowns. Following the suit, Finance Minister (FM), Ms. Nirmala Sitharaman announced certain relief measures on 24 March 2020 relating to Taxation, Corporate Affairs, Insolvency, and Bankruptcy Code (IBC), Fisheries, Financial Services, and Commerce Sector.
The taxpayers have most of their deadlines expiring at the end of the financial year i.e., 31 March 2020.Considering the significant impact, COVID-19 is having on businesses, the FM has proposed the following:
1. Self-assessment tax
2. Regular tax
3. Taxes withheld or collected at source
4. Equalization levy
5. Securities Transaction Tax and
6. Commodities Transaction Tax
7. However, the late fee/penalty on such delayed payments have been waived off.
Financial Services Measures
Three months’ relaxation for:
(Latest Amendments yet to be issued)
The above relief measures announced by the government are unprecedented and welcomed by all the taxpayers. But to discuss over some issues and recommendations which should be worked upon for, lets first look at some case studies.
Recommendations which has become provided:
Some 50 officers of the Indian Revenue Service (IRS) recommended raising the highest tax rate to 40% for people with annual income above 10 million rupees ($131,130) or a wealth tax for those with net worth of 50 million or more in a report sent to the Central Board of Direct Taxes (CBDT) and shared on Twitter on Saturday.
Late on Sunday on Twitter, the Income Tax Department, governed by the CBDT, said the report did not reflect the official views of the CBDT and the Finance Ministry. It said an inquiry was being launched into why the report was shared with the public.
However summing up, Finance Ministry sources said that neither IRS Association nor any group of officers mentioned in report were ever asked by the government to give any report on the subject. It was not part of their duty to prepare such a report and taking personal views to the media constituted an act of indiscipline, the sources said. The report, dated April 23, said that “In times like these, the so called ‘super rich’ have a higher obligation towards ensuring the larger public good”.
Other Measures taken:
But some suggestive measures which can be reviewed and taken as after the calling of Anti crisis due to COVID-19, to mitigate the negative effects of this pandemic, Poland Government has set a New law covering
RELIEF FOR BUSINESSES ACTIVITY INVOLVED IN COMBATING COVID-19
PIT and CIT taxpayers who are actively involved in combating the epidemic may benefit from that special tax relief:
1. One-off Depreciation Allowance: possibility of applying a one-off depreciation allowance with respect to fixed assets acquired in 2020 for the purposes of the production of goods related to combating Covid-19;
2. Qualified R&D Expenditures: possibility of including eligible research and development expenditures made in 2020 with the aim of developing products necessary to combat Covid-19 in the calculation of income tax prepayments;
3. 200% of Donations made between 1 January 2020 and 30 April 2020 is deductible;
4. 150% of Donations made in May 2020 is deductible;
5. 100% of Donations made between 1 June 2020 and 30 September 2020 is deductible.
Our Finance Ministry can as well review the policy of other countries in this pandemic which can be of great help. These are some of the suggestions which can be looked to strengthen the businessperson position which will ultimately leave a great positive impact on economy.