Certain income tax developments from March 2020 amid COVID-19

Article explains about Belated & revised returns for FY 2018-19 (AY 2019-20), Tax saving measures for FY 2019-20 (AY 2020-21), Investments for Capital gains exemption, Payment of Advance tax and TDS for the FY 2019-20, Filing of TDS returns and statements  and other issues amid COVID-19.

Belated & revised returns for FY 2018-19 (AY 2019-20):

♦ The last date to file belated & revised returns for AY 2019-20 was March 31, 2020. The due date has now been extended to June 30, 2020.

♦ The late fee of Rs. 10,000 under section 234F will still be applicable with respect to belated returns.

♦ In case there is a self-assessment tax payable, interest under section 234A, 234B and 234C may be applicable as follows:

• If tax is paid by March 19, 2020, interest rates will apply based on the existing provisions of the Income-tax Act (i.e. 12% per annum or 1% per month).
• If tax is paid between March 20, 2020 to June 30, 2020, reduced interest at the rate of 0.75% per month will be applicable instead of 1% per month with respect to each section.

Tax saving measures for FY 2019-20 (AY 2020-21)

• Please note, there is no extension of the financial year for 2019-20. Income for the period April 1, 2019 to March 31, 2020 will be considered while filing the ITR for FY 2019-20 and not upto June 30, 2020.
• Having said the above, deductions under 80C, 80D and 80G for the FY 2019-20, can be claimed by investing/ making payments till June 30, 2020 (originally the cut-off date was March 31, 2020).
• With respect to donations under section 80G, you may please note the following:
  • Donation to PM-CARES will get the same tax treatment as available to the Prime Minister National Relief Fund. Which means, it shall be eligible for 100% deduction under section 80G without any ceiling limit. Qualifying limit of 10% of gross total income shall not be applicable and entire donation will be allowed as deduction.
  • Since the date for claiming deduction under section 80G for FY 2019–20 is extended upto June 30, 2020, contributions to PM-CARES till June 30 can be claimed as a deduction in the ITR of FY 2019–20.
  • If you are opting for the new tax regime of concessional rates for FY 2020-21 (AY 2021-22), you can still make donations to the PM-CARES Fund upto June 30, 2020. Having said that, you will need to preferably claim this in FY 2019–20 because deductions can’t be claimed under 80G in the new tax regime. If you are anyway continuing in the old tax regime in the FY 2020–21, there is no issue and you can choose to claim the deduction either in FY 2019–20 or FY 2020–21.
  • If you are making donations to any other institution other than the PM-CARES Fund, please check with the donee for applicable 80G deduction. If they are a privately-run charitable organisation, you may most likely get 50% deduction with the 10% of adjusted gross total income ceiling limit.
  • Please mandatorily ask for a receipt which has the PAN and address of the organisation mentioned.
  • Please ensure that contributions more than Rs. 2,000 are made through modes other than cash.
  • Contributions in kind (like clothes, food items, utensils etc) will be not eligible for deduction under section 80G. Hence, if you are looking to claim a deduction, you may want to contribute by way of money instead of kind.

Investments for Capital gains exemption

• If there were any capital gains earned during FY 2019-20 and there was an intention to invest in bonds/ units under the provisions of section 54EC/ section 54EE for claiming capital gains exemption, such that the time limit to invest was expiring anytime between March 20, 2020 to June 29, 2020, the due date for the making such investments shall be now extended upto June 30, 2020.
• You may please note, if you were not able to invest in a residential house under section 54/ 54F, you have time to invest the gains/ proceeds in a Capital Gains Accounts Scheme till the due date of filing of the return for FY 2019-20 as per the existing provision of the Income-tax Act.

Payment of Advance tax and TDS for the FY 2019-20

• The due date for the payment of the last instalment of advance tax for FY 2019-20 was March 15, 2020 (also the due date with respect to assessees adopting the presumptive taxation). Please note, the due date for the tax payment is not extended. The relief given is with respect to the interest charged under section 234B and section 234C. If you were not able to make the advance tax payment on time i.e. by March 15, 2020, the rate of interest to be charged now under section 234B and section 234C will be 0.75% per month instead of 1% per month from March 2020 to June 2020.
• The due date for the TDS remittance for March 2020 is April 30, 2020. Please note, the due date for the tax payment has not been not extended. Hence, companies and entities to whom tax audit is applicable are required to remit the TDS payments on or before the existing due date of April 30, 2020. The relief given is with respect to the interest charged under section 201. If you are not able to make the TDS payment within the due date i.e. by April 30, 2020, the rate of interest to be charged will be 0.75% per month instead of 1.5% per month from March 2020 to June 2020.

Filing of TDS returns and statements

• Quarterly filing of TDS returns (like 24Q, 26Q): The due date for the filing of the last quarter of the TDS returns for FY 2019-20 as per the existing provisions was May 30, 2020. This is now extended to June 30, 2020. TDS certificates may also be furnished by June 30, 2020.
• Filing of TDS Statements (like 26QB, 26QC, 26QD): The due date for filing these forms/ statements for February, March & April 2020 is now extended to May 30, 2020.

Others

• Requirement of Aadhaar-PAN linking has been extended from March 31, 2020 to June 30, 2020.
• Vivaad se Vishwas scheme: No additional 10% amount is required to be paid if payment made by June 30, 2020.

The official announcement of the relief measures by the Ministry of Finance released on March 24, 2020 is available on this link:

https://taxguru.in/income-tax/fm-relaxes-tax-regulatory-compliance.html