With the increased transmissibility, morbidity, mortality of the emerging P2 Corona Variant and its ability to evade detection by diagnostic tests and decreased susceptibility to antiviral drugs, this new variant has taken everyone with a major surprise and setback. The so-called night curfews are a kind of mini lockdowns impending to be major lockdown if the situation does not improve within coming days.
The health services are already under lot of pressure and the rising cases have taken a toll on them and might collapse or cripple the health support services.
That is why, it has become more important for the Govt to announce certain financial support measures so as to give some sign of relief to the already bleeding businesses which were thriving to surface out of Covid 2020 pandemic.
Some of the suggestive measures to the Govt are listed as below:
17 suggestive measures related to direct tax provisions
1. Defer the instalments of various banks for the first quarter which will be due in the month of May, June, July 2021.
2. Advance tax for the first quarter 2021-22 fin. Year
Pre announcement for deferring advance tax deadline from 15th June to a later date. The revenues for the first quarter are going to be affected and calculating and paying the advance tax seems to be an uphill task.
3. Adhaar PAN linking
The last extended date is 30th June 2021. With the number of increasing cases in a matter of 4-5 days, it is imminent that the citizens are not going to join soon and the partial lockdown may be converted to full lockdown.
4. Section 54 of the income tax act
There are lot of practical problems wherein the assessee’s have invested amount in Capital Gain Account Scheme and whose timelines are expiring during March 2021 to June 2021 for the cases wherein the immovable property was transferred/ sold between March 2019 to June 2019; since TWO years have expired or are expiring in this period. Due to this unprecedented crisis, the assessee’s are not In a position to step out, analyze the proposed properties, cannot meet lawyers, valuers, bankers to avail loan facilities. Purchase of immovable property is a big task involving other mediators and their non-availability may jump the 30th June deadline.
5. Section 54EC of the income tax act
The LTCG need to be invested in pre-defined specified instruments within a time period. The timeline for the compliances falling between March 2021 and May 2021 might be a weary task practically to honor this timeline.
6. Assumption of permanent establishment
In case, the KMP key management personnel are stuck in India, does that constitute establishment of PE in India need to be clarified. Lifting or relaxing the rules would be advantageous.
7. Foreign shipping companies
FSCs need to obtain No Objection Certificate (NOC) and Port Clearance Certificate (PCC) in addition to DIT Relief certificate at the time of outbound vessels from an Indian Port.
8. Tax holiday
Tax holiday is a period when collection of taxes is suspended, deferred, reduced or postponed. Waiver of Property taxes, leisure taxes, entertainment taxes for the retail, entertainment, hospitality and leisure businesses need to be considered.
9. Tax on withdrawals on retirement plans
In this time of financial crisis, everyone will count on the saved money or funds parked for retirements. Easy withdrawals from PPF account with increased limits without any penal provisions, NSS withdrawals without any withholding taxes and for other instruments can be envisaged to overcome this taxing period.
10. Weighted deductions for prolonged sanitisation expenditures
The Sanitization and the preventive expenditures is not only a one-time expense but need to be adapted by the businesses in a prolonged way with stricter implementation. The weighted deduction can be offered to encourage the industry to come forward and adapt this as a routine feature.
11. Enhanced capital investments/ employment generation
To incentivize the capital expenditure and to augment to production capacities, full deduction/ exemptions to be considered to increase production which will provide employment opportunities which will further circulate the cash flow into the system/ economy.
12. Statement of Financial Transactions Filing
The Statement of Financial transactions commonly known as SFTs need to be filed by 31st May 2021. Statement of Equalization levy need to be filed by 30th June 2021 for the financial year 2020-21. The same may be extended timely so that the focus shifts to Jan Hai To Jahaan Hai.
13. Management stuck in India
As per POEM (Place of Effective Management) rules in India, if a key decision maker is stuck in India during this lockdown period where the flights are not allowed, making the decisions in India will render the foreign company as tax resident company of India. This would be harsh scenario wherein the temporary change in location of that key personnel owing to travel not being allowed, would unjustly tax that company in India.
14. Number Of Days Criteris For NRIs
There can be instances wherein the NRIs are stranded in India due to sudden lockdown and cannot head back to their country of residence or place of work. Counting such number of days as stay in India would harm them by including their global income as taxable in India.
15. Transfer pricing strategies and change of business models
With this pandemic Covid 19, there can be change in the practical scenarios, change in the margins, change in arm’s length provisions, fluctuations in profitability due to which the earlier transfer pricing agreement needs amendment or revision for a year or two year till the things flow back to normal or new normal, the government should consider such situations and come out with some guidelines or SOPs to accept such changes during these testing times
16. TDS deposit time extension
The last date for TDS deposit is 30th April 2021. It is requested to allow TDS deposit date be extended to 30th June 2021 along with filing of TDS returns without any implication of penal interest on late deposits.
17. Era of lesser fines/ penalties on small non-compliances
With the worldly disease Corona, there can be lot of instances; which may not reach to the highest level about the problems faced by the businessmen, professionals and the industry in small and at large; there can be small bona fide non compliances which may be missed due to various reeling stresses, it would be a great motivating factor, if those small mis-compliances are not penalized and fines may be lifted in the financial year 2021-22.
Disclaimer- While every care has been taken to ensure the accuracy/ authenticity of the above, the readers are advised to recheck/ reconfirm the same from the original sources/ relevant departments. The company shall in no way be responsible for any loss or damage suffered to any person on account of the same. The views expressed are personal opinion, compilation and is no way, to be used for any legal opinion, matters.
(Republished with amendments)