Income Tax Relief Measures by Govt. due to COVID-19 pandemic

“What’s the use of a fine house if you haven’t got a tolerable planet to put it on.”

A very famous quote of poet and philosopher Henry David Thoreau which holds so true in the present crisis this world is facing. The global pandemic and proliferate increase in its outspread has led the common man to face the crisis. In view of the challenges faced by taxpayers in meeting the compliance requirements under various provisions of the Income-Tax Act, 1961, the Government has maneuvered a number of relief measures. Through this article, I have tried to enumerate the relaxations and relief steps announced by the Government from time to time in the past two months for the benefit of the taxpayers.

1. Extension of Various Time Limits 

2. Reduction in TDS/TCS Rates

Reduction in TDS and TCS rate for non-salaried payments (Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc.) for period up to March 31, 2021 has been reduced by 25%.

• However, no reduction in rates of TDS or TCS will be available where the tax is required to be deducted or collected at a higher rate due to the non-furnishing of PAN/Aadhaar.
• However, the Finance Minister hasn’t provided any relief in the due date of tax payments. But the taxpayers can apply to the Assessing officer to allow quarterly payment of TDS under Rule 30(3). Assessing officer can grant permission only with the previous approval of Joint commissioner and under Special Cases. Term ‘Special Cases’ has not been defined in the Income-tax Act or Rules. It has to be seen whether the current situation, due to Coronavirus pandemic, can be construed as a special case by the Assessing Officer to pass on the benefit of quarterly payment of TDS or not. Covid-19 is a global pandemic, and it has affected every business – big or small. This fact may play an important role while evaluating which case constitutes a special case or not.
• But the relief of reduced rate of interest of 0.75% per month or part of the month shall apply for default in payment of TDS for the period 20th March 2020 to 30th June, 2020. And, also there would be no penalty or prosecution on such delay.

3. Issuing Pending Income Tax Refunds up to Rs. 5 lacs

In order to provide relief for individuals who are facing cash crunch due to pay cuts or job loss or waiting for their salaries or wages to be released by their employers, the Income Tax Department also announced to issue all pending income tax refunds up to Rs 5 lakh immediately to individuals, charitable trusts  and business entities.

4. Reduction in statutory EPF Rate

In order to increase the take home pay of employees and reduce the cost to the employers, Statutory PF contribution by employer reduced to 10% from 12% for three months- May, June and July 2020. EPF or employee provident fund contribution will be 10% each for employees and employers. Central public sector enterprises and State PSUs will however, continue to contribute 12% as employer contribution. The reduced rate is also not applicable to establishments eligible for PMGKY benefits, since the entire employees and employers contribution totalling to 24% of the monthly wages is being contributed by the Central govt.

5. Deferment of Applicability of Clause 30C (GAAR Provisions) & Clause 44 (GST Details) in the Tax Audit Report

CBDT vide Circular No. 10/2020 dated 24.04.2020 deferred the applicability of Clause 30C & Clause 44 of Form 3CD (Tax Audit Report) till March 31, 2021. The reporting under clause 30C and clause 44 of the Tax Audit Report was kept in abeyance till 31st March, 2019 vide Circular No. 6/2018 dated 17.08.2018, which was subsequently extended to 31 .03.2020 vide Circular No. 9/2019.

6. Relief for the purpose of Residency

CBDT issued Income Tax Circular No. 11/ 2020 dated 08.05.2020 in respect of Residential Status for Assessment Year (AY) 2020-21 to provide NRIs and foreigners visiting India heave a sigh of relief. CBDT has come out with this circular in which

-For persons who came to India before March 22, 2020, the period of stay from March 22 to  March 31, 2020 will not be taken into account for determining the number of days of stay in India.

-For persons who have been quarantined in India due to COVID-19 on or after March 1, 2020 and have either not been able to leave India prior to March 31 2020, or were able to leave India on an evacuation flight on or before March 31, 2020, the period of the stay from the beginning of the quarantine till March 31, 2020 or the date of departure, as applicable, will not be taken into account for determining the number of days of stay in India.

-For persons who have departed on an evacuation flight on or before March 31, 2020, the period of stay in India from March 22, 2020, to the date of departure, shall not be taken into account for determining the number of days of stay in India.

7. Other Measures

• The CBDT has allowed the Form 15G/H submitted by taxpayers for FY 2019-20 to remain valid till 30 June 2020 for FY 2020-21 also. This means that investors who are required to submit the Form-15G/Form-15H for lower or nil deduction of tax from their income can submit it in the first week of July, 2020, as well for FY 2020-21(AY 2021-22).
• The interest rate on delayed payment of returns has also been cut to 9% from 12%.
• Relief from section 269US for wholesalers (having B2B transactions) to not offer electronic payment methods, such as debit cards powered by RuPay, unified payments interface (UPI) and UPI quick response code, which are generally used by retail customers. They were made compulsory for businesses in 2019 with the aim of promoting a less-cash economy.
• Instant online PAN card through Aadhaar facility formally launched- The applicant may go to the e-filing website of the Income Tax Department to provide her/his valid Aadhaar No. & submit the OTP generated on the Aadhaar registered mobile no.Waiving cash
• Withdrawal fee for using ATMs of other banks.
• Relaxing threshold for insolvency proceedings to Rs 1 crore.

In the words of Jane Goodallm “You cannot get through a single day without having an impact on the world around you. What you do makes a difference and you have to decide what kind of a difference you want to make.”

So, in this crucial time, please stay back at your home and keep yourself and your family safe from COVID-19.

In case of any query/clarification, please feel free to reach me at sonakshiagarwalca@gmail.com