As the impact of Covid 19 deepens and the cost of the outbreak rises, the outbreak has been termed as pandemic by the World Health Organisation and various Governments including Government of India. Social distancing has been unequivocally accepted to be the best way to contain its spread, leading to announcement of complete lockdown in the country. Keeping in view the challenges faced by taxpayers in meeting the compliance requirements under such conditions, the Union Finance Minister had announced several relief measures relating to statutory and regulatory compliance matters across sectors in view of COVID-19 outbreak.

The relief measure announced through various press release, notifications, circulars, etc. range from relaxations in Income Tax to various benefits under Indirect Taxation regime also. Lets have a look at each of them one by one……

INCOME TAX (Direct Taxes)

For Direct Tax regime month of March is usually the most important month for the year as all the financial and taxation planning falls in this month and also the month experiences most of the due dates to be complied by the taxpayers. Since lockdown started from 23rd of March 2020 the tax payers started facing challenges in meeting the compliances on time. Keeping in view the problems faced the Union Finance Minister announced several relaxations as follows:

  • Extension of Filing of Income Tax Return for the F.Y. 2018-19:

31st March 2020 was the last date for the filing of Income Tax Return both Original and Revised for the financial year 2018-19 (A.Y. 2019-20) which has been extended till 30th of June 2020.

  • Last date for Aadhar – PAN Linking has been extended to 30th of June 2020.
  • Last date for Tax Saving Investments for deductions for F.Y. 2019-20 has been extended:

Deductions under sections like Section 80C, etc. are allowed to the taxpayers for making various eligible investments. Such investments are usually allowed for the year in which such investments are done. For Example: LIC Premium for the month of January is usually paid in the month of February and similarly the premium for the month of march is paid in the month of April. But due to lockdown and to promote the liquidity in the hands of the taxpayers the last date for the investments pertaining to the financial year 2019-20 has been extended to 30th June 2020. In other words the date for making various investment/payment for claiming deduction under Chapter-VIA-B of IT Act which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations), etc. has been extended to 30th June, 2020. Hence the investment/payment can be made up to 30.06.2020 for claiming the deduction under these sections for FY 2019-20.

  • The date for making investment/construction/purchase for claiming roll over benefit/deduction in respect of capital gains under sections 54 to 54GB of the IT Act has also been extended to 30th June 2020. Therefore, the investment/ construction/ purchase made up to 30.06.2020 shall be eligible for claiming deduction from capital gains arising during FY 2019-20.
  • Reduced Interest Rate for late payment of Various dues:

Any payment/dues to be made towards department under Income tax (Ex: Advance Tax, TDS, TCS, etc.), Equilisation levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) which are due for payment from 20.03.2020 to 29.06.2020, if paid before 30.06.2020, then the reduced interest at the rate of 9% p.a. shall be leviable on such late payments. Further no penalty/prosecution shall be initiated for this late/non-payment.

  • Under Vivad se Vishwas Scheme, the date has also been extended up to 31/12/2020. Hence, declaration and payment under the Scheme can be made up to 31/12/2020 without additional payment.
  • Reduction in rates of TDS and TCS:

The TDS rates for all non-salaried payment to residents, and tax collected at source rate has been reduced by 25 percent of the specified rates for the remaining period of FY 20-21 i.e. from 14/05/2020. TDS rates for period 01/04/2020 to 13/05/2020 remains the same as previous.

The new rates for TDS for FY 2020-21 are as follows:

Section of the Income-tax Act Nature of Payment Existing Rate of TDS Reduced rate from 14/05/2020 to 31/03/2021
193 Interest on securities 10% 7.5%
194 Dividend 10% 7.5%
194A Interest other than interest on securities 10% 7.5%
194C Payment of Contractors and sub-contractors 1% (individual/HUF)

2% (others)

0.75% (individual/HUF)

1.5% (others)

194D Insurance Commission 5% 3.75%
194DA Payment in respect of life insurance policy 5% 3.75%
194EE Payments in respect of deposits under National Savings Scheme 10% 7.5%
194F Payments on account of re-purchase of Units by Mutual Funds or UTI 20% 15%
194G Commission, prize etc., on sale of lottery tickets 5% 3.75%
194H Commission or brokerage 5% 3.75%
194-I(a) Rent for plant and machinery 2% 1.5%
194-I(b) Rent for immovable property 10% 7.5%
194-IA Payment for acquisition of immovable property 1% 0.75%
194-IB Payment of rent by individual or HUF 5% 3.75%
194-IC Payment for Joint Development Agreements 10% 7.5%
194J Fee for Professional or Technical Services (FTS), Royalty, etc. 2% (FTS, certain royalties, call centre)

10% (others)

1.5% (FTS, certain royalties, call centre)

7.5% (others)

194K Payment of dividend by Mutual Funds 10% 7.5%
194LA Payment of Compensation on acquisition of immovable property 10% 7.5%
194LBA(1) Payment of income by Business trust 10% 7.5%
194LBB(i) Payment of income by Investment fund 10% 7.5%
194LBC(1) Income by securitisation trust 25% (Individual/HUF)

30% (Others)

18.75% (Individual/HUF)

22.5% (Others)

194M Payment to commission, brokerage etc. by Individual and HUF 5% 3.75%
194-O TDS on e-commerce participants 1% (w.e.f. 01.10.2020) 0.75%

The new rates for TCS for FY 2020-21 are as follows:

Section of the Income-tax Act Nature of Receipt Existing Rate of TCS Reduced rate from 14/05/2020 to 31/03/2021
206C(1) Sale of
(a) Tendu Leaves 5% 3.75%
(b)Timber obtained under a forest lease 2.5% 1.875%
(c) timber obtained by any other mode 2.5% 1.875%
(d) Any other forest produce not being timber/tendu leaves 2.5% 1.875%
(e) scrap 1% 0.75%
(f) Minerals, being coal or lignite or iron ore 1% 0.75%
206C(1C) Grant of license, lease, etc. of
(a) Parking lot 2% 1.5%
(b) Toll Plaza 2% 1.5%
(c) Mining and quarrying 2% 1.5%
206C(1F) Sale of motor vehicle above 10 lakhs 1% 0.75%
206C(1H) Sale of any other goods 0.1% (w.e.f. 01.10.2020) 0.075%
  • Due date for the Tax Audits and Income Tax return for the Financial Year 2019-20:

The due date of all Income Tax Returns for Assessment Year 2020-21 will be extended to 30 November, 2020.  Similarly, tax audit due date will be extended to 31 October 2020.

GOODS AND SERVICES TAX (Indirect Tax)

Similar to that of the Income Taxes (Direct Taxes) there are various compliances under GST Act which are to be complied by the taxpayers from time to time which includes number of GST Monthly/Quaterly Return Statements (GSTR 1, GSTR 3B, etc.), Annual Returns(GSTR 9), GST Audit(GSTR 9C), etc. which when not complied in time brings into effect various penalty provisions and non availability of relevant data at the time of lockdown made it very difficult for the taxpayers to comply with them. To make it easy and keeping in mind the difficulties faced Department has provided various relaxations in the compliances under GST as well. Lets have a look at them:

  • Conditional waiver of Late fees on late filing of GSTR 3B:

Department has, through various notifications, introduced the conditional waiver of the late fees for late filing of GSTR 3B. Under this waiver if the return for any month is filed before the prescribed date then no late fees shall be levied but if such return is filed even after one day of the prescribed date then the late fees shall be levied from the day 1 as if no waiver scheme was introduced for the same. The last dates for the GSTR 3B are as follows:

Class of Registered Person Applicability in States Tax Period Prescribed Last Date
Taxpayers with aggregate turnover of more than Rs. 5 Crore in the preceding financial year All States February 2020

 

24/06/2020
All States March 2020

 

24/06/2020
All States April 2020

 

24/06/2020
All States May 2020

 

27/06/2020
Taxpayers having an aggregate turnover of more than Rs. 1.5 Crore and upto Rs. 5 Crore in the preceding financial year All States February 2020

 

29/06/2020
All States March 2020

 

29/06/2020
All States April 2020

 

30/06/2020
Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands or Lakshadweep May 2020 12/07/2020
Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh or Delhi May 2020 14/07/2020
Taxpayers having an aggregate turnover of upto Rs. 1.5 Crore in the preceding financial year All States February 2020

 

30/06/2020
All States March 2020

 

03/07/2020
All States April 2020

 

06/07/2020
Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands or Lakshadweep May 2020 12/07/2020
Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh or Delhi May 2020 14/07/2020
  • Conditional Waiver of late fees on Late filing of GSTR 1:

Department has introduced conditional waiver for GSTR 1 similar to that of the GSTR 3B. The penalty is charged from Day 1 if the return for the period is not filed within the prescribed last date. The last dates as prescribed for the different tax periods are as follows:

Class of Registered Person Applicability in States Tax Period Prescribed Last Date
All registered person who are required to/or have opted to file GSTR 1 on monthly basis. All States March 2020 30/06/2020
All States April 2020 30/06/2020
All States May 2020 30/06/2020
All registered person who are required to/or have opted to file GSTR 1 on quarterly basis All States For the quarter ending on 31/03/2020 30/06/2020
  • Reduction of Interest Rate on late payment of various dues:

Department has introduced no interest/reduced interest policy for the different categories of taxpayers to reduce the difficulty faced by them and enhancing the liquidity at the same time. For the Taxpayers with Aggregate Annual turnover more than Rs. 5 Crore, No Interest shall be charged if payment has been made before the prescribed last date of GSTR 3B filing for any tax period. And for the taxpayers with the aggregate annual turnover of less than Rs. 5 Crore the interest shall be charged at the reduced rate of 9% p.a. after 15 days of the due date on which such payment was to be made.

  • Due date of filing of Annual Return for the Financial Year 2018-19:

Looking at the hardships faced the due date for the Annual return for the financial year 2018-19 has been extended to 30/09/2020 vide notification dated 05/05/2020.

  • Last date of furnishing of the Central Excise returns due in March, April and May 2020 has been extended to 30th June,2020.
  • Wherever the last date for filing of appeal, refund applications etc., under the Central Excise Act, 1944 and rules made thereunder is from 20th March 2020 to 29th June 2020, the same has been extended to 30th June 2020.
  • Wherever the last date for filing of appeal, refund applications etc., under the Customs Act, 1962 and rules made thereunder is from 20thMarch 2020 to 29th June 2020, the same has been extended to 30th June 2020.
  • Wherever the last date for filing of appeal etc., relating to Service Tax is from 20th March 2020 to 29th June 2020, the same has been extended to 30th June 2020.
  • The date for making payment to avail of the benefit under Sabka Vishwas Legal Dispute Resolution Scheme 2019 has been extended to 30th June 2020 thus giving more time to taxpayers to get their disputes resolved.

The above relief under these tax laws have been introduced with the aim of providing the taxpayers around the country with some cushion time to arrange everything and then comply with the rules and regulations of the respective laws. These reliefs are the welcoming steps of the Government of India and will surely help the taxpayers in this difficult time.

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Company: Mukul Verma & Co.
Location: Bhopal, Madhya Pradesh, IN
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