A Representation on Representation on Covid 19 related hardships faced by Direct Taxpayers around the country is made to Finance minister which focused on Prosecution for Non / delayed deduction of of TDS for month of March and April 2020, Stay of demand, Validity of Lower or Nil rate deduction certificates issued issued under section 197 which are expiring on 31.03.2020.
Representation is made Jointly by IMC Chamber of Commerce and Industry, Chartered Accountants Association – Ahmedabad, Chartered Accountants Association – Surat, Bombay Chartered Accountants’ Society, Karnataka State Chartered Accountants’ Association, Lucknow Chartered Accountants’ Society and Chamber of Tax Consultants.
Relevant Text of the representation is as follows:-
Dated: 30th March, 2020
Honourable Finance Minister Ministry of Finance,
Government of India,
128-A North Block,
We refer to the situation arising on account of out-break of pandemic of COVID – 19 and lockdown being imposed by the Government Authorities of all the offices and institution across globe. Currently, Indian Government has announced lock-down up-to 14th April 2020.
The Hon’ble Finance Minister (`FM’) on 24th March 2020, has made certain announcements on Tax Compliance and Regulatory matters for providing relief to taxpayers. However, there are certain issues in the announcement which needs further clarifications, as well there are other compliance deadlines for taxpayers in the months of March and April which are still not addressed by Hon’ble FM and which need to be extended by the CBDT so that taxpayers do not have to face hardships on account of non-compliance of the same.
- Delayed payment of TDS for month of March and April: The Hon’ble FM has announced that the taxpayers shall be liable to lower interest @ 9% p.a for delay in deposit of TDS if it is paid by 30 June 2020. In this connection, it is to be noted that as per provisions of Section 201, where the taxpayer, who is required to deduct the TDS, does not deduct or does not pay such tax or fails to pay such tax after making the deduction, then such person shall be deemed to be an “assessee in default” in respect of such tax. During this period, it is quite likely that a number of taxpayers who are required to deduct and pay TDS will not be able to do so on account of complete lock-down. The announcement has provided them relief in the form of lower interest on delayed payment of TDS and absolved them from penalty arising if any on account of the same. However, if such taxpayer who on account of this forced delay in TDS deposit, is deemed to be an “assessee in default” as per provision of Section 201, then tax authorities can initiate prosecution proceedings for delay in deposit of TDS. Accordingly, it is suggested that necessary announcement may be made that for delay in deposit of TDS for this period, the taxpayers will not be considered as “assessee-in-default” and prosecution proceedings will not be initiated against such taxpayers.
- Stay of demand: It has been announced by Hon’ble FM that various due-dates/ time limits expiring between 20 March 2020 to 29 June 2020 shall be extended to 30 June 2020. It is to be noted that there is no mention regarding whether recovery proceedings will be initiated or it will be stayed, in respect of collection of outstanding demand due from taxpayer in this period. Various High Courts on their own motion have issued directives to authorities falling within their jurisdiction, that all the interim orders passed and expiring during this period will be automatically extended. In view of the same, in the cases where stay of demand has been granted by AO/ CIT/ ITAT is expiring in lock-down period, same shall stand automatically extended for further period, till authorities start However, in cases where no stay of demand has been granted or time-limit of 30 days as provided by section 156 is expiring in lock-down period, it is suggested that necessary clarification may be issued that the time-limit for payment of demand in such scenarios is extended till 30 June 2020 and the taxpayer will not be treated as an “assesseein-default” for this period and there will not be any interest/ penal/ criminal action be taken against the taxpayer.
- Validity of certificates issued u/s. 197: In many cases, the income-tax department has issued certificates u/s. 197 for nil or lower withholding tax. The validity of such certificates would end on 31st March, 2020. Considering the complete disruption in normal life, it is requested that the validity of all such certificates should be extended by 3 months.
Further, it is suggested that powers may be delegated to CBDT to issue instruction to grant appropriate relief to an assessee who has been adversely affected by Covid-19 in genuine cases.