Income Tax Relief Measures in India Amid COVID-19

During the COVID-19 pandemic, the central and many state governments are in the thick of the action to provide tax relief to taxpayers. This article offers an overview of the recent Direct and Indirect Key income tax relief provided by the government. Take a look!

A. Direct Tax

Return Filing OF Income

The due date for filing late and revised returns of income for the assessment year 2019-20 was extended from 31 March to 30 June 2020. Additionally, the due date of all income-tax return for FY 2019-20 is extended from 31 July 2020 and 31 October 2020 to 30 November 2020 and tax audit from 30 September 2020 to 31 October 2020. The timeline for linking Aadhaar with PAN was also extended to 30 June 2020.

TDS & TCS Return for Q4 of FY 2019-20

Taxpayers were required to file Q4 return of TDS (tax deducted at source) by 30th April 2020 and by 15th May 2020 for Q4 TCS (tax collected at source) return of the previous year 2019-20. These dates were extended up to 30th June 2020. Consequently, the taxpayers were given a reprieve from the penalty leviable under section 234E for the period up to 30th June 2020. Any delay beyond that date would only attract fees under section 234E for those delayed days.

Investments u/s 80C

The date of making investments specified u/s 80C was extended till 30th June 2020. This claim will be reflected in the books of account of the subsequent year. The taxpayers have to ensure that the deduction is claimed only once failing which would attract the penal consequence under section 270A.

Relief in Respect of Residency Conditions

The government has relaxed the conditions for the determination of the residential status for the previous year 2019-20. Moreover, a prolonged period of stay, of individuals who have come to India on a visit, will be excluded in certain situations.

• Announcement of Special Package for Revival of the Economy
• To provide more cash flow at the disposal of the taxpayers, the TDS rates for non-salaried specified payments made to residents and TCS rates for the specified receipts are reduced by 25 percent of the existing rates.
• Payment for the contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible at the reduced rate of TDS which will be applicable for the remaining part of the Financial Year 2020-21 i.e.14 May 2020 to 31 March 2021.
• The timeline for payment of disputed arrears under the "Vivad se Vishwas" Scheme has been further extended from 30 June 2020 to 31st December.
• Relief For Businesses Operating in Special Economic Zones

For business units operating in SEZ (special economic zones) approved under the Special Economic Zones Act, 2005 as of 31 March 2020, the last date to begin manufacturing or provide any services to qualify for the available tax exemptions was extended to 30 June 2020.

B. Indirect Taxes

• Extension of GST Return Filing Deadlines
• The due date for filing the forms GSTR-3B for March, April, and May 2020 (i.e. returns of February, March, and April 2020) is extended till 30th June 2020.
• The date for filing GST annual returns of FY 18-19, which is due on 31 March 2020 is also extended till June 2020.
• Late Fees Waiver
• Taxpayers with a turnover of up to INR 5 cr. are also provided with a waiver of late fees, interest and penalty on delayed payment of tax and filing of returns and the following extensions was also provided.

Return periodLate fees will be waived if filed on or before the given dateInterestFeb 202024th of June 2020Zero interest for 15 days + interest rate @9% p.a.March 202024th of June 2020Zero-interest for 15 days + interest rate @9% p.a.April 202024th of June 2020Zero-interest for 15 days + interest rate @9% p.a.May 202027th of June 2020 (due date extended for return filing)NA

• Extension For Payment Date Under Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019
• To clear the backlog of pending litigations from the pre-GST regime, a legacy dispute resolution scheme called the “Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019" was introduced from 1 September 2019. Because of the lockdown, the last date for making the payment under the Sabka Vishwas Scheme was extended till 30th June.
• Extension of Validity of E-way Bill

The validity period of the e-way bill generated before 25th March whose validity expires during the period 20th March-15th April was extended till 31st May.Further Reading:E-Way Bill Generation for Transactions Recorded in Tally.ERP 9

• Extension of Compliances Due Dates

In case the due date falls between 20th March 2020 and 29th June 2020 for the following under the GST law, it shall tended to 30th June 2020 :

• Issue of notice
• Notification
• Approval order
• Sanction order
• Filing of appeal and
• Furnishing of return, statements, applications, reports, any other documents
• Relaxations in Customs
• Initially, exporters importing goods under Advance Authorization/Export Promotion Capital Goods Scheme and imports made by an Export oriented unit were granted exemption from levy of IGST and Compensation cess up to 31st March 2020 which has now been extended till 31 March 2021.
• CBIC (Central Board of Indirect Taxes & Customs) has recently announced measures to further enhance the automation in the customs clearance process. Therefore, the customs authorities will enable electronic mode communication of PDF-based Final electronic Out of Charge copy (i.e eOoc) of Bill of Entry and e-Gate pass to the importers / Customs Brokers starting from 15th of April. The resulting eOoC copy of BoE and e-Gate pass copy will be sent to the concerned Customs Broker and /or importer via email if registered, once the Out of Charge is granted. The Gate Officer or the Custodian will examine the e-Gate pass copy to allow the physical exit of the imported goods from the Customs area.

Conclusion

The govt. has taken swift measures for businesses, particularly for MSMEs. Introducing collateral-free loans to stressed MSMEs and Rs 50,000 crore equity infusion and relaxation in TDS deduction has given a boost to this sector. Furthermore, the relaxation in TDS deduction will improve the cash flow of MSMEs that was already facing an acute financial crunch.It is an appreciable step of govt to push the deadlines of the various schemes, such as tax filing dates, and relaxation of other compliances. It will assist in handling the current situation of the Indian economy in these times of crisis. The govt. must continuously assess the economic situation and come up with supplementary relief measures for the economy severely hit by the Coronavirus-induced crisis.To avail the benefits to taxes and other reliefs, taxpayers must remember CAT (Completeness, Accuracy, and Timeliness) while recording the transactions. They must record all the transactions accurately and in the correct period so that the financial statements of the entity portray a true and fair view. Tally can help taxpayers to achieve this objective. This tool is easy to understand and simple to operate. The ERP 9 version of Tally helps in taking a critical decision that can be taken by looking at the financial reports.