Relief Under Taxation Laws Amid of COVID-19 Pandemic by Government of India

As the impact of COVID-19 deepens and the cost of the outbreak rises, the outbreak has been termed as a pandemic by the World Health Organisation and various Governments including the Government of India. Social distancing has been unequivocally accepted to be the best way to contain its spread, leading to the 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 the COVID-19 outbreak.

The relief measure announced through the various press release, notifications, circulars, etc. range from relaxations in Income Tax to various benefits under the Indirect Taxation regime also. Let’s 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 taxpayers 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 the 30th of June 2020.
  • The last date for Aadhar – PAN Linking has been extended to the 30th of June 2020.
  • The 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 investments/payments 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 rollover 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.), Equalisation 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 PaymentExisting Rate of
TDS
Reduced rate
from 14/05/2020
to 31/03/2021
193Interest on securities10%7.5%
194Dividend10%7.5%
194AInterest other than interest
on securities
10%7.5%
194CPayment of Contractors and
sub-contractors
1%
(individual/HUF)
2% (others)
0.75%
(individual/HUF)
1.5% (others)
194DInsurance Commission5%3.75%
194DAPayment in respect of life
insurance policy
5%3.75%
194EEPayments in respect of
deposits under National
Savings Scheme
10%7.5%
194FPayments on account of repurchase of Units by Mutual
Funds or UTI
20%15%
194GCommission, prize etc., on
sale of lottery tickets
5%3.75%
194HCommission or brokerage5%3.75%
194-I(a)Rent for plant and machinery2%1.5%
194-I(b)Rent for immovable property10%7.5%
194-IAPayment for acquisition of
immovable property
1%0.75%
194-IBPayment of rent by individual
or HUF
5%3.75%
194-ICPayment for Joint
Development Agreements
10%7.5%
194JFee for Professional or
Technical Services (FTS),
Royalty, etc.
2% (FTS, certain
royalties, call
center)
10% (others)
1.5% (FTS,
certain royalties,
call center)
7.5% (others)
194KPayment of dividend by
Mutual Funds
10%7.5%
194LAPayment 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 secularization trust25%
(Individual/HUF)
30% (Others)
18.75%
(Individual/HUF)
22.5% (Others)
194MPayment to commission,
brokerage etc. by Individual
and HUF
5%3.75%
194-OTDS 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 ReceiptExisting Rate of
TCS
Reduced rate
from 14/05/2020
to 31/03/2021
206C(1)Sale of
(a) Tendu Leaves5%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) scrap1%0.75%
(f) Minerals, being coal or
lignite or iron ore
1%0.75%
206C(1C)Grant of license, lease, etc. of
(a) Parking lot2%1.5%
(b) Toll Plaza2%1.5%
(c) Mining and quarrying2%1.5%
206C(1F)Sale of motor vehicle above
10 lakhs
1%0.75%
206C(1H)Sale of any other goods0.1% (w.e.f.
01.10.2020)
0.075%

  • The due date for the Tax Audits and Income Tax return for the Financial Year2019-20: The due date of all Income Tax Returns for Assessment Year 2020-21 will be extended to 30 November 2020. Similarly, the 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 the GST Act which are to be complied by the taxpayers from time to time which includes the number of GST Monthly/Quarterly 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 keep in mind the difficulties faced the Department has provided various relaxations in the compliances under GST as well. Let’s 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 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 PersonApplicability in StatesTax PeriodPrescribed Last Date
    Taxpayers with aggregate turnover of more than Rs. 5 Crore in the preceding financial year All StatesFebruary 202024/06/2020
    All StatesMarch 202024/06/2020
    All StatesApril 202024/06/2020
    All StatesMay 202027/06/2020
    Taxpayers having an aggregate turnover of more than Rs. 1.5 Crore and upto Rs. 5 Crore in the preceding financial yearAll StatesFebruary 202029/06/2020
    All StatesMarch 202029/06/2020
    All StatesApril 202030/06/2020
    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 LakshadweepMay 202012/07/2020
    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 DelhiMay 202014/07/2020
    Taxpayers having an aggregate turnover of upto Rs. 1.5 Crore in the preceding financial year All StatesFebruary 202030/06/2020
    All StatesMarch 202003/07/2020
    All StatesApril 202006/07/2020
    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 LakshadweepMay 202012/07/2020
    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 DelhiMay 202014/07/2020
  • Conditional Waiver of late fees on Late filing of GSTR 1: Department has introduced a 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 PeriodPrescribed Last Date
    All registered person who are required to/or have opted to file GSTR 1 on monthly basis.All StatesMarch 202030/06/2020
    All StatesApril 202030/06/2020
    All StatesMay 202030/06/2020
    All registered person who are required to/or have opted to file GSTR 1 on quarterly basisAll StatesFor the quarter ending on 31/03/202030/06/2020
  • Reduction of Interest Rate on late payment of various dues: The Department has introduced no interest/reduced interest policy for the different categories of taxpayers to reduce the difficulty faced by them and enhancing 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.
  • The 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 an 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 an appeal, refund applications, etc., under the Customs Act, 1962, 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 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 has 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.

CA Mukul Verma
Financial Expert
Bhopal, India