The global COVID-19 pandemic has brought the world to a standstill with major economies in complete lockdown. Businesses in India are closed since the 24th March 2020 owing to the nationwide lockdown. With the economy taking a major hit and difficulty in meeting the legal compliances due to the lockdown, the Central government has announced some major relaxations in terms of legal compliances.
In this article, we highlight some major relaxations announced by the government with respect to:
- Income Tax Law
- Goods & Services Tax Law
- Company Law
Relaxations in Income Tax Law
Relaxations given in the Income Tax law includes extension of due dates, processing of refunds, etc. These are given below:
Filing Income Tax Return for AY 2019-20
Filing of belated income tax return for AY 2019-20 (FY 2018-19)
Section 139(1) of the Income Tax Act requires a person to file Income Tax Return on or before the due date. Section 139(4) provides that if a person has not furnished the return of income within the due date, he may still furnish the return of income at any time before the end of the relevant assessment year or before completion of assessment, whichever is earlier.
The due dates of filing return for the Assessment Year 2019-20 (i.e. Financial Year 2018-19) are –
- 31st July 2019: for persons who are not liable for tax audit
- 30th September 2019: for persons who are liable for tax audit
- 30th November 2019: for persons who are liable to furnish a report for transfer pricing
Therefore, the last date of filing a belated return for the Assessment Year 2019-20 as per Income Tax Act is 31st March 2020. However, considering the genuine hardship of the taxpayers, the government has decided to extend this date to 30th June 2020.
Filing of revised income tax return for AY 2019-20 (FY 2018-19)
Often assessees make unintentional errors in their original return of income. Section 139(5) provides that if a person having furnished a return discovers any omission or wrong statement therein, he may furnish a revised return at any time before the end of the relevant assessment year or before the completion of assessment, whichever is earlier.
The last date for revising the return of income for the Assessment Year 2019-20 (i.e. FY 2018-19) was 31st March 2020. which is now extended to 30th June 2020.
Hence if an assessee has made any error in the original return or belated return or revised return for the Assessment Year 2019-20, he may file a revised return before 30th June, 2020.
Return filing for the AY 2020-21 (FY 2019-20)
The due dates of all income tax returns for the FY 2019-20 has been extended to 30th November, 2020 is as follows:
|Type of Assessee||Earlier due date||Current due date|
|Assessee is –|
A company, or
A person whose accounts are required to be audited, or
A partner of a firm whose accounts are required to be audited.
|31st October, 2020||30th November, 2020|
|Assessee who is required to furnish report of transfer pricing||30th November, 2020||30th November, 2020|
|Other assessees||31st July, 2020||30th November, 2020|
Tax Audit for FY 2019-20
The Government has extended the due date for tax audit for the Financial Year 2019-20 from 30th September, 2020 to 31st October, 2020.
Linking PAN with Aadhaar
Section 139AA provides the requirement of linking the Permanent Account Number (PAN) with Aadhaar. The PAN allotted to a person shall become invalid if the person fails to link Aadhaar number with his PAN. After repeated extensions, the government had fixed the last date for linking PAN with Aadhaar as 31st March 2020, failing to which the non-complied PANs would be declared as invalid. However, considering the current situation, the government has once again extended the last date to 30th June 2020.
Tax saving deposits
Various tax saving deposits made by assessees to get deductions in their income tax calculations, can now be made up to 30th June, 2020. Earlier the date was 31st March, 2020. Points to be noted are:
- Chapter VIA deductions:
- Section 80C: Deposits like life insurance premium, tax saving certificates, National Saving Certificates etc. can now be done till 30th June, 2020
- Section 80D: Deposits for mediclaim insurance for self/ family/ parents, etc. can now be done till 30th June, 2020.
- Section 80G: Donations given for availing deduction from income tax can be made till 30th June, 2020.
- Donations to PM CARES fund can be claimed as donation u/s 80G and 100% deduction for the same shall be available.
- Section 80G(4) provides that where the aggregate of sums paid as donations under this section exceed 10% of the Gross Total Income, then the amount in excess of 10% shall be ignored for the purpose of computing aggregate of sums in respect of which deduction is to be allowed. However, this 10% rule will not be applicable if donation is made to PM CARES fund.
Capital Gains deduction
Extension has been made in the last date of making investment in capital gains rollover scheme provided in section 54 and 54GB and investment under section 54EC of Income Tax Act.
Section 54 provides for investment in residential house property, where capital gains arise out of transfer of residential house property. Under this section, in order to claim deduction from capital gain, assessee is required to purchase a residential house property within 2 years from the date of transfer or construct a residential house property within 3 years from the date of transfer.
Section 54GB provides for investment of net consideration from transfer of residential property in equity shares of an eligible company. The company has to utilize the amount subscribed by the assessee by way of equity shares for purchase of new asset, within 1 year for the date of subscription in equity shares by the assessee.
Section 54EC provides for deduction in capital gain where investment of consideration from transfer of land or building is done in long term specified assets such as REC bond, NHAI bond, etc. Such investment has to be done within 6 months from the date of transfer.
As per the relief provided by the government due to the COVID 19 pandemic, all investments that were due between 20th March, 2020 and 29th June, 2020 to claim the benefit u/s 54, 54GB and 54EC, can now be done up to 30th June, 2020.
Income Tax Refund
The government has decided that all pending income tax refunds up to Rs. 5 lakhs shall be released immediately to individuals as well as business entities. This move is expected to benefit approximately 14 lakh tax payers.
Under the Aatmanirbhar Bharat Abhiyaan Scheme announced on 13th May, 2020 it has been decided that all pending refunds to charitable trusts and non-corporate businesses and professions including proprietorship, partnership, LLP, and Co-operatives shall be issued immediately.
For delayed payments of advance tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March, 2020 and 30th June, 2020, interest of 9% shall be charged instead of 12% or 18% per annum. In other words, 0.75% interest will be charged per month instead of the existing 1%/1.5% per month). No late fee or penalty shall be charged due to delay in filing returns during this period.
Although the due dates for payment of TDS/ TCS has not been extended, interest will be charged at a reduced rate of 0.75% per month instead of 1%/ 1.5% per month due to delay in deposit.
Apart from the above, the due date for filing return / statement of TDS and TCS for the Quarter ending on 31st March, 2020 has been extended as follows: –
|Statement||Earlier due date||Extended due date|
|TDS Statement for January, 2020 to March, 2020||31st May, 2020||30th June, 2020|
|TCS Statement for January, 2020 to March, 2020||15th May, 2020||30th June, 2020|
Further, due dates of filing statements such as 26QB, 26QC, 26QD for the months of February, 2020 to April, 2020 have also been extended to 30th June, 2020.
In the Aatmanirbhar Bharat Abhiyaan Scheme announced, the rates of TDS for non-salaried specified payments and rates of TCS for specified receipts has been reduced by 25% of the existing rates. Payments for contract charges, professional fees, interest, rent dividend, commission etc. shall be eligible for the revised rates of TDS. This reduction shall be applicable from 14th May, 2020 to 31st March, 2021. These revised TDS/ TCS rates are expected to increase liquidity in the hands of the taxpayers.
Notice/ Intimation/ Appeals/ Assessment, etc.
Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for roll over benefit of capital gains under Income Tax Act, Wealth Tax Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT Law, Equalization Levy law, Vivad Se Vishwas law where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020.
Further, the date of assessments getting time barred 30th September, 2020 have been extended to 31st December, 2020 and those getting time barred on 31st March, 2021 have been extended to 30th September, 2021
Vivad se Vishwas
The Direct Tax Vivad Se Vishwas Act, 2020 received the assent of the President on 17th March, 2020. This Act aims to provide for dispute resolution in respect of pending income tax litigation. The objective of this scheme is to reduce pending income tax litigations but resolving disputes through waiver of penalty and interest. Assessees with pending disputes can pay off their demands excluding interest and penalty and will be immune to prosecution.
The scheme can be summarized as follows: –
|Payment made on or before||Payment required where Appeal, writ, SLP, Arbitration relates to disputed tax||Payment required where Appeal, writ, SLP, Arbitration relates to disputed penalty or interest or fees|
|31st March, 2020||100% of disputed tax (125% in search cases) (waiver of interest and penalty)||25% of the disputed penalty or interest or fee|
|30th June, 2020||110% of disputed tax (135% in search cases||30% of the disputed penalty or interest or fee|
Under the Aatmanirbhar Bharat Abhiyaan Scheme, the government has announced that making payment without the additional amount of 10% will be extended to 31st December 2020.
Relaxations in Goods & Services Tax Law
The various relaxations given in GST Law includes waiver of interest/ penalty, extension of due dates, etc. These are explained as follows:
Due dates of filing monthly/ quarterly returns
Although due dates for most returns have not been specifically extended, however the interest / late fee have been waived if return is filed on or before 30th June, 2020. GSTR-3B for the month of May, 2020 has been extended as follows:
|Taxpayer has an aggregate turnover of more than Rs. 5 crores in the previous financial year.||27th June, 2020|
|Taxpayer has an aggregate turnover upto Rs. 5 crores in the previous financial year; and Principal place of business is in the states of 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.||12th July, 2020|
|Taxpayer has an aggregate turnover upto Rs. 5 crores in the previous financial year; and Principal place of business is in the states of 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.||14th July, 2020|
The CBIC vide Notification No. 42/2020-Central Tax dated 05.05.2020 clarified that the due date for filing GSTR-3B for the months of January, 2020 to March, 2020 for suppliers having principal place of business in the Union territory of Ladakh has been extended to 30th May, 2020.
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The CBIC vide Notification No. 38/2020-Central Tax dated 05.05.2020 has amended the CGST Rules, 2017 thereby providing that, a registered person registered under the provisions of Companies Act, 2013 shall, during the period from 21st April, 2020 to 30th June, 2020 be allowed to furnish GSTR-3B verified through Electronic Verification Code (EVC).
Further, for a registered person who is required to furnish a NIL return in GSTR-3B for a tax period, may furnish the same through short messaging service (SMS) using the registered mobile number and the said return shall be verified by a registered mobile number based One Time Password (OTP) facility.
Date for opting composition scheme has been extended till 30th June, 2020. Further last date for making payments for the quarter ending 31st March, 2020 and filing return for FY 2019-20 by the composition dealers have been extended till 30th June, 2020.
Considering the hardships of the suppliers due to the COVID 19 pandemic, the due date for filing annual return for the FY 2018-19 had initially been extended to 30th June, 2020 from 31st March, 2020. The CBIC vide Notification No. 41/2020-Central Tax further extended the deadline to 30th September, 2020.
The CBIC vide Notification No. 35/2020-Central Tax dated 3rd April, 2020 had provided that, where an e-way bill has been generated under Rule 138 of CGST Rules and its period of validity expires between 20th March, 2020 and 15th April, 2020, the validity period of such e-way bill shall be deemed to have been extended till 30th April, 2020.
On 5th May, 2020 the CBIC issued Notification No. 40/2020-Central Tax, amending the earlier notification and thereby further extending the validity of such e-way bills till 31st May, 2020.
Notice/ Notification/ Approval/ Sanction/ Appeal
Due date for issue of notice, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents, time limit for any compliance under the GST laws where the time limit is expiring between 29th March, 2020 to 29th June, 2020 shall be extended to 30th June, 2020.
Sabka Vishwas Scheme
The Sabka Vishwas Scheme, 2019 was announced in the Union Budget, 2019 to resolve all disputes relating to erstwhile Service Tax and Central Excise Law and certain other indirect tax laws. The scheme came into force on 1st September, 2019 and was operational till 31st December, 2019. Pending litigations could be settled by payment of demands. This scheme provided substantial waiver in interest and penalty and complete immunity from prosecution. Taxpayers were even allowed to voluntarily disclose and pay thereby avoiding consequences in law. For voluntary disclosure, the full amount disclosed has to be paid, while for other cases, relief is provided as follows:
|Demand||Relief where cases are pending adjudication or appeal||Relief where no appeal is pending|
|Up to Rs. 50 lakhs||70%||60%|
|Greater than Rs. 50 lakhs||50%||40%|
The declaration was required to be made by 31st December, 2019 in Form SVLDRS-1. A statement stating the amount payable was to be issued by the designated committee in Form SVLDRS-3 within 60 days from receipt of declaration. Payment was required to be made within 30 days from the date of issue of SVLDRS-3.
Considering the current situation, the government announced that, payment under the Sabka Vishwas Scheme can be made up to 30th June, 2020 without attracting any interest.
GST Refund Disposal
The government has instructed all Principal Chief Commissioners and Chief Commissioners to ensure expeditious processing of all pending GST refunds, including IGST refunds. All pending refunds were to be processed by 30th April, 2020.
Relaxations in Company Law
Companies Auditors Report Order (CARO), 2020 was supposed to be made effective from Financial Year 2019-20. Its applicability has now been pushed to Financial Year 2020-21. Thus, for the audit of companies taking place in respect of FY 2019-20, CARO, 2016 shall continue to apply.
Fee for late ROC Filing
No additional fees shall be charged for late filing during a moratorium period from 1st April, 2020 to 30th September, 2020 in respect of most documents, returns, statement etc. required to be filed with the ROC irrespective of its due date. This will significantly reduce the compliance burden of companies/ LLPs.
The mandatory requirement of holding board meetings within prescribed interval provided in Companies Act, 2013 shall be extended by a period of 60 days till the next 2 quarters, i.e. till 30th September, 2020.
As per Schedule IV to the Companies Act, 2013, independent directors are required to hold at least one meeting without the attendance of Non-independent directors and members of management. For the year 2019-20, if the independent directors of a company are not able to hold even one meeting, then it shall not be viewed as a violation.
Newly incorporated companies are required to file a declaration for commencement of business within 6 months from incorporation. The government has allowed an additional 6 months to give such declaration.
Section 149 of the Companies Act requires that at least one director should be a resident, i.e. he should be present in India for at least 182 days. Considering the current situation, the government has announced that any non-compliance to this provision shall not be treated as violation.
Corporate Social Responsibility
Section 135 of the Companies Act, 2013 deals with corporate social responsibility (CSR). Companies coming under the purview of CSR are required to spend at least 2% of the average net profit for the immediately 3 preceding financial years in CSR activity. In the events of the current pandemic, the government has announced that CSR funds shall be allowed to be spent in various activities to battle COVID 19. The MCA has clarified that, funds spent on promotion of healthcare, including preventive healthcare, sanitation and on disaster management shall be counted as CSR activity.
Insolvency and Bankruptcy Code
Due to the emerging financial distress faced by most companies on account of the large-scale economic distress caused by COVID 19, the government has decided to raise the threshold of default under section 4 of the IBC 2016 to Rs 1 crore (from the existing threshold of Rs 1 lakh). This will prevent triggering of insolvency proceedings against MSMEs. Suspending of section 7, 9 and 10 of the IBC 2016 for a period of 6 months is also being considered so as to stop companies at large from being forced into insolvency proceedings in such force majeure causes of default.