With COVID-19 declared as a pandemic by WHO, major economies have ordered shutdowns across the globe. With lockdowns severely impacting the international businesses and a prediction of lower growth by credit rating agencies, the Government was forced to announce bailout packages. In India, too, various industry bodies made representations seeking relief on numerous aspects from the Government, who has attempted to manage the deteriorating business conditions effectively with certain measures. The Finance Minister, Nirmala Sitharaman, announced a slew of relief measures on 24 March 2020.
Relief Measures
Measures have been announced for various sectors ranging from financial services to corporate affairs and fisheries, below is a brief snapshot of the industry expectation, measures announced and riders, if any, pertaining to direct taxes:-
| Industry Expectation | Relief Measure Announced | Point for consideration |
| Extension of due date for filing of tax returns for FY 2018-19 | Accepted with reduced interest @ 0.75% per month on tax payments | No waiver/ relief of late fee of INR 10,000 and interest for late filing |
| Extension of dates for compliance | Met, compliances with respect to various filings, orders, etc. falling between 20 March 2020 to 29 June 2020 extended to 30 June 2020 | N.A. |
| Extension of due date for filing Withholding Tax Returns/ Equalisation Levy Returns | Met, compliance by 30 June 2020 along with a waiver of late fee and penalty | N.A. |
| Extension for payment of taxes | Relief with respect to reduced interest @ 0.75% per month |
|
| Extension of the first cut-off date for Vivad Se Vishwas Scheme, 2020 |
Accepted:-
|
Silence on the extension of the closing date of the scheme |
|
Roll-back of provisions relating to:-
|
Date of applicability extended to 1 October 2020 via amendment in Finance Bill, 2020 | N.A. |
| Extension of APA timelines for FY 2020-21 | No relief yet | N.A. |
| Extension of sunset date for SEZ | No relief yet | N.A. |
In the Pipeline
Furthermore, it has been announced that additional relief measures may be undertaken pursuant to the assessment of the growing impact of the COVD-19 outbreak.
As per recent reports, the Government is also mulling various probabilities for either complete removal of buyback tax and LTCG Tax or providing a temporary relief thereof. Such a move would definitely bring cheer in the stock markets as well as aid in corporate restructuring, which may become a necessity when India revives itself from the COVID-19 outbreak.
Suggestions
The Government may consider giving necessary directions to the revenue authorities while completing the audit for the years affected by COVID-19:-
- Allowance of depreciation on fixed assets, especially in the manufacturing sector, have been not used temporarily owing to the impossibility of performance;
- Relaxation in due dates for payment of ESI/PF, under their respective statues as allowability of such payments, post the due dates prescribed under the respective statutes has always been a tug of war between taxpayers and the revenue authorities;
- Allowance of a provision or actual loss of inventories on account of obsolescence etc. during the lockdown period.
Conclusion
The above relief measures announced by the Government are unprecedented and would be welcomed wholeheartedly by all the taxpayers. While the fine print of necessary circulars/ notifications/ legislative amendments is awaited, it still needs to be seen whether relief may also be provided on the following counts, in the near future:
- Extension of due dates for filing of audit reports/ tax returns for FY 2019-20;
- Extension of the timeline for the assessments time barring on 30 September 2020.
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