Introduction

We are pleased to present the latest edition of Tax Street – our newsletter that covers all the key developments and updates in the realm of taxation in India and across the globe for the month of March 2020.

  • The 'Focus Point' covers the economic impact of COVID-19, leading to compliance relaxation which paves a way to adopt proactive measures to manage business in these challenging times.
  • Under the 'From the Judiciary' section, we provide in brief, the key rulings on important cases, and our take on the same.
  • Our 'Tax Talk' provides key updates on the important tax-related news from India and across the globe.
  • Under 'Compliance Calendar', we list down the important due dates with regard to direct tax, transfer pricing and indirect tax in the month.

Focus Point

COVID-19 – Managing Tax and Compliance Function in difficult times

The spread of pandemic COVID-19 has left the entire world grappling with its negative impact on the socioeconomic front. With most of the countries steadily going into lockdown, the businesses across the globe have taken or started taking a hit.

The outbreak has far-reaching consequences on the businesses – disruption of supply chain management, piling up of inventory, a mounting number of accounts receivables and payables, cash management issues, defaults in honoring debt servicing obligations, just to name a few. Such matters have forced the businesses to take unpopular decisions of downsizing, initiating pay cuts, discontinuance of product lines, operations, etc.

Handling these challenging times may require the organizations to adopt proactive realignment/restructuring/ curative measures. Here, we have tried to cover how can the tax function at the organization manage its functions and assist businesses in these challenging times.

As is rightly said, extraordinary times call for innovative thinking and extraordinary solutions. Instead of halting operations in the lockdown, corporates can use technology effectively to ensure the smooth functioning of business operations as well as compliances. We have tried to capture a few aspects of how corporates can manage tax and compliance function.

Managing withholding Tax Compliances (Local and Foreign Remittance)

  • The Indian Government has not extended the due date for deposting withholding taxes but merely granted a relaxation in payment of interest by reducing the interest rates from 12%-18% to 9%. It is thus imperative for the companies to ensure that taxes are deposited within the prescribed time and manage the compliances in order to avoid interest costs in such challenging times;
  • Companies can look at using various automated tools, which help in working on data remotely and also helps in managing compliances.
  • In respect of Foreign Remittances, Nexdigm has also developed a web-based, automated tool that is hosted on a secure cloud server. The entire process of foreign remittances can be done online through this tool without any need for physical presence in the office.

Managing Tax Assessments

Not only the business houses, but even the revenue authorities have shifted from the usual assessment procedure to digital platforms. New applications are developed to bring a paradigm shift in taxation by promoting faceless assessment. It ensures the ease of compliance, transparency, efficiency, and expeditious disposal of cases.

With the outbreak of COVID-19, the Indian Judiciary has also shifted to digital modes of hearing like:

  • Supreme court had announced hearing of urgent cases via video conferencing;
  • The appellate tribunals accepted adjournments over e-mails;
  • The revenue officers are also working from home.

In such an environment, it becomes a task for the corporates to be compliant with the notices issued by the tax department. Given that entities no longer work from their office arena, software applications that maintain tax documents and litigation trackers would prove to be a knight in the shining armor. It is also important to evaluate whether it's possible to fast track pending litigations at various forums where significant relief is possible, leading to the release of tax demand that was paid.

To view the full article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.