Right from the beginning of the COVID-19 outbreak in India, the government has been proactively granting relaxations to the taxpayers for meeting various statutory and regulatory compliance requirements. The government brought the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (the Ordinance) on 31 March 2020, which extended various time limits prescribed under the direct tax statute. Considering the prevailing circumstances, the government has extended the relief measures for providing further relief to the taxpayers by issuing a notification on 24 June 20201, which shall be effective from 30 June 2020. The major reliefs provided are as follows:
Extension of Dates
Pursuant to the issuance of the notification, compliance dates of the actions falling due during the period commencing 20 March 2020 and ending 31 December 2020, on the part of the taxpayers as well as the tax authorities, have been extended to 31 March 2021. Few of such compliances/actions are illustrated as under:
- Issuance of notices falling within the above period, say notice for reopening of assessment under section 147 of domestic tax laws, penalty notices, issuance of the questionnaire under on-going assessments;
- The time limit for filing appeals either by the taxpayers or revenue authorities before any appellate forum;
- Issuance/processing of intimations under section 143(1)/ 200A of the Income Tax Statue;
- Issuance of orders for completion of any proceedings under Direct Tax Laws;
- Submission of the statement (in Form No. 49C) by non-resident having a liaison office in India;
- Filing of Statement of Financial Transactions for FY 2019-20;
- Application for allotment of PAN in case of a non-individual resident person, which enters into a financial transaction of Rs. 2,50,000 or more during FY 2019-20;
- Filing of a statement (in Form No. 3CEK) by an eligible investment fund in respect of its activities during the financial year 2019-20;
- Return in respect of securities transaction tax for the financial year 2019-20;
- Filing of Equalization Levy return for advertisement services for FY 2019-20;
- Filing of applications by the taxpayers under various provisions of the statute (such as revision applications/interest or penalty waiver applications), etc.
The above extensions shall also be available for various compliances specified under the provisions of respective statutes pertaining to Equalization Levy, Wealth Tax, Benami Law, Black Money Law, etc.
However, due dates for the following compliances on the part of the taxpayers, have been extended as mentioned hereunder:-
- Due dates of income tax returns and audit reports for all taxpayers for FY 2019-20 have been extended to 30 November 2020 and 31 October 2020, respectively. This is in line with the announcements made by Hon'ble Finance Minister on 13 May 2020;
- Due date for filing of withholding
tax returns and return for collection of tax at source for the
quarter ending 31 March 2020 and issuance of tax
deduction/collection certificates thereof:
Tax Deductor/Tax Collector Tax Deduction/Collection Return Tax Deduction/Collection Certificate A. As Employers Government 15 July 2020 15 August 2020 Others 31 July 2020 15 August 2020 B. Other than as Employer Government 15 July 2020 31 July 2020* Others 31 July 2020 15 August 2020*
- Investments/deposits/acquisition/purchase/construction etc. (referred to in sections 54 to 54GB of the Income Tax Statue), on account of sale of capital assets, due to be made during the period commencing from 20 March 2020 and ending on 29 September 2020 may now be completed by 30 September 2020;
- Commencement of production of goods/rendering of services by a unit located in Special Economic Zone (SEZ), due to be made during the period commencing from 20 March 2020 and ending on 29 September 2020 may now be done by 30 September 2020, provided the letter of approval has been issued on or before 31 March 2020;
- Investments in various schemes for the purposes of claiming exemptions (such as LIC, PPF, Medical Insurance, donation, etc.) in the tax returns for FY 2019-20 may now be made up to 31 July 2020;
- In line with Hon'ble FM's announcements on 13 May 2020, declaration for the purposes of opting Vivad se Vishwas Scheme may now be filed up to 31 December 2020. However, it is to be noted that even the tax authorities also need to pass appropriate orders under the Scheme by 31 December 2020.
No extension of reduced interest rates
It is pertinent to note that relaxation of reduced rate of 0.9% per month provided under the Ordinance with respect to payments due during the period commencing on 20 March 2020 and ending on 29 June 2020 has not been extended to the payments due after 30 June 2020. Accordingly, such payments would now attract the interest rates provided under the respective provisions of the statute.
The notification has announced certain relaxation for transfer pricing related matters, mainly aligned with the above relaxations. However, the due date for annual transfer pricing compliances for the FY 2019-20 has remained unchanged. The summary is provided hereunder:-
|Particulars||Revised due dates|
|Proceedings before TPO – AY 2017-18||29 January 2021|
|Indian HQ: Filing of Country by Country Report (CbCR) for the accounting year ended on 31 March 2019. Applicable to an Indian company, which is the ultimate parent entity of the group.||31 March 2021|
|Indian Subsidiary - CbCR Intimation in Form 3CEAC for the group accounting year ended on 31 Dec 2019 (Where the group will file CbCR before December 2020)||31 March 2021|
|Annual compliances for FY 2019-20|
|Filing on Accountant's Report in Form 3CEB||31 October 2020|
|Master File in Form 3CEAA||30 November 2020|
|Intimation of Master File in Form 3CEAB||31 October 2020|
|Indian Subsidiary - CbCR Intimation in Form 3CEAC for the group accounting year ended on 31 March 2020 (Where the group will file CbCR before March 2021)||31 January 2021|
Apart from above, the government also issued a notification amending the new tax regime for the salaried taxpayer. The same is discussed in brief as under.
Relaxation to salaried persons under the New Tax Regime
Finance Act 2020 has introduced a new tax regime for the salaried taxpayers wherein the income tax slabs have been increased to seven slabs, as against the historical four slabs. These new slabs come with the condition that the exemptions or deductions, such as LTA, HRA, standard deduction, Mediclaim deduction, savings interest deduction, donation, etc. may not be available while arriving at the taxable income for FY 2021-22. In terms of the notification dated 26 June 20202, salaried taxpayers opting for taxation under the new regime would now be eligible to claim exemption of the following allowances granted by the employer to meet the following expenses while performing official duties, in their tax return:
- allowance granted to meet the cost of travel on tour or on transfer;
- allowance granted to meet the expenditure incurred on conveyance in the performance of duties of an office or employment of profit;
- allowance granted on tour or for the period of journey in connection with the transfer, to meet the ordinary daily charges incurred on account of absence from the normal place of duty;
- transport allowance granted to specially-abled for the purpose of commuting between the place of their residence and the place of their duty.
The notification has also clarified that the exemption of INR 50 per meal, a non-transferable paid voucher provided by an employer, shall not be available to an employee opting for the new tax regime.
Granting of the above relaxations by way of extension of deadlines or otherwise has been whole-heartedly welcomed, especially when the COVID-19 outbreak seems to have a farther end. Similarly, granting an exemption for the allowances in relation to expenses incurred on official duty will bring parity amongst the salaried taxpayers opting for old or new tax regime.
However, there are certain areas where conflicts may arise, for which the government may need to issue clarifications:
- While timelines for filing the tax return have been extended, relief from levy of interest for the filing of tax return after the due date prescribed under the statute has only been restricted where the amount of shortfall in tax doesn't exceed INR 1 Lakh. This may create difficulties, where the amount of shortfall in tax exceeds INR 1 Lakh, especially when the last date for issuance of Form 16 by the employer is 15 August 2020;
- Similarly, a late fee of INR 5,000 levied for filing a tax return after respective due dates prescribed under the statue, but before 31 December has not been waived off. This seems to be in conflict when the salaried individuals would receive Form 16 itself on 15 August 2020, i.e., after the due date of 31 July 2020 prescribed under the statute;
- Whether the extension of due dates for compliance and action under Vivad se Vishwas Scheme also includes an extension for payment under the Scheme, as the notification has only extended the due dates for various compliances/actions and not the due dates for payment of taxes;
- Granting of differential exemption benefit in relation to meal vouchers may lead to disparity amongst the employees opting for old and new tax regimes, respectively, when their employer would provide the meal voucher to each employee.
The government may also need to provide similar relaxations/extensions as they are long-awaited by the industry. Some of these relaxations can be as follows:
- Extension of applicability of provisions of Equalization Levy introduced by Finance Act, 2020, on non-resident e-commerce operators while making the online sale of goods or services. Under the notification, only compliance under the law pertaining to Equalization Levy has been extended, and the payment due dates have remained intact. Accordingly, first payment due under Equalization Levy 2.0 would need to be made by 7 July 2020;
- Extension of validity of lower withholding certificates issued for FY 2019-20, as many taxpayers are still awaiting lower withholding certificates in lieu of their applications filed for FY 2020-21.
1. CBDT Notification 35/ 2020 dated 24 June 2020 read with corrigendum vide CBDT Notification 39/2020 dated 29 June 2020
2. CBDT Notification 38/ 2020 dated 26 June 2020
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.