Recent Tax Announcements made and Regulatory Reliefs given due to the COVID-19 Effect : An Indian Context

As the world battles the COVID-19 pandemic, countries are moving to stringent measures like lockdowns and curfews. With markets crashing, the global economy is staring at a deep distress.

Entire world is fighting against epidemic COVID 19 outbreak and Hon’ble Prime Minister of India Sh. Narendra Damodardas Modi has taken much need precautionary step of complete lockdown from midnight 12’o clock of 24th March, 2020 onwards for next 21 days and again extended to 3rd May, 2020 for another 19 days.

In this difficult environment, each regulatory body is releasing relief measures and guidelines for easing out the impact of COVID 19. On the financial and compliance front, announcements have been flowing from the Government authorities in the form of deferment of statutory due dates or relaxation in payment terms to overcome the financial crisis being faced due to lock-down.

Similar to several countries, the Government of India has begun working on an economic package to deal with the impact of the pandemic. Realising the hardships faced by its citizens, the Union Finance & Corporate Affairs Minister Smt. Niramla Sitharaman has announced several important relief measures on tax and regulatory aspects.

The Finance Minister also announced that necessary legal circulars and legislative amendments for giving effect to these relief measures will be issued by the concerned Authority.

Following is the summarised form of the key announcements made by the Finance Minister here below:

Direct Taxes

1. Extension of tax return filing deadline

The deadline for the following types of tax return have been extended from 31 March 2020 to 30 June 2020

  1. Belated income-tax return for tax year 2018-19
  2. Revised income-tax return for tax year 2018-19

2. The timeline for linking Aadhaar with PAN has been extended to 30 June 2020

3. Relief with regards to delay in payment of taxes

  • Interest at the reduced rate of 9% (i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged on delay in respect of following payments made between 20 March 2020 and 30 June 2020:
    1. Advanced tax
    2. Self-assessment tax
    3. Regular tax
    4. Taxes withheld or collected at source
    5. Equalization levy
    6. Securities Transaction Tax and
    7. Commodities Transaction Tax
  • Penalty and late fees in relation to the above mentioned payments are to be waived off

4. Extension of compliance due dates

In respect of the following, where the due dates fall between 20 March 2020 and 29 June 2020, the revised due dates shall be 30 June 2020:

  • Issue of notice
  • Intimation
  • Notification
  • Approval order
  • Sanction order
  • Filing of appeal
  • Furnishing of return, statements, applications, reports, any other documents
  • 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

5. The Direct Tax Vivad se Vishwas Act, 2020:

The timeline for payment of disputed arrears without attracting additional 10% amount under the Vivad se Vishwas Scheme extended from 31 March 2020 to 30 June 2020.

Indirect Taxes

1. Extension of GST return filing deadlines:

  • The last date for filing the forms GSTR-3B due in months of March, April and May 2020 (i.e. returns of February, March and April 2020) will be extended till 30 June 2020 (in staggered manner)
  • Date for filing GST annual returns of FY 18-19, which is due on 31 March 2020 is extended till the last week of June 2020

2. Relief in respect of payment of taxes

  • For those having aggregate annual turnover less than INR 50mn, no interest, late fee, and penalty will be charged for the period
  • However, for those having an aggregate annual turnover of more than INR 50mn, a reduced rate of interest @ 9% per annum will be charged from 15 days after due date (current interest rate is 18 % per annum) for the delayed payment between 20 March 2020 and 30 June 2020, but no late fee and penalty will be charged if complied before 30 June 2020
  • Last date for making payments by the Composition dealers for the quarter ending 31 March 2020 will be extended till the last week of June 2020
  • Payment under Sabka Vishwas Scheme shall be made without interest till 30 June 2020

3. Extension of compliances due dates

In respect of the following under GST law, where the due date falls between 20 March 2020 and 29 June 2020, shall be extended to 30 June 2020:

  • Issue of notice
  • Notification
  • Approval order
  • Sanction order
  • Filing of appeal and
  • Furnishing of return, statements, applications, reports, any other documents

4. Date for opting for composition scheme for the F.Y. 2020-2021 is extended till 30 June 2020

5. 24X7 Custom clearance till end of 30 June 2020

Corporate Laws 

1. CARO 2020

Applicability of Companies (Auditor’s Report) Order, 2020 will be effective from FY 2020-2021

2. Board meeting

The mandatory requirement of holding Board meetings within prescribed interval provided by the Companies Act, 2013 (120 days) shall be extended by a period of 60 days till next two quarters i.e. till 30 September

3. Meeting of Independence Directors

For FY 2019-20, if mandatory one meeting of independent directors is not held, the same will not be treated as non-compliance

4. Form INC-20A- Declaration of commencement of Business

New Companies being given 6 more months for filing declaration of commencement of business

5. Debenture

Time line to invest 15% of debentures maturing in a particular year has been extended from 30 April 2020 to 30 June 2020

6. Deposit Reserve

Requirement of creating a Deposit Reserve (equal to 20%) of deposits maturing during FY 20-21, extended to 30 June 2020 instead of 30 April 2020

7. Minimum residency

Non-compliances with 182 days residency in India by Director will not treated as non-compliance

8. No Additional Fees

Moratorium period from 1 April 2020 to 30 September 2020, during which no additional fee would be charged in respect of any filing, irrespective of its due date

9. Insolvency and Bankruptcy Code 2016 (IBC)

  • Minimum amount of default required to initiate insolvency and liquidation on corporate debtors raised from INR 1 lakh to INR 1 crore, effective immediately, in order to prevent admission of MSMEs defaulting due to economic conditions in lieu of COVID-19
  • Proposed Suspension of new initiations of Corporate Insolvency Resolution Process under Sections 7, 9 and 10 of IBC for 6 months, contingent upon scenario beyond 30 April 2020 as a safeguard companies from defaults attributable to financial downturn pursuant to the COVID-19 pandemic

Among the measures announced late on Tuesday, the government extended the e-way bill validity for the second time since the lockdown was imposed. The e-way bill generated on or before March 24 and expiring during the March 20-April 15 period would now be valid till May 31. This is likely to help trucks stuck en route to reach their destinations.

Further, the notification extended by three months the deadline for furnishing the annual return and GST audit for financial year 2018-19 to September 30. Additionally, a taxpayer can now furnish monthly return GSTR-3B showing nil sales through SMS using the registered mobile number. This return would be verified by a registered mobile number based one-time password (OTP) facility, the notification said.