Extensions under various provisions of Direct Tax due to COVID-19

income tax

The COVID-19 pandemic has broadly impacted the majority of the countries across the world. Accordingly the Government of India has taken rapid & quick steps in various sectors like medical, finance to help meet the challenge addressed by this danger of COVID-19. While the focus is primarily to stop the spread done by viruses, governments additionally have a hard-hitting task of managing the economic aftermath of this pandemic. One such measure was announced by the Finance Minister on 24th March 2020 through Press Release to give relaxation in Statutory and regulatory compliances across the Sectors for the taxpayers so that the compliances can be met and there are no penal consequences for delays which are beyond the control. Several other Orders, Notifications were also released by the Government. Here we talk about its impact or changes on our Indian Direct Tax Structure.

  1. Due Date Extensions through Press Release on 24th March 2020 by Finance Minister:
Belated Return of FY 18-19 (AY 19-20)31st March 202030th June 2020
Revised Return of FY 18-19 (AY 19-20)31st March 202030th June 2020
Aadhaar-PAN linking31st March 202030th June 2020
Vivad se Vishwas Scheme 2020:
Declaration & Payment without additional payment of 10%
31st March 202030th June 2020
Issue of
approval order,
sanction order,
filing of appeal,
furnishing of return,
any other documents,
time limit for completion of proceedings by the authority
Between 20th March 2020 to29th June 202030th June 2020
Any investment/ construction/ purchase made by the taxpayer for claiming rollover benefit/deduction for FY 19-20 in respect of Capital Gain u/s 54 to 54GB of IT Act

Any investment/payments by the taxpayer for claiming deduction for FY19-20 under Chapter VIA-A of IT Act including 80C(LIC, PPF, NSC, etc), 80D(Mediclaim), 80G(Donations)

Commencement of operations for SEZ units for claiming deduction u/s 10AA of IT Act
31st March 202030th June 2020

  1. Reduced Rate of Interest through Press Release on 24th March 2020 by Finance Minister:

For delay in payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 & 30th June 2020reduced interest rate at 9% instead of 12 % or 18 % p.a.( i.e. 0.75% p.m. instead of 1% or 1.5% p.m. ) will be charged for this period. 

No late fee/penalty shall be charged for delay relating to this period between 20th March 2020 and 30th June 2020.

Here is the chart showing the above relief as announced by the finance minister as compared to provisions of the section under Income Tax Act’1961:

ParticluarsSectionInterest as per sectionReduced interest rate
due to COVID-19 outbreak
Regular Tax234A12% annually (1% p.a.)9% p.a.
Advance tax234B12% annually (1% p.a.)9% p.a.
TDS201(1A)18% annually (1.5%p.a.)9% p.a.
TCS206C(7)12% annually (1% p.a.)9% p.a.
Equalisation levy17012% annually (1% p.a.)9% p.a.
STT10412% annually (1% p.a.)9% p.a.
CTT12312% annually (1% p.a.)9% p.a.

  1. Opening of ITAT Offices & Benches:

ITAT issues Office Order dated 16.04.2020 regarding opening of ITAT benches and offices from 20th April’2020 ensure all preparatory arrangements concerning social distancing in offices as also that the permitted activities are implemented in a phased manner after strict implementation of the guidelines.

  1. Issue all pending Income Tax Refunds:

Ministry of Finance (MoF) issues Press Note dated 8th April 2020 to provide immediate relief to the business entities and individuals benefiting around 14 lakh taxpayers by issuing all pending Income Tax refunds up to Rs. 5 Lakhs.

  1. PM Cares Fund:
    • Donation to PM Cares Fund:
      • Ministry of Finance (MoF) issues Press Note dated 31st March 2020 wherein it is declared that donations made to PM Cares Fund shall be eligible for 100% deduction u/s 80G of IT Act. Further limit of deduction of 10% of Gross Income shall not be applicable for donations to this fund.
      • As the date for deduction u/s 80G has extended to 30th June 2020, donations made till 30th June 2020 under this fund shall also be eligible for claiming deduction in FY19-20.
      • Any Person including Corporates paying concessional tax on income for FY20-21 under new regime can also donate up to 30th June 2020 & claim deduction u/s 80G for the FY19-20 & shall not lose his eligibility to pay tax in concessional taxation regime for the income of FY20-21.
    • Income received from Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND):
      • As per Amendment in the Income Tax Act 1961(2020) Income received from PM Cares Fund would be Exempt under section 10(23C)(i).
  1. Issue of Certificate for Lower Rate/Nil Deduction/Collection of TDS or TCS u/s 195,197 & 206C(9):

CBDT issues Orders u/s 119 & Clarification stating that certificates for FY 19-20 will be applicable for the FY20-21 till 30th June 2020 until the certificate for FY 20-21 is issued by the Assessing Officer.

  1. Submission of Form 15G & 15H for FY 20-21:
    • CBDT issues Order u/s 119 of IT Act 1961 dated 3rd April 2020 to mitigate the genuine hardship of the eligible person who is not able to submit the Form 15G & 15H for FY 20-21 timely to Bank & other Institutions by increasing validity of the Form 15G & 15H submitted for the FY 19-20 till 30th June 2020 for FY 20-21 .
    • The payer who has not deducted tax based on the said Forms shall have to report details of such payments in TDS statement for the quarter ending on 30th June 2020 following the provisions of Rule 31A(4)(vii) of IT Act 1962.

All these changes, extensions in due dates and relief in interest, fee, and the penalty for late filings of various statutory forms amid a nationwide lockdown to tackle the pandemic by the government is the key strategy of helping the individual taxpayers, businesses, and corporates which will not reduce the compliance burden. But it’s just shifted for some period and hence taxpayers should evaluate their all forms of compliance obligations and try to manage all such obligation through the e-filing or online mechanisms as though, now India has transformed into Digital India & most of the compliance work can be discharged Online so taxpayers should try to discharge it as soon as possible to fulfill the obligations within extended timelines, to avoid any issues/penal consequences at a later date. Although the government has taken steps to ease the burden for taxpayers, it is a responsibility of every taxpayer to discharge their tax obligation timely & on a priority basis.

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