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COVID 19- IS A FORCE MEASURE- MORE RELAXATION IS REQUIRED- INCOME TAX

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COVID 19- IS A FORCE MEASURE- MORE RELAXATION IS REQUIRED- INCOME TAX
By: DEV KUMAR KOTHARI
March 26, 2020
All Articles by: DEV KUMAR KOTHARI       View Profile
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In this write-up author has made an analysis of press release about  relaxations and relief allowed in view of COVID 19 which is in nature of a sever force measure because life, expectancy of life, health, relations, are effected by the crisis. Financial crisis will have a severe impact in short duration of 3-6 months and significant impact for a medium duration of 2-3 years over finances of all.  For time being many will have to depend on savings and borrowings to manage family affairs also. Therefore, it is wrong to say that  relief measures are given, in fact relaxation by allowing 3 extra months is not a relief, it is a necessity for time being.

On the basis of impact shown and felt by economy , industry, business and commerce and also position of employment and inflation and continuing difficulties, further relaxation of  time and fiscal relief may be required.

From Press Release:  

Ministry of Finance Finance Minister announces several relief measures relating to Statutory and Regulatory compliance matters across Sectors in view of COVID-19 outbreak

Posted On: 24 MAR 2020 5:10 PM by PIB Delhi

From press release

Observations

 The Union Finance & Corporate Affairs Minister Smt. Niramla Sitharaman today announced several important relief measures taken by the Government of India in view of COVID-19 outbreak, especially on statutory and regulatory compliance matters related to several sectors.

Relaxation is basically by allowing more time to make compliances. This should not be described as RELIEF.

While addressing the press conference through video conferencing here today, Smt. Sitharaman announced much-needed relief measures in areas of Income Tax, GST, Customs & Central Excise, Corporate Affairs, Insolvency & Bankruptcy Code (IBC) Fisheries, Banking Sector and Commerce.

These cannot properly be called relief measures. The relaxations are in view of force measure- difficult circumstances in which people are placed.  Time is extended for Government Officers and public both equally , therefore, calling it relief is a bit insulting for tax payers.

The Minister of State for Finance & Corporate Affairs Shri Anurag Singh Thakur was also present besides Shri A.B. Pandey, Finance Secretary and Shri Atanu Chakraborty, Secretary, Department of Economic Affairs.

 

Following are the decisions with respect to statutory and regulatory compliance matters related to various sectors: -

 

Income Tax 

 

1. Extend last date for income tax returns for (FY 18-19) from 31 March, 2020  to  30 June, 2020.

We hope that time limit for belated return  and for revising returns both are  extended u.s. 139.4 and 139.5 respectively of IT Act.  The same should also apply in other situations where  31.03.2020 is last date for any process. And there is no uncertainty about this. 

2. Aadhaar-PAN linking date to be extended from 31 March, 2020 to 30 June, 2020.

It could have been allowed longer duration at one go instead of extending again and again.

 3. Vivad se Vishwas  scheme – no additional 10% amount, if payment made by June 30, 2020.

The extension should be for filing of declaration and not payment because payment is dependent on process and order of department.

4.  Due dates for  issue  of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for 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   under Income Tax Act,  Wealth Tax ActProhibition of Benami Property Transaction Act, Black Money Act,  STT law, CTT Law, Equalization Levy law, Vivad Se Vishwas  law  where the time limit is expiring between 20  March 2020  to 29 June 2020 shall be extended to 30th June 2020.

This is general extension. Time to make tax saving investments is extended, this will be a relief however, time up to 30.06.2020 may not be sufficient due to financial constraints.

 Extension up to 30.06.2020 in all cases is not proper, in fact an extra time of three months from limitation period could be better option. E.G. for limitation falling on 29.06.2020 time may be allowed up to 29.09.2020.

5. For delayed payments of advanced tax, self-assessment tax,  regular tax, TDS, TCS, equalization levy,  STT, CTT  made between 20th March 2020  and  30 June 2020,  reduced interest rate  at 9%   instead of 12 %/18 % per annum ( i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged  for this period.  No late fee/penalty shall be charged for delay relating to this period.

 

In view of difficult circumstances, rate of 9% is  very high.

For period beyond due date a no interest period of at least  three months should be allowed.

When on refunds interest @ 6% is allowed, there is no reason for charging higher rate particularly when in most of such cases interest is not allowed resulting into actual rate to be around 8.5% 

6. Necessary legal circulars and legislative amendments for giving effect to the aforesaid relief shall be issued in due course. 

Let us hope for complete and clear amendments and circulars.

     

 

By: DEV KUMAR KOTHARI - March 26, 2020

 

 

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