In light of the ongoing COVID-19 pandemic, the Government of India ("Central Government") had provided relief to taxpayers by extending statutory and regulatory compliance timelines under various direct tax statutes through the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (the "2020 Tax Ordinance"). The 2020 Tax Ordinance covered, within its scope, the following legislations:
- The Income-tax Act, 1961 (the "ITA")
- The Direct Tax Vivad Se Vishwas Act, 2020 (the "VSV Act")
- Chapter VIII of Finance Act, 2016 (Equalisation Levy)
- The Prohibition of Benami Property Transactions Act, 1988
- The Black Money (Undisclosed Foreign Income and Assets) and imposition of Tax Act, 2015
- The Wealth-Tax Act, 1957
- Chapter VII of Finance (No. 2) Act, 2004 (Securities Transaction Tax)
- Chapter VII of Finance Act, 2013 (Commodities Transaction Tax)
The 2020 Tax Ordinance was promulgated, with immediate effect, on 31 March 2020, to put into effect measures as to relaxation in the compliance requirements under taxation laws in India. The 2020 Tax Ordinance extended time limits for compliances and actions falling due between 20 March 2020 and 29 June 2020. The 2020 Tax Ordinance also provided for reduction of interest in cases where any tax became due between 20 March 2020 and 29 June 2020 and, for such cases of delay, it provided that no penalty can be levied and no prosecution can be sanctioned. The 2020 Tax Ordinance provided that the period, which ends on 29 June 2020, can be extended by a notification by the Central Government.
Vide notification1 dated 24 June 2020 ("Notification"), with the objective to provide further relief to taxpayers, the Central Government has extended the timelines as under:
- Compliances timelines
|Compliance||Revised due date|
|Filing of income-tax return (original as well as revised income-tax returns) for Financial Year 2018-19 (Assessment Year 2019-20)||31 July 2020|
|Filing of income-tax return for Financial Year ("FY") 2019-20 (Assessment Year 2020-21)||30 November 2020. However, interest for delay in filing of income-tax return2 may be triggered where the amount of net tax payable3 (self-assessment tax) does not exceed INR 100,000.|
|Furnishing of tax audit report for FY 2019-20 (Assessment Year 2020-21)||31 October 2020|
|Furnishing of TDS statement and certificates to the employees by employers for FY 2019-20||15 August 20204|
|Furnishing of TCS statement for FY 2019-20||15 August 20205|
|Investments / items entitled for deductions specified in Chapter VIA of ITA under the heading "B-Deductions in respect of certain payments"6 for FY 2019-20||31 July 2020, i.e., investment/ payment can be made up to 31 July 2020 for claiming the deduction under these sections for FY 2019-20.|
- Capital gains rollover exemption
Time limit for making investment or construction or purchase for claiming roll-over benefit in respect of capital gains pursuant to Sections 54 to 54GB of the ITA has been further extended to 30 September 2020. Therefore, investment or construction or purchase made up to 30 September 2020 shall be eligible for claiming deduction from capital gains.
- Due date for completion of activities /
Due dates for the issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports and any other documents, and the time limit for completion of proceedings by the authorities and any compliance by the taxpayer, including investment in saving instruments or investments for roll-over benefit of capital gains under various legislations, where the time limit expires between 20 March 2020 to 31 December 2020, has been extended to 31 March 2021.
- Commencement of activities of eligible Special Economic
Beginning any activity of manufacture or production of an article or a thing or providing of services by newly established units in Special Economic Zone ("SEZ") to claim profit-linked tax holiday under Section 10AA of the ITA, and in cases where the letter of approval from SEZ authorities has been issued on or before 31 March 2020, the date for commencement of operations has now been further extended to 30 September 20207.
- Extension of timeline under the VSV Act
The 2020 Tax Ordinance had extended the concessionary time period for payment of tax arrears, penalty and interest under the VSV Act from 31 March 2020 to 30 June 2020. The Finance Minister had further announced an extension of the date for making payment without any additional amount under the VSV Act to 31 December 2020. While the legislative amendments are not yet enacted, the aforesaid Notification provides that the due date for actions, which are required to be completed between 20 March 2020 and 30 December 2020, shall be 31 December 2020.
As a consequence, the date of furnishing of declaration, passing of order etc. under the VSV Act stands extended to 31 December 2020.
- No extension of concessionary rate of interest on
delayed remittance of tax
For delayed payments of advance tax, self-assessment tax, regular tax, tax-deducted at source, tax collected at source, equalisation levy, securities transaction tax and commodity transaction tax, the benefit of reduced interest rates has not been extended. For delay in the remittance in any of the aforementioned taxes, interest will be payable as per the original provisions of the ITA, either at the rate of 1% or 1.5% per month; the benefit of the lower rate of 0.75% per month under the 2020 Tax Ordinance will not be available. Also, immunity against penalty and prosecution shall not be available where there is a delay in the remittance of any of the aforementioned taxes post 30 June 2020.
3. INDUSLAW VIEW
The further relaxation of timelines in these unprecedented times is a welcome move by the Central Government. The extended period will give taxpayers time to streamline tax compliances. It is recommended that the Central Government consider a tax relief package which can serve the twin purpose of stimulating demand and bolstering domestic investment by savings.
1. Reference CG-DL-E-24062020-220145 / S.O. 2033(E) (Notification no. 35 of 2020 available at https://www.incometaxindia.gov.in/news/notification_35_2020.pdf)
2. Under section 234A of the ITA, interest at the rate of 1% at the rate of one per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date upto the date of filing of the tax return is levied. For this purpose, 'due date' shall continue to be as prescribed under the ITA and the benefit of it being extended to 30 November 2020 shall not be available where the net tax payable exceeds INR 100,000.
3. Amount of income-tax on total income reduced by (i) advance tax paid; (ii) any tax deducted or collected at source; (iii) any relief of tax allowed (for when salary, etc., is paid in arrears or in advance or on account of tax paid in a country or specified territory outside India); (iv) any deduction allowed on account of tax paid in a country outside India; and (vi) any minimum alternate tax or alternate minimum tax credit allowed to be set off.
4. In case of government employer, the due date for furnishing TDS statement has been extended to 15 July 2020.
5. In case of government collector, the due date for furnishing TCS statement has been extended to 15 July 2020.
6. This includes eligible investments under section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations) etc.
7. The 2020 Tax Ordinance had extended the due date for commencement of operations to 30 June 2020 from 31 March 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.