On 24 March 2020, the Hon’ble Finance Minister announced several compliance related relaxations to ease the compliance burden on business community which was followed by a press release (Press Release). To give effect to the Press Release, the Government on 31 March 2020 passed the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (“Ordinance”). Key takeaways of income-tax related provisions in the Ordinance are as follows.
§ Extension of due date:
The due date for the following compliances or filings has been extended to 30 June 2020:
o The due date for filing belated as well as revised return for FY 2018-19
o The due date for availing benefits under the Vivad de Vishwas Scheme (Scheme) without paying any additional amounts
o The due date for completion of any proceeding or passing of any order or issuance of any notice / intimation / notification / approval order / sanction order, filing of appeal / reply / application, furnishing of report / return statements / and any such documents necessary for compliance or completion of any proceedings under inter alia Income Tax Act 1961, Wealth Tax Act 1957, Prohibition of Benami Property Transactions Act 1988, Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 where the due date is between 20 March 2020 to 29 June 2020.
o The due date for making investments / deposits for claiming deductions specified under Chapter VI-A of Income Tax Act 1961 under the heading “B - Deduction in respect of certain payments” such as deductions under section 80C to section 80GGC for FY 2019-20.
o The due date for making investment, deposit, payment, acquisition, purchase, construction for claiming exemptions specified under section 54 to 54GB of Income Tax Act 1961 (i.e. roll over benefit of capital gains where the due date for availing exemption is between 20 March 2020 to 29 June 2020).
o The due date for commencing manufacture or production of any article or thing before 31 March 2020 for exporters located in SEZ to claim benefit of exemption under section 10AA of Income Tax Act 1961. However, the due date has been extended only for commencement of manufacture or production and not for obtaining approval under SEZ Act, 2005.
§ Relaxation in Penal Provisions:
o Taxpayer shall pay a reduced interest at the rate of 9% instead of 12 % / 18 % per annum (ie 0.75% per month instead of 1 / 1.50% per month) as may be applicable, for delay in payments of inter alia advance tax, self-assessment tax, regular tax, tax deducted at source, tax collected at source, equalization levy made between 20 March 2020 and 30 June 2020.
o Further, no late fee/penalty shall be charged for delay relating to this period and no prosecution shall be sanctioned in respect thereof.
§ Benefit of 80G extended to PM Cares Fund:
o Suitable amendments have been made under section 80G of Income Tax Act 1961 to provide that donation made to PM Cares Fund shall qualify for 100% deduction under section 80G.
These relaxations are a welcome move and will help the taxpayers to breathe a sigh of relief and will avoid any last moment panic to comply with the statutory timelines, in light of the unfortunate COVID-19 outbreak. On a substantive front, the Government should also consider announcing some tax sops (tax deductions) for taxpayers who (i) set up, operate and maintain such quarantine centers or (ii) are desirous of expending their CSR funds to help the community at large to come out of this pandemic.
Vinita Krishnan (Director), Raghav Kumar Bajaj (Principal Associate) and Avin Jain (Associate)