Relaxation from tax and regulatory compliance timelines in view of COVID-19 outbreak
Having gripped the world with massive footprints, the coronavirus pandemic has kicked off a wave of mass hysteria over the conscious precautions. Surging cases of people hoarding essential commodities in large quantities, have come to the notice. Routine life of everyone is badly affected due to shutting down of schools, colleges, malls, Cinema halls etc. India has gone in lockdown mode and economy will also remain in this mode with the increasing cases of the spread of Covid-19 disease at a fast clip over the past few days. Several companies such as Maruti Suzuki India Ltd, Titan Co. Ltd, Dabur India Ltd and Asian Paints Ltd. have announced closure of their manufacturing facilities. All domestic passenger flights are being suspended for the month.
While there is a general agreement that social distancing is the need of the hour, there are growing concerns over the severe economic impact of an extreme lockdown situation. India has gone ahead of various countries in imposing strict restrictions on its citizens to fight the spread of Covid-19.
In this situation the India Government decided to defer the Tax and regulatory payments and compliance filings as a relief to combat the existing crisis. The Hon’ble Finance Minister (FM), Nirmala Sitharaman held a press conference on Tuesday 24th March, 2020 to announce various important relief measures taken by the government on statutory and regulatory compliance matters which has been highlighted below:
a) Income Tax
- Due date for filing belated and revised income tax returns (ITR) under section 139(4) and 139(5) respectively of the Income Tax Act, for FY 2018-19 (AY 2019-20), extended from 31st March, 2020 to 30th June, 2020.
- A person having Permanent Account Number (PAN) is required to link his Aadhaar number on or before 31st March, 2020. Failure to do so shall make the PAN inoperative immediately after 31st March, 2020. Extension has been granted for linking of Aadhaar with PAN from 31st March 2020 to 30th June 2020.
- Under the Direct Tax Vivad se Vishwas Act, 2020, if a taxpayer under the Act opts for withdrawal of appeals, he/she is required to pay 100 % of the disputed tax if paid by 31st March, 2020, and if paid after 31st March, 2020, 110 % of the disputed tax is required to be paid. Under the relief measures announced in the press release, the additional 10 % amount has been waived off, if the amount is paid by 30th June, 2020.
- It has been now decided that where the time limit of 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 Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT law, Equalisation Levy law, Vivad Se Vishwas law is expiring between 20th March, 2020 to 29th June, 2020, it shall be extended to 30th June, 2020.
- In the cases of delay in deposit of advance tax, self-assessment tax, regular tax, TCS, equalisation levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT), interest of 12% p.a. (i.e. 1% p.m.) and for delay in deposit of TDS interest of 18% p.a. (i.e. 1.5% p.m.) is levied. The Government has given a relief by reducing the interest rate of 9% p.a. (i.e. 0.75% p.m.) instead of 12%/18% and removing the penalty provision, only in the cases where delayed payments will be made during 20th March, 2020 to 30th June, 2020.
b) GST/Indirect Tax
- Taxpayers having aggregate annual turnover less than INR 5 crore will be allowed to file return under Form GSTR-3B due in March 2020, April 2020 and May 2020, till 30th June, 2020 without any interest, late fee, and penalty whereas others having annual turnover more than or equals to INR 5 crore will be allowed to file the same with a reduced interest of 9% p.a. instead of the existing 18% p.a., from 15 days after the relevant due date but without any late fee or penalty.
- Another major relief provided is the extension of the due date for opting for composition scheme till 30th June, 2020. Moreover, the last date for making payments for the quarter ending 31st March, 2020 and filing of return for FY 2019-20 by the composition dealers has also be extended till the 30th June, 2020.
- The due date of filing the annual return in Form GSTR-9 for the FY 2018-19, which was due on 31st March, 2020, has been extended till 30th June, 2020. (Notification no. 15/2020 – Central Tax dated 23 March 2020 has already been issued in relation to the extension of due date for filing annual return for FY 2018-19).
- Due dates for issue of notice, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents, time limit for any compliance under the GST laws where is expiring between 20th March, 2020 to 29th June, 2020, has been proposed to be extended to 30th June, 2020.
- Moreover payment date under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 shall be extended to 30th June, 2020 without any interest, if payment is made by 30th June, 2020.
The Government has decided to start customs clearance on 24X7 basis till 30th June, 2020, even during the lockdown period and has also decided to relax the timelines where due date for issuance of notice, notification, approval order, sanction order, filing of appeal, furnishing applications, reports, any other documents etc. or time limit for any compliance under the Customs Act and other allied laws is expiring between 20th March, 2020 to 29th June 2020, it has been decided to extend the same till 30th June, 2020.
d) Financial Services
Considering the crisis situation and the lockdown decision, the government has decided that no charges will be levied on cash withdrawal through Debit Card from any other bank’s ATM, no fees will be charged for not maintaining the minimum balance requirement and there will be a reduction in the bank charges for digital trade transactions for all trade finance consumers for the next 3 months.
e) Corporate Affairs
- In order to reduce the financial burden from the non-compliant Companies/ LLPs and to clear their backlog of pending filings and to make a ‘fresh start’ the Government has decided to waive the additional fees for delay in filing of any form, document, return, statement etc. with MCA, during the moratorium period starting from 1st April, 2020 to 30th September, 2020.
- It has also been decided to extend the mandatory time gap between two Board meetings as per the Companies Act, 2013 (currently 120 days) has be extended by 60 days for quarter ending 30th June, 2020 and 30th September, 2020.
- The Hon’ble Finance Minister even highlighted that the applicability of the recently introduced Companies (Auditor’s Report) Order, 2020 shall be made from FY 2020-2021 instead of FY 2019-2020 s as to ease the burden from the Companies as well as the Auditors.
- A major relaxation provided by the Government is the removal of the condition of non-compliance with the provisions of Schedule IV of the Companies Act, 2013 in case of inability of holding separate meeting of Independent Directors during the FY 2019-2020.
- Timelines for creation of deposit reserve of 20% of the deposits maturing during FY 2020-2021 has been relaxed from 30th April, 2020 till 30th June, 2020.
- Requirement to invest 15 % of debentures maturing during a particular year in specified instruments before 30th April, 2020, has been extended to 30th June, 2020.
- As per the provisions of the Companies (Amendment) Ordinance 2018, a newly incorporated company needs to file a declaration for Commencement of Business (in Form INC-20A) with the Registrar of Companies within 180 days of the date of incorporation of the company. An additional time period of 6 months has now been allowed to the newly incorporated companies.
- Inability to meet minimum residency requirement of stay in India for 182 days by at least one director of the company under section 149 of the Act, shall not be treated as a violation for FY 2019-20.
- In order to prevent triggering of insolvency proceedings against MSMEs, the thresholds of default under section 4 of Insolvency and Bankruptcy Code, 2016 (IBC, 2016) has been raised to INR 1 crore (from the existing threshold of INR 1 lakh). It has been declared that in case the COVID-19 outbreak continues beyond 30th April, 2020, the government may consider suspending section 7, 9 and 10 of the IBC 2016 for a period of 6 months to stop companies at large from being forced into insolvency proceedings in such force majeure causes of default.
Detailed notifications/circulars regarding any/all the above compliance requirements shall be reviewed and issued by the Ministry of Corporate Affairs as and when required.
It is not only the statutory and compliance relaxation, but it has also been discussed and decided that in order to normalise the entire scenario, import of SPF Shrimp Broodstock and other Agriculture inputs expiring between 1st March, 2020 to 15th April, 2020 has been extended by 3 months, delay upto 1 month in arrival of consignments shall be condoned. There will be no additional rebooking charges for quarantine cubicles for cancelled consignments in Aquatic Quarantine Facility (AQF) Chennai and the verification of documents and grant of NOC for Quarantine has been relaxed from 7 days to 3 days.
In order to combat the impact of coronavirus on the economy and to mitigate the aftereffects of Covid-19, the Government is now working out on the Economic packages. The Hon’ble Finance Minister of India stated that every attention is being given to the economy and the Hon’ble Price Minister is also closely monitoring the situation. The current situation in the economy may not improve immediately but the entire global economy may take some time to grow and attain the desired level.
Written and compiled by
CA Sunil Kumar Gupta
Founder Chairman, SARC Associates