As Indian Government, both central and state, as well as countries around the world, are implementing emergency measures to support their economies amid the coronavirus (COVID-19) threat, we have also decided to provide trusted analysis of the latest tax policy developments to our partners and readers. Through series of posts, we will try to break down key policy initiatives so that it becomes comprehensible for the small and growing businesses.
Micro, Small and Medium Enterprises (MSME) in India are increasingly feeling the impact of the coronavirus outbreak on their businesses. In India, considering the scale of operations of MSME firms, they generally don’t have much cash reserves. In addition to it, their credit limits also don’t provide them sufficient space to pay the salaries and wages in this crisis. With our discussion with some of the MSME exporters, we found out that MSME exporters are also not receiving the payments as buyers are also in bad shape and demand has nosedived.
Government of India, in view of COVID-19 outbreak, has announced several important relief measures pertaining to statutory and regulatory compliance matters related to several sectors. Central government has brought an ordinance on March 31, 2020 to give effect to various relief announcements made by them on March 24, 2020 under the Income Tax Act, 1961 and Benami Property Act. Further, the Finance Ministry has also issued many clarifications and office memorandum, to satisfy all the doubts raised by the taxpayers.
Some of the key relief measures announced by government are as follows:
- PMCARES Fund - Donations made to PMCARES Fund shall be allowed 100% deduction without any limit u/s 80G of the Income Tax Act, 1961. All donations made till June 30, 2020 will be eligible for deduction from income of FY 2019-20.
- AADHAR PAN Linking - The last date for linking Aadhar with PAN Card has been extended to June 30, 2020.
- IT Return for FY 2018-19 - Deadline for filing of original/ revised Income Tax Return for the FY 2018-19 (Assessment Year 2019-20) has been extended to June 30, 2020 from March 31, 2020.
- Tax Saving Investments - Deadline has been extended for making the tax saving investment for claiming deductions under Chapter-VIA-B of Income Tax Act, 1961 which includes Section 80C (LIC, NSC etc.), 80D (Mediclaim), 80G (Donations), etc. All the investments made under tax saving scheme till June 30, 2020 can be claimed in FY 2019-20.
- Capital Gains - In respect of Capital Gains, the government has provided extension of deadline for making investment/construction/purchase for claiming benefit u/s 54 to 54GB of the Income Tax Act, 1961 to June 30, 2020 for the FY 2019-20.
- SEZ Units - In case of SEZ units which have received approvals by March 31, 2020, has been given an extension till June 30, 2020 to apply for commencement of operation. These SEZ units will be eligible for claiming deduction u/s 10AA of the Income Tax Act, 1961.
- The government has also extended the date for passing of order or issuance of notice by the authorities under Income Tax Act & Benami Law to June 30, 2020.
- Late Payment of Taxes - Reduced rate of interest @9% p.a. will be charged for non-payment of Advance Tax, TDS, TCS, Equalization Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) which were due for payment from March 20, 2020 to June 29, 2020, only if they are paid by June 30, 2020. Further, the government has also assured that no penalty/prosecution shall be initiated for the said non-payments.
- Vivad Se Vishwas - Under the Vivad Se Vishwas Schemes, the last date for making declaration and payment without any additional payment have been extended to June 30, 2020.
- PPF & SSA - The government has also clarified that the deadline for making mandatory minimum deposit in Public Provident Fund (PPF) & Sukanya Samridhi Account (SSA) for the FY 2019-20 has been extended to June 30, 2020. It further said that relief will be provided only on the one-time deposit made till June 30, 2020. No revival fee/penalty charges will be applicable if compliance is made till the extended date.