A presentation on the Direct Tax Reliefs available to assesses in the COVID-19 lock-down scenario

1. COVID -19 and Indian Tax Regime
Corona v/s Income Tax
1Prepared by : CA Heer Gajjar

2. Introduction
• We maybe well aware of the scenario and background of Indian
Taxation Regime however a quick brief of Indian Tax Regime–
Indian Tax Regime
(Ministry of
Finance)
Direct Taxes
(CBDT)
Income Tax
Indirect Taxes
(CBIC)
GST Customs
2Prepared by : CA Heer Gajjar

3. Current Reliefs in Income Tax
• At present the following major reliefs have already been
undertaken under The Income Tax Act, 1961 and are discussed
herein –
– Reliefs under Residential Status
– Reduction in Rates of TCS and TDS
– Extension of various time-lines and
– Procedural Reliefs
Many other reliefs have also been bestowed upon the tax-
payers. They have been summarized as Other Reliefs.
3Prepared by : CA Heer Gajjar

4. Reliefs under Residential Status
• According to the Notification no. F.No.370142/18/2020-TPL (Circular 11
of 2020) issued by the Central Board of Direct Taxes on 08th May, 2020
under the powers conferred u/s 119 of the Income Tax Act, 1961, for
computation of residential status u/s 6 of The Income Tax Act,1961 the
following period shall be excluded for an Individual who has came to visit
India before 22nd Mar,2020 –
– Period upto 31st March ,2020 (if he is unable to leave India)
– If a person was quarantined in India, on account of COVID-19, on or
after 01st March,2020, then the period from the beginning of his
quarantine to the date of his departure (on an evacuation flight) or
31st March,2020
– Any other person who departed India on an evacuation flight on or
before 31st March,2020, then his period of stay In India from 22nd
March,2020 to his date of departure
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5. Reliefs under Residential Status –Key
Takeaways
• The above benefits have been awarded only to an Individual.
• The residential status of body corporate(s) depending upon the
POEM still remains unaltered.
• The above relief is granted only in respect of Individuals, who
arrived in India before 22nd March, 2020.
• Relief has been granted with regards to the previous year 2019-20.
There is no explicit / deemed implication of the same on the
previous year 2020-21.
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6. Reduction in Rates of TCS & TDS
• The rate of Tax Collected at Source (TCS) has been reduced
considerably, for 11 payments liable to TCS.
• The rate at which Tax is deducted at Source for various payments
pertaining to 23 specified payments has also been reduced.
• It is pertinent to note that the reduction in rates of TDS / TCS does
not amount to reduction in the Income Tax Liability. It is just a
measure to infuse liquidity in economy.
• The reduced rates are applicable from 14th May,2020 to 31st
March,2020.
• This means the benefit shall not be available for –
– payments already made during 01st April,2020 to 13th May,2020.
– Payments made for any subsequent assessment years
6Prepared by : CA Heer Gajjar

7. Analysis of Impact – Reduced Rates of
TDS and TCS (2)
• Further the reduced rates apply only if the assesse furnishes a –
– PAN or
– Aadhar number.
In absence of the same, the higher rates (20%) continue to be
effective.
• The lower rates shall not benefit the salaried assesses.
• It is also important to note that the benefit of such reduced rates
does not apply to the NRI’s.
• Also no rate deduction has been granted on TDS rates for payments
to be made u/s 195 i.e. for foreign payments, old rates continue to
apply.
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8. Extension in Time-lines
• Various time-lines have been extended by CBDT to enable reliefs to
the assesses.
• Majority of these reliefs are granted by the CBDT u/s 119 of The
Income Tax Act, 1961.
• The reliefs Include -
– Due Date for Filing ITR
– Due Date for Tax Audit Report
– Extension in dates of Vivad se Vishwas Scheme
– Extension for Re-registration of Trusts u/s 12BA
– Extension in dates of assessments
– Extension in period of Limitation (SC)
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9. Extension in Time-lines (1)
• The government has extended various due-dates
– The due date for filing belated Income Tax return u/s 139(5) has been
extended from 31st March,2020 to 30th June,2020.
– However Late Filing Penalty of Rs. 10,000 is required to be paid for the
same u/s 274F.
– Also the penalty is in addition to late payment interest @ 9% (reduced
from 12%)
• Also for Investments u/c VI – A, the investments can be made upto 30th
June,2020 and deduction for the same can be claimed in the Income Tax
Return for the AY 2020-21.
• The PAN – Aadhar linking due-date has also been extended to 30th June
2020.
• The due date for filing ITR for FY 2019-20, has been extended from 31st
July,2020.
9Prepared by : CA Heer Gajjar

10. Extension in Time-lines (2)
• With regards to the ITR for current year -
• It is pertinent to note that the due-dates for businesses liable to
furnish report for Transfer Pricing u/s 92E remains unaltered(
i.e.30th Nov, 2020)
Type of Return Revised Due Date Original Due Date
Assessee whose books
are not liable to Tax
Audit
30th November, 2020 31st July,2020 or 31st
October,2020
Assessees required to
get books of accounts
audited
31st October, 2020 30th September,2020
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11. Extension in Time-lines (3)
• The timelines under DTVSV i.e. Direct Taxes Vivad se Vishwas
scheme for settlement of direct tax liabilities without penalties has
also been extended.
• Now assessees can settle tax dispute under the same without
payment of any interest and penalty upto 31st December,2020. The
earlier due date was 30th June, 2020.
• The requirement for re-registration of trusts u/s 12BA for new
procedures has been postponed from 1st June,2020 to 1st
October,2020.
• It is important to note that the original plan was phased to be
implemented from 1st June,2020 to 31st August,2020. However the
new plan or phased plane for implementation has not been
formally announced yet.
11Prepared by : CA Heer Gajjar

12. Extension in Time-lines (4)
• The CBDT has also extended the time-lines for completion of
various assessments so as to enable sufficient time to the
department and allow for a fair and just trial. The due-dates for
completion of the assessments are-
12Prepared by : CA Heer Gajjar
Revised date for
completion of
assessment
Original date for
completion of
Assessment
Period of Extension
31.12.2020 30.09.2020 3 months
30.09.2021 31.03.2021 6 months

13. Extension in Time-lines (5)
• Additionally the CBDT shall ensure that no scrutiny notices are
issued to the tax-payers during the period of lock-down.
• It is pertinent to note that an assesse may receive notice for the
transactions undertaken by him during the time of lock-down is on-
going.
• The liberty is granted only for not issuing an notices during lock-
down. This simply implies that the issue of notices (and time for
subsequent assessments have been delayed).
• The Supreme Court has also ordered vide May 06 ,2020 that for
those cases, where the Limitation Act applies and the same go
time-barred during the period of lock-down, an additional period of
15 days shall be permitted once the lock-down is lifted.
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14. Procedural Reforms
• The CBDT has also ensured some procedural reforms for relief to
the assesses. The major ones as reported by a newspaper are –
– The CBDT has also issued internal directives to delay the issue of
notices for Q1.
– Also the orders u/s 263 have been ordered to be uploaded
manually instead of issuing the same thru paper-mode.
14Prepared by : CA Heer Gajjar

15. Suggestions
• The reforms already granted are highly appreciated. However, there
are certain other steps that the Ministry of Finance can take to
ensure better results.
• The same maybe , but not necessarily, needs to be in the form of a
Tax Rebate / Tax Holiday only.
• There are many Innovative approaches to the same as well.
However, the use of Tax Rebate / Tax Holiday cannot be over-looked
either. Hence let’s just have a walk through the same.
15Prepared by : CA Heer Gajjar

16. Tax Rebates - Pros
• Tax Rebate is good to be allowed –
– Ensures continuous flow of revenue for government, which
govt. can in turn spend on public expenses and hence wheels of
economy rotate
– Tax rebate will also provide economic relief to the industries
and sectors
– Tax rebate can be as high as 99% for worst hit sectors such as
aviation and newspaper and relatively low such as 50% for
healthcare industry
– Tax Rebate would also ensure no hostile take-overs of Indian
companies by foreign business and would eliminate the fear of
extinction of domestic industries
– Tax Rebate is also advisable from the perspective of
encouragement to young businesses such as start—ups and
entrepreneurs’.
16Prepared by : CA Heer Gajjar

17. Tax Rebates - Cons
• Tax Rebate and Tax Holiday is unadvisable as –
– It will hit the government treasuries hard
– It might temporarily attract industries and create jobs but once
the period is over the probability of businesses moving out
cannot be ignored.
– If the same is permitted, govt. will not have enough funds to
ensure sufficient development of the society
– If tax holidays are allowed it might risk the economy in the
hands of the industries in entirety and without govt. discretion
to enhance inclusive development of economy
– Tax Holidays do not ensure economy will spur up but it surely
will lead to no revenue funds.
17Prepared by : CA Heer Gajjar

18. Out of Box! (Maybe…)
• Permit Tax Deferrals and EMI to pay taxes alongside Tax Rebates
• Enhance deductions under Income Tax Act for contribution to PM
Cares fund (Maybe weighted deduction should be considered)
• Anyone who works for social welfare such as medical professionals
should be enrolled in govt. pensions project post-retirement
• Tax Rebates can also be linked to continual employment and non-
deduction of salaries for employees during and post lock-down
period. This will ensure flow of funds to end consumers who will
demand products and ultimately will boost production and keep the
economy on roll.
18Prepared by : CA Heer Gajjar

19. Other Miscellaneous Reforms
• Major reliefs to MSME
• Extension in Due Date for GSTR (1, 3B and 9 / 9C)
• Extension in Dates for BM
• EGM’s permitted thru Video Call
• Extension of CLSS Scheme
• Reduction in EPF Contribution
• Relaxations with regards to provisions of IBC, 2016
• Extension of time-lines for E-way Bills till 31.05.2020
19Prepared by : CA Heer Gajjar

20. Disclaimer : The views, ideas and opinions expressed herein are personal and for purposes of
professional knowledge enhancement only. Discretion is advised when acting on the lines of
this presentation. The same should be in no way considered as a professional / legal advice
and the author takes no responsibility for any incidental damages / claims.
20Prepared by : CA Heer Gajjar