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Taxmann's Analysis on Income tax reliefs given by the Government due to Covid-19

 The impact of the Covid-19 has been very troublesome. The entire economy has been effected by it financially as well as emotionally. Government has been taking many steps to help every one in whichever way it can to keep the economy and people’s failing morale. Following is the list of the measures taken by the Govt. with respect to the Income Tax Act, 1961:

1.      Extension of the due dates

Considering the lockdown prevailing in the entire country leading to temporary shutting down of the activities, Finance Minister Smt. Nirmala Sitharaman, announced various measures to address the concerns relating to statutory and regulatory compliance. To give effect to such announcement, the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (hereinafter referred to as ‘Ordinance 2020’) has been promulgated by the President of India.

The ordinance provided for extension of various due dates as prescribed under the Income Tax Act aw well as Income Tax Rules. After the issuance of the ordinance, it was also announced by the Finance minister that the due date of filing of return for the Financial Year 2019-20 will be extended to November 30, 2020. Additionally, the due date for tax audit under section 44AB shall be extended from September 30, 2020 to October 31, 2020.

It was also announced that due date of 30-09-2020 for completion of assessments shall be extended to 31-12-2020. Where assessments are getting barred on 31-03-2021, it shall be extended to 30-09-2021. Following is the list of extended due dates under the Income-tax Act for the year:

Section

Nature of compliance


Original Due Date


Extended Due

Date*

 

 

 

 

 

Extension of due dates relating to Income-tax returns

 

Section 139(1)

Filing of return for Assessment year 2020-21

31-07-2020/ 31-10-2020

30-11-2020


Section 139(4)



Filing    of    belated   return  for   the Assessment Year 2019-20



31-03-2020


30-06-2020


Section 139(5)



Filing    of    revised   return for the Assessment Year2019-20



31-03-2020


30-06-2020

 



Section 143(1)

 

Sending an intimation after processing of return of income (ITR), if the return isfiled:

a)        During Financial Year 2018-19 under section139;

b)        During Financial Year 2018-19 in response to a notice issued under section142(1)

 

 

31-03-2020

 

 

30-06-2020

 


Section 149

 

Time-limit to issue a reassessment notice for the:

a)      Assessment Year 2015-16 if escaped income is less than Rs. 1 lakh

 

b)      Assessment Year 2013-14 if escaped income is more than Rs. 1 lakh

 

c)      Assessment Year 2003-04 if escaped income is related to any asset (including financial interest in any entity) located outside India


d)      Assessment Year 2013-2014, to a person who has been treated as an agent of a non-resident under section 163

 

 

 

 


31-03-2020

 

30-11-2020

 

Extension related to TDS and TCS related compliances

 

 

 

   Section 200 read with Rule 31A

 

Furnishing of TDS Statement for  the fourth quarter of the Financial Year 2019-20


 

 


31-05-2020

 

30-06-2020

 

Furnishing of TDS Statement in form 26QB/26QC/26QD for the month of

 

a) February, 2020

30-03-2020

30-06-2020

b) March, 2020

30-04-2020

30-06-2020

c) April, 2020

 

30-05-2020

30-06-2020

 

 

 

 

 

 

Section 203 read with Rule 31



Issue of TDS certificate

 

a) Form 16: In respect tax deducted from the salary paid during the Financial Year 2019-20


 

 


15-06-2020

 

30-06-2020

 

b) Form 16A: In respect of  tax deducted from payments other than salary for the Quarter ending on March 31,2020


 

 


15-06-2020

 

30-06-2020


c) Form 16B/16C/16D: In  respect  of tax deducted under section 194-IA/194-IB/194M during the month of March,2020


 



15-05-2020


30-06-2020


d) Form 16B/16C/16D: In respect  of tax deducted under section 194-IA/194-IB/194M during the month of April,2020



14-06-2020


30-06-2020

 

Section 206C read with Rule 31 AA


 


Furnishing of TCS Statement for fourth quarter of the Financial Year 2019-20

 




15-05-2020

 


30-06-2020

 

Section 206C read with rule 37D


 

 

Issue of TCS certificate for the fourth quarter of the Financial Year 2019-20

 


30-05-2020

 

30-06-2020

 

Section 206C read with Rule 37CA and Section 192(1A) read with Rule 30

 

Furnishing of Form 24G by an office of the Government for the month of

 

a) March 2020

30-04-2020

30-06-2020

b) April 2020

15-05-2020

30-06-2020

c) May 2020

15-06-2020

30-06-2020




Section 200A & Section 206CB



Due date to send the intimation for processing of statement of TDS/TCS filed during the Financial Year 2018-19


 





31-03-2020

 



30-06-2020


Extension of due dates relating to PAN


 

 

Application for allotment of PAN:


 

 

 

 

         Section 139A

 

a) In case of non individual resident person, which enters into a financial transaction of Rs. 2.5 lakhs or more during FY 2019-20 and hasn't been allotted any PAN;

 

           b) In case of person being managing director, director, partner, trustee, author, founder, karta, CEO, principal officer or office bearer of the person referred to in Rule 114(3)(v) or any person competent to act on behalf of the person referred to in Rule 114(3)(v) and who has not been allotted any PAN

         

31-05-2020

30-06-2020


Section 139AA


 

 Linking of Aadhaar number and PAN


31-03-2020


30-06-2020


Section 139AA read with 114 AAA

 


PAN to be treated as inoperative due to non-linking it with Aadhaar number




31-03-2020


31-03-2020*

**


 

 

Extension of due dates relating to others matters

 


Section 10AA

Commencement of operation by the SEZ units for claiming deduction under section10AA

 

Note: If necessary approval is received by SEZ units on or before March 31, 2020

Due dates falling between 20-03-2020

to 29-06-2020**

30-06-2020



Section 54 to 54GB

 

Making Investments or completing construction/purchase for claiming deduction from capital gains arising during the Financial Year 2019-20.

 

Due dates falling between 20-03-2020to

29-06-2020**

30-06-2020




Chapter VIA

(Part B)

 

Making  various  tax  saving investments or payments for the Financial Year 2019-20 (Section 80C to 80

80GGC)

 

31-03-2020

30-06-2020


Section 285BA read with Rule

114E


 

Furnishing of Statement of Financial Transactions (SFT) for the Financial Year 2019-20

31-05-2020

30-06-2020

Section 3 of Direct Tax Vivad se Vishwas

Act, 2020

Non-payment  of     additional                         10% payment of disputedtax

31-03-2020

30-06-2020

-

 

The due date shall be extended in the following cases:

a)      Passing of Order or issuance of notice, notifications, sanction or approval by the authorities, commissioners or tribunal;and

b)      Filing of appeal, reply or  application or furnishing ofany

report, document etc.

 

Due date falling between 20-03-2020 to

29-06-2020**

 

30-06-2020

2.      Reduction in the rate of TDS

The pendamic has caused harm to every person in the economy from a big corporate office to a person earning their livelihood from a cart. So, to provide liquidity and reduce the excessive burden in the hands of the assessees, annoucement was made by the Finance Minister to reduce the TDS and TCS rates. Rates were revised for non-salaried resident persons with respect to payments made from 14-05-2020 to 31-03-2021. Following is the list of reduced rate of TDS and TCS:

List of reduced TDS rates


S.NO 


Section of
the Income-tax Act


Nature of Payment


Existing Rate of TDS


Reduced rate from
14/05/2020 to 31/03/2021

1.

193

Interest on Securities

10%

7.5%

2.

194

Dividend

10%

7.5%

3.

194A

Interest other than interest on securities

10%

7.5%

4.

194C

Payment of Contractors and sub-contractors

1% (individual/
HUF) 2% (others)

0.75% (individual/
HUF) 1.5% (others)

5.

194D

Insurance Commission

5%

3.75%

6.

194DA

Payment in respect of life insurance policy

5%

3.75%

7.

194EE

Payments in respect of deposits under National Savings Scheme

10%

7.5%

8.

194F

Payments on account of re-purchase of Units by Mutual Funds or UTI

20%

15%

9.

194G

Commission, prize etc., on sale of lottery tickets

5%

3.75%

10.

194H

Commission or brokerage

5%

3.75%

11.

194-I(a)

Rent for plant and machinery

2%

1.5%

12.

194-I(b)

Rent for immovable property

10%

7.5%

13.

194-IA

Payment for acquisition of immovable property

1%

0.75%

14.

194-IB

Payment of rent by individual or HUF

5%

3.75%

15.

194-IC

Payment for Joint

10%

7.5%

 

 

Development Agreements

 

 

16.

194J

Fee for Professional or Technical Services (FTS), Royalty, etc.

2% (FTS, certain
royalties, call centre) 10% (others)

1.5% (FTS, certain
royalties, call centre) 7.5% (others)

17.

194K

Payment of dividend by Mutual Funds

10%

7.5%

18.

194LA

Payment of Compensation on acquisition of immovable property

10%

7.5%

19.

194LBA(1)

Payment of income by Business trust

10%

7.5%

20.

194LBB(i)

Payment of income by Investment fund

10%

7.5%

21.

194LBC(1)

Income by securitisation trust

25% (Individual
/HU F) 30% (Others)

18.75% (Individual
/H UF) 22.5% (Others)

22.

194M

Payment to commission, brokerage etc. by Individual and HUF

5%

3.75%

23.

194-0

TDS on e-commerce participants

1% (w.e.f. 1.10.2020)

0.75%

List of reduced TCS rates

S. No

Section of the Income- tax Act

Nature of Receipts

Existing Rate of TCS

Reduced rate from 14/05/2020 to 31/03/2021

1.

206C(1)

Sale of

(a) Tendu Leaves

5%

3.75%

(b)Timber obtained under a forest lease

2.5%

1.875%

(c) timber obtained by any other mode

2.5%

1.875%

(d) Any other forest produce not being timber/tendu leaves

2.5%

1.875%

(e) scrap

1%

0.75%

(f) Minerals, being coal or

1%

0.75%

 

 

lignite or iron ore

 

 

2.

206C(1C)

Grant of license, lease, etc. of
(a) Parking lot

2%

1.5%

(b) Toll Plaza

2%

1.5%

(c) Mining and quarrying

2%

1.5%

3.

206C(1F)

Sale of motor vehicle above 10 lakhs

1%

0.75%

4.

206C(1H)

Sale of any other goods

0.1% (w.e.f 01.10.2020)

0.75%

 

3.      Deduction at the rate of 100% with respect to donations made under “PM CARES Fund”

The Taxation and other laws (Relaxation of certain provisions) ordinance, 2020, dated 30/03/2020 has amended section 80G to provide relief to the every person donatingtoPM CARES Fund. PM CARES Fund was formed to provide relief to those people who are most affected by it.

The donations made to the fund is eligible for 100% deduction under section 80G of the Income-tax Act, 1961. Additionally, to give more relief to the doners, the limit on deduction of 10% of gross income shall also not be applicable for donation made to PM CARES Fund. Deduction is available only with respect to the donations made up to 30-06-2020.

4.      Relaxations for people stuck in India while determining residential status

The residential status of a person is generally determined on the basis of the stay of a person in India. Various concerns were made by the individuals who came to India for a limited period of time but could not return back due to the closed international flights. This stay could make them resident during the year in India and would lead to higher tax on their incomes.

So, to provide relief to such individuals, while computing their residential status it was provided that with respect to the individuals who came to India before 22nd March, 2020 and,

(a)    Has been unable to leave India on or before 31st March, 2020, his period of stay in India from 22nd March, 2020 to 31st March, 2020 shall not be taken into account; or

(b)    Has been quarantined in India on account of Novel Corona Virus (Covid-19) on or after 1st March, 2020 and has departed on an evacuation flight on or before 31st March, 2020 or has been unable to leave India on or before 31st March, 2020, his period of stay from the beginning of his quarantine to his date of departure or 31st March, 2020, as the case may be, shall not be taken into account; or

(c)    Has departed on an evacuation flight on or before 31st March, 2020, his period of stay in India from 22nd March, 2020 to his date of departure shall not be taken into account.

 

5.      Waiving off of deposit to be made under “Vivad Se Vishwas Scheme”

Govt. has decided to waive off the additional 10% payment of disputed tax if assessee applies under the Vivad Se Vishwas Scheme after 31-03-2020 till 31-12-2020. Thus, taxpayers opting under this scheme till 31-12-2020 are liable to pay only 100% of disputed tax or 25% of disputed interest, fee or penalty (as the case may be). However, if a taxpayer has got the favorable ruling in immediate higher appellate forum or pending appeal is filed by the Dept., he will be liable to pay 50% of the disputed tax or 12.50% of disputed interest, fee or penalty (as the case may be).

6.      Deferment of due dates for compliance of charitable trusts

The Finance Act, 2020 has brought major changes in the compliance procedures in case of NGOs. Section 12AB was inserted making the existing chartitable trusts to apply for re-registration as well as provisions for the new trusts to be registered. The new provisions were applicable with effect from 01-06-2020. Considering the pendamic and understanding the situation that the NGOs might not be able to cope up with the new procedural aspect of the provisions a Press Release dated 09-05-2020 was issued stating that the entities approved/ registered/ notified under section 10(23C), 12AA, 35 and 80G of the Income-tax Act would be required to file intimation within three months from 1st October, 2020, that is, by 31stDecember, 2020. Further, it was also provided that the amended procedure for approval/ registration/ notification of new entities shall also apply from 1stOctober, 2020.

7.      CBDT extends validity of Forms 15G and 15H of FY 2019-20 by 3 months due to outbreak of COVID-19

Due to outbreak of pandemic COVID-19, the Assessing Officer was finding difficulties in disposing of the applications for lower or nil rate of TDS/TCS. Thus, to mitigate hardship of assessees, the CBDT has issued following directions and clarifications:

(a)    In case the application is pending, the certificate issued to assessee in the Financial Year (FY) 2019-20 will be applicable for FY 2020-21 as well till June 30, 2020 or disposal of their application, whichever is earlier.

(b)    In case asseessee couldn’t apply for issue of lower or nil deduction of TDS/TCS certificate, he can also use certificate issued for FY 2019-20 till June 30, 2020. However, he needs to apply at the earliest giving details of the transactions.

(c)    In case of assessee who is not having such certificate for FY 2019-20, can apply for application for lower or nil TDS/TCS certificate vide e-mail addressed to the concerned Assessing Officer. Certificate will be issued to him via email. The Email shall contain the following documents:

·         Form-13

·         Documents/informations required to be uploaded on TDS-CPC website while filing up Form-13

·         Projected Balance Sheet and P&L account for FY 2020-21

·         Provisional Balance Sheet and P&L account for FY 2019-20

·         Balance Sheet and P&L account for FY 2018-19

·         Form-26AS for FY 2019-20 and FY 2018-19

·         ITR pertaining to FY pertaining to FY 2018-19


(d)   In case payment is being made to Non-resident having Permanent Establishment in India, tax shall be deducted at the rate of 10% including surcharge and cess till June 30, 2020 or disposal of application of assessee, whichever is earlier (for assessee’s not falling in (a) or (b) category).

 

8.      AO to dispose of application for lower/nil deduction for FY 2019-20 by 27-04-2020 vide e-mail:

COVID-19 virus has disrupted normal working of the Income-tax department also. Therefore, the application filed by the taxpayers under sections 195 and 197 of the Income-tax Act for lower or nil rate of deduction of TDS/TCS may not be attended in timely manner by the TDS Assessing Officer (AO). The CBDT videOrder dated 31-03-2020, has extended the validity of existing TDS/TCS certificates of FY 2019-20 up to June 30, 2020 for the Financial Year 2020-21 until their application is disposed of by the AO.

It may be possible that application for lower/nil rate of TDS/TCS certificate for the Financial Year 2019-20 is also pending with AO. Thus, the CBDT has directed that all such assessees, who has timely filed application for lower or nil deduction of TDS/TCS on traces portal for the Financial Year 2019-20 and such application is pending for disposal, shall intimate vide an e-mail addressed to the AO concerned, regarding pendency of such application. Assessees are required to intimate the concerned AO along with required documents and evidences of filing their application in traces portal.

The AO shall dispose of the application by 27-04-2020 and communicate to the assessee regarding issue/rejection of certificate vide e-mail.

9.      Payment of refund up to Rs. 5 lakhs

To provide immediate relief to the taxpayers, the Ministry of Finance has decided to immediately issue all pending Income-tax refunds up to Rs. 5 lakh. Further, it has also been decided to issue all pending GST and Custom refunds which would provide benefit to around 1 lakh business entities, including MSME. Thus, the total refund granted will be approximately Rs. 18,000 crore.

 


Disclaimer: This information is updated till 04 June 2020.

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