Move comes after a group of IRS created panic and tax policy uncertainty.
After rejecting “ill-conceived” suggestions by a group of Indian Revenue Services (IRS) officers, the Central Board of Direct Taxes (CBDT) directed officials not to keep any communication with assessees or issue scrutiny notices to them without the board’s approval.
According to it, any such notice would have an “adverse effect” on the assessees amid the coronavirus (Covid-19) pandemic.
These directives are part of the interim action plan for the first quarter (April-June) prepared by the direct tax board. It highlights certain areas which need immediate attention and preparedness until normalcy returns.
The move comes at a time when the tax department faced widespread criticism on a report prepared by a group of IRS officers. It had created panic and tax policy uncertainty at a time when India is already going through a difficult economic situation.
“Identification and preparedness regarding the issuance of notice under Section 148, which deals with income escaping and return filing in all eligible cases, should be done by June 30. However, these notices are to be issued only after getting fresh communication from the board in this regard,” said the CBDT note.
It added that due to the unprecedented situation arising out of Covid-19-induced social distancing and lockdown this year, a relatively short interim action plan has been issued.
Considering the current situation, we have been putting a slew of tax relief measures to mitigate the impact on business and even on household.
Any such communication may put pressure on the taxpayers and create unnecessary panic. A new system had already been put in place to make officials accountable for their communication with assessees.
However, during the lockdown, even such communication would not go without the board consent, said a CBDT official. Other than keeping no communication with assessees, the tax officials have been asked to centralise cases where searches took place in the financial year 2019-202.
This is because once lockdown is lifted, the officials would work on disposing them on merit.
Moreover, the CBDT asked officials to be prepared for tax demands in cases of international taxation, tax deduction at source and exemption-related charges.
The board wants the department to examine all pending demands, according to permanent account number (PAN) and assessment years.
It also removed demands which are creating duplication and are lying in the system. Besides, officials were asked to reconcile brought-forward cases, especially on TDS, based on the information available on the Traces portal for TDS units. The interim action plan also instructed officials to dispose of all applications concerning granting registration to charitable trusts received upto March 31.
Meanwhile, the direct tax board told its officials to upload manual orders on the systems, especially those under Section 263. It deals with appeals where the principal commissioner or commissioner may call for and examine the record of any proceeding. He or she may consider an order passed by the assessing officer to be erroneous, if it is prejudicial to the interests of the revenue.
The government announced a Rs 1.7 lakh crore relief package aimed at providing a safety net for those hit the hardest by the Covid-19 lockdown, along with insurance cover for frontline medical personnel. About 800 million people will get free cereals and cooking gas apart from cash through direct transfers for three months. The 21-day lockdown began on March 25.
The Pradhan Mantri Garib Kalyan Yojana includes higher wages under the Mahatma Gandhi National Rural Employment Act (MGNREGA), Rs 1,000 ex-gratia payment to nearly 30 million poor senior citizens, widows and disabled as well as insurance coverage of as much as Rs 50 lakh each for about 2 million healthcare workers battling the disease.
States have been asked to use the Building and Construction Workers Welfare Fund to provide relief to construction workers and the first installment of Rs 2,000 under the Pradhan Mantri Kisan Yojana will be frontloaded to reach 87 million farmers in April.
Immediately
“We’ve immediately responded within 36 hours of the lockdown. We’ve first reached out to the poorest of the poor, who need help,” finance minister Nirmala Sitharaman said while announcing the programme on Thursday.
The package will be rolled out immediately.
“We will think about the others… will gradually address if there’s more to attend to,” she said, when asked about a stimulus plan for companies, many of which have had to cease production, cut salaries or lay off employees because of the economic pain.
Industry and experts welcomed the announcements, even as the market responded positively with the Sensex closing at 29,947 points, up nearly 5% from Wednesday’s close.
“It’s a very well-defined package, reinforcing government’s intent that no one should be deprived of basic facilities in today’s stressed times,” said State Bank of India Chairman Rajnish Kumar. “We are hopeful of more calibrated responses in coming weeks as the impact of the pandemic unfolds.”
Under the package, the government will provide 5 kg of wheat or rice and 1 kg of pulses free every month for the next three months. Besides, 204 million women Jan Dhan account holders will get Rs 500 per month for the next three months. MGNREGA wages will rise to Rs 202 a day from Rs 182 to benefit 136.2 million families.
The measures will benefit the most vulnerable sections of society, said ITC chairman Sanjiv Puri.
Such “critical and large-scale interventions” are the need of the hour, he said. “These timely measures… will go a long way in providing support to farmers, daily wage earners, SHG (self-help group) women and poor senior citizens during such an unprecedented situation.”
ORGANISED SECTOR
The government said it will pay the entire provident fund contribution of those who earn less than Rs 15,000 per month in companies having less than 100 workers as they are at risk of losing their jobs. That amounts to 24% of basic pay–12% from the employee and 12% from the employer. This will be paid by the government for three months.
“This would prevent disruption in their employment,” a finance ministry statement said.
In addition, the Employees’ Provident Fund Regulations will be amended to include the coronavirus pandemic as grounds for allowing a non-refundable advance of 75% of the corpus or three months of wages, whichever is lower, from their accounts.
INDUSTRY DEMAND
India Inc sought help for distressed businesses across sectors such as tourism, hospitality, automobiles and aviation, besides micro, small and medium enterprises (MSMEs), where cash flows are down to a trickle amid mandatory adherence to tax and statutory payments.
“We hope that the RBI will soon bring in relief measures for distressed businesses including a moratorium on debt repayments and redefinition of non-performing assets,” said Confederation of Indian Industry director general Chandrajit Banerjee.
He added that the government could be more aggressive in its spending with an overall fiscal stimulus at 2.5-3% of GDP if disruptions continue for the next three months.
“Other segments of society, who are also looking forward to measures such as EMI waivers, as also extension of loan scheme tenures among ot others, economic package shall be on wait and watch mode,” said Niranjan Hiranandani, president of Assocham.
The finance minister heads the Economic Task Force that was set up by the Prime Minister.
Finance minister Nirmala Sitharaman announced a slew of measures for extension of statutory and regulatory compliances in view of the corona virus pandemic spreading its wings and impacting the economy.
Allaying fears that there is no economic emergency in the country, FM said that the Economic Task Force will soon announce an economic relief package to deal with the impact of the corona virus pandemic on the economy.
These are largely in the area of ease of doing business, by providing reliefs in extension of due dates for compliances and reliefs from late fee and penalties, in view of the lock downs announced in several states and districts.
Income Tax
The last date for filing income tax returns for Financial Year 2018-19, extended from 31st March, 2020 to 30th June, 2020.
Aadhaar-PAN linking date extended from 31st March, 2020 to 30th June, 2020.
Vivad se Vishwas scheme – no additional 10% amount, if payment made by June 30, 2020.
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, Equalization Levy law, Vivad Se Vishwas law where the time limit is expiring between 20th March 2020 to 29th June 2020 extended to 30th June 2020.
For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30th June 2020, reduced interest rate at 9% instead of 12 %/18 % per annum ( i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.
Necessary legal circulars and legislative amendments for giving effect to the aforesaid relief shall be issued in due course.
GST/Indirect Tax
Last date for filing GSTR-3B in March, April and May 2020 extended till the last week of 30th June, 2020 for those having aggregate annual turnover less than Rs. 5 Crore. No interest, late fee, and penalty to be charged.
For any delayed payment made between 20th March 2020 and 30th June 2020 reduced rate of interest @9 % per annum ( current interest rate is 18 % per annum) will be charged. No late fee and penalty to be charged, if complied before till 30th June 2020.
Date for opting for composition scheme is extended till the last week of June, 2020. Further, the last date for making payments for the quarter ending 31st March, 2020 and filing of return for 2019-20 by the composition dealers will be extended till the last week of June, 2020.
Date for filing GST annual returns of FY 18-19, which is due on 31st March, 2020 is extended till the last week of June 2020.
Due date 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 the time limit is expiring between 20th March 2020 to 29th June 2020 extended to 30th June 2020.
Necessary legal circulars and legislative amendments to give effect to the aforesaid GST relief shall follow with the approval of GST Council.
Payment date under Sabka Vishwas Scheme extended to 30th June, 2020. No interest for this period shall be charged if paid by 30th June, 2020.
Customs
Custom clearance will operate 24X7 till June 30, 2020.
Due date for issue of notice, notification, approval order, sanction order, filing of appeal, furnishing applications, reports, any other documents etc., time limit for any compliance under the Customs Act and other allied Laws where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020.
Financial Services
Relaxations for 3 months
Debit cardholders to withdraw cash for free from any other banks’ ATM for 3 months
Waiver of minimum balance fee
Reduced bank charges for digital trade transactions for all trade finance consumers
Corporate Affairs
No additional fees shall be charged for late filing during a moratorium period from 01st April to 30th September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date, which will not only reduce the compliance burden, including financial burden of companies/ LLPs at large, but also enable long-standing non-compliant companies/ LLPs to make a ‘fresh start’;
The mandatory requirement of holding meetings of the Board of the companies within prescribed interval provided in the Companies Act (120 days), 2013, shall be extended by a period of 60 days till next two quarters i.e., till 30th September;
Applicability of Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-2021 instead of from 2019-2020 notified earlier. This will significantly ease the burden on companies & their auditors for the year 2019-20.
As per Schedule 4 to the Companies Act, 2013, Independent Directors are required to hold at least one meeting without the attendance of Non-independent directors and members of management. For the year 2019-20, if the IDs of a company have not been able to hold even one meeting, the same shall not be viewed as a violation.
Requirement to create a Deposit reserve of 20% of deposits maturing during the financial year 2020-21 before 30th April 2020 shall be allowed to be complied with till 30th June 2020.
Requirement to invest 15% of debentures maturing during a particular year in specified instruments before 30th April 2020, may be done so before 30th June 2020.
Newly incorporated companies are required to submit commencement of Business certificate within 6 months of incorporation. This is now extended to 12 months.
Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Companies Act, shall not be treated as a violation.
Due to the emerging financial distress faced by most companies on account of the large-scale economic distress caused by COVID 19, it has been decided to raise the threshold of default under section 4 of the IBC 2016 to Rs 1 crore (from the existing threshold of Rs 1 lakh). This will by and large prevent triggering of insolvency proceedings against MSMEs. If the current situation continues beyond 30th of April 2020, we may consider suspending section 7, 9 and 10 of the IBC 2016 for a period of 6 months so as to stop companies at large from being forced into insolvency proceedings in such force majeure causes of default.
Detailed notifications/circulars in this regard shall be issued by the Ministry of Corporate Affairs separately.
Department of Commerce
Extension of timelines for various compliance and procedures will be given. Detailed notifications will be issued by Ministry of Commerce.
RBI is also likely to question the auditor on whether the SBI proposal would have any ‘material impact’ on the existing accounts of Yes Bank
The Reserve Bank of India will check if troubled lender Yes Bank’s auditor had raised any alarm in the past year. The apex bank has been in touch with the auditor and will look into whether they had specifically issued any warning in the past 12 months.
According to a report in The Economic Times, RBI has been in touch with auditor BSR & Co and wants to know if it had raised any red flag relating to the health of Yes Bank or any other issue. The auditor is part of KPMG India. The central bank is also likely to question the auditor on whether the SBI proposal would have any ‘material impact’ on the existing accounts of Yes Bank.
On Friday, the RBI announced a reconstruction scheme for the bank. It said that SBI that has expressed interest to invest in the troubled bank would do so to the extent of holding 49 per cent shareholding. The apex bank said that SBI’s investment in Yes Bank would not impact the employees and their current terms of employment.
BSR and Co was appointed as Yes Bank’s auditor after RBI banned SR Batliboi & Co for a year. The RBI had stated that the firm that was part of EY was banned due to “lapses identified in a statutory audit assignment carried out by the firm”.
RBI put restrictions on Yes Bank on March 6, allowing its customers to withdraw only Rs 50,000 for a month. The apex bank relaxed the guidelines subsequently. On Tuesday, the bank permitted its credit card customers to pay their credit card dues and loan obligations from other bank accounts. It allowed NEFT payments to clear loan EMIs and make credit card payments. The bank had, before that, allowed customers to withdraw money from ATMs of other banks.
On a day when the Economic Survey acknowledged the fact that both GST system is complex, taxpayers found it impossible to file their returns.
The Central Board of Indirect Taxes and Customs (CBIC) late on Friday night extended the due date for furnishing GST Annual Return and Reconciliation Statement (GSTR-9 / 9A and GSTR-9C) for FY 2017-18 in a staggered manner. The last date to file the Returns was January 31, 2020.
This came after thousands of taxpayers took to social media complaining about the GST portal not working. “Considering the difficulties being faced by taxpayers in filing GSTR-9 and GSTR-9C for FY 2017-18 it has been decided to extend the due dates in a staggered manner for different groups of States to 3rd, 5th and 7th February 2020 as under,” CBIC said in a Tweet.
Accordingly under Group 1, the states of Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Puducherry, Telangana, Andhra Pradesh, Other Territory has been placed and they will need to file their returns by 3rd February 2020.
Group 2 includes Jammu and Kashmir, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan and Gujarat that have to file by 5th February 2020.
Lastly group 3 includes the states of Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Andaman & Nicobar Islands, Jharkhand, Odisha, Chhattisgarh, Dadra and Nagar Haveli and Daman and Diu, Lakshadweep, Madhya Pradesh, and Uttar Pradesh, which now have to file by 7th February 2020.
On a day when the Economic Survey acknowledged the fact that both GST system is complex, taxpayers found it impossible to file their returns. By evening of January 31, #gstnfailed was the top trend on Twitter. At 10 30 pm CBIC tweeted the extension dates, but early reports suggest the portal is still not working.
The ministry further said it has also taken a note of difficulties and concerns expressed by the taxpayers regarding filing of GSTR-3B and other returns.
The Finance Ministry has announced the three due dates for filing GSTR-3B for different categories of Taxpayers.
The Finance Ministry today said that now GST taxpayers can file their GSTR-3B returns in a staggered manner. Considering the difficulties faced by trade and industry in the filing of returns, the government has decided to introduce several measures to ease the process.
Presently the last date of filing GSTR-3B returns for every taxpayer is 20th of every month. From now on, the last date for filing of GSTR-3B for the taxpayers having annual turnover of Rs 5 crore and above in the previous financial year would be 20th of the month. Thus, around 8 lakh regular taxpayers would have the last date of GSTR-3B filing as 20th of every month without late fees.
The taxpayers having annual turnover below Rs 5 crore in the previous financial year will be divided further into two categories. The tax filers from 15 States/ UTs, i.e., Chhattisgarh, Madhya Pradesh, Gujarat, Daman and Diu, Dadra and Nagar Haveli, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh will now be having the last date of filing GSTR-3B returns as 22nd of the month without late fees. This category would have around 49 lakh GSTR-3B filers who would now have 22nd of every month as their last date for filing GSTR-3B returns.
For the remaining 46 lakh taxpayers from the 22 States/UTs of Jammu and Kashmir, Laddakh, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha having annual turnover below Rs 5 crore in previous financial year will now be having last date of filing the GSTR-3B as 24th of the month without late fees.
The Finance Ministry said that the necessary notification in this regard would be issued later by the competent authority.
In a statement issued, the Ministry further said that it has also taken note of difficulties and concerns expressed by the taxpayers regarding the filing of GSTR-3B and other returns. The matter has been discussed by the GSTN with Infosys, the Managed Service Provider, which has come out with the above solution to de-stress the process as a temporary but immediate measure. For further improving the performance of GSTN filing portal on a permanent basis, several technological measures are being worked out with Infosys and will be in place by April 2020.
The changes in this year’s ITR forms are significant because it is seeking more disclosures.
More disclosures are aimed at improving income tax compliances & e-assessments.
In AY 2018-19, 58.7 million returns were filed, out of which about 23.7 million people filed returns with no tax liability
While it may be commonplace in Uncle Sam’s country, India is slowly getting used to the idea of disclosing more information to the taxman. In the last five years, income tax return (ITR) forms have started asking for more details to ensure that your spending patterns match your tax return profile.
However, the department seeking details of a valid passport or foreign travel with spends of over ₹2 lakh has left many with a feeling of discomfort as it further complicates the filing process. Many experts also worry about the privacy and security issues. “Data protection law for individuals in our country is not like that in developed countries such as the US. Also, given that the Personal Data Protection Bill 2019 is under consideration, many people are worried and skeptical when it comes to divulging so much information,” said Divya Baweja, partner, Deloitte Haskins and Sells LLP, an accounting firm.
Whether asking for more information will bear fruit and result in better tax compliance continues to be a question mark. The fact remains that you need to provide additional details, for which you have to be on top of many things, including your spending patterns. Now, if you have spent more than ₹2 lakh on foreign travel or ₹1 lakh on electric bills in the current financial year (FY), you will need to furnish these details. The new ITR forms notified by Central Board of Direct Taxes (CBDT), for the upcoming assessment year (AY) 2020-21, require you to disclose such information. If your spending patterns don’t line up with your tax declarations, it may land you in hot water.
The objective is to gather more and more information and make the process of selecting cases for scrutiny easier.
New ITR Forms: ITR-1 & ITR4
ITR-1 which is also known as “Sahaj” can be used by an individual whose incomes primarily include salary income and whose total income does not exceed Rs.50 lakh during the FY. On the other hand ITR-4 can be used to file returns by resident individuals, Hindu Undivided Family (HUFs) and firms (other than LLP) having a total income of up to Rs.50 lakh from business and profession and filing return under presumptive taxation scheme.
There are two major changes in the ITR Forms – first, an individual taxpayer cannot file return either in ITR-1 or ITR4 if he is a joint-owner in house property, second, ITR-1 form is not valid for those individuals who have deposited more than Rs.1 crore in bank account or has incurred Rs2 lakh or Rs1 lakh on foreign travel or electricity respectively.
Additional info
So far, the government has notified ITR-1 and ITR-4 forms for tax filing for FY 2019-20 or AY 2020-21. However, you will have to wait to file returns as online utilities are not yet updated. The new ITR forms ask you to provide a valid passport number, if you have one; and details of your employer like name, nature of business, address and TAN.
The objective is to gather more and more information about an individual, which will help the tax department carry out specific enquries and make the process of selecting cases for scrutiny easier. “These alterations may be happening because the government is slowly moving towards e-assessments and is thus seeking greater clarification from taxpayers in the return itself to save time and costs,” said Shailesh Kumar, director, Nangia Andersen Consulting Pvt. Ltd, a business tax advisory firm.
Other experts echo the thought. “The changes reflects the continuing journey of the government towards simplification and automation. It has already started providing pre-filled return forms. These disclosures will help capture the complete details of taxpayers and the validation of their financial information, wherever such information is available from more than one source,” said Kuldip Kumar, partner and leader, personal tax, PwC, an accountancy firm.
Data is the new oil
In a computerised environment, tax returns are now filed online and data is something that the government wants to be best friends with to tackle the problem of tax evasion. At the front-end, it is seen as asking for more information from you, the tax payer. However, this isn’t the first time the ITR forms have been amended. Every year, CBDT notifies the forms carrying amendments in accordance with the Finance Act. The aim is to increase the tax base as only a tiny percentage of the population files returns. Also, among the people who file returns, about 40% show that they have no tax liability.
At the back-end, the government is taking steps to strengthen the compliance ecosystem. For instance, in 2004, as a measure to widen the tax base, the concept of Annual Information Return (AIR) filing was introduced. AIR is a statutory requirement where mutual funds, institutions issuing bonds and registrars or sub-registrars, and so on are required to record and report high-value financial transactions of individuals to the tax department.
In 2006, a project for enabling e-filing of ITR was launched. Further, in 2007, the government launched integrated taxpayer data management system (ITDMS). Under this system, data from multiple sources is collected in a complex process for drawing a complete profile of the taxpayer. A non-filers monitoring system (NMS), focusing mainly on non-filers with potential tax liabilities, was also initiated by the department. The system assimilates and analyses in-house information as well as transactional data received from various sources like ITR and AIR filed by third parties and other departments to identify people who had undertaken high value financial transactions but did not file their returns.
Taking it further, in the year 2017, the tax department initiated “project insight” to strengthen the non-intrusive information-driven approach for improving tax compliance and effectively utilizing information in tax administration. Under this project, an integrated data warehousing and business intelligence platform, which includes Income Tax Transaction Analysis Centre (INTRAC) and Compliance Management Centralized Processing Centre (CMCPC), has been set up. According to the department’s website, INTRAC leverages data analytics in tax administration and performs tasks related to data integration, compliance management, enterprise reporting and research support. CMCPC uses campaign management approach (consisting of emails, SMS, reminders, outbound calls and letters) to support voluntary compliance.
Will disclosures help?
The government wants you to divulge more information for better scrutiny. However, some experts feel that this will only increase the burden on the tax payers, who are already struggling with a very complicated system of tax filing. “This is overreach and intrusion, and it’s a wasteful exercise. For instance, many people from India go to gulf countries for labour work; if such people get notices, they won’t know how to respond. There is a lot of duplication. The department has already acquired most of this information through AIR filed by different entities,” said Himanshu Sinha, partner, Trilegal, a law firm.
While giving out more information makes things more difficult, such information will be able to trace non-filers and is intended to bring more compliances.
