Relief from Tax due date compliance before 31st March 2020- An appeal to the Finance Minister
There are various compliance which are falling due on 31st March 2020. Due to corono-virus spread over, there s a life danger and resultantly there is a lock down in various districts of the country. Even where there is no lock down, the offices are closed voluntarily to provide safety and to control its spread over.
At this critical hour, there is also a concern in the mind of the taxpayer, tax professionals and tax collectors about the probable course of action. The Income Tax Officers Association appealed for extending the financial year closure date from 31st March 2020 to 30th April 2020. The association has appealed that in view of the corona virus and the consequences attached thereto, the closure date of the financial year be extended from 31st March 2020 to 30th April 2020.
Whether the extension of the financial year could be possible? There was already a proposal in the Government earlier to change the financial year from March closing to the December closing. However, the proposal has been kept on hold since long.
Let us check what could be done to handle the present situation. There appear to be three options in the present situation:
- Extend the closure of financial year from from 31st March 2020 to 30th April 2020.
- Extend the financial year from from 31st March 2020 to 31st December as a result of which the the next financial year could be December year ending rather than March year Ending.
- Don’t change or extend the financial year but simply extend all the compliance date by two months.Let us see what could be easily and conveniently done. But first we need to understand the Government limitations in not taking the decisions. The present limitations is not only for Income Tax Department, the same is equally hold true for GST department. Undeniably, Tax department officials, unlike health, police or hospital, can be relieved from duty for a temporary period like any other Govt or private organisations.
- Extending the date of financial year closure to 30th April would mean that the financial year of taxpayer would be for 13 months. It would impact the next year collections as well and the extension of one month would be too short to handle the corono virus situation. Further, the proposed financial year closure to 31st December would be very difficult in the next year. The proposal to extend the closure of the financial year looks slightly impossible.
- The date extension for closure of the financial year to 31st December could ultimately result in dual purpose, i.e., 1. Proper time to handle coronovirus 2. Shifting of financial year form March to December which would mean that the calendar year would be financial year from next year onward. This situation could be taken as an opportunity to set international standards of December closure. However, change would require terrible working and budgetary revisions and parliament approval. However, it would be better than the first options as the fiscal deficit could be planned in a better way. As a result of second options, the collection of VSVS scheme could be the part of revenue for the financial year closing on 31st Dec.
- The Government may decide to continue the financial year closure at 31st March but can just extend all the compliance which are needed by 31st March may be done by 31st May. It may be noted that this can be done by the CBDT itself without approaching the cabinet or Government in view of the global cornovirus situation prevailing.