To

The Finance Minister

Smt. Nirmala Sitharaman

New Delhi

Subject: Relief to the Industry & Business

Respected Madam,

Pursuant to the painful situation arisen due to outbreak of Corona Virus, Lot of relief has been granted by the Hon’ble Finance Minster from the Statutory  compliance requirements of March – 2020.  The relief granted will benefit not only the taxpayers but also to the tax authorities who are finding it difficult to comply the due dates requirements due to corona outbreak. In short, extension of the due dates of March 2020 to June 2020 will be a great relief to all the stakeholders.

However, the relief given is not sufficient to take care of the economy which is suffering from the slowdown, liquidity crunch & uncertainty. The present outbreak of cronona virus has further deepened the trouble of the struggling economy.

All over the world, different countries have announced rampant stimulus package to reduce the burden of industries in view of Covid – 2019. It may be noted that during the period of lockdown, the businessmen will already be paying the salary to the workmen and staff as per the announcements of Hon’ble PM Shri Narendra ji Modi. Further none of the staff and workers are retrenched from the employment despite well know fact that corona virus impact would be longer than anticipated.

Though your kind Honour has already announced the intention of coming out with the stimulus package, an earlier announcements will definitely reduce the prevailing sentiments in the economy.

All the Indian Governments have given various relief packages for the farmers in the past. However, this time a strong stimulus package is needed for the businesses who are the contributor of major chunk of revenue to the Government Treasury. The proposed stimulus may kindly include the following as part of economic package for the business & Industry:

I] ECONOMIC FRONT:

1. All outstanding bill payment should be deferred for a period of at least 6 months. All outstanding bill payments be allowed to be made in subsequent 12 equal monthly installment. Preferably, the payment may be allowed without any interest components.
2. There is a deep trouble in the recovery of books debts and also the sale is showing a heavy downward trend. As a result, the interest service & EMI payment is getting adversely affected. The banks are after the recovery as non-payment would make the account as NPA.It is most humbly appealed that,
   a) the banks need to be given concession in considering the account as NPA. The norms need to be relaxed to 6 months as against 3 months under present regime.
   b) All interest & EMI which are due between 1^st January 2020 to 30^th September 2020 be converted to a new term loan A/c to be repayable in next 12 months in equal installment.
   c) All EMI’s to banks and NBFC to be put on hold for 6 months with no levy of penal interest on delayed payment.

3. Contribution to the PF/ESIC payment be deferred for a period of around 6 months without interest. Other Statutory dues dates may also be kindly be extended for 180 days.
4. All recovery pressure by the tax officials be kept on hold for a period of around 1 years. No coercive measures should be taken by the tax officials or the banks during the period of one year.

5. An instant OD facility to the extent of around 20% be provided to the borrower to meet the liquidity crunch prevailing in the economy. Similar facility has already been announced by the SBI to its customers.

6. Interest subvention to the extent of 6% in loans to MSME and small businessmen be provided as a measure to improve the sustainability in the market.

7. All EMI be it housing loan, vehicle loan, car loan, etc may be deferred for a period of 6 months without any penal consequences but subject to the capitalisaiton of the interest during the intervening period of 6 months.
8. Govt. Department like Railways, MSEB etc. normally do not make payments for more than 6 months which ultimately have a cascading on their suppliers who suffer & the chain goes on. Banks normally do not consider debtors of above 90 days for calculation of DP limit. Hence Government department must be instructed to clar the bills within 30 to 45 days.Maam, it may kindly be noted that if anyone don not pay the electricity bill for 30 days they cut your connection. There is no such accountability or responsibility at any side of the Government.

   It is our requested that if Government clears the bills  in 30 to 45 days, lot of NPA’s can be avoided & it will help in improving working capital cycle.

9. If a borrower wants to change his bank then present takeover norms of RBI specially with regard to turnover, profits & ratios are so stringent & it becomes very difficult for borrower to change the bank. Hence, takeover norms of RBI must be relaxed & special takeover norms be introduced specially for financial year 2020-21
10. Many borrowers are presently SMA 1 or 2 ( i.e. on the verge of becoming NPA). After giving special package of 10 or 20% additional limit; that additional limit must not be used for clearing the existing over-dues. It should be separately made available to borrowers & overdue amount be converted into Working capital term loan -WCTL repayable over a period of 12 to 24 months with or without FITL( Funded interest term loan) & this restructuring should not be considered for credit rating. If not done so, on one hand borrower may get a package & on the other due to poor credit rating he will have to pay higher interest rate.

11. The present norms related to collateral security need to be relaxed in view of multiple factors in the last couple of months.
12. Banks may be instructed either to not charge or charge a very nominal processing fee for restructuring or any liberal credit scheme as mentioned above

13. SPECIAL MAJOR TO BOOST THE MARKET:
    Share market has been volatile and the investment by retail investor is also missing. To boost the flow of capital in the share market, the following innovative measures may kindly be considered:

a) There are various persons who have invested in the ULIP plan of Insurance Companies wherein investment can be done after the premium is due. Since the share market is also lacking in liquidity, the policy holder may be permitted to invest the amount up to 11 months prior to its due date also. As a result, the policy holder will be able to invest in the market as per his individual perception about the market and the share market can also get the required liquidity. Presently, due to IRDA regulation, insurance companies cannot accept payment prior to 30 days of its due date. The new relaxation of payment in advance may enable ULIP investor to get the better appreciation in their fund value.

b) An additional deduction up to Rs. 1.50 Lakh for investment in the National Pension Scheme (NPS) for the period from 1^stApril 2020 to 30^th September 2020 may be provided. The senior citizens who cannot be invests in the NPS may be given an option to invest in the equity mutual fund.

c) The present limit of Rs. 50 Lakh against long term capital gain for investment in the specified bonds issued by NHAI / REC may be enhanced to Rs. 1 Crore. This additional deduction of Rs.50 Lakh may be allowed exclusively for investment in the equity mutual funds.

d) The buy backs norms may kindly be relaxed so that the coroporate with liquidity can buy back its shares resulting in a better value or price for the other shareholders.

II] GOODS & SERVICE TAX (GST):

1. The compliance with the provision of Reverse Charge Mechanism (RCM) be scrapped forever. There is no benefit to the Government Treasury as a result of RCM as the buyer/ service recipient as it is eligible for its set off. It will relieve the business from the unnecessary compliance burden which is not yielding any revenue to the Treasury as well.
2. The 10% restrictions rule for GST ITC credit under Section 36(4) of the CGST Act need to be removed from the monthly compliance requirements. If required, the same may be imposed at the time of filing annual return only. As a result, there will not be any loss to the Government Treasury and also the businessmen would be having better ease of business.
3. There are various purchases wherein the GST credit is blocked pursuant to Section 17(5). It is against the very basic concept of “seamless credit” in the GST.  The same need to be abolished and GST paid on all expenses / investment in the course of business be allowed as credit to the buyer.

4. There is a provision in GST in section 16(4) as a result of which ITC is denied to the genuine buyer. The same need to be scrapped in totality.

5. Till 31^st December 2020, the GST return payment date may kindly be extended to 30^th of every month.

III] INCOME TAX:

1. There is a new TCS provision introduced by recent Union Budget – 2020 in the form of section 206C(1H). It now requires every seller having turnover exceeding Rs. 10 Crore in the preceding financial year to collect Tax at Source @ 0.10% if the value or aggregate value of sale to any buyer during the year exceeds Rs. 50 Lakh. This proposal to impose TCS will neither result in widening the tax base nor in deepening the revenue collection as all such businessmen are duly covered by GST registration mechanism wherein bill-wise details is already available with the Government. We strongly appeal that TCS u/s 206(1H) must be scrapped so that industry can focus on innovation & business and not on unnecessary compliances. Business houses may kindly be encouraged to do constructive activities rather than clerical & non revenue generating activities. It will result in better revenue collections, employment & growth.

2. Industry is already incurring CSR expenditure towards the noble cause & welfare of the society. However, the same is not eligible for deduction as of now. It is requested that the expenditure of CSR may be allowed as deduction. Further, the amount incurred over and above the minimum stipulated sum of 2% be granted a weighted deduction of 150% of such expenditure.

3. Late fee under section 234E for delay in filing of TDS return of earlier quarter of the current financial year may also be waived off under the prevailing economic scnerio.

4. Salary and wages payment during the period of lock down may be given an additional weighted deduction of say 150% as the payment during such time is down without any other benefits to the industry.

5. The return filing due date for the FY 2019-2020 would be due from July to October 2020. The present extension to 30^th June 2020 would result in compliance of not only FY 20018-19 but also of return filing for FY 2019-20. It would be in the larger interest of all if the date of return filing for FY 2019-20 is extended by 6 months well in advance. As a result, businessmen would be able to concentrate on their business better after the effect of present epidemic of Cornona Virus is over. If the date is not extended in advance then the business would be left with compliance burden without any business growth.

6. The advance tax due for the first two quarters may be relieved and the same may be compensated in last two equal quarterly installments. It will enable better liquidity with the businessmen in this cash crunch scenario.

We hope that you will find above proposal suitable & in the interest of the Nation. We strongly believe that the above stimulus package would help in reviving the economy.

Thanking You

Yours Faithfully

Team www.TheTaxTalk.com