RELIEF MEASURE ANNOUNCED BY INCOME TAX DEPARTMENT IN VIEW OF CORONA VIRUS -2019 – BY NARESH JAKHOTIA

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RELIEF MEASURE ANNOUNCED BY INCOME TAX DEPARTMENT IN VIEW OF CORONA VIRUS -2019

CA Naresh Jakhotia

  1. Income Tax Department has announced the clearance of all income tax refunds up to Rs 5 Lakh immediately to individuals and business entities. According to press note of the department, this decision would benefit around 14 Lakh taxpayers.
  2. Belated tax return and revised tax return for Financial Year (FY) 2018-19 could have been filed on or before 31 March 2020. This due date is now extended to 30 June 2020.
  3. Specified investment / payments (such as investment in Public Provident Fund, Life Insurance payments etc.) or donation to avail deductions from income for FY 2019-20 was to be made till 31 March 2020. Now these investments / payments to avail deductions from income for FY 2019-20 can be made till 30 June 2020.
  4. Similarly, exemptions from Long Term Capital Gains are available if certain investments are made within the prescribed time from the date of transfer of the capital asset. Now any such investment which is due for investment in between 20th March 2020 to 29th June 2020 is allowed to be made up to 30th June 2020. However, wavier of this is subject to all other conditions mentioned in the Income tax Act, 1961.
  5. All donation done in Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) which is newly set up by the Central Government is eligible for deduction u/s 80G. Taxpayer can claim 100% amount given as deduction. For claiming deduction in the return for FY 2019-20, Donation to PM CARES fund could be made till 30th June 2020 i.e., donation made even after 31st March 2020 will be eligible for deduction of the FY 2019-20.
  6. Aadhaar was required to be linked with PAN by 31st March 2020. Else, PAN would have been inoperative. The due date to link Aadhaar and PAN is now extended to 30 June 2020.
  7. Where any taxes are due to be paid between 20th March to 29th June under the Income Tax Act and if such taxes are paid by 30th June 2020 then the interest on delayed payment of such taxes will be levied @ 0.75%per month or part of the month instead of 1% per month. Some examples of tax payments, for which this benefit could be availed are:
    a) Tax Deducted at Source (TDS) that are due between 20 March and 29 June;
    b) First installment of advance tax due by 15 June 2020 for FY 2020-21.

There shall be no penal consequences and prosecution on account of these delayed tax payments.

  1. Taxpayer  is required to obtain certificate from the tax authorities for tax withholding on certain incomes at lower or NIL rate. The certificate needs to be obtained by making application to the tax department at the beginning of every financial year. Considering the current situation of COVID-19, the certificates already held for FY 2019-20 shall be valid till 30th June 2020 pending grant of approval by the tax department for a new certificate for FY 2020-21. If any taxpayer has not filed an application yet for FY 2020-21, they are expected to file the same at the earliest with the help of modified online process and email to the concerned assessing officer.
  2. Tax officers are instructed to dispose of the pending lower deduction application for FY 2019-20 by 27th April 2020. The applicant is required to intimate about pendency of the application to the concerned tax officer vide e-mail and the concerned officer shall communicate on the acceptance or rejection vide e-mail to the individual.
  3. The valid Form 15G and Form 15H submitted to the banks or financial institutions for lower or nil tax deduction on interest / income for FY 2019-20 is now going to remain valid till 30 June 2020.
  4. The VSV Scheme is introduced to avoid the prolonged litigation for matters provided in the scheme by paying the disputed tax amount with immunity from payment of interest and penalty on the same. Originally, the applicant under VSV Scheme were required to pay only the disputed taxes or specified percentage of disputed demands by 31stMarch 2020. However, an additional percentage of the disputed taxes was payable if the taxes are paid after 31st March but before 30th June 2020. As per the measures announced, even if the taxes are paid after 31 March but on or before 30 June 2020, no additional percentage of the disputed taxes is payable.
  5. Withdrawal from PF while in service is restricted for employees. However, Employees Provident Fund Organisation (EPFO) has allowed employees to obtain a non-refundable advance from their existing PF balances while in service. The amount of advance shall be lower of 3 months’ Basic and Dearness Allowances or 75% of the balance in PF account. Also, it is clarified that this amount being advance will not be taxable.
  6. Since all the compliances due between 20thMarch 2020 to 29th June 2020 has been extended till 30th June 2020, the due date for filing quarterly TDS return also automatically get extended to 30th June 2020.

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