New Relief Measures for Income Tax Assessee

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New Relief Measures for Income Tax Assessee

Government is proactively reacting to the demand of the taxpayers rather than waiting for the last minute. Finance Minister Smt. Nirmala Sitharaman vide press conference dated May 13, 2020 offered the second relief package for the income tax payee which includes extension of all due dates of filing income tax return, completing assessment & relaxation in TDS/TCS provisions. The major relief announcements are summarized as under:

  1. Extension of due date for filing the Income Tax Return for FY 2019-20:

The due date for filing the income tax return for majority of taxpayer was July 31st, 2020 whereas it was 31st October for taxpayers who are required to get the books of accounts audited. The date has been extended for all such categories of taxpayers. A comparative chart of old due dates vis a vis new due dates is compiled as under:

S.No. Category of Taxpayers Earlier Due Date Revised Due Date
1 If assessee is required to furnish a report of transfer pricing (TP) Audit in Form No. 3CEB

 

30th November 30th November
2 Company assessee not required to furnish transfer pricing audit report in Form No. 3CEB 31st October*

 

30th November
3 If assessee is required to get its accounts audited under Income-tax Act or under any other law 31st October*

 

30th November
4 Individual is a partner in a firm (whether working or not working) whose Accounts are required to be audited. 31st October*

 

30th November
5 In any other case 31st July 30th November
6 Audit Report u/s 44AB 30th September 31st October*

[* Earlier, this date was 30th September. However, by the Finance Act-2020, the due date of filing income tax return is one month after the date of filing the audit report. It means that the due date of filing audit report u/ s 44AB would be 30th October].

In short, the due date of 31st July & 31st October has now been extended unequivocally to 30th November 2020. If the return is not filed within due date then late fee (& it is not termed as Penalty) would leviable. For taxpayer with income up to Rs. 5 Lakh, Late fee would be Rs. 1,000/-.  For taxpayer with income exceeding Rs. 5 Lakh, Late fee would Rs. 5000/- if return is filed by 31st December & Rs. 10,000/- if return is field after 31st December.

Questions are raised by lot many taxpayers regarding the applicability of late fee. It may be noted that
a) the late fee is applicable only if there is obligation to file the return of income u/s 139(1).
b) Returns filed voluntarily without any obligations attached u/s 139(1) would not be subject to any late fee.
c) In case of individual, obligation to file income tax return arises if the income before deduction under chapter VI-A is above the basic exemption limit.
d) Firms/companies have an obligation to file the return of income even if there is no income or business carried out by it during the financial year.
e) If taxpayers incur any loss during the year, there is a benefit to carry forward such loss for set off in subsequent years. However, this benefit of carry forward of loss is available only if ITR is filed within due date. If the ITR is filed after the due date then the benefit to carry forward the loss stands cancelled.

  1. Date of 30.06.2020 is not extended:
    In the earlier relief package, date for investment/ compliances falling due between 20th March 2020 to 29th June 2020 was extended to 30.06.2020. This date not been extended again & it will be continued to be 30th June 2020.
  2. Reduction of TDS Rate:
    The government has also reduced the TDS rates. Deduction of tax at source (TDS) at lower rate would leave more liquidity in the hands of the taxpayers and the amount could be used for smooth business operation. TDS on specified payments (other than salary) made to residents and rate of TCS for specified receipts has been reduced by 25%. The reduced TDS and TCS rates will remain valid till March 31, 2021. For example, the commission is normally liable for TDS @ 5%. With effect from 14th May 2020, new TDS rate would be 3.75%.  Various other payments like interest, rent, professional fees, contractual payments etc would be subject to lower rate of TDS.
  3. Date of payment under Vivad se Vishwas Scheme:
    The Vivad se Vishwas Scheme was announced in the Budget 2020 to allow one-time settlement of tax dispute between the tax department and the taxpayers. The settlement can be made without paying any penalty and interest on the tax dispute amount. The date of making payments without interest and penalty under Vivad se Vishwas scheme (VSVS) -2020 has also been again extended to December 31st, 2020. This is the second extension of the scheme. Earlier the vide press conference dated March 24, 2020, the scheme was extended to June 30th, 2020.
  4. Speedy Income Tax Refund for charitable trust:
    FM has also announced to clear all pending refunds to charitable trusts and non-corporate business & professions immediately
  5. Extension of date for completing Assessment:
    The date of completing assessment by the Tax authorities has also been extended. All assessments which were getting barred on September 30th, 2020 has been extended to December 31st, 2020. Similarly, all assessment which were on March 31st, 2021 has been now extended to September 30th, 2021
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