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Key Amendment by The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 : A Short Overview
- It has replaced the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and the notifications issued under the Ordinance. Clause 11 of the Act provide for repeal and savings of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.
- Through the Ordinance earlier and two notifications, the Government has provided the following relaxations in the direct taxes:
- Various time limits for compliances and statutory actions under the taxation laws, other related legislations and the rules or notifications prescribed/ issued under these Acts have been extended.
- Interest for delay in payment of income-tax (e.g. advance tax, TDS, TCS), Equalization Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) due for payment from 20.03.2020 to 29.06.2020 to be charged at reduced rate of 9% per annum (0.75% per month), if the payment is paid by 30.06.2020. Further, no penalty/ prosecution shall be initiated for these non-payments.
- Date for payment of amount payable under the Direct Tax Vivad se Vishwas Act, 2020 without additional amount, has been extended from 31.03.2020 to 30.06.2020, i.e., if payment is made by 30.06.2020, no additional amount shall be payable.
- The donation made to the PM CARES Fund has been made eligible for 100% deduction u/s 80G of the Act. The income of the said Fund has also been made exempt.
- The time for filing of original as well as revised income-tax returns for FY 2018-19 (relevant to AY 2019-20) has been extended to 30.09.2020.
- The due date for income-tax return for FY 2019-20 (relevant to AY 2020-21) has been extended from 31.07.2020 (for individuals etc.) and 31.10.2020 (for companies etc.) to 30.11.2020. Further, the due date for furnishing of tax audit report has also been extended from existing 30.09.2020 to 31.10.2020.
- The date for payment of self-assessment tax in case of taxpayers whose self-assessment tax liability is upto Rs. 1 Lakh has been extended to 30.11.2020 so as to give relief to small and middle-class taxpayers.
- The date for making various investment/payment for claiming deduction under Chapter VIA-B of the Act has also been extended to 31.07.2020.
- The date for making investment/construction/purchase/deduction in respect of capital gains under section 54 to 54GB of the Act has been extended to 30th September, 2020;
- The date for commencement of operation for the SEZ units for claiming deduction under section 10AA of the Act has also been extended to 30th September, 2020 for the units which have received necessary approval by 31.03.2020.
- The time limit for furnishing of TDS/TCS statements and issuance of TDS/TCS certificates for FY 2019-20 has been extended to 31.07.2020 and 15.08.2020 respectively;
- The date for passing of order or issuance of notice by the authorities and various compliances under various direct taxes and Benami Law which are required to be passed/issued/made by 31.12.2020 has been extended to 31.03.2021.
- The date for linking of Aadhaar with PAN has also been extended to 31.03.2021;
- Compliance dates under the Direct Tax Vivad se Vishwas Act, 2020 (the DTVsV Act) falling during the period 20.03.2020 to 30.12.2020 have been extended to 31.12.2020.
- It has been clarified that in case of a senior citizen referred to in sub-section (2) of section 207 of the Act, the taxes paid by him under section 140A of the Act within the due date (before extension) shall be deemed to be advance tax.
In addition to giving effect to the above issues granted earlier by ordinance, following legislative changes have also been done to give effect to other announcements and press releases issued.
- The new procedure for approval/ registration/ notification of certain entities u/s 10(23C), 12AA, 35 and 80G of the Act, introduced by the Finance Act, 2020, from 01.06.2020 to 01.10.2020 (Press Release dated 08.05.2020) has been deferred. It may further be noted that further relaxation is provided now so as to make the procedure operational from 1stApril, 2021
- Reduction of rate of deduction of tax at source for specified non-salaries payments to residents and specified rates of collection of tax at source by 25% for remaining period of the financial year 2020-21 as was announced by the Press Release dated 13.05.2020.
- Extension of date for making payment under the DTVSV Act without additional amount to31.12.2020.aswas declared by Press Release dated 24.06.2020.
In addition to above ordinance and effect to the press relases and announcements, following further amendment has been done in the Income-tax Act-1961 / Finance Act, 2020:
- Amendments is done in section 6 to provide more clarity to the changes carried out by the Finance Act, 2020.
- Insertion of new clauses is done in section 10, and also amendment of section 115AD is carried out so as to provide special dispensation under the Income-tax Act to Category-III Alternative Investment Funds located in the International Financial Services Centre (IFSC), so as to encourage relocation of foreign funds to the IFSC. [The regime shall be similar to the one provided for Foreign Portfolio Investors (FPI) investing from certain countries by virtue of provisions under that Act, read with the Double Taxation Avoidance Agreement of such countries].
- Amendment is done in clause (23FE) of section 10 to provide that the Abu Dhabi Investment Authority shall make investment out of the fund of the Government of Abu Dhabi instead of Government of the United Arab Emirates as the said funds are owned by the former. Also that the sovereign fund and the pension fund shall be required to fulfil conditions as may be specified in the notification exempting them.
- Amendments is done in all relevant sections so as to defer the applicability of new procedure for approval or registration or notification of certain entities under sections 10(23C), 12AA, 35 and 80G of that Act, inserted by the Finance Act, 2020, from 1stJune, 2020 to 1stApril, 2021, so as to ease the compliance burden in view of continuing pandemic andalso to make certain consequential amendments.
- Amendment is done in section 13 to include reference to sections 12AA and 12AB inExplanation1 to that section, to provide that for the purposes of said sections, “trust” includes any other legal obligation.
- Amendment is done in of section 35 to provide that fifth proviso to sub-section (1) thereof, inserted by the Finance Act, 2020, shall apply with effect from the assessment year commencing on or after 1stApril, 2022, instead of 1stApril, 2021, as currently provided.
- Amendment is done in section 35AC to provide thattheNational Committee provided there under shall be discontinued and its functions shall be discharged by the Principal Chief Commissioner of Income-tax or of the Chief Commissioner of Income-tax (Exemption).
- Amendment is done in section 133A to raise the level of approval of power of survey and also to limit the powers of income-tax authorities to conduct survey.
- Amendment is done in section 133C to provide that the prescribed authority under that section shall utilise the information in accordance with the scheme notified under sub-section (3) thereof or under the scheme proposed to be notified.
- Amendments is done in sections 143 and insertion of new section 144B to incorporate the provisions of the Faceless Assessment Scheme, 2019 therein with effect from 1stApril, 2021 (now faceless assessment scheme shall be part of the Act wef 1stApril 2021).
- Amendment is done in so as to categorically provide that any assessment order passed on or after 1stApril, 2021 shall be treated as non-est, if it is required to be passed by the National Faceless Assessment Centre, but has been passed by any other authority.
- Amendments/insertion is done in/for various sections namely sections 92CA, 130, 135A, 144C, 151A, 157A, 231, 253, 264A, 264B, 279 and 293Dto empower the Central Government to notify schemes for making all departmental processes (like determination of ALP, assigning functions, vesting jurisdictions, calling for information, inspecting documents, DRP, issuance of notices, collection or recovery, appeal to ITAT, issuance of notices for assessment/reassessment, sanction for such notices, revision of orders, compounding of offence, according approval for registration etc) under the Income-tax Act faceless and jurisdiction less.
- Amendment is carried out now in sections 263 and 264 so as to provide that the Principal Chief Commissioner or Chief Commissioner, besides the Principal Commissioner or Commissioner as currently provided, shall also have the power of revisions of orders.
- Amendment is done in the section 274 so as to provide that in the scheme to be notified under that section relating to penalty, which at present makes reference only to the Assessing Officer and the assessee, penalty there under can be levied by income-tax authorities including Assessing Officers in respect of assessee or any other person also;and to eliminate the interface between the income-tax authority and the assessee or any other person.
- Amendment is done in section 2 of the Finance Act 2020 so as to provide for cap of surcharge at 15% on dividend income of the Foreign Portfolio Investor for which due representation was done immediately after the Budget 2020..
- The Act now further empowers the Central Government to remove, by order, any difficulty that may arise in giving effect to the provisions of the Act for a period of two years now.