Tax Compliance Relaxation due to COVID-19

Here we discuss recent Income Tax Compliance relaxation as announced by the Govt of India in response to COVID-19. As most aware of the impact of the COVID-19 pandemic on the economy and personal finance. COVID-19 has widely impacted most of the countries and will have a huge impact on every aspect of our lives in the coming days.

This pandemic posed a significant challenge to Govt for managing the economic fallout. However, the Govt of India has come up with some announcements by providing immediate relief to individuals and businesses such as EMI Moratorium Tax rebates & relaxation, etc.

As in India, new financial year start from 1st April, therefore most of taxpayer and business need to complete their year-end compliance such as filing of revised returns or compliance related to tax assessments, appeals, etc.
Govt announced Income Tax Compliance relaxation related year-end tax compliance and related statutory due date falling during these days. Mainly in response to this, the Govt extend timelines till 30th June without any penalties for this delay and waived Interest for delay in tax deposition during this time period. Detailed timelines announced by the government are outlined below:

  1. Tax Compliance pertaining to FY 2019-20 ( Year ended on 31st March)
  2. Tax Compliance pertaining to FY 2020-21 ( New Financial Year)
  3. Tax Compliance pertaining to FY 2018-19 ( Last Financial Year)

Tax compliance for FY 2019-20

Here, it is important to list of the key tax compliances applicable to an individual taxpayer for FY 2019-20 and their existing and revised timelines:


1. Payment of tax deducted at source (TDS) for the month of March 2020 to the Govt - Due Date - No change in time for payment which is 30 April 2020However, reduced interest rate @ 0.75% per month or part thereof would be applicable for delay in payment of tax (instead of 1.5% per month or part thereof) for the deposit of taxes between 1 May to 30 June 2020.

2. Filing of TDS return for the 4th quarter of FY 2019-20 (i.e Jan-March 2020) - The due date of 31 May 2020 has been extended to 30 June 2020.

3. Payment of advance tax /self-assessment tax for FY 2019-20 (if not paid till 15 March 2020) - The tax is payable by 31 March 2020 and by 31 July 2020/ 30 September (with interest under section 234B).

No change in the timeline for payment of tax, however, reduced interest rate 0.75% per month or part thereof would be applicable for delay in deposit of tax (instead of 1%) per month or part thereof for payment of taxes between 20 March 2020 to 30 June 2020.

4. Filing of tax return (where no tax audit is required) - The due date for filing the personal tax return remains unchanged on 31 July 2020.

5. Specified investments to claim deduction under section 80 of the Act - Specified investment to claim deduction such as deposits in Public Provident Fund (PPF), National Savings Certificate (NSC), Post office Deposits, etc.). The specified investments which were required to be made by 31 March 2020 can now be made till 30 June 2020.

6. Investments for rollover benefit of capital gains - Due dates in order to claim capital gain exemption such as the deposit in capital gains account scheme, or purchase/ construction of a property, etc.
Where the due date for these actions was falling between 20 March to 29 June 2020, the same may now be completed by 30 June 2020.

Tax compliance for FY 2020-21

As per the tax provisions, the quarterly payment of advance tax is due on 15 June, 15 September, 15 December and 15 March respectively for respective quarters of the financial year.

For Q1 of FY 2020-21, the due date for payment of advance taxes is 15 June 2020. The reduced interest rate of 9% p.a. would be applicable instead of 12% p.a. for advance taxes paid between 16 June 2020 to 30 June 2020.

Other measures:
Apart from the above, the finance minister has also announced to extend the Aadhaar-PAN linking deadline to 30 June 2020 from existing 31 March 2020. Further, the Government has announced that all the Income-tax related compliances which are falling due between 20 March 2020 to 29 June 2020 would be extended to 30 June 2020.

Tax compliance for FY 2018-19

Due date of filing of Belated Return and Revision of Income Tax return was 31st March 2020 which extended up to 30th June 2020.

Belated Return: As per Income Tax Act, A taxpayer who has not yet filed his tax return FY 2018-19 i.e. 1 April 2018 to 31 March 2019 yet can file their tax return by 31st March 2020 with Penalty of 10,000. However, now this due date extended up to 30th June 2020. The penalty of 10,000 remains the same, there is no waiver in it. Such returns are termed a ‘belated return’ in income tax.

Revision/Correction in Return: Similarly, where a tax return for FY 2018-19 was filed within the due date but the taxpayer realizes that the tax return requires any correction /revision, such ‘revised return’ could also be filed by 31 March 2020. Now this date is extended up to 30th June 2020.

Further, delayed payment of self-assessment tax made between 20 March 2020 to 30 June 2020 would attract a reduced interest rate of 9% per annum (p.a.) instead of 12% p.a.


Conclusion

It is suggestive that you should evaluate your tax compliance obligations and see if there is any compliance they can manage through the e-filing or online mechanisms or which can be complied within the extended timelines. Delay in compliance may affect you adversely.

As these Tax Compliance relaxation measures are announced during the initial time of nationwide lockdown, however, if lockdown further progression, Govt may come up with additional Tax Compliance relaxation. Bookmark this page for all tax compliance updates in the future.

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