Income Tax Reliefs Given by Government Due to Covid-19 | Taxmann’s

The impact of the Covid-19 has been very troublesome. The entire economy has been effected by it financially as well as emotionally. Government has been taking many steps to help every one in whichever way it can to keep the economy and people’s failing morale. Following is the list of the measures taken by the Govt. with respect to the Income Tax Act, 1961:

1.Extension of the due dates

Considering the lockdown prevailing in the entire country leading to temporary shutting down of the activities, Finance Minister Smt. Nirmala Sitharaman, announced various measures to address the concerns relating to statutory and regulatory compliance. To give effect to such announcement, the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (hereinafter referred to as ‘Ordinance 2020’) has been promulgated by the President of India.

The ordinance provided for extension of various due dates as prescribed under the Income Tax Act aw well as Income Tax Rules. After the issuance of the ordinance, it was also announced by the Finance minister that the due date of filing of return for the Financial Year 2019-20 will be extended to November 30, 2020. Additionally, the due date for tax audit under section 44AB shall be extended from September 30, 2020 to October 31, 2020.

It was also announced that due date of 30-09-2020 for completion of assessments shall be extended to 31-12-2020. Where assessments are getting barred on 31-03-2021, it shall be extended to 30-09-2021. Following is the list of extended due dates under the Income-tax Act for the year:

2. Reduction in the rate of TDS

The pendamic has caused harm to every person in the economy from a big corporate office to a person earning their livelihood from a cart. So, to provide liquidity and reduce the excessive burden in the hands of the assessees, annoucement was made by the Finance Minister to reduce the TDS and TCS rates. Rates were revised for non-salaried resident persons with respect to payments made from 14-05-2020 to 31-03-2021. Following is the list of reduced rate of TDS and TCS:

Read: Income-tax Returns for a Salaried Taxpayer

List of reduced TDS rates

List of reduced TCS rates

3. Deduction at the rate of 100% with respect to donations made under “PM CARES Fund”

The Taxation and other laws (Relaxation of certain provisions) ordinance, 2020, dated 30/03/2020 has amended section 80G to provide relief to the every person donating to PM CARES Fund. PM CARES Fund was formed to provide relief to those people who are most affected by it.

The donations made to the fund is eligible for 100% deduction under section 80G of the Income-tax Act, 1961. Additionally, to give more relief to the doners, the limit on deduction of 10% of gross income shall also not be applicable for donation made to PM CARES Fund. Deduction is available only with respect to the donations made up to 30-06-2020.

4.Relaxations for people stuck in India while determining residential status

The residential status of a person is generally determined on the basis of the stay of a person in India. Various concerns were made by the individuals who came to India for a limited period of time but could not return back due to the closed international flights. This stay could make them resident during the year in India and would lead to higher tax on their incomes.

So, to provide relief to such individuals, while computing their residential status it was provided that with respect to the individuals who came to India before 22^nd March, 2020 and,

(a) Has been unable to leave India on or before 31st March, 2020, his period of stay in India from 22nd March, 2020 to 31st March, 2020 shall not be taken into account; or

(b) Has been quarantined in India on account of Novel Corona Virus (Covid-19) on or after 1st March, 2020 and has departed on an evacuation flight on or before 31st March, 2020 or has been unable to leave India on or before 31st March, 2020, his period of stay from the beginning of his quarantine to his date of departure or 31st March, 2020, as the case may be, shall not be taken into account; or

(c) Has departed on an evacuation flight on or before 31st March, 2020, his period of stay in India from 22nd March, 2020 to his date of departure shall not be taken into account.

5. Waiving off of deposit to be made under “Vivad Se Vishwas Scheme”

Govt. has decided to waive off the additional 10% payment of disputed tax if assessee applies under the Vivad Se Vishwas Scheme after 31-03-2020 till 31-12-2020. Thus, taxpayers opting under this scheme till 31-12-2020 are liable to pay only 100% of disputed tax or 25% of disputed interest, fee or penalty (as the case may be). However, if a taxpayer has got the favorable ruling in immediate higher appellate forum or pending appeal is filed by the Dept., he will be liable to pay 50% of the disputed tax or 12.50% of disputed interest, fee or penalty (as the case may be).

6.Deferment of due dates for compliance of charitable trusts

The Finance Act, 2020 has brought major changes in the compliance procedures in case of NGOs. Section 12AB was inserted making the existing chartitable trusts to apply for re-registration as well as provisions for the new trusts to be registered. The new provisions were applicable with effect from 01-06-2020. Considering the pendamic and understanding the situation that the NGOs might not be able to cope up with the new procedural aspect of the provisions a Press Release dated 09-05-2020 was issued stating that the entities approved/ registered/ notified under section 10(23C), 12AA, 35 and 80G of the Income-tax Act would be required to file intimation within three months from 1st October, 2020, that is, by 31^stDecember, 2020. Further, it was also provided that the amended procedure for approval/ registration/ notification of new entities shall also apply from 1^stOctober, 2020.

7.CBDT extends validity of Forms 15G and 15H of FY 2019-20 by 3 months due to outbreak of COVID-19

Due to outbreak of pandemic COVID-19, the Assessing Officer was finding difficulties in disposing of the applications for lower or nil rate of TDS/TCS. Thus, to mitigate hardship of assessees, the CBDT has issued following directions and clarifications:

(a) In case the application is pending, the certificate issued to assessee in the Financial Year (FY) 2019-20 will be applicable for FY 2020-21 as well till June 30, 2020 or disposal of their application, whichever is earlier.

(b) In case asseessee couldn’t apply for issue of lower or nil deduction of TDS/TCS certificate, he can also use certificate issued for FY 2019-20 till June 30, 2020. However, he needs to apply at the earliest giving details of the transactions.

(c) In case of assessee who is not having such certificate for FY 2019-20, can apply for application for lower or nil TDS/TCS certificate vide e-mail addressed to the concerned Assessing Officer. Certificate will be issued to him via email. The Email shall contain the following documents:

· Form-13

· Documents/informations required to be uploaded on TDS-CPC website while filing up Form-13

· Projected Balance Sheet and P&L account for FY 2020-21

· Provisional Balance Sheet and P&L account for FY 2019-20

· Balance Sheet and P&L account for FY 2018-19

· Form-26AS for FY 2019-20 and FY 2018-19

· ITR pertaining to FY pertaining to FY 2018-19

(d) In case payment is being made to Non-resident having Permanent Establishment in India, tax shall be deducted at the rate of 10% including surcharge and cess till June 30, 2020 or disposal of application of assessee, whichever is earlier (for assessee’s not falling in (a) or (b) category).

8. AO to dispose of application for lower/nil deduction for FY 2019-20 by 27-04-2020 vide e-mail:

COVID-19 virus has disrupted normal working of the Income-tax department also. Therefore, the application filed by the taxpayers under sections 195 and 197 of the Income-tax Act for lower or nil rate of deduction of TDS/TCS may not be attended in timely manner by the TDS Assessing Officer (AO). The CBDT videOrder dated 31-03-2020, has extended the validity of existing TDS/TCS certificates of FY 2019-20 up to June 30, 2020 for the Financial Year 2020-21 until their application is disposed of by the AO.

It may be possible that application for lower/nil rate of TDS/TCS certificate for the Financial Year 2019-20 is also pending with AO. Thus, the CBDT has directed that all such assessees, who has timely filed application for lower or nil deduction of TDS/TCS on traces portal for the Financial Year 2019-20 and such application is pending for disposal, shall intimate vide an e-mail addressed to the AO concerned, regarding pendency of such application. Assessees are required to intimate the concerned AO along with required documents and evidences of filing their application in traces portal.

The AO shall dispose of the application by 27-04-2020 and communicate to the assessee regarding issue/rejection of certificate vide e-mail.

9.Payment of refund up to Rs. 5 lakhs

To provide immediate relief to the taxpayers, the Ministry of Finance has decided to immediately issue all pending Income-tax refunds up to Rs. 5 lakh. Further, it has also been decided to issue all pending GST and Custom refunds which would provide benefit to around 1 lakh business entities, including MSME. Thus, the total refund granted will be approximately Rs. 18,000 crore.

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