Relaxations in Income Tax Provisions on account of Covid-19 (post March 2020 ordinance)

Covid-19 has created a havoc worldwide and people are struggling hard to barely survive in this uncertain environment. People are stranded in different parts of the world on account of lockdown, quarantine and suspension of travel both domestic and international. Due to this, people are facing difficulties even in completing their tax compliances under the Income tax Law. In this regard, the government came up with an ordinance wherein due dates which are falling between 20th March 2020 and 29th June 2020have been extended to 30th June 2020 (with exception of tax deposits due dates).

However, in these hard times, the government is expected to provide further relief to reduce the burden on the taxpayers. In wake of the above, the government has come up with the following relaxations:

  • Tax auditCircular No. 10/2020 dated 24th April 2020, has provided that the proposed clause 30C (pertaining to General Anti-Avoidance Rules (GAAR)) and proposed clause 44 (pertaining to Goods and Services Tax (GST) compliance) of the Form No. 3CD shall be kept in abeyance till 31st March 2021. Accordingly, they will not be applicable for the tax audits for financial year 2019-20.
  • Tax residency – As per the provisions of the Income tax Act, taxability of income of an individual in India depends on his/her residential status during the financial year, which in-turn depends on the number of days of presence of the individual in India during that year.

However, on account of lockdown, quarantine and suspension of domestic and international travel, certain individuals who had come on a visit to India, were not able to leave India. Due to this, there might be an impact on their residential status and thus taxability of their income.

Accordingly, to address genuine hardship in such cases, relaxation has been provided to individuals who came to India on a visit before 22nd March 2020for checking the residential status for the financial test 2019-20, via Circular No. 11/2020 dated 8th May 2020 as under:

  • Who was unable to leave India on or before 31st March 2020 –period of stay from 22ndMarch 2020 to 31st March 2020, will not be considered for checking residential status.
  • Who has been quarantined in India on or after 1st March 2020 and has departed on an evacuation flight on or before 31st March 2020 or was unable to leave India on or before 31st March 2020– period of stay from the beginning of his quarantine to date of departure or 31st March 2020 (as may be applicable), will not be considered for checking residential status.
  • Who has departed on an evacuation flight on or before 31st March 2020 – period of stay from 22ndMarch 2020 to date of departure, will not be considered for checking residential status.
  • Registrationprocess u/s 10(23C), 12AA, 35 and 80G – Finance Act, 2020 rationalized the procedure relating to approval/ registration/ notification of certain entities registered under section 10(23C), 12AA, 35 and 80G and required the entities registered under these provisions to file intimation within 3 months starting 1st of June 2020, i.e. latest by 31st August 2020.

Due to Covid-19, relaxation has been provided via Press Release dated 9th May 2020, with respect to the above provisions and the new procedure has been deferred till 1st October 2020. Accordingly, the intimation is now required to be filed within three months from 1st October 2020, i.e., by 31st December 2020.

  • Rates of TDS – Government via its Press Release dated 13th May 2020has slashed the rates of TDS and TCS for non-salaried payments to residents by 25% w.e.f. 14th May 2020 till 31st March 2021.
  • Further, the government has announced the following reliefs on 13th May 2020:
  • Refunds – All non-corporate business and profession refunds to be issued immediately.
  • Due dates for tax compliances – The due dates for filing income tax returns by individuals (i.e. 31st July 2020) and for others which are subject to tax audits (i.e. 31st October 2020) stands extended to 30th November 2020. In addition to this, the due date for filing tax audit reports has been extended from 30th September 2020 to 31st October 2020.
  • Due date for assessments – The due date for completion of assessments which are time-barring on 30th September 2020 stands extended to 31st December 2020 and those time-barring on 31st March 2021 stands extended to 30th September 2021.
  • Vivad se Vishwas Scheme – The due date for making payment under the scheme without additional amount, has been further extended from 30th June 2020 to 31st December 2020.

The above relaxations have been widely welcomed. Further, the government is expected to provide more such relaxations and deferments, specially, around the new income tax provisions introduced by Finance Act 2020.

This content is meant for information only and should not be considered as an advice or opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.

Posted by: Amit Kumar Garg

Designation: Managing Partner

Organization: AKGVG & Associates

Mobile no: +91-9818330516


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