Amidst the ongoing humanitarian and economic steps to address the impact from COVID-19, the government has also taken a slew of measures to ensure that people from different walks of society don’t feel the pinch of the lockdown imposed due to the pandemic.
The government is not only trying to ‘flatten the curve’ of coronavirus infection, but is simultaneously trying to support individuals and businesses to cope with the financial impact of COVID-19 by introducing a mix of financial and tax relief measures.
Against the above backdrop, from individual tax perspective, the government has taken several steps to provide relief; it brought the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 [the Ordinance] on March 31, 2020, which, inter alia, extended various time limits of tax compliances.
In order to provide further relief to taxpayers, the government issued a Notification on June 21, 2020, wherein the time limit for filing individual income tax return for the Financial Year (‘FY’) 2019-20 (Assessment Year (‘AY’) 2020-21) has been extended from July 31, 2020, to November 30, 2020. Further, the date of furnishing of audit report under any provisions of the Income Tax Act, 1961 has been extended to October 31, 2020.
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Moreover, in order to provide relief to taxpayers, the date for payment of self-assessment tax in the case of a taxpayer whose self-assessment tax liability is up to Rs 1 lakh, has also been extended to November 30, 2020.
However, it has been clarified that there will be no extension of date for the payment of self-assessment tax for taxpayers having self-assessment tax liability exceeding Rs 1 lakh.
In this case, the self-assessment tax shall be payable by the due date specified in the Income-tax Act, 1961 (IT Act), i.e. by July 31, 2020, and delayed payment would attract interest under section 234A of the IT Act, which is applicable at the rate of 1% per month.
Moreover, the government has relaxed the timelines for investments/payments for claiming deduction under Chapter VI-A of the IT Act covered in Section 80C (LIC, PPF, NSC, etc.), 80D (Mediclaim), 80G (Donations), etc, which has been further extended to July 31, 2020. Hence, the investment/payment can be made up to July 31, 2020, for claiming deduction under these sections for FY 2019-20.
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Continuing with this relief measure, the date for making investment/construction/purchase to claim rollover benefit/deduction in respect of capital gains under Sections 54 to 54GB of the IT Act, has also been extended to September 30, 2020. Therefore, any investment/construction/purchase made up to September 30, 2020, shall be eligible for claiming deduction from capital gains.
In addition, the date of furnishing of the Tax Deducted at Source (‘TDS’)/Tax Collected at Source (‘TCS’) statements and issuance of TDS/ TCS certificates, being the prerequisite for enabling taxpayers to prepare their return of income, for FY 2019-20, has been extended to July 31, 2020, and August 15, 2020, respectively.
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Additionally, the timeline for linkage of Permanent Account Number (PAN) with Aadhaar has also been extended from July 31, 2020, to March 31, 2021.
The extension of timelines for filing tax returns and other related tax compliances is a well-thought-out measure, as due to lockdown it is difficult for individual taxpayers to obtain necessary documentation required for preparation of tax returns and file their returns on time. This surely comes as a big relief to individual taxpayers who are clear beneficiaries of this welcome change.
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(Divya Baweja is Partner with Deloitte India, and Divya Grover is Manager with Deloitte Haskins and Sells LLP.)