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The rapid outbreak of Novel coronavirus (Covid-19) presents an alarming health crisis that the world is fighting with. The COVID-19 outbreak has significant impact on economies of effected countries. While the country is in complete lockdown the new financial year (FY 2020-21) has sneaked in from 01st April 2020.

For Income Tax purpose while new FY 2020-21 has begun, FY 2019-20 comes to an end on 31st march 2020 whose income will be assessed in AY 2020-21 there have been several important changes that one needs to be aware of.

Here are those key income tax changes effective from 01st April 2020.

1. Financial Year not extended:

Firstly it is important to bring into notice that Financial year has not been extended. Many explanations have been circulated in this behalf but the government has clarified this on 30th March 2020 and the same status for FY as 2020-21 i.e. from 1st April 2020 to 31st March 2021 will be maintained.

2. Return date for AY 2019-20(FY 2018-19) has been extended:

The last for filing ITR for without late fees was 31st august 2019 but it could have been belatedly filed by 31st March 2020 which has been extended to 30th June 2020. However the penalty under sec 234F for delay on filing of Income tax return and Interest will still needs to be paid. Also the return already filed can be revised till 30th June 2020.

3. Interest in Tax due:

The government has reduced interest rate at 9% p.a. instead of 12% p.a. (i.e. 0.75 percent per month instead of 1 percent per month) for delayed payments of advance tax, self-assessment tax, TDS, TCS, STT, CTT made between 20th March 2020 and 30th June 2020. No Late fees/penalty shall be charged for delay relating to this period. It should be noted in this regard that in case of payment of tax with respect to belated return for AY 2019-20 interests will be charged at reduced rate of 9% p.a. if paid between the above mentioned dates.

Note: Due date for payment of TDS has not been extended only rate of Interest for delayed payments has been reduced therefore any payments made after due dates (as 7th april or 30th april) need to be reported in Form 3CD.

4. Last date for saving based investments:

The government has extended the date for various investments/payments for claiming deduction under chapter VI-A & B of the Income Tax act 1961 till 30th June 2020. Therefore tax benefit u/s 80C , 80D or 80G for FY 2019-20 can be availed even if the investments are done between 01stApril 2020 to 30TH  June 2020. But those who have already made investments for FY 2019-20 can invest till June 2020 and thereafter in the financial year 2020-21 to avail tax benefit for the same year.

5. Capital Gain Roll Over Benefit:

The date for making investment/construction/purchase for claiming roll over benefit/deduction in respect of capital gains under sections 54 to 54GB of the IT Act has also been extended to 30th June 2020. Therefore, the investment/ construction purchase made up to 30.06.2020 shall be eligible for claiming deduction from capital gains arising during FY 2019-20.

6. Extension of date for issue of Notice, Intimation or Order:

Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, any other documents and time limit for completion of proceedings by the authority expiring between 20th March 2020 to 29th June 2020 has been extended to 30th June 2020. Therefore in case if any litigation is pending before the income tax authority which falls due between the given dates has been extended till 30th June 2020.

7. Commencement of Operation for SEZ:

The date for commencement of operation for the SEZ units for claiming deduction under deduction 10AA of the IT Act has also extended to 30.06.2020 for the units which received necessary approval by 31.03.2020.

8. Vivad se Vishwas Scheme:

The due date to make declaration and payment under the said scheme has been extended to 30th June 2020. Therefore no additional 10% is required to be paid.

9. PM CARES FUND

A special fund “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)” has been set up for providing relief to the persons affected from the outbreak of Corona virus. The provisions of the Income-tax Act have been amended to provide the same tax treatment to PM CARES Fund as available to Prime Minister National Relief Fund. Therefore, the donation made to the PM CARES Fund shall be eligible for 100% deduction under section 80G of the IT Act. Further, the limit on deduction of 10% of gross income shall also not be applicable for donation made to PM CARES Fund.

As the date for making payment u/s 80G has been extended the donation made to PM CARES fund till 30.6.2020 shall also be eligible for deduction for FY 2019-20.

Note: Any person willing to opt for new tax Regime for FY 2020-21 can make donation (including PM CARES fund) till 30th June 2020 and claim deduction for FY 2019-20 without losing the eligibility to pay tax at concessional rates as per New Tax regime for FY 2020-21. 

10. ESI Contribution:

The Director General has relaxed the provisions entered in regulation 26 & 31 of The Employees state Insurance (General) Regulations Act 1950 wherein the date for payment of contribution for the month of February and March has been substituted to 45 days instead of 15 days.

Thus, the due dates for payments of ESI contribution for the month of February and March is 15th April 2020 and 15th May 2020 respectively instead of 15th March 2020 and 15th April 2020. Hence this need to be taken care of while preparing FORM 3CD for FY 2019-20 where due dates will be taken for February and March as amended.

11. Certificate of lower/NIL rate deduction for TDS/TCS:
  1. All the assesses who have filed application for lower or nil deduction for FY 2020-21 and whose applications are pending for disposal as on the date and they have been issued such certificated for FY 2019-20, then such certificated shall be applicable till 30.06.2020 or till the disposal of application whichever is earlier.
  2. In case where the assessed could not apply for issue of lower or nil rate deduction of TDS/TCS for FY 2020-21 but having certificates for FY 2019-20, such certificate will be applicable till 30.6.2020 for FY 2020-21. However they need to apply at the earliest giving all the details as required as soon as normalcy is restored or 30.6.2020 whichever is earlier.
  3. In case where the assesse has not applied for the issue of lower or nil deduction for FY 2020-21 and also he is not having any such certificate for FY 2019-20, a modified procedure for application via email to concerned Assessing officer has been laid down.
  4. While making payments to NRI’S (including foreign company) having Permanent Establishment in India and are not covered by A and B above tax shall be deducted at the rate of 10% including surcharge and cess till 30.6.2020 or disposal of their application whichever is earlier.

Income Tax Changes that can affect the Business Compliance in Income Tax due to Novel Coronavirus (Covid – 19) has been explained.

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This Blog is Created by the CA Bhoomika as Taxwix Consultant..
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