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Income-tax, income-tax compliances, ITR date relaxation, covid-19 pandemic, timelines for the taxpayers, tax returns, TDS return, self-assessment tax

The covid-19 pandemic has widely impacted most of the countries and will undoubtedly have a far-reaching impact on every aspect of our lives. Considering the situation with each passing day, governments across the globe have announced or are likely to announce measures to help meet the challenge posed by this threat. While the focus is primarily to contain the spread of the virus, governments also have a tough task of managing the economic fallout of this pandemic. Towards this end, one of the measures taken by the Indian government is to relax some of the key compliance timelines for the taxpayers so that compliances can be met and there are no penal consequences for delays which are beyond the control of the taxpayers.

In case of India, the new financial year has started with effect from 1 April and taxpayers will be looking at the applicable compliances for the new financial year. Taxpayers would also now be required to meet various compliances related to the previous FY2019-20 like payment of any pending tax amounts, filing of tax returns, etc. There may also be some taxpayers who have compliance obligations related to past tax years, for e.g., filing of revised returns or compliances related to tax assessments, appeals, etc.

The relaxation in tax compliance timelines announced by the government are outlined in the following paras which allow extended timeline till 30 June for meeting various obligations without any adverse implications.

Tax compliances for FY2018-19

As per the provisions of the Income-tax Act, 1961 (‘the Act’), a taxpayer who missed filing the tax return for FY2018-19 i.e. 1 April 2018 to 31 March 2019, before the original due date, i.e. 31 July 2019/ 30 September 2019 (where tax audit is applicable), may file the tax return by 31 March 2020, albeit with a penalty of `10,000, and subject to certain conditions. Such returns are termed a ‘belated return’. Similarly, where a tax return for FY2018-19 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.

Considering the present situation, the finance minister of India has extended such belated/revised tax return filing due date to 30 June 2020. Hence, for FY2018-19, a belated/revised tax return may be filed up to 30 June 2020 without any additional penal consequences.

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

Tax compliances for FY2019-20

Here, it is important to list down 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 into the Govt. treasury:

· No change in time for payment which is 30 April 2020

· However, 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 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 (without interest under section 234B for delay in deposit of tax) and by 31 July 2020/ 30 September (with interest under section 234B)

· No change in 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 at 31 July 2020

5. Specified investments to claim deduction under section 80 of the Act (e.g. deposits in Public Provident Fund (PPF), National Savings Certificate (NSC), five-year term deposits with Banks/ Post office, 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 roll over benefit of capital gains (e.g. deposit in capital gains account scheme, or purchase/ construction of property, etc)

· Where the due date for these actions were falling between 20 March to 29 June 2020, the same may now be completed by 30 June 2020.

Tax compliances for FY2020-21

As per the domestic 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. 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 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.

Some of other key timelines worth noting are:

-The timeline for processing of tax return under Section 143(1a) would automatically get extended to 30 June 2020.

-The direct taxes dispute resolution scheme known as ‘Vivad se Vishwas’ scheme has been extended vis-a-vis the initial date of 31 March 2020 to 30 June 2020 without any additional interest payment

-The due dates for issue of notice, intimation, notification, income tax order, filing of appeal, furnishing of return, statements, applications, reports, etc. where the time limit for compliance by the tax authority or tax payer were falling between 20 March to 29 June, have been extended to 30 June 2020.

Way forward

Taxpayers should evaluate their 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. At the same time, while the government has taken steps to ease the burden for taxpayers, it is the responsibility of each taxpayer to discharge their tax obligation in timely manner on priority. In India now, most of the tax compliances can be discharged online, hence, the taxpayers should ensure to comply with all key tax compliances, to avoid any issues/penal consequences at a later date.

Disclaimer: Due care has been taken to draft this write-up and is intended to express the Authors understanding and to start an academic discussion on the subject discussed in above write-up. it should not be considered as professional advice. Readers are advised to refer to relevant provisions of law before applying any of the above-mentioned views. The author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the content of this write-up.
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