The first case of Coronavirus disease (COVID-19) in India was reported on 30th January 2020. With the increase of number of coronavirus disease, the outbreak has been declared pandemic in India in more than dozen states and union territories, where provisions of Epidemic Diseases Act, 1897 and Disaster Management Act, 2005 have been invoked. On 24th March 2020 the Prime Minister ordered a nationwide lockdown for 21 days starting from 00:00 hours of 25th March 2020. In response to the outbreak of coronavirus disease 2019 (COVID-19), the Union Finance Minister, Government of India has issued several emergency tax measures to mitigate the impact of pandemic on Indian economy. In this regard the government has brought Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (hereinafter Taxation Laws Ordinance, 2020) on 31.03.2020 which provides for extension of various time limits under the Taxation and other laws. Taxation Laws Ordinance, 2020 says that in view of spread pandemic COVID-19 across many countries of the world including India, causing immense loss to the lives of the people, it has become imperative to relax certain provisions including extension of time limit, in the taxation and other laws. This ordinance also provides for extension of time limits contained in the Rules or Notification which are prescribed/ issued under these laws. Simultaneously, Ministry of Corporate Affairs, Government of India in order to support and enable Companies and Limited Liability Partnerships (LLPs) in India to focus on taking necessary measures to address the COVID-19 threat, including the economic disruptions caused by it, issued special measures to reduce their compliance burden and other risks.
In this article we will discuss the various tax measures under Taxation Ordinance, 2020 and special measures issued by Ministry of Corporate Affairs, Government of India amid outbreak of COVID-19 pandemic and its impact on tax regime and corporate affairs in India. Some of the relief measures issued by the Union government to tax payers and corporate entities in India are as under:
TAXATION LAW MEASURES
Prime Minister CARES Fund
The Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) was created on 28 March 2020 following the COVID-19 pandemic in India. The fund will be used for combating, containment and relief efforts against the coronavirus outbreak and similar pandemic like situations in the future. Taxation Laws Ordinance, 2020 amends the provision in the Income Tax Act, 1961 to allow 100 per cent deduction on donations to the PM-CARES Fund.
Income Tax and Benami Laws
-The last date of filing of original as well as revised income-tax returns(ITR) for the Financial Year 2018-19 (Assesment Year 2019-20) have been extended to 30th June, 2020.
-The date for making various investment/payment for claiming deduction under Chapter-VIA-B of Income Tax Act which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations), etc. has been extended to 30th June, 2020. Hence the investment/payment can be made up to 30.06.2020 for claiming the deduction under these sections for FY 2019-20.
-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.
-The date for commencement of operation for the Special Economic Zones (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.
-The date for passing of order or issuance of notice by the authorities under various direct taxes & Benami Law has also been extended to 30.06.2020.
-It has provided that reduced rate of interest of 9% shall be charged for non-payment of Income-tax (e.g. advance tax, TDS, TCS) Equalization Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) which are due for payment from 20.03.2020 to 29.06.2020 if they are paid by 30.06.2020. Further, no penalty/ prosecution shall be initiated for these non-payments.
Vivad se Vishwas Scheme
The Union Budget 2020 has proposed ‘Vivad Se Vishwas’ Scheme (No dispute but trust) which aims at reducing litigations in the direct taxes payments. Under Vivad se Vishwas Scheme, the date has also been extended up to 30.06.2020. Hence, declaration and payment under the Scheme can be made up to 30.06.2020 without additional payment.
- Last date of furnishing of the Central Excise returns due in March, April and May 2020 has been extended to 30th June,2020.
- Wherever the last date for filing of appeal, refund applications etc., under the Central Excise Act, 1944 and rules made thereunder is from 20th March 2020 to 29th June 2020, the same has been extended to 30th June 2020.
- Wherever the last date for filing of appeal, refund applications etc., under the Customs Act, 1962 and rules made thereunder is from 20th March 2020 to 29th June 2020, the same has been extended to 30th June 2020.
- Wherever the last date for filing of appeal etc., relating to Service Tax is from 20th March 2020 to 29th June 2020, the same has been extended to 30th June 2020
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was launched to help taxpayers, including small taxpayers, in clearing the baggage of disputes under legacy taxes (Service Tax and Central Excise), which are subsumed in Goods and Service Tax. The date for making payment to avail of the benefit under Sabka Vishwas Legacy Dispute Resolution) Scheme 2019 has been extended to 30th June 2020 thus giving more time to taxpayers to get their disputes resolved.
Goods and Services Tax (GST)
A new enabling provision in Central Goods and Services Tax Act (CGST Act), 2017 inserted. Section 168A of CGST Act empowers the Government to extend the time limit specified in, or prescribed or notified under, this Act on recommendations of the GST Council in respect of actions which cannot be completed or complied with due to force majeure. The Taxation Law Ordinance, 2020 also explain the term force majeure. It provides that for the purposes of this section, the expression "force majeure" means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of this Act.
CORPORATE LAW MEASURES
Corporate Social Responsibility
On 23rd March 2020 the Ministry of Corporate Affairs, Government of India has issued clarification regarding the CSR policy. It state that keeping in view of the of novel Corona Virus (COVID-19) in India, its declaration as pandemic by the World Health Organisation (WHO), and, decision of Government of India to treat this as a notified disaster, it is hereby clarified that spending of CSR funds for COVID-19 is eligible CSR activity. Clarification also state that funds may be spent for various activities related to COVID-19 under item nas. (i) and (xii) of Schedule VII relating to promotion of health care, including preventive health care and sanitation, and, disaster management.
The Companies and Limited Liability Partnerships (LLPs)
On 24th March 2020 the Ministry of Corporate Affairs, Government of India has issued Special Measures under Companies Act, 2013 (CA-2013) and Limited Liability Partnership Act, 2008 in order to support and enable Companies and Limited Liability Partnerships (LLPs) in India to focus on taking necessary measures to address the COVID-19 threat, including the economic disruptions caused by it. Some of measures are as under:
i. The first measure is that no additional fees shall be charged for late filing during a moratorium period from 01sr April to 30th September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date, which will not only reduce the compliance burden, including financial burden of companies/ LLPs at large, but also enable long-standing non-compliant companies/ LLPs to make a 'fresh start'.
ii. The mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (CA- 13) (120 days) stands extended by a period of 60 days till next two quarters i.e. till 30th September. Accordingly, as a onetime relaxation the gap between two consecutive meetings of the Board may extend to 180 days till the next two quarters, instead of 120 days as required in the CA-13.
iii. As per Para Vll (1) of Schedule lV to the CA-13, lndependent Directors (lDs) are required to hold at least one meeting without the attendance of Non-independent directors and members of management. For the financial year 2019-20, if the lDs of a company have not been able to hold such a meeting, the same shall not be viewed as a violation.
iv. Newly incorporated companies are required to file a declaration for Commencement of Business within '180 days of incorporation under section 10A of the CA-13. An additional period of 180 more days is allowed for this compliance.
v. Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the CA-13 shall not be treated as a non-compliance for the financial vear 2019-20.
About the Author: Vikram Karuna is a Doctoral Candidate of Tax Law and Senior Research Fellow in Law School, Banaras Hindu University, Varanasi. He is author of 'Foreign Direct Investment and Constitution of India.'
1. Central Goods and Services Tax Act, 2017.
2. Companies Act, 2013.
3. Finance Minister proposes wide-ranging facilities and measures in Direct Tax Regime https://pib.gov.in/PressReleasePage.aspx?PRID=1601460 (last visited on 5 April, 2020).
4. Income Tax Act,1961.
5. Limited Liability Partnership Act, 2008.
6. PM CARES Fund https://en.m.wikipedia.org/wiki/PM_CARES_Fund (last visited on 5 April, 2020).
7. Sabka Vishwas – Legacy Dispute Resolution Scheme. Available at https://pib.gov.in/newsite/PrintRelease.aspx?relid=194968 (last visited on 5 April, 2020).
8. Special Measures under Companies Act, 2013 (CA-2013) and Limited Liability Partnership Act, 2008 in view of COVID-19 outbreak, dated 24th March, 2020, Ministry of Corporate Affairs, Government of India. Available at http://www.mca.gov.in/Ministry/pdf/Circular_25032020.pdf (last visited on 5 April, 2020).
9. The Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (No. 2 of 2020).
10. 2020 coronavirus pandemic in India https://en.m.wikipedia.org/wiki/2020_coronavirus_pandemic_in_India (last visited on 5 April, 2020).