Eye on lockdown
driven tax reliefs and various compliances under the Income Tax Act, 1961 (as
amended by the Finance Act, 2020) knocking at our doorstep
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Section No.
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Particulars
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Existing provisions under the Income Tax
Act, 1961 ("the Act")
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Scope of amendment under
the Finance Act, 2020 (the Finance Act)
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Date of making
compliance
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VA Comments
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12AB
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Fresh
Registration of charitable trusts/ institutions
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-
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Section 12AB inserted vide the Finance Act, prescribes a new
procedure to obtain fresh registration by charitable trusts/ institutions
w.e.f 01.06.2020. Registrations obtained u/s 12A/ 12AA shall be inoperative
from such date.
(a) In case of trusts registered under section 12A/ 12AA as
on the date of coming effect of amendment –application for registration u/s
12AB is to be made within 3 months from such
date;
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31.08.2020
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In case of registered trusts, application for fresh registration
is to be made within 3 months from 01.06.2020, i.e., 31.08.2020. Whereas in
cases where application for registration is pending on 01.06.2020, as such no
order granting registration is passed, the same would be treated as pending
application made u/s 12AB.
Similar to the above effect, application for fresh registration is
to be made by charitable institutions u/s 10(23C) of the Act.
Pursuant to the above amendment, charitable trust/institutions
will not be eligible to claim dual benefit under sections 11/12 and sections
10(23C)/ (46) i.e., benefit under one section shall be deemed to be
inoperative
when the other is claimed/operative.
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(b) In case of pending applications
as on the date of coming effect of amendment – it shall be deemed to be
applications pending u/s 12AB;
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(c) In case of fresh registration - application is to be made at least one month
prior to the commencement of the previous year relevant to the assessment
year from which registration is sought.
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The
new procedure limits the period of registration of trusts for a maximum of 5 years.
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TDS/ TCS provisions
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194
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TDS on payment
of dividend
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Under the existing provisions of the Act, there is no requirement
to deduct TDS on payment of dividend.
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Vide the Finance Act, existing provisions of section 194 were
amended to provide for deduction of TDS
@10% by a domestic company, on payment of dividend in cases where
dividend exceeds INR 5 thousand in India.
Similarly, section 194Kwas inserted vide the Finance Act to provide for deduction of
TDS @10%by a mutual fund/ UTI, on
any income (excluding income chargeable under head capital gains) paid in
respect of units of a mutual fund to a resident.
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01.04.2020
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Re: Section 194 - With the removal of Dividend Distribution Tax (‘DDT’)
corresponding amendments were made under TDS provisions (i.e. section 194,
section 194K, section 194LBA etc.) to bring to tax dividend or/ and income
from units in the hands of the recipient shareholders, which were earlier
exempt in their hands, due to DDT paid by the payer companies/ mutual fund.
Re:
Section 194J -With the relaxation in the rates of
TDS on FTS (and royalty related to cinematographic films), the payers would
need to review their existing
contracts as to whether the ‘nature’ of services
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194J
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TDS on fee for
professional or technical
services or
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The existing provisions of section 194J provide for deduction of
tax @ 10% on
all payments
made to
a resident
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The Finance Act relaxes the scope of levy of TDS on payment by way
of ‘fees for technical services (‘FTS’), other than professional services @2%,as opposed to the earlier rate of
TDS
@10%.
The
beneficial rate of TDS of 2% u/s 194J also extends to royalty paid for sale,
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01.04.2020
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Section No.
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Particulars
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Existing provisions under the Income Tax
Act, 1961 ("the Act")
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Scope of amendment under
the Finance Act, 2020 (the Finance Act)
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Date of making
compliance
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VA Comments
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royalty
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towards fees for
professional or technical services or royalty.
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distribution,
or exhibition of cinematographic films, which was earlier subject to tax at
10%.
In respect of all other cases, TDS would continue to be deducted
at the rate of 10%.
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rendered by
the service providers, fall in the category of professional or technical
service.
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194N
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TDS on payment
of cash
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Section 194N, inserted vide Finance Act, 2019 provides for
deduction of TDS @2% by every banking company/ post office, at the time of
making payment to a person on aggregate amounts paid in excess of INR 1
crores during the previous year.
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While no amendment pertaining to section 194N proposed in the
Finance Bill 2020, the Finance Act 2020 aimed at expanding the scope of
section 194N,
w.e.f. 01.07.2020by reducing the threshold limit for TDS on
aggregate cash withdrawal from INR 1 crore to INR 20 lakh made during
01.04.2020 to 31.03.2021, in cases where such person, has not filed return of
income for all3previous years immediately
preceding the previous year in which cash is withdrawn, and the due date for
filing ITR under section 139(1) has expired. The deduction of tax under this
situation shall be:
(i) @2% from the aggregate cash withdrawn, if such aggregate exceeds
INR 20 lakhs during the previous year (01.04.2020 to 31.04.2021) but does not
exceed INR 1 crore; or
(ii) @5% from the aggregate cash withdrawn, if such aggregate exceeds
INR 1 crore during the previous year (01.04.2020 to 31.04.2021).
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01.07.2020
- Date of
coming effect of amendment
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The amendment vide Finance Act, widens the scope of applicability
of section 194N to promote cashless economy. Prior to amendment, flat rate of
TDS @2% was deducted by banks/ post offices, w.e.f 01.09.2019 on aggregate
cash withdrawals made by a person exceeding INR 1 crores, during the previous
year.(i.e. from April 01st, 2019 till March 31st, 2020)
Although the amendment vide Finance Act, comes into force from
01.07.2020, the entire previous year from 01.04.2020 to 31.03.2021 would be
considered for computing the threshold limit of INR 20 lakhs/ INR 1 crore.
However, TDS @2%/ 5% would be deducted only with effect from 01.07.2020 in
respect of such cash withdrawals.
This provision would also apply in case
where belated returns is filed by such person u/s 139(4) of the Act.
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194O
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TDS on payment by e-commerce operator to e-commerce
participant
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Vide the Finance Act, section 194O was inserted w.e.f 01.10.2020,
requiring an e-commerce ‘operator’
to deduct TDS @ 1% on payment made
to an e- commerce ‘participant’
for sale of goods/ provision of services to a purchaser, through e-facility or e-platform provided by
such operator.
Wherein,
(i) E-commerce
operator’ is defined to mean a person who owns, operates or manages the
digital facility/ platform and is responsible for paying to the participant;
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01.10.2020
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Individual/ HUF participant are not subject to TDS provisions u/s 194O, in cases where -
(a)
gross value of sales does
not exceed INR 5 Lakhs during the previous year (i,e., 01.04.2020 till
31.03.2021);and
(b)
PAN/ Aadhaar is furnished to
the operator.
A service provider rendering services on own digital
platform/facility would not be covered within the
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Section No.
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Particulars
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Existing provisions under the Income Tax
Act, 1961 ("the Act")
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Scope of amendment under
the Finance Act, 2020 (the Finance Act)
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Date of making
compliance
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VA Comments
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(i)
E-commerce participant’ means a person
resident in India selling goods or services (including digital
products) through digital facility/ platform for e-commerce
(ii)
‘E-commerce’ means supply of goods or
services or both (including digital products) over digital or electronic network
TDS is to be deducted on the gross value of sale of goods/
services at the time of credit or payment to participant, whichever is
earlier. Direct payment made by purchaser to participant shall be deemed to
be made by the operator for computing gross value of sales.
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purview of the section [E.g., Ferns & Petals, Printvenue,
etc.]
In case of online classified services provider such as OLX,
Quickr, 99Acres, Justdial, etc., only a digital platform is provided to
connect prospective buyers with sellers and the actual sale is transacted
independently between the parties without the knowledge or involvement of the
service provider. Such cases would, in our view, fall outside the ambit of
section 194-O
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206C
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TCS
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The existing provisions of section 206C of the Act, provide for
collection of TCS on business of trading in alcohol, liquor, forest produce,
scrap etc.
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Under the Finance Act, amendments have been made in the provisions
for collecting TCS on:
(i) Sale of goods: TCS @ 0.1% to be collected by seller of any goods (other than
exports) from receipts during the previous year exceeding INR 50 Lakh in lieu
of such sales.
Only a seller whose total sales, gross receipts or turnover from
business exceeds INR 10 crores during the FY immediately preceding the FY,
shall be liable to collect such TCS.
(ii) Liberalised Remittance
Scheme (LRS)/ Overseas tour: TCS @ 5% is to be
collected by (a) an authorised dealer on such amount of remittance made
outside India, in excess of INR 7 lakhs under the LRS; (b) seller of an
overseas tour program package irrespective of the amount received from buyer
of such package.
However, in case where remittance is made outside India through
AD, under LRS for overseas tour program, TCS on full amount would be
collected by the AD, even if the amount remitted is less than INR 7 Lakhs.
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01.10.2020
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Re (i): Sale of goods - TCS @1% would be collected where buyer has not provided PAN or
Aadhaar number to seller; In this case, TAN of seller will be used at the
time of depositing TCS.
The amendment considers such amount in excess of Rs.50
lakhs within the scope of TCS. Accordingly, in case of receipts of Rs.80
lakhs from a buyer, TCS at the rate of 0.1% (in case of PAN/ AADHAAR
availability) on Rs.30 lakhs (amount in excess of Rs.50 lakhs would be
collected)
The applicability of TCS is on receipt basis. For instance,
receipts from a buyer being Rs.80 lakhs in any PY, out of which, Rs.20 lakhs
pertain to preceding PY, TCS would still be collected on the entire
differential of Rs.30 lakhs irrespective of the same pertaining to a
different FY.
Re (ii): LRS/ Overseas
tour - TCS @10% would be collected in non-PAN/
Aadhaar cases
Amendment has been made u/s 206C(1G) to
provide for concessional rate of TCS @0.5% in case remittance
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Section No.
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Particulars
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Existing provisions under the Income Tax
Act, 1961 ("the Act")
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Scope of amendment under
the Finance Act, 2020 (the Finance Act)
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Date of making
compliance
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VA Comments
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is made out of education loan
obtained u/s 80E of the
Act.
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Equalization levy
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165A of
Finance Act, 2016
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Equalization
levy (‘EL’)
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The concept of EL was introduced
in Finance Act, 2016. EL was required to be deducted @ 6% on payments
made to non-residents (‘NR’) for digital advertising by (i) resident carrying on business or profession; or (ii) NR
having PE.
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The Finance Act extends the scope of EL to cover, in addition to
online advertisements, consideration received for e-commerce supply or
services facilitated by a NR on or
after 01.04.2020 (a) to a person resident in India; (b) to any person who
purchases goods/ services from NR using
Indian IP address;
(c) from sale of advertisement
which targets a customer resident in India or a customer accessing
advertisement through Indian IP address; and (d) from sale of data collected from a person resident
in India or from a person using Indian IP
address.
In respect of aforesaid, EL is required to be paid as a self-assessment tax @2%
by the NR on the overall consideration
received.
EL in case of e-commerce supply or services
does not apply in cases where, (a) NR has PE in India and such e-commerce
sales / services made are effectively connected to it; or (b) turnover of NR
is less than INR 2 crore; or (c) where the NR is liable to EL in respect of
online advertisement.
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01.04.2020
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The obligation to deposit EL in case of e-commerce supply or
services rests on the e-commerce operator. Unlike the case of EL for online
advertisements, the obligation does not lie on the payer to deduct at source.
In terms of section 166A of Finance Act, 2016, the e- commerce
operator is required to quarterly deposit EL on the 7th of the following month and March 31st
for the month of March.
In addition to above, simple
interest and penalty would be
levied in case of failure of payment of EL by e- commerce operator.
Statement of EL is to be prepared and filed on or
before 30th June of the FY immediately following the FY in which EL is
chargeable.
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The Taxation and Other
Laws (Relaxation of Certain Provisions) Ordinance, 2020 (‘the Ordinance’)
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(A)
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Impact on TDS/TCS related compliances
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Relaxation of interest on
delay in deduction/ deposit of
TDS/ TCS
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The due date for payment/ deposit of TDS/ TCS is 7th of
the following month and returns are to be filed quarterly.
TDS/ TCS in respect of the month of March (FY 2019-20), April and
May were due for payment on 30.04.2020(07.04.2020
for TCS), 07.05.2020 and 07.06.2020 respectively. In case of failure to
deduct and deposit of TDS, interest at the rate of 12/18% p.a. is charged. In
addition to the above, penalty and late fee u/s 271H and 234E of the Act are
also levied.
However, in view of the global pandemic
of COVID-19, certain relief/measures in the area of statutory compliances
under the Act, were provided vide the Ordinance.
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Due Dates:
March 2020
–
30.04.2020 (FY
2019-20);
April 2020
–
07.05.2020
May 2020 –
07.06.2020
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For delayed payment of TDS/ TCS, etc. falling between 20th March
2020 and 30th June 2020, reduced interest rate at 9% instead of 12 %/18 % per annum (i.e. 0.75% per month instead
of 1/1.5 percent per month) would be charged for this period.
Such option is available to the taxpayers in respect of any taxes/
levy under the Act, such of advance tax, self- assessment tax, regular tax,
etc.
No late fee/penalty shall be charged for
delay relating to this period.
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Section No.
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Particulars
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Existing provisions under the Income Tax
Act, 1961 ("the Act")
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Scope of amendment under
the Finance Act, 2020 (the Finance Act)
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Date of making
compliance
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VA Comments
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(B)
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Statutory Compliances – Assessee & Department
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Assessee
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Due date for furnishing of return, statements, applications,
reports or any other documents
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The due date for filing revised
and belated return of income
for the AY 2019- 20 stands extended by 3 months from earlier 31.03.2020 to 30.06.2020.
All statutory compliances in respect of filing of
return(s)/statements viz., TDS returns(i.e.
for Quarter ending 31.03.2020 being 31.05.2020),
SFT statement (i.e. for FY 2019-20
being 31.05.2020)etc., which
were due to be filed between the period 20.03.2020 to 29.06.2020 stand
extended to 30.06.2020.
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30.06.2020
–
Last date of filing of return/ statement
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In case of ROI for AY 2019-20, consequential interest on late
payment of self-assessment tax will be levied at prescribed lower rate of 9%
per annum, as against existing rate of 12% per annum for the period from
20.03.2020 to 30.06.2020.
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Assessee
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Linking of
Aadhaar and PAN
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In terms of CBDT Notification dated 13.02.2020, every individual
was mandated to link Aadhaar and PAN by 31.03.2020, in the absence of which
the PAN would become inoperative.
The said
cut-off date now stands extended to 30.06.2020.
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30.06.2020
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Assessee
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Due date for
filing of appeal
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Limitation
for filing appeal before various forums, viz., CIT(Appeals), Income Tax
Appellate Tribunal and High Court, which was due to expire between the
period 20.03.2020 to 29.06.2020, now stands extended to
30.06.2020.
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30.06.2020
– Last date of filing of appeal
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Assessee
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Vivad se
Vishwas Act, 2020 (VsV)
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In terms of the VsV Act, the cut-off date for the applicants
proposing to resolve pending disputes were required to pay 100% of disputed
tax up to 31.03.3030 (1st deadline) stands extended to 30.06.2020
by the Ordinance.
However, no change is made to the cut
off of the second deadline, in case of payment made after 31.03.2020 but
before 30.06.2020.
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30.06.2020
- Last
date of filing of application
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Department
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Time limit for
completion of proceedings,
passing any order, issuance of notice/
notification, etc., has also
been
similarly
extended.
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Vide the Ordinance -
(i) Due date for issuance of various statutory notice(s) by income tax
authorities (viz, under section 148, 143(2), 153A, etc.), expiring between
20.03.2020 to 29.06.2020 stands extended to
30.06.2020.
(ii) Time-limit for issuance of intimation under section 143(1),
200A(1), 206CB(1), etc., stand extended to
30.06.2020.
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30.06.2020
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Last date for issuance of notice or completion of proceedings
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(iii) Time limit for issuance of notification, approval order(s)
and sanction
order(s)
under various provisions of the Act stand extended.
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(iv) Time limit for completion
of proceedings getting time barred during the
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Section No.
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Particulars
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Existing provisions under the Income Tax
Act, 1961 ("the Act")
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Scope of amendment under
the Finance Act, 2020 (the Finance Act)
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Date of making
compliance
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VA Comments
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period 20.03.2020 to
29.06.2020, can now be concluded by 30.06.2020 by
the authority
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(C)
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Investments
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Time limit for making investments for claiming deduction under
the Act (AY 2020-
21)
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Vide the Ordinance, investments made in any tax saving instrument,
deposit, payments etc., for claiming any benefit/ deduction under Chapter – VIA – Heading B; and for
making purchase, construction, of investment for claiming exemption from capital gains, falling during
20.03.2020 to 29.06.2020, has
been extended to 30.06.2020 or any later date as may
be notified.
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30.06.2020
- Last date for making investments for AY 2020-21
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Investments, contributions, donations, deposits, etc., made up to
30.06.2020, can be claimed as deduction under the respective sections for the
AY 2020-2021.
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(E)
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Others
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The Ordinance has extended the date for commencement of operation
of Special Economic Zone (SEZ) units for the purpose of claiming deduction
under deduction 10AA to 30.06.2020, subject, however, to unit having received
necessary approval by 31.03.2020;
The Prime
Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM
CARES Fund) was created on 28thMarch, 2020 following the COVID-2019
pandemic in India, to be used for combating, containment and relief efforts
against the coronavirus outbreak and similar pandemic like situations in the
future.
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30.06.2020
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Necessary amendments have been made in section 80G and section
10(23C) to provide 100% deduction of contributions made to PM CARES Fund,
without any capping limit on the Gross Total Income.
Further, vide the Ordinance, benefit of exemption under section
10(23C)(i) of the Act has been extended to person(s) receiving income on
behalf of PM CARES Fund.
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Circulars/
Clarifications issued by the CBDT and Court orders
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23.03.20
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Supreme Court
Suo Moto WP (C) No.3/2020
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SC indefinitely extends limitation period for filing appeals
against orders of HC or any tribunal before SC
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The SC, taking suo motu cognisance of the difficulties being faced
in filing appeals, petitions, etc., vide judgment dated 23.03.2020 held that
a period of limitation in all proceedings, irrespective of the limitation
prescribed under the general law or Special Laws whether condonable or not
shall stand extended w.e.f. 15th March, 2020 till further orders, thereby
indefinitely extending the limitation.
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Since the time period for filing appeal(s) stand extended, the
requirement to file formal application before appropriate forum for
condonation of delay may no longer be required.
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25.03.20
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Delhi High
Court (on its own motion) WP 2/2020
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Delhi High Court extends interim stay on orders of
the High Court/ Tribunal etc.,
subsisting as on
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On similar lines, the Delhi HC taking suo moto cognizance of the
extraordinary circumstances, ordered for all matters pending before the court
and subordinate courts, wherein such interim orders issued were subsisting as
on 16.03.2020 and expired or will expire thereafter, to be automatically extended till 15.05.2020 or
until further orders.
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Section No.
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Particulars
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Existing provisions under the Income Tax
Act, 1961 ("the Act")
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Scope of amendment under
the Finance Act, 2020 (the Finance Act)
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Date of making
compliance
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VA Comments
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16.03.2020 to
15.05.2020
or such later date.
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Thereafter, similar stay orders extending the period of interim
stay provided to the taxpayers, to later dates were passed by High Courts of
other states, such as Kerala, Bombay, Ahmedabad etc.
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31.03.20
and 03.04.20
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Order dated 31.03.2020
03.04.2020
in F.No.275/2
5/2020-
IT(B) u/s 119
of the Act
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CBDT issued orders dated
31.03.2020 and
03.04.2020 regarding
(a) issue of certificates for lower tax/ nil deduction/ collection of
TDS/ TCS u/s 195, 197 and 206C(9) of the Act (‘certificates’); and (b)
submission of Form 15G/15H for FY 2020-21
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The CBDT vide orders dated 31.03.2020 and 03.04.2020 provided
certain reliefs arising out of TDS/ TCS provisions as under:
(i) Application for obtaining certificates for FY 2020-21 is pending, but certificate for FY
2019-20 is already issued – Such certificates of FY 2019- 20 would be
considered valid for 01.04.2020 till 30.06.2020 (FY 2020-21) or disposal of
application, whichever is earlier[Order
dated 31.03.2020];
(ii) No application for obtaining certificates for FY 2020-21 is made,
however, certificate for FY 2019-20 is
already issued – Such certificates are applicable till
30.06.2020.However, they need to apply at the earliest to the Assessing
Officer as per procedure prescribed [Order
dated 31.03.2020];
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Extended till
30.06.2020
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(iii) In case of no pending application or certificate for FY 2019-20 – a modified
procedure for application and consequent handling by assessing officer would
be followed [Order dated 31.03.2020];
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(iv) On payments made to NR having PE
in India, in case of no pending application or certificate, tax will be
deducted at rate of 10% including surcharge and cess, on such payments till
30.06.2020 (F.Y. 2020-21), or disposal of their applications, whichever is
earlier[Order dated 31.03.2020];
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(v) In case of pending applications
for obtaining certificates for FY 2019-20, the Assessing Officers have been
directed to dispose off the applications through a liberal procedure by
27.04.2020 [Order dated 03.04.2020]
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(vi) In case a person had submitted
valid Forms 15G and 15H to the Banks or other institutions for FY2019-20,
then these Forms would be valid up to 30.06.2020 for FY 2020-21 [Order dated 03.04.2020];
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Section No.
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Particulars
|
Existing provisions under the Income Tax
Act, 1961 ("the Act")
|
Scope of amendment under
the Finance Act, 2020 (the Finance Act)
|
Date of making
compliance
|
VA Comments
|
|
09.04.20
|
Clarification
dated 09.04.2020
in F.No.275/2
5/2020- IT(B)
|
CBDT issued certain clarifications on orders dated 31.03.2020 and
03.04.2020 in respect of issuance of issuance of certificates
|
CBDT vide circular dated 09.04.2020, inter-alia clarified the
following issues under order dated 31.03.2020:
(i)
Validity period of lower tax/
nil deduction/ collection certificates (‘certificates’) of FY 2019-20 – Valid
for the relevant period of issue in FY 2019-20 and for a further period from
01.04.2020 till 30.06.2020 (FY 2020-21);
(ii)
Threshold/ Transaction limit for
certificates of FY 2019-20 – An amount similar to that of the threshold
amount of FY 2019-20, would be assigned fresh for the period between 01.04.20
to 30.06.2020
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Extended till
30.06.2020
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09.04.20
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Clarification
dated 09.04.2020
in F.No.178/7
/2020-ITA-I
|
CBDT issued clarification for submitting certificate
for claiming deduction u/s 80G of
the Act, in respect of donation to PMCARES
Fund by an employee.
|
Vide circular dated 09.04.2020, the CBDT clarified that, in case
where donation is made by an employee through his employer, deduction in
respect of thereof will be admissible u/s. 80G, on the basis of Form 16 /
Certificate issued by the Drawing & Disbursing Officer [DDO] / Employer
in this regard.
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