India Extends Tax Compliance Deadlines to Offset COVID-19 Impact Amidst Lockdown

The rapidly escalating novel Coronavirus has claimed over 15,000 victims and infected close to 400,000 people across 132 countries. India saw its first positive case in the first week of March, and in less than four weeks, this number has crossed 500. Vowing not to follow in the lines of the heavily infected countries, India has imposed a 21-day lockdown period starting March 25, 2020. While this is an excellent move and should hopefully flatten the curve for India, it does raise concerns among taxpayers who are expected to file their tax returns - March being the tax month.

The lockdown will prove to be particularly tricky for tax practitioners, chartered accountants and company secretaries as organizations have started to work from home, and these professionals have minimal access to data before impending deadlines.

Realizing this concern as well as others around tax compliance, Union Finance Minister, Nirmala Sitaraman announced the implementation of various statutory and regulatory compliance relief measures to help concerned taxpayers, especially MSMEs. Here is an outline of the relief measures announced by the Government of India. 

Deadlines extended

The deadline for filing returns of the goods and services tax for March, April, and May this year has been extended till June 30, 2020. Organizations with an aggregate annual turnover of less than Rs. 5 Crore can file GSTR-3B due in March, April, and May 2020 by the last week of June 2020 without attracting any penalties.

Taxpayers with an annual turnover above Rs. 5 crores are required to file their returns due in March, April, and May 2020 by the last week of June 2020. However, this will attract interest, but the same will be charged at a reduced rate of 9% per annum from 15 days after the due date instead of the current 18%.

Additionally, if the returns are filed before June 30, 2020, taxpayers will not be charged with late fees or penalties.

With lakhs of goods trucks stranded on highways because of the lockdown, the Government has extended the validity of e-way bills that will expire between March 20 and April 15, 2020, to April 30, 2020.

Taxpayers who would like to opt for the GST composition scheme can do so by the last week of June 2020. The last date for making tax payments for Q1 2020 and the last date for filing of return for FY 2019 20 by the composition dealers was extended till the last week of June 2020.

The Government has also extended the last date for linking the PAN card with Aadhaar from March 31 to June 30. Additionally, the last date for filing the income tax returns for FY 2018-19 has been extended from March 31 to June 30, 2020.

Newly incorporated organizations that are required to declare the commencement of business within six months of operations have been given an additional six months to file their declarations.

The due date for issue of notice, notification, approval order, sanction order, filing an appeal, furnishing applications, reports, any other documents and the time limit for any compliance under the Customs Act and other allied Laws where the time limit is expiring between March 20, 2020, to June 29, 2020, shall be extended to June 30, 2020.

Additionally, clearance under Customs will be available on a 24x7 basis until June 30, 2020.

Finally, the due date for issue of notice, notification, approval order, sanction order, filing an appeal, furnishing returns, statements, applications, reports or any other documents and the time limit for any compliance under the GST laws where it is expiring between March 20, 2020, and June 29, 2020, has been extended to June 30, 2020.

Thresholds expanded

The default limit for filing insolvency and bankruptcy code has been raised from Rs. 1 lakh to Rs. 1 crore.

1. Extension In Filing GST Returns

All Due Dates are in Staggered Manner

2. Interest, Penalties and Late Fees Waiver

3. Relaxation for Composition Dealers

Date to opt for composition scheme, the last date for making tax payments for Q1 2020, and the last date for filing of return for FY 2019 20 by the composition dealers extended till the last week of June 2020.

4. Extension of Time limit Other Compliances

Due date for issue of notice, notification, approval order, sanction order, filing of an appeal, furnishing of return, statements, applications, reports, any other documents, the time limit for any compliance under the GST laws where the time limit is expiring between 20 03 2020 to 29 06 2020 shall be extended to 30 06 2020.

5. Extension for Payment under Sabka Vishwas Scheme

The payment date under Sabka Vishwas Scheme has been extended to June 30, 2020. If payment is made before the end of June, taxpayers will be charged no interest for the said period.

CBIC clears Rs 10,700 cr GST, customs duty refund in 16 days

CBIC authorities in a 'Special Refund and Drawback Disposal Drive,' have processed over 1.07 lakh GST and IGST refund claims and over 1.86 lakh customs and duty refunds disbursing a total over Rs.900 crores in a record 16 days. The drive was undertaken after the Finance Ministry announced clearing of pending refunds on April 8, 2020, in a bid to provide relief to businesses, especially MSMEs, in light of the Coronavirus pandemic and lockdown. The CBIC is expected to clear a total of Rs.18,000 crore in refunds in the coming months to provide relief to businesses. The refund process under GST laws is supposed to be cleared in 60 days. Still, it is currently being fast-tracked, so companies can use the refunds to return to normalcy once the lockdown is lifted.

Government extends the validity of e-way bills, defers restriction on availing input tax credit

The lockdown has led to lakhs of trucks being stranded for days on different highways across the country, and with their e-way bills moving past their validation date, most consignments are now liable to pay hefty penalties. In view to provide relief to such a situation, the Government has extended the validity of e-way bills that would have expired between March 20 and April 15 to April 30, 2020.

The Government has deferred the implementation of a 10% restriction on availing input tax credit during February-August, which would then be cumulatively adjusted in September

An economic bailout package will be announced soon and is likely to focus on procedural measures on the SME tax front. While this is a welcome move, industries are still hoping to be granted some tax relief as the lockdown is causing economic damage on a massive scale.

Government to release all GST, customs refund worth Rs 18k crore

The Government has decided to issue all pending GST and Custom refunds which would provide benefit to around 1 lakh business entities, including MSMEs granting a total refund of approximately ₹18,000 crore. Last month, the Government extended the filing of Returns for the month of March, April and May 2020 and composition returns under GST to June 30. The Finance Minister also said companies which have less than Rs 5 crore turnover will not have to pay interest, late fee or penalty. For bigger companies, late fee and penalty will not apply and only interest at a reduced rate of 9% will be charged.

GSTN issues Advisory on Opting-in for Composition Scheme for 2020-21

Due to the COVID-19 pandemic and subsequent lockdown, taxpayers are facing many challenges while filing returns and to ease this concern, the Government has extended dates for those businesses who have opted for the composition scheme under GST for the financial year 2020-21. Additionally, regular and registered taxpayers who want to opt-in for the Composition Scheme under the Goods and Services Tax in FY 2020-21 can apply using Form GST CMP-02 by June 30th, 2020.

Relaxations on reconciliation obligation from February 2020 to August 2020

Businesses avail input tax credit in a month on purchases and utilize the same for payment of GST liability. Earlier relaxations allowed for filing of GSTR-1 for March to May 2020 without payment of late fee but the dates for payment of taxes were not extended. This situation posed a problem since it did not give the businesses a lead time for executing reconciliations required to avail input tax credit. Businesses were worried that they would have to pay more cash for the taxes due.

To address this concern, the Government has relaxed the reconciliation obligation from February 2020 to August 2020 and an aggregated reconciliation is allowed for these tax periods in the month of September 2020.

Summary of recent extended GST filing dates as tax relief for COVID-19

1. For taxpayer who wants to opt-in for Composition Scheme in FY 2020-21

Normal taxpayers who want to opt for Composition Scheme should not file GSTR 3B and GSTR 1 for tax period of FY 2020-21 from any of the GSTIN on the associated PAN.

2. For taxpayers who fall under Composition Scheme

3. For Non-Resident Taxpayers, Input Service Distributors (ISD), Tax Deductors at Source (TDS) & Tax Collectors at Source (TCS):

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