Changes in Tax Related Deadlines Due to Lockdown

Government Extends Financial Deadlines Amid Coronavirus Outbreak

Introduction

Here are the changes in Tax Related Deadlines announced by Finance Minister amidst COVID-19 outbreak in the Nation. Government has extended key financial deadlines and provided some relaxation in the due dates of filing of various returns and tax payments.

Changes in Tax Related Deadlines due to Lockdown

Basic Clarification

• Finance Minister has extended the due date / deadlines for filing of returns or taxes. There is no change in the Financial Year.
• Please note that, FY 2019-20 means the period from 1^st April 2019 to 31^st March 2020 ONLY. The year ending of 31^st March 2020 is not extended to 30^th June 2020.
• Therefore, while filing your Income Tax Return for FY 2019-20, income from the period from 1^st April 2019 to 31^st March 2020 shall be considered for reporting. Income from 1^st April 2020 to 31^st March 2021 should be reported in the IT Return of FY 2020-21.
• Below table shows the changes in Tax related deadlines announced by government amid COVID-19 outbreak.

1. Extension for Filing of Income Tax Return of FY2018-19

• Extension for filing of Income Tax Return of FY2018-19
  • For Financial Year 2018-19 (period from 1^st April 2018 to 31^st March 2019), last date of filing of Belated Income Tax Return was 31^st March 2020 earlier. Now the date has been extended up to 30^th June 2020.
  • It means, now a taxpayer who has not filed his Income Tax Return for FY 2018-19 till date, can file his return up to 30^th June 2020.
• Interest on Late Filing of Income Tax Return is reduced to 9% p.a. (w.e.f. 1^st April 2020 to 30^th June 2020)
• Similar provisions are applicable for delayed payment of advance tax under section 234B and 234C
• If a taxpayer files Income Tax Return after the due date, taxpayer is liable to pay simple interest @ 1% p.m. i.e. (12% p.a.)
• Now, as the due date is extended due to COVID-19, interest on late filing of return has been reduced from 1% p.m. to 0.75% p.m. This amendment is applicable only for the period from 1^st April 2020 to 30^th June 2020.
• Therefore, the interest on late filing of return shall be payable as below –

• Example –
  • Mr. Arun has missed the due date for filing of IT return of FY 2018-19. His tax payable is Rs. 50,000. His interest under section 234A shall be applicable from 1^st August 2019 till the date of filing. Let us understand interest calculation under different scenarios –

Please note, that this interest is payable in addition to the late filing fees under section 234F. No relaxation is provided under 234F. The provision is elaborated in the next point.

2. No relaxation for Late filing Fees under section 234F

• If a taxpayer fails to file his income tax return on or before due date, he shall pay late filing fees ranging between Rs. 5,000 to Rs. 10,000.
• As far as FY 2018-19 is concerned, the due date for filing of Income tax Return was 31^st July 2019. However, if any taxpayer has missed the due date, late filing fees for FY 2018-19 shall be payable as below –

3. Extension for Investing in Tax Saver Instruments

• This provision is specifically for FY 2019-20. In order to claim tax benefits under section 80C to section 80U, taxpayer must invest in tax saver instruments on or before 31^st March 2020. Now this deadline is extended to 30^th June 2020.
• Therefore, the taxpayers who have not yet invested in tax saver instruments can invest in it even after 31^st March 2020 and can claim benefit under section 80C to 80U.
• Example 1
  • For FY 2019-20, Mr. Ajit fails to invest in tax saver instrument before 31^st March 2020. However, he invests in ELSS on 10^th April 2020.
  • Now, considering the recent announcement by Finance Minister, Mr. Ajit can claim this investment under section 80C while filing Income Tax Return of FY 2019-20.
• Example 2
  • Mr. Ajit invests Rs. 1,50,000 in ELSS every year in the month of April. Therefore, by practice, he invested Rs. 1,50,000 in April 2019 as well as in April 2020. How much deduction can be claimed by Mr. Ajit in his Income Tax Return of FY 2019-20?
  • Now, here Mr. Ajit has made an investment in April 2020 for FY 2020-21. In this case, he will need to provide a self-declaration stating that the investment of Rs. 1,50,000 made in April 2020 shall not be considered as a part of tax saver investments of FY 2019-20.
  • Currently, a self-declaration is sufficient for filing of Income Tax Return.

4. Extension of Due date for Investments made for Capital Gain Exemptions

• There are certain tax exemptions given under section 54, 54EC, 54F for claiming exemption from capital gain on investing in specified tax saver instruments.
• Under section 54, Investment in the new property shall be made before expiry of 3 years (in case of construction of the new property) and 2 years (in case of purchase of the new property) from the date of sale of the original property.
• Under section 54EC and 54F, Investment in tax saver bonds shall be made within 6 months from the date of sale of the property.
• Now, the cases where this time limit is expiring between 20^th March 2020 to 29^th June 2020, such last date shall be extended to 30^th June 2020.
• Example
  • Mr. Arvind has sold his house property on 23^rd September 2019 and he wishes to save Capital Gain Tax by investing in REC Bonds. Under general provisions of Income Tax, investment in REC Bonds shall be made on or before 22^nd March 2020.
  • Now, as per the recent announcement, the due date expiring on 22^nd March 2020 has extended to 30^th June 2020. Therefore, Mr. Arvind can claim exemption under section 54EC even if he invests in REC Bonds after 22^nd March 2020 but before 30^th June 2020.

5. Extension of due date for PAN and Aadhar Linking

The Last date of Aadhar PAN Linking has been further extended from 31^st March 2020 to 30^th June 2020.

6. No Extension for Deposit of TDS but relaxation in interest rates on late payment

• Due date for payment of TDS has not been extended. However, the rate of interest for delayed payment of TDS is reduced from 18% p.a. (i.e. 1.5% p.m.) to 9% p.a. (i.e. 0.75% p.m.)
• For delayed deposit of TDS reduced interest rate is 9% instead of 18% p.a. This reduced rate of interest is applicable only for the period from 1^st April 2020 to 30^th June 2020.

7. No bank charges applicable on cash withdrawal from another bank’s ATM up to 30^th June 2020

• Now a Debit Card Holder of a bank can withdraw any amount from another bank’s ATM. No bank charges are applicable on such transaction up to 30^th June 2020.
• Example
  • If Mr. Amit holds a Debit Card of State Bank of India. If he withdraws certain amount from ATM of HDFC Bank, no bank charges will be applicable on such withdrawal till 30^th June 2020. Earlier, this service was chargeable.

8. No compulsion on Maintenance of Minimum Bank Balance

• Every bank account holder needs to keep a minimum balance in his account as decided by the Bank.
• Considering the COVID-19 outbreak, Finance Minister has relaxed this provision. Now, no bank charges shall be applicable even if the bank balance is below the minimum required balance as per Bank’s policy.

9. Other Key Relaxations

1. Vivaad se Vishwas Scheme

Vivaad se Vishwas Scheme has also been extended to 30.06.2020 and from now to 30.06.2020, there will be no additional 10% charge on late filing of application.

2. Extension of Due date for filing of GST Returns

• Last Date for Filing March 2020, April 2020 and May 2020 GST returns and also composition returns are extended up to 30^th June 2020.
• No interest, No Late Filing Fees and No Penalty will be charged to the Companies having turnover less than Rs. 5 Crores.
• In other cases, (means for the Companies having turnover more than Rs. 5 Crores), No Late Filing Fees and No Penalty will be charged but interest shall be payable @9% p.a.
• Date for opting for composition scheme under GST has been extended to 30^th June 2020

3. Customs Duty and Central Excise

• Last date of ‘Sab ka Vishwas Scheme’ for settling disputes in Indirect Taxes, has been extended again from 31^st March 2020 to 30^th June 2020.
• During this period, no interest will be levied, if payment is made up to 30^th June 2020.

4. Extension for Some of the Procedures

• Due date has also been extended up to 30^th June 2020 for the following procedures –
  • Issue of Notice, Intimation, Notification, approval order, sanction order,
  • Filing of appeal
  • Furnishing of Return, statements, applications, reports, any other documents
  • Time Limits for completion of the proceeding by the authority