CMS Expert Guide to the law and regulation of Covid-19 tax relief

Country-by-country comparison

Value Added Tax

  • None
  • N/A

Corporate Income Tax

  • 2 months deferral of deadline for submission of Corporate tax return for 2 months (until 31 May 2020)
  • simpler procedure when asking for deferral of tax obligations, if the taxpayer is impacted by Coronavirus regulations (e.g. mandatory closure, quarantine etc.)
  • Extension of the due date for filing tax return to:
    • 30 September 2020 for FY commencing 1 April 2019;
    • 30 November 2020 for FY commencing 1 April 2020.
  • For delayed tax payments made between 20 March 2020 and 30 November 2020, no penalty will be applied, and the late payment interest rate is reduced to 0.75% per month. 

Social Security Contributions or Payroll Tax

  • 24 months deferral of April, May and July social security contribution payments for self-employed persons,
  • partial refund of salaries for employees, who cannot work due to Coronavirus restrictions (e.g. substantial lack of business, mandatory closure, medical quarantine etc.
  • deferral of social security contributions payment in now also possible
  • Payment of Employee’s Provident Fund (EPF) contribution (equal to 12 % of basic salary) by the Indian government between March and August 2020, for companies having up to 100 employees and up to 90 per cent of the employees are drawing wage up to Rs 15,000 per month.
  • Reduction of Employees' Provident Fund contribution rate from 12% to 10% between March and August 2020. This scheme will be applicable for workers who are not eligible to the above-mentioned support.
  • Reduction by 25 % of rates of tax deduction at source (TDS) for non-salaried specified payments made to residents and tax collection at source (TCS) for the specified receipts (from 14 May 2020 to 31 March 2021).
  • Certain TDS payments for February or March 2020, or Q1 ending 31 March 2020, were extended to 15 July and 31 July 2020.

Other relief measures

  • 2 months deferral of deadline for submission of annual financial statements (until 31 May 2020)
  • all tax inspections and reviews are temporarily halted
  • judicial and administrative deadlines stop running until 30 July 2020
  • 12 months loan repayment deferral for businesses subject to mandatory closure during quarantine period
  • The due date for completion of any proceeding or passing of any order or issuance of any notice / intimation / notification / approval order / sanction order, filing of appeal / reply / application, furnishing of report / return statements /  and any such documents necessary for compliance or completion of any proceedings under inter alia Income Tax Act 1961, Wealth Tax Act 1957, Prohibition of Benami Property Transactions Act 1988, Black Money (Undisclosed Foreign Income and Assets), Imposition of Tax Act 2015 and the GST laws and the Customs and Allied Laws, where the due date is between 20 March 2020 to 29 June 2020, is extended to 30 June 2020. 
  • Corporate social responsibility (mechanism requiring large compagnies to spend at least two percent of their average net profits of the three immediately preceding financial years towards CSR) : any expenditure towards various activities related to COVID-19 shall be considered an eligible CRS expenditure.
  • Goods and services tax (GST) filing deadlines - Form GSTR-3B:
    • With regards to the form for February, March and April 2020:
      • For taxpayers with an aggregate annual turnover up to INR 15 million: last date for filing extended to 30 June for February, 3 July for March and 6 July for April, without penalty and late payment interest.
      • For taxpayers with an aggregate annual turnover between INR 15 million and INR 50 million: last date for filing extended to 29 June 2020 for February and March and to 30 June for April, without penalty and late payment interest.
      • For taxpayers with an aggregate annual turnover of INR 50 million or more: last date for filing extended to 24 June 2020 without penalty; late payment interest will be charged after 15 days of nonpayment at a reduced rate of 0.75% per month (from 1.5%).
    • With regards to the form for May 2020:
      • For taxpayers with an aggregate annual turnover up to INR 15 million: last date for filing extended to 14 July, provided that the principal place of business is located in certain States. 
      • For taxpayers with an aggregate annual turnover between INR 15 million and INR 50 million: last date for filing extended to 12 July, provided that the principal place of business is located in certain States. 
      • For taxpayers with an aggregate annual turnover of INR 50 million or more: last date for filing extended to 27 June 2020. 
  • GST filing deadlines - Form GSTR-1:
    • For taxpayers with an aggregate annual turnover of INR 50 million or more: last date for filing for March, April and May 2020 extended to 30 June 2020, without late payment fee. 
    • For taxpayers with an aggregate annual turnover of less than INR 50 million: last date for filing their quarterly return (for January to March 2020) extended to 30 June 2020, without late payment fee. 
  • GST annual returns for FY 2018/19: due date for filing extended from 31 March 2020 to the last week of June 2020.
  • Date for electing for composition scheme (i.e. simplified GST scheme for small businesses), for filing composition returns for FY 2019/20 and for making payments for the quarter ending 31 March 2020 extended until 30 June 2020.
  • Payment date under Sabka Vishwas Scheme (i.e. monetary mechanism for resolving disputes related to the GST and other indirect taxes) extended to 31 December 2020 with no interest.
  • Insolvency proceedings: increase of the threshold of default under section 4 of the IBC 2016 to Rs 1 crore (from the existing threshold of Rs 1 lakh). 
  • Moratorium of three months of lending institutions on payment of all term loan instalments (including principal, interest payments, bullet repayments, EMIs and credit card) failing due between 1 March 2020 and 31 May 2020.

Additional comments

  • Additional measures are planned to be introduced by 10 April 2020.
  • Insolvency proceedings: If the current situation continues beyond 30 April 2020, suspension for a period of 6 months (i.e. until 31 October 2020), which could also be extended up to twelve months.
  • Extension for furnishing tax audit report for tax year 2019-20: due date of furnishing tax audit report for tax year 2019-20 for all taxpayers shall be extended from 30 September 2020 to 31 October 2020.
  • Extension for period of limitation for completion of assessments: the period of limitation in relation to assessments which are getting statute barred on 30 September 2020 (i.e., for tax year 2017-18) shall be extended to 31 December 2020. Further, the statute of limitation in relation to assessments which are getting statute barred on 31 March 2021 shall be extended to 30 September 2021.
  • Modification of FDI legislation: Prior approval of the Indian government is now required for: 
    • foreign direct investments into India (direct or indirect) by an entity of a country which shares a land border with India (i.e. China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar and Afghanistan);
    • wholly owned subsidiaries, set up (directly or indirectly) by Chinese companies or established through Kong-Kong intermediary companies by American or European companies, to issue further equity capital to their parents; 
    • global or multi-jurisdictional transactions resulting in an indirect investment in or transfer of an Indian company’s equity instruments or if the beneficial ownership of the Indian company goes to a Chinese investor; and
    • rights issuances, share buybacks, exits of existing investors from an Indian company which result in an increment in a Chinese investor’s stake. 
  • Commercial Banks and Cooperative banks have been restricted by Reserve Bank of India from making dividend payments out of profits made in fiscal year ended 31 March 2020.
  • Immediate issuance of income tax refunds: all pending refunds of charitable trusts and non-corporate taxpayers are issued immediately.
  • Automatic collateral free loans up to INR 3 trillion until 31 October 2020:
    • Emergency credit line to businesses / MSMEs from banks.
    • This will be available to companies with up to INR 250 million outstanding credit and turnover of up to INR 1 billion whose accounts are classified as standard.
    • 100% credit guarantee cover will be given to Banks providing such loans.
    • No additional collateral or guarantee fees are to be paid.
  • Subordinated debt for stressed MSMEs up to INR 200 billion.  
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