Undoubtedly news of Covid-19 will become the schema of 2020 for most of us. Experts are already calling 2020 as the year for Social Distancing. Along with Social Distancing, there’s another word that comes to mind i.e Recession. International Monetary Fund predicts that the world GDP for 2020 has already sunk by 3%. Economists worldwide have been waving red flags, and understandably countries are paying due attention to the looming financial mayhem. Many of which have already declared gargantuan packages for their Economies. Japan leads the way by an impressive package roughly 21% of its GDP. Optimistically enough, India Trails Japan by announcing an Economic Stimulus nearly 10% of India’s GDP. Finance Minister Nirmala Sitharaman announced the details of the INR 20 Lakh Crore Economic stimulus on May 13, 2020. FM announced a handful of Direct Tax interventions Atmanirbhar Bharat Economic Stimulus to help India’s Economy become more Self Reliant. Along with major announcements for the MSME sector, FinMin announced several high flying measures in the Direct Tax Genre.
Income Tax Return/Audit Due Date Extended
CBDT has claimed to received numerous messages from individuals and organizations alike for easing the Income Tax Return filing due date. And FinMin addressed these messages by extending the due dates for Income Tax filing for individuals/organizations and the last date to file their Audit Reports as well.
We sense that there’s a lot of confusion regarding the due date for filing Income Tax Returns with and without Tax Audit. So, let us cut the clutter and clear the ambiguity for you.
ITR with Tax Audit Applicability
|Applicable||October 31, 2020||November 30, 2020|
|Not Applicable||July 31, 2020||November 30, 2020|
The due dates for filing your Income Tax Returns with and without Tax Audit applicability have been shifted from October 31 and July 31 to November 30, 2020. This extension was highly anticipated as a commercial activity are halted. Along with this the due dates to file Audit Reports are also been extended from September 30 to October 31, 2020.
These extensions should provide much-required breathing space to individuals and organizations to complete their tax compliance on time.
TDS & TCS Update
Under the Atmanirbhar Bharat Direc Tax Measures, FinMin declared that Tax Deducted at Source(TDS) and Tax Collected at Source(TCS) Rates will be reduced by 25%. Notably, This reduction in TDS rates is temporary and effective from May 13, 2020 to March 31, 2021. Through this measure, FinMin claimed that liquidity of worth INR 50,000 Crore will be released, effectively relieving lakhs of financially bottlenecked Individuals.
The Government is hoping that the reduced TDS and TCS rates shall indeed boost the cycle of consumption and demand and keep Indian Economy buoyant. Refer to the table below for a detailed explanation of NEw Reduced Rates for the rest of FY 2020-21.
|Section||Nature of Payment||Old Rate||New Rate|
|192||Payment of Salary||As Per Slab Rates||As Per Slab Rates|
|194A||Interest(other than interest on Securities)||10%||7.5%|
|194C||Payment to Contractor/Sub-Contractor||1%/2%||0.75%/1.5%|
|194H||Commission on Brokerage||5%||3.75%|
|194J||Payment for Technical Services/Professional services||2%/10%||1.5%/7.5%|
Here is the tweet by Income Tax Department regarding the reduction in TDS and TCS rates.
Other Direct Tax Measures: Atmanirbhar Bharat
FinMin also declared that all pending Income Tax Refunds up to INR 5 Lakhs shall be issued immediately. This move shall positively affect close to 14 Lakh Taxpayers. However, considering the ambiguity of this announcement, it remains unclear whether these refunds are issued for individuals or organizations. Clarification is expected on this front.
Moving on, Nirmala Sitharaman also announced reliefs to those individuals under the Vivad se Vishwas Scheme. Period of the scheme for
making payment without an additional amount is extended to December 31, 2020.
In conclusion, it is safe to say that India’s Economic Package is by far the largest among all developing nations. The Chief of the Global Economic Monitoring Branch, Hamid Rashid lauded India’s ‘impressive‘ stimulus package. He further cemented his belief that this package shall be able to reassure markets and to boost domestic consumption.
As India is gearing up for Lockdown 4.0, people are getting more and more anxious about the future. Surely, these measures will provide a much-needed adrenaline boost to our Economy.
Until next time.