The COVID 19 pandemic has affected the lives of every person across the globe and the governments worldwide are taking multifaceted actions persistently to support citizens and businesses socially & economically and to fight against the negative impact of COVID on economy.
Among all the actions, Indian Government has also ease the burden of tax on taxpayers to support individuals and businesses to meet cash flow problems and to meet hardships arsing in filing Income Tax.
Due to pandemic, deadline to file Income Tax Return was extended for many times even they were given chances to file ITR for assessment year 2020-2021.
Second wave of COVID 19 has occurred due to which number of COVID cases has been increasing continuously. Due-date for filing ITR for individual that is 31st July is also coming. Every individual taxpayer’s eye is on Income Tax Department and Ministry of Finance in terms of relaxations and other benefits to face the challenges occur due to pandemic.
Additional Time to deal with Tax affairs
1. Extension of Due-dates
Currently, the due dates for filing Income Tax Return is as follows –
Filing of ITR in Non- Audit cases
Furnishing Audit Report
Filing of ITR in Audit Cases
Like the last assessment year 2019-2020, taxpayers might expect the benefit of extension of due date for assessment year 2020-21, so that every person who is willing to file Income Tax Return can submit their ITR easily.
Due to prolonged negative effect of COVID, many taxpayers may not file ITR for tax evasion and to avoid monetary expenditure as there are many taxpayers who earn up-to or less than basic exemption limit.
2. Remission of Penalties & Interests
The Tax administrators should remit or suspend the interest and penalties against late-filing of ITR especially when deadlines for fling ITR are extended.
The government might marginally reduce the interest rates for late Income tax payment like the last year.
3. Deferral of Tax Payments
This pandemic badly impacts the cash flow situation of businesses and individuals and the failure of cash flow will amount to failure of many businesses through a domino effect.
Thus, Indian Government should provide deferral of tax payments as follows –
- By accepting Tax payment in instalments
- By downward adjustment of tax payment with advance tax
Updated Tax Return Forms
Taxpayers might expect the separate schedule in the form of updated Tax Return forms in which they can easily and smoothly furnish all the details of deposits or investments or payments. Most of the details will be pre-filled in the forms.
In order to provide potential cash flow in India, the Indian Tax Administrators must process the quick refund to tax payers.
Relief on Residential status for 2020-2021
Many people came to India on a visit but they could not go back due to Covid, lockdown and suspension of flights. Eventually, they had to stay in India for more span of time. Therefore, taxpayers have been given relief on the conditions of residential status for assessment year 2020-21. The period of stay in India up-to the date or normalization of pandemic condition and the working of international flights shall be excluded for determining the residential status of individual.
Special Package for revival of Indian Economy
A large number of small businesses got closed down due to lack of funds and heavy losses and other businesses incurred heavy losses. Moreover, many Individuals lost their jobs. This pandemic has shattered Indian Economy very badly in every sphere.
Government of India announced special tax related package for revival of Indian Economy.
1. Reduction in TDS & TCS Rates
- Since taxpayers did not have funds to pay taxes thus, the government reduced the TDS & TCS rates for non-salaried specified payments made to residents of India by 25 % of the existing rates in order to provide funds at the disposal of taxpayers.
- The specified payments include the payment made against professional fees, contract, dividend, rent, interest, brokerage, commission etc.
- The fact to note is that this reduction is not applicable on whole financial year rather it is applicable from 14th May 2020 to 31st March 2021.
2. Extension of validity period of ‘Vivad Se Vishwas Scheme’
The GOI has also extended the validity period of ‘Vivad Se Vishwas Scheme’ up-to 31st March 2021 to revive economic conditions of country.
3. Extension of Validity period of Trade Policy 2015-20
Likewise, the government has also extended the validity period of Trade Policy up –to 31st March 2021.
4. Extension of Custom relaxations
Initially, the Government granted exemption from levy of IGST & Compensation Cess till 31st March 2021 to all the exporters importing goods under the scheme of Advance Authorization or Export Promotion Capital Goods. Thereafter, the exemption time limit has been extended up-to 31st March 2021.
Key Reliefs Given in Budget 2021
1. Senior Citizens – Exempted from filing ITR
The government has exempted senior citizens above the age of 75 years from filing Income Tax Returns in order to ease the burden of tax compliances on senior citizens. This exemption is subjected to condition that the senior citizen has no other income except the pension and interest income received from the bank hosting the pension account.
2. Cash Allowance in lieu of LTC
All the individual taxpayers who could not claim Leave Travel Concession benefit last year due to Covid related restrictions on travelling have been given tax exemption on cash allowance received in lieu of LTC.
3. Pre-Filled Income Tax Return Forms
The government has proposed to provide pre-filled ITR Forms to all individual taxpayers in order to ease the tax compliances. Thus, all the details of salary, TDS, details of capital gains from listed securities, dividend income, tax payments etc. will be pre-filled. This step is taken to ease the e-filing of ITR Forms.