Foreign Trade Policy 2015-2020 extended for one year
The Union Commerce and Industry Ministry today announced changes in the Foreign Trade Policy (FTP) of Government of India. The present Policy which came into force on 1st April, 2015, is for 5 years and has validity upto 31st March, 2020. In view of the unprecedented current situation arising out of the pandemic Novel COVID-19, the Govt. has decided to continue relief under various export promotion schemes by granting extension of the existing Foreign Trade Policy by another one year i.e. up to 31st March, 2021. Several other relief measures have also been announced to support trade and industry. Salient points of the changes made in the FTP are as follows:
Foreign Trade Policy 2015-2020 extended for one year
To provide continuity in the policy regime, the current FTP, valid till 31.03.2020 has been extended till 31.03.2021. Similar extension is made in the related procedures, by extending validity of Hand Book of Procedures.
Benefit under all the Export Promotion Schemes (except SEIS) and other schemes, available as on date, will continue to be available for another 12 months.Decision on continuation of SEIS will be taken and notified subsequently.
Similarly, validity period of the Status Holder Certificates is also extended. This will enable the Status Holders to continue to avail the specified facilities/benefits.
Exemption from payment of IGST and Compensation Cess on the imports made under Advance/EPCG Authorisations and by EOUs etc. has been extended up to 31.03.2021.
The scheme for providing “Transport Marketing Assistance on the specified Agricultural Products” is further extended for one year.
Validity period for making imports undervarious duty free import authorizations (AA/DFIA/EPCG) expiring between 01.02.2020 and 31.07.2020,has been allowed automatic extension for another six months from the date of expiry, without requirement of obtaining such endorsement on these authorizations.
Whereever the period to make export is expiring between 01.02.2020 and 31.07.2020 under various authorizations, automatic extension in the export obligation period is allowed for another six months from the date of expiry, without payment of any composition fee.
Last dates for applying for various duty credit Scrips (MEIS/SEIS/ROSCTL) and other Authorisations have been extended.
Time lines for imposing late cuts, on the applications which are filed after the prescribed dates, have been relaxed.
Validity period of Letter of Permission/ Letter of Intent as granted to EOUs, units in STPs/EHTPs/BTPs is further extended up to 31st December, 2020.
Last date of filing applications for refund of TED/Drawback, Transport and Marketing Assistance has been extended.
Extension in time has been allowed for filing various Reports/Returns etc. under various provisions of the FTP.
ICAI Advisory on Accounting and Assurance related issues for F.Y. 2019-20: Covid-19 Disruptions
COVID-19, an infectious disease caused by a novel Coronavirus is exponentially spreading illness throughout the globe and has been recognized as a global pandemic by the WHO. The various governments are taking drastic measures, including locking down of entire country to reduce the impact of this catastrophe.
The adverse impact of this global pandemic can vary from nation to nation, industry to industry and above all entity to entity. The effect depends upon the nature and extent of business connectivity of the individual entities with the nations more seriously affected by this pandemic. Apart from the health and safety of mankind, Covid-19 Disruptions has unfavourably affected the economic environment which in turn has consequential impact on the results in the financial statements and reporting.
ICAI Advisory on Accounting and Assurance related issues for F.Y. 2019-20: Covid-19 Disruptions
There is also a need to advise the preparers of financial statements to ensure that the potential impact of COVID-19 is suitably considered in preparing and reporting their financial statements for the year ended March 31, 2020. Considering all the above factors, in order to guide the preparers and auditors, the Institute of Chartered Accountants of India (ICAI), Regulator of Chartered Accountancy profession in India, has developed an Advisory on “Impact of Coronavirus on Financial Reporting and the Auditors Consideration” highlighting few important areas which require particular attention in respect of financial statements for the year 2019-20. ICAI Advisory is consistent with those provided in other jurisdictions.
CA. Atul Kumar Gupta, President, ICAI said “Chartered Accountants are always committed as professionals to ensure that financial reporting continues to be of high quality and reliable based on applicable accounting framework and, audit opinions are based on performing the best audit procedures laid down in standards on audit.”
Specific requirements of a few Accounting Standards that may need special attention are indicated in this Accounting Advisory. The said Advisor only draw the attention of preparers to some of the important requirements of Indian Accounting Standards (Ind AS) and Accounting Standards (AS), and this is not meant to be exhaustive and may differ based on specific facts, circumstances and business of respective preparers.
The advisory has been prepared for:
1. Entities to whom Ind AS is applicable and
2. Entities to whom AS is applicable, viz,
Companies to whom Companies, Accounting Standards Rules, 2006 is applicable and
Non-corporate entities to whom AS issued by ICAI is applicable
Accounting advisory guides on the key areas that need to be considered during these challenging times as given below. May refer Annexure A for further details.
Inventory Measurement
Impairment of Non-Financial Assets such as PPE, Goodwill and Intangibles
Financial Instruments (Impairment Losses, Fair Value Measurement and Hedge Accounting)
Leases
Revenue
Provisions, Contingent Liabilities and Contingent Assets
Modiļ¬cations or Termination of Contracts or Arrangements
Going Concern Assessment
Income Taxes
Consolidated Financial Statements
Property, Plant and Equipment
Presentation of Financial Statements
Borrowing Costs
Post Balance Sheet Events
Interim Financial Reporting
Salient Points w.r.t. Auditing Advisory are:
Further, Auditors are also advised by the ICAI to carefully evaluate circumstances prevailing in their audits and assess risk accordingly when applying the concepts given in the Advisory in their audits. Following are salient feature of Auditing Advisory:
The advisory covers the areas which require special attention of auditors in current scenario like Valuation of Inventory on a date other than date of financial statements, Audit of Consolidated Financial Statements where Components/component auditors are located in severely affected places, Subsequent Events or Events after Reporting date, Going Concern etc.
It has been advised that auditors have a public interest obligation to complete the audit work in accordance with professional standards and ethics requirements and under the current circumstances, Auditors must recognise that the specific aspect they need to report to address the challenges and uncertainties arising out of the impact of COVID-19.
President, ICAI further added “I am sure the advisory will meet the objective of its release and help both preparers and auditors in their respective areas. In these challenging times, this advisory will surely help Chartered Accountants in discharging professional responsibilities more effectively.”
PM CARES FUND ELIGIBLE FOR 100% DEDUCTION UNDER SECTION 80G
PM Cares fund eligible for 100% deducation under Section 80G
A special fund “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)” has been set up for providing relief to the persons affected from the outbreak of Corona virus. Contribution towards PM CARE Fund, was eligible for 50% deduction in view of it being notified under section 80G(5), as against PM National Relief Fund, which is eligible for 100% deduction under Section 80G(1) read with clause (iiia) of section 80G(2).
Thus in order to provide 100% deduction of the amount being contributed to PM CARES FUND to fight Coronavirus ordinance has been amended. Ordinance also amended the provisions of the Income-tax Act to provide the same tax treatment to PM CARES Fund as available to Prime Minister National Relief Fund. Further, the limit on deduction of 10% of gross income shall also not be applicable for donation made to PM CARES Fund.
Below is Legal Text from the Ordinance:
A special fund “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)” has been set up for providing relief to the persons affected from the outbreak of Corona virus. The Ordinance also amended the provisions of the Income-tax Act to provide the same tax treatment to PM CARES Fund as available to Prime Minister National Relief Fund. Therefore, the donation made to the PM CARES Fund shall be eligible for 100% deduction under section 80G of the IT Act. Further, the limit on deduction of 10% of gross income shall also not be applicable for donation made to PM CARES Fund.
As the date for claiming deduction u/s 80G under IT Act has been extended up to 30.06.2020, the donation made up to 30.06.2020 shall also be eligible for deduction from income of FY 2019-20. Hence, any person including corporate paying concessional tax on income of FY 2020-21 under new regime can make donation to PM CARES Fund up to 30.06.2020 and can claim deduction u/s 80G against income of FY 2019-20 and shall also not lose his eligibility to pay tax in concessional taxation regime for income of FY 2020-21.
FM brings an ordinance to give effect to extension of time limits under Taxation and Benami acts
News: In order to give effect to the announcements made by the Union Finance Minister vide Press Release dated 24.03.2020, regarding several relief measures relating to statutory and regulatory compliance matters across sectors in view of COVID-19 outbreak, the government has brought in an Ordinance on 31.03.2020 which provides for extension of various time limits under the Taxation and Benami Acts. It also provides for extension of time limits contained in the Rules or Notification which are prescribed/ issued under these Acts.
It may be noted that the outbreak of Novel Corona Virus (COVID-19) across many countries of the world has caused immense loss to the lives of people, and accordingly, it has been termed as pandemic by the World Health Organisation and various Governments including Government of India. Social distancing has been unequivocally accepted to be the best way to contain its spread, leading to announcement of complete lockdown in the country. Keeping in view the challenges faced by taxpayers in meeting the compliance requirements under such conditions, the Union Finance Minister had announced several relief measures relating to statutory and regulatory compliance matters across sectors in view of COVID-19 outbreak on 24.03.2020 vide a press release.
FM brings an ordinance to give effect to extension of time limits under Taxation and Benami acts
Some of the important features and time limits which get extended by this Ordinance are as under: –
Direct Taxes & Benami:
(i) Extension of last date of filing ITR (original as well as revised income-tax returns) for the FY 2018-19 (AY 2019-20) to 30th June, 2020.
(ii) Extension of Aadhaar PAN linking date to 30th June, 2020.
(iii) The date for making various investment/payment for claiming deduction under Chapter-VIA-B of IT Act which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations), etc. has been extended to 30th June, 2020. Hence the investment/payment can be made up to 30.06.2020 for claiming the deduction under these sections for FY 2019-20.
(iv) The date for making investment/construction/purchase for claiming roll over benefit/deduction in respect of capital gains under sections 54 to 54GB of the IT Act has also been extended to 30th June 2020. Therefore, the investment/ construction/ purchase made up to 30.06.2020 shall be eligible for claiming deduction from capital gains arising during FY 2019 -20.
(v) The date for commencement of operation for the SEZ units for claiming deduction under deduction 10AA of the IT Act has also extended to 30.06.2020 for the units which received necessary approval by 31.03.2020.
(vi) The date for passing of order or issuance of notice by the authorities under various direct taxes& Benami Law has also been extended to 30.06.2020.
(vii) It has provided that reduced rate of interest of 9% shall be charged for non-payment of Income-tax (e.g. advance tax, TDS, TCS) Equalization Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) which are due for payment from 20.03.2020 to 29.06.2020 if they are paid by 30.06.2020. Further, no penalty/ prosecution shall be initiated for these non-payments.
(viii) Under Vivad se Vishwas Scheme, the date has also been extended up to 30.06.2020. Hence, declaration and payment under the Scheme can be made up to 30.06.2020 without additional payment.
Indirect Taxes:
(i) Last date of furnishing of the Central Excise returns due in March, April and May 2020 has been extended to 30th June,2020.
(ii) Wherever the last date for filing of appeal, refund applications etc., under the Central Excise Act, 1944 and rules made thereunder is from 20th March 2020 to 29th June 2020, the same has been extended to30th June 2020.
(iii) Wherever the last date for filing of appeal, refund applications etc., under the Customs Act, 1962 and rules made thereunder is from 20th March 2020 to 29th June 2020, the same has been extended to30th June 2020.
(iv) Wherever the last date for filing of appeal etc., relating to Service Tax is from 20th March 2020 to 29th June 2020, the same has been extended to30th June 2020
(v) The date for making payment to avail of the benefit under Sabka Vishwas Legal Dispute Resolution Scheme 2019 has been extended to 30th June 2020 thus giving more time to taxpayers to get their disputes resolved.
In addition to the extension of time limits under the Taxation and Benami Acts as above, an enabling section has got inserted in the CGST Act, 2017 empowering the Government to extend due dates for various compliances inter-alia including statement of outward supplies, filing refund claims, filing appeals, etc. specified, prescribed or notified under the Act, on recommendations of the GST Council.
4. A special fund “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)” has been set up for providing relief to the persons affected from the outbreak of Corona virus. The Ordinance also amended the provisions of the Income-tax Act to provide the same tax treatment to PM CARES Fund as available to Prime Minister National Relief Fund. Therefore, the donation made to the PM CARES Fund shall be eligible for 100% deduction under section 80G of the IT Act. Further, the limit on deduction of 10% of gross income shall also not be applicable for donation made to PM CARES Fund.
As the date for claiming deduction u/s 80G under IT Act has been extended up to 30.06.2020, the donation made up to 30.06.2020 shall also be eligible for deduction from income of FY 2019-20. Hence, any person including corporate paying concessional tax on income of FY 2020-21 under new regime can make donation to PM CARES Fund up to 30.06.2020 and can claim deduction u/s 80G against income of FY 2019 -20 and shall also not lose his eligibility to pay tax in concessional taxation regime for income of FY 2020-21.
Deactivated DIN: DIR-3KYC/ACTIVE can be filed between 1.04.2020 to 30.09.2020 without any filing fee
DIN holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3KYC/DIR-3 KYC-Web and those Companies whose compliance status has been marked as “ACTIVE non-compliant” due to non-filing of Active Company Tagging Identities and Verification (ACTIVE) eform are encouraged to become compliant once again in pursuance of the General Circular No. 11 dated 24th March, 2020 & General Circular No.12 dated 30th March 2020 and file DIR-3KYC/DIR-3KYC-Web/ACTIVE as the case may be between 1st April, 2020 to 30th September, 2020 without any filing fee of INR 5000/INR 10000 respectively.
DIR-3KYC/ACTIVE can be filed between 1.04.2020 to 30.09.2020 without any filing fee
CBIC has made Clarification on GST refund related issues vide Circular No.135/05/2020, dated 31st March, 2020. The circular deals with issues like, bunching of refund claims across Financial Years, refund of accumulated input tax credit (ITC) on account of reduction in GST Rate, change in manner of refund of tax paid on supplies other than zero rated supplies, refunds of Input Tax Credit under Section 54(3), new Requirement to mention HSN/SAC in Annexure ‘B’.
CBIC Clarification on GST refund related issues
Circular No.135/05/2020 – GST
CBEC-20/01/06/2019-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
****
New Delhi, Dated the 31st March, 2020
To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All)
The Principal Director Generals/ Director Generals (All) Madam/Sir,
Subject: Clarification on refund related issues – Reg.
Various representations have been received seeking clarification on some of the issues relating to GST refunds. In order to clarify these issues and to ensure uniformity in the implementation of the provisions of law in this regard across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the issues detailed hereunder:
2. Bunching of refund claims across Financial Years
2.1 It may be recalled that the restriction on clubbing of tax periods across different financial years was put in vide para 11.2 of the Circular No. 37/11/2018-GST dated 15.03.2018. The said circular was rescinded being subsumed in the Master Circular on Refunds No. 125/44/2019-GST dated 18.11.2019 and the said restriction on the clubbing of tax periods across financial years for claiming refund thus has been continued vide Paragraph 8 of the Circular No. 125/44/2019-GST dated 18.11.2019, which is reproduced as under:
“8. The applicant, at his option, may file a refund claim for a tax period or by clubbing successive tax periods. The period for which refund claim has been filed, however, cannot spread across different financial years. Registered persons having aggregate turnover of up to Rs. 1.5 crore in the preceding financial year or the current financial year opting to file FORM GSTR-1 on quarterly basis, can only apply for refund on a quarterly basis or clubbing successive quarters as aforesaid. However, refund claims under categories listed at (a), (c) and (e) in para 3 above must be filed by the applicant chronologically. This means that an applicant, after submitting a refund application under any of these categories for a certain period, shall not be subsequently allowed to file a refund claim under the same category for any previous period. This principle / limitation, however, shall not apply in cases where a fresh application is being filed pursuant to a deficiency memo having been issued earlier.”
2.2 Hon’ble Delhi High Court in Order dated 21.01.2020, in the case of M/s Pitambra Books Pvt Ltd., vide para 13 of the said order has stayed the rigour of paragraph 8 of Circular No. 125/44/2019-GST dated 18.11.2019 and has also directed the Government to either open the online portal so as to enable the petitioner to file the tax refund electronically, or to accept the same manually within 4 weeks from the Order. Hon’ble Delhi High Court vide para 12 of the aforesaid Order has observed that the Circulars can supplant but not supplement the law. Circulars might mitigate rigours of law by granting administrative relief beyond relevant provisions of the statute, however, Central Government is not empowered to withdraw benefits or impose stricter conditions than postulated by the law.
2.3 Further, same issue has been raised in various other representations also, especially those received from the merchant exporters wherein merchant exporters have received the supplies of goods in the last quarter of a Financial Year and have made exports in the next Financial Year i.e. from April onwards. The restriction imposed vide para 8 of the master refund circular prohibits the refund of ITC accrued in such cases as well.
2.4 On perusal of the provisions under sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 and sub-section (3) of section 54 of the CGST Act, there appears no bar in claiming refund by clubbing different months across successive Financial Years.
2.5 The issue has been examined and it has been decided to remove the restriction on clubbing of tax periods across Financial Years. Accordingly, circular No. 125/44/2019-GST dated 18.11.2019 stands modified to that extent i.e. the restriction on bunching of refund claims across financial years shall not apply.
3. Refund of accumulated input tax credit (ITC) on account of reduction in GST Rate
3.1 It has been brought to the notice of the Board that some of the applicants are seeking refund of unutilized ITC on account of inverted duty structure where the inversion is due to change in the GST rate on the same goods. This can be explained through an illustration. An applicant trading in goods has purchased, say goods “X” attracting 18% GST. However, subsequently, the rate of GST on “X” has been reduced to, say 12%. It is being claimed that accumulation of ITC in such a case is also covered as accumulation on account of inverted duty structure and such applicants have sought refund of accumulated ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act.
3.2 It may be noted that refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. It is noteworthy that, the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of sub-section (3) of section 54 of the CGST Act. It is hereby clarified that refund of accumulated ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act would not be applicable in cases where the input and the output supplies are the same.
4. Change in manner of refund of tax paid on supplies other than zero rated supplies
4.1 Circular No. 125/44/2019-GST dated 18.11.2019, in para 3, categorizes the refund applications to be filed in FORM GST RFD-01 as under:
a. Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;
b. Refund of tax paid on export of services with payment of tax;
c. Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;
d. Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax;
e. Refund of unutilized ITC on account of accumulation due to inverted tax structure;
f. Refund to supplier of tax paid on deemed export supplies;
g. Refund to recipient of tax paid on deemed export supplies;
h. Refund of excess balance in the electronic cash ledger; i. Refund of excess payment of tax; j. Refund of tax paid on intra-State supply which is subsequently held to be inter- State supply and vice versa; k. Refund on account of assessment/provisional assessment/appeal/any other order; l. Refund on account of “any other” ground or reason.
4.2 For the refund of tax paid falling in categories specified at S. No. (i) to (l) above i.e. refund claims on supplies other than zero rated supplies, no separate debit of ITC from electronic credit ledger is required to be made by the applicant at the time of filing refund claim, being claim of tax already paid. However, the total tax would have been normally paid by the applicant by debiting tax amount from both electronic credit ledger and electronic cash ledger. At present, in these cases, the amount of admissible refund, is paid in cash even when such payment of tax or any part thereof, has been made through ITC.
4.3.1 As this could lead to allowing unintended encashment of credit balances, this issue has been engaging attention of the Government. Accordingly, vide notification No.16/2020-Central Tax dated 23.03.2020, sub-rule (4A) has been inserted in rule 86 of the CGST Rules, 2017 which reads as under:
“(4A) Where a registered person has claimed refund of any amount paid as tax wrongly paid or paid in excess for which debit has been made from the electronic credit ledger, the said amount, if found admissible, shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03.”
4.3.2 Further, vide the same notification, sub-rule (1A) has also been inserted in rule 92 of the CGST Rules, 2017. The same is reproduced hereunder:
“(1A)Where, upon examination of the application of refund of any amount paid as tax other than the refund of tax paid on zero-rated supplies or deemed export, the proper officer is satisfied that a refund under sub-section (5) of section 54 of the Act is due and payable to the applicant, he shall make an order in FORM RFD-06 sanctioning the amount of refund to be paid, in cash, proportionate to the amount debited in cash against the total amount paid for discharging tax liability for the relevant period, mentioning therein the amount adjusted against any outstanding demand under the Act or under any existing law and the balance amount refundable and for the remaining amount which has been debited from the electronic credit ledger for making payment of such tax, the proper officer shall issue FORM GST PMT-03 re-crediting the said amount as Input Tax Credit in electronic credit ledger.”
4.4 The combined effect the abovementioned changes is that any such refund of tax paid on supplies other than zero rated supplies will now be admissible proportionately in the respective original mode of payment i.e. in cases of refund, where the tax to be refunded has been paid by debiting both electronic cash and credit ledgers (other than the refund of tax paid on zero-rated supplies or deemed export), the refund to be paid in cash and credit shall be calculated in the same proportion in which the cash and credit ledger has been debited for discharging the total tax liability for the relevant period for which application for refund has been filed. Such amount, shall be accordingly paid by issuance of order in FORM GST RFD-06 for amount refundable in cash and FORM GST PMT-03 to re-credit the amount attributable to credit as ITC in the electronic credit ledger.
5. Guidelines for refunds of Input Tax Credit under Section 54(3)
5.1 In terms of para 36 of circular No. 125/44/2019-GST dated 18.11.2019, the refund of ITC availed in respect of invoices not reflected in FORM GSTR-2A was also admissible and copies of such invoices were required to be uploaded. However, in wake of insertion of sub-rule (4) to rule 36 of the CGST Rules, 2017 vide notification No. 49/2019-GST dated 09.10.2019, various references have been received from the field formations regarding admissibility of refund of the ITC availed on the invoices which are not reflecting in the FORM GSTR-2A of the applicant.
5.2 The matter has been examined and it has been decided that the refund of accumulated ITC shall be restricted to the ITC as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. Accordingly, para 36 of the circular No. 125/44/2019-GST, dated 18.11.2019 stands modified to that extent.
6. New Requirement to mention HSN/SAC in Annexure ‘B’
6.1 References have also been received from the field formations that HSN wise details of goods and services are not available in FORM GSTR-2A and therefore it becomes very difficult to distinguish ITC on capital goods and/or input services out of total ITC for a relevant tax period. It has been recommended that a column relating to HSN/SAC Code should be added in the statement of invoices relating to inward supply as provided in Annexure–B of the circular No. 125/44/2019- GST dated 18.11.2019 so as to easily identify between the supplies of goods and services.
6.2 The issue has been examined and considering that such a distinction is important in view of the provisions relating to refund where refund of credit on Capital goods and/or services is not permissible in certain cases, it has been decided to amend the said statement. Accordingly, Annexure-B of the circular No. 125/44/2019-GST, dated 18.11.2019 stands modified to that extent.
6.3 A suitably modified statement format is attached for applicants to upload the details of invoices reflecting in their FORM GSTR-2A. The applicant is, in addition to details already prescribed, now required to mention HSN/SAC code which is mentioned on the inward invoices. In cases where supplier is not mandated to mention HSN/SAC code on invoice, the applicant need not mention HSN/SAC code in respect of such an inward supply.
7. It is requested that suitable trade notices may be issued to publicize the contents of this circular.
8. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. Hindi version would follow.
(Yogendra Garg)
Principal Commissioner
y.garg@nic.in
Order u/s 119 for issue of certificates for lower rate/nil deduction/collection of TDS or TCS
Due to outbreak of Covid-19 virus, there is severe disruption in the normal working of almost all sectors, including functioning of the Income tax Department. In such a sccnario the applications filed by the payees u/s 195 and 197 of the Act for lower or nil rate of deduction of TDS and applications by buyers/licensees/lessees u/s 206C (9) of the Act for lower or nil rate of collection of TCS for F.Y. 2020-21 have not been attended in a timely manner by the TDS/TCS Assessing officers causing hardship to tax payers.
Considering the constraints of the Field Officers in disposing of the applications for lower or nil rate of TDS/TCS and to mitigate hardships of payees and buyers/licensees/lessees, the CBDT issues following directions/clarifications by exercise of its powers u/s 119 of the Act:
F.No. 275/25/2020-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
North Block, New Delhi
31st March. 2020
Subject: Order u/s 119 of The Income Tax Act, 1961 on issue of certificates for lower rate/nil deduction/collection of TDS or TCS u/s 195, 197 and 206C (9) — reg.
Due to outbreak of the pandemic Covid-19 virus, there is severe disruption in the normal working of almost all sectors. including functioning of the Income -tax Department. In such a scenario, the applications filed by the payees u/s 195 and 197 of the Act for lower or nil rate of deduction of TDS and applications by buyers/licensees/lessees u/s 206C (9) of the Act for lower or nil rate of collection of TCS for F.Y. 2020-21 have not been attended in a timely manner by the TDS/TCS Assessing Officers, causing hardship to tax payers.
Considering the constraints of the Field Officers in disposing of the applications for lower or nil rate of TDS/TCS and to mitigate hardships of payees and buyers/licensees/lessees, the CBDT issues following directions/clarifications by exercise of its powers u/s 119 of the Act:
a) All the assessees who have filed application for lower or nil deduction of TDS/TCS on the Traces Portal for F.Y.2020-21 and whose applications are pending for disposal as on date and they have been issued such certificates for FY 2019-20. then such certificates would be applicable till 30.06.2020 of F.Y. 2020-21 or disposal of their applications by the Assessing Officers, whichever is earlier, in respect of the transaction and the deductor or collector if any, for whom the certificate was issued for F.Y. 2019-20.
b) In cases where the assessees could not apply for issue of lower or nil deduction of TDS/TCS in the Traces Portal for the FY 2020-21 but were having the certificates for F.Y. 2019-20, such certificate will be applicable till 30.06.2021 of F.Y. 2020-21. However, they need to apply at the earliest giving details of the transactions and the Deductor/Collector to the TDS/TCS Assessing Officer as per procedure laid down in sub-para c) below, as soon as normalcy is restored or 30.06.2020, whichever is earlier.
c) In cases where the assessee has not applied for issue of lower or nil deduction of TDS/TCS in the Traces Portal, and he is also not haying any such certificate for F.Y.2019-20, a modified procedure for application and consequent handling by the TDS/TCS Assessing Officer is laid down which is enclosed as Annexure.
d) On payments to Non-residents (including foreign companies) having Permanent Establishment in India and not covered by (a) and (b) above, tax on payments made will he deducted at the rate of 10% including surcharge and cess, on such payments till 30.06.2020 of F.Y. 2020-21, or disposal of their applications, whichever is earlier.
(Mahesh Kumar)
Director (IT-Budget), CBDT
–
ANNEXURE
Application for Lower/Nil Deduction Certificate:The applicant shall apply for the Lower/Nil deduction/collection certificate under sections 197/206C(9) of the Income lax Act vide an e-mail addressed to the Assessing Officer concerned. The e-mail shall contain data/documents as under:
Duly filled in Form 13 (Annexure 1 and/or Annexure III)
The documents/information as required to be uploaded on TDS-CPC website while tilling up of Form 13
Projected Balance Sheet and P&L account of FY 2020-21
Provisional Balance Sheet and P&L account of FY 2019-20
Balance Sheet and P&L account of FY 2018-19
Form 26AS for FY 2019-20 & 2018-19
ITR pertaining to FY 2018-19
For issue of certificates for lower/ nil deduction of tax undo- sections 195(2) and 195(3), the process of furnishing of applications will continue to be same with the modification that the applications will be lilad via ein ail and certific will also be issued via email.
Issuance of the Certificate: The certificate(s) shall be issued up to 30.06.2020 or any other date (earlier than 30.06.2020) as specified by the AO. The Assessing Officer shall communicate the issuance of certificates vide mail containing following information:
S. No.
TAN of the deduct or
PAN of the Deductee
Financial year
Section under which Tax at source is to be deducted / collected
Estimated amount of income / sum to be received / paid
Applicable rate of deduction / collection
Valid From Date
Valid to Date
The issuance of certificate shall be communicated to the applicant who in turn shall share the same with the deductor/collator.
MCA Clarification on DIR-3 KYC Filing as on 31-03-2020
MCA Clarification on DIR-3 KYC Filing as on 31-03-2020
DIN holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3KYC/DIR-3 KYC-Web and those Companies whose compliance status has been marked as “ACTIVE non-compliant” due to non-filing of Active Company Tagging Identities and Verification(ACTIVE) eform are encouraged to become compliant once again in pursuance of the General Circular No. 11 dated 24th March, 2020 & General Circular No.12 dated 30th March 2020 and file DIR-3KYC/DIR-3KYC-Web/ACTIVE as the case may be between 1st April, 2020 to 30th September, 2020 without any filing fee of INR 5000/INR 10000 respectively.
E-Filing FAQs on Direct Tax Vivad se Vishwas Form 1
Q1: As per the form, the Assessee is required to mention reference number of appeal filed by it. When the matter is pending with CIT(A), Appeal No. may not be available with Assessee, as notice might not have been issued. Whether acknowledgement number of e- appeal can be mentioned?
Reply : The label of “Appeal Reference Number” may be treated as “Appeal Reference Number / Acknowledgment Number” in all schedules and in Part B “Reference Number” as “Reference Number / Acknowledgment Number”
Q2: When Hon’ble ITAT has decided the appeal before 31st January, 2020 and time limit for filing appeal has not yet expired and as per form when due date of filing of appeal is mentioned, Assessee cannot proceed to file details regarding disputed tax. Only when appeal number is mentioned, then only Assessee can fill up necessary schedule.
Reply: Department has enabled the schedules in above case on 26th March, 2020. Updated online Form is available on e-Filing portal.
Q3: As per Question- Answer No. 7 of FAQ, if appellate authority has set aside an order, (except where assessment is cancelled with a direction that assessment is to be framed de novo), to the file of AO for giving proper opportunity, Assessee would be eligible to avail of Vivad Se Vishwas. However, in the prescribed form, no tab or schedule for such cases are available.
Reply: Declarant can fill the required details in Part B itself mentioning that the appeal is pending with CIT(A), as explained in FAQ No 7 issued by CBDT vide Circular 7/2020 dt 4th March 2020
Q4: As per the Scheme once the declaration made by Assessee is accepted by designated authority and Form 3 is issued, the declarant shall pay the amount determined within 15 days of receipt of certificate and intimate the details of such payment to the designated authority. As per the Scheme Assessee has an option for making payment on or after 1st April, 2020 but before the last date after making additional payment as prescribed. Suppose, form No. 3 is issued by designated authority on or before 31st March, 2020, Assessee can pay taxes along with additional amount before the last date even if 15 days have lapsed or the form will be void.
Reply: As per the scheme, the declarant has to pay tax and intimate the same within 15 days of issue of Form 3.
Q5: How the TDS deductors will file in case they don’t have PAN?? Kindly clarify as they can’t login into e-filing website and they don’t have facility on cpc-tds. Kindly guide.
Reply: Deductors have to login using TAN. They can do so in a similar manner when they filed appeal in TDS cases or how they file TDS statements on e-filing portal -they use their TAN as user ID. Taxpayers using their PAN based login cannot file TDS related Form 1. The respective deductors have to login using TAN as user ID in the e-Filing portal.
Q6: What has to be entered in the Part E(iv)- Refund?
Reply: In the Form 1, what is visualized in Part E is the reporting of claim of tax payment under Minor head 400 (incl Adjustment RO) after the assessment order is passed. Therefore, there is no requirement of TDS or prepaid taxes – advance tax or SAT. Since any RO adjusted against demand has a corresponding challan, same has to be reflected under tax payment as Regular Assessment Tax (Minor head 400).
The E(iv) is for cases where the refund claimed by taxpayer was reduced in assessment (not refund adjusted against arrears – the label is incorrect and will be changed). This is because the PART F visualizes the actual tax payment or Refund as case may be against the disputed tax amount payable under the scheme (this is post assessment)
Example – Refund adjusted will figure in tax payment itself as a challan. This is for refund reduction- when taxpayer claimed 100 Rs but ITD raised additional demand of 80 Rs, so refund will be reduced to 20 Rs. To enable taxpayer to show this in E(iv) as Rs 80, the refund row has been put.
E-Filing FAQs on Direct Tax Vivad se Vishwas Form 1
Q7. Whether it is possible to make payment of taxes under the VsV scheme before filing of Form 1.
Answer: Yes, such payments can be reflected in Form 1 itself in Part E.
Q8. Whether challan for making payment of taxes under VsV scheme is the same as 400 (or any other existing codes) challan? Or any other new specific challan code is being introduced for the same If yes, when is new challan code likely to be introduced.
Answer: Yes, Challan under VsV scheme will be usual Regular Assessment Tax challan – Corporation Tax or Income Tax (as the case may be)- with minor head 400. Please take care to ensure that PAN and AY are correctly mentioned. NO NEW CHALLAN has been released for DTVSV
Taxman to accept application & issue nil/lower tax deduction certificate via email: CBDT
Order u/s 119 of The Income Tax Act, 1961 on issue of certificates for lower rate/nil deduction/collection of TDS or TCS u/s 195, 197 and 206C(9)
Due to outbreak of Covid-19 virus, there is severe disruption in the normal working of almost all sectors, including functioning of the Income tax Department. In such a sccnario the applications filed by the payees u/s 195 and 197 of the Act for lower or nil rate of deduction of TDS and applications by buyers/licensees/lessees u/s 206C (9) of the Act for lower or nil rate of collection of TCS for F.Y. 2020-21 have not been attended in a timely manner by the TDS/TCS Assessing officers causing hardship to tax payers.
Considering the constraints of the Field Officers in disposing of the applications for lower or nil rate of TDS/TCS and to mitigate hardships of payees and buyers/licensees/lessees, the CBDT issues following directions/clarifications by exercise of its powers u/s 119 of the Act:
• Applicability of the this Scheme: Any Defaulting LLP is permitted to file belated documents, which were due for filing till 31.08.2020 in accordance with the provisions of this Scheme.
• Manner of payment of fees and additional fee on filing belated document for seeking immunity under the Scheme: The defaulting LLPs may themselves avail of the scheme for filing documents which have not been filed or registered in time on payment of fee as payable for filing of such document / return.
Provided that no additional fees shall be payable for filing and belated documents under this scheme.
• Immunity from prosecution in respect of document(s) filed under the scheme: The defaulting LLP, which have filed their belated documents till 30.09.2020 and made good the default shall not be subjected to prosecution by the Registrar of such defaults.
• The Scheme shall not apply: This Scheme shall not apply to LLPs which has made an application in Form 24 to the Registrar, for striking off its name from the register as per provisions of Rule 37(1) of the LLP Rules, 2009.
• After 30.09.2020, the Registrar shall take necessary action under the LLP Act, 2008 against the LLPs which have not availed this Scheme and are in default in filing of documents as required under the provisions of LLP Act, 2008 in a timely manner.
IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION.
Company Fresh Start Scheme 2020 & LLP Settlement Scheme 2020
In pursuance of the Government of India’s efforts to provide relief to law abiding companies and Limited Liability Partnerships (LLPs) in the wake of COVID-19, the Ministry of Corporate Affairs, has introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020” which is already in vogue to provide a first of its kind opportunity to both companies and LLPs to make good any filing related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity. The Fresh Start scheme and modified LLP Settlement Scheme incentivize compliance and reduce compliance burden during the unprecedented public health situation caused by COVID-19. The USP of both the schemes is a one-time waiver of additional filing fees for delayed filings by the companies or LLPs with the Registrar of Companies during the currency of the Schemes, i.e. during the period starting from 1st April, 2020 and ending on 30th September, 2020.
2. The Schemes, apart from giving longer timelines for corporates to comply with various filing requirements under the Companies Act 2013 and LLP Act, 2008, significantly reduce the related financial burden on them, especially for those with long standing defaults, thereby giving them an opportunity to make a “fresh start”. Both the Schemes also contain provision for giving immunity from penal proceedings, including against imposition of penalties for late submissions and also provide additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed. However, the immunity is only against delayed filings in MCA 21 and not against any substantive violation of law.
3. Details of the both the Schemes may be perused from the Circulars dated 30.03.2020, issued by the Ministry of Corporate Affairs.
Contribution to PM CARES Fund as eligible CSR activity under Companies Act 2013
The Government of India has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ with the primary objective of dealing with any kind of emergency or distress situation such as that posed by COVID-19 pandemic. To this MCA has clarified that, contribution to PM-CARES Fund as eligible CSR activity under item no. (viii) of the Schedule VII of Companies Act, 2013.
Contribution to PM CARES Fund as eligible CSR activity under Companies Act 2013
eF. No. CSR-05/1/2020-CSR-MCA GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS
5th floor, A Wing, Shastri Bhawan, Dr. R.P. Road. New Delhi-110001 28.03.2020
OFFICE MEMORANDUM
Subject: Clarification on contribution to PM CARES Fund as eligible CSR activity under item no. (viii) of the Schedule VII of Companies Act, 2013.
The Government of India has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ with the primary objective of dealing with any kind of emergency or distress situation such as that posed by COVID-19 pandemic.
2. Item no. (viii) of the Schedule VII of the Companies Act, 2013, which enumerates activities that may be undertaken by companies in discharge of their CSR obligations, inter alia provides that contribution to any fund set up by the Central Government for socio-economic development and relief qualifies as CSR expenditure. The PM-CARES Fund has been set up to provide relief to those affected by any kind of emergency or distress situation. Accordingly, it is clarified that any contribution made to the PM CARES Fund shall qualify as CSR expenditure under the Companies Act 2013.
3. This issues with the approval of competent authority.
(Gyaneshwar Kumar Singh)
Joint Secretary to Govt of India
Copy to:
1. E- Governance for uploading on MCA Website
2. Guard File
There is a fake new circulating in some section of media that the Financial Year has been extended. A notification issued by the Government of India on 30th March 2020 with respect to some other amendments done in the Indian Stamp Act is being misquoted. There is no extension of the Financial Year.
The Finance ministry said that a notification has been issued by the Department of Revenue, Ministry of Finance on 30th March, 2020 which relates to certain amendments to the Indian Stamp Act. It pertains to putting in place an efficient mechanism for collection of Stamp Duty on Security Market Instruments transactions through Stock Exchanges or Clearing Corporation authorized by Stock Exchanges Depositories. This change was earlier notified to be implemented from 1st April, 2020. However, due to the prevailing situation, it has been decided that the date of implementation will now be postponed to 1st July 2020.
Apportionment of input tax credit in case of business reorganization: FAQ’s
Q. In case of demerger, proviso to rule 41 (1) of the CGST Rules provides that the input tax credit shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme. However, it is not clear as to whether the value of assets of the new units is to be considered at State level or at all-India level?
The explanation to rule 41(1) of the CGST Rules states that “value of assets” means the value of the entire assets of the business, whether or not input tax credit has been availed thereon. The value of assets of the new units is to be taken at the State level (at the level of distinct person) and not at the all-India level.
Q. Is the transferor required to file FORM GST ITC – 02 in all States where it is registered?
No. The transferor is required to file FORM GST ITC – 02 only in those States where both transferor and transferee are registered.
Q. The proviso to rule 41 (1) of the CGST Rules explicitly mentions ‘demerger’. Other forms of business reorganization where part of business is hived off or business in transferred as a going concern etc. have not been covered in the said rule. Wherever business reorganization results in partial transfer of business assets along with liabilities, whether the proviso to rule 41(1) of the CGST Rules, 2017 shall be applicable to calculate the amount of transferable ITC?
Yes, the formula for apportionment of ITC, as prescribed under proviso to rule 41(1) of the CGST Rules, shall be applicable for all forms of business re-organization that results in partial transfer of business assets along with liabilities.
Q. Whether the ratio of value of assets, as prescribed under proviso to rule 41 (1) of the CGST Rules, shall be applied in respect of each of the heads of input tax credit viz. CGST/SGST/ IGST/ Cess?
No, the ratio of value of assets, as prescribed under proviso to sub-rule (1) of rule 41 of the CGST Rules, shall be applied to the total amount of unutilized input tax credit (ITC) of the transferor i.e. sum of CGST, SGST/UTGST and IGST credit. The said formula need not be applied separately in respect of each heads of ITC (CGST/SGST/IGST). Further, the said formula shall also be applicable for apportionment of Cess between the transferor and transferee.
Q. How to determine the amount of ITC that is to be transferred to the transferee under each tax head (IGST/CGST/SGST) while filing of FORM GST ITC–02 by the transferor?
The transferor shall be at liberty to determine the amount to be transferred under each tax head (IGST, CGST, SGST/UTGST) within this total amount, subject to the ITC balance available with the transferor under the concerned tax head.
Q. In order to calculate the amount of transferable ITC, the apportionment formula under proviso to rule 41(1) of the CGST Rules has to be applied to the unutilized ITC balance of the transferor. However, it is not clear as to which date shall be relevant to calculate the amount of unutilized ITC balance of transferor?
The apportionment formula shall be applied on the ITC balance of the transferor as available in electronic credit ledger on the date of filing of FORM GST ITC – 02 by the transferor.
Q. Which date shall be relevant to calculate the ratio of value of assets, as prescribed in the proviso to rule 41 (1) of the CGST Rules, 2017?
The “appointed date of demerger” is the date from which the scheme for demerger comes into force and it is specified in the respective scheme of demerger. Therefore, for the purpose of apportionment of ITC under rule 41(1) of the CGST Rules, the ratio of the value of assets should be taken as on the “appointed date of demerger”.
For the purpose of apportionment of ITC under rule 41(1) of the CGST Rules, while the ratio of the value of assets should be taken as on the “appointed date of demerger”, the said ratio is to be applied on the ITC balance of the transferor on the date of filing FORM GST ITC – 02 to calculate the amount to transferable ITC.
Referance :
Section 18 (3) of CGST Act read with rule 41(1) of CGST Rules
New Procedure For GST Compliance For IRP/RP, corporate debtors who are undergoing the CIRP
CBIC Notification No. 11/2020–Central Tax dated 21.03.2020 prescribes, New Procedure For GST Compliance For IRP/RP, corporate debtors under the provisions of the Insolvency and Bankruptcy Code, 2016 who are undergoing the corporate insolvency resolution process (CIRP) and the management of whose affairs are being undertaken by interim resolution professionals (IRP) or resolution professionals (RP) from the date of the appointment of the IRP/RP till the period they undergo the corporate insolvency resolution process (CIRP)
IRP /RP be treated as a distinct person of the corporate debtor, and shall be liable to take a new registration –
The said class of persons shall, with effect from the date of appointment of IRP /RP, be treated as a distinct person of the corporate debtor, and shall be liable to take a new registration in each of the States or Union territories where the corporate debtor was registered earlier, within thirty days of the appointment of the IRP/RP.
Provided that in cases where the IRP/RP has been appointed prior to the date of this notification, he shall take registration within thirty days from the commencement of this notification, with effect from date of his appointment as IRP/RP.
Returns to be filed – The said class of persons shall, after obtaining registration file the first return under section 40 of the said Act, from the date on which he becomes liable to registration till the date on which registration has been granted.
New Procedure For GST Compliance For IRP/RP
Input tax credit – The said class of persons shall, in his first return, be eligible to avail ITC on invoices covering the supplies of goods or services or both, received since his appointment as IRP/RP but bearing the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the CGST Act and the rules made thereunder, except the provisions of section 16(4) of the CGST Act and rule 36(4) of the CGST Rules, 2017.
Registered persons who are receiving supplies from the said class of persons shall, for the period from the date of appointment of IRP / RP till the date of registration as required in this notification or thirty days from the date of this notification, whichever is earlier, be eligible to avail input tax credit on invoices issued using the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the CGST Act and the rules made thereunder, except the provisions of rule 36(4) of the CGST rules.
Refund of Tax Deposited: Any amount deposited in the cash ledger by the IRP/RP, in the existing registration, from the date of appointment of IRP/RP to the date of registration in terms of this notification shall be available for refund to the erstwhile registration.
How are dues under GST for pre-CIRP period be dealt?
In accordance with the provisions of the IBC and various legal pronouncements on the issue, no coercive action can be taken against the corporate debtor with respect to the dues for period prior to insolvency commencement date.
The dues of the period prior to the commencement of CIRP will be treated as ‘operational debt’ and claims may be filed by the proper officer before the NCLT in accordance with the provisions of the IBC. The tax officers shall seek the details of supplies made / received and total tax dues pending from the corporate debtor to file the claim before the NCLT. Moreover, section 14 of the IBC mandates the imposition of a moratorium period, wherein the institution of suits or continuation of pending suits or proceedings against the corporate debtor is prohibited.
Should the GST registration of corporate debtor be cancelled?
It is clarified that the GST registration of an entity for which CIRP has been initiated should not be cancelled under the provisions of section 29 of the CGST Act, 2017. The proper officer may, if need be, suspend the registration. In case the registration of an entity undergoing CIRP has already been cancelled and it is within the period of revocation of cancellation of registration, it is advised that such cancellation may be revoked by taking appropriate steps in this regard.
Is IRP/RP liable to file returns of pre-CIRP period?
No. In accordance with the provisions of IBC, 2016, the IRP/RP is under obligation to comply with all legal requirements for period after the Insolvency Commencement Date. Accordingly, it is clarified that IRP/RP are not under an obligation to file returns of pre-CIRP period.
Some of the IRP/RPs have made deposit in the cash ledger of erstwhile registration of the corporate debtor. How to claim refund for amount deposited in the cash ledger by the IRP/RP?
Any amount deposited in the cash ledger by the IRP/RP, in the existing registration, from the date of appointment of IRP / RP to the date of notification specifying the special procedure for corporate debtors undergoing CIRP, shall be available for refund to the erstwhile registration under the head refund of cash ledger, even though the relevant FORM GSTR-3B/GSTR-1 are not filed for the said period.
MINISTRY OF LABOUR AND EMPLOYMENT vide Gazette ID CG-DL-E-28032020-218950 dated 28.03.2020 has issued Employees’ Provident Funds (Amendment) Scheme, 2020 in exercise of the powers conferred by section 5 read with sub-section (1) of section 7 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
Applicability: with immediate effect from 30.03.2020
In the Employees’ Provident Funds Scheme, 1952, in paragraph 68L, after sub-paragraph (2), the following sub-paragraph shall be inserted, namely:-–
―(3) The Commissioner or, where so authorized by the Commissioner, any officer subordinate to him, may, on an application from any member of this Scheme employed in any establishment or factory located in an area declared as affected by outbreak of any epidemic or pandemic by the appropriate Government, permit a non-refundable advance from the provident fund account of such member not exceeding the basic wages and dearness allowances of that member for three months or up to seventy-five per cent. of the amount standing to his credit in the Fund, whichever is less.
RBI on 27.03.2020 issued a press release on STATEMENT ON DEVELOPMENT AND REGULATORY POLICIES which states the following policy announcement.
LIQUIDITY MANAGEMENT.
Targeted Long-Term Repos Operations (TLTROs).
Cash Reserve Ratio.
Marginal Standing Facility.
Widening of the Monetary Policy Rate Corridor.
Moratorium on Term Loans.
Deferment of Interest on Working Capital Facilities.
Easing of Working Capital Financing.
Deferment of Implementation of Net Stable Funding Ratio (NSFR).
Deferment of Last Tranche of Capital Conservation Buffer
Permitting Banks to Deal in Offshore Non-Deliverable Rupee Derivative Markets (Offshore NDF Rupee Market)
REGULATION AND SUPERVISION.
“Alongside liquidity measures, it is important that efforts are undertaken to mitigate the burden of debt servicing brought about by disruptions on account of the fall-out of the COVID-19 pandemic. Such efforts, in turn, will prevent the transmission of financial stress to the real economy, and will ensure the continuity of viable businesses and provide relief to borrowers in these extraordinarily troubled times”.
FINANCIAL MARKETS.
“The decision in respect of financial markets is essentially of a developmental nature, intended to improve depth and price discovery in the forex market segments by reducing arbitrage between onshore and offshore markets. This measure assumes greater importance in the context of the increased volatility of the rupee caused by the impact of COVID-19 on currency markets”.
While the measures taken by RBI are in the right direction pumping in more liquidity for the banks to lend and to take care of the emerging emergency anticipated liquidity crisis to some extent, the lowering of repo rates may lead to lowering of the lending rates by the bank which may reciprocate in reducing the deposit rates also which is a natural corollary of the market behaviour. Under the existing market conditions and the financial volatility, no body can predict the future market behaviour and financial situation and liquidity. It may take two to three years for the market to stabilise for growth of business and the liquidity crisis to ease leading to better and sufficient cash flow to meet the financial commitments. In this connection let us not forget what happened after the collapse of Lehman Bros in U S in the year 2008 and its effect on the global economy. What is happening now is the worst calamity and tragedy unprecedented so far affecting the global economy.
Taking into account the uncertainty prevailing with regard to the spread of the deadly decease of corona virus and its longevity, how the liquidity and more so the burden of servicing of debt and interest are going to be ensured in the absence of any signs of abetting of this ranging pandemic catastrophe. The repayment of debt and servicing of term loan depend on the cash flow. Hence, mere moratorium on the repayment of debt / or EMI for three months will not give any relief to the borrowers unless the adequate cash flow is ensured. Same with deferment of interest on working capital. The only way to give relief will be to reassess and re-appraise the cash flow and fix the repayment of installments and servicing of interest with adequate moratorium and extended tenure to repay the loan and servicing of interest based on the revised cash flow. The revised repayment terms will not be uniform for all the loans and it will vary from account to account depending on the revised cash flow. Even staggering of margin money requirement also may be considered.
It can be observed that RBI Governor’s statement shows that RBI has announced its policy but the methodology of implementation is left to the banks which have given the loans to formulate their policy at their discretion. Instead if RBI had announced the methodology of implementing the regulatory policy in a uniform way and mandatory for all the banks to implement it, it would have ensured equality of reliefs without any distinction and discrimination. Besides, it would have also given the benefit of reduction in interest uniformly to all the borrowers. However, it is to be seen how the banks are going to implement the RBI development and regulatory policies for the benefit of the customers.
T. R. Radhakrishnan
(The Author invites comments from readers and he can be contacted through his e-mail trrk1941@gmail.com)
PM Narendra Modi Appeal to Contribute in PM CARES fund to fight Coronavirus
Prime Minister Narendra Modi has announced the constitution of the PM’s Citizen Assistance and Relief in Emergency Situations (PM-CARES) fund. This will be a dedicated national fund with the primary objective of dealing with any kind of emergency or distress situation, like posed by the COVID-19 pandemic.
The emergency fund was created by Prime Minister Narendra Modi on Saturday after his office received numerous requests from people for donations to support the government in its fight against the impact of Covid-19.
Prime Minister is the Chairman of this trust and its Members include Defence Minister, Home Minister and Finance Minister. Citizens and organisations can go to the website pmindia.gov.in and donate to PM CARES Fund.
This fund will enable micro-donations allowing a large number of people will be able to contribute with smallest of denominations. Donations to this fund will be exempted from income tax under section 80(G). Mr Modi has always believed and shown in actions that public participation is the most effective way to mitigate any issue and this is yet another example.
It is my appeal to my fellow Indians,
Kindly contribute to the PM-CARES Fund. This Fund will also cater to similar distressing situations, if they occur in the times ahead. This link has all important details about the fund. https://t.co/enPvcqCTw2
In a series of tweets, Prime Minister said, people from all walks of life have expressed their desire to donate to India’s war against COVID-19. He appealed to the people to contribute to the PM-CARES Fund. Prime Minister said, this will go a long way in creating a healthier India. He said, this fund will also cater to similar distressing situations, if they occur in the times ahead.
Mr Modi has said that every single contribution in the PM- CARES Fund matters and there is nothing big or little. Reacting to the enthusiastic response of the people, he said that it shows our collective resolve to defeat COVID-19. In response to a student’s contribution, Mr Modi said, the future of the nation is ensuring the nation’s future.
Citizens and organisations can go to the website pmindia.gov.in and donate to PM CARES Fund using following details:
Name of the Account : PM CARES
Account Number : 2121PM20202
IFSC Code : SBIN0000691
SWIFT Code : SBININBB104
Name of Bank & Branch : State Bank of India, New Delhi Main Branch
UPI ID : pmcares@sbi
Following modes of payments are available on the website pmindia.gov.in –
Debit Cards and Credit Cards
Internet Banking
UPI (BHIM, PhonePe, Amazon Pay, Google Pay, PayTM, Mobikwik, etc.)
RTGS/NEFT
Donations to this fund will be exempted from income tax under section 80(G).
Amidst the COVID-19 outbreak and lockdown in various states, the Finance Bill 2020 introduced vide Union Budget 2020-21 was passed by both Houses of Parliament, with certain amendments including relaxation of ‘deemed residency’ rule for Indian citizens not liable to tax in any other country, enlargement in the scope of Equalization levy to include e-commerce supply or services, etc. Finance Act 2020 has been notified by Finance Ministry. Here are the key amendments of this Act:
1. Tax Rates:
A. TAX RATES APPLICABLE TO INDIVIDUAL AND HINDU UNDIVIDED FAMILY (HUF)
a) Option – I (OLD SCHEME)
Income (Rs.)
Proposed rate of tax (AY 2021-22)
Upto 2,50,000*
Nil
2,50,001-5,00,000
5%
5,00,001-10,00,000
20%
10,00,001 and above
30%
* For Senior Citizen Exemption Limit is Rs.3,00,000 and for Super Senior Citizen (80 years and above) Exemption Limit is Rs. 5,00,000
ii. Cess @ 4% is leviable on the amount of income tax and surcharge, if any.
iii. Rebate under Section 87A continues for a resident individual whose total income does not exceed 5,00,000. The amount of rebate is 100% of income tax calculated before cess or 12,500 whichever is less (There is no mention of amendment of Section 87 A in Finance Bill; Accordingly it appears that deduction under the said section will still be available).
c) Surcharge to be added
Income (Rs.)
(AY 2021-22)
Upto 50 Lakhs
Nil
50 Lakhs – 1 Crore
10%
1 Crore – 2 Crores
15%
2 Crore – 5 Crores
25%
Above 5 Crores
37%
B. CORPORATE TAX RATES
Turnover Particulars
Tax Rate
Gross turnover upto 400 Cr. in the FY 2017-18
25%
Gross turnover exceeding 400 Cr. in the FY 2017-18
30%
Where the company opted for Section 115BA
25%
Where the company opted for Section 115BAA
22%
Where the company opted for Section 115BAB
15%
In addition cess and surcharge is levied as follows:
Cess: 4% of corporate tax
Surcharge applicable:
Income Limit
Surcharge Rate on the amount of income tax
Net income exceeds Rs.1 Crore but doesn’t exceed Rs.10 Crore
7%
Net income exceeds Rs.10 Crore
12%
However, the rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be 10% irrespective of amount of total income.
C. FIRMS
Flat tax rate of 30% and surcharge @ 12% of income tax if income exceeds Rs. 1 Cr. ; Further cess @4% will be levied.
2. Exemptions removed under new tax regime
Individual or HUF opting for taxation under the newly inserted section 115BAC of the Act shall not be entitled to the following exemptions / deductions :
(i) Leave travel concession as contained in clause (5) of section 10;
(ii) House rent allowance as contained in clause (13A) of section 10;
(iii) Some of the allowance as contained in clause (14) of section 10;
(iv) Allowances to MPs/MLAs as contained in clause (17) of section 10;
(v) Allowance for income of minor as contained in clause (32) of section 10;
(vi) Exemption for SEZ unit contained in section 10AA;
(vii) Standard deduction, deduction for entertainment allowance and employment / professional tax as contained in section 16;
(viii) Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. (Loss under the head income from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law);
List of Exemptions/Deductions available under new tax regime – Budget 2020
(ix) Additional deprecation under clause (iia) of sub-section (1) of section 32;
(x) Deductions under section 32AD, 33AB, 33ABA;
(xi) Various deduction for donation for or expenditure on scientific research contained in sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35;
(xii) Deduction under section 35AD or section 35CCC;
(xiii) Deduction from family pension under clause (iia) of section 57;
(xiv) Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.
Following allowances shall be allowed as notified under section 10(14) of the Act to the Individual or HUF exercising option under the proposed section :
a) Transport Allowance granted to a divyang employee to meet expenditure for the purpose of commuting between place of residence and place of duty
b) Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office;
c) Any Allowance granted to meet the cost of travel on tour or on transfer;
d) Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
3. Finance Act 2020 abolished Dividend Distribution Tax (DDT) on dividends. Instead, it made dividends taxable in the hands of investors at their slab rate.
4. Tax Audit Threshold increased.
In wake of ease of doing business, Tax Audit threshold has been increased to 5 crores from existing 1 crore by Finance Act 2020.
