RECORDS ACROSS JURISDICTIONS MUST TO PREVENT TAX DISPUTES5 min read

By- Anadi Chitranshi




BACKGROUND

In view of the spread of pandemic COVID-19 across many countries of the world including India, causing immense loss to the lives of people, it has become imperative to relax certain provisions, including extension of time limit, in the tax laws and other laws;

  • Relaxation of certain provisions of specified Act.

Specified Act means:

(i) Wealth-tax Act, 1957;
(i) Income-tax Act, 1961;
(iii) Prohibition of Benami Property Transactions Act,1988;
(iv) Chapter VII of the Finance (No. 2) Act, 2004;

(v) Chapter VII of the Finance Act, 2013;(vi) the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015;

(vii) Chapter VIII of the Finance Act, 2016; or

(viii) the Direct Tax Vivad se Vishwas Act, 2020;

  • Amendment of Sections 10 and 80 G of Income Tax Act 1961.

(i) in section 10, in clause (23C), in sub-clause (i), after the word “Fund”, the words and brackets “or the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)” shall be inserted;

(ii) in section 80G, in sub-section (2), in clause (a), in sub clause (iiia), after the word “Fund”, the words and brackets “or the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)” shall be inserted.

  • Amendment of Section 3 of the Direct Tax Vivad Se Vishwas Act, 2020
  • Relaxation of time limit under Central Excise Act, 1994; Customs Act, 1962; Customs Tariff Act, 1975 and Finance Act 1994.
  • Amendment of Section 127 of Finance Act (No.), 2019

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CURRENT ISSUE

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 govt 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 gives relaxation to the time limits mentioned in the Notification which are 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 named as pandemic by the World Health Organisation and various countries including  India. Social distancing has been worldwide accepted to be the best way to contain its spread, leading to complete lockdown in the country.

QUESTION OF LAW

Keeping in view the problems faced by taxpayers in meeting the compliance requirements under such aspects, the Union Finance Minister had declared several relief measures relating to statutory and regulatory compliance matters across every filed to decrease the challenges in view of COVID-19 outbreak on 24.03.2020 vide a press release.

Some of the important features which get extended by this Ordinance are as under: –

(i) Extension of last date of filing of original as well as revised income-tax returns for the FY 2018-19 (AY 2019-20) to 30th June, 2020.

(ii) Extension of linking Aadhaar-PAN date to 30th June, 2020.

All the businesses organisations which are prevailing within the boundaries of India now have to maintain the records of their employees travels visits in the last few weeks in order to check themselves whether they are having any kind of symptons related to this pandemic, in order to prevent disputes related to taxable presence or permanent establishment (PE) that may arise as a result of the 21-day lockdown in India, said experts. The Organization for Economic Cooperation and Development (OECD) has endorse that this lockdown should not change the determination of PE, since the situation is temporary. Due to outbreak of the Covid-19 pandemic, there is severe disruption in the normal working of almost all sectors. To mitigate the hardships of taxpayers, the CBDT has issued the following directions/clarifications by exercise of its power under Section 119 of the Income-tax Act, 1961. Further, on payments to Non-residents (including foreign companies) having Permanent Establishment in India, where the above applications are pending, tax on payments made will be deducted at the subsidised 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 (Order passed on 31.03.2020).

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CONCLUSION

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.In case of pending applications for lower/nil rate of TDS/TCS for F.Y. 2019-20, the Assessing Officers have been directed to dispose off the applications through a liberal procedure by 27.04.2020, so that the taxpayers may not have to pay extra tax which may cause liquidity issues to them. To mitigate the hardships of small taxpayers, it has been decided that if a person had submitted valid Forms 15G and 15H to the Banks or other institutions for F.Y. 2019-20, then these Forms would be valid up to 30.06.2020. This will safeguard the small tax payers against TDS where there is no tax liability.

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