CORONAVIRUS 2019 - nCOV IMPACT ON TAXATON AND REGULATION IN INDIA

By Karan Gupta | 6 min read

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CORONAVIRUS 2019 - NCov

Coronavirus in India

The second wave of the deadly COVID-19 has hit India like wildfire in 2021. Every day, more than three lakhs cases have been recorded in the country for the past few weeks, making India one of the worst-hit countries in the world. The center and the state governments have been adopting several measures to control the spread of the virus.

Relief Measures by Finance Ministry

When the morale of the nation is dwindling with an uncertain enemy at the gates, the reform measures announced by the Finance Minister have come as a relief.

COVID-19 has triggered an economic emergency. In these extraordinary times, the Central Government is doing well to handhold the industrial sector through policy measures. Continuous efforts to check the COVID-19 spread and announcement of further policy measures for the smooth functioning of the economy are the need of the hour.

Taxation

  1. The time limit for filing belated or revised returns has been curtailed by three months i.e. For AY 2021-22, the last date for belated/revised return would be 31 December 2021 (instead of 31 March 2022).
  2. Exemption from ITR filing to senior citizens aged 75 years and above, earning only pension and interest income.
  3. The income tax department launched pre-filled ITRs with additional details to simplify the return filing process
  4. Tax returns for financial year 2019-20 can be filed by July 2021.
  5. A 25 percent reduction in existing rates for tax deducted at source for specified non-salary payments which are made to residents.
  6. Window for making payments under ‘Vivaad se Vishwas Scheme’—a tax dispute resolution mechanism—without any additional amount has been extended till Dec. 31

Regulatory

  1. The deadline for linking Aadhaar with PAN (Permanent Account Number) has been extended to 30 June 2021.
  2. In Budget 2021, Finance Minister Nirmala Sitharaman proposed to offer major relief for companies that transact digitally. Thus, to incentivise non-cash digital transactions and to reduce the burden of compliance of small and medium enterprises, the government has now increased the threshold limit from Rs.5 crore to Rs.10 crore.
  3. Companies Auditor’s Report Order (CARO) 2020 shall be made applicable from the financial year 2020 -2021 instead of being applicable from the financial year 2019-2020 notified earlier.

Lockdown implemented by Chief Ministers

Lockdown by Chief Ministers

RBI announces Rs. 50,000 Cr Liquidity

Reserve Bank of India
  1. The Reserve Bank of India (RBI) announced a Covid package of Rs 50,000 crore for vaccine makers, medical equipment suppliers, hospitals, and even patients in need of funds to treat the disease while opening up another round of restructuring of loans for individual and small borrowers for up to two years.
  2. The RBI will buy Rs 35,000 crore of bonds from the secondary market on May 20. This will be part of the Rs 1 trillion Government Securities Acquisition Programme (G-SAP) scheduled for the quarter, of which Rs 25,000 crore has already been done.

IMPACT

  1. The health loan will have a trickle effect on other sectors as well. The amount of Rs 50,000 crore is roughly 9 per cent of India’s total health expenditure of Rs 6 trillion. A direct support to the sector will generate total output demand of roughly Rs 80,000 crore. The sectors to benefit include organic chemicals, rubber, plastics among others where the limit utilisation is close to 55 per cent.
  1. Individual borrowers and small businesses that availed of the facility last year but allowed restructuring of less than two years can now demand to stretch their repayment period up to two years. Loans given by SFBs to small microfinance institutions (MFIs) that have asset size of up to Rs 500 crore will now be considered under priority sector.

LOAN RELIEF

  1. To ease the Covid stress, the RBI governor extended another round of restructuring for individual borrowers and small businesses. The governor said such borrowers with a loan outstanding of up to Rs 25 crore, and who did not avail of moratorium or restructuring relief last year, could ask for restructuring of their loans for up to two years.
  1. The RBI also opened up a special long term repo operation window for small finance banks (SFB), whereby the banks can borrow funds up to Rs 10,000 crore at repo rate for deploying for fresh loans of up to Rs 10 lakh per borrower.

Steps taken by us to combat Corona Virus

  1. Provided the facility of working from home to each and every personnel of our firm during the time of quarantine, while being regularly connected using project management and video chat tools.
  2. Asked our employees to wear a mask and latex gloves when handling documents and encouraged video conferences instead of meeting clients in person with clients.
  3. Video Team Meetings to be conducted twice a day for keeping updates and boosting morale of employees, while allowing social interaction between employees.
  4. Teams are asked to visit the client premises only if absolutely necessary and with proper safety precautions. Personal vehicle is being advised under such cases.
  5. Ground rules have been set for work hours, breaks and interruptions along with boundaries with family members during working hours.
  6. Urged employees to create a healthy workspace – good light, comfortable temperature, desk, ergonomic adjustable chair, computer keyboard and mouse suited to their needs, telephone headset, etc.

Precautions to be taken by you

Stay at home, Stay safe, Stay healthy!

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