Has COVID-19 Turned You Into A Worried Taxpayer? Here Are The Updates You Must KnowApril 13, 2020
The Coronavirus pandemic has had a great impact on our lives, personally and professionally. A lot of small businesses have shut down, a lot of companies are finding innovative ways to make revenues still, and others are barely getting by.
The governments of all countries, including India, have taken several measures to ease the lives of people during this crisis. Giving stimulus packages to small businesses, granting extensions in loan repayment tenures, and requesting companies to honour job offers are some such initiatives.
However, if you are still worried as a taxpayer about how things will function during and after the pandemic, here are some updates you should know.
What is GST?
The government of India utilises the money Indians pay through various taxes for various purposes across all sectors like public welfare, healthcare, education, and so on.
During this pandemic, the government has made some exceptions for GST payments. Before moving on to the latest news on gst, you should be aware of what GST is.
GST in India
India adopted the goods and services tax (GST) scheme in 2017. It is one of the biggest tax reforms the country has seen. GST refers to the tax paid on all goods and services sold for domestic consumption, with some exceptions. Goods and services are divided into five different tax slabs for collection of tax: 0%, 5%, 12%, 18% and 28%.
The main intention behind the scheme was to avoid double taxation. Earlier, tax used to be paid at every stage of the value chain from manufacturer to the end-user, so the customers were paying “tax on tax”.
How has the Government Provided Relief?
Extensions for Filing GST Returns
The GST return is a document that contains all the sales, purchases, the taxes collected on sales (output tax), and the taxes that are paid on purchases (input tax).
If your turnover is more than INR 40 lakhs (10 lakhs for north-eastern states)yearly, then you must register yourself on the GST portal online, get a unique GSTIN number and file GST returns periodically. Based on the type of GST return, you have to file monthly or quarterly.
However, since many businesses are struggling to earn revenues during the lockdown, the Finance Minister announced an extension in the deadline for filing GST returns for the March-May quarter to 30th June from 31st March.
Further, in case of late payment, companies with turnover of less than INR 5 crores are exempt from a penalty. Other companies will be charged a reduced rate of 9%. This provides some relief to businesses who hope to make up for the lost revenue once the country comes out of the lockdown.
Extensions Related to Income Tax
The due date for filing income tax returns for the financial year 2018-2019 has been extended to 30th June too. Another decision the Supreme Court took earlier this year was to make the linking of Aadhaar and PAN mandatory for everyone.
The last date for this has been postponed from 31st March to 30th June. No extra charge or penalty is to be levied in for late payment of advance tax or TDS for the financial year.
Simply put, businesses file for bankruptcy (or is declared bankrupt) when they can no longer pay their debts. If you do decide to register, your business is forcibly shut down. To relieve small businesses from facing this situation, the government has come up with measures.
The Finance Minister raised the qualifying threshold that would lead to Insolvency & Bankruptcy Code (IBC) from INR 1 lakh to 1 crore. The government has also suspended Section 7 (initiation of insolvency), 9 (application for insolvency) and 10 (initiation of insolvency proceedings) in the IBC for six months since the lockdown has continued even after April.
Certain sections of the IBC have been redefined to make it applicable to companies under distress in a situation like this.
A lot of small business people would be falling behind on payments during the crisis. At the same time, other business people would not receive their dues. Since cash is getting harder to obtain, debit cardholders can now withdraw cash from any ATM – even those belonging to other banks – without being charged a fee.
However, the government has been motivating Indians to shift towards a digital and cashless economy for the last couple of years, much before the pandemic. This makes it easier for the government to track everyone’s money, thereby crippling the circulation of black money.
The government can then use taxpayer’s clean money to bring about necessary changes in the nation, something that’s very much needed now.
No exporters or importers will face any challenges or hassle in the customs clearance till 30th June, up to which they can operate 24 X 7.
Taxpayers and tax authorities now have time till 30th June to deal with any issue related to the filing of an appeal and the furnishing of applications, reports or any other documents, if the time limit expires before then.
Some corporates, namely LLPs (Limited Liability Partnerships), need not pay any additional fees for any late filing of documents or returns or statements, irrespective of their due dates, during the period from 1st April 2020 to 30th September.
Newly incorporated companies, whose operations have been put on hold due to the lockdown, will get six months more to submit the declaration form for starting the business. The auditors of corporate businesses have some relief too since the Company’s (Auditor’s Report) Order (CARO 2020) will apply from FY 2020-21 and not FY 2019-20.
Be Aware as a Taxpayer
As a taxpayer in these uncertain times, it is still good to be aware of all the options and facilities you have that ease the burden of paying taxes. For those of you with small businesses, many companies have worked and are working on digital technologies like gst invoice software, e-billing systems etc. that will make business simpler.
This will make you a much better and digital-oriented businessperson when you come out on the other side of the pandemic.