The COVID-19 menace has shaken the best of nations across the world, such as the USA and China. India has also prepared itself for all the unforeseen cases. Its government has come to the rescue of a weakening economy during this crisis.
Every goody comes at a cost. Likewise, some of the tax experts said to The Economic Times that the tax relief measures announced by our Hon’ble FM Nirmala Sitharaman on the 24th of March 2020 would cost around 2% to 3% of India’s GDP. Also, they are optimistic that the measures will address the liquidity crisis in the long run.
Two measures will ensure that the consumption levels are not hampered in India. These include the goodies announced under the Gareeb Kalyan Yojana on the 26th of March 2020 and today’s call for a 3-month term loan moratorium.
On the 24th of March 2020, the government announced the date extensions for all the income tax and GST compliances till the last week of June 2020. The GST department will not charge any late fee or penalty until then. However, large taxpayers with an annual turnover of more than Rs 5 crore must still pay interest at a reduced rate of 9% p.a. instead of 18% p.a., if the GST payment is made within 15 days from the due dates. The interest charge has been entirely waived off for the rest of them.
Similarly, all the income tax assessees who had to pay any taxes and levies for the FY 2019-20 can now deposit after the original due dates, but before the 30th of June 2020. However, they may have to incur interest at a reduced rate of 9% p.a. instead of 12% p.a. or 18% p.a. The reduction in the interest has been granted for the payment of advance tax, self-assessment tax, tax deducted at source, etc.
Popular schemes such as ‘Vivad Se Vishwas’ and ‘Sabka Vishwas LDRS’, introduced respectively for the direct and indirect tax legacy cases, are extended up to the 30th of June 2020. The government expects an increase in the voluntary declarations and deposit of tax dues that are pending for proceedings. A 24/7 EXIM trade facilitation at custom ports will promote ease of doing business without any disruptions till June 2020.
The companies and LLPs too got relief for the various compliance matters the MCA portal. Additional fees were waived off on the applications and filings, 60-day relaxation was given for the physical board meeting requirements, and a 6-month extension was granted for the commencement of business.
On the 26th of March 2020, the government further announced populist measures to ensure that the weaker sections of the society stay financially protected during these times. A total of Rs 1.70 lakh crore has been earmarked for the relief.
The farmers, MNREGA workers, registered construction workers, poor widows, disabled persons, senior citizens and 20 crore women having Jan Dhan accounts will get a certain amount of money transferred into their bank accounts for the next three months under the Direct Benefit Transfer. BPL families will also get free LPG cylinders for the next three months.
The loan limit for collateral-free loans has been increased to Rs 20 lakh for 63 lakh women self-help groups across India. The small business establishments will benefit from the government’s contribution towards both the employer and employee PF, for the next three months. EPFO scheme regulations will undergo an amendment to allow a non-refundable advance, where the amount computed is lower of 75% of the fund or three months’ salary.
Economic analysts have stated to The Economic Times that the lockdowns will wipe off nearly Rs 9 lakh crore of the GDP. However, these relief measures will also ensure that more money remains in the hands of the citizens. Therefore, the consumption will be less hit by the crisis.
There is an important lesson for businesses to learn. It is time for them to move to better and integrated systems that can support digital and remote access for its employees, vendors and customers. They should adopt enterprise resource planning across the organisation to be able to manage crisis or disasters effectively. It will keep the businesses function smoothly to a significant extent.
Meanwhile, the Centre and the States/UTs are unitedly coming together and well-collaborating to combat COVID-19. It is a moment for the world’s largest democratic nation to keep its chin up proudly.
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Annapoorna, popularly known as Anna, is an aspiring Chartered Accountant with a flair for GST. She spends most of her day Singing hymns to the tune of jee-es-tee! Well, not most of her day, just now and then.