THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020

[Mr. M. GOVINDARAJAN]

Introduction

Indian Finance Minister Sitharaman had announced a series of measures to deal with the economic crash as India, along with the rest of the world, battles the corona virus pandemic on 24.03.2020.  Since the Parliament is not in session the measures are brought to effect by means of passing an ordinance by the Hon’ble President of India  vide Notification dated 31.03.2020.   The ordinance is called as ‘The Taxation and other laws (Relaxation of certain provisions) Ordinance, 2020.

Specified Acts

The ordinance stipulates the following Acts as specified Acts for the purpose of this ordinance-

• The Wealth Tax Act, 1957;
• The Income Tax Act, 1961;
• The Prohibition of Benami Transactions Act, 1988;
• Chapter VII of the Finance (No. 2) Act, 2004;
• Chapter VII of Finance Act, 2013;
• The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015;
• Chapter VIII of the Finance Act, 2016; or
• The Direct Tax Vivad Se Vishwas Act, 2020.

Relaxation in compliances

Section 3 of the Ordinance gives powers to the Central Government to relax the time limit for compliance of certain provisions of the specified Act that falls from the period from 20.03.2020 to 29.06.2020 or such other date after 29.06.2020.

The relaxation may be for-

• completion of any proceeding or passing or any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, any authority, commission or tribunal, by whatever name called under the provisions of the specified Act; or
• filing of any appeal, reply or application or furnishing or any report, document, return, statement or such other record, by whatever name called, under the provisions of the specific Act; or
• for making investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purposes  of claiming any deduction, exemption or allowances under the provisions contained in-

• sections 54 to 54GB (capital gains) or under any provisions of Chapter VI-A under the Heading ‘B – deductions in respect of certain payments’ thereof  (section 80C to section 80 GGC) of Income Tax Act, 1961;
• such other provisions of that Act, subject to fulfillment of certain conditions, as the Central Government may, by notification, specify; or

beginning of manufacture or production of articles or things or providing any services referred to section 10AA of the Income Tax Act, in a case where the letter of approval, required to be issued in accordance with the provisions  of Special Economic Zone Act, 2005, has been issued on or before 31.03.2020.

Extension of time for compliance

The ordinance extended the date for compliance of above provisions of the specified Act to 30.06.2020 or any other date as may be notified by the Central Government.  The Central Government may specify different dates for completion or compliances of different actions. 

Payment of tax

The tax dues under the specified Act are to be paid within the due date as specified in the specified Act. The due dates may fall within 20.03.2020 and 29.06.2020  or such other date specified by the Central Government by means of  notification.  The ordinance gives power to the Central Government to relax the interest rate on the delayed payment of tax as below-

• the rate of interest payable, if any, in respect of such amount for the period of delay shall not exceed 0.75% for every month or part thereof, irrespective of the interest rate specified in the  specified Act;
• no penalty shall be levied and no prosecution  shall be sanction in respect of the delayed payment.

Amendment to Income Tax Act, 1961

Section 4 of the Ordinance amended the Income Tax Act, 1961 as detailed below-

• Section 10(23C)(i) – the Prime Minister’s National Relief Fund – the ordinance inserted the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) is inserted along with the PM National Relief Fund.
• Likewise under Section 80G (2) (a)(iiia) the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) is inserted along with the PM National Relief Fund.

Amendment to Direct Tax Vivad Se Vishwas Act

In the direct tax vivid se vishwas scheme one time relief is granted to the assessees to clear the tax arrears with less burden.  Two time frames have been given in this scheme.  One is to pay the dues within 31.03.2020 and the payment made on or after 01.04.2020.  If the payment is made on or after 01.04.2020 interest is levied at certain percent and penalty also.  The said two time frames have been extended by the ordinance.  The payment to be made on or before 31.03.2020 is extended up to 30.06.2020 and the date of 01.04.2020 is refixed as 01.07.2020.

Relaxation of time limit under Customs & Central Excise Act

The time limit specified in the following Acts-

• Central Excise Act, 1944;
• Customs Act, 1962 (except the following sections-

• Section 30 – Delivery of arrival manifest or import manifest or import report
• Section 30A- Passenger and crew arrival manifest and passenger name record information.
• Section 41- Delivery of departure manifest or export manifest or export report. -
• Section 41A- Delivery of departure manifest or export manifest or export report.
• Section 46 – Entry of goods on importation.
• Section 47 – Clearance of goods for home consumption)

• Customs Tariff Act, 1975;
• Chapter V of Finance Act, 1994

(before GST regime) falls during the period from 20.03.2020 to 29.06.2020 or the date as may be specified by the Central Government after 29.06.2020 for completion or compliance of such action as-

• completion of any proceeding or passing or any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, any authority, commission or tribunal, by whatever name called; or
• filing of any appeal, reply or application or furnishing or any report, document, return, statement or such other record, by whatever name called,

shall, notwithstanding that completion or compliance of such action has not been made within such time stand extended to 30.06.2020 or such other date after 30.06.2020 as the Central Government may notify.  The Central Government may specify different dates for completion or compliance of different action for the above said actions.

Amendment to Finance (No.2) Act, 2019

Chapter V of the Finance (No.2) Act, 2019 deals with the Sabka Vishwas Dispute Resolution Scheme, 2019.  Under this scheme the eligible person is to make declaration under section 125 of the Scheme.  Section 126 provides that the designated committee will verify the declaration filed by eligible person.  Section 127 provides for the issue of statement by the designated committee. 

Section 127(1) provides that where the amount estimated to be payable by the declarant, as estimated by the designated committee, equals the amount declared by the declarant, then, the designated committee shall issue in electronic form, a statement, indicating the amount payable by the declarant, within a period of sixty days from the date of receipt of the said declaration.  The ordinance amended section 127(1) and provided that the declaration may be filed on or before 31.05.2020.

Section 127(2) provides that where the amount estimated to be payable by the declarant, as estimated by the designated committee, exceeds the amount declared by the declarant, then, the designated committee shall issue in electronic form, an estimate of the amount payable by the declarant within thirty days of the date of receipt of the declaration.  The Ordinance amended section 127(2) and provides that the designated committee shall issue in an electronic form, an estimate of the amount payable by the declarant on or before 01.05.2020.

Section 127(4) provides that after hearing the declarant, a statement in electronic form indicating the amount payable by the declarant, shall be issued within a period of sixty days from the date of receipt of the declaration.  The ordinance extended this time limit to 31.05.2020.

Section 127(5) provides that the declarant shall pay electronically through internet banking, the amount payable as indicated in the statement issued by the designated committee, within a period of thirty days from the date of issue of such statement.  The ordinance extended the said time limit up to 30.06.2020.

Amendment to CGST Act, 2017

The ordinance inserted a new section 168A giving powers to the Central Government to extend time limit in special circumstances.

The newly inserted section 168A(1) provides that notwithstanding anything contained in this Act, the Government may, on the recommendations of the GST Council, by notification, extend the time limit specified in, or prescribed or notified under this Act, in respect of actions which cannot be completed or complied with due to force majeure.

Section 168A(2) provides that the power to issue Notification under section 168A(1) shall include the power to give retrospective effect to such notification from a date not earlier than the date of commencement of this Act.

The explanation to this section defines the expression ‘force majeure’ as means a case of war, epidemic, flood, drought, fire cyclone, earthquake or any other calamity cause by Nature or otherwise affecting the implementation of any of the provisions.

Discussions to this article

[Sushil Kumar Khetan]

As per explanation provided in sec 3 (2) of this ordinance - “the period of delay” means the period between the due date and the date on which the amount has been paid."

Please clarify whether interest should be calculated from due date of payment to actual date of payment or from the date of deduction of TDS amount (as provided in sec 201 (1A)).