FM- PLEASE EXEMPT ADVANCE TAX INSTALLMENTS OF 15 June and 15 September 2020

[DEV KUMAR KOTHARI]

Desirability for exempting advance tax installments:

As discussed in this write-up it is desirable that installments of advance tax payable on 15^th June and 15^th September 2020 deserve to be exempted to reduce some fiscal hardships. The advance tax payable for FY 2020-21 may then be collected in two installment falling due on 15^th December 2020 and then on 15^th March 2021.

^{Some of difficulties explained:}

New financial year 2020-21 started in situation of Lockdown which continued and is still continuing in major way in totality.

Partial un-locking is not helping in earning income as usual but has just raised hopes for improvement.

IN fact partial unlocking may be handy, if at all in selling old stocks in many cases and trades in new stocks is difficult.

Due to lockdown and partial un lock, there is difficulty in preparing accounts, estimation of income and payment of advance tax.

There are increased uncertainties in profitability and amount of profits due to uncertain prices of many stocks to be carried as on 31.03.2021, uncertainties of realisation from customers, larger bad debts etc.

Earning are bound to fall:

There is overall likely loss of four to six  months of  production and services, a part of it may recover in some cases, and in many cases loss is irreversible.

There have been losses of production and services due to lockdown.

There will be similar losses due to partial un- lock of activity.

High costs:

Costs will be much higher due to:

Lower level of activity.

High cost due to distancing.

High cost due to low attendance.

Low productivity in work from home and fixed and recurring costs increase due to making proper arrangements to work at home.

 Extra costs:

Capital expenditure for making arrangements for facing Covid situations.

Capital expenditure for making arrangements for making arrangements for work with distancing

and

Capital expenditure for making arrangements for work from home , etc.

causing higher Fixed Assets, loans,  interest, depreciation and operational expenses.

Due to safety measures to be followed by adopting distancing, less attendance of working people, providing masks, PPE, sensitization equipment and consumables, medical check-up , medical and health facilities etc.

Lower price due to reduced demand:

For many products there will be significant fall in demand and therefore prices of products and services can fall in many cases. Reduction in salaries, deferment of increments and promotions, and job cuts by many organizations are clear indications in this regard.

Due to low earnings tax payable will be low. Rates of TDS have been reduced to 75% of normal rates in many cases. In spite of low rate of TDS but increased scope of TDS, it is likely that major portion of tax payable will be covered by TDS and TCS.  

Hope from the FM

In view of above ground realities author hopes that honorable FM will take timely decision to waive requirements of paying first and second installments of advance tax for FY 2020-21 related to Assessment Year 2021-22.