To give compliance relief to citizens in the midst of the COVID pandemic, Lok Sabha has as of late passed a Bill that amends tax collection laws. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill 2020, will replace the Taxation and different Laws (Relaxation of Certain Provisions) Ordinance, 2020, proclaimed in March. The Bill additionally endorses a few changes in tax rules to boost investment.
Finance Minister Nirmala Sitharaman said the ordinance was important to concede different compliance deadlines under GST and Income Tax (I-T) Act during the pandemic.” The Bill comes at a very apt time, provides relief measures in terms of compliance requirements amid the pandemic,” said Ravi S. Raghavan – Tax Counsel, Majmudar & Partners.
Key Changes of the Taxation Bill passed to Provide Compliance Relief to the Taxpayers
Given below is a list of the changes of the Taxation Bill which was passed in order to provide compliance relief to the Taxpayers:
- The Bill amends the provisions of the Income Tax Act to provide tax relief to contributions in the PM-CARES Fund. Any contribution made to the PM-CARES Fund would meet all requirements for 100% deduction under Section 80G, which permits donations made to specified relief funds and charitable institutions as a deduction from net absolute pay arriving at taxable.
- The Bill proposes several significant revisions with regards to foreign investors, both FPIs and Category III AIFs. The toll of overcharge on dividends of FPIs has been capped at 15% which is at par with capital gains. Further, the Bill will provide relief to tax collection from capital gains on the transfer of securities (apart from shares of Indian organization) and concession in taxation at the rate of 10% on profit and interest income on securities for the Category-III AIFs, which have been set up in GIFT City.
Capping surcharge was required after the abolition of DDT in the Finance Act, 2020 and there was an ambiguity while computing advance tax on the extent of surcharge payable by FPIs. This amendment is to augur the promotion of investment funds in IFSC and hence, the AIFs with PEs in India has been sidelined for this benefit,” said Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP.
- CBDT prior decreased the rates for Tax Deduction at Source (TDS) by 25% for non-salaried specified payments made to inhabitants during the period from 14 May 2020 to 31 March 2021. The Bill proposes to include the changes for the Income Tax Act with retrospective effect from 14 May 2020.
- The due date to record the income tax returns for FY 2019-20 is November 30, 2020. The due date to record all other related forms and reports, (for example, Transfer valuing report, Tax Audit report, and so on) is October 30, 2020.
- For delay in payment of the advance tax, self-evaluation tax, regular tax, TDS, TCS, equalization levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) made between March 20 and June 30, minimized interest at 9% per annum will be charged for this particular duration. If in case, the amount has been paid by June 30, no further penalty or prosecution will be started.
- The date for the passing of request or issuance of notice by the people having high authority and different compliance under different direct taxes and Benami Law which are needed to be passed/issued/made by December 31 2020 has been extended out to March 31, 2021.
- The Bill tries to make faceless evaluations relevant to at least eight processes under the I-T Act, including for collection and recuperation of tax and gathering of information. “The faceless assessment scheme is a milestone initiative that has the potential to remove grey areas of the tax-administration. Doing away with the discretionary power available to tax assessing officers was unimaginable until a few days ago,” said Ravi S. Raghavan – Tax Counsel, Majmudar & Partners.
- The Bill likewise proposes to alter the Direct Tax Vivad se Viswas Act, 2020 to extend the date for payment without extra amount to 31st December.