Income Tax Act,1961 Details:
During the recent pandemic of COVID-19 there are several steps taken by the government to come out from this recession period including, providing relaxation under various income tax provision. It has also slightly increased the compliance burden for some taxpayers. The lockdown impact of the COVID-19 has been largely disruptive and the complete lockdown period has signalling a deep recession. It would result in a sharp loss in the incomes of assesses.
Relaxation provided under Income Tax
2.1 Extension of last date of filing of original as well as revised income-tax returns for the F.Y. 2018-19 (A.Y. 2019-20). Income tax department has extended the due date for furnishing return relating to F.Y. 2018-19. Therefore, now if any taxpayer wants to file his return (original or revised) relating to F.Y. 2018-19 it can be filed latest by 31st July, 2020.
2.2 Extension of Aadhaar-PAN linking : Since the introduction of this topic government is providing relaxation in relation to this provision and now it has been extended till 31st March,2021.
2.3 The date for making various investment/payment for claiming deduction under Chapter-VIA-B of Income Tax Act, 1961; which includes Section 80C (Life insurance policy, Contribution to Public Provident fund, etc.), 80D (Mediclaim), 80G (Donations), etc. has extended to 31 July, 2020. Therefore, any investment made till this date will be eligible for deduction for F.Y. 2019-20.
2.4 The date for making investment/construction/purchase for claiming roll over benefit/deduction in respect of capital gains under sections 54 to 54GB of the IT Act was also been extended to 30th September, 2020. Therefore, the investment/ construction/ purchase made up to 30.09.2020 shall be eligible for claiming deduction from capital gains arising during F.Y. 2019-20.
2.5 The date for commencement of operation for the Special Economic Zone (SEZ) units for claiming deduction under deduction 10AA of the Income Tax Act, 1961. has also been extended to 30.09.2020 for the units which received necessary approval by 31.03.2020.
2.6 It has provided that reduced rate of interest of 9% shall be charged for non-payment of Income-tax (e.g. advance tax, TDS, TCS) Equalization Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) which are due for payment from 20.03.2020 to 29.06.2020 if they are paid by 30.06.2020. Further, no penalty/ prosecution shall be initiated for these non-payments. Therefore, in case were payment has not been made before the revised due date i.e. 30.06.2020 then in that case interest shall be levied from due date of respective payment.
2.7 Under Vivad se Vishwas Scheme, the date has also been extended up to 31.12.2020. Hence, declaration and payment under the Scheme can be made up to 31.12.2020 without additional payment.
2.8 In order to provide relief to small and middle-class taxpayers, the date for payment of self-assessment tax in the case of a taxpayer whose self-assessment tax liability is up to ₹1 lakh has also been extended to 30th November, 2020. “The extension enables the tax payers to ensure compliance amidst the pandemic. This relief is available to assesses only in case where his tax liability is less than ₹1 lakh.
2.9 The last date for furnishing TDS and TCS statements for F.Y. 2019-20 (Last Quarter) has been extended to 31st July, 2020 and 15th August, 2020 respectively. Further due date of TDS Return of Quarter I and Quarter II for financial year 2020-21 is unchanged and it is be filed by 31st July, 2020 i.e. for first quarter and 31st October, 2020 i.e. for second quarter. Further due dates for TCS return if Quarter I and Quarter II will be 15th July, 2020 and 15th October, 2020 respectively.
2.10 From now more than one account is allowed for income tax refund i.e. new forms allow tax-payers to select more than one bank account for receiving tax refunds. This will reduce work of professional in case of refund reissue request.
2.11 Every person donating to PM CARES Fund shall be eligible to claim a 100% deduction of the amount donated from his total income. Further, the restriction of Section 80G (4) which limits the deduction to 10% of adjusted gross income shall also not be applicable for donation made to PM CARES Fund.
2.12 Further government has also provided relaxation in due date of filling ITR return and due date of filing Tax Audit report. Due date in relation ITR for person covered under Tax Audit and for person not covered under Tax Audit is 30th November, 2020. Further last date of filing Tax Audit report will be 31st October,2020.
2.13 Government has also provided major relief in form of reduction in rate on TDS by 25% i.e. any person liable to deduct TDS on or after 14th May, 2020 till 31st March, 2021 is only required to deduct 75% of original rate. For e.g. if rate is 2% then in that case deduction is to be done at 1.5%. It is also to be noted that relief is not applicable for Section 192 (Salary), 192A (Premature withdrawal from EPF), 194B (Winning from lottery crossword puzzles, card games and any other games of any sort), 194BB (Income from winning from Race Horse), 194N (Payment of certain amount in cash). Further this relief is also not applicable in case where payment is made to Non-Resident.
Increase in Compliance:
Besides this relief there are some new changes in ITR form where assessee may face burden of extra compliance
3.1 Taxpayers now cannot use ITR-1, the simplest form, if they jointly own a house property. Intention of government behind this is, it is quite common for couples to purchase houses jointly to increase home loan eligibility and maximise tax benefits on housing loans. Principal repaid is eligible for deduction under section 80C, subject to the overall limit of Rs 1.5 lakh, and interest paid of up to Rs 2 lakh under section 24. In this regard now they will be required to furnish ITR-2, which seeks extensive disclosures.
3.2 The provision relating to mandatory filing of ITR has been expanded to cover more taxpayers and the following situations are also been covered where ITR filing is mandatory:
Even assesses income is below the taxable limit. If the assessee-
- Has deposited amount more than 1 crore in aggregate in one or more of current account maintained with banks or co-operative society.
- Has incurred foreign expenditure of more than Rs. 2,00,000/- for himself or any other person.
- Has incurred electricity expenditure of more than 1 lakh.
Question that may arise in relation to Donation to PM CARES Fund.
Question: Whether donation done during period 01-04-2020 can be considered for financial year 2019-20?
Answer: As per guidelines issued by government donations made to PM Cares Fund between 01-04-2020 and 30-06-2020 can be claimed as deduction either in the financial year 2019-20 or 2020-21, at the option of the taxpayer. But, if the taxpayer opts to claim a deduction in the Financial Year 2020-21, then he shall not be eligible to opt for concessional tax regime of section 115BAC and 115BAD, as the case may be.
Question: Whether employees can get deduction in his name even when he has contributed to fund set-up by his employer and that fund has given donation to PM CARE fund?
Answer: As per new requirement any deduction under section 80G/80GGA will be allowed only if a statement is furnished by the donee, i.e. he will be required to furnish a statement in respect of donations received by him and he will be required to issue certificate. Based on which deduction will be allowed to the donor as per applicable section. Now if the amount has been donated by employer through a fund set-up by him then in that case also even if certificate is issued in name of employer all the contributors i.e. employee will be eligible to claim such deduction under respective section.