President gives Assent for Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020

In March 2020, the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020, was promulgated that seeks to provide various reliefs in terms of compliance requirements for taxpayers amid the coronavirus pandemic.

• Now, on September 29, 2020, the President of India, Ram Nath Kovind gave his assent to the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 which will amend 5 Acts viz. the Income-tax Act, 1961, Central Goods and Services Tax Act, 2017, Finance Act, 2019, the Direct Tax Vivad se Vishwas Act, 2020 and the Finance Act, 2020.

Key features of Bill:

Extension of time limits:  The time limits for compliance or completion of certain actions under the specified laws, falling during the period March 20, 2020 to June 29, 2020, have been extended. till September end 2020. 

Interest and penalty:  Payment of any tax, made after the due date (due between March 20, 2020 and June 29, 2020), but before June 30, 2020 (or any further date specified by the government), will not be liable for prosecution or penalty.  The rate of interest payable for the delay in payment will not exceed 0.75% per month.

Faceless Assessment Scheme: On 13 August 2020, Prime Minister launched the ‘Transparent Taxation’ platform encompassing faceless assessments, faceless appeals, etc. Read Here. The Taxation Bill proposes that faceless assessment scheme will be incorporated under the Income Tax Act from April 2021.

Donations to PM CARES Fund:  Under this bill the provision of IT Act, 1961 has amended by making tax features of Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) at par with Prime Minister’s National Relief Fund. 

• Means donations under PM-CARES fund are eligible for 100% deductions under section 80G of IT Act.

GST-related compliances:   The Ordinance amends the Central Goods and Services Tax Act, 2017 to allow the central government to notify an extension to the time limits for various GST-related compliances and actions under the Act.

Resolution of disputes related to direct taxes: The Ordinance amends the Direct Tax Vivad se Vishwas Act, 2020, which provides a mechanism for resolution of pending tax disputes related to income tax and corporation tax.  

• As per amendment, the date for payment without any additional levy under the Direct Tax Vivad se Viswas Act, 2020, has been extended to December 31, 2020, or a further date as and when notified.

Resolution of disputes related to indirect taxes:  The Ordinance amends the Finance (No. 2) Act, 2019 to extend the time limits specified for completion of various actions under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, which provides a mechanism for resolution of pending tax disputes related to indirect taxes.

• Under the scheme, for resolution of disputes, a person is required to pay the amount determined by the designated committee within 30 days of the issue of statement.  The Ordinance removes the 30-day time limit and specifies that the payment must be made by June 30, 2020.

Relief to foreign investors: The Bill amends the Finance Act, 2020 to clarify with regard to capping of surcharge at 15% on dividend income of the Foreign Portfolio Investor.

• From April 1, 2020, tax exemption will be provided on the income of category III Alternate Investment Funds in the International Financial Services Centre (IFSC) from masala bonds, derivatives or overseas investments.

TDS/TCS: Tax deduction at source or tax collection at source (TDS, TCS) at three-fourth the rate or 9% a year on transactions from May 14, 2020, till March 31, 2021, will be enacted. 

Recent Related News:

• On June 26, 2020, the Government notified the new Floating Rate Savings Bonds (FRSB), 2020 (Taxable) Scheme in place of 7.75% Savings (Taxable) Bonds, 2018, with effect from July 1, 2020. The 7.75% Savings (Taxable) Bonds, 2018 Scheme was ceased for subscription from the close of banking business on May 28, 2020.
• On 7th May 2020, the Central Board of Direct Taxes (CBDT) amended Rule 44G of Income-tax Rules, 1962 for making an application to invoke the mutual agreement procedure in Form no.34F which will be called Income-tax (8th Amendment) Rules, 2020.

About Central Board of Direct Taxes (CBDT):
Chairman– Pramod Chandra Mody
Headquarters– New Delhi