The economy has taken a major blow due to the COVID-19 pandemic. Necessary steps have been exercised by governments around the world, including the Indian government, to support their respective economies. On 24th March 2020, the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman announced important relief measures on statutory and regulatory compliance matters across various sectors. These announcements were particularly focused in the areas of Income Tax, EPF, ESI, GST, Customs & Central Excise, Corporate Affairs, Insolvency & Bankruptcy Code (IBC), Fisheries, and banking services and commerce. We have compiled them all in one summary to give businesses, pensioners, and taxpayers quick access to the relief measures available.
The Employee Provident Fund (EPF) is a government-initiated scheme to provide monetary support to all salaried individuals after their retirement. With the current crisis, many salaried individuals are worried that employers may not be capable of contributing to the EPF or even paying their monthly wages. The Indian Government has come up with relief measures to eliminate panic under such scenarios. On March 26, 2020, Finance Minister Nirmala Sitharaman made two major announcements with regards to members of the Employees’ Provident Fund Organisation (EPFO).
-> Government pays EPF contribution
UPDATE: This scheme has been extended for three more months, until August.
The EPF contribution comes from both the employer and the employee at 12% each. The employer’s contribution is divided between the Employee’s Pension Scheme (EPS) paying 8.33% and the Employee’s Provident Fund (EPF) paying 3.67% to a total of 12%. In light of the COVID-19 pandemic, the government has offered to pay both parts of the EPF contribution for the next three months. This is for establishments that have 100 employees or less and in which 90% of those employees are earning less than Rs.15,000/month.
-> EPF rates down to 10%
It was announced on Wednesday, 13th May 2020 by Union Finance Minister Nirmala Sitharaman that EPF contribution of both employer and employee will be reduced to 10% each from existing 12% each for all establishments covered by EPFO for the next three months. However, the Central Public Sector Enterprises (CPSEs) and state public sector undertakings (PSUs) will continue to contribute 12% as an employer contribution. This scheme will be applicable for workers who are not eligible for 24% EPF support under PM Garib Kalyan package and its extension.
-> Easier to withdraw your EPF corpus
The current situation is creating a need for some employees to withdraw their EPF corpus. In response, the government will relax the EPF withdrawal rules to give employees easier access to their money. The Employee Provident Fund Office has now introduced a Pandemic Advance, in which employees can withdraw up to 75% of the amount in their EPF account, or 3 months’ basic salary and dearness allowance, whichever is less.
For more information visit: www.epfindia.gov.in.
The Employee State Insurance Corporation (ESIC) is a social security and health insurance scheme for salaried Indian citizens. Keeping in mind the elevated need for healthcare at the moment, Director General Sri Raj Kumar IAS has relaxed the provisions of regulation 26 and 31 of the Employees’ State Insurance General Regulations, 1950.
-> ESIC relaxes deadlines
ESIC announced on Monday, Mar 16, 2020, that the Govt. of India has relaxed the ESIC contribution deadline by 30 days for all employers and employees. This means the ESI contributions for the months of February 2020 and March 2020 can be filed and paid up to April 15, 2020, and May 15, 2020, instead of March 15, 2020, and April 15, 2020, respectively.
Visit the official site for details: www.esic.nic.in
Income tax announcements
The government has also taken initiatives to help the general population with their income tax.
-> Extended deadlines and no extra charge
The Government extended the last date for income tax returns for the financial year 2018-19, from 31st March 2020 to 30th June 2020. The date to link Aadhaar with PAN has also been extended to 30th June 2020 from its previous deadline of 31st March 2020. As far as the Vivad se Vishwas scheme is concerned, no additional 10% amount will be charged if payment is made by June 30th, 2020.
Due dates have also been pushed to 30th June 2020 for certain activities relating to the Income Tax Act, Wealth Tax Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT Law, Equalization Levy law, or Vivad Se Vishwas law where the expiring date was between 20th March 2020 and 29th June 2020. This applies to issuing notices, intimations, notifications, approval orders, and sanction orders; filing appeals; and furnishing returns, statements, applications, reports, and any other documents; completion of proceedings by the authority; and any compliance by the taxpayer, including investment in saving instruments or investments for rollover benefits of capital gains.
-> Extended dates for Income Tax returns
The due date for Income Tax returns for the year 2019-2020 has now been extended from 31st July and 31 October to 30 November 2020.
-> Interest rates reduced and no late fee
For payments delayed on advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, and CTT between 20th March 2020 and 30th June, 2020, the interest rate is reduced to 9% per annum instead of the earlier 12% or 18% (i.e., 0.75% per month instead of 1% or 1.5% per month). Also, no late fee or penalty shall be charged for delay in payment during this period.
Individuals can now submit Form 15G and 15H for the current fiscal after June 30 for claiming exemption from Tax Deducted at Source (TDS) on interest income.
-> TDS,TCS cut by 25%
TDS, TCS rate for non-salaried payments for a period up to March 31, 2021, has cut by 25%.
Note: Some of the above-mentioned legal circulars and legislative amendments are yet to be fully formally announced and shall be issued over the course of time.
Visit the official site for details: https://www.incometaxindiaefiling.gov.in/home
Financial services announcements
Bank services have relaxed requirements in the following areas for the next three months:
-> Withdraw cash without additional charges
Debit card holders can withdraw cash from any other banks’ ATM without having to pay additional charges.
-> Minimum balance waived
Account holders can now maintain a bank balance of zero without penalty, as the minimum balance has been waived.
-> Bank charges reduced
Bank charges for digital trade transactions for all trade finance consumers have also been reduced.
Learn more: pib.gov.in/PressReleseDetail.aspx?PRID=1607942
Many of these relief measures that involve taxes, and measures relating to business and commerce, will still require time to be implemented. To tackle this, an Ordinance was issued by the Finance Ministry on 31st March, which provides for extension of various time limits under the Taxation and Benami Acts.
-> Direct Taxes & Benami
The last date of filing of original and revised income tax returns for FY 2018-19 (AY 2019-20) has been extended to 30th June 2020.
The Aadhaar-PAN linking date has been extended to 30th June 2020.
The date for making various investments or payments for claiming deductions under Chapter-VIA-B of the IT Act, including Section 80C (LIC, PPF, NSC, etc.), 80D (Mediclaim), and 80G (Donations), has been extended to 30 June 2020. Hence, the investments or payments can be made up to 30 June 2020 for claiming deductions under these sections for FY 2019-20.
The date for making investments, construction, or purchases for claiming rollover benefits or deductions on capital gains has also been extended to 30 June. The date for commencement of operation for the SEZ units claiming deduction under section 10AA of the IT Act has also been extended to 30 June for the units which received necessary approval by 31 March 2020.
-> Indirect Taxes
The last date for furnishing the Central Excise returns due in March, April and May 2020 has been extended to 30 June 2020.
In addition to the extension of time limits under the Taxation and Benami Acts above, a section has been inserted in the CGST Act, 2017 empowering the Government to extend due dates for various compliances (including the statement of outward supplies, filing refund claims, and filing appeals) specified, prescribed or notified under the Act, on the recommendations of the GST Council.
-> PM Cares Fund
The ordinance issued on 31st March also amended the provisions of the Income-tax Act to provide the same tax treatment to the PM CARES Fund that is available to the Prime Minister National Relief Fund. Therefore, any donation made to the PM CARES Fund shall be eligible for 100% deduction under section 80G of the IT Act.
-> Rs 50,000 crore equity infusion for MSMEs
Rs 50,000 crore equity infusion for MSMEs through Fund of Funds; to be operated through a Mother Fund and few daughter funds.
-> Rs 3 L crore collateral-free automatic loans
Rs 3 lakh crore collateral-free automatic loans to meet operational liabilities built up, buy raw material, and restart business. Businesses and MSMEs from banks and NBFCs with up to 20% of entire outstanding credit as of February 29, 2020, will get this emergency credit. Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover are eligible to get this collateral-free credit.
-> Extension of 6 months for contractors
All central government agencies to provide an extension of up to 6 months, without cost to contractor, to obligations like completion of work covering construction and goods and services contracts.
-> Rs 90,000 crore for Power Distribution Companies
Rs 90,000 crore liquidity injection for Power Distribution Companies (DISCOMs).
Don’t miss out because you didn’t know!
It is important to help each other in any way possible during these hard times. We’re committed to continuing to help you, so we will be updating this blog as new announcements are made. Until then, stay home, stay safe!