Commerce and Management faces unprecedented setbacks due to the COVID-19. All world, irrespective of its strengths and weaknesses will overcome this disease by using its full resources. At this juncture, I try to summarize the recent developments in Indian Commerce and Management. There are a lot of Regulatory, compliance, concession and adjustments measures are announced by various Regulators of Indian Economy to overcome the crisis .Commerce and management has tried to protect the foundation of our economic strength through the following important measures:-
Finance Act 2020.
Lok Sabha passed the Finance Bill 2020 on 23rd March 2020 .Following are the important newly inserted sections /amended sections in the Finance Act 2020.
1. Section 6 amended
As per amended section 6, now a person may be
b. Not ordinary resident
c. Deemed Resident
2. Section 43CA amended:
Variation rate applicable to this section is increased to 10%
3. Section 44AB:
Certain clauses of this section is amended
This section is amended to encourage cash less transactions. Now an assessee whose turnover is less than Rs 5crores,can opt presumptive taxation If his he has received in cash and paid up to 5% the total receipts and total payments respectively. Under the above circumstances auditing is not necessary.
4. Section 57: Deduction
Deduction in respect of expenses incurred to earn dividend income is allowed as per section 57 subject to the condition that the deduction shall be get up to 20% of the dividend income
5. Section 80EEA:
Deduction in respect of interest paid on specified housing loan taken for certain house property.
Certain clauses of this section is amended.
This benefit has been further extended up to 31/3/2021
6. Section 80GGA:
- Deduction in respect of certain donations for scientific research or rural development.
- Certain clauses of this section is amended
- Any donation above Rs 2000 under section 80GGA is allowed only if it pays in any mode other than cash
7. Section 80M:
Deduction in respect of certain inter-corporate dividends. Dividend received from domestic company is allowed as deduction in computing total income of a domestic company.
8. Section 115BAA:
- Tax on income of certain domestic companies.
- Certain clauses of this section is amended.
- The companies which opt under this section can claim deduction under section 80 M
9. Section 115BAB:
- Tax on income of new manufacturing domestic companies.
- Certain clauses of this section is amended.
- The companies which opt under this section can claim deduction under section 80 M
10. Section 115BAC:
The individuals and HUFs may follow the existing Tax Rates or Alternative Tax Rates Slab for Individuals and HUF
Rate of Tax
From 2,50,001 to 5,00,000
From 5,00,001 to 7,50,000
From 7,50,001 to 10,00,000
From 10,00,001 to 12,50,000
From 12,50,001 to 15,00,000
But, he has decided to opt under this section ,he cannot claim deductions and exemptions under the following heads and Chapter VI A
1. Income from House property
2. Income from House Property
3. Income from Business or Profession
4. Income from Capital Gains
5. Income from Other sources.
11. Section 115BAD:
Tax on income of certain resident co-operative societies.
A co-operative society can opt assessment as per existing income tax provisions or as per 115 Section 115BAD .If it opt under this section , co-operative society can not claim exemptions and deductions under the existing Income Tax provisions.
12. Section 115BBDA:
Tax on certain dividends received from domestic companies.
This section will not applicable for assessment year 2021-2022 on words. That means dividend received from domestic companies will be taxable in the hands of the persons who received the dividends.
13. Section 115JC:
If an Individual or HUF who opts to tax under Sec.115BAC or a Co-operative society which opts to tax under Sec115BAD, then Alternate Minimum Tax is not applicable to such assesses.
14. Section 115JD amended
If any company opts to pay tax under Sec.115BAC or Sec.115BAD and if any brought forward Alternate Minimum Tax [AMT] credit exists at the time of option , such credit will lapse as it is not allowed to carry forward further.
15. Section 115-O amended
Companies need not pay DDT from A.Y 2021-2022 on words
16. Section 115-R amended
Now, the specified company/mutual fund is not required to pay tax on the income distributed by them. It will be taxed in the hands of recipient i.e., Unitholders.
17. Section 139 amended
It is amended and made as due date for filing of ITR of partners (i.e., both the sleeping and working partner) will be that of audit cases (i.e.,31st Oct of relevant Assessment year).
18. Section 194 amended
Now, as per Sec 194 the Company which distributes dividend has to deduct TDS @10 %If such dividend paid is more than Rs.5000/-
19. Section 194A
New clause added is as follows:-------
As per Section 194A, Every cooperative society whose total sales or gross turnover exceeds Rs 50 crores shall deduct TDS @10% in respect of the interest credited or paid if such amount is more than 40,000 .Such amount in respect of senior citizen will be Rs.50,000.
20. Insertion of New Section 194K
Any person responsible for paying to a resident any income in respect of Units of certain mutual funds Shall deduct TDS at the rate of 10% of such income subject to certain conditions
21. Insertion of New Section 194-O
E-commerce operator to the e-commerce participant has to deduct TDS @1 % at the time of credit of amount of sale or service or both of the e-commerce participant other than an Individual and HUF e-commerce participant whose relevant sales do not exceed Rs.5 lakhs per year.
22. Insertion of New Section 271AAD
There will be Penalty for false or omitted entries found in books of accounts. The penalty will be equal to the amounts of such false entry or omitted entry.
Income Tax Related Measures
A. Declaration of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.
The Government of India has announced Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 to give relaxation to direct and indirect tax payers in the wake of COVID-19.Following are the important provisions with respect of the said ordinance.
You may file belated and revised return of Income with respect to the financial Year 2018-2019 up to 30/6/2020, if you do not file it till date.
You may link Aadhaar-PAN up to 30th June, 2020,if you do not link it till 24/3/2020
You may claim Sec 80C,Sec 80D,Sec 80 G contributions made during April-June , 2020 in the financial year 2019-2020 itself.
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 has also been extended to 30th June 2020.
B. Income Tax Appellate Tribunal has started regular interactive sessions.
The Income Tax Appellate Tribunal (ITAT) has decided to productively utilise the time available during the 21-day lockdown.It has planned to commence a series of Video Conferences involving regular interactive sessions. ITAT expects that such meetings will be extremely useful in exchanging views and formulating strategies as to how to improve the rate of disposal of cases as well as quality of judicial orders.
C Income Tax refund
The Income Tax Department has announced that it will issue all pending income tax refunds up to Rs 5 lakh immediately to individuals and business entities.
D. Announcement of PM CARES FUND
PM CARES FUND
“Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)' is a special fund created by the Government of India for providing immediate relief to the people who has been suffered due to outbreak of COVID -19.
If you donate fund to PMCARES FUND, you will get 100% deduction under Sec 80G of Income Tax Act , 1961.Likewise,you will get deduction in the financial year 2019-2020 itself, if you donate to the fund before 30/6/2020.
III. Companies Fresh Start Scheme 2020
MCA has announced Companies Fresh Start Scheme 2020 to help the companies to start fresh without remitting additional filing fees for delayed filing. The companies can use the plan during 1/4/2020 to 30/9/2020
Any company which has made default in filing various statutory documents can use this scheme .Then the company will get relief from penalty and prosecution
This Scheme is not applicable to the following types of companies
1. Companies against which final notice for Striking off the name initiated,
2. Companies which voluntarily filed application for Striking off the name
3. Companies which have been amalgamated
4. Companies which have applied for Dormant Status
5. Vanishing Companies cannot use the scheme
6. Increase in authorised capital involved (Form SH-7)
7. Charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9)
Defaulting companies have to withdraw the appeals filed in respect of their default in filing statutory documents .Then they can file Form CFSS-2020 for application of immunity.
There will no fee to file Form CFSS-2020. Immunity is offered only to the delay in filing of forms .It will not get for violation of any law.
IV. Various relaxations under GST
The CBIC on the 3rd of April, 2020 released a list of notifications. Following are the summary of some of the important of them
1.Any registered person who wants to opt for Composition Scheme for Financial Year 2020-21 may apply in FORM GST CMP-02 on the common portal before June 30,2020
2. For reversal of ITC , one has to apply in FORM GST ITC-03 on the common portal before June 30,2020
3. No interest on GSTR 3B will be charged for the month of February, March, and April for taxpayers having an aggregate turnover of more than rupees 1.5 crores and up to rupees five crores in the preceding financial year subject to the condition that they have to file the return within the extended due dates
4. Due date to file GSTR-1 for the following months has been extended to 30th June.
d. quarter ending 31st March
5. Due date to file following forms having been extended (for registered persons paying tax under the composition scheme)
a. FORM GST CMP-08 –up to 7/7/2020
b. GSTR 4 in respect Quarter 3ending 31/3/2020 –up to 15/07/2020
6. Some concession has been given in respect of e-way bills
V. Developments in insolvency and bankruptcy laws
The Government of India has decided to make the following amendments in the Insolvency and Bankruptcy laws.
1. The IBBI through a notification dated 29th March, 2020 has decided that the companies will get an extension of 17 days (starting from March 29th) to complete various activities under CIRP. However the extension did not affect the outer limit of completing CIRP. It will be completed within the following time limits
a. 180 days or
b. 270 days or
c. 330days or
as the case may be
2. The Government of India also decided to raise the threshold for filing an insolvency application from the present Rs 1 lakh to Rs 1 Crore.
3. The Government of India also decided to suspend the following sections of IBC 2016
a. Section 7
b. Section 9
c .Section 10
VI. ICAI issues advisory on Accounting and Auditing due to COVID-19 disruptions Posted on 01 April 2020
The Institute of Chartered Accountants of India (ICAI), Regulator of Chartered Accountancy profession in India, has developed an Advisory on “Impact of Coronavirus on Financial Reporting and the Auditors consideration'.
The advisory has been prepared for:
1. Entities to whom Ind AS is applicable and
2. Entities to whom AS is applicable, viz,
Companies to whom Companies, Accounting Standards Rules, 2006 is applicable and Non-corporate entities to whom AS issued by ICAI is applicable
Accounting advisory guides on the key areas that need to be considered during these challenging times as given below.
a. Inventory Measurement
b. Impairment of Non-Financial Assets such as PPE, Goodwill and Intangibles
c. Financial Instruments (Impairment Losses, Fair Value Measurement and Hedge Accounting)
e. Revenue Provisions,
f. Contingent Liabilities and Contingent Assets
g. Modiﬁcations or Termination of Contracts or Arrangements
h. Going Concern Assessment
i. Income Taxes
j. Consolidated Financial Statements
k. Property, Plant and Equipment
l. Presentation of Financial Statements
m. Borrowing Costs
n. Post Balance Sheet Events
VII. Revised LLP Settlement Scheme, 2020.
The Ministry of Corporate Affairs has introduced a Revised LLP Settlement Scheme, 2020 to help the Limited Liability Partnership firms in mitigating the effects of COVID-19 on their economic resources.The following are the important features of the scheme
a. it helps to make a fresh start by filling delayed returns irrespective of its duration of default.
b. it reduces the compliance burden of LLPs during this COVID -19 affected period.
c. One time Waiver of additional fees for delayed returns.
d. The scheme will be in force between 1/4/2020 and 30/9/2020
VIII. Regulatory Package of RBI
Following are the important features of Regulatory Package of RBI (Announced on 27/3/2020)
(i) Term Loans
RBI has directed to allow a moratorium of three months (between March 2020 and May 2020) in respect of all term loans (including agricultural term loans, retail and crop loans) subject to certain conditions. The institutions will be included under that scheme
a. All commercial banks (including regional rural banks, small finance banks and local area banks),
b. Co-operative banks,
c. all-India Financial Institutions,
d. NBFCs (including housing finance companies)
ii. Working Capital Facilities
Lending institutions may defer interest in respect of working capital loan sanctioned in the form of cash credit and overdraft. The deferment will be in the period from March 1, 2020 to May 31, 2020.
(iii) Easing of Working Capital Financing
The lenders may recalculate the drawing powers of borrowers in respect of working capital loan sanctioned in the form of cash credit and overdraft. This relief will get up to the period of May 31, 2020.
iv. Non- Performing Asset (NPA)
The moratorium, deferment and recalculation available in favour of borrowers will not affect the Credit Card score of borrowers.
IX. PM Garib Kalyan Anna Yojana
PMGKY 2020.The Government of India has announced PM Garib Kalyan Anna Yojana to tackle COVID-19.Following are the important benefits/attractions of the scheme
All ration card holders will get an additional 5 kg ration in April 2020.It may be Rice or wheat.
2. Medical Insurance amounted 50 Lakhs per Medical worker during April-June 2020Period is an another benefit under the scheme.
3.All ration card holder will also get the 1 kg of pulse-free for the next three months .The pulse which is locally preferred will be given to the ration card holders.
4. MNREGA workers will get a daily wages of 202 per day.
5. Farmers will get next installment of PM Kisan Yojana in April 2020.
6. Both Employee contribution and Employer contribution to EPF will be pay by the government for next three months .Government will pay 12% + 12% (24%) for the next three months.
7. Following persons will get Rs 1000 for next three months
b. Old age men
c. Disabled pensioner
8.Jan Dhan Yojana account holders will get the benefit of Rs 500/ month for the next three month and this amount will be directly credited into their account in two installments so that they will not face any problem in a period of disruption.
9.Ujjawala Yojana gas holders will get the cylinder as free of cost for April, May and June 2020
10.SHG workers will get 20 lakh as collateral loan without any security.
11.Non Refunadable advance from EPF is an another feature of this scheme.
X. Extension of Premium payment in respect of Vehicle insurance Renewal Policies.
Central Finance Ministry has decided to extend Premium payment in respect of Vehicle insurance Renewal Policies. Therefore the policies, which have to be renewed between March 25, 2020 and April 14 , gets an extended time up to April 21,2020.
XI. Extension in respect of 15 G Form and 15 H Form.
If you have no income more than the exempted limit, you may give 15 G in banks and other financial institutions.Then the banks and financial institutions will not deduct TDS. If you are senior citizen, the relevant form is 15H.Now,the Government of India has decided that if a person had submitted valid forms 15 G and 15H to the banks and other financial institutions like KSFE and Treasury department for F.Y 2019-2020,then those forms would be valid up-to June 30,2020.
XII. RBI permits greater space to State Governments/ Union Territories for availing overdraft facilities up to September 30,2020.
a. RBI has decided to increase the number of days for which a State/ UT can be in overdraft continuously to 21 working days.
b. It has also decided to increase the number of days for which a State/ UT can be in overdraft in a quarter to 50 working days.
Central Government will give Rs 34,000 Crore as GST compensation to various State governments
XIV.PPF,RD, Sukanya Samriddhi Yojana minimum balance
Government of India has decided to avoid fine in respect of maintaining minimum balance in PPF, RD and Sukanya Samriddhi Yojana .Now, you can renew the said accounts without paying the fine and penalty .
XV. NRA from RPF.
Amount received from RPF is taxable if he was not in continuous service for 5 years. Now due to COVID 19, GOI has decided to give a concession on that regard. Therefore, now NRA received from RPF exempt from Income Tax.
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