The government on Tuesday extended the deadline for filing income tax and GST returns, raised threshold of default that could trigger insolvency of a company and waived charges on cash withdrawals from ATM of other banks as a precursor to a broader stimulus package for the economy distressed by the coronavirus outbreak.
The last date for filing income tax returns for 2018-19 aswell as that for linking PAN with biometric ID Aadhaar has been extended bythree months to June 30. The last date for filing GST annual returns for lastfiscal, which is due on March 31, has also been extended till the last week ofJune.
As the outbreak of the Covid-19 pandemic and the lockdownsacross cities create large scale economic disruption, Finance MinisterNirmalaSitharaman announced that the threshold of loan default that couldtrigger insolvency proceedings has been raised to Rs 1 crore from the existing Rs1 lakh now.
“This will by and large prevent triggering ofinsolvency proceedings against small, micro and medium enterprises(MSMEs),” she said at a news conference. “If the current situationcontinues beyond April 30, 2020, we may consider suspending Section 7, 9 and 10of the Insolvency and Bankruptcy Code (IBC) 2016 for a period of 6 months so asto stop companies at large from being forced into insolvency proceedings insuch force majeure causes of default.”
With lockdowns restricting movements, the government waiveda minimum balance fee on the savings bank account as well as allow charge-freewithdrawals from any bank ATM for three months. Also, bank charges for digitaltrade transactions for all trade finance consumers have been reduced.
For companies, it relaxed mandatory requirement of holdingmeetings of the board of directors by 60 days and waived the fee for latefilings during the moratorium period.
Stating that the announcements done on Tuesday were to easethe burden of compliance on citizens during the lockdown period, Sitharamansaid an economic relief package was in works and it will be announced”sooner rather than later”.
“Every attention is being given to the economy. ThePrime Minister himself is closely monitoring the situation,” she saidadding multi-layered composition of the Covid-19 Economic Task Force, announcedby the Prime Minister last week, is already working.
Inputs from sub-groups of the task force on various sectorsof the economy are being analysed in detail. “And as I said, the economicpackage is being worked out. And as I said earlier, sooner we shall come withan announcement on that,” she said.
“The work of the task force which is multi-layered isalready almost intensively nearing a conclusion. So, the task force basedreport and the action following the task force’s report are almost at its peak.And that is why I have said, we will announce the economic package soonerrather than later.”
“Work is going on we are very close to announcingeconomic package,” she said.
The measures announced included an extension of the deadlinefor the tax settlement scheme, Vivad se Vishwas, to June 30, 2020, along withsome other income tax filing requirements.
The extension of timelines for GST returns for three months— March to May, to the end of June without any late fees, penalty and interestfor enterprises with turnover less than Rs 5 crore will provide significantrelief for SMEs who are likely to be subject to intense liquidity pressures.
While the extension of default threshold for IBCapplicability from Rs 1 lakh to Rs 1 crore will act as a protection for MSMEsin the current crisis period and further, the intent to suspend creditor rightson corporate insolvency for a temporary 6-month period was also hinted by thefinance minister.
This will arrest any possible move by lenders to proceedunder IBC in a scenario where corporate asset quality has already seen stressdue to the continuing economic slowdown and is being further aggravated by theCovid-19 led lockdown.
Also, due dates for notices as well as investment in savinginstruments or investments for rollover benefit of capital gains under theIncome Tax Act were extended to June 30.
For delayed payments of advanced tax, self-assessment tax,regular tax, TDS, TCS and STT, a reduced interest rate of 9 per cent instead of12/18 per cent will be charged for this period. No late fee/penalty shall becharged for the delay.
Goods and Services Tax (GST) returns for the month of March,April and May can now be filed by last week of June with no interest, late feeand a penalty for companies with less than Rs 5 croreturnover.
Others can file GST returns for these months by last week ofJune but the same would attract a reduced rate of interest of 9 per cent perannum from 15 days after the due date (current interest rate is 18 per cent perannum).
No late fee and penalty to be charged, if complied before June 30. Also, the date for opting for the composition scheme has been extended till the last week of June.