COVID – 19 Economic Reliefs

COVID -19 pandemic will be having its long lasting effects in India not in terms of only human cost but also the economic cost of the shutting down and disruptions in almost all trade and manufacturing activities. Also, the global slowdown and the probabilities of countries entering into recession and companies going bankrupt, India is not likely to be an exception. India’s GDP growth is expected to be moderate from the earlier estimates of 5 percent for FY 20-21.
To fight the side-effects of COVID – 19, the Prime Minister has announced the creation of an economic task force to suggest some steps to ease the situation. Although, it is not possible to completely avoid the economic slowdown from COVID – 19, the Government is continuously working towards preventing the temporary crisis first from permanently harming the workforce and the businesses through job-losses and bankruptcies. Tax deadlines and due dates of many other tax compliances have been extended. A relief package of INR 1,70,000 crores has been announced to help them who needed it the most along with the RBI’s measures injecting liquidity in the financial system to minimize the damage from this pandemic. Further, there are also discussions on the second economic relief package that may include relief for the MSMEs, services & exports and industry sector hit hard by the lockdown.

Below are the highlights of the various announcements with respect to statutory and regulatory compliance matters and other relief measures to control the damage of COVID-19.

INCOME TAX

  1. Due date to file the belated income tax returns for FY 18-19 extended to 30th June, 2020
  2. Aadhaar-PAN linking date to be extended to 30 June, 2020.
  3. Vivad se Vishwas scheme (VVS) – no additional outflow of 10% amount, if payment made by June 30, 2020.
  4. Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for roll over benefit of capital gains under Income Tax Act, where the time limit is expiring between 20th March 2020 to 29thJune 2020 shall be extended to 30th June 2020.
  5. For delayed payments of advanced tax, self-assessment tax, TDS, TCS, equalization levy, etc. made between 20th March 2020 to 30thJune 2020, reduced interest rate at 9% instead of 12% / 18% per annum (i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.
  6. All payees can deduct tax as per their existing certificates up to June 30, 2020 for the Financial Year 2020-21 until their application is disposed by the AO. All other payees can apply for nil/lower deduction of tax certificate via email and certificate will also be issued via email.
  7. Notification issued by the Government of India on 30th March 2020 with respect to some other amendments done in the Indian Stamp Act is being misquoted. There is no extension of the Financial Year.

Note: Necessary legal circulars and legislative amendments for giving effects to the aforesaid relief shall be issued in due course.

GST/ INDIRECT TAX

  1. Last date of filing GSTR-3B due for the month of February, March & April 2020 till the last week of June, 2020.
  2. No interest, late fee and penalty for companies having turnover less than 5 crores. For others, a reduced rate of interest @9 % per annum would be charged from 15 days after due date (current interest rate is 18 % per annum), if complied before till 30th June 2020.
  3. Date for opting for composition scheme is extended till the last week of June, 2020. Further, the last date for making payments (CMP-08) for the quarter ending 31st March, 2020 and filing of return for 2019-20 by the composition dealers will be extended till the last week of June, 2020.
  4. Date for filing GST annual returns of FY 18-19, which is due on 31 March, 2020 is extended till the 30thJune 2020.
  5. Due date for issue of notice, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents, time limit for any compliance under the GST laws where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020.
  6. Date of making payment under Sabka Vishwas (Legacy Dispute Resolution) Scheme shall be extended to 30-06-2020. No interest will be charged if the amount is paid by 30-6-2020.

CORPORATE AFFAIRS

  1. No additional fees shall be charged for late filing during a moratorium period from 1st April to 30th September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry
  2. The mandatory requirement of holding meetings of the Board of the companies within prescribed interval provided in the Companies Act (120 days), 2013, shall be extended by a period of 60 days till next two quarters i.e., till 30th September;
  3. Applicability of Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-2021 instead of from 2019-2020 notified earlier.
  4. As per Schedule 4 to the Companies Act, 2013, Independent Directors are required to hold at least one meeting without if the Independent Directors of a company have not been able to hold even one the attendance of Non-independent directors and members of management. For the year 2019-20, meeting, the same shall not be viewed as a violation.
  5. Newly incorporated companies are required to file a declaration for Commencement of Business within 6 months of incorporation. An additional time of 6 more months shall be allowed.
  6. Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Companies Act, shall not be treated as a violation.
  7. Requirement under section 73(2)(c) of Companies Act, 2013 to create a reserve of 20% of deposits maturing during the financial year 2020-21 before April 30, 2020 shall be allowed to be complied with till 30th June 2020
  8. Requirement under rule 18 of the Companies (Share Capital & Debentures) Rules, 2014 to invest 15% of debentures maturing during a particular year in specified instruments before April 30, 2020, may be done so before June 30, 2020.
  9. “Companies Fresh Start, 2020” scheme has been issued to give opportunity to Companies to make a fresh start as fully compliant entity. Under this scheme, one time waiver of additional fees for delayed filings is allowed by MCA. Period of Scheme is 1st April, 2020 to 30th September, 2020.

SEBI REQUIREMENTS FOR LISTED COMPANIES

  1. Regulation 31 relating to Shareholding Pattern – Due date for 4th quarter extended from 21-04-2020 to 15-05-2020
  2. Regulation 33 relating to Financial Results – Due date for submitting the quarterly/annual results has been extended to June 30, 2020

INSOLVENCY & BANKRUPTCY CODE, 2016

To raise the threshold of default under section 4 of the IBC 2016 to Rs 1 crore (from the existing threshold of Rs 1 lakh) to prevent triggering of insolvency proceedings against MSMEs

FINANCIAL SERVICES/ BANKING REGULATIONS

  1. Relaxations for 3 months –
     Debit cardholders to withdraw cash for free from any other banks’ ATM
     Complete waiver of minimum balance fee
     Reduced bank charges for digital trade transactions for all trade finance consumers
  2. All commercial, regional, rural, NBFCs and small finance banks are being permitted to allow 3-month moratorium on payment of instalments in respect of all term loan EMIs outstanding on March 31
  3. For CC/OD limits, to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 up to May 31, 2020. The accumulated accrued interest shall be recovered immediately after the completion of this period.
  4. As Analysts and experts tracking the sector said that simple interest rate would be calculated by banks for the three-month period in which loan repayment was due but was not paid under the moratorium. This additional interest may either be added up to all your future EMIs or your loan tenure could get extended at the same EMI level.
    As Analysts and experts tracking the sector said that simple interest rate would be calculated by banks for the three-month period in which loan repayment was due but was not paid under the moratorium. This additional interest may either be added up to all your future EMIs or your loan tenure could get extended at the same EMI level.
  5. Deferment of NPA recognition from 1st March 2020 to 30th June 2020 for defaulting payments and for other reasons

OTHER COMPLIANCES

  1. Due date for ESI contribution for Feb and March 2020 can be filed and paid up to 15-04-2020 and 15-05-2020 respectively
  2. IRDAI has asked the life insurance companies to extend the grace period for accepting insurance renewal premiums due in March by one more month in areas where lockdown has been declared by the state governments.
  3. A detailed advisory on reporting and auditing of Impacts on financial statements due to COVID-19 of financial year 2019-20 has been issued by ICAI

DIRECT BENEFITS TRANSFER FOR ORGANIZED SECTOR

  1. The government will bear the cost of EPF contribution of both employer and employee (24 per cent) for the next three months for those establishments which have up to 100 employees and 90 per cent of them earn less than INR 15,000.
  2. Workers can draw up to 75 per cent non-refundable advance from credit in PF account or 3 months’ salary, whichever is lower

OTHER ANNOUNCEMENTS FOR DAILY WAGE EARNERS/POORS

  1. 20.40 crores Pradhan Mantri Jan Dhan Yojanawomen accountholders would be given an ex-gratia of INR 500 per month for next 3 months
  2. Increase in MNREGA wages to INR 202 from INR 182
  3. INR 1000 per month for next 3 months to tide over difficulties during this period under PM Garib Kalyan Yojana for senior citizens, widows and divyang.
  4. INR 50 lakh medical insurance cover per person for healthcare workers, sanitation workers, paramedics, doctors and nurses who are exposing themselves to the virus.

Disclaimer: The above Highlights has been prepared for clients and the firm’s personnel view. It is general information and does not express view or opinion of Singhi Chugh & Kumar (“SCK”). It is meant for general guidance and no responsibility for loss arising to any person on the basis of the above information would be accepted by SCK. It is recommended that professional advice be sought based on the specific facts and circumstances.



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