Coronvirus related lock down has taken the entrepreneurial world by surprise. Businesses have activated Business continuity plans, invoked force majeure clauses of their agreements and have gone into hibernation. On the other side, this has exposed the risks of uncertainty of entrepreneurship, leading to the individual thought process of safeguarding their own economic ecosystem. The government has also come up with various measurees to provide regulatory, food, economic, monetary security to Indian strata. Economic package of USD 22.5 Billion for common man has been introduced by the central government. Further for entrepreneurs, certain measures in terms of tax, regulatory and RBI led monetary relief has been introduced.

Delayed deposit of TDS interest rate to be 9 percent P.A. till 30.06.2020, no late fee/penalty for delayed payment of taxes in this period.

COVID-19 relief measures, which will lead to ease of doing business in this difficult time for entrepreneurs are:

Direct Tax

  1. Due date for belated and revised Income tax returns for Financial Year 2018-19 extended from 31 March 2020 to 30 June, 2020.
  2. Linking of Aadhaar and PAN extended from 31st March 2020 to 30 June, 2020.
  3. Income tax dispute resolution scheme extended to 30 June 2020 i.e. Vivad se Vishwas scheme (no additional 10 percent amount).
  4. Limitation period, expiring between 20 March 2020 to 29 June 2020, extended to 30 June 2020 for due dates under Income Tax Act and various direct tax regulations for issue of notices, intimation, notification, filing of appeal, furnishing of return, statements, any other documents and completion of proceedings by authority and any compliances by the taxpayer.
  5. Interest rate reduced to nine percent instead of 12 percent or 18 percent P.A (per annum) for delayed payments of taxes till 30 June, 2020. Delayed deposit of TDS interest rate to be 9 percent P.A. till 30.06.2020, no late fee/penalty for delayed payment of taxes in this period.

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Indirect taxes

  1. Due date of filling GSTR 3B for turnover less than five crores for the month of February 2020, March 2020 and April 2020 extended till last week of June 2020 and for turnover more than five crores, the date for above mentioned months extended till last week of June 2020 subject to interest (i.e. nine percent P.A.), No penalty.
  2. Date for opting Composition Scheme extended to 30-6-2020 from 31-3-2020.
  3. Date of filling Annual Return for the financial year 2018-19 extended till the last week of June 2020.
  4. Other Due dates for any compliance under the GST laws, Including Payment date under service tax dispute resolution scheme i.e. Sabka Vishwas Scheme shall be extended to 30 June, 2020. No interest.
  5. Government has provided 24 by 7 custom clearance services till end of 30 June 2020 including the extension of the due date to 30 June 2020 for any custom compliance, issue of notice, notification, approval order, any other documents etc.

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Corporate Laws

  1. No additional fee from 1 April 2020 to 30 September 2020, for late filing of any documents, return, statement, etc to be filed with MCA by Companies/ LLPs.
  2. Requirement of holding board meetings within an interval of 120 days is further extended by a period of additional 60 days, till 30 September 2020.
  3. The Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-21 instead of 2019-20.
  4. As per Schedule IV to the Companies Act, 2013, Independent Directors (ID) are required to hold at least one meeting without the attendance of Non-Independent Directors and members of management. For FY 2019-20, if the ID have not been able to hold such a meeting, the same shall not be viewed as a violation.
  5. Timeline for creation of deposit redemption reserve of 20 percent of deposits maturing during the FY 2020-21 has been extended till 30 June 2020
  6. Timeline to invest or deposit at least 15 percent of amount of debentures maturing in specified methods of investments or deposits before 30 April 2020, is extended till 30 June 2020.
  7. Timeline for filing of declaration on commencement of business by New Companies within 180 days extended by an additional period of 180 days.
  8. For Financial Year 2019-20, non-compliance of minimum residency period of 182 days by any one director, shall not be treated as non-compliance.
  9. Further, it has also been clarified that spending of CSR funds for COVID-19 is eligible CSR Activity.
  10. Due to the emerging financial distress faced by most companies on account of the large-scale economic distress caused by COVID-19, it has been decided to raise the threshold of default under section 4 of the Insolvency and bankruptcy code 2016 to Rs 1 crore (from the existing threshold of Rs 1 lakh). This will by and large prevent triggering of insolvency proceedings against MSMEs.

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RBI lead Banking Relief

  1. Rescheduling of Payments – Term Loans and Working Capital Facilities; Banks and NBFC’s are permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020, and May 31, 2020. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium. In respect of working capital facilities sanctioned, recovery of interest may be deferred for three months.
  2. Easing of Working Capital Financing; Banks and NBFC’s are permitted to recalculate drawing power by reducing the margins and/or by reassessing the working capital cycle, relief available till 31 May 2020.
  3. Mortarium and relief related actions taken by lending institutions pursuant to RBI directions will not adversely impact the credit history of the beneficiaries nor result into Non Performing asset classification of their loans.

Rajat Chawla is a Chartered Accountant. The views expressed are the author’s own.

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