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Tax & Regulatory Compliance Relaxations Announced to Ease Burden on Business

Novel Corona Virus has impacted around 200 countries/territories and has infected over 500K people globally forcing everyone to be confined inside their homes. As factories have suspended their activities and workers are staying at home, this pandemic has impacted all sectors and businesses. The economists have predicted large scale impact on global economic growth. This serious threat to mankind has forced the Governments of impacted countries to come out with various relief measures and economic packages.

India is also not untouched by this pandemic. In order to arrest the spread of COVID – 19, on March 24, the Indian Government announced a total lockdown of the entire country for 21 days. Considering the challenges faced by the Indian corporates and small business houses, the Government has announced a number of relaxations with regard to tax and regulatory compliances in the last few days.

We have summarised below key tax and regulatory compliance relaxations which may be relevant to your India operations:


TAX

  • All due dates under the Income Tax Act falling between 20th March 2020 to 29th June 2020 have been extended to 30th June 2020. This includes belated return filings, appeals, various proceedings, dispute resolution schemes, etc
  • The interest rate for the delay in deposit of direct taxes from 20th March 2020 to 30th June 2020 has also been reduced to 9% from the existing 12% or 18%. Also, no penalty or a late fee will be levied
  • GST due dates have also been extended to 30th June 2020
  • GST payments for March, April and May can now be made till 30th June 2020. There will not be any interest, penalties, etc, for businesses having turnover up to INR 50 million. For others, interest @ 9% (existing 18%) will be applicable if the delay is being 15 days from the due date
  • Under Corporate law also all late fees have been relaxed
  • Relaxations have been announced with regard to holding a board meeting

COMPANY LAW 

  • No late fee on delayed filings up to 30th September 2020
  • Up to 30th September 2020, the gap between two consecutive board meetings can be up to 180 days (additional 60 days) instead of 120 days
  • In the event a resident director has not been able to complete 182 days stay in India, it will not be treated as a non-compliance
  • Up to 30th June, companies are allowed to hold board meetings via video-conference (or other audio-visual modes) instead of holding mandatory physical meetings for restricted matters such as accounts approval, board report approval, merger, amalgamation, etc
  • In relation to newly incorporated companies, the requirement to file a declaration for the commencement of new business within 6 months (once committed capital is brought in) has been extended to 1 year

CUSTOMS

  • Customs clearance will operate 24/7 till 30th June 2020
  • All compliance deadlines have been extended to 30th June 2020

The above measures will certainly provide some level of compliance and statutory relief to the Indian corporate sector. A lot more support is expected from the Government to help businesses, particularly small businesses, and start-ups, to stay afloat through these challenging times.

Credits:

  • Neoma Kapoor, Head – Tax & Regulatory
  • Sujeet Kumar, Senior Manager – Tax & Regulatory
  • Deepali Bhatt, Manager – Corporate Secretarial
  • Pragati Pandey – Corporate Secretarial
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