Atmanirbhar Bharat: Taxation Relief – Is it a Real Relief?

Starting off with a genuine question, does mere deferment of taxes mounts to reliefs?
The taxation reliefs provided in the “Aatmanirbhar India Economic Relief Package” may be more of the nature of deferment of incidence, rather than providing actual monetary relief. The Taxation Reliefs announced by Hon’ble Finance Minister are as follows :

  1. TDS/TCS Rate reduction by 25% 
    Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts are reduced by 25% of the existing rates. Payment for the contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS. This reduction shall be applicable for the remaining part of the FY 2020-21 i.e. from 14 May 2020 to 31 March 2020. This measure is sought to release liquidity of 50,000 crore

    Is it a Real Relief?
    No. Though the reduction of TDS will boost the liquidity in the hands of people, it will not provide any monetary relief per se. The amount of tax will have to be paid by the assessees by the next year.

  2. Direct Tax Refunds to be issued immediately:
    All pending refunds to charitable trusts and non- corporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately.

    Is it a Real Relief?
    No. Again, this will increase the liquidity in the hands of the said assessees, but will not provide any tax benefit in monetary terms. It was their money, to begin with, hence no monetary incentive provided.

  3. Due Dates Extended:
    Due date of all income-tax return for FY 2019-20 will be extended from 31st July 2020 & 31st October 2020 to 30th November 2020 and Tax audit from 30th September 2020 to 31st October 2020.

    Is it a Real Relief?
    Yes, as it will provide more time for compliance to the assessees. However, this can not be considered as a direct monetary relief, as it is merely procedural in nature. It will, however, reduce the interest/penalty burden in case of assessees which would have otherwise found it difficult to comply with the original deadlines.

  4. Date of Assessments getting barred increased :
    Date of assessments getting barred on 30th September 2020 extended to 31st December 2020 and those getting barred on 31st March 2021 will be extended to 30th September 2021.

    Is it a Real Relief?
    No, for the taxpayers. Yes, for the Income Tax Department.
    Increasing the dates of assessment amounts to providing extra time to Income Tax Authorities for completion of the assessment. In simple words, the assessments which should have been completed by Income Tax Officials by 30th September 2020 can now be completed till 31st December 2020 and those which were required to be completed till 31st March 2021 can now be completed till 30th September 2021.

  5. Vivad se Vishwas Scheme Extended without additional payment :
    Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December 2020.

    Is it a Real Relief?Yes. The scheme will enable the assessees to settle the litigations without payment of interest and penalty. The assessees who feel that their case has little to no merit would definitely like to opt for the scheme and avoid payment of penalty and interest. The increased deadline will certainly help such taxpayers.

All in all, the taxation reliefs do not provide much of a relief, can be said as a temporary repair to the situation at hand. If there had been slashing in the tax rates to support the business community especially the MSMEs that would have definitely brought in a huge sigh of relief to the various sectors.

Do check out the details of the INR 20 lakh crore package announced by the PM.

CA Anirudh Arora         


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