As part of the covid-19 pandemic-related relief measures, and due to the lockdown in the country, the government on 31 March promulgated an ordinance, relaxing certain provisions of income tax and other tax laws, and extending certain due dates under these laws. This ordinance also provided for the government to notify any other dates. On 24 June, it notified further extensions to certain due dates. What are these concessions, how do they affect the common taxpayer and do they really provide the needed relief?
There is no extension provided for payment of advance tax, which is payable by 15 June, 15 September, 15 December and 15 March. However, if the advance tax payable by 15 June is paid by 30 June, interest would be payable at 0.75% per month instead of 1.5%. However, if you miss the due date of 15 June, it appears that the interest would still be payable for a period of three months, as usual, and not just for the 15 days delay.
Belated and revised income tax returns (ITR) for the financial year 2018-19 can now be furnished till 31 July.
The due dates for filing ITR for all taxpayers for FY20 has been extended to 30 November. However, if you are a salaried employee and wish to file your return of income early, you may still need to wait awhile till your employer and banks, where you hold fixed deposits, upload their tax deducted at source (TDS) returns and the online Form 26AS is updated. This may not happen till 15 August, since the due date for TDS returns, which was 31 May, has also been extended to 31 July.
Further, you cannot relax thinking that the due date for filing your ITR is now many months away. Interest for delay in filing of ITR will still apply at the normal rate of 1% per month in case your self assessment tax liability (the differential tax you pay when you file your return) exceeds ₹1 lakh. You, therefore, need to compute your estimated balance tax liability, and if it exceeds ₹1 lakh, not just pay it, but also file your ITR by the normal due date. Else, you may have to suffer the additional liability of interest.
The government has permitted you to make tax-saving investments for FY20 till 31 July (this was earlier extended to 30 June). When you make these investments during the current year before 31 July, you need to keep in mind that you can claim a deduction only once—either in FY20 or in FY21.
Further, a problem you may face, if you are depositing ₹1.5 lakh in your Public Provident Fund (PPF) account before 31 July and claiming the deduction for FY20, is that there is also a maximum limit of ₹1.5 lakh for deposits in a PPF account during an FY. This limit has not been relaxed or increased. Therefore, you may not be able to deposit any more amount during the current FY, in order to be able to claim a deduction for such deposit.
However, there is no similar problem under the National Pension System (NPS), as there is no cap on deposits under it, but only a cap for deduction under the income tax law.
Time limits for filing appeals, replies or applications have also been extended, if the due date for filing these was between 20 March and 29 June (now extended to 31 December). However, the practical experience has been that the Centralized Processing Centre (CPC) has been issuing notices for adjustments to returns even during the lockdown, and has been passing orders making such adjustments without giving time to taxpayers till 30 June (now extended to 31 March 2021). This forces taxpayers to resort to filing appeals or rectification applications—a waste of their time and energies. Surely, CPC must be aware of the change in law, and must act in accordance with it.
In case of reinvestment of capital gains to claim exemption, which needed to be reinvested between 20 March and 29 September, the investment has to be made before 30 September in order to claim the benefit.
While these relaxations were necessary, taxpayers are left with the feeling that these are merely procedural timelines which have been extended, subject to complicated conditions, and no real benefit has been given, though other countries have done so.
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