India Extends Key Tax Deadlines Again for Businesses in 2020 due to COVID-19

Businesses in India will be relieved to hear that the government has once again extended deadlines for filing returns as they grapple with the impact of COVID-19 lockdowns, supply chain disruptions, and slowdown in consumer spending.

The extension of tax filing and assessment dates will ease the compliance and financial burden on individuals and enterprises.

In addition, the reduced rates announced as part of the US$265 billion economic relief package (Atmanirbhar Bharat Abhiyan) for tax deduction at source (TDS), which is the collection of tax on income, dividends, or asset sales and tax collected at source (TCS), which is the tax payable by a seller that is collected from the buyer at the point of sale – offers more cash in hand for beleaguered businesses and entrepreneurs.

Deadline for filing FY 2018-20 income tax return extended to September 30, 2020

The deadline for filing revised income tax returns for the FY 2018-19 (AY 2019-20) has been extended from July 31, 2020 to September 30, 2020.

Deadline for linking Aadhaar with PAN

The deadline for linking the biometric Aadhaar with PAN has been extended to March 31, 2021.

Eligibility for capital gains tax exemptions

The government has extended the date for investment, engaging in construction, and making purchases to claim deductions on capital gains tax (under Sections 54 – 54B of the Income Tax Act) to September 30, 2020. Tax exemptions are available on capital gains if the capital gains are invested in purchase or construction of residential property.

Deadline for filing FY 2019-20 income tax return, issuing Form 16

The government announced in May that the deadline for filing income tax returns (ITR) for the financial year (FY) 2019-20 would be pushed from July 31, 2020 and October 31, 2020 to November 30, 2020.

For employers, the deadline to issue Form 16 (the TDS certificate for salaried employees) has been extended to August 15, 2020. The government had previously extended this deadline (via an ordinance issued on March 31) from June 15, 2020 to June 30, 2020.

Tax audit deadline in 2020

The government also extended the deadline for tax audits from September 30, 2020 to October 31, 2020.

Deadlines for meeting GST compliance

According to the notification number 55/2020 issued June 27, 2020 – the deadlines for GST procedural compliance requirements that were due between March 20, 2020 and August 30, 2020 have been extended to August 31, 2020.

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The forms that are covered by the government’s latest extension are ITC-04 from January to March 2020, GSTR-5 and GSTR-5A from February to May 2020, and GSTR-6, 7, and 8 from March to May 2020. The extensions do not apply on the filing of CMP-08/ GSTR-4, GSTR-1, and annual returns, among others.

Earlier, the deadline for filing of the Letter of Undertaking (LUT) in GST form RFD-11 for compliance in the period between March 20, 2020 and June 29, 2020 was extended to June 30, 2020. All registered taxpayers in India who export goods or services must furnish the GST RFD-11 form on the common portal of the GSTN in order to make their exports without payment of IGST.

For more information and assistance to avoid unnecessary delays and to take advantage of new extensions and relief measures, please email us at india@dezshira.com.

Tax-related relief measures for businesses in the COVID-19 economic relief package

The TDS rates for non-salaried payments to tax residents and the rates of TCS for specified receipts have been reduced – by 25 percent. These reduced rates will apply till March 31, 2021. For example, reduced TDS is applicable on fixed deposits, rent payments exceeding INR 50,000 per month, dividend payments from mutual funds and issued by companies, etc.

Under the government’s Vivad se Vishwas scheme, the date for making payments without incurring interest and/or penalties has been extended to December 31, 2020. Previously, the date had been extended to June 30, 2020 under this scheme. The Vivad se Vishwas scheme is important as it enables the one-time settlement of an ongoing tax dispute with the tax department without paying a penalty or interest.

Deadline for completing or correcting old income tax returns

India’s tax department has announced a one-time relaxation for the verification of online tax returns filed for the last five assessment years (AY) from 2015-16 to 2019-20 – due to the failure to authenticate the tax return electronically or non-filing of the ITR-V form and sending a signed physical copy to the tax office. The new deadline to rectify your old income tax returns is September 30, 2020.

How to verify your income tax return

There are multiple ways to verify your income tax return, such as via an Aadhaar-based OTP, generate an EVC (10-digit alphanumeric code valid for 72 hours) via net banking, generate an EVC via bank account, generate EVC through bank ATM, verify through demat account if that is applicable, or send your physical signed ITR-V form (acknowledgment receipt) to the tax department.

If you cannot ‘e-verify’ your IT return and have chosen to download the ITR-V from the Income Tax Department’s website, you need a password to open it. After receiving your ITR-V (acknowledgement receipt), you have to mail it to the tax department within 120 days of e-filing your IT return.

The ITR-V is a one-page document that must be signed in blue ink. It must be mailed either through ordinary post or speed post but not through any courier service. The address that the ITR-V form must be mailed to is:

Centralized Processing Centre (CPC), Income Tax Department, Post Box No. 1, Electronic City Post Office, Bangalore-560500, Karnataka.

(The article was originally published July 14, 2020 and has been updated on July 30, 2020.)

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