The government on Tuesday extended the deadline for filing income tax and GST returns, raised the threshold of default that could trigger insolvency of a company, and waived charges on cash withdrawals from ATMs of other banks as a precursor to a broader stimulus package for the economy distressed by the coronavirus outbreak.
The last date for filing income tax returns for 2018-19 as well as that for linking PAN with biometric ID Aadhaar has been extended by three months to June 30. The last date for filing GST annual returns for the last fiscal, which is due on March 31, has also been extended till the last week of June.
As the outbreak of the covid-19 pandemic and the lockdowns across cities create large scale economic disruption, Finance Minister Nirmala Sitharaman announced that the threshold of loan default that could trigger insolvency proceedings has been raised to Rs 1 crore from the existing Rs 1 lakh now.
"This will by and large prevent triggering of insolvency proceedings against small, micro and medium enterprises (MSMEs)," she said at a news conference. "If the current situation continues beyond April 30, 2020, we may consider suspending Section 7, 9 and 10 of the Insolvency and Bankruptcy Code (IBC) 2016 for a period of 6 months so as to stop companies at large from being forced into insolvency proceedings in such force majeure causes of default."
With lockdowns restricting movements, the government waived the minimum balance fee on savings bank accounts as well as allowed charge-free withdrawals from any bank’s ATMs for three months. Also, bank charges for digital trade transactions for all trade finance consumers have been reduced.
For companies, it relaxed the mandatory requirement of holding meetings of the board of directors by 60 days and waived the fee for late filings during the moratorium period.
Stating that the announcements done on Tuesday were to ease the burden of compliance on citizens during the lockdown period, Sitharaman said an economic relief package was in works and it will be announced "sooner rather than later".
"Every attention is being given to the economy. The prime minister himself is closely monitoring the situation," she said, adding that a multi-layered composition of the covid-19 economic task force, announced by the prime minister last week, is already working.
Inputs from sub-groups of the task force on various sectors of the economy are being analysed in detail. "And as I said, the economic package is being worked out. And as I said earlier, sooner we shall come with an announcement on that," she said.
"The work of the task force which is multi-layered is already almost intensively nearing a conclusion. So, the task force based report and the action following the task force's report are almost at its peak. And that is why I have said, we will announce the economic package sooner rather than later."
"Work is going on, we are very close to announcing the economic package," she said.
The measures announced included an extension of the deadline for the tax settlement scheme, Vivad se Vishwas, to June 30, 2020, along with some other income tax filing requirements.
The extension of timelines for GST returns for three months -- March to May, to the end of June without any late fees, penalty and interest for enterprises with a turnover less than Rs 5 crore -- will provide significant relief for SMEs who are likely to be subject to intense liquidity pressures.
While the extension of default threshold for IBC applicability from Rs 1 lakh to Rs 1 crore will act as a protection for MSMEs in the current crisis period and further, the intent to suspend creditor rights on corporate insolvency for a temporary 6-month period was also hinted by the finance minister.
This will arrest any possible move by lenders to proceed under IBC in a scenario where corporate asset quality has already seen stress due to the continuing economic slowdown and is being further aggravated by the covid-19 led lockdown.
Also, due dates for notices as well as investment in saving instruments or investments for rollover benefit of capital gains under the Income Tax Act were extended to June 30.
For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS and STT, a reduced interest rate of 9 per cent instead of 12/18 per cent will be charged for this period. No late fee/penalty shall be charged for the delay.
Goods and Services Tax (GST) returns for the months of March, April and May can now be filed by the last week of June with no interest, late fee and a penalty for companies with less than Rs 5 crore turnover.
Others can file GST returns for these months by the last week of June but the same would attract a reduced rate of interest of 9 per cent per annum from 15 days after the due date (the current interest rate is 18 per cent per annum).
No late fee and penalty to be charged, if complied before June 30. Also, the date for opting for the composition scheme has been extended till the last week of June.
Photograph: PTI Photo