Ensure You Don’t Miss Tax Compliance Deadlines Amid Challenges of COVID-19

Then read ahead to understand where the government has eased tax laws...

• Interest applicable on delay of tax payable to be paid

  No extension is provided for advance tax payment, which is payable by 15 June, 15 September, 15 December, and 15 March. If there is a delay of 15 days in paying the advance tax payable, 0.75% interest would be payable per month instead of 1.5%.

  For e.g., if the advance tax payable by 15 June is paid by 30 June, 0.75% interest would be applicable per month instead of 1.5%. However if you miss the due date that exceeds beyond 15 days, then the interest would still be payable at 1.5% for a period of three months, as usual, and not just for the 15 days delay for there is no new revised deadline.

  However, you can submit your belated and revised income tax returns (ITR) for the previous financial year 2018-19 by 31 July 2020.

• TDS returns due date is postponed

  The due date to file FY20 ITR for all taxpayers has been postponed to 30 November, 2020. Yet if you wish to file your income returns early, you will have to wait as the employers and banks that upload their tax deducted at source returns details and update the 26AS form online for individuals may not happen as promptly.

  Since the due date for TDS returns has been extended till 31 July 2020, the form won't be available till 15 August 2020, resulting in a delay in ITR filings.

• Additional tax liability of interest

  When you procrastinte, the interest on delay in filing will apply at the normal rate of 1% per month. However if it exceeds Rs 1 lakh when you self-assess your tax liability (the differential tax you pay when you file your return), then you have to pay the additional liabitily and file your ITR by the normal due date. Else if have you may suffer only the additional liability of interest.

• Tax saving investment claim deduction only once as per the limit

  To invest in tax saving investments, the government has permitted taxpayers time until 31 July 2020, to file it for FY20 . However, when you do invest in a tax-saving avenue during or before July, you can claim a deduction only once-either in FY20 or in FY21.

  However if you are investing in a Public Provident Fund before 31 July 2020, there's a permissible limit of Rs 1.5 lakh for claim deduction for FY 20. This limit has not been relaxed or increased for year

  Hence, you may not be able to deposit a larger sum during the current FY to claim a deductionwhen you invest in a PPF. However, under the National Pension System (NPS), there is no cap on deposits, but only a cap for deduction under the income tax law.

  
  Image by Steve Buissinne from Pixabay

• Extension in filing adjustments till 31 December 2021

  The government has extended the time limits for filing appeals, replies, or applications filed between 20 March to 29 June till 31 December 2020. However, the Centralized Processing Centre (CPC) issued notices for adjustments on returns even during the lockdown and passed orders about making such adjustments without giving time to taxpayers till 30 June, now extended to 31 March 2021. This is a huge inconvenience to the taxpayers as it is a time waste exercise.

• Reinvestment claim

  The claim exemption for the reinvestment of capital gains, which have to be reinvested between 20 March to 29 September 2020, has to be done before 30 September in order to claim the benefit. So, this extension is not of much help.

Conclusion:

The government decided to ease the tax pressure and as part of COVID-19 relief measures had announced the extension deadlines. Though these relaxations were necessary, they were not significantly helpful.

In my view, engage in tax planning carefully, evaluate your tax outgo and make a sensible choice to maximize the tax benefit.

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Warm Regards,
Aditi Murkute
Senior Writer

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