Covid-19 relief measures for tax filing for AY 2020-21

The government has proposed Covid-19 relief measures by way of extending the deadlines for certain regulatory compliances and tax payments, thereby offering taxpayers the opportunities to preserve cash flows. Let us look at the relief measures pertaining to income tax filing for AY 2020-21.

CBDT through a notification dated October 29, 2020, has further extended the due date of tax filing from the previously extended date of November 30, 2020 to December 31, 2020 for individual taxpayers, and January 31, 2021 for taxpayers whose accounts are subject to tax audits.

The government extended the date of making investments for claiming deductions under the Income-tax Act which includes deductions in 80C (public provident fund, Life insurance premium, national saving certificates etc.), 80D (medical insurance), 80G (donations to recognized institutions). With this relaxation in a timeline, all the investments made under these sections up to July 31, 2020 can be claimed as deductions while filing ITR for FY 29-20. Further CBDT has updated all the new tax forms by providing a new schedule DI to furnish these details.

You can also claim a 100% deduction for the donations made to the PM CAREs fund until June 2020 while filing the ITR for AY 2020-21. The time limit was also extended to September 30, 2020 for claiming capital gains exemption. A taxpayer can make investments or deposit in the capital gains account scheme until September 30, 2020 to claim the exemption under section 54 to 54GB while filing the ITR filing for AY 2020-21.

The government announced the extension of the deadline of linking PAN with Aadhaar by nine months from June 30, 2020 to March 31, 2021. Failure to link PAN with your Aadhaar will render the PAN inoperative from April 1, 2021. An extension was also granted for assessments getting barred as of December 31, 2020 to March 31, 2021 and those getting barred on March 31, 2021 are extended till September 30, 2021.

Conditions to determine the residential status by an individual’s presence in the number of days for FY20 has been relaxed. Hence any prolonged period of stay by the individuals who have come to visit India and are unable to fly back due to travel restriction or quarantine get excluded. However, the government is yet to issue a clarification in respect of extended stay during FY21.

The rates of Tax Deduction at Source (TDS) for non-salaried payments made to residents like payment for a contract, interest, rent, commission, professional fees, dividend, commission, brokerage, etc. and rates of Tax Collection at Source (TCS) for the specified receipts are reduced by 25%.

The reduced rates of TDS/TCS are applicable from May 14, 2020 to March 31, 2021. However, in cases where the tax is required to be deducted or collected at a higher rate due to non-furnishing of PAN number, there will be no reduction in rates of TDS or TCS.

Validity period and threshold limit of the lower/nil tax certificates, i.e. from 15G/ 15H for FY 2019-20 was extended for a further period and remained valid till June 30 2020 for FY21.

The Last Due date for issuance of TDS/ TCS certificates pertaining to FY20 has been extended to July 31, 2020 and August 15, 2020 respectively. The due date for issuance of Form 16 was also extended to August 15, 2020.

(The writer is Founder and CEO - ClearTax)