GST Filing Date Extended, Late Penalty Waived for Businesses Amid Coronavirus Crisis
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In an effort to provide relief to businesses struggling with the economic fallout of Coronavirus outbreak, Indian finance minister Nirmala Sitharaman on Tuesday announced a slew of measures related to compliance and regulation. In a significant move, companies with turnover of less than INR 5 crore will not be charged any interest, late fee or penalty on late GST return filing, Sitharaman said.
For bigger companies above this threshold, a subsidised interest rate of 9 per cent will be levied but there will be no late fee or penalty. Additionally, deadline for GST returns for March-May 2020 has been extended till June 30 for all firms.
“Considering everyone’s cash flows are going to get impacted due to the COVID-19 crisis, delaying mandatory filings and waiving late fees and penal interests for businesses having up to INR 5 crore in annual turnover is a good move,” said Kunal Varma, co-founder and chief business officer, MoneyTap.
In a significant relief to micro, small and medium enterprises (MSMEs), threshold of default has been increased to INR 1 crore from INR 1 lakh to prevent insolvency proceedings. Newly incorporated companies will be given a window of six months to file the declaration of commencement of business.
Sitharaman assured that if the situation does not get better before April 30, the government will consider suspending, Section 7, Section 9 and Section 10 of the Insolvency and Bankruptcy Code for a period of six months. The three sections deal with the process of filing corporate insolvency.
Archit Gupta, founder and CEO of ClearTax, said businesses should view this setback as an opportunity to become more technology focused. “Businesses must use this time to explore ways to move compliance completely digitally, use cloud-based services, and build strong controls and systems so that teams can work digitally and remotely.”
Gupta adds that government should extend timeline for book closure as work in most offices has come to a halt ahead of the end of financial year. "Businesses need to close the books of accounts, do stock checks, inventory accounting and management, close accounts, deduct and deposit TDS, etc. All of these tasks may be hampered during these times as offices are closed and not all of these tasks can be completed from home."
In what is being hailed as an important step by experts, customs clearance has been declared as an essential service till June 30, 2020, under which it will be operational round the clock. “This is a particularly beneficial relief as the import/export business will not come to a complete standstill now,” says Varma.
As for individual taxpayers, last date for filing income tax returns for the financial year 2018-19 and linking Permanent Account Number with Aadhaar has also been extended to June 30, from the existing March 31. Interest rate on delayed payments has been reduced to 9 per cent from 12 per cent.
Under the Vivaad se Vishwas scheme, people can now pay their dues till June 30 without having to pay the extra 10 per cent interest on the principal amount. The amnesty scheme was launched by the government in the Budget 2020, wherein the taxpayer has to pay only the disputed amount and get a waiver of interest and penalty.
For delayed deposit of tax deducted at source (TDS), interest rate has been halved to 9 per cent from the existing 18 per cent.
As part of other measures, minimum balance charges of bank savings accounts has been waived and ATM withdrawal charges have been withdrawn for three months. Currently, banks such as ICICI Bank and HDFC Bank charge as high as INR 500 fee on non-maintenance of average minimum balance.
Advocating social distancing and isolation, Sitharaman appealed to customers to visit bank branch only if absolutely necessary. She added that an economic package is being worked upon and will be announced ‘sooner than later’. Last week, Prime Minister Narendra Modi had announced that a task force led by the finance ministry will be formed to deal with the economic impact of coronavirus.