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13 May 2021
COVID-19 Second Wave Impact: Recent Direct and Indirect Tax Relaxations

With the outbreak of COVID-19’s second wave, taxpayers have been facing adversities in complying with certain statutory compliances. The Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC) have recently granted relaxations, thereby extending certain statutory timelines vide various circulars/notifications.

Direct Tax Relaxations
 
Particulars Extended Due Date Reference
Filing of objections before DRP, which were due to be filed by 1 April 2021 31 May 2021 Circular 08/2021 dated 30 April 2021
Filing of Appeal before CIT(A), which was to be filed by 1 April 2021 or thereafter  31 May 2021 Circular 08/2021 dated 30 April 2021
Filing of income tax return in response to the notice issued for re-assessment proceedings which were to be filed by 1 April 2021 31 May 2021 Circular 08/2021 dated 30 April 2021
Filing of belated or revised return for AY 2020-21 31 May 2021 Circular 08/2021 dated 30 April 2021
Payment of taxes withheld on purchase of immovable property/renting of immovable property by individual or HUF/other taxes withheld under specified circumstances by an individual or HUF 31 May 2021 Circular 08/2021 dated 30 April 2021
PAN-Aadhar Linking  30 June 2021 Notification No. 20/2021 dated 31 March 2021
Issuance of an order of assessment/re-assessment 30 June 2021 Notification No. 38/2021 dated 27 April 2021
Passing of Final Assessment Order pursuant to DRP Directions 30 June 2021 Notification No. 38/2021 dated 27 April 2021
Issuance of a notice of re-assessment under old  re-assessment regime 30 June 2021 Notification No. 38/2021 dated 27 April 2021
Issuance of an intimation pursuant to processing of Equalisation Levy Return 30 June 2021 Notification No. 38/2021 dated 27 April 2021
Payment of amount determined under Vivad se Vishwas Scheme, without any additional levy 30 June 2021 Notification No. 39/2021 dated 27 April 2021

Further relaxations have also been provided for acceptance of cash payment, by specified hospitals, dispensaries, nursing homes, COVID care centers or similar medical facilities, between 1 April 2021 to 31 May 2021 for treatment of COVID patients, subject to obtaining PAN/Aadhar of the patient and payer and relationship between patient and payer by such entities1.

Moreover, the Supreme Court of India has also provided an extension to the period of limitation under any general or special law in respect of all judicial or quasi-judicial proceedings till further orders2.


Indirect Tax Relaxations

Goods and Services Tax

Interest/Late fee relaxations and extension in due dates of periodic GST compliances
The government, vide Notification Nos. 8/2021-CT and 9/2021-CT dated 1 May 2021 has accorded relaxations in the form of interest and late fee waiver concerning GST compliances (GSTR-3B and GST PMT-06). A snapshot of key relaxations for GST compliances of April 2021 is given below:

 
Taxpayer Interest Late Fees
Rate Timelines
Turnover > INR 50 million in the preceding FY
(GSTR-3B)
9% Till 4 June 2021 Late fees waiver till 4 June 2021. Normal late fees thereafter
18% After 4 June 2021
Turnover < / = 50 million in the preceding FY
(GSTR-3B)
Nil Till 4 June 2021 Late fees waiver till 19 June 2021. Normal late fees thereafter
9% 5 June to 19 June 2021
18% After 19 June 2021
Quarterly Return Monthly Payment (QRMP) Scheme 
(Payment of tax through GST PMT -06 for April 2021)
Nil Till 9 June 2021 Not applicable
9% 10 June to 24 June 2021
18% After 24 June 2021

Further relaxations in due dates of GSTR-1 and Invoice Furnishing Facility (IFF) for April 2021
[Notification No. 12/2021-CT and 13/2021-CT dated 1 May 2021]:

 
Type of Return Extended Date
GSTR-1 [for taxpayers not under QRMP scheme] On or before 26 May 2021
IFF [optional facility for taxpayers under QRMP scheme] On or before 28 May 2021

Relaxation in availment of Input Tax Credit (ITC)
[Notification No. 13/2021-CT dated 1 May 2021]
Rule 36(4) of CGST Rules, 2017, i.e., 105% cap on ITC availment, will be applied cumulatively for the months of April 2021 and May 2021, in GSTR-3B for the month of May 2021.

Extension of statutory time limits
[Notification No. 14/2021-CT dated 1 May 2021]
Particulars Original Date Revised Date
Completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, Commission or Tribunal, by whatever name called 15 April to
30 May 2021
31 May 2021
Filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called 15 April to
30 May 2021
31 May 2021
In case of refund, where a notice has been issued for rejection of refund claim and the time limit for issuance of order falls between: 15 May to
30 May 2021
(a) 15 days after the receipt of reply to the notice from the registered person; or 

(b) 31 May 2021, whichever is later
In case of registration, where the time limit for completion of action by the officer falls due between: 1 May to
31 May 2021
15 June 2021

Customs law

In addition to the above compliance relaxations, the government has granted the following key exemptions from Customs duties on import of critical medical products:

 
Particulars Exemption up to Notification No.
Exemption from Customs duty on import of Remdesivir injection and related products used in its manufacture  31 October 2021 27/2021 – Customs dated
24 April 2021
Exemption from Customs duty and health cess on import of oxygen, oxygen related equipment and COVID-19 vaccines 31 July 2021 28/2021 – Customs dated
24 April 2021
Reduction of IGST on Oxygen Concentrators when imported for personal use [from 28% to 12%] 30 June 2021 30/2021 – Customs dated
1 May 2021
Exemption from IGST on imports of specified COVID-19 relief material donated from abroad 30 June 2021 Ad hoc Exemption Order
No. 4/2021 - Customs dated
3 May 2021
 
1. CBDT Notification 56/2021 dated 07 May 2021 & Notification 59/2021 dated 10 May 2021
2. SC Order dated 27 April 2021 in Miscellaneous Application No. 665/2021 in SMW(C) N. 03/2020
Our Comments
Extension of various compliances by CBDT and Apex Court suo motto is a welcome move providing much-needed relief to the nation as it continues to battle the pandemic’s second wave. While Hon’ble Delhi High Court3 has issued a notice seeking responses from the Indian Government, CBDT, CBIC, etc., for the extension of timelines, one can expect remaining extensions to be issued soon. However, it is worth noting that, at present, most of the extensions under direct tax benefit the authorities rather than the common man.

On the indirect tax front, extension in due dates of periodic compliances should provide relief to taxpayers. However, except for small taxpayers (having turnover up to Rs. 50 million), there is only a partial waiver of interest liability on delayed payment of taxes through GSTR-3B. Thus, despite various States imposing lockdowns and restrictions on the movement of goods and persons to curb the COVID-19 spread, all other taxpayers would be required to file their GSTR-3B within the usual time limit to avoid the interest implication of 9%.

The exemptions from Customs duties on key medical products such as oxygen-related equipment, COVID-19 vaccines and drugs would help cater to the rising demands at affordable rates during this period of crisis.

As citizens struggle to overcome one of the biggest health crises that has disrupted business at a global scale, the government has attempted to alleviate the detrimental effects of this pandemic by issuing extensions and other relaxations that will assist the common man in navigating these difficult times.
 
3. Order dated 06 May 2021 in Anil Kumar Goel & Others vs Union of India & Others [W.P.(C) 5177/2021]
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