Recent Direct Tax Benefits Provided to MSMEs

• A) General Time Limit Extensions: Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and timelimit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for roll over benefit of capital gains under Income Tax Act, Wealth Tax Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT Law, Equalization Levy law, Vivad Se Vishwas law where the time limit is expiring between 20th March 2020 to 29th June 2020 extended to 30th June 2020.
• B) Income Tax Returns for FY 2018-19: Extension of last date of filing of original as well as revised income-tax returns for the FY 2018-19 (AY 2019-20) to 30th June, 2020.
• C) Aadhaar-PAN Linking: Extension of Aadhaar-PAN linking date to 30th June, 2020.
• D) Chapter VIA-B Tax Savings Deductions: The date for making various investment/payment for claiming deduction under Chapter-VIA-B of Income-tax Act which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations), etc. extended to 30th June, 2020. Hence the investment/payment can be made up to 30.06.2020 for claiming the deduction under these sections for FY 2019-20.
• E) Capital Gains Rollover Benefit: The date for making investment/construction/purchase for claiming roll over benefit/deduction in respect of capital gains under sections 54 to 54GB of the Income-tax Act, 1961 extended to 30th June 2020. Therefore, the investment/construction/purchase made up to 30.06.2020 shall be eligible for claiming deduction from capital gains arising during FY 2019-20.
• F) SEZ Units Operation Commencement (Section 10AA): The date for commencement of operation for the SEZ units for claiming deduction under deduction 10AA of the Income-tax Act extended to 30.06.2020 for the units which received necessary approval by 31.03.2020.
• G) Direct Taxes & Benami Law Orders: The date for passing of order or issuance of notice by the authorities under various direct taxes & Benami Law extended to 30.06.2020.
• H) Reduced Interest Rate of 9%: Reduced rate of interest of 9% to be charged for non-payment of Income-tax (e.g. advance tax, TDS, TCS) Equalization Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) which are due for payment from 20.03.2020 to 29.06.2020 if they are paid by 30.06.2020. Further, no penalty/prosecution to be initiated for these non-payments.
• I) Vivad Se Vishwas Scheme: Under Vivad se Vishwas Scheme, the date was extended up to 30.06.2020. However, it was later on extended to 31.12.2020 vide Press Release dated 13.05.2020. In other words, the date for making payment without additional amount under the “Vivad Se Vishwas” scheme extended to 31 December, 2020.

• Pending Lower/Nil Deduction Applications (FY 2020-21): All the assessees who have filed application for lower or nil deduction of TDS/TCS for F.Y. 2020-21 and whose applications are pending for disposal as on date and they have been issued such certificates for F.Y. 2019-20, then, such certificates would be applicable till 30.06.2020 of F.Y. 2020-21 or disposal of their applications by the AOs, whichever is earlier, in respect of the transaction and the deductor or collector if any, for whom the certificate was issued for F.Y. 2019-20.
• Inability to Apply on TRACES Portal: In cases where the assessees could not apply for issue of lower or nil deduction of TDS/TCS in the TRACES Portal for the F.Y. 2020-21, but were having the certificates for F.Y. 2019-20, such certificates will be applicable till 30.06.2020 of F.Y. 2020-21. However, they need to apply at the earliest giving details of the transactions and the Deductor/Collector to the TDS/TCS Assessing Officer as per procedure prescribed.
• Payments to Non-Residents with Permanent Establishment: Further, on payments to Non-residents (including foreign companies) having Permanent Establishment in India, where the above applications are pending, tax on payments made will be deducted at the subsidised rate of 10% including surcharge and cess, on such payments till 30.06.2020 of F.Y. 2020-21, or disposal of their applications, whichever is earlier (Order passed on 31.03.2020).
• Disposal of FY 2019-20 Lower/Nil Applications: In case of pending applications for lower/nil rate of TDS/TCS for F.Y. 2019-20, the CBDT has directed AOs to dispose of the applications through a liberal procedure by 27.04.2020, so that the taxpayers may not have to pay extra tax which may cause liquidity issues to them (Order passed on 03.04.2020).
• Validity of Forms 15G and 15H: To mitigate the hardships of small taxpayers, CBDT decided that if a person had submitted valid Forms 15G and 15H to the Banks or other institutions for F.Y. 2019-20, then these Forms would be valid up to 30.06.2020. This will safeguard the small tax-payers against TDS where there is no tax liability (Order passed on 03.04.2020).

“To mitigate the hardships of small taxpayers, CBDT decided that if a person had submitted valid Forms 15G and 15H to the Banks or other institutions for F.Y. 2019-20, then these Forms would be valid up to 30.06.2020. This will safeguard the small tax-payers against TDS where there is no tax liability (Order passed on 03.04.2020).”

“Thereafter, the Hon’ble Finance Minister announced on 13.05.2020 that the pending income tax refunds to charitable trusts and non-corporate businesses and professions including proprietorship, partnership and LLPs and cooperatives shall be issued immediately.”

• Reduction in Rates of ‘Tax Deduction at Source’ and ‘Tax Collected at Source’: The TDS rates for all non-salaried payment to residents, and tax collected at source rate reduced by 25 percent of the specified rates for the remaining period of FY 20-21. This provided liquidity to the tune of Rs. 50,000 Crore.
• Extensions of Income Tax Return and Tax Audit Due Dates: The due date of all Income Tax Returns for Assessment Year 2020-21 extended to 30 November, 2020. Similarly, tax audit due date extended to 31st October 2020.

The fiscal and statutory relief packages introduced by the Government and CBDT — spanning liquidity injections, TDS/TCS reductions, compliance extensions, and expedited refunds — provide a crucial lifeline to MSMEs as they adapt and rebuild amidst the post-pandemic economic landscape.