Covid-19 and the need for a Total Tax Moratorium

April 03,2020
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Mr. Raghavan Ramabadran (Partner, Lakshmikumaran & Sridharan)
Mr. Sai Prashanth (Principal Associate)

As policymakers across the globe struggle to combat the rapidly escalating Covid-19 pandemic, they find themselves in uncharted territory. This applies both on the medical as well as the economic front. Our Hon’ble Finance Minister Smt. Nirmala Sitharaman has swiftly reacted to the situation and has brought in a slew of changes in the tax regime to ease both statutory and regulatory compliance burden. In effect, these changes bring into effect what can be referred to as ‘tax moratorium’. But are they enough to achieve a total ‘tax moratorium’? This article delves into various such measures and also highlights the lacunae which exist as on date.

Reliefs under Goods and Service Tax regime

Under the GST regime, the Finance Minister has announced that the due date for filing of Monthly Return in Form GSTR-3B filing for months from February to April, 2020 will been extended to June, 2020. Since payment of taxes coincide with filing of Form GSTR-3B, this extension has technically postponed all such GST payments to the month of June, 2020. It has also been clarified that there will be either no or reduced interest for delay in filing of the Return depending on the turnover of the assessee and also that there will be no imposition of late fee and penalty.

In addition, the due date for issue of notice, filing of appeal, or time limit for any compliance under the GST laws where such limit is expiring between 20th March 2020 to 29th June 2020 has also been clarified to be extended to 30th June 2020.

To effectuate the above, an Ordinance has been issued on 31st March 2020 called the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, whereby the Central Government, by issuance of a notification, is empowered to extend any time limit specified in Central Goods and Service Tax Act, 2017 which cannot be completed/complied with due to force majeure.

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