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Atma Nirbhar Bharat Abhiyan Part-1

May 15, 2020 | Latest Tax Update, Latest Update, Latest Updates

Hon’ble Prime Minister Shri Narendra Modi on 12th May 2020 announced a Special economic and comprehensive package of Rs 20 lakh crores – equivalent to 10% of India’s GDP. He gave a clarion call for the Self-Reliant India Movement. He also outlined five pillars of Aatma Nirbhar Bharat which are Economy, Infrastructure, System, Vibrant Demography, and Demand. The Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman on her press conference on 13th May 2020 explained that ‘Atma Nirbhar India’ doesn’t mean to look inwards and isolationist, but the goal is to build a self-reliant India that is why the Economic Package is called Aatma Nirbhar Bharat Abhiyaan. Citing the pillars on which we seek to build Aatma Nirbhar Bharat Abhiyaan, Smt. Sitharaman said our focus would be on land, labor, liquidity, and law. The key announcements are as follows:
  • Reduction in rates of Tax Deducted at Source (TDS) and Tax Collection at Source (TCS)
  • To provide more funds at the disposal of the taxpayers, the rate of TDS for non-salaried specified payments made to residents and the rate of TCS for the specified receipts shall be reduced by 25% of the existing rates.
  • Payment for the contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS.
  • This reduction shall be applicable from 14 May 2020 to 31 March 2021
  • There shall be no reduction in rates of TDS or TCS in case required to be deducted/collected at a higher rate due to the non-furnishing of PAN/Aadhaar.
  • The summary of the reduction of TDS rate is as follows:
S. No. Section Nature of Payment Existing Rate of TDS New Rate of TDS (from 14/05/2020 to 31/03/2021)
1 193 Interest on Securities 10% 7.5%
2 194 Dividend 10% 7.5%
3 194A Interest other than interest on securities 10% 7.5%
4 194C Payment to Contractors and sub-contractors 1% (Individual/HUF) 2% (others) 0.75% (Individual/HUF) l.5% (others)
5 194D Insurance Commission 5% 3.75%
6 194DA Payment in respect of life insurance policy 5% 3.75%
7 194EE Payment in respect of deposits in under National Savings Scheme 10% 7.5%
8 194F Payment on account of repurchase of units by Mutual Funds or UTI 20% 15%
9 194G Commission, prize, etc., on sale of lottery tickets 5% 3.75%
10 194H Commission or brokerage 5% 3.75%
11 194-l(a) Rent for plant and machinery 2% 1.5%
12 194-l(b) Rent for immovable property 10% 7.5%
13 194-IA Payment for acquisition of immovable property 1% 0.75%
14 194-IB Payment of rent by individual or HUF 5% 3.75%
15 194-IC Payment for Joint Development Agreements 10% 7.5%
16 194J Fee for Professional or Technical Services (FTS), Royalty, etc. 2% (FTS, certain royalties, Call Centre) 10% (others) 1.5% (FTS, certain royalties, Call Centre) 7.5% (others)
17 194K Payment of Dividends by Mutual Funds 10% 7.5%
18 194LA Payment  of Compensation on acquisition of immovable property 10% 7.5%
19 194LBA(1) Payment of income by Business Trusts 10% 7.5%
20 194LBB(i) Payment of income. by Investment fund 10% 7.5%
21 194LBC(1) Income by the securitisation trust 25%(Individual/HUF) 30% (Others) 18.75%(Individual/HUF) 22.5% (Others)
22 194M Payment to the commission, brokerage, etc. by Individual and HUF 5% 3.75%
23 194-O TDS on e-commerce participants 1% (w.e.f. 1.10.2020) 0.75%
 
  • The summary of the reduction of TCS rate is as follows:
S. No. Section Nature of Receipts Existing rates of TCS New rates of TCS (from 14/05/2020 to 31/03/2021)
1 206C(1) Sale of
(a) Tendu Leaves 5% 3.75%
(b)Timber obtained under a forest  lease 2.5% 1.875%
(c) timber obtained by any other mode 2.5% 1 .875%
(d) Any other forest produce not being timber/tendu leaves 2.5% 1 .875%
(e) scrap 1% 0.75%
(f) Minerals being coal or Lignite or iron ore 1 % 0.75%
2 206C(1C) Grant of a license, lease, etc. of
(a) Parking lot 2% 1 .5%
(b) Toll Plaza 2% 1 .5%
(c) Mining and quarrying 2% 1 .5%
3 206C(1F) Sale of the motor vehicle above INR 10 lakhs 1 % 0.75%
4 206C(1H) Sale of any other goods 0.1 % (w.e.f 01/10/2020) 0.075%
 
  • Extension of Due Dates
  • Income Tax Return (ITR): Due date for filing of ITR for the Financial Year (FY) 2019-20 extended from 31 July 2020 and 31 October 2020 to 30 November 2020. The summary of due dates for filing of ITR for FY 2019-20 is as follows:
S. No. Particulars Type of Assessee Existing Due Dates Extended Due Dates
1 Taxpayers having international and specified domestic transactions required to file Form 3CEB Corporate 30 November 2020 30 November 2020
Non-Corporate
2 Taxpayers not having international and specified domestic transactions Corporate 31 October 2020 30 November 2020
Non-Corporate (Audit applicable)
Partner of a firm (on which audit is applicable)
3 Other Assessee (not covered above) Individual and Non-Audit Assessee 31 July 2020 30 November 2020
 
  • Tax Audit Report (TAR): Due date for TAR for the FY 2019-20 extended from 30 September 2020 to 31 October 2020.
S. No. Particulars Type of Assessee Existing Due Dates Extended Due Dates
1 Tax Audit (taxpayers having international and specified domestic transactions required to file Form 3CEB) Both Corporate and Non-Corporate 31 October 2020 31 October 2020
2 Tax Audit (taxpayers not covered above) Both Corporate and Non-Corporate 30 September 2020 31 October 2020
 
  • Income Tax Assessment: Date of completion of tax assessments related to Assessment Year (AY) 2018-19 and 2019-20 have been extended to 31 December 2020 and 30 September 2021.
S. No. Assessment Years Type of Assessee Existing Due Dates Extended Due Dates
1 2019-20 Both Corporate and Non-Corporate 30 September 2020 31 December 2020
2 2020-21 Both Corporate and Non-Corporate 31 March 2021 30 September 2021
 
  • The period for making payment without additional amount under the direct tax dispute resolution (Vivad se Vishwas Scheme) has been extended to 31 December 2020 which was earlier extended from 31 March 2020 to 30 June 2020.
  • Processing of Tax Refunds
  • Tax refunds pending in the case of Charitable Trusts and Non-corporate Business and Profession (including proprietorship, partnership, LLP, and co-operative society) shall be issued immediately.
The above mentioned direct tax reliefs may support the economy by providing liquidity in the hands of the taxpayers to handle the difficult situation arisen due to COVID-19. Even though due dates have been extended for the above-referred compliances, it is advisable to make timely compliances to avoid the last time rush.
  • Boost to NBFCs/ MFIs & HFCs
Special liquidity scheme for NBFCs/ MFIs & HFCs
  • INR 30,000 crore special liquidity scheme to be launched by Government, liquidity being provided by RBI
  • Under this, investments to be made in both primary & secondary market transactions
as well as investment-grade debt paper of non-banking finance companies (NBFCs), housing finance companies (HFCs) and microfinance institutions (MFIs)
  • These will complement RBI/ other Government measures to augment liquidity
  • Securities will be 100% guaranteed by the Government of India.
Partial Credit Guarantee Scheme 2.0 for NBFCs/ MFIs
  • Existing Partial Credit Guarantee scheme is being revamped and now will be extended to cover the borrowings of lower-rated NBFCs, HFCs, and other MFIs.
  • INR 45,000 crore liquidity infusion through a Partial Credit Guarantee Scheme 2.0
  • NBFCs, HFCs, and MFIs with low credit rating require liquidity to do fresh lending to MSMEs and individuals
  • First 20% of the loss to be borne by the Government
  • Liquidity injection for DISCOMs & relief for Consumers
  • Power Finance Corporations & Rural Electrification Corporation to infuse INR 90,000 Crores to Distribution Companies (DISCOMs) against receivables
  • Loans to be given against state guarantees to discharge liabilities of DISCOMs to Generation Companies (GENCOs)
  • Central Public Sector Generation companies will give a rebate to DISCOMs; benefits to be passed on to end-users.
  • DISCOMs to offer digital payment facility to consumers
  • Reforms for MSMEs
  • Rs 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs
An emergency Credit Line to Businesses/MSMEs from Banks and NBFCs up to 20% of entire outstanding credit as on 29.2.2020, can be availed by the borrowers with up to Rs. 25 crore outstanding and Rs. 100 crore turnover. A collateral-free automatic loan will be provided which would be for a 4-year tenure. No principal repayment would be required for the first 12 months and the scheme will last till October 21, 2020. This scheme would benefit 45 lakh units.
  • Rs 20,000 crores Subordinate Debt for Stressed MSMEs
The government will facilitate the provision of INR 20,000 crores Subordinated Debt for stressed MSMEs which would benefit 2 lakh MSMEs. Even NPA or stressed MSMEs are eligible for the scheme. The government will provide INR 4,000 crore to Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) who will provide a partial guarantee to banks. Banks would provide loans to Promoters of MSMEs who would infuse them in their Unit.
  • Rs 50,000 crore. Equity infusion for MSMEs through Fund of Funds
Funds of the fund will infuse Rs 50,000 crore equity for those MSMEs who have potential and are viable but faces a shortage of equity. Corpus of the fund would be Rs 10,000 crores which would help expand capacities and help them get listed.
  • New Definition of MSMEs
The definition being changed for MSMEs in their benefit so that they can grow in size and still get benefits. Manufacturing and Services are now one classification. Investment limit which defined MSMEs revised upwards. Additional criteria being brought in is turnover size. The revised MSME criteria for Manufacturing and Service enterprises is as given below; Micro: Investments* less than Rs 1 crore and turnover of less than Rs 5 crore Small: Investment* less than Rs 10 crore and turnover less than Rs 50 crore Medium: Investment* less than Rs 20 crore and turnover less than Rs 100 crore * Calculation of Investment For Manufacturing Enterprises- investment in plant and machinery shall be considered at the original cost excluding land and building. For Service Enterprises- investment in the equipment shall be considered at the original cost excluding land and building and furniture, fittings, and other items not directly related to the service rendered.
  • Global tenders to be disallowed up to Rs 200 crores
Since Indian MSMEs and other Companies have faced unfair competition from foreign players, the next step for MSMEs is to disallow global tenders in government procurement up to Rs 200 crore or less. This will allow MSMEs a chance to supply for these big projects and would boost Self-reliant India as well as Make in India.
  • Other interventions for MSMEs
For MSMEs, the government to promote and provide e-market facilities and also ensuring that all the dues of MSMEs are cleared by the Government and Central Public Sector Enterprises within 45 days.
  • EPF Reforms
  • 2500 crore EPF Support for Business & Workers for 3 more months
EPF relief for all eligible establishments with Rs 2,500 crore liquidity support. The government will provide both employer and employee contributions for another three months i.e. June to August 2020 as well. This would boost liquidity for 3.6 lakh establishments and 72.22 lakh employees.
  • EPF contribution reduced for Business & Workers for 3 months- Rs 6750 crores Liquidity Support
To increase take-home salaries for those not covered in EPF benefit, the statutory PF contribution is being reduced from 12 percent to 10 percent. For state PSUs and Central Public Sector Enterprises – the employers will continue to pay 12 percent. This would provide liquidity of Rs 6,750 crore to employers and employees over three months.
  • Relief to Contractors
Extension of up to 6 months (without costs to the contractor) to be provided by all Central Agencies (like Railways, Ministry of Road Transport & Highways, Central Public Works Dept, etc) which would cover construction/ works and goods and services contracts. However, Government agencies to partially release bank guarantees, to the extent contracts are completed, to ease cash flows.
  • Extension of Registration and Completion Date of Real Estate Projects under RERA
Urban Development Ministry shall issue advisories to states and UTs to treat the COVID-19 period will be treated as force majeure. Thus, fresh project registration certificates can be issued and, registration and completion date can be extended suo moto for up to six months for projects registered on or after March 25, 2020. Last Updated: 15th May 2020 This article is contributed by:  Munesh Gaur Manager, Legal  

Tag: Atma Nirbhar