Tax relief and changes to trade policies due to COVID-19
While businesses are responding to the stress caused by the coronavirus pandemic through work force protection, supply chain stabilisation, customer engagement, financial stress tests, and business continuity planning, it is of paramount importance to keep abreast of changes to the tax laws and the relief measures announced by the Government to help people and businesses navigate through the challenging times.
Union and State Governments have recently announced a slew of relief measures to dispel the gloom caused by COVID-19, which has brought the global business world to a grinding halt. In this article we summarise key announcements made by the Union and State Governments in India.
Reliefs to ease cash-flow constraints under the GST law
To ease the cash flows, with respect to the GST the Government has announced relief in the form of a waiver/reduced rate of interest on delayed tax payments; waiver of late fees on delayed returns; expeditious disbursement of refund claims; and, in a few states, reimbursement/exemption from state taxes. The restrictions on input tax credits due to non-compliance by a vendor has also been relaxed for a limited time. The deadline for making final instalment payments for the resolution of legacy tax disputes (under the Amnesty Scheme), is also extended.
Reliefs to ease the compliance burden under the GST law
With a view to easing the compliance burden during the pandemic and the widespread lock-down, the Government has extended the due dates for filing monthly/annual GST tax returns and other compliance requirements for specified classes of taxpayers. The time limit for filing of appeals, statements, declarations, and so on, that are normally due between 20 March 2020 and 29 June 2020 have also been extended.
Reliefs under Customs Law and Foreign Trade Policy
To smooth international trade, the Government is: allowing 24 x 7 customs clearance; temporarily dispensing with the need to submit bonds; relaxing the documentation requirements applicable to claim exemptions of duty; easing documentation procedures related to bonded warehouses and scanning of containers of specified classes of importers, and so on.
In a key announcement, the Government has extended by one year the validity of the Foreign Trade Policy (FTP), which was set to expire in March 2020. Further, similar relaxations are also provided under FTP to extend deadlines for refund claims; realisation and repatriation of export proceeds; compliance requirements; and claims for export benefits. The validity of different schemes allowing duty free import of goods, certificates, authorisations and licenses, and so on, has also been extended.
We believe that enabling smooth and efficient management of tax compliance in these troubled times is one of the keys to managing the crisis. To do so, business will have to reallocate resources, reassign responsibilities, keep track of the economic stimulus packages, review existing systems, and utilise the tax reliefs announced by the Government.
Dinesh Kumar B