In the midst of 2020, when the global pandemic of COVID-19, has wreaked on economic stability both in India and worldwide, The Parliament of India passed a number of resolutions to improve traditional corporate practices and evolving better systems of governance. One of the important Bill passed by the Indian Parliament in its Monsoon session is The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020. The article discusses the key highlights of Taxation and other Laws (Relaxation and Amendment of certain provisions) Bill, 2020.
By: Syed Suhaiba Geelani, 4TH year B.A.L.L.B, (Five-year law), University of Kashmir.
Taxation and other Laws (Relaxation and Amendment of certain provisions) bill, 2020 was initially introduced by Finance Minister Nirmala Sitaraman on 18-9-2020 in Lok Sabha and was subsequently passed in the Lok Sabha and Raj Sabha on 19-09-2020 and 22-09-2020 respectively. It received the Presidential assent on 29.09.2020 and finally, on the same day, it was notified to become Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020).
This newly proposed bill embodies a number of tax-related and other changes that seeks to provide relief to taxpayers, from various compliances under certain ‘specified Acts’, for the Financial Year 2020-21. The Bill aims to provide concessions in the payment of interest arising due to delay in the payment of taxes. In addition to this, in cases where there is any delay in the payment of taxes for the specified period if the same is paid within the prescribed date, the bill contains provisions for waiver of penalty and prosecution. The bill has incorporated and ratified all the provisions of the Ordinance and the two notifications issued thereunder.
The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020, containing a lot of amendments seek to supersede prior law of Taxation and further to amend the Income Tax Act, 1961 including amending section 12AB – new registration procedure for Trusts and Institutions, faceless assessment, and other various faceless proceedings.
The amendments have been made, either through changes in existing provisions or by incorporation of new ones. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 covers 8 laws including Wealth-tax Act, 1957, Income-tax Act, 1961, Prohibition of Benami Property Transactions Act, 1988, Chapter VII of the Finance (No. 2) Act, 2004 (related to Securities Transaction Tax), Chapter VII of the Finance Act, 2013(related to Commodities Transaction Tax), Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Chapter VIII of the Finance Act, 2016 (Equalisation Levy), Direct Tax Vivid se Vishwas Act, 2020. As the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 provides relaxation in compliances, it is also known as Specified Act, 2020.
The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 is composed of the following 8 Chapters:
|Chapter-II||Relaxation of certain provisions of specified Act|
|Chapter-III||Amendments to the Income-tax Act, 1961|
|Chapter-IV||Amendments to the Direct Tax Vivad Se Vishwas Act|
|Chapter-V||Relaxation of a time limit under certain Indirect Tax laws|
|Chapter-VI||Amendment to the Central Goods and Services Tax Act, 2017|
|Chapter-VII||Amendment to the Finance (No. 2) Act, 2019|
|Chapter-VIII||Amendment to the Finance Act, 2020|
Highlighted below are the important changes introduced by the new Bill and the objectives that it seeks to achieve:
- The provisions of section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020, provides for the extension of various time limits for completion of actions under the specified Acts. It provides that where any due date is specified or prescribed or notified under any specified Acts including the Income Tax Act and such due date falls between the period of March 20, 2020, and December 31, 2020, then the tax or levy may be paid by 31 March 2020 or such extended date as may be notified later by the Central Govt.
- The Bill further provides for a reduction in interest, waiver of penalty and prosecution for the delay in payment of certain taxes or levies during the specified period. However, all the above relaxations are provided only for payment of any tax, cess, or levy under the Income Tax Act, 1961 and or under any other specified Acts.
- The Bill also offers amendments to the Income-tax Act, 1961. Such amendments include providing of tax incentive for Category-III Alternative Investment Funds located in the International Financial Services Centre (IFSC) to encourage relocation of foreign funds to the IFSC, deferment of a new procedure of registration and approval of certain entities introduced through the Finance Act, 2020, providing for a deduction for donation made to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) and exemption to its income, incorporation of Faceless Assessment Scheme, 2019 therein, empowering the Central Government to notify schemes for faceless processes under certain provisions by eliminating physical interface to the extent technologically feasible and to provide deduction or collection at source in respect of certain transactions at a three-fourths rate for the period from 14th May 2020 to 31st March 2021.
- It proposes to amend the Direct Tax Vivad se Viswas Act, 2020 and the Finance Act, 2020.
The Direct Tax Vivad se Vishwas Act, 2020 has been amended to extend the date for payment without 10% additional amount to 31-12-2020 in line with the relaxation provided in the Ordinance of 2020.
- It also empowers the Central Government to notify certain dates relating to filing of declaration and making of the payment. It provided to amend the Finance Act 2020 to clarify regarding capping of the surcharge at 15 per cent. on dividend income of the Foreign Portfolio Investor.
- The Bill empowers the Central Government to remove any difficulty up to a period of two years and provide for repeal and savings of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.
- The Bill under clause 4 seeks to amend certain provisions relating to the Income-Tax Act, 1961. It provides the mechanism for calculation of the income of non-resident in the prescribed manner. (clause (4D) of section 10.)
The Bill has prescribed a new registration procedure for Charitable Trusts and Institutions under section 12AB.
- Regarding furnishing statement of donations, the proposed amendment to sub-section (5) of section 80G empowers the Board to provide for furnishing a statement of donations received from the dunes to the income-tax authority in the prescribed form and within the prescribed time limit.
- The authority to withdraw approval to an association or institution for carrying out any eligible project or scheme has been granted to Principal Chief Commissioner of Income Tax (Exemption) or the Chief Commissioner of Income Tax (Exemption)
- Additionally, the insertion of sub-section (1A) in section 115AD provides for the calculation of income that is attributable to units held by a non-resident in the prescribed manner.
Taxation and other Laws (Relaxation and Amendment of certain provisions) bill, 2020 has introduced a number of progressive provisions, curbing the effect of the pandemic, and proving beneficial for National economy.