“There was an urgent need to give relief to the taxpayers… amendments in the clauses was needed to extend compliance dates, waive or defer penalties and prevent prosecution,” she said winding up the discussion in Lok Sabha on Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020. The bill was later passed by voice vote. The bill will replace the ordinance that was promulgated to extend timelines for statutory compliances.
Time limits for compliances and statutory actions by taxpayers between March and June 2020 because of the pandemic, had been extended.
The date for payment without any additional levy under the Direct Tax Vivad se Viswas Act, 2020, has been extended to December 31, 2020, or a further date as and when notified. “If the pandemic is not over till then, we are taking the power for further extension without needing to come to Parliament again,” she said.
The Bill offers significant relief to foreign investors.
Surcharge levied on the dividend income of foreign portfolio investors (FPIs) that use a trust structure will be capped at 15%, offering them significant relief. From April 1, 2020, tax exemption will be provided on the income of category III Alternate Investment Funds in the International Financial Services Centre from masala bonds, derivatives or overseas investments.
“The amendments have been introduced to further strengthen the IFSC, it should not be viewed negatively,” Sitharaman said.
She added that faceless assessments and appeals will bring in tax transparency and bring an end to tax terrorism using technology on the direction of the Prime Minister. “We’re bringing in tax transparency through law because it is extremely important for the country,” she said.
The new legislation has brought in Faceless Assessment Scheme, 2019, empowering the central government to notify schemes for anonymous processes. Under the scheme, the government has also proposed to include transfer pricing litigation within faceless assessments.
Among other changes, tax deduction at source or tax collection at source (TDS, TCS) at three-fourth the rate or 9% a year on transactions from May 14, 2020, till March 31, 2021, will be enacted. “This will help the affected parties during the pandemic,” she said.
The lower rate of interest and exemption from penalty or prosecution in case of non-payments has been enabled in cases of payments of Equalization Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) besides advance tax, TDS and TCS.
The FM added that amendments under the Central GST Act were again limited to extending deadlines for compliance, tax payments and filing, and had no bearing on the compensation payments to states.
“The compliances under Central GST have been extended as well, therefore amendment was needed which has been done after GST Council’s recommendation,” she said, adding that the retrospective effect of the Act was limited to period starting from March 20 – when the Council gave its approval – since the notification was issued in April.
“Let me clarify, this provision will not affect compensation payment to states in any way,” she added.