Existence is more important than Economy - Auditor G. Karthikeyan from Coimbatore

In a day of serious developments, the country saw two important announcements - first from the Finance Minister and then from the Prime Minister himself. While the nation was still trying to comprehend the impact  of compliance push backs announced by the finance ministry, the Prime Minister in an unprecedented move, announced a 21 day country wide lock down. In effect, India goes into complete shutdown mode from midnight tonight with only essential services left functioning. In scale and length, it is more drastic than an emergency or war time lock down – the first of its kind, in India’s post-Independence history. However, the lock down is essential if the national fabric is to survive intact.

The economy of India was already reeling under pressure from a slow down from 2019. Demand and consumption were stagnating. Now COVID-19 is an unprecedented additional set back – a one of its kind epidemic that we have never seen in our life time and one that poses a huge threat to the whole world. It is scary to know that we are in transmission stage 3 though the central and state governments is taking all out efforts to mitigate the risk. The next three weeks are critical in our battle against the disease and I do hope that every Indian will rise up to support this challenge and demonstrate social responsibility.

The shutdown of the whole country is likely to impact the Indian economy considerably, more so small business owners and MSMEs. The small time roadside businesses, daily wage earners, hawkers, pedlars are likely to be hit hard by the prolonged shut down.  Both the Centre and state governments are likely to announce relief measures for basic food and survival.  A basic income guarantee  to daily wage earners is the need of the hour.  Some of it has already been announced and more might well be in the pipeline.

For the industry FM announced extension of time for Income tax, GST, Companies Act, Customs compliance matters which will be a relief.  More than statutory dues, one largely expects redefinition of NPAs, reduction or waiver of interest from bank during this unusual shut down, additional credit facilities from banks without tedious process, extension of time for packing credit, extension of time for export bill realization etc. It is imperative that the business houses have adequate cash flow to pay their employees and meet other payables to ensure continuity of business.

Possibly banking related relief announcements may be expected soon. This will infuse confidence in the minds of business owners especially MSME and small businesses. We are in the financial year end and a number of statutory filings fall due around this time. We can expect some more regulatory relaxations in the days to come.

The Prime Minister did not mention any economic aspects of the shut down in his address to the nation today and rightly so. If the country fails to comply with this “Lakshman Rekha” for 21 days, then as the PM said, the impact might well be a step back to what we were 21 years ago. The need of the hour is both restraint and compliance. Unless every individual cooperates with the government orders, the end to this pandemic cannot be achieved. Notwithstanding the economic fallout, a nation in preventive lock down is infinitely preferable to a nation in chaos.

Here are the list of changes the Finance Minister has announced yesterday:

INCOME TAX RELATED

1. FY 2018-2019 | AY 2019-2020 - ITR last date extended to 30th June 2020
2. Tax payment made till 30Th June- Interest reduced from 12% to 9% 
   
3. Delayed deposit of TDS till 3oth June- Reduced interest 9%
   
4. Extension of dates for various compliances
   
5. Due date for all notices/orders/appeals/applications/reports/any other document/any compliance by taxpayers up-to 30th June, 2020
   
6. All investments/Saving instruments for rebates can be made by 30th June 2020.
   
7. Adhaar-PAN linking date extended to 30th June 2020
   
8. Vivad Se Vishwas Scheme extended up-to 30th June 2020, No additional charge of 10% up-to 30th June 2020, earlier disputed tax has to be deposit by 31st March without additional charge of 10%.
   

GST RELATED

1. March, April and May 2020 month GST returns & composition returns filing date extended up-to 30th June 2020.
   
2. Companies with less than 5 Crore Turnover no interest, late fees or penalty.
   
3. Other companies more than 5 Crore turnover, no Late fee and penalty, only interest at reduced rate of 9%
   
4. Date for opting composition scheme extended to 30th June 2020.
   

CUSTOM /CENTRAL EXCISE

1. Sabka Vishawas scheme (Indirect Taxes) extended from 31st March 2020 to 30th June 2020, no interest will be levied at all.
   
2. Custom clearance till 30th June 2020 will be 24*7 MCA
   
3. From 1st April till 30th September, 2020, no additional fees for late filings.
   
4. Holding board meetings period of 60 days relaxation till next 2 quarters.
   
5. Applicability of CARO 2020 will be from FY 2020-2021 instead of 2019-2020
   
6. 2019-2020, if no meeting held with Independent director, no violation.
   
7. For newly incorporated companies, commencement of business form can be filed with additional time of 6 months.
   
8. If company director not comply with minimum mandatory period to be stayed in India u/s 149 of Companies act, it will not be treated as violation.
   

INSOLVENCY AND BANKCRUPTCY CODE, 2016

1. Threshold of default raised from Rs. 1 Lacs to 1 Cores
   
2. If situation of COVID-90 continues like this, after 30th April, 2020, may suspend section 6, 7, 9 and 10 of IBC for next 6 months.
   

BANKS RELATED (DFS RELATED)

1. Debit card holders can withdraw cash from any bank ATM- No charge up-to next 3 months
   
2. No minimum balance requirement fees for bank accounts
   
3. Bank charges reduced for digitally transactions related to all trade finance.

Let us join hands - sorry don’t touch each other physically and maintain social distancing - let’s put our minds together to come out of this grim lockdown situation first through helping those in need and we can worry about the status of the economy later. 

G.Karthikeyan is Coimbatore based Chartered Accountant with more than 3 decades having rich experience in corporate and international audit &taxation experience. His columns can be seen regularly in most of the dailies and magazines. He was the past President of TiE Coimbatore