Tax Bill to expand faceless assessment scheme, provide relief to taxpayers

The Lok Sabha has passed a taxation Bill aimed at expanding the faceless assessment scheme and to provide compliance-related relief to taxpayers. The legislation includes extension of deadlines for return filing and linking of PAN and Aadhaar. The Bill was passed by a voice vote after stiff opposition on issues pertaining to tax treatment and transparency of PM Cares Fund and the GST compensation issue.

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020, will replace the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 promulgated in March under which time limits for statutory compliances under goods and services tax, and income tax act were extended in the wake of the Covid-19 pandemic.

The legislation provides tax exemption for contributions made to PM-CARES Fund, which was set up in March. Besides, it makes faceless assessment applicable to at least 8 processes under the IT Act, including assessment, collection and recovery of tax, appeals, revisions, gathering of information, etc. With the amendment, transfer pricing assessments and litigation, and dispute resolution panel have been brought under the faceless scheme.

 

Finance Minister Nirmala Sitharaman said that faceless assessments and appeals will bring in tax transparency and bring an end to tax terrorism using technology. “We’re bringing in tax transparency through law because it is extremely important for the country,” she said.

The sunset clause for claiming a tax holiday for already approved special economic zones units has been extended by another year to March 31, 2021.

The amendments also bring relief to foreign investors as surcharge levied on the dividend income of foreign portfolio investors (FPIs) that use a trust structure has been capped at 15%.

Besides, 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 from April 1, 2020.

Sitharaman said that the amendments have been introduced to further strengthen the IFSC and it should not be viewed negatively.

A lower rate of interest and exemption from penalty or prosecution has been provided in case of delayed payments of Equalisation Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) besides advance tax, TDS and TCS.

The Act was amended to also extend the payment date under the Direct Tax Vivad se Vishwas Act, 2020 without additional amount to 31st December, 2020.

Sitharaman added that amendments under the Central GST Act were also 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 an 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 a 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.

Trinamool Congress leader Mahua Moitra launched an attack on the PM Cares Fund and Centre’s stand on GST compensation to states. While PM Cares fund provides 100 per cent tax exemption, contributions to state chief minister relief funds do not enjoy that, resulting in unfair treatment of identical contributions to the two funds, pointed out Moitra. “This is against public interest, against public policy, completely disincentivises corporate contributions which the state governments otherwise would have got,” said the TMC MP.

On the GST compensation, Moitra said that  the Centre cannot run away from its responsibility and must cover up Rs 2.35 trillion by borrowing. “I ask myself in such a situation: is incompetence post majeure (an event or effect that can be neither anticipated, nor controlled)? Is criminal negligence post majeure?”

Bill seeking to amend FCRA introduced in LS

A Bill that seeks to amend the Foreign Contribution (Regulation) Act (FCRA), under which providing the Aadhaar numbers of the office-bearers of any NGO will be mandatory for registration and public servants will be barred from receiving funds from abroad, was introduced in the Lok Sabha on Sunday. The Foreign Contribution Regulation (Amendment) Bill 2020, introduced in the Lok Sabha by Minister of State for Home Nityanand Rai, also proposes to enable the Centre to allow an NGO or association to surrender its FCRA certificate.  PTI