Claim 100% deduction on donation to PM CARES Fund

The government has provided tax relief and extended deadlines for statutory filings

The Covid-19 crisis has impacted not just India but the entire global economy. Amid this global economic downturn and with countries under lockdown, people are trying their best to handle work and other responsibilities from home. To offer them support in this scenario, the government has provided tax relief and extensions in deadlines for statutory compliances.

Extension of due dates: The due date to file a belated return and a revised return for Financial Year (FY) 2018-19 has been extended from March 31, 2020 to June 30, 2020. Accordingly, an individual taxpayer who has not filed his income tax return for FY 2018-19, or who wishes to revise a tax return that has already been filed, can now file or revise the return on or before June 30, 2020.

Further, the due dates for “furnishing returns and filing statements by employer” falling within the period March 20, 2020 and June 29, 2020, has now been extended to June 30, 2020. Hence, the due date for filing of ETDS returns for the fourth quarter, which fall within this period, also stands extended. One can therefore expect delays in issue of Form 16/12BA for FY2019-20.

Due date for linking Pan-aadhaar extended: It is mandatory to obtain Aadhaar number in India (subject to exceptions) and mention it in the tax return form at the time of filing the tax return. Also, according to income tax laws, it is mandatory to link the PAN number with Aadhaar number. The deadline for linking PAN with Aadhaar was March 31, 2020, failing which the PAN number would have become inoperative. Due to the Covid-19 situation, this deadline has been extended until June 30, 2020.

Tax-saving investments: An individual is required to make tax-saving investments in order to claim a tax deduction (for example, investment in Public Provident Fund, ELSS, etc.) on or before March 31 of the respective financial year. Quite often, individuals end up making these investments in the month of March itself. On account of the lockdown in most parts of India during March 2020, it was difficult for individuals to make investments. Hence, the government has extended this deadline of March 31 till June 30,

2020. Consequently, an individual can make an investment on or before June 30, 2020 and claim a tax deduction for FY 2019-20. Care should be taken to ensure that a deduction for this investment is not claimed in FY 2020-2021 as well.

Donation to PM CARES Fund: The government has set up a new fund by the name of ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund) to provide relief to people affected by the Covid-19 outbreak. An individual can claim 100 per cent deduction for donation made to PM CARES Fund, under Section 80G of the Income Tax Act, 1961 (Act). Ordinarily, Section 80G restricts the amount of donation qualifying for deduction to 10 per cent of the gross total income. The government has relaxed this limit if the donation is made to PM CARES Fund. Accordingly, one can claim a 100 per cent deduction for the amount contributed to this fund.

Further, any donation made up till June 30, 2020 can be claimed as a deduction for FY 2019-20.

Vivad se Vishwas Act: The government had recently introduced the Vivad se Vishwas Act, 2020, a dispute settlement mechanism with the objective of reducing long-pending litigation. This scheme provides complete protection from interest, penalty and prosecution, if 100 per cent of the disputed tax was paid on or before March 31, 2020. Further, if paid after March 31, 2020, but on or before June 30, 2020, 110 per cent of the disputed tax was to be payable. Under the tax relief measures due to Covid-19, the additional 10 per cent amount shall not be payable if the amount is paid by June 30, 2020.

Partial withdrawal of Provident

Fund (PF): Another welcome amendment announced by the government is the facility for a nonrefundable advance from the Provident Fund account whether it is held with the RPFC or with the employer’s private PF trust.

An individual can withdraw up to 75 per cent of the amount in his PF account or an amount equal to three months of basic wages and dearness allowance (if any), whichever is lower. This is on non-refundable basis, which means the individual is not required to refund this amount.

The claim can be made online from the employee’s PF account on the portal. The PF authorities have clarified that there will be no income tax thereon.

Form 15G/15H valid till June 30, 2020: Form 15G/15H needs to be submitted to the payer of income (such as banks/financial institutions) at the start of the financial year, failing which the payer deducts tax on the interest, dividend or other income payable during that financial year. For FY21, many of the individuals will be unable to submit these forms in time due to the lockdown. To mitigate the hardship this may cause, the Central Board of Direct Taxes issued a notification on April 3 stating that if the individual has submitted Form 15G/15H for FY 2019-20, then that form will be valid till June 30, 2020.

An individual can claim 100 per cent deduction for donation made to PM CARES Fund, under Section 80G of the Income Tax Act, 1961 (Act). Ordinarily, Section 80G restricts the amount of donation qualifying for deduction to 10 per cent of the gross total income

Reduced rates of interest: Where a tax payment’s due date according to income tax provisions falls between March 20, 2020 and June 29, 2020, and the tax could not be paid within such due date, then interest payable in respect of delay shall be levied at 0.75 per cent per month (as opposed to 1 per cent or 1.5 per cent per month levied usually), provided such tax is paid by June 30, 2020.