Aadhaar-PAN, Vivad se Vishwas, belated ITR, tax-saving deadlines extended to June 30, 2020

The government has extended most income tax-related compliance deadlines for individuals to June 30, 2020. The main deadlines extended include: Linking Aadhaar with PAN, making investments for tax saving for FY 2019-20, settling tax disputes under Vivad se Vishwas sans interest, penalty and filing of income tax returns (ITR). All of these actions had to be completed by March 31 earlier.

Amid curfews and lockdowns due to the Covid-19 pandemic, the government has decided to extend the deadline for settling tax disputes under the Vivad se Vishwaas scheme without paying any interest and penalty from March 31, 2020 to June 30, 2020. The extension of the deadline means that individuals can now settle tax disputes by the new deadline without paying any penalty and interest.

The government has also extended the deadlines for filing income tax return (ITR) for FY 2018-19 to June 30, 2020 from the present one of March 31, 2020. For FY 2018-19, delayed payment for tax payments have been reduced from 12 per cent to 9 per cent. No extension, for delayed TDS deposit has been reduced from 18 per cent to 9 per cent.

Sonu Iyer, Tax Partner, EY India says, "Revised and belated tax returns for FY 2018-19 due to be filed on or before March 31, 2020 may now be filed up to June 30, 2020. In case any tax is still payable for FY 2018-19, interest will be charged at 9 per cent instead of 12 per cent for the period starting from March 20, 2020 until the date of payment of tax or June 30, 2020, whichever is earlier."


Regarding interest payment on delayed tax payments, Iyer says, "The date of last instalment of advance tax payment is March 15 and is not extended but for the interest for delayed deposit of advance tax due on March 15 will now be computed at 9 per cent instead of 12 per cent for the period starting March 20 until June 30, 2020."

She adds, "Based on the press note, it may be inferred that the delayed deposit of TDS for any year may be paid up to June 30, 2020 with interest at 9 per cent instead of 12 per cent/ 18 per cent for the period from March 20, 2020 to date of payment or June 30, 2020, whichever is earlier. We will need to review the fine print of the Amendment Act or the ordinance to be certain of these interpretations."

Various income tax officials associations and chartered accountants, since Monday, have been asking the Central Board of Direct Taxes (CBDT) to extend income tax-related deadlines because of the lockdowns across various states.

Why the deadline extensions were needed
Deadline for Vivad se Vishwas: This is a direct tax scheme announced in the Budget 2020, for settling the tax dispute between individuals and tax department. The scheme offers complete waiver on interest and penalty to the taxpayers with a full and final settlement of the dispute. Further, if the individual opts for the scheme, then such income tax dispute cases cannot be reopened in any other proceeding by the income tax department or any other designated authority.

With regards to the deadline, if it was not extended, then individuals opting to settle their tax dispute after March 31, 2020, would have to pay an extra 10 per cent of the disputed tax amount. The extension was much needed relief for the taxpayers who could not visit their chartered accountants to figure out whether they should opt for the scheme or not. Further, to that law came into effect from March 17, 2020 and related forms and other rules of the scheme were notified on March 18, 2020. Thus, only 12 days left till deadline after notification of forms/rules.

Deadline for filing belated ITR: If the deadline for belated ITR was not extended for FY 2018-19, then taxpayers would have lost the opportunity to file their tax return unless income tax department specifically asks them to. According to the Income Tax Department, wilful failure of filing ITR can lead to prosecution and levy of fines under the Income-tax Act, 1961.

Deadline for PAN-Aadhaar: The Finance Minister, Nirmala Sitharaman, today announced that the deadline to link PAN with Aadhaar has been extended to June 30, 2020. The earlier deadline was March 31, 2020. For those who are yet to link their PAN with Aadhaar, this extension will come as a relief as not linking the two will lead to the PAN becoming 'inoperative', as per current income tax laws.

Deadline for filing revised ITR: The original deadline to file revised ITR was also March 31, 2020. It is important for an individual to provide correct income details in their tax return. If the tax department later discovers an income which was not reported earlier in the tax return, then it could lead to penal consequences for under-reporting/mis-reporting of income.

Complete tax-savings for FY 2019-20: The government has also provided relief for those individuals who are yet to complete their tax savings. According to PIB release, individuals taxpayers can complete investments in tax-saving instruments by June 30, 2020 from the present deadline of March 31, 2020.

Sudhir Kapadia, National Tax Leader, EY India, said, “The FM made some significant announcements on tax compliances and regulatory matters in light of the severe COVID 19 business disruptions. The extension of both last years indirect and this years direct tax resolution schemes to June, 2020 ( without the additional 10% tax payment for direct taxes) will allow breathing time to assesses to carefully evaluate this option and allow for liquidity to make the necessary tax payments under these schemes. Similarly the extension of timelines for filing tax returns under various provisions till June, 2020 will go a long way in helping businesses to comply in due course in these challenging times. Whilst the reduction in interest rate to 9% for delayed tax payments is a welcome relief, it would have been better to allow a three month deferral for paying income taxes without any interest and only thereafter provide for interest payment.”