The CBDT has announced certain key changes in the income-tax provisions for certain payments and expenses, which shall be applicable from Oct 1st, 2020, for facilitating ease for the assesses and taxpayers for the Act. Many of the taxpayers, investors, depositors, and consumers will get affected by the new provisions such as changes in key timelines to file revised (ITRs) and new guidelines for payment cards(Debit/Credit) for their use and secure application by the Reserve Bank of India (RBI).
Therefore, the following are some of the guidelines to be taken care of-
1. Extension of deadline for filing belated or revised ITRs-
Acknowledging the difficulties created by the pandemic, the Central Board of Direct Taxes (CBDT) has extended the due date for furnishing of belated and revised income tax returns (ITRs) for assessment year (AY) 2019-20 from September 30 to November 30. Earlier, the Centre had on July 29 extended the deadline extended the date for the submission of the Original as well as Revised return ITRs till September 30. Such extension is intended to provide relaxation to taxpayers’ “hardships” amid the coronavirus pandemic.
2. New debit/credit card guidelines Applicable from Oct 1, 2020-
The Reserve Bank of India has carved out new guidelines regarding the use and their application for secure payments of debit and credit cards effective from Oct 1, 2020.
Such payments will include-
a. Permitting international transactions on debit/credit card payments at the request of the customer.
b. Customers have been provided with the option to turn off their cards and block the transactions, such cards which have not been used for contactless or online payments.
c. Customers will have the benefit to choose their spending limits on their cards.
3. TCS on foreign remittances over Rs 7 lakh-
On September 29, 2020, the Central Board of Direct Taxes (CBDT) has issued a detailed clarification concerning the new TDS/TCS provisions applicable from October 1. The following are the new provisions on tax collected at source (TCS) that have been brought in via amendments to the Finance Act, 2020.
a. Under the first one, 5 percent TCS would be applicable on amounts exceeding Rs 7 lakh in a financial year for foreign remittances under the Liberalised Remittance Scheme (LRS) of the RBI. Additionally, a limited TCS of 0.5 percent would be applicable for remittances towards loans to pursue education.
b. Next, a 5 percent TCS on purchase of overseas tour packages, irrespective of the value, is applicable under the new norms. Moreover, TCS shall also be applicable at 0.1% on the sale of goods above Rs 50 lakh in a year. Further, the companies shall be obligated towards filling returns by the 10th day of the following month as per the new rules.
c. While the rate of TCS is 5%, it will be 10% in case PAN or Aadhaar is not provided to an Authorised Dealer of the foreign exchange in question. In the case of foreign travel, the TCS is collected by the travel operator.
d. The TCS will not be applicable if you make all arrangements of the foreign tour on your own. It will also not apply if the remitter is subject to the TDS, under the Income Tax Act, 1961.
e. If the tax has already been paid as TDS, and still the TCS is levied, you can claim a refund from the TCS.
4. Introduction of standardized Health insurance-
The IRDAI has issued specific guidelines and specifications issued applicable from October 1, with a purpose to reintroduce the scheme policies covering the expenses of the COVID-19 treatments. Thus, medical expenses related to COVID-19 treatments will be covered under schemes launched after the date.
5. Rates and Policies on small savings to be unaffected-
However, the Government of India has kept the interest rates applicable on schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), and other small saving schemes unaffected for the October-December quarter of FY20-21.
Therefore, PPF shall continue at an interest rate of 7.1 percent per annum including saving schemes like NSC at 6.8 percent, Senior Citizens Savings Scheme at 7.4 percent, and the savings deposit at 4 percent as same as applicable in the previous quarter.
Similarly, the interest rate on Sukanya Samriddhi Yojana to be effective at 7.6 percent, on Kisan Vikas Patra (KVP) to be retained at 6.9 percent p.a., on term deposits stretching from one to five years has been kept between 5.5-6.7 percent. And finally, in Recurring Deposits for a term of at 5.8 percent.
Conclusion:
Therefore, a wide variety of changes have been introduced to relax the hardships associated with the current situations of a pandemic. However, the outcomes of the changes and the reaction of the masses on the changes in the previous provisions and the now applicable ones are yet to be evaluated in entirety.
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