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3 April 2020
COVID-19 IMPACT: Relaxation in certain compliances including extensions in Foreign Trade Policy 2015 - 2020
 
Direct Tax
Exercising the powers conferred under Article 136 of the Constitution, The President of India has promulgated the ‘The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020’ on 31 March 2020 which gives legal sanctity to the relief measures announced vide Press Release dated 24 March 2020 as covered in detail our earlier Tax Alert.

In addition to the previous amendments, the Ordinance has provided the following relief measures:
  • Relaxation for 10AA units
    The date for commencement of manufacturing operation for the SEZ units for being entitled to deduction under deduction 10AA of the IT Act has been extended to 30 June 2020 for the units which have received the letter of approval by 31 March 2020.
    It is pertinent to note that there is no extension in the sunset period, the relaxation is only with respect to the condition of the commencement of manufacturing. 

     
  • Donations to PM Cares Fund
    The PM Cares Fund has been recently set-up as a public charitable trust by the Government. The Ordinance provides that donations made to the said fund would be eligible for 100% tax deduction (the limit on the deduction of 10% of gross income would not apply).
    Donations to the said fund made up to 30 June2020, would be eligible for deduction for AY 2020-21 (FY 19-20)
Our Comments
The relaxations provided  are absolutely apt in such difficult times where business houses are badly affected and saddled with liquidity situations. These measures help as an assurance of no adverse implications due to the impossibility of performance.  
 
In addition to a 100% tax deduction on contribution to PM CARES Fund, such contribution is also an eligible expenditure under the Corporate Social Responsibility (CSR). . If such contributions made over and above the minimum prescribed amount, they would be eligible to offset against the CSR arising in subsequent years.
 
However, the taxpayers should consider the below points:
  • There is no waiver in terms of late fee of INR 10,000 for filing the delayed return
  • Similarly, there is no relief from interest payable on filing of delayed returns (in case tax is payable) 
  • The due dates for filing of audit reports/tax returns for FY 2019-20 remain unchanged
 
Indirect Tax  
Taking into account the business disruption due to the COVID-19 pandemic, the Government has made certain amendments to,  handbook of procedures, erstwhile IDT laws including GST in order to provide relief for businesses and exporters. Many of the relaxations provided are to give effect to and enable the Government to implement the relief measure already announced in the press release issued by the Government on 24 March 2020. Captured below are the key announcements and amendments -  

Extensions and relaxations under
  1. Validity of Foreign Trade Policy 2015 - 2020 (FTP)
    The validity of FTP 2015 - 2020 has been extended from 31 March 2020 to 31 March 2021. Accordingly, the new FTP 2020 - 2025 would be introduced in April 2021.
     
  2. Extension in time limit for filing MEIS application
    The time limit for filing MEIS application for the shipping bills filed during the period 1 February 2019 to 31 May 2019 would be as under – 
    Later of - 
    1. 15 months (earlier 12 months) from the Let Export Order (LEO) date or
    2. Three months from the date of uploading EDI shipping bill into the DGFT server by Customs.
       
  3. Extension in time limit for filing SEIS application
    The due date to file SEIS applications for export of services made during FY 2018-2019 has been extended from 31 March 2020 to 31 December 2020.

     
  4. Validity of status certificates
    Any status certificate issued under FTP 2015 - 2020 would be valid for a period of 5 years from the date of application or up to 31 March 2021, whichever is later.

     
  5. Advance Authorization (AA) related 
    • Relaxation of norms
      - Norms ratified by the Norms Committee in respect of any advance authorization (AA) obtained would be valid for a period of 3 years from the date of ratification or up to 31 March 2021, whichever is later. 
    • Extension in validity of AA
      - In respect of AAs where the validity for import is expiring between 1 February 2020 and 31 July 2020, the validity is automatically extended by a period of 6 months from the date of expiry. 
      - No separate amendment/endorsement is required on such AAs. 
      - The option to avail further extensions would remain available as per the eligibility criteria. 
    • Extension in fulfillment of Export Obligation (EO)
      - In respect of AAs where the EO is expiring between 1 February 2020 and 31 July 2020, the EO period is automatically extended by a period of 6 months from the date of expiry. 
      - No separate application with composition fee, amendment or endorsement is required for this purpose. 
      - The option to avail further extensions would remain available as per the eligibility criteria.
    • In case of replenishment AA, where the last date for filing the application falls between 1 February 2020 and 31 July 2020, the last date stands extended by a further period of 6 months.
       
  6. Extension in time limit for filing Rebate of State and Central Taxes and Levies (RoSCTL) application applicable to textile sector
    The time limit to file RoSCTL application in respect of shipping bills where the LEO date falls between 7 March 2019 and 31 December 2019 has been extended from 30 June 2020 to 31 December 2020. 

     
  7. Export Promotion Capital Goods Scheme (EPCG) related 
    • Extension in time limit for submission of installation certificate
      - Every EPCG license holder is required to submit an installation certificate within a period of 6 months from the date of completion of import. 
      - In cases where the date of submission of installation certificate is expiring between 1 February 2020 and 31 July 2020, the period has been extended by a period of 6 months from the original due date. 
    • Extension in block wise export obligation
      - Where the export obligation is expiring between 1 February 2020 and 31 July 2020, such period would be extended for a period of 6 months from the date of expiry.
       
       
  8. Extension in validity of Letter of Permission (LOP) / Letter of Intent (LOI) for Export-oriented units, Export Hardware Technology Park, Software Technology Park and Biotechnology parks
    All LOPs/LOIs whose validity expires on or after 1 March 2020 would be deemed to be valid up to 31 December 2020. 

     
  9. Extension in time limit for filing application for claiming Terminal Excise Duty (TED) /Drawback
    The time limit to file an application for claiming TED/Drawback where the due date falls on or after 1 March 2020 would be extended up to 30 September 2020. 
  10. Applicability of late cuts in respect of various provisions
    The late date for submission of application for the purpose of late cut would be considered as extended vide the attached public notice. 
Extensions and relaxations under IDT laws, GST vide the Taxation and other laws (Relaxation of certain provisions) Ordinance, 2020
 
  1. Extension in compliance of certain actions under erstwhile laws
    Under the provisions of Central Excise Act, 1944, Customs Act, 1962, Customs Tariff Act, 1975 and Chapter V of Finance Act, 1994, the due date in respect of the following actions which falls between 20 March 2020 and 29 June 2020 or any date after 29 June 2020 would be extended to 30 June 2020 or such date after 30 June 2020 as may be specified by a notification - 
    - Completion of any proceeding or issuance of any order, notice, intimation, notification or sanction or approval, by any authority, commission, tribunal. 
    - Filing of any appeal, reply or application or furnishing of any export, document, return or statement. 

     
  2. Extension of time limit in special circumstances under GST 
    - A new Section 168A has been inserted in the CGST Act, 2017 which provides that the CBIC may extend the time limit in respect of certain actions as mentioned in the CGST Act, 2017 and which could not be completed due to force majeure.  
    - Force majeure means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of this Act. 
Our Comments
Owing to the lockdown on account of the COVID-19 pandemic, exports and imports have been adversely impacted. Exporters were facing several difficulties in meeting the existing due dates to avail benefits and complete compliances under the foreign trade policy. The extension to the FTP 2015 - 2020 by 1 year and relief in due dates by 6 months comes as a welcome relief to exporters. Further, the extension in time limit related to ongoing litigations under erstwhile laws would help in dealing with them appropriately at a later date.
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