Govt Relaxes Compliance Norms for Businesses Amid COVID-19

April 27, 2020

5 min read

Government taking steps to help the startups during this pandemic. Some of them include a reduction in income tax, relaxation for SEZs, rendering financial support and forwarding a hand in handling corporate affairs.

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Amit Arora

Consultant, Gurgaon

BUSINESS COMPLIANCE CONSULTATION
Govt helping startups during Coronavirus lockdown

The COVID-19 situation is amplified globally. The spread of coronavirus has unhinged the established order of things. With the government of India announcing the countrywide complete lockdown, industrial sectors are suffering the most. The chaos in the lives of venture capitalists, entrepreneurs, and start-ups worrying about what the after-effects of coronavirus will be on the economy of our country is undeniable. 

However, the government of India is yet to declare any fiscal or monetary stimulus in the wake of coronavirus. The Union Finance and Corporate Affairs Minister, Nirmala Sitharaman recently introduced several relief measures, especially on the regulatory compliances for several sectors.

In the recent press conference meeting held through the video conferencing by FM, she has recently announced some relief measures in the areas of income tax, GST, customs & central excise, corporate affairs, Insolvency & Bankruptcy Code (IBC), fisheries, banking sector, and commerce. Here are some of the measures explained.

INCOME TAX:

The World Health Organization (WHO) declared the COVID-19 as a global pandemic on March 11, and the economy in India is going through the worst slowdown in decades. Although, as a relief for most of the corporate sector, the government is extending all of its due dates for the start-ups regarding linking their Aadhaar card to pan cards and the last date for FY 18-19 income tax returns to 30th June 2020 which was previously set on 31st March 2020.

Also, the extensions in the due dates till 30th June for the issue of notice, intimation, notification, approval order, sanction order, filing of an appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for rollover benefit of capital gains under Income Tax Act, Wealth Tax Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT Law, Equalization Levy law, Vivad Se Vishwas law where the time limit was expiring between 20th March 2020 to 29th June 2020.

The government is also ensuring that no late fee or penalty will be charged for delayed payments of advance tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30th June 2020, the reduced interest rate at 9% instead of 12%/18% per annum ( i.e. 0.75% per month instead of 1/1.5% per month) will be charged for this period.

FOR SEZ UNITS:

Due to the countrywide lockdown due to rising cases of COVID-19 epidemic, the government has relaxed some compliance norms for the units, developers, co-developers of special economic zones (SEZs). These compliances include the requirement to file quarterly progress reports attested by independent chartered engineers by developers and co-developers, SOFTEX form to be filed by IT/ITES units, filing of annual performance reports by SEZ units and extension of letters of approval (LoAs) which may expire.

Although, all of the extensions of letters of approval and other compliance documents may be assisted through the electronic mode in a time-bound manner. As for the cases where the extension through electronic mode is not possible, government officials are asked to make sure that no one faces any distress due to the expiry of validity during this period of distress.

FINANCIAL SUPPORT:

With over 600 start-ups stakeholders working together to leverage technology into driving the solutions for the current COVID-19 pandemic, the government is also trying to reduce the burden on their shoulders. For starters, the government of India has increased the threshold for default from existing INR 1 lakh to INR 1 crore. Furthermore, the government has decided to form a social COVID-19 economic task force especially working directly under the finance minister to monitor and balance the forthcoming crisis situation for the start-ups. 

And Finally, as the dessert for the start-ups and other vulnerable sections of populations and business, the government is most likely to launch a relief fund of INR 2.3Tn( $ 20 Bn) soon enough which provide great help for these sectors to build up a strong front for the upcoming storm in the wake of the novel coronavirus.

CORPORATE AFFAIRS:

The government's advisory hasn’t overlooked the corporate affairs raised by many industrialists. With millions of people across India forced into the lockdown, in a bid to contain the spread of novel coronavirus, the government has extended the mandatory meeting of the board of companies by 60 days till the next two quarters i.e. till 30th September which is supposed to happen within 120 days as prescribed by the Companies Act.  

Furthermore, understanding the current fiscal year situation where the country’s GDP growth has fallen to 4.7 in the 3rd quarter, the coronavirus crisis is likely to drag it further down in the fourth quarter. The government has declared for the year 2020 to be made pertinent from the financial year 2020-2021 instead of 2019-2020 as notified earlier by the Applicability of Companies Order (The Auditor’s Report). This would appreciably ease the burden on the companies and their auditors.

And as for the newly incorporated companies it has been made mandatory to file a declaration of commencement of business within 6 months of incorporation where an additional time of 6 months shall be allowed.

Conclusion

The Coronavirus is honestly anomalous and the current crisis will go through four stages: acknowledgment, containment, survival, and recovery. This is not just another Great Depression or Economic crisis, there will not be a single industry immune to its effects. Recession is definite, and the government is providing tremendous support for start-ups and newly incorporated businesses. For your business to survive this pandemic, along with being updated about the recent government reliefs you need to plan your future steps very carefully and have a good digital business front.

Reference:

https://yourstory.com/2020/03/covid19-affect-startup-funding-coronavirus 

https://www.startupindia.gov.in/content/sih/en/newsfeed.html