In addition, Finance Minister Nirmala Sitharaman promised further fiscal measures but insisted that India, which has the world’s seventh-biggest gross domestic product, was not on the verge of economic catastrophe.
Individuals will be allowed to file their annual tax returns by June 30, a three-month extension, for the fiscal year that ended March 31, 2019, Sitharaman said via videoconference from New Delhi, the Indian capital.
“We are very close to coming up with an economic package which will be announced sooner rather than later,” she said.
However, concerns among Indian citizens and businesses about the pandemic’s immediate impact prompted the government to respond quickly with a set of statutory and regulatory compliance measures, the minister said.
“There have been several calls for us to respond to in terms of deadlines that people are struggling to keep. So therefore, today, we have come up with a comprehensive and detailed announcement,” she said.
Nonetheless, the government will not declare a financial emergency, according to Sitharaman.
The other measures she announced include reducing the interest rate on delayed tax payments to 9% from 12% for fiscal 2019, extending to June 30 — from March 31 — the deadline to link government-issued Aadhaar and PAN cards for tax payments, and extending the application deadline for India’s tax amnesty program to June 30.
In addition, the government relaxed rules that trigger insolvency cases against micro-sized, small and medium-sized enterprises, loosened norms for the conduct of corporate board meetings, extended the final date for return of goods-and-services tax for March, April and May to June 30, and provided for around-the-clock customs clearances through June 30.
Across India on Sunday, residents observed what was described as a voluntary curfew, hours after the country’s borders were temporarily closed to international flights in an attempt to contain the spread of the coronavirus. As of Tuesday, the country had reported 536 confirmed cases of COVID-19, the disease caused by the virus, including 10 deaths.
Sudhir Kapadia, national tax leader of EY India, called Sitharaman’s tax announcements “significant” in light of business disruptions from COVID-19.
He said extending last year’s indirect tax scheme and this year’s customs-related direct tax resolution program to June 2020 — without the usual 10% tax surcharge for direct taxes — will give Indian businesses “breathing room to assess and carefully evaluate these options and allow for liquidity to make the necessary tax payments under these schemes.”
In a note to clients, Kapadia called the interest rate cut to 9% for delayed tax payments “welcome relief.” But he said it would have been better if the government had allowed a three-month deferral for paying income taxes without any interest.
The Federation of Indian Chambers of Commerce and Industry, a leading business lobby, welcomed the minister’s announcement.
Sangita Reddy, FICCI president, said in a statement the “extensive measures” to relax regulatory and tax compliance rules to mitigate the impact of COVID-19 were “a good first step.”
--Editing by John Oudens.
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