The central government collected Rs 10.27 trillion as direct taxes during 2019-20, a record shortfall of Rs 1.45 trillion, or 12.2 per cent, compared with the revised estimates (RE). This may prompt the revenue department, under the finance ministry, to reset its Budget math for 2020-21, official sources said.

According to a senior revenue official, the massive shortfall can be attributed to the overall economic slump, besides corporate tax rate cuts, the Vivaad se Vishwas tax settlement scheme proving to be a non-starter, and the ongoing Covid-19 lockdown.


Official figures showed that the gross amount collected under direct taxes as of March 31 was Rs 12.11 trillion. This included the tax refunds outgo to the tune of Rs 1.83 trillion. The net collection, thus, stood at Rs 10.27 trillion, as against the revised estimates of Rs 11.70 trillion.

The government has issued an ordinance to give effect to the relaxation in several compliances including extension in last dates to June 30 for making investments in instruments such as National Savings Certificates, Public Provident Fund for claiming income tax benefits. Income tax Act, Benami Act are being sought to be amended via the ordinance - Taxation and Other LAws(Relaxation of Certain Provisions) Ordinance, 2020.

The ordinance also seeks to amend the Income Tax Act to enable 100% deduction to donations made to the PM's Citizen Assistance and Relief in Emergency Situations (PM CARES) Fund, set up to enable citizens to contribute to government’s containment efforts against the Covid-19 outbreak.

Even while the country is in a complete lockdown to control the spread of Coronavirus in the country, the new financial year (FY) 2020-21 has sneaked in from April 1. For income tax purpose, while the FY 2020-21 has begun on April 1 and will end on March 31, 2021, the relevant assessment year (AY) will be AY 2021-22. All income earned during the FY is assessed in the AY and income tax return for FY 2020-21 is accordingly filed in the AY 2021-22.

As a taxpayer and even if one is not a taxpayer, there have been several important changes that one needs to be aware of. Here are a few of those key income tax changes effective April 1, 2020.

Firstly, it is important to note that contrary to the concern raised about a change in the financial year, the government had clarified on March 30, 2020, that the financial year has not been extended and the status quo on the same is being maintained.

ITR Filing Last Date: Amidst the Coranavirus crisis, in order to provide some relief to the taxpayers and income tax filers, the government had come out with certain measures aimed at them. The last date for filing the income tax return (ITR) for the financial year 2018-19 has been extended to June 30, 2020, from the existing date of March 31, 2020. According to Homi Mistry, Partner, Deloitte India, “The Finance Minister, Nirmala Sitharaman held a press conference 24 March 2020 to announce various relief measures taken by the government on statutory and regulatory compliance matters in view of the outbreak of COVID19, however, the necessary legal and legislative amendment for giving effect to the aforesaid relief is awaited.”

A three-month extension in deadlines for tax payment and filing of returns notwithstanding, the Income-Tax Department has asked field formations to contact large taxpayers over phone or email to follow up on pending collections. Rakesh Gupta, Commissioner of Income Tax (Coordination & Systems), Central Board of Direct Tax (CBDT), last week asked field formations to submit a daily report on follow-ups on pending tax collections from large taxpayers.

While most tax officers working from home in view of the lockdown announced to check the spread of Covid-19, it is possible to continue working in today's connected world, the message to officials said.

The new financial year will begin on April 1, 2020, amid a country-wide lockdown. Even though the government has extended various tax-related deadlines (such as filing of income tax return for FY 2018-19, tax-saving for FY 2019-20, linking of PAN with Aadhaar etc.) certain new tax-related rules will come into effect from April 1.

The government via a press release dated March 30, 2020, has clarified that there is no extension of the financial year.

Here is a look at the new tax rules that will come into effect from the new financial year, i.e. April 1, 2020.

India’s direct taxes body has clarified that defaulters need to settle their tax dues within 15 days from the time the disputed amount is mutually agreed upon, under its dispute settlement mechanism that has now been extended till June 30.

Not only that, after they are issued what is known as Form 3 for payment of arrears, taxpayers will also have to inform tax authorities that they have paid up, the Central Board of Direct Taxes said in a set of frequently asked questions.

The Vivaad Se Vishwas scheme is a no interest - no penalty window that was supposed to end on March 31 but has since been extended in light of lockdowns and disruptions due to the Covid-19 outbreak.

Earlier, there was confusion over whether the duration to settle the dues was 15 days or one month. The latest FAQ has put to rest speculation over the window of settlement.

The Central Board of Direct Taxes (CBDT) is likely to soon notify the compliance relaxations including three-month window till June 30 to carry investments in savings instruments under income tax.

“Notification will be issued by March 31,” a senior government official told ET.

Finance minister Nirmala Sitharaman had last week announced several relaxations in compliances including under the income tax.

The government had last week extended the due dates for issue of notice, intimation, notification, approval order, sanction order, filing of 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 to June 30, 2020.

To provide relief to taxpayers locked down to contain spreading of highly infectious Novel Coronavirus COVID-19, Finance Minister Nirmala Sitharaman has declared extension in the last date for filing of Income Tax Return (ITR) for the financial year (FY) 2018-19 to June 30, 2020 from March 31, 2020 for those assessees who have not filed their returns yet.

Along with the extension in the last date of filing ITR, the due date for linking PAN with Aadhaar and tax payment date under ‘Vivad se Vishwas’ scheme to avoid paying additional 10 per cent tax have also been extended to June 30, 2020.

As the country has come to a standstill due to pan India lockdown to contain spreading of highly infectious Novel Coronavirus COVID-19, Financial Minister Nirmala Sitharam has announced extension of cutoff dates related to income tax, GST and other compliances till June 3, 2020.

However, the extension beyond the financial year (FY) 2019-20 end date of March 31, 2020 has created some doubts. For example, if a person makes some tax-saving investment between April 1, 2020 to March 31, 2020, whether it will pertain to FY 2019-20 or FY 2020-21.

So, to remove such confusions, will it be better to extend FY 2019-20 itself? Experts, however, differ on this.

According to Archit Gupta, Founder and CEO – ClearTax, “The spread of Coronavirus or COVID-19 has shut businesses and enforced a stay at home for all of us.

From the reasons why we need innovative solutions to address tax litigation and why a lockdown can’t be a substitute for quick action in other areas to how every constituent in the economy and the legal system governing the economy has to now reboot, here's a selection of Business Standard Opinion pieces for the day.

Are central banks across the globe running out of ammunition with interest rates already at zero or in negative territory, and with questions about declining returns of the quantitative easing programmes? What are the likely economic costs of an extended lockdown, especially for the poor? Why do startup leaders give priority to creativity over processes? Alokananda Chakraborty sums up.

Finance Minister Nirmala Sitharaman on Tuesday announced a slew of measures ranging from extension of deadline for filing income tax returns to waiving cash withdrawal fee for using automatic teller machine (ATMs) of other banks and relaxing threshold for insolvency proceedings to Rs 1 crore. The relaxations announced by the finance minister came in the backdrop of lockdown in numerous cities to contain the spread of deadly coronavirus.
Ms Sitharaman on Tuesday said that the deadline for filing income tax returns for the financial year 2018-19 has been extended to June 30, 2020 from March 31, 2020. The interest rate on delayed payment of returns has also been cut to 9 per cent from 12 per cent.

The government also extended the last date for linking PAN with unique biometric ID Aadhaar to June 30 from March 31.

The Vivad Se Vishwas (VSV) Bill 2020 has now been passed by both houses of Parliament. Finance minister Nirmala Sitharaman had announced this in her budget speech as part of GoI’s direct tax measures. It is in line with the Sabka Vishwas scheme, which aims at the resolution of legacy disputes in indirect taxes.

VSV is expected to resolve a major part of direct tax litigations worth about Rs 4.8 lakh crore by way of remission and waiver of interest, and penalty for all pending disputes for which an appeal is filed. The provisions of the scheme also provide relief to taxpayers who have won their appeal at any stage by way of 50% remission of tax liability and 100% waiver of interest and penalty.

The scheme will enable taxpayers, especially MSMEs, to settle their tax disputes and use their scarce resources for business, rather than litigating tax positions. It has been designed as a comprehensive dispute settlement mechanism and not one merely drafted to chase hoarders of black money.

The tax administration has actively engaged with the stakeholders to work on the modalities of VSV. Many suggestions have already been incorporated in the Bill to make the amnesty scheme an effective one.

The government’s newly introduced e-filing facility to end direct tax disputes under Vivad se Vishwas scheme may not do much help to the taxpayers now. With only 10 days left to reach the deadline of Vivad se Vishwas scheme and amid coronavirus scare keeping people away from offices, the success of the dispute resolution scheme may differ than anticipated. While the overview and the purpose of the scheme were already known to the taxpayers, the exact rules and related forms have reached them only yesterday.

Even if the corporations find it worthy to file the dispute resolution to end the long-pending litigation, the new set of rules may make it inconvenient for them to get through this while working from remote locations.

“Government has notified rules and forms just 10 days before the deadline for payment of tax under the Vivad se Vishwas scheme and now the portal has recently initiated the acceptance of declarations under the scheme but seems all will go in vain as Covid-19 is in its full swing and the complete lockdown has been requested by Hon’ble prime minister in his speech,” Rajat Mohan, Senior Partner, AMRG & Associates, told Financial Express Online.

Corporates are already closing their offices and have asked employees to work from home in such circumstances collating data on tax disputes and in-house deliberation on the same is impossible forcing the companies to opt out of the scheme, he added

The income tax department on Wednesday kick-started implementation of the direct tax dispute resolution scheme, Vivad se Vishwas, by notifying the ‘designated authorities’ who will accept applications and issue orders under each jurisdiction.

However, with barely 14 days to avail full benefit of the scheme, the rules and forms for taxpayers are still awaited, making the timeline appear unrealistic.


Besides, tax experts pointed out that with a majority of workforce functioning from home due to the coronavirus pandemic, it was impossible to meet the March 31 deadline (without additional payment) under the scheme.

The Central Board of Direct Taxes (CBDT) on Wednesday directed the principal chief commissioners to ‘immediately’ notify field officers as ‘designated authorities.’ Principal chief commissioner of income tax Delhi notified 13 commissioners of income tax as designated authorities. The move comes a day after the scheme was notified post President’s assent.

The scheme is open till June 30 and an additional 10 per cent needs to be paid for taxes paid after March 31. There are more than 400,000 such cases eligible to avail of the scheme, and they involve at least Rs 9.3 trillion.

The designated authorities will determine the amount payable within 15 days of receiving the declaration and grant a certificate of amount to be paid.

The declarant will have to deposit the money within 15 days of determining the tax liability.

Publicly pooled offshore funds could soon get a respite from the recent budget announcement to tax indirect transfers of category II Foreign Portfolio Investors (FPIs), said two people privy to the development. The move will benefit nearly 2,000 FPIs who put together own 15-20 per cent of FPI assets in the country.

The Budget proposal aimed to impose additional capital gains tax on investors and unit holders of category II FPIs. However, several big ticket funds based out of Mauritius reached out to the government, saying they weren’t eligible for category I licenses since they were based out of non-FATF jurisdictions and the new tax will take their effective capital gains tax rate to 40 per cent.

There were also concerns that the law had retrospective effect since it was brought into force from September 23,2019, even though the announcement was made on February 1,2020.

According to Gouri Puri, partner, Shardul Amarchand, providing such exemption to publicly pooled funds would be encouraging for the industry.

“This should provide comfort and assurance to the investors in FPIs,” said Puri.

Indirect share transfer provisions apply to funds that have deployed more than 50 per cent of their portfolio investments in India. The rules say that transfer of shares or units of such funds even outside India will be subject to capital gains tax domestically.

The gross tax revenue collected in the April-February period is nearly flat — a growth of 0.12% — compared to the mop-up in the corresponding period a year ago, the government said in Parliament on Monday. This makes it difficult for the government to achieve the modest growth baked into the revised estimate for gross tax collections this fiscal.

The government garnered Rs 16.89 lakh crore of tax revenue (net of refunds) in the first 11 months of the fiscal, compared with Rs 16.87 lakh crore in the same period last year. In the face of the sluggish revenue collection growth, the government had cut the Budget estimate for gross tax collection by nearly Rs 3 lakh crore to Rs 21.63 lakh crore, a growth of about 4% over the actual tax collection last year.

Due to corporate tax cut announced in September last year, the total direct tax collection for the April-February period came in 3.5% lower at Rs 8.14 lakh crore. However, indirect tax collection, which includes GST, saw a growth of 3.8% at Rs 8.75 lakh crore.

Tax officials are ready with necessary rules and forms under the Vivad Se Vishwas Scheme to settle direct tax disputes, and will issue them soon after the law gets presidential assent, two officials told ET.

The Central Board of Direct Taxes has also directed its officers to be prepared with tax calculations for taxpayers to ensure speedy execution of the scheme, given the tight deadline of March 31, they said. It is also ready with the online system that will be used by taxpayers to avail the scheme.

Parliament had on Friday approved the Direct Tax Vivad se Vishwas Bill, 2020, which would give taxpayers an opportunity to settle their disputes by paying due taxes with complete waiver of interest and penalty until March 31. It would also allow dispute settlement with some additional payment till July 31.

“The forms and rules are ready,” a senior official told ET on condition of anonymity. “Once the bill is enacted, we will be able to issue them. Even the utility is also ready from the system side, so online declarations can be filed immediately after the bill is enacted.”

The direct tax disputes related to unexplained cash deposited in banks during the demonetisation period could be settled under the direct tax dispute resolution scheme. If the assessees opt for the scheme, they need to pay 75% of the unexplained cash deposited in banks as tax, finance minister Nirmala Sitharaman said on Friday in the Rajya Sabha. She added that the scheme was ‘not an amnesty scheme at all’ for cases involving unexplained cash deposit during November 8-December 31 in 2016.

FE had reported earlier demonetisation-related disputes worth as much as Rs 3 lakh crore may avail the scheme as the income tax department had completed the final assessment on all such cases, and many of them had already been challenged in the appellate forum.

Parliament on Friday approved the Direct Tax Vivad Se Vishwas Bill, which was passed by a voice vote and returned by the Rajya Sabha as it was a money Bill. It was approved by the Lok Sabha on March 4. Under the scheme, taxpayers willing to settle disputes would be allowed a complete waiver of interest and penalty if they pay the entire amount of tax in dispute by March 31 this year, following which an additional 10% disputed tax shall have to be paid over and above the tax liability.

Exemptions and deductions in personal income tax, “should be continually revisited, rationalised and eventually scrapped in tandem with moderation of tax rates,” the Standing Committee on Finance recommended in its report on demand for grants. The report backed the government’s move of gradually doing away with deductions, exemptions and complicated tax structure for taxpayers.

“However, terminal benefits available to retiring employees should not be taxed with a view to ensuring social security to senior citizens,” the committee, headed by Jayant Sinha, added in its report presented in Rajya Sabha, Thursday.

The Committee further flagged that cases of fraudulent claims of input tax credit under goods and services tax (GST) based on fake invoices had more than doubled, from 2211 in FY 2018-19, to 5986 in FY 2019-20, even as the Central Board of Indirect Taxes and Customs (CBIC) was using analytical tools and systems generated intelligence to curb tax evasion.

The Committee added that the department of revenue extends the monthly due date for filing Goods and Services Tax (GST) returns to 25th of every month, and has asked the government to sort out “all the festering issues pertaining to GST at the earliest.”