Grant Thornton TaxPod – January 2021

Hello and welcome to our first episode for year 2021. We bring you the latest tax and regulatory developments that took place in the last month.

Let's begin with the key direct tax developments of the month.

The big announcement this month is the introduction of the Faceless Penalty Scheme, 2021. Similar to the Faceless Appeal Scheme, the faceless penalty scheme entails creation of a National Faceless Penalty Centre to facilitate the conduct of faceless penalty proceedings in a centralised manner. The scheme also envisages creation of Regional Faceless Penalty Centres, penalty units and penalty review units.

Moving on, the government again extended the due dates for filing tax return, Form 3CEB and tax audit reports. The last date for filing of tax return for taxpayers for whom tax audit is mandatory, have also been extended to 15th February 2021. In addition, the Central Board of Direct Taxes (the CBDT) has now categorically stated that, to preserve return filing discipline, there would not be any further extension in these due dates.

On the international tax front, the United States Trade Representative had in June 2020 initiated an investigation into the equalisation levy introduced by India in Finance Act 2020, The Report concludes that the levy is discriminatory, unreasonable, and burdens or restricts U.S. commerce. In response to the said investigation report, the Ministry of Commerce and Industry has issued a press release, which states that the purpose of the levy is to ensure fair competition, reasonableness and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations. The press release concludes by saying that the Indian government is examining the report and would take appropriate action keeping in view the overall interest of the nation.

On the regulatory front, the Ministry of Corporate Affairs (the MCA) has notified the effective date of certain sections of Companies (Amendment) Act, 2020 to 21 December 2020. The word ‘fine’ has been substituted with word ‘penalty’ in most of the sections. Accordingly, the power of imposition of fine has now been shifted from the National Company Law Tribunal and the Regional Directors to Registrar of Companies. In order to deal with the Covid-19 pandemic outbreak, the MCA had earlier given major relaxations with respect to holding of Board meeting through physical presence of Directors. This relaxation allowed the companies to take up and conclude matters which were earlier not allowed through video conferencing (like approval of annual financial statements, approval of board’s report, approval of audit committee, etc.). These relaxations which were provided till 31 December 2020 have now been extended till 30 June 2021.

Now let’s see some of the major indirect tax updates of the month.

Pursuant to the recommendations of the GST Council, the Central Board of Indirect Taxes and Customs (CBIC) has extended the due date for furnishing the annual returns for Financial Year 2019-20 from 31 December 2020 to 28 February 2021.

Another major step taken by the Government is to extend the benefit of the Remission of duties and Taxes on Exported Products (the RoDTEP) scheme to all export goods with effect from 1 January 2021 with an aim to boost exports. The scheme would provide refund of central, state and local duties/taxes to exporters that were so far not being rebated/refunded and were therefore, placing exports at a disadvantage. The refund would be credited in the exporter’s ledger account with customs and can be used to pay basic customs duty on imported goods. Such credits can also be transferred to other importers. The RoDTEP rates would be notified in due course and shall be applicable with effect from 1 January 2021 to all eligible exports of goods (subject to specified conditions and exclusions).

For detailed analysis of last month’s GST related developments, download our monthly GST compendium from our website www.grantthornton.in. 

That’s all for this time.

We will see you next month with the Budget 2021 updates.