Statutory and Regulatory compliance- COVID-19

Ministry of Finance

Finance Minister announces several relief measures relating to Statutory and Regulatory compliance matters across Sectors in view of COVID-19 outbreak

The Union Finance & Corporate Affairs Minister Smt. Niramla Sitharaman on 24 March 2020 announced several important relief measures taken by the Government of India in view of COVID-19 outbreak, especially on statutory and regulatory compliance matters related to several sectors. While addressing the press conference through video conferencing, Smt. Sitharaman announced much-needed relief measures in areas of Income Tax, GST, Customs & Central Excise, Corporate Affairs, Banking Sector and Commerce.

Following are the decisions with respect to statutory and regulatory compliance matters related to various sectors: —

Direct Tax Department-(Income Tax)

1. Extend last date for income tax returns for (FY 18-19) from 31^st March, 2020 to 30^th June, 2020.

2. Aadhaar-PAN linking date to be extended from 31^st March, 2020 to 30^th June, 2020

3. Vivad se Vishwas scheme – No additional 10% amount, if payment made by June 30, 2020.

4. 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 including investment in saving instruments or investments for roll over 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 is expiring between 20^th March 2020 to 29^th June 2020 shall be extended to 30th June 2020.

5. For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30^th June 2020, reduced interest rate at 9% instead of 12 %/18 % per annum ( i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.

Indirect Tax Department- (GST & other)

1. Last date for filing GSTR-3B in March, April and May 2020 will be extended till the last week of 30^th June, 2020 for those having aggregate annual turnover less than Rs. 5 Crore. No interest, late fee, and penalty to be charged.

2. For any delayed payment made between 20th March 2020 and 30^th June 2020 reduced rate of interest @9 % per annum (current interest rate is 18 % per annum) will be charged. No late fee and penalty to be charged, if complied before till 30^th June 2020.

3. Date for opting for composition scheme is extended till the last week of June, 2020. Further, the last date for making payments for the quarter ending 31^st March, 2020 and filing of return for 2019-20 by the composition dealers will be extended till the last week of June, 2020.

4. Date for filing GST annual returns of FY 18-19, which is due on 31^st March, 2020 is extended till the last week of June 2020.

5. Due date for issue of notice, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents, time limit for any compliance under the GST laws where the time limit is expiring between 20^th March 2020 to 29th June 2020 shall be extended to 30th June 2020.

6. Payment date under Sabka Vishwas Scheme shall be extended to 30^th June, 2020. No interest for this period shall be charged if paid by 30^th June, 2020.

Customs

7. 24X7 Custom clearance till end of 30^th June, 2020

8. Due date for issue of notice, notification, approval order, sanction order, filing of appeal, furnishing applications, reports, any other documents etc., time limit for any compliance under the Customs Act and other allied Laws where the time limit is expiring between 20^th March 2020 to 29th June 2020 shall be extended to 30th June.

Financial Services

·         Relaxations for 3 months

-       Debit cardholders to withdraw cash for free from any other banks’ ATM for 3 months,

-       Waiver of minimum balance fee,

-       Reduced bank charges for digital trade transactions for all trade finance consumers.

Corporate Affairs

1. No additional fees shall be charged for late filing during a moratorium period from 01st April to 30th September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date, which will not only reduce the compliance burden, including financial burden of companies/ LLPs at large, but also enable long-standing non-­compliant companies/ LLPs to make a ‘fresh start’͖

2. The mandatory requirement of holding meetings of the Board of the companies within prescribed interval provided in the Companies Act (120 days), 2013, shall be extended by a period of 60 days till next two quarters i.e., till 30th September;

3. Applicability of Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-2021 instead of from 2019-2020 notified earlier. This will significantly ease the burden on companies & their auditors for the year 2019-20.

4. As per Schedule 4 to the Companies Act, 2013, Independent Directors are required to hold at least one meeting without the attendance of Non-independent directors and members of For the year 2019-20, if the IDs of a company have not been able to hold even one meeting, the same shall not be viewed as a violation.

5. Newly incorporated companies are required to file a declaration for Commencement of Business within 6 months of incorporation. An additional time of 6 more months shall be allowed.

6. Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Companies Act, shall not be treated as a default violation.

7. Spending of CSR funds for COVID- 19 is eligible CSR Activity. Funds may be spent for various activities related to COVID- 19 related to health care including preventive health care and sanitation, and, disaster management.

RBI’s COVID-19 Regulatory Package

Reserve Bank of India (RBI) on March 27, 2020 announced a Regulatory Package on COVID-19 to tackle the impact of deadly Corona virus on Indian Economy. RBI Governor Shaktikanta Das announced several measures while addressing the media after the release of Seventh Bi-monthly Monetary Policy Statement 2019-20. RBI’s Regulatory Package is addressed to all the commercial banks, co-operative banks, financial institutions and Non-Banking Finance Companies (NBFCs) in the wake of COVID-19 outbreak. The financial package aims to mitigate the impact of Coronavirus on debt markets, infuse liquidity and ensure the functioning of possible businesses.

Key announcements made by Reserve Bank of India on March-27,2020 :-

Indicator	Current Rate	Existing Rate	Impact
CRR	3%	4%	Higher the CRR, lower the amount of money banks can lend out or invest. So, when the CRR is higher, lower would be the liquidity and vice versa. It is not necessary that a hike in the CRR would lead to a hike in home loan interest rate. But, as a reduce in rate in the CRR increase the supply of credit, when the RBI reduce the CRR, banks would reduce home loan interest rates if the demand for credit does not fall proportionately.
SLR	18.50%	19.50%	When the SLR is high, banks have less money for commercial operations and hence less money to lend out. When this happens, home loan interest rates often rise. When the SLR is low, similarly, home loan interest rates are likely to fall
Repo Rate	4.40%	5.15%	·         Increase in funds for loans, ·         Reduce in Loan EMI
Reverse Repo Rate	4%	4.90%	The purpose of this measure, relating to reverse repo is to make it relatively unattractive for the banks to passively deposit the funds with the RBI and instead to use these funds to lending to the productive sectors of the economy.

Let’s have a look at the measures announced by the RBI:

1)    3-Months Moratorium on Term Loans

All the lending institutions including commercial banks, RRBs, co-operative banks, NBFCs and Financial Institutions have been asked to grant 3-months moratorium on the payment of installments under all term loans outstanding as on March 1, 2020.

What does it imply? – Now, the installments of term loans which were due on March 1, 2020 can be paid until May 31, 2020. The extension of payment is valid on installment as well as interest. The Interest will continue to add on the outstanding amount during the moratorium period.

2)    Type of Payments covered under Moratorium: Principal , Interest, EMIs and Credit Card dues

3)    Which loans are included under Term Loans?- Retail Loans, Agricultural Term And Crop Loans

Note: Retail Loans cover home loans, auto loans, personal loans, education loans and EMIs on purchase of mobiles, fridge, TV and gadgets, etc.

4)    Deferment of interest payments for Business loans

The central bank has deferred the payment of interest for all business loans or working capital loans outstanding as on March 1, 2020 up to May 31, 2020. Businesses will be required to pay off the entire accumulated interest after the expiry of moratorium or deferment period.

5)    Working Capital facilities: Loans granted in the form of cash credit or overdraft

Easing of Working Capital funding through recalculation of Drawing Power

Borrowers facing stress on repayment of working capital loans granted in the form of cash credit and overdraft due to Coronavirus outbreak will now be allowed to recalculate their drawing power. The drawing power can be reassessed by reducing the profit margins or working capital cycle. This relief will be granted until May 31, 2020.

Businesses which will be granted relief under this package will be placed under supervisory review to ensure that the economic fallout is due to the COVID-19 pandemic.

6)    Moratorium & Recalculation of Drawing Power will not result in Asset Classification downgrade

As the central bank is granting the moratorium or deferment or recalculation of drawing power facility due to economic slowdown cased by COVID-19 pandemic, this would not lead to reclassification of asset or asset classification downgrade. As this relief will not be considered as a concession or change in terms of loan agreements.

7)    Asset Classification as NPA & SMA

The asset classification as Non-Performing Asset (NPA) and Special Mention Account (SMA) of term loans granted moratorium will be done on the basis of revised payment schedule of installments. On the other hand, the asset classification of working capital loans will be carried out on the basis of total accumulated interest. 

8)    Reschedule of loan repayment to not impact credit score

The revised schedule of payment of installments and interest will not be considered as a default. This will not adversely impact the credit score or history of the borrowers.

Now, Have a look at these questions and answers to clarify your doubts related to the relief granted under the package:

Q1. When will RBI’s COVID-19 regulatory package come into effect?

Answer: RBI’S rescue package to contain the economic slowdown caused by COVID-19 comes into effect from March 27, 2020 itself.

Q2. Who all will be able to enjoy moratorium under the RBI’s regulatory package?

Answer: Home loan borrowers, car loan borrowers, personal loan borrowers, education loan borrowers, agricultural loan borrowers, crop loan borrowers

Q3. Does Moratorium apply to EMIs and Credit Card dues?

Answer: Yes, the 3-month moratorium applies to Equated Monthly Installments (EMIs) and Credit Card dues.

Q4. Is the RBI’s regulatory package applicable to all private and public sector banks?

Answer: Yes, the package applies to all the commercial banks including the private and public sector banks. However, each bank has to frame its own policy in regard with the package.

Employees' Provident Fund (EPF)

FM: Govt of India will pay the Employees' Provident Fund (EPF) contribution, both of employer and employee, put together it will be 24%, this will be for next 3 months. This is for those establishments which have up to 100 employees and 90% of them earn less that 15,000

.

Govt ready to amend the regulation of EPF due to this pandemic so that workers can draw upto 75% non-refundable advance from credit in PF account or 3 months salary, whichever is lower.