FM Sitharaman eases regulatory, tax compliance burden amid Covid-19; here’s what more could be done

By: |
March 24, 2020 6:59 PM

Sector-specific measures, cash flow & liquidity enhancement measures are first needed to ensure that businesses can withstand this tough period.

coronavirus, COVID-19, nirmala sitharaman, finance minister, FM Sitharaman, relief packageDue to the Covid-19 pandemic and a major lockdown in 32 states and UTs of India, the industry was waiting for more measures.

Finance Minister Nirmala Sitharaman on Tuesday announced major regulatory and compliance relief for individuals and companies, easing the burden on customers and businesses alike amid the coronavirus lockdown. Extension of deadline for filing I-T returns and GST returns to 30 June 2020; raising threshold limit to initiate IBC proceeding from Rs 1 lakh to Rs 1 crore; extending the deadline to avail benefit from Sabka Vishwas Scheme; and waiving off penalty, late fee, and interest were among the highlights of the relief measures announced. However, due to the Covid-19 pandemic and a major lockdown in 32 states and UTs of India, the industry was waiting for more measures.

Sector-specific measures, cash flow & liquidity enhancement measures, special help to auto and pharma, straight away cancelling the initiation of IBC proceedings to support the MSME sector, are among the major demands of the industry. Extension in timeline for reference under IBC could also have been announced without waiting till 30th April. Now everybody is looking for the Economic Task Force to complete its exercise and announcement of the economic package,” Hari Hara Mishra, Director, UV ARC, told Financial Express Online. 

In order to protect the MSME sector from the headwind of the Covid-19 pandemic, it is also suggested to stop the initiation of IBC proceedings on the sector. “Depending on how the situation evolves, as stated by the FM, there may be a requirement to suspend initiation of IBC proceedings to support the MSME sector and ensure that the same is able to recoup from the loss it is currently suffering,” Karan Mitroo, Partner, Luthra & Luthra Law Offices, told Financial Express Online. If the same is implemented one may also need to consider the impact of the banks and financial institutions and provide some measures to ease the burden on them as well, he added.

Here are some other notable industry and expert views:

  • Manish Aggarwal, Partner and Head, Infrastructure M&A, and Special Situations Group, KPMG in India: There is an urgent need to address the entire restructuring and resolution framework that exists at present to facilitate large scale restructurings and to avoid insolvencies. Sector-specific measures, cash flow & liquidity enhancement measures are first needed to ensure that businesses can withstand this tough period. This, in real sense, will avoid insolvency situations. The stoppage of the process towards insolvency is necessary but not a sufficient condition to address fundamental issues facing the business environment.
  • Maulik Doshi, Senior Executive Director, Transfer Pricing and Transaction Advisory Services, Nexdigm (SKP): The major boost is for the Direct Tax dispute resolution scheme “Vivad Se Vishwas Scheme” which got passed by parliament and forms were notified only last week. Without the extension, the scheme would not have been attractive. On the delayed payment of TDS and other taxes, there is a reduced interest rate of 9%. There are several businesses suffering from working capital issues in the current times and it would have been good if the FM had waived the interest for 3 month period at least for small and mid-sized companies, like the FM announced in GST.
  • Rajesh Gupta, Co-Founder & Director, BUSY Infotech: Along with these initiatives, the government should take more initiatives to ease the situation such as giving economy release packages to stabilize the current status of small and medium enterprises in the market. It will help them to gain momentum which they lost from the last 15-20 days. Simultaneously, the government should also compensate for the losses incurred to maintain the survival of SMEs in the market.
  • Vishal Wagh, Research Head, Bonanza Portfolio Ltd: Weak sectors like auto, auto ancillary are waiting for relief, pharma needs some special help to do further research to fight virus like Corona. Moreover, work in front of direct tax relief should be considered.
  • Narendra Solanki, Head Fundamental Research, Investment Services, Anand Rathi Shares and Stock Brokers: The measures announced by the FM today are more of relaxation on small procedural statutory and regulatory compliance due to the financial year ending in March amid Coronavirus lockdown. The measures announced would definitely help various small, mid and large companies in dealing with the current Coronavirus lockdown and help people to remain in confinement for the time being.

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