To deal with the COVID-19 pandemic Indian government has announced an Rs.20-lakh-crore economic stimulus package. This is designed after consulting with many stakeholders and is aimed to mitigate the impact of COVID-19 on the current economy of the nation.
Top 5 announcements on EPF and income tax
Taking ahead PM Modi’s vision of a “self-reliant India”, the honorable Finance Minister Nirmala Sitharaman made a series of important announcements with regards to personal finances measure to boost the economy. Here are the top five important announcements you should know:
- The deadline for filing income tax returns of the current fiscal year has been extended to 30 November from 31 July. As part of the Direct Tax measures, Centre has given an extension for the filing of income-tax returns in the current financial year from 31 July to 30 November. This announcement came soon after PM Modi announced the Rs.20 lakh crore stimulus package to counter the damage which the COVID-19 pandemic has caused on the economy. The due dates for the current financial year have been extended from July 31 and October 31 to November 30, the finance minister Nirmala Sitharaman said while explaining the details of the stimulus package announced on Tuesday evening by Prime Minister Narendra Modi. The date for the tax audit is also extended by a month i.e. from September 30, 2020, to October 31, 2020, she mentioned. To give relief to masses, the period of “Vivad se Vishwas” Scheme for making payment without paying additional interest and penalty will also be extended to December 31, 2020.
- TDS, TCS rate for non-salaried payments has been slashed by 25 percent (for a period up to March 31, 2021). A move that will help in releasing Rs. 50,000 crores into the system, said Nirmala Sitharaman. To reduce the financial burden on citizens, the Finance Minister has announced that TDS for non-salary specific payments made to residents and rates of TCS for specific types of receipts will be reduced by 25 percent. She further made it clear that these new reduces rates of TDS and TCS will be valid until 21 March 2021. She added details to her statement and said that these revised rates will be applicable on payments such as TDS on rent which is more than Rs. 50,000 per month, dividend payment type from TDS on fixed deposits and mutual funds, etc. In the press conference, she said “To extend more funds at the disposal of taxpayers and reduce their burden, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments like payments made to residents and rates of Tax Collection at Source (TCS) for the specific type of receipts shall be reduced by 25 percent,” the Finance Minister said.
- To give relief to employees as well as employers in payment of provident fund. To increase take-home salary for employees and reduce the burden of payment of provident fund from employers’ side, the Finance Minister Nirmala Sitharaman in her press conference said that for the next three months of time EPF or employee provident fund contribution will be reduced from 12 percent to 10 percent for both.
- Employees and employers.CPSEs and state PSUs will, however, have the same contribution of 12 percent as an employer.“The announcement by the government to reduce the PR contribution of both parties from 12 percent to 10 percent, will help increase the take-home salary of employees. It will also help the employers, especially for the international workforce wherein the company picks up the cost.” Ms. Saraswathi Kasturirangan, partner at Deloitte India.
- The finance minister also announced a three-month extension of the scheme under which the government will take care of the payment of the EPF contribution of employees and employers. This means the central government pays 24 percent of the month’s salary into EPF accounts below Rs. 15,000 per month, for those who are working in establishments where up to one hundred employees work. With 90% or more of such employees whose monthly wages is less than Rs. 15,000. After the extension, this scheme is now available until August 2020. This will provide at least some relief to both employees and employers to deal with this economic crisis.
- The EPF decision is set to provide relief to at least 6.5 lakh establishments/ firms covered under EPF and approximately 4.3 crore such employees, said Nirmala Sitharaman. She further added that it will provide liquidity of cash of nearly ₹6,750 crores to employees as well as employers over the period of the next three months. This is a good move which will increase cash liquidity for both struggling businesses and helpless cash-starved workforce, said K.R. Shyam Sundar, industrial relations professor at XLRI, Jamshedpur. However, he also said that this quick injection of liquidity is like “low-hanging fruit for the government” and would come at the cost of savings of the workers. “In reality, the costs of the COVID-19 pandemic crisis management shifted on to those workers who are not covered by the EPF subvention scheme, thanks to its narrow coverage,” he said.
In response to the global outbreak of coronavirus pandemic 2019 (COVID-19), governments in many countries have issued series of emergency legislation to deal with the current economic situation and mitigate the impact of the pandemic on their country’s economy.
Since March 24, the Indian government has been announcing many measures to ease the burden of economic slowdown on people’s life. Right from announcing relief packages for various industries and establishments, to measures for increasing cash liquidity for both employers and employees, and to open lockdown in a controlled way to make the economy up and running again.
Both demand and supply are in desperate need of revival in the Indian economy today. The government also announced a ₹3 lakh crore collateral-free loan scheme for businesses, especially micro, small and medium enterprises (MSMEs), as part of a ₹20-lakh-crore economic stimulus package. Many measures have been announced related to employment and bankruptcy matters as well.