India: Government and Judiciary Measures in view of COVID 19 Coronavirus Outbreak

Gautam Khurana

ILO Consulting Services Pvt Ltd

COVID-19 Coronavirus Outbreak has presented challenges that nobody could have envisaged three months ago. The rapid and continuous spread of COVID 19 presents significant challenges to people and businesses across the globe. The most difficult problems that businesses need to consider are their legal liabilities and obligations namely contractual obligations, employer-employee relationships, government levies, pending disputes, regular compliance obligations.

The Government of India (‘GOI’) and Supreme Court (‘Apex Court’) announced several measures on statutory and regulatory compliance in the areas of Limitation Period, Direct Tax, Indirect Tax, Corporate Affairs, Bankruptcy Code in the view of COVID-19 Coronavirus Outbreak in India.  The key measures in this regard are summarized as below:


Period of Limitation Regulations

  1. The Apex Court on the 23rd March 2020 has extended the period of limitation in all petition, applications, suits, appeal, and other proceedings with effect from 15th March 2020 irrespective of the limitation prescribed under the general law or special laws till the new order to be passed by the Apex Court. The order is binding on all Courts, Tribunal, and authorities.


Direct Tax Regulations

  1. The last date of filing the Income Tax Return under Income Tax Act 1961 for the financial year 2018-19 has been extended from 31st March to 30th June 2020.
  2. The Income Tax department has presented the Vivad Se Vishwas Scheme (‘Scheme’) dated 5th February 2020 which provides an option to the taxpayers for settlement of disputed tax on or before 31st March 2020 without any interest and penalty. In case the taxpayer opts the scheme after 31st March’2020, the taxpayer shall be liable for an additional amount. The due date of 31st March 2020 is now extended to 30th June 2020.
  3. The Income Tax due dates namely issuance of the notice, notification, submission of income tax return, filing of an appeal, submission of statement or reports or any other documents which are required to be provided between 25th March 2020 to 29th June 2020 are now extended to 30th June 2020. The Income Tax department reduced the interest rate at the rate of 9 percent annum against 12 percent or 18 percent per annum for delayed payment of advance tax, Tax Deducted at Source, Tax Collected at Source, etc. made between 20th March and 30th June’ 2020. Further, no penalty or fee shall be charged for the delay relating to the period between 20th March and 30th June 2020.


Indirect Tax Regulations

  1. The due date for filling of annual return of Goods & Service Tax for the year 2018-19 extended till last week of 30th June 2020.
  2. The due date of any compliances or procedure under Goods & Service Tax and Customs Laws falling between 25th March 2020 to 29th June 2020 is now extended to 30th June 2020. The amount payable under Sabka Vishwas Scheme also extended to 30th June 2020.


Corporate Regulations

  1. The Securities and Exchange Board of India has extended the due date of submission of filling of financial results for the quarter and year ended 31st March 2020 up to 30 June 2020 by Equity Listed Companies. The due date of submission of financial results by companies with listed Non-Convertible Debenture, Non-Convertible Redeemable Preference Shares and Commercial Papers for the half-year and year ended on 31st March 2020 have been extended to 30 June 2020.
  2. The Board of Directors and the Audit Committee of the Listed Company are relaxed from observing the stipulated time gap between two meetings for the meeting held or proposed to be held between 1st December 2019 and 30th June 2020,
  3. The Ministry of Corporate Affair notified that Directors of the Company can participate in meetings for the discussion namely approval of financial statements, board reports through video conference or audio conference instead of physical presence up to 30th June 2020.
  4. The Ministry of Corporate Affair notified 1 April 2020 to 30 September 2020 as Moratorium Period on levying any government fees on the submission of any form, returns, statements, document by companies or Limited Liability Partnership irrespective of their due date. The benefit of this relaxation can be availed by existing defaulting companies. This would lead to a reduction of not only the compliance burden but also a reduction in cost.
  5. The Ministry of Corporate Affair extended the time gap between two consecutive board meetings to a maximum of 180 days. This one-time relaxation is available for the next two quarters i.e. up to 30th September 2020.
  6. The newly incorporated company required to submit the declaration for the commencement of new business within 6 months of its incorporation. However, the Ministry of Corporate Affair has extended the timeline for such compliance from 6 months to 1 year from the date of incorporation.
  7. Every company is required to have at least one director who has stayed in India for a period of minimum 182 days during a financial year. Due to travel ban across several countries (including India), the Ministry of Corporate Affairs not considered as a non-compliance for the financial year 2019-20.
  8. The Ministry of Corporate Affair extended the last date of this deposit and investment compliance to 30 June 2020 in respect of the debentures maturing during the financial year 2020-2021.


Insolvency and Bankruptcy Regulations

  1. The Government of India raised the threshold of default for filing of an insolvency petition under the Insolvency and Bankruptcy Code, 2016 from Rs 1 Lakh to Rs 1 Crore.


The relief measures announced by the government are a welcome move due to COVID-19 Coronavirus Outbreak. These measures would certainly help to address some of the issues faced by the organization. However, considering the current scenario, more regulatory changes may require in case COVID-19 Coronavirus Outbreak continued for more than three months.

XLNC ARCHIVE | 30 March 2020


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