Frah Saeed, Advocate
Co-founder Clearmytax.in
1. Introduction:
Due to the outbreak of Noel Corona Virus (COVID-19) across many countries of the world, including India and challenges faced by tax payers in meeting compliance requirements under various provisions of the CGST Act, the Government has announced various relief measures relating to statutory and regulatory compliance matters across sectors.
To provide the relief, various notifications have also been issued by the Government on 03-04-2020 out of which one of the notification, is Notification No. 35/2020-CT dated 03-04-2020 issued under Section 168A of the CGST Act,2017 for extending due date of compliance which falls during the period from 20-03-2020 to 29-06-2020 to 30-06-2020.
Subsequent to issue of above notification the tax deductors are under dilemma as to whether they have got any relief or not in regard to due date of deposition of TDS under GST Law. Lets us discuss in detail, the relevant provisions and try to demystify the position.
2. Corona Relief provided by Notification No. 35/2020-CT dated 03-04-2020
The said Notification inter alia mandates as under:
where, any time limit for completion or compliance of any action, by any authority or by any person, has been specified in, or prescribed or notified under the said Act, which falls during the period from the 20-03-2020 to the 29-06-2020, and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action, shall be extended upto the 30-06-2020, including for the purposes of–
(a) completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts stated above; or
(b) filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the Acts stated above;
It has further been stated that such extension of time shall not be applicable for the compliances of the provisions of the said Act, as mentioned below –
(a) Chapter IV;
(b) sub-section (3) of section 10, sections 25, 27, 31, 37, 47, 50, 69, 90, 122, 129;
(c) section 39, except sub-section (3), (4) and (5);
(d) section 68, in so far as e-way bill is concerned; and
(e) rules made under the provisions specified at clause (a) to (d) above;
3. Corona Relief for tax deductors demystified:
Before demystifying the corona relief granted to tax deductors in regard to filing of returns and deposition of tax so deducted, let us go through the relevant Sections of CGSt Act, 2017 which govern the above compliances.
As per Section 39(3) of the CGST Act, 2017 read with Rule 66(1) of the CGST Rules, 2017 every registered person required to deduct tax at source under the provisions of Section 51 is required to furnish, a return in FORM GSTR-7, electronically, for the month in which such deductions have been made within ten days after the end of such month.
Further in terms of Section 39(7) of the CGST Act, 2017, every registered person, who is required to furnish a return inter alia under section 39(3), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return.
From above it is evident that due date of deposition of TDS is linked with the due date of filing of TDS return which is 10th of next month. Further payment of tax is essential before filing of GST Return in light of point No. 4 of the Instructions to FORM GSTR-7.
Now after going through the above provisions, let us go back to the Notification No. 35/2020-CT dated 03-04-2020 and try to demystify the relief that has been offered to tax deductors.
3.1 Filing of GSTR-7
It has clearly been stated in Notification No 35/2020-CT that compliance which falls during the period from the 20-03-2020 to the 29-06-2020 are extended upto the 30-06-2020. Further in the exclusions also sub-section (3) of Section 39 has been kept out, meaning thereby that the benefit of extended time will be available to tax deductors in filing of GSTR-7. Accordingly the GSTR-7 for months March, April and May,2020 which as per law are required to be filed by 10th April, 10th May and 10th June,2020 can now be filed by 30th June,2020.
The above view is also corroborated by Circular No. 136/06/2020-GST dated 03-04-2020 which inter alia states that in terms of notification No. 35/2020- Central Tax, dated 03.04.2020, the tax deductors have been allowed to furnish the returns specified in sub-sections (3) of section 39 of the said Act, for the months of March, 2020 to May, 2020 on or before the 30th June, 2020.
3.2 Payment of tax deducted
Now let’s come to second important aspect as to whether the above relief will also be applicable for making payment of taxes as well or payment of tax deducted will be required to be made by the original due dates i.e. 10th of next month.
The dilemma in this regard is further aggravated in view of fact that Notification No 35/2020-CT excludes Section 39 (except sub-section (3), (4) and (5)) from its purview which means sub-section (7) which governs payment of tax is kept out of the benefit accorded by said notification. Thus a view appears that payment of TDS is to be made by 10th of next month only and no extension has been granted. However such a view would be absurd. Lets discuss why?
As discussed supra in terms of Section 39(7) of the CGST Act, 2017, every registered person, who is required to furnish a return inter alia under section 39(3), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return. Thus the due date of payment hinges upon the due date of filing of return, meaning thereby if the due date of filing of return is extended, as has been done currently the due date of payment shall also be extended consonantly.
Further in terms of Rule 85(4) of the CGST Rules,2017 the amount deducted inter-alia under section 51, shall be paid by debiting the electronic cash ledger maintained as per Rule 87 and the electronic liability register shall be credited accordingly. Thus in case only payment of tax has been made (without filing of GSTR-7), which has been credited to electronic cash ledger, it will not amount of discharge of liability and liability will be discharged only at time of filing of GSTR-7 by debiting the electronic cash ledger. From above it is aptly clear that even if we make payment of TDS now, it won’t serve any purpose as anyways Government doesn’t get any money as money is lying in your account. Thus the tax deductors should make use of the corona benefit and file their GSTR-7 (along with payment of TDS) for months March, 2020 to May, 2020 on or before the 30th June, 2020 without any levy of interest as interest under Section 50(1) is levied when payment of tax is made after the due date which in instant case has been extended to 30th June,2020.
4.0 Concluding Remarks
From above deliberations it is aptly clear that corona relief has been offered to tax deductors and they can make payment of tax and file their GSTR-7 for months March, 2020 to May, 2020 on or before the 30th June, 2020.This a welcome measure and will give a breathing space to the tax deductors in such critical time of Corona outbreak.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
