Utilizing new tax due dates: Maximizing advantages

27 Jun 2022 | Finance

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Hooshang Bakht

Brego Business was started with a mission to make entrepreneurship easy. Our goal is to help business owners grow and scale without having to deal with the day-to-day stress of running a business. We specialize in providing services that help business owners grow their businesses, including Digital Marketing, search engine marketing (SEM), social media marketing (SMM), LinkedIn marketing, video production, accounts receivable (AR), accounts payable (AP), internal audit, VCFO, and recruitment. We have helped more than 500 brands grow their businesses. We work closely with clients to understand their unique needs and develop customized strategies that deliver measurable results.

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Tax Due Dates

The Corona crisis has hit businesses hard, with sales decreasing like never before, and many are considering shutting down. Cash flow has been affected so badly that businesses are finding it difficult to survive even for a month. Every business owner needs working capital to run their business, and with so many tax compliances due during March & April, there are more cash outflows. However, the Government has given some relief to taxpayers by providing extensions on the due date for GST tax, which will postpone cash outflows and help businesses to survive this pandemic. The Government has also given relief packages to MSME’s, including GST tax exemptions, which will boost liquidity in the economy and help small business owners to survive this crisis. Let’s first understand what GST tax extensions are given by the Government to support businesses and learn how you can get benefits from it, whether it be in a monetary or non-monetary way.

Goods & Service Tax (GST):

GST being an indirect tax is payable every month which means cash outflow every month, GST payments need to be made every 20th, if this is not paid on time you will have to pay interest @ 18% p.a, late fees 100rs per day plus other penalties. Below are the due dates which are extended as a relief measure by the Government:

  • Due date for return period February, March, April & May has been extended till 30/06/2020 for those whose turnover is below 5 Crores.
  • No Interest, No Penalties, No Late fees for companies with turnover less than Rupees 5 Crore for February, March, April & May.
  • No Penalties, No Late fees for companies with a turnover more than Rupees 5 Crore, and interest at a reduced rate of 9% will be charged if return filed on or before 30/06/2020
  • Due date for GSTR 9 & 9C(GST Annual return) Extended till 30/09/2020
  • Due date for CMP08(Composition Taxpayer)has been extended till 30/06/2020
  • Due date for opting into the composition scheme has been extended to 30/06/2020.

Now let’s see how you can maximize the benefit by utilizing the extension. GST payment due dates are extended till 30th June so the GST amount parked in your bank account can be infused in your working capital and you can use this till 29th June which is more than one month. Apart from this, there is always an issue with GSTR 1 vs GSTR 3B vs Books (Tally) reconciliation, which results in cash outflow and additional burdens of interest penalties. This is the best time to reconcile the same and adjust/amend the difference in March GST return.

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Income Tax

Income tax being direct tax is payable yearly and the same was due in the next few months but due to this crisis every business owner is facing cash flow issues, additionally due to lock down its difficulty to finalize books and come to tax liability. Considering this government has also extended income tax due dates and given some relief so that businesses at the company level and also at a personal level can get benefits and have some relief. Below are the extended due dates for the same:

  • Due date for Quarterly TDS filing for Q4 is extended till 30th June 2020
  • Income Tax return filing due date for FY 19-20 is extended to 30th November 2020.
  • Tax audit due date for FY 19-20 is extended to 31st October 2020
  • Due date for Belated/Revised income tax return for FY 18-19 is extended till 30th June 2020
  • TDS rate reduced by 25% from 14th May to 31st March 2021
  • Due date for making investments & payments for claiming deduction under
    -80C (LIC, PPF, NSC etc.)
    -80D (Mediclaim)
    -80G (Donations)
    Extended to June 30th, 2020 for FY 2019-20
  • Due date for linking PAN card with Aadhar is extended to 30th June 2020
  • All delayed payments of advance tax, self-assessment tax, TDS, TCS, made between 20/03/2020 and 30/06/2020 will be charges at reduced interest rate i.e., 9% p.a

What you can do during this Pandemic to clean up your accounts.

This is the best time to contact your accounts team and go over the books and ask them to do all the reconciliation related to GST tax which will make your books error-free. And you can also get accurate data for any managerial decision for the upcoming year related to GST tax which is most important to overcome all the downfalls due to COVID-19. With the relief packages offered by the Government related to GST tax, it is important to ensure that your business is GST compliant and all the necessary GST tax compliances are taken care of. By doing so, you can avoid any penalties and interest charges related to GST tax. This will also help you to better manage your cash flow and plan for the future. 

By keeping track of all the GST tax-related transactions, you can also claim input tax credit, which can help you reduce your GST tax liability. It is important to note that the Government has also provided extensions on the due date for GST tax compliances, which can help you postpone the cash outflow related to GST tax and manage your cash flow during these challenging times. So, make sure to take advantage of these relief measures related to GST tax and plan ahead to ensure the survival and growth of your business during this pandemic.

March closing is always a nightmare, but thanks to the extension you will get enough time to close the books with accuracy you can do the below things to make sure books are perfect with zero errors:

– Ledger confirmation from Debtors, Creditors, loans, etc.

– Check if all recurring expenses are recorded every month and nothing is missed and make sure provisions for the same are made in March.

-Ecommerce reconciliation can be done as deliveries are stopped and we can check whether e-commerce operators are charging a proper commission or if there is any hidden cost attached which is affecting margins.

-Check if TDS is properly deducted on payments/invoices and nothing is missed

Since we are doing GST annual return for FY 18-19 as the due date for the same is extended till 30th September 2020, you might have to revise our income tax return too, so due to extension you have time to revise your income tax return of FY 18-19 till 30th June 2020

Audit can be done with sufficient time and queries can be resolved with zero errors. Yes vouching is not possible but you can share your data with auditors and they can share their observation, vouching can be done after lockdown

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