Covid_Economy_Taxes.5e8decd984eff, Tax Implications Of Covid-19

Tax Implications Of Covid-19


Tax Implications Of Covid-19-

Since the beginning of 2020, the widespread of Covid-19 was all over the World and

it has affected the economy of the richest and

developed countries. It has shaken the economy of developed to least developed countries and brought them to their knees. Countries with the highest number of cases that have been affected the most are the United States of America, India, Brazil, Russia, the United Kingdom, France, Spain, Italy, Turkey, Germany, Colombia, Argentina, Mexico, Poland, South Africa, Iran, Ukraine, Peru, Indonesia and so on[1].

Just like the Healthcare facilities failed to like that the economy also failed

as most of the countries were either under lockdown or

emergency situations or very little movement was allowed. So many people ran out of business and went bankrupt and their businesses shut-down forever

which has affected the economy of each and every country on a large scale.

Majorly affect because of lockdown

It is a well-known fact that a country’s maintenance, expenses, facilities, salary to government employees, etc. everything’s expense run on the tax paid by a country’s own citizens. But everything was shut down during the beginning of the lockdown period so does the businesses and

the salaries of the employees in the private and

government sector were not being paid on time and many people got fired from their jobs. So in this case the tax paid and deducted from the accounts and

paid by the people has also been majorly affect.

The tax has been extremely affected by the Covid-19 in many ways as-

  1. Tax plays an important to a country and to provide basic goods and health-care facilities to its people. During the situation of a crisis, its importance becomes most important but aggressive tax planning by the large taxpayers is at the end going to affect the country and its citizen at large. The tax paid by the large taxpayers can create a big difference in a country’s development and providing the basic needs during times of pandemic.
  2. Tax is going to play an important role in the recovering of the economies of the world. An average Tax-to-GDP ratio went on declining in the developing countries in the year 2020.  This is going to have an even longer imprint after the 2008-09 global financial crisis and it took an average of 8 years or revenues to recover to their pre-crisis level. Countries with limited budgetary room going into the emergency have hit the worst than those who have better flexibility on both fiscal and
Taxation part
  1. monetary sides. A great amount of direct international financial support and debt relief is going to be need during and after the peak of the pandemic. Taxation plays an important part in future macroeconomic stimulus to recover growth and taxes will play a part in creating
  2. ‘the new normal’ along with influencing equality, fundamental rearrangement in social behaviors make the outcome of the pandemic a good time to ‘green’ our tax systems.
  3. Transparency along with the monitoring of domestic revenues, aid and the expenditure of both will be critical. For the group of lower income countries considerable attempts to build tax, capacity are fundamental to a development blueprint directed at distribution of the Sustainable Development Goals.
  4. In India: The situation of India is no less different as it has majorly affected by the covid-19 pandemic. So many people have lost their jobs because of the lockdown and everything was shut down for almost 8 months since March 2020. In order to save the economy, the Government took many steps with
  5. the help as income Tax Returns (ITR) dates were extend and the relaxation measures were grant. India made two important changes to its tax law-
  6. Section-194O has been introduced to the Income Tax Act, 1961 and according to this act, it is now compulsory for an online platform to deduct tax at the rate of 1% from
  7. the payment done to a resident e-commerce member.

Scope of eualization

  1. The scope of 6% equalization duty has been increase to online advertising by a non-resident business.
  2. In 2020, Section 6 of the Income Tax Act, 1961 was improve. According to the new amended act, a person of Indian origin or an Indian Citizen would be considered a resident in India by spending more than 120 days of being a resident for more than 365 days within 4 previous years or more and he/she is in India for interval in all to 60 days or more in the preceding year. Thus, the prior threshold of 182 days for residency has been shorten to 120 days.
  3. People with an income of more than 1.5 million Indian rupees (other than from foreign origins) will be taxable in India. A person of Indian origin or
  4. an Indian citizen would be consider a resident if no tax is paid by him in another jurisdiction.
  5. The Central Board of Direct Taxes(CBDT) on May 8, 2020, published a clarification expressing that:
  6. A person shall not be considered for the motive of tax residence if he came on a stay in India prior to March 22 and was not able to leave on or before March 31, 2020
  7. A person who has depart on an evacuation flight on or before March 31 or a person who was quarantin on or after March 1 and either depart on an evacuation flight on or before March 31, their period of visit in India from March 22 until March 31 or date of departure will not be considered for the motive of calculation of tax residence.
  8. In the Union Budget 2021 , the Finance Minister ‘Nirmala Sitharaman’ present the budget in the Parliament and there were serious changes in the taxation process were declare by her which are as follows:

More points

  1. Scrapping of Income Tax for senior citizens under certain situations: If a person has income only in the form of pension and
  2. bank interest and taxes are deduct from them. This exemption is accessible for people of age 75 years or more and
  3. it can be claim by filing a declaration in the bank
  4. New rules for removal of double taxation for NRIs
  5. Reduction in the time period of tax assessments among other measures
  6. Startups will get an extension in their tax holiday for an extra year
  7. Advance tax liability on dividend income shall appear after the declaration of payment of dividend 
  8. Extension of home loan interest tax break: A deduction of up to Rs. 1.5 lakh was available on loans take up to 31 March 2021 which has now extend to 31 March 2022. This aims on two objectives- financially supporting new homeowners and boosting the real estate sector.
  9. Increase in safe harbor threshold among price of house and stamp value: The Budget suggests boosting the safe harbor threshold
  10. from 10% to 20%, hence
  11. avoiding the taxation in the hands of the home buyers. The purchase price less than Rs. 2 Crore of the first allotment of residential unit is applicable from November 12, 2020 to June 30, 2021.

Conclusion :

Better provisions and measures are need to be taken by the Government in order to cover up all the loss and failing economy by adopting better tax regimes during the time of Tax Implications Of Covid-19 . Indirect Taxes, GST, VAT, Income Tax Returns (ITR), and so on, play an important role in the development and regulation of a Country and the authorities should make sure that these taxes are being deducted and paid by the people. During the time of Tax Implications Of Covid-19, the situation

all over the world could have been controll up to a limit by adopting

the National Disaster Management Act 2005, Epidemic Diseases Act of 1897, Siracusa Principles, etc. in order

to control the spread of Tax Implications Of Covid-19 and also for the better management of the situation.

References

  1. https://www.worldometers.info/coronavirus/countries-where-coronavirus-has-spread/
  2. https://www.imf.org/en/News/Articles/2020/06/16/vc-facing-the-crisis-the-role-of-tax-in-dealing-with-covid-19
  3. https://news.bloombergtax.com/daily-tax-report-international/insight-direct-tax-implications-of-covid-19-for-india
  4. https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx


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