Extension of due dates, refunds, reductions, virtual meetings & other reliefs
Due to the Covid-19 pandemic and lock-down, the Government of India has provided some reliefs in terms of extension of due dates for filing accounts, reduction in rates of TDS, clearing income tax refunds, virtual meetings etc. Let’s look at some reliefs relevant to charitable and religious trusts and institutions.
Return with charity commissioner
The Office of the Charity Commissioner (Maharashtra State) vide Notice dated 4th August 2020 has extended the last date for filing the accounts for the Financial Year 2019-20 to 30th October 2020.
Return with Income tax
Ministry of Finance (Income tax) has extended due dates of filing Return of Income and Tax Audit reports.
Due date for filing Return of Income tax in ITR 7 by trusts and institutions whose books are required to be audited has been extended to 30th November 2020 instead of 31st October 2020.
Return with ROC
Non-profit Companies licensed under section 8 (earlier section 25) may file annual accounts (Form AOC-4) within 30 days from the conclusion of the AGM by 29th October 2020 and Annual Return in MGT-7 within 60 days from the conclusion of AGM by 28th November 2020.
Re-validation of 12A & 80G
The Ministry of Finance has released a press note titled: “New procedure for registration, approval, etc. of certain entities deferred to 1st October, 2020”.
Accordingly, charitable and religious trusts and institutions approved/ registered/ notified under section 10(23C), 12AA, 35 and 80G of the Income-tax Act, 1961 (the Act) would be required to file intimation within three months from 1st October, 2020, i.e., by 31st December, 2020 for re-validation of their existing tax exemption and tax deduction certificates. Earlier the window for this exercise of re-validation was from 1st June 2020 to 31st August 2020.
In April 2020, the government announced that the Income Tax Department will release all pending income tax refunds up to Rs. 5 lakhs immediately which will benefit around 14 Lakh taxpayers.
Later, Finance Minister Ms. Nirmala Sitaraman held a press conference on 13th May 2020 to provide details of Rs. 20 Lakh Crore special economic package announced by the Prime Minister the day before 12th May 2020 to spur growth and revive the Indian economy amid COVID-19 pandemic.
She specifically stated that pending income tax refunds to charitable trusts and non-corporate businesses and professions including proprietorship, partnership and LLPs and cooperatives shall be issued immediately.
Please check whether your charitable trust or institution’s pending income tax refunds have been credited to your organisation’s bank account. If not, please follow up through your auditors.
Reduction in TDS & TCS
Rates of Tax Deduction at Source (TDS) for all non-salaried payment to residents, and Tax Collected at Source (TCS) rates have been reduced by twenty five percent of the specified rates.
Charitable trusts and institutions while paying for Professional or Technical Services or receiving fees for Professional or Technical Services should note that now under section 194J TDS should be deducted @ 7.5% instead of @ 10%.
The new TDS and TCS rates have come into effect from 14th May 2020 and will remain effective till 31st March 2021, (i.e., till the end of the financial year 2020-21.
With the pandemic still creating difficulties in normal functioning, the Ministry of Corporate Affairs (MCA) on 23rd June, 2020 granted further relaxations. Even the requirement of holding Board Meetings with physical presence of Directors for approval of the Annual Financial Statements, Board’s Report, etc. has been further relaxed. Such meetings can continue to be held till 30th September 2020 through video conferencing or other audio-visual means. Previously the relaxation was granted till 30th June, 2020.
However, while virtual meetings are officially recognised under the Indian Companies Act 2013, online or virtual meetings are not yet officially recognised under the Maharashtra Public Trusts Act 1950 or the Societies Registration Act 1860 or similar state legislation as yet.
There is no official circular or notification about validity of online/virtual meetings for Trusts or Societies. However, we do know that government meetings are also being conducted virtually on account of social distancing norms.
Considering the lock-down and requirement of Social Distancing ‘Virtual Meetings’ using technology (Skype, Zoom, Google Meet, Web-ex, etc.) seems to be a good, practical and safe option under the given circumstances. These Apps also provide facilities to record the meeting which should be adequate proof of who was in attendance and what was discussed, decided and resolved.