New financial year, New financial journey. After the completion of Financial Year 2019-20, we are stepping into new financial year 2020-21. In this COVID-19 crisis, we all are in quarantine. But the time does not stop, there are some important things one should know and think from beginning of the Financial Year (FY). This article contains the checklist of important task to do and mistakes to avoid done in FY 2019-20 in Goods and Service Tax (GST) and Income Tax.
1. Economy during FY 2019-2020
We all know about the great economy slowdown during financial year 2019-2020 that was at the rate of 5% approx., slowest in past 11 years and this is what going to happen when you try to emerge your country from $3 trillion economy to $5 trillion economy. Such slowdown is also due to major set back of Yes Bank crisis and Corona Virus Pandemic. Our economy will revive sooner or later.
2. GST
2.1 Composition Scheme
- The composition scheme is applicable to manufacturers or traders whose taxable business turnover is up to Rs 1.5 crore (Rs 75 lakh in case of North-Eastern States). A service provider can also opt for the scheme if his taxable turnover is up to Rs 50 lakh. This limit is to be checked in Previous Year to determine the eligibility of applicability of composition scheme. But there are strings attached. Businesses with inter-state supplies, manufacturers of ice cream, pan masala, aerated water and tobacco, and e-commerce players cannot opt for the composition scheme.
- If you are a composition dealers as per section 10 of CGST Act, 2017, then you are allowed to supply services to the extent higher of 10% of the turnover in the preceding financial year or Rs. 5 lakhs.
- The due date to opt for this the composition scheme for FY 2020-21 is extended till 30th june 2020.
Step by Step guide of filing CMP-08 for composition taxpayer
- The applicable tax rates under the composition scheme are –
- 1 per cent (0.5 per cent Central GST and 0.5 per cent State GST) of turnover in case of manufacturers and traders,
- 5 per cent in the case of restaurants and
- 6 per cent for other service providers.
- The tax is to be paid from tax payer’s own pocket without charging it to the customer. The words “composition taxable person, not eligible to collect tax on supplies” should be mentioned at the top of every bill issued by him.
2.2 New Billing series
- Rule 46(b) of the CGST Rules 2017, which specifies that the tax invoice issued by a registered person should have a consecutive serial number, not exceeding sixteen characters – hyphen or dash and slash symbolized as “-” and “/” respectively, and any combination thereof, unique for a financial year.
- This Rule implies that the start of new financial year 2020-21 (w.e.f. 01/04/2020), a new invoice series, unique for the financial year is to be started by the GST taxpayers. Similar provision is there in rule 49 of the CGST Rule 2017, in respect of the issue of bill of supply by registered taxpayers availing composition scheme or supplying exempted goods or services or both.
30 important relaxation in various compliance matters announced by Nirmala Sitharaman
- The Combination series should be unique for every Financial Year.
2.3 LUT
- As per IGST Act, the export of goods and services can be conducted through two ways:
- Submit Letter of Undertaking (LUT) and then export without payment of GST.
- Pay IGST at the time of export and claim refund of IGST.
- LUT has to be submitted only once during the year and this option is only available to those exporters who had not been prosecuted and the amount of tax evaded has not exceeded Rs. 2.5 lakh.
- LUT or bond shall be submitted in Form GST RFD-11.
2.4 Other Points
Following checklist should be conducted by the GST Registered Person-
- It is important for any tax payer to see that all its inward supplies has been reported in GSTR 1 by his vendor so as to enable him to avail the input tax credit. If any inward supplies have not been uploaded in GSTR 1 by the vendor then input tax credit to be availed will be limited to 10% of eligible input tax credit available.
- In case the tax payer is issuing many invoices of small amount, then in such case he can make consolidated tax Invoice by the end of each day.
No extension of Financial Year, clarified by Government
- Tax Payer may Issue consolidated debit/credit note in respect of multiple invoices issued in a financial year rather than single debit/credit note in respect of each invoice.
- If the tax payer has issued goods for job work or for any other purpose other then by way of supply then there is no requirement to issue invoice. However, in such cases, delivery challan has to be issued as a document, absence of which would result in penalty.
3. Income Tax
The year FY 2019-20 ends. There are many things which a person should sit and look back. As the Financial year has came to an end, one must finish and complete some task to avoid any further problems at the time of self-assessment. One should collect the documents of the investments done till 31st March 2020. However, due to COVID-19 one can do the investment for tax saving till 30th June as per the ordinance passed by the Government.
3.1 Deductions
There would have some mistakes done in Financial Year 2020-21 that need to be correct. Although there is time but why not better do today than tomorrow. Following are the deduction a taxpayer can take of his/her regular expenses/investments-
- Any donation done for PM CARES Fund (notified now), PM National Relief Fund or CM Relief Fund is eligible for 100% deduction under Section 80G.
- You must have paid Life Insurance Premium for self, spouse, children and if the policy is taken after 1/4/2012 then the deduction would be lower of premium paid or 10% of policy value (15% in case of specified disability).
- Amount deposited in public Provident Fund, Tuition fees paid for education of maximum 2 children, Fixed Deposit in Bank or Post office for 5 years or more, pension fund of LIC such as UTI/MF or other insurance company.
Changes applicable w.e.f. 01.04.2020 – GST, Income Tax
- In case you are making repayment of loan taken for purchase or reconstruction of House, then deduction will be available only after completion of construction and also in addition to deduction that is being claimed under house property.
- You must have deposited some amount for a girl child in Sukanya Samridhi scheme and the good news is that it is also eligible for deduction.
- One of the most important deduction for individuals is the contribution to pension scheme of central government where additional deduction of Rs. 50,000 is available over and above the following limit.
Not filing ITR (Income Tax Return) of AY 2019 – 20; Know the Outcome first
- All above expense/investment have collective deduction limit of Rs. 1,50,000 u/s 80C, 80CCC and 80CCD(1).
- If there are any expense of medical insurance premium, central government health scheme, preventive health check up and medical treatment of self, spouse, parents and dependent children then maximum deduction allowed is Rs. 50,000.
- Deduction is available for 8 years in case of higher studies education loan.
- If you have made any donation, then deduction would be available on the same condition to it is not in cash above Rs. 2000 (donation can not be made to political party or electoral trust in cash).
- If you are getting interest on saving bank account then you can claim deduction of such interest income subject to maximum Rs. 10,000 (Rs. 50,000 in case of senior citizen).
- If you have purchased any house property or constructing the same for which loan has been sanctioned during F.Y. 2019-2020 the deduction of interest on such loan will be available upto Rs. 1,50,000 provided the stamp duty value of such house property is upto Rs. 45,00,000.
- The new deduction is available in respect of purchase of electric vehicle. Therefore, if you take the loan for purchasing electric vehicle between FY 2019-2020 to FY 2022-2023 then you will be eligible for deduction of interest on such loan subject to maximum of Rs. 1,50,000.
- All these deduction will be limited to the GTA i.e. Gross Total Income.
3.2 TDS/TCS
Following are the due dates for return filling and payment of taxes for Financial Year 2020-21:-
| Quarter Ending | TDS Return Due Date | TCS Return Due Date |
| June 2020 | 31st July, 2020 | 15th July, 2020 |
| September 2020 | 31st October, 2020 | 15th October, 2020 |
| December 2020 | 31st Jan, 2021 | 15th Jan, 2021 |
| March 2021 | 31st May, 2021 | 15th May, 2021 |
- Due date for payment of TDS is 7th of next month for the month from April to February and 31st April for the month of March.
- Due date for payment of TCS is as follows:-
- Where tax is collected by Office of Government:
- tax is collected without challan, then due date would be the date of collection.
- tax is collected with challan, then due date would be 7th of next month.
- In other cases, tax collected should have been deposited upto 7th of next month.
- Where tax is collected by Office of Government:
- In case of TDS, late filling fee is Rs. 200/day, penalty would be Rs 200/day for not filling TDS return but subject to maximum of TDS amount ( in case of wrong details submitted in TDS return, the amount of penalty would range from Rs. 10000 to Rs. 100000) and Interest for non-payment would be 1.5% per month or part of the month whereas in case of non-deduction it would be 1% per month or part of the month.
3.3 Return Filling and Tax Payment
a) Return Filling Due Date
| Category of Tax Payer | AY 2020-21 |
| Individual/HUF/AOP /BOI | 31st July 2020 |
| Business(requiring Audit) | 31st October 2020 |
| Business(requiring TP report) | 30th November 2020 |
- Advance Tax Due Date for financial year 2020-21
| DUE DATE | ADVANCE TAX PAYABLE |
| On or Before 15th June | 15% of Advance Tax |
| On or before 15th September | 45% of Advance Tax |
| On or Before 15th December | 75% of Advance Tax |
| On or Before 15th March | 100% of Advance Tax |
3.4 Aadhar-PAN linking
- The last date to link your Aadhaar with PAN had been deferred to 30th June, 2020 failing of which would make your PAN inoperative from 1st July,2020. Following is the link for step by step guide to link.
Easy way of linking Pan with Aadhar
3.5 Rules for Salaried employees
Here is the list of some of the major deductions and allowances, available to the salaried persons, using which one can reduce their income tax liability-
1) Exemption of House Rent Allowance
2) Standard Deduction @ Rs. 50,000 flat deduction
3) Leave Travel Allowance (LTA) which can be availed only twice in a block of 4 year and is only limited to domestic travels and the mode of transport should be through Air, Railway or Public transport. It can be carried forward in next block, if unused.
4) Mobile reimbursement is limited to lower of actual amount paid or amount provided in the Salary package.
Important Income Tax Penalties under Income Tax Act, 1961
5) Books and periodicals is limited to lower of actual amount paid or amount provided in the Salary package.
6) Food coupons are taxable as Perquisites in hands of Employee but however, such coupons are tax exempt upto Rs. 50 per meal.
New Income Tax Rates & existing Income Tax Rates : Quick comparison
7) Section 80C, 80CCC and 80CCD(1), Medical Insurance Deduction (Section 80D), Interest on Home Loan (Section 80C and Section 24), Deduction for Loan for Higher Studies (Section 80E), Deduction for Donations (Section 80G), Deduction on Savings Account Interest (Section 80TTA), had been already covered in above section of Deduction.
8) Income tax exemption on relocation allowance such as Car transportation cost, registration charges, packaging charges, etc will be exempt from tax in case employee shifts to other place.
9) Cab Facility transport provided by employer would not be taxed as perquisite in hands of employee as it would be an expense for the employer.
10) Health club facility provided by employer, if provided uniformly to all employees, would not be taxable as perquisite.
11) Gifts or vouchers provided by employer are exempt upto Rs. 5000 per year.
Tax Discussion Forum
The author of above article is CA Rahul Gaur.
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