News: ASSOCHAM appeals govt for extension of tax filings

Corporate Insurance

ASSOCHAM appeals govt for extension of tax filings

Giving several specific suggestions, the ASSOCHAM said to avoid wide-scale incidence of NPAs, the Government and the RBI should consider providing a one-time rollover of all debt for businesses.
ASSOCHAM appeals govt for extension of tax filings

The ASSOCHAM extended collaborative support of its over 4.5 lakh members to ''heroic" resolve and efforts of the Prime Minister Narendra Modi-led government to deal with the COVID-19 crisis, suggesting immediate relief measures including one-time rollover of all debt for businesses and individuals. Besides, the IBC framework be kept in suspension for 6-12 months in view of the worsening economic situation.  

Participating in a video conference of industry leaders and apex chambers, convened by the Prime Minister, senior ASSOCHAM delegation, said while businesses are genuinely concerned about supply chains, jobs, and continuity, ''They all stand by you in this hour of need and look to you for guiding the nation through this crisis''

Giving several specific suggestions, the ASSOCHAM said to avoid the wide-scale incidence of NPAs, the Government and the RBI should consider providing a one-time rollover of all debt for businesses (LLPs, proprietorships, companies, HUFs, etc.) across all industries (capital loan, working capital loan, etc.) and individuals (home loan, auto loan, education loan, etc.). A similar rollover was undertaken in 2008, during the Lehman collapse, helping various industries survive that phase.

The government should extend a 90-day moratorium on all statutory filings and a similar extension from all statutory commitments (such as RoC, Income Tax, GST, VAT, RERA, etc.). ''This will allow businesses and individuals much required relief in meeting these demands and not defaulting on payments'', the chamber leadership stated before the Prime Minister.

Companies are saying if the govt gives them a rebate, it will help them stay in business, and it'll not lead to job or pay cuts. Other countries such as The United States, Canada, and other European countries are discussing tax relief measures for the corporates, which will benefit the employees in the long run. 

If the government extends the deadline of filing the income tax returns, linking PAN with Aadhar, filing of revised ITR, it will give relief for the working segment. Payroll taxes will put more money into the pocketbook of workers and allow them to stay in business. 

While the IBC framework has been very effective in managing and maximizing values for the companies under the insolvency procedure, the IBC framework should be suspended for 6-12 months in the wake of a worsening economic situation.

To enhance liquidity, Government (Central and State), Government-owned organizations and PSUs should on priority clear all dues, subsidy payments, etc. to the private sector, especially to the highly impacted export-oriented businesses and MSMEs. Expeditious payments from organizations such as NHAI, Port Authorities, and public utilities etc. will infuse much-needed liquidity in the system. The Government should also pay all pending tax refunds to businesses and individuals.

As exports are bound to suffer, possibilities for filling up the gap with domestic markets should be explored but in case the situation worsens and the production of business falls below 50% of capacity, the insurance companies should compensate under Loss of Profit. Force Majeure should not be used by the insurance companies, the chamber stated. 

There were two Acts passed to promote the welfare of building and construction workers, under which 1% cess on the cost of construction was collected. From these funds, more than INR 25,000 crore are still unspent. The center and state should look at utilizing these funds to provide income support to the labor, which has been deeply impacted by the pandemic.

It further suggested that the Government should undertake a 3% subvention of interest for working capital loans to the most impacted sectors – labor-intensive industries, MSMEs and export-oriented businesses. Additionally, the loan repayment schedule should have a moratorium of 1 year, giving such businesses some cushion during this period of intense financial stress.

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Topics: Corporate Insurance, #COVID-19

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