Representation on enactment stage changes in Finance Bill 2020

The Finance Bill 2020 was passed by both houses of Parliament on 24 March 2020 without any discussion or debate and received Presidential assent on 27 March 2020. There were many amendments at the enactment stage of Finance Bill 2020, including the introduction of a new Equalisation Levy on e-commerce transactions with effect from 1 April 2020.

While many of our suggestions in Post Budget Memorandum on Direct Taxation were addressed in the amendments (like duplicated tax on dividends from REITs/Invits, extending s.80M deduction to foreign dividends, deferring dates of new TDS under section 194-O and TCS under sections 206C(1G)/(1H), etc), the enacted provisions give rise to many practical challenges/ implementation issues to the stakeholders. These will need to be addressed through legislative changes or issue of Notifications or clarificatory Circulars, as may be appropriate to the context.

In the wake of Covid-19 pandemic lockdown, the Government notified Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 on 31st March 2020 to give effect to various Direct/Indirect Tax and Statutory Compliance relaxation announced on 24th March 2020. The Ordinance will need to be regularised through an Amendment Bill when the Parliament next convenes for monsoon session post lifting of Covid 19 lockdown. Our members feel that the passing the Amendment Act, to regularise the said Ordinance, will provide a window to make legislative changes to address some of the pressing difficulties arising out of enactment stage changes.

While deferring the applicable date of new TDS under s.194-O for e-commerce transactions and TCS under s.206C(1G)/(1H) for Liberalised Remittance Scheme, overseas tour package and sale of goods from 1 April 2020 to 1 October 2020, the enactment stage changes give CBDT power to issue guidelines for removing difficulties faced in implementation of the new TDS/TCS provisions.

In view of the same, the Bombay Chamber is pleased to submit a memorandum on enactment stage changes in Finance Bill, 2020 on Direct Taxation for your kind consideration. It broadly covers the following :-

• Issues on new residency rules and perquisite taxation for contributions to PF, NPS and ASF in excess of Rs. 7.50 lakhs
• Issues related to TDS on dividends
• Issues related to TDS and TCS provisions including suggestions on issues on which guidelines can be issued on TDS u/s. 194-O and TCS u/s. 206C(1G)/(1H)
• Issues related to Equalisation Levy on e-commerce transactions through non-resident e-commerce operator.

We trust our suggestions shall be duly considered and appropriate notifications/clarifications will be announced at the earliest. If required, we shall be happy to elaborate on any of the issues in the representation.