Amidst the Covid-19 crisis, the Central Board of Direct Taxes (CBDT), the apex policy making body for Income Tax and Corporate Tax, has given yet another relief to the corporate sector. Companies will not be required to undertake GAAR (General Anti-Avoidance Rules) & GST (Goods & Services Tax) reporting under the amended Tax Audit Form till March 31, 2021.
“In view of the prevailing situation due to Covid-19 pandemic across the country, it has been decided by the board that the reporting under clause 30C and clause 44 of the Tax Audit Report shall be kept in abeyance till March 31, 2021,” CBDT said in a circular.
Sandeep Jhunjhunwala, Director at Nangia Andersen LLP, felt the decision to defer the onerous reporting requirements is a clear indicator that the CBDT is ensuring that there aren’t any slips between the cup and the lip, leading to taxpayers' anguishes. In the midst of a Covid-19 pandemic, tax authorities have been proactively announcing the relaxation in compliance and reporting obligations for businesses. A fair and detailed guidance on no GAAR certification is expected as this is an area devoid of precedence and largely characterised by interpretational issues, before the reporting requirement is made operative post March 31, 2021.
“Re-writing the fate of tax treaties and creating another milestone in the history of international taxation, the Multilateral Instrument (MLI) also has come into effect in India on April 1, for the majority of covered tax agreements that India has. Businesses would now need to assess the dual tests under MLI and GAAR to conclude on tax positions for business structures, transactions and potentially business models itself,” he said.
Section 44AB of the Income Tax Act, read with rule 6G of the Income Tax Rules, requires specified persons to furnish the Tax Audit Report along with the prescribed particulars in the Form 3CD. Initially reporting was to be made by August 20, 2018 but deferred twice to March 31, 2020. The board received several representations stating the difficulty in implementation of the reporting requirements in view of the pandemic and requesting deferment.