All the pending income-tax refunds up to ₹5 lakh to be released immediately
The move is set to benefit around 1.4 million individual taxpayers as well as 100,000 businesses
NEW DELHI :
The finance ministry will immediately release ₹18,000 crore in tax refunds to individuals and businesses to provide relief against the backdrop of the covid-19 pandemic, it said on Wednesday.
The move will benefit around 1.4 million individual taxpayers, as well as 100,000 businesses. The move follows the recent government step to offer relief in interest, fee and penalty for late filings of various statutory forms amid a nationwide lockdown to tackle the pandemic.
“It has been decided to issue all the pending income-tax refunds up to ₹5 lakh immediately," the ministry said. The ministry has also decided to issue all pending goods and services tax (GST) and customs duty refunds, which would benefit businesses, including micro, small and medium enterprises.
Easing the liquidity problem of individuals and businesses has been a key part of the government’s strategy to help them tide over the crisis. This includes loan repayment moratoriums and cash transfers to the needy, distribution of additional grain and pulses to the poor.
Businesses that have borne the brunt of the lockdown would be enthused at the prospect of getting GST refunds enabling quicker resumption of operations, said M.S. Mani, partner at Deloitte India.
These measures have been taken as businesses are facing the challenge of paying wages to their workers with dwindling revenue streams during the lockdown period. Last month, Prime Minister Modi had appealed to businesses to adopt a humane approach and not enforce pay cuts.
“It appears that only refunds processed finally until now will be released. It is, however, expected at this stage that the authorities provisionally issue all refund claims filed and technical or procedural issues are taken up later on," said Ritesh Kanodia, partner at Dhruva Advisors, a professional services firm.
The quick refunds and the lockdown which started at the end of FY20 as well as compliance relief given for various statutory filings and the extension of due dates could have a sobering effect on tax collections in the just concluded financial year.
Industry executives welcomed the quick release of refunds.
“The Government of India has been responsive to the requirements of trade and industry since the industry, especially the micro, small and medium enterprises, required funds urgently and this will certainly help," said Chandrajit Banerjee, director general of industry body, the Confederation of Indian Industry (CII).