The outbreak of Coronavirus disease 2019 (COVID-19), first identified in Wuhan, the capital of Hubei, China, in December 2019 and since then has spread globally, has been recognised as a pandemic by the World Health Organization (WHO) on 11 March 2020. India is widely affected by this pandemic. As on 29.04.2020, more than 31000 cases of Coronavirus have been confirmed in India with more than 1000 deaths.
Taking into consideration its severe intensity, seen in the context of India having the highest rate of density population in the world, the Governments, both at Union and State levels, commenced necessary actions on war footing to prevent the spread of this pandemic. It was all the more so when it is known that this deadly disease has no medicinal cure.
Resultantly, everything and every activity, barring the activities relating to and concerning with the essential supplies came to a complete grinding halt. Though the improvement in the environment due to such a lockdown was a silver lining, however, the toll on economy due to this lockdown is too early to be estimated.
While presenting the Finance Bill for the year 2020-21, the Union Government on 01.02.2020 had reasonably estimated India’s nominal GDP growth rate (i.e., real growth + inflation) of 10 percent, however, the same now seems far from reality and certainty. The slowdown in demand, closure of production activities, fall in the global price of crude oil, ban on foreign trade, price decrease in the commodities like energy, metals and fertilizers, restrictions on the aviation industry as also on tourism, amongst others, are bound to exert downward pressure on the inflation, thus adversely affecting the economy chart. It is believed that India’s aggressive lockdown could bring the country’s growth down to 2.5 percent from 4.5 percent it had earlier estimated. However, as per a statement released by Chief India Economist of Goldman Sachs on 09.04.2020, the economic growth of India has been estimated at a low figure of 1.6% only.
Coronavirus had its impact in the industry in general, which has seen, not only cutting the salaries but also laying off its employees. The hotels are vacant and airlines have closed their wings. The live events industry has also estimated a loss of more than Rs. 3000 crores.
The manufacturing, an important part of any economy, suffers from a total lack of clarity. Lockdown has put great stress on the supply chains of essential commodities, and therefore, many of the Indian companies have focused on the production and supply of essential items only, thereby stopping all other production activities, thereby bringing down the production graph. Likewise, the other sectors like agriculture being the primary sector and the tertiary sector are also not free from its impact. There is hardly any manpower available for agricultural purposes in different states. Lockdowns have manifestly made the farmers difficult to take their produce for sale to the markets. The informal sector of India, the backbone of its economy, will be hardest hit in view of economic activities coming to a total standstill. These lockdowns and restrictions on commercial activities and public gatherings are necessarily likely to strongly impact domestic growth. As estimated by the Centre for Monitoring Indian Economy (CMIE) on 07.04.2020, the overall unemployment rate may have surged to 23 per cent, with urban unemployment standing at nearly 31 per cent. International Labour Organisation (ILO) has estimated about 40 crores workers of unorganised sectors to be unemployed.
The United Nations Conference on Trade and Development (UNCTAD), has suggested that India’s trade impact due to the COVID-19 outbreak could be around USD 348 million. For India, the overall trade impact is estimated to be at 129 million dollars for the chemicals sector, textiles and apparel at 64 million dollars, the automotive sector at 34 million dollars, electrical machinery at 12 million dollars, leather products at 13 million dollars, metals and metal products at 27 million dollars and wood products and furniture at 15 million dollars. As per UNCTAD estimates, exports across global value chains could decrease by USD 50 billion during the year in case there is a 2% reduction in China’s exports of intermediate inputs. What is also worrisome is the effect of all the circumstantial conditions on the Rupee value which is at its lower value of more than Rs. 76 per USD, exerting extra burden and pressure on the cost of import of commodities and services in India, and on the accumulated foreign reserves.
To minimise the effect in the economy caused by the COVID -19 outbreak, the Union Finance & Corporate Affairs Minister, on 24.03.2020, announced several important relief measures taken by the Government of India, especially on statutory and regulatory compliance matters related to several sectors. The Central Government, amongst others, announced much-needed relief measures in areas of Income Tax, GST, Customs & Central Excise, Corporate Affairs, Insolvency &Bankruptcy Code (IBC) Fisheries, Banking Sector and Commerce, intended to boost the economy.
Steps taken by the Indian Government:
The Central Government, amongst others, has taken the following decisions in these directions:
- Income Tax
- Extension of the last date for income tax returns for the financial year 2018-2019 from 31.03.2020 to 30.06.2020.
- Aadhaar-PAN linking date to be extended from 31.03.2020 to 30.06.2020.
- Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of an appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for rollover benefit of capital gains under Income Tax Act, Wealth Tax Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT Law, Equalization Levy law, Vivad Se Vishwas law where the time limit will be expiring between 20.03.2020 to 29.06.2020 shall be extended to 30.06.2020.
- For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20.03.2020 and 30.06.2020, the reduced interest rate at 9% instead of 12 %/18 % per annum (i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.
- GST/Indirect Tax
- Those having an aggregate annual turnover less than Rs. 5 Crore can file GSTR-3B due in March, April and May 2020 by the last week of June 2020, without any interest, late fee, and penalty.