Tax Collected Or Lost During COVID-19
Tax in the form of revenue is collected from the citizens of the country to do activities in the interest of public and to run the government and the country as well. But due to COVID-19, there has been declared complete lockdown all over the country and all the economic, business and every kind of activities has been banned from which govt. can collect tax from the citizens. This complete lockdown had led to great loss to each and every sector which was running in the country as the companies needed to gives salaries to the employees working in the company. It was due to the reason that the company cannot fire all their employees because after lockdown they have to again recruit new employees to their company.
Delhi govt. has said that in the month of April, 2019 it has collected around Rs 3,566 crore as tax but the situation is quite adverse in the month of April, 2020 in presence of COVID-19 epidemic, as the collection of tax was only Rs 323 crore. This is approximately one-tenth of the collection of tax which has decreased.[1] This collection of tax was also possible because few activities which involved in essential services and factories that manufacture essential items such as processed and packed food and medical equipment have been allowed to operate. Hospital staff, bank officials, grain, vegetable and fruit mandis, grocery stores, takeaway services, e-commerce websites and pharmacists has been allowed to go to work too, since they are deemed to be part of essential services. Delhi’s budget for the month of March was introduced of Rs 65,000.[2]
Goods and Services Tax (GST) collection has slipped below Rs 1 lakh crore mark in March, hitting five-month low of Rs 97,597 lakh crore, due to impact of coronavirus outbreak on the economy. In the last four months, GST collection had crossed Rs 1 lakh crore mark each time thanks to tax department’s anti-evasion steps. GST revenue in March reported a decline of 4 per cent over the same month last year. The collection, however, was lower than Rs 1.05 lakh crore in February 2020. The total number of GSTR-3B Returns filed for the month of February up to March 31, 2020 was 76.5 lakh. Taking into account the GST collected from import of goods, the total revenue during March has decreased by 8 per cent in comparison to the revenue during March, 2019. During last month, the GST on import of goods has shown a negative growth of (-) 23 per cent as compared to March 2019.[3]
While state and central govt. was in great loss and economy was under great threat and loss, Central and State govt. decided to open liquor shops in different states. According to the Reserve Bank of India’s data, state governments earned around Rs 1.75 trillion from excise duty, most of which came from liquor sales, in FY20. It was their third-largest source of revenue after GST and sales tax or value-added tax (largely on transport fuel). Exercise duty accounted for nearly 12.5 % of states’ total tax revenues in the last fiscal year.[4]
Government held that for delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30th June 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.[5]
Recently govt. has also introduced package of Rs 20 lakh crore to fight against COVID-19 irrespective of the fact that the govt. is not getting tax or revenue due to the amid lockdown, which nobody knows for how long it will last. But we, as the govt. or the owner of the business or of any company one need to think that the money is not unlimited and we the lockdown will be extended for longer period than neither the government will get revenue which can hamper the country to the extent from which recovery might not possible nor any company will be able to establish itself again.
In the last two month of amid lockdown, we have seen the condition of the country and the people as well. People are losing their jobs as their employers couldn’t able to afford to give money to their employees. Some people are also coming up with donations but still it’s not easy to fulfil the needs of 130 crore population of our India. Government employees, ministers are also taking a cut off from their salary so that the economy can be retrieved to a well function. Now again, the lockdown 4.0 has been extended till 31st may will almost the same rules as there was in lockdown 3.0 apart from giving state governments to regulate things using their own powers and giving leverage as per the condition in their particular state and area.
[1] Mallica Joshi, As compared to april 2019: Tax collection dips to a tenth, Indian Express, April 25, 2020.
https://indianexpress.com/article/cities/delhi/delhi-tax-collection-coronavirus-lockdown-april-2019-6378019/ (Accessed on 15th May, 2020)
[2] Ibid.
[3] Business Today, Coronavirus effect: GST collection slips below Rs 1 Lakh crore mark in March, hits 5 month low, April 14, 2020 13:27 IST.
https://www.businesstoday.in/current/economy-politics/coronavirus-effect-march-gst-collection-rs-97597-crore-lowest-since-october/story/399872.html (Accessed on 16th May)
[4] Krishna Kant, Minting money: States earned Rs. 1.75 trillion from sale of alcohol in FY20, May 5, 2020 1:25 IST.
https://www.business-standard.com/article/markets/minting-money-states-earned-rs-1-75-trillion-from-sale-of-alcohol-in-fy20-120050500053_1.html (Accessed on 16th May)
[5] CA Hitesh Sukhanani, Due Dates for E-Filing of TDS/TCS Return AY 2020-21, May 13, 2020.
https://blog.saginfotech.com/due-dates-of-e-filing-of-tds-or-tcs-return (Accessed on 17th May)
By
Vinakshi Kadan