Recently, an important development caught the eye of the Indian public when the government implemented the ‘Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020’. This legislation facilitates a variety of tax compliance measures announced earlier in the year as part of COVID-19 response initiatives.
Key Features of the New Ordinance
In the wake of ongoing pandemic, numerous changes in tax laws have been introduced via this ordinance. A concession has been made for taxpayers, with an extension in the deadline for income tax filing. The last dates for investing in financial instruments like the National Savings Certificates and Public Provident Fund to claim income tax benefits have also been pushed back.
A major change is observed in the deadline for linking PAN with Aadhaar, which has now been extended by three months to June 30th. All these steps are designed keeping the current crises and its potential financial implications on taxpayers into consideration.
Tax Treatment for PM-CARES Fund
The recently constituted PM-CARES Fund, set up as a measure to combat the challenges posed by the COVID-19 pandemic, has been granted parity with the Prime Minister’s National Relief Fund (PMNRF) by this ordinance. This means that donations to the PM-CARES fund are now eligible for 100% deductions under Section 80G of the Income-tax Act.
While the PM-CARES Fund is a recent introduction, the PMNRF has been in existence since 1948, created by then-Prime Minister Jawaharlal Nehru. The latter has traditionally been utilized for relief efforts during natural calamities, or to sponsor medical treatments such as kidney transplants, cancer treatments, and aid for acid attack victims.
Understanding Ordinances
An ordinance is a law or decree issued by a state or national government without the explicit approval of the legislature. In India, this power is accorded to the President by Article 123 of the Constitution, allowing for ordinances to be promulgated when Parliament is not in session, and if there are circumstances necessitating ‘immediate action’.
However, there are limitations to this power. Primarily, an ordinance can only be issued when Parliament is not in session, and must be ratified within six weeks of Parliament reassembling. If it is not approved within this timeframe, or if both Houses of Parliament pass resolutions disapproving the ordinance, it will cease to operate.
All these measures introduced by the government through this ordinance are intended to ease financial burdens and provide relief during this period of national crisis. The changes brought about by this ordinance offer a contemporary perspective on the intersection of public policy, fiscal management, and humanitarian aid in times of emergency. As such, they bear significance not just for taxpayers, but for all citizens keeping a close watch on these developments.
