CA students participate in tax planning. The risks produced by the covid-19 are the challenge in front of the internal auditing team. It is the responsibility of the top management to plan the operations as per the changing business environment. Internal auditing is demanding for the responses from the auditors to the changing environment. During covid-19 the government of India had implemented certain changes in the due dates and provisions to manage the tax liability. So, it is important to know the amendments and the planning to manage the business operations. The income tax tribunal had issued orders for the bench functioning, circulation of amended dates, and urgent matters. CBIC has responsibility for the smooth functioning of the import, export, and indirect taxes. During the time of the financial crisis, the focus of the government is described as a short term or medium term. It is not longitudinal as the situation is not permanent. Let me see some impact of tax amendments in India.
• The government has extended the due date for GST annual returns and introduced a new system with e-invoicing for small taxpayers. The liquidity with the business is a key area to be focused on during a pandemic. The government encourages small business as it contributes equally to develop the economy.
• With effect from April 2020 dated 15th the board implemented automation for the process of the goods. The Customs broker will receive the gate pass which aids in the exit of the goods from the broker place.
• There is a change in the percentage of TDS and TCS with a 25 percent reduction. This amendment is an application for the financial year 2020-2021.
• The usage of technology is beneficial for the smooth functioning of finance and supply chain management. The digital management of documentation and tax compliances is beneficial in times of covid-19.
• The PM cares fund is now applicable to the CSR goals of the companies. This amount is eligible for the 100 percent reduction. To manage the post locks down period the government encourages manufacturing companies and big corporate companies through contributions and deductions. This brings liquidity to large scale businesses.
• To manage the cash flow operations the government has allowed for the 15 days late payment of taxes.
• For the manufacturing units of mobile phones, the government has introduced an incentive scheme which is productivity linked one. This move is to support the manufacturing sector as per the demand and supply of the economy.
Importance of tax planning after covid-19
Business continuity is the challenge that many enterprises face now. The government restrictions, economic fluctuations, competitive pressure, and health challenges are affecting the small and micro enterprises as well. The apps from Microsoft and Google-like power Automation, power apps, Microsoft Teams, Zoom, and SharePoint would help to collaborate for the risk management and audit assistance in times of pandemic. The amendments in the tax system should support the crisis and ensure progression. The internal audit team must give due importance to the temporary and permanent changes. The following points are worth considering:
• It is important to control the financial operations of the company. The tasks such as inventory provision, valuation of intangible assets, impairment of goodwill, and valuation of assets need to be controlled. The company must decide about the management’s reporting and accounting completeness. The reporting deadlines for the quarterly results must be considered.
• Control over the management.
• Control with transaction processing.
• Accounting controls for the joint venture or partnership types of businesses.
• Control with the cash payment and cash flow management.
• Control over the automated systems.
• Control over the service providers like outsourcing agents.
• Concerns with the trading process
• It is essential to check the business security with the remote working software systems during a pandemic.
• The health regulations regarding employees need to be compiled.
• The issues with supply chain management like the third party activities and resources are sufficient to handle critical operations.
• As there is fluctuation in the demand and supply ratio, the businesses need to adjust the resources and stock availability as per the economic fluctuation.
• The HR process of annual performance is not considered during the period of crisis.
Final words
Globally the revenue of many companies has been affected due to the pandemic. EBITDA is the value that shows the operating income of the company. And this value shows the value of the company as well. This calculation will not consider the interest, tax, depreciation which are non-operating factors. It is under testing to provide a fairer picture of the company’s earnings. The influence of covid-19 on the valuation of the company is temporary. The negotiations in the commercial market will bring adjustments with the promoters and investors for the calculation of EBITDA. Financial impact, changes in productivity, global recession, funding problems, supplychain issues, information support issues for decision making, the effect of immigration, trade, and tax, privacy risks, cyber-security problems, and other risks are the concerns during the covid-19. The top management needs to understand the amendments and plan for the development of the company from multiple perspectives.
