Business and industry may have been granted needed breather to take breezily through necessary compliances but the financial losses that would be as yet mounting, nothing much from the Government.
Shipra Walia/Chartered Accountant, Noida
Amidst the pandemic terror, the economic fallout of the current crisis, created by the virus (COVID -19), being faced by businesses and industry may not be exactly known but by no measure would it be less than colossal, the world over, including in India.
Business community and industry may have been granted some much needed breather to take them breezily through the necessary compliances in the Indian context but as regards the financial losses that would be as yet mounting, nothing much has been seen as forthcoming from the Government.
It would be a major breakthrough once a cure for the virus (COVID – 19) has been discovered, however until then companies which are involved in the research and development to find a cure may have already incurred huge amount of capital and/or revenue expenditure.
It would be worthwhile considering that a separate account head as ‘COVID – 19 – R & D expenditure’ be created by such companies to collect and collate all such costs over a period of time and the same be clarified to be allowed as a deduction from the total income of the relevant financial year. In respect of any capital expenditure, a threshold limit of Rs. 1 crore per year or 20% of capital expenditure, whichever is less may be proposed as an allowable deduction and the balance capital expenditure in the subsequent four years with a terminal deduction in the sixth year from the year when deduction has been started to be claimed, but not later than Assessment Year 2025-26.
A certificate from an independent Chartered Accountant in practice (other than the internal or statutory auditor), certifying the entire expenditure incurred on this account and bifurcated into capital and revenue expenditure may be required to be obtained in this regard.
Similarly, for all businesses (micro, small and medium enterprises) and industry in general, all such expenditure, revenue in nature, collected and collated into a separate account head as ‘COVID-19 expenses’, incurred for the purposes of maintaining the business as a going concern on account of temporary cessation of business activity (which is different from the discontinuing of the business operations), may be clarified as an allowable deduction from the total income of the relevant financial year, upon obtaining a certificate from a Chartered Accountant in practice (other than the internal or statutory auditor).
(Writer Shipra Walia is partner of W S & Associates LLP www.wsco.in)
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