20 Policy Changes Impacting Individual and Business from October 2020

From taxes on foreign fund transfers to the stopping of free LPG connections under the Ujjwala scheme, here are the major changes that took place from 1st October, 2020.

1. GST returns information to be included in Form 26AS

• Form 26AS is an annual consolidated income tax credit statement. It helps the taxpayer to ascertain the tax deducted and the advance tax paid during the year and match with the tax deposited as per the tax department’s records.
• Information on GST returns will appear in an income tax statement form called Form 26AS
• The Central Board of Direct Taxes (CBDT) authorises the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) to upload information relating to GST returns, which is in his possession, in the Annual Information Statement in Form 26AS, within three months from the end of the month in which the information is received by him.
• The Principal DG/DG (System) will specify the procedures, formats and standards for the purposes of uploading of Annual Information Statement in Form 26AS.
• The format of Form 26AS was also modified and enlarged to include information received from other departments/ agencies, including the GST authorities.

2. Implementation of GST e-invoicing system

• The new GST e-invoicing system will be implemented from October 2020.
• GST e-invoice is basically a digital invoice for goods and services provided by the business firm generated at the government GST portal.
• ‘E-invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal.
• Under the proposed e-invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN).
• All invoice information will be transferred from this portal to both the GST portal and e-way bill portal in real-time.
• Businesses with sales up to Rs 500 crore will be excluded from compulsory e-invoicing.

3. TCS is collected on Remittance out of India under Liberalised Remittance Scheme (LRS) of RBI.

• As per the Finance Act of 2020 from 1st October 2020, funds sent abroad under the RBI’s liberalised remittance scheme are subject to TCS subject to certain conditions
• Tax is to be collected by bank/ foreign exchange dealer if he receives sum in excess of Rs 7,00,000 or more in aggregates from buyers being a person remitting such amount out of India, at the rate of 5%
• In non-PAN/Aadhaar cases the rate shall be 10%

4. TCS is collected on selling of overseas tour package

• A seller of an overseas tour program package who receives any amount from any buyer, being a person who purchases such package, shall be liable to collect TCS at the rate of 5%.
• In non-PAN/ Aadhaar cases the rate shall be 10%.
• There is no monetary limit for this transaction, irrespective of any amount TCS must be collected by seller of that package

5. TCS is to be collected on Sale of goods under Section 206C(1H)

• Seller of the Goods whose turnover during the preceding FY exceeded Rs. 10 Crore and receives Rs. 50 Lakhs or more from a Domestic buyer of the goods has to collect TCS @ 0.1% (in case of non-PAN/Aadhar @ 1%) of the amount received (including GST)
• TCS rate has been reduced to 0.075% for the period 1st October 2020 to 31st March 2021.

6. TDS to be deducted on Payments Made to e-Commerce Participants

• Section 194O was introduced in the Union Budget 2020. According to Section 194O, an e-Commerce operator is required to deduct TDS for facilitating any sale of goods or providing services through an e-Commerce participant from 1st October, 2020.
• An e-Commerce operator is a person who owns, operates, or manages a digital/electronic facility for the sale of goods and services. He is responsible for making payments to the e-Commerce participant on such sales.
• An e-Commerce participant is a person who sells goods, services, or both through an electronic facility provided by an e-Commerce operator. He must be a resident of India.
• E-Commerce operators should deduct TDS @1% at the time of credit of the amount of sale of goods, services, or both to the account of an e-commerce participant or at the time of making payment to an e-Commerce participant by any other mode, whichever is earlier.

7. New debit card, credit card rules of RBI to be applicable

• In an attempt to make digital payments using debit cards and credit cards more secure, Reserve Bank of India (RBI) issued new guidelines that came into effect 1st October 2020.
• At the time of issue / re-issue, all debit, credit cards shall be enabled for use only at ATMs and Point of Sale (PoS) devices within India
• If customers want to use their debit, credit cards outside India, they would need to request their banks for the facility.
• All banks, card issuing companies have been asked by RBI to disable online payment for all debit, credit cards that have never been used for online or for contactless transactions in India or abroad.
• People will now be able to register for preferences such as opt-in or opt-out services, spend limits and other services for online transactions, international transactions and contactless transactions.
• Users will have 24×7 access to switch ON/OFF or change all transaction limits via all available channels — mobile application / internet banking / ATMs / Interactive Voice Response (IVR).
• Many banks were issuing cards based on near field communication (NFC) technology. A merchant doesn’t need to swipe such cards or insert them in the point of sale terminal. These are also known as contactless cards. Card holders will also get the option to enable or disable the NFC feature also.
• Card holders on both debit and credit will have a new facility to set up transaction limit.

8. New health insurance rules to be implemented

IRDA on 11th June, 2020, issued the guidelines on Standardization of general terms and clauses in Health Insurance Policy Contracts. These guidelines will be applicable to all the health insurers who are providing indemnity-based health insurance [excluding Personal Accident (PA) and Domestic / Overseas Travel] products for individuals and groups on or after 1st October, 2020. IRDA provided guidelines on a number of situations such as:

• Situations where policy will be considered void
• Settlement of a Claim
• Multiple Policies
• Fraud in a Health Insurance Policy
• Cancellation of Policy
• Migrating and porting the policy
• Renewal of Policy
• Withdrawal of Policy
• Moratorium Period
• Payment of Premium in Instalments and so on.

9. Health insurance claim should be settled or rejected within 30 days from the date of receipt of last necessary document

• Health insurer shall settle or reject a claim, within 30 days from the date of receipt of last necessary document.
• In the case of delay in the payment of a claim, the Company shall be liable to pay interest to the policyholder from the date of receipt of last necessary document to the date of payment of claim at 2% above the bank rate (rate fixed by the RBI at the beginning of the financial year in which claim has fallen due).
• However, where the circumstances of a claim warrant an investigation in the opinion of the Company, it shall initiate and complete such investigation at the earliest, not later than 30 days from the date of receipt of last necessary document.
• In such cases, the Company shall settle or reject the claim within 45 days from the date of receipt of last necessary document.
• In case of delay beyond 45 days, the Company shall be liable to pay interest to the policyholder at 2% above the bank rate from the date of receipt of last necessary document to the date of payment of claim.

10. Cancellation of Health Insurance Policy to be done only after giving 15 days’ notice

• The policyholder may cancel the policy by giving 15 days written notice and in such an event, the Company shall refund premium for the unexpired policy period.
• No refunds of premium shall be made in respect of Cancellation where, any claim has been admitted or has been lodged or any benefit has been availed by the insured person under the policy.
• The Company may cancel the policy at any time on grounds of misrepresentation non-disclosure of material facts, fraud by the insured person by giving 15 days written notice.
• There would be no refund of premium on cancellation on grounds of misrepresentation, non-disclosure of material facts or fraud.

11. Health Insurance companies cannot reject a genuine claim after a policyholder pays premium for eight years

• After completion of 8 continuous years under the policy no look back is to be applied. This period of 8 years is called as moratorium period.
• The moratorium would be applicable for the sums insured of the first policy and subsequently completion of 8 continuous years would be applicable from date of enhancement of sums insured only on the enhanced limits.
• The moratorium would be applicable for the sums insured of the first policy and subsequently completion of 8 continuous years would be applicable from date of enhancement of sums insured only on the enhanced limits.
• The policies would however be subject to all limits, sub limits, co-payments, deductibles as per the policy contract.

12. Revised definition of Pre-Existing Disease

The definition of “Pre-Existing Disease” at Clause 33 of Chapter I under Section 1 of the Master Circular on Standardization of Health Insurance Products was rectified. Pre-existing Disease means any condition, ailment, injury or disease:

• That is/are diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement or
• For which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement.

All existing health insurance products that are not in compliance with this definition shall not be offered and promoted from 1st October, 2020 onwards

13. Premium on health insurances can be paid in instalments

Insured person can opt for Payment of Premium on an instalment basis i.e. Half Yearly, Quarterly or Monthly, as mentioned in the policy Schedule/Certificate of Insurance, and the following Conditions shall apply:

• Grace Period (specified by Insurer as per product design) would be given to pay the instalment premium due for the policy.
• During such grace period, coverage will not be available from the due date of instalment premium till the date of receipt of premium by Company.
• The insured person will get the accrued continuity benefit in respect of the “Waiting Periods”, “Specific Waiting Periods” in the event of payment of premium within the stipulated grace Period.
• No interest will be charged If the instalment premium is not paid on due date.
• In case of instalment premium due not received within the grace period, the policy will get cancelled.
• In the event of a claim, all subsequent premium instalments shall immediately become due and payable.
• The company has the right to recover and deduct all the pending installments from the claim amount due under the policy.

14. No physical verification of documents by traffic official is required, Soft copy of the documents is permitted.

• Some major changes were made to the Motor Vehicle Act, 1989 which came in effect from October 1, 2020. As per the new rules, one will be able to save your documents on mobile. These will prevent individuals from carrying the baggage of physical documents unnecessarily. Now, one can present their soft copies of their driving license or other related documents, when the same are asked for.
• As there will be no physical verification of vehicular documents. If traffic official needs to revoke the driving license, it would be done through a portal, which will get updated consecutively.
• As per the official notification, the behaviour of the driver would be observed and the police officer’s identity will also be updated in the portal. Every time a driver or vehicle is inspected, the records would be updated on the portal.
• Driving license and other documents like registration certificate, etc can be saved online on governments’ Digi-locker or m-parivahan.

15. Mobile Phones are to be used only for route navigation

According to the amendments made in the Motor Vehicles Rules 1989 by the Ministry of Road Transport and Highways any handheld communications devices like smartphones can be used for route navigation, by making sure the driver’s concentration is intact while driving.

16. Fine under the Motor Vehicle Act, 1989 to be issued through e-challan

• Those caught violating the traffic rules will be fined under the Motor Vehicle Act, 1989. This will prevent the vehicle from repeated checking easing the traffic on the road.
• The e-challan will be issued through the digital portal of the government to those found breaking the traffic rules.
• After the driving licence is cancelled, offender will have to report on the digital portal.

17. Sweet shops to display ‘Best before Date’

• The Food Safety and Standards Authority of India (FSSAI) issued an order that from 1st October, 2020, food business operators (FBOs) should decide and display the ‘best before date’ of sweets on the container or tray of non-packaged or loose sweets depending upon the nature of the product and local conditions.
• Food safety commissioners of states have been asked to ensure compliance to these directions, the order added.

18. Mixing of other edible oils with mustard oil is banned

Consumers will now get only pure mustard oil as the Central government has banned the mixing of any other edible oil with mustard oil. The ban imposed by the Food Safety and Standards Authority of India (FSSAI) came into force from 1st October 2020. By this decision, consumers will get only pure mustard oil while by increasing the consumption of mustard farmers will get a fair price for their produce which will encourage them to go in for mustard farming.

19. LPG connection will not be free

• Under the Pradhan Mantri Ujjwala Yojana (PMUY), the process of availing a gas connection for free came to an end on 30th September, 2020.
• The Union government had in March announced three 14.2-kg LPG cylinders free of cost to about 8 crore Ujjwala beneficiaries from April to June to help them cope with the economic pain due to the COVID-19 pandemic.

20. Buying TV’s will become costlier

• As part of ‘Atmanirbhar Bharat’ the government is determined to expand domestic production capacity for open cell panels so that imports can be restricted.
• Prices of television sets could go up from October 2020 as the 5% import duty concession, which was offered last year, on open cell panels ended on 30th September, 2020.
• Now open-cell panels will attract 5% import duty.