On January 17, 2020, the Ministry of Health and Family Welfare acknowledged the emergence of COVID-19 pandemic that was spreading across China.  Tamil Nadu reported its first confirmed case of COVID-19 on March 7, 2020.   As of April 28, the state has 1,937 confirmed cases of COVID-19 (seventh highest in the country).  Of these, 1,101 have recovered (third highest rate of recovery in the country among states with 100 or more cases) and 24 have died.  The state government has taken several actions to contain the spread and impact of COVID-19.  In this blog, we look at the key measures taken by the Tamil Nadu government between January 19 and April 28, 2020. 

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Initial phase

The Tamil Nadu government came out with a series of responses between January 19 and February 1.  These included: (i) readying Rapid Response Teams (RRTs) at state and district levels, (ii) setting up of a 24/7 control room, (iii) thermal scanning of air travellers from China, (iv) creating isolation wards in the General Hospitals of four major cities, and (v) running appropriate awareness campaigns. 

Some of the other early measures are summarised below:

Health measures

  • On March 13, the Governor declared COVID-19 to be a notified disease in the state of Tamil Nadu, under the Tamil Nadu Public Health Act, 1939.  Notifying a disease allows for incidences of the disease to be mandatorily reported to the government and in turn, helps authorities to respond with appropriate measures to prevent the spread of the disease. 

  • On March 15, the government prescribed the Tamil Nadu COVID-19 Regulations, 2020.  These regulations detail the responsibilities of hospitals and individuals, and the powers of officials in relation to the diagnosis, treatment, and containment of COVID-19. These include (i) creation of isolation wards in hospitals, (ii) containment measures in an area once positive cases are detected, and (iii) mandatory 14-day home isolation for asymptomatic air travellers from COVID-19 affected countries.

  • On March 15, the government also mandated a 14-day institutional isolation for all air travellers to prevent import of infections from other states.  The state also initiated setting up of testing camps and conducting disinfectation drives in the border districts. 

Travel and Movement

  • On March 15, the government notified a series of instructions that restricted the movement of people in the state.  These include (i) shutting down of establishments, such as, educational institutions (up to Class 5), theatres, malls etc, and (ii) banning of inter-state travel for 15 days. 

  • On March 16, the government announced additional restrictions till Mar 31, such as, closure of: (i) anganwadis and making alternate provision of dry ration for children at their homes, (ii) swimming pools, amusement parks, gyms, zoos, museums, bars, clubs etc, and (iii) all educational institutions, except the conduct of practical exams for class 10 and 12, and various entrance exams.  

  • State borders were sealed off for road traffic, except for movement of essential commodities, from March 20 to March 31.  Public transportation services, such as metro rail and inter-state private buses, were also suspended till March 31. 

  • The Prime Minister asked the country to observe a Janta Curfew from 7 am to 9 pm on March 22,. The state government further extended this curfew to 5 am on March 23.  Following this, the government immediately announced a state-wide lockdown from March 24 up to April 1. 

  • On April 5, the government issued an advisory for the quarantine of migrant workers and the conduct of health camps for them. 

Welfare Measures

  • On March 15, the government announced financial assistance of a total of Rs 60 crore to various departments, such as, health, transport etc, to take precautionary measures to combat COVID-19.

  • On March 24, the government announced the distribution of cash support of Rs 1,000 to all entitled family cardholders.  Further, they were also eligible for free supply of essential commodities such as rice, dal, sugar, etc, during the month of April, through the Public Distribution System (PDS). 

During the lockdown

A state-wide lockdown was announced from March 24 to April 1, followed by a nation-wide lockdown between March 25 and April 14.  On April 13, the state-wide lockdown was extended up to April 30. This was followed by the extension of the nation-wide lockdown from April 15 to May 3. Under this, certain activities could be resumed after April 20. 

Some of the key measures undertaken during the lockdown period are: 

Travel and movement

  • Amidst the lockdown, on March 25, the government notified that establishments providing essential goods and services, which were allowed to operate.  These included establishments such as  (i) police forces, (ii) treasury, (iii) public utilities, (iv) banks, (v) media, (vi) telecommunications, and (vii) shops dealing with food, groceries etc.  Further, on March 28, the government permitted a few agriculture-related establishments to operate, such as, Mandis, fertiliser shops, and agencies involved in procurement of agriculture products. 

  • An Expert Committee formed by the state government to formulate guidelines for phased exit from lockdown after April 20, recommended the extension of the lockdown till May 3.  Certain select activities were, however, permitted to resume operations from April 20 onwards. These include (i) MNREGA works related to irrigation and water conservation, (ii) rural construction projects on irrigation, dam safety, hospital buildings, roads and bridges, and (iii) state and central government offices at one-third capacity.  

  • In view of rising number of cases, on April 24, stringent curfew orders were passed in the districts of (i) Chengalpattu, (ii) Kancheepuram, and (iii) Thiruvallur. The curfew will be imposed between April 26 and April 29, from 6 am to 9 pm, and with more stringent restrictions than under the ongoing nation-wide lockdown, such as, (i) petrol bunks to operate only between 8 am and 12 noon, and (ii) supermarkets and shops to remain shut. 

  • Curfew orders were passed in 5 more districts.  In Chennai, Coimbatore and Madurai, curfew is imposed between 6 am and 9 pm from April 26 to April 29.  In Salem and Tiruppur, curfew was imposed from April 26 to April 28. 

Welfare Measures

  • On March 30,   the government announced a cash assistance of Rs 1,500 per month to be credited into the bank accounts of differently-abled persons.  It also announced that transgenders without ration cards, were eligible to receive 12kg of rice, 1kg of dal, and 1 litre of cooking oil, from fair price shops (FPS).

  • On April 2, the government announced a concession package to manufacturers of COVID-19 related medical equipment, who will commence production before July 31, 2020. The package applied to both MSMEs and large manufacturers of equipment, such as, ventilators, Personal Protection Equipment (PPE) kits and medicines.  Some of the concessions include: (i) 30% capital subsidy, upto Rs 20 crore, (ii) 100% stamp duty waiver, (iii) 6% interest subvention for capital loans for two quarters, (iv) commencement of manufacturing without prior approval, and (v) provision of necessary land on priority basis for short-term/long-term leases, etc. 

  • Rs 50 lakh grant was announced to the families of frontline workers in the event of their unfortunate demise.  If infected by COVID-19, they are eligible for Rs 2 lakh assistance towards treatment costs.  In certain cases, if eligible, their kin would also receive a government job offer. 

  • On April 7, the government announced that MLALAD funds could be utilised for COVID-19 prevention and containment activities. A total of Rs 1.25 crore can be utilised towards prevention, containment, treatment, and purchase of medical equipment, PPEs etc.

Health Measures

  • On April 2, the government released a list of designated COVID-19 hospitals in the state. Instructions were issued to refer all COVID-19 positive cases exclusively to these designated hospitals. However, willing citizens were also permitted to approach private hospitals, at their own cost. Private hospitals were further instructed to establish dedicated fever clinics to cope with the increasing load of flu and fever cases.

  • Amidst a rise in the number of cases, on April 4, the government issued instructions to: (i) avoid all kinds of religious gatherings, (ii) hospitals to not show religious bias in treating patients, and (iii) doctors to coordinate with the government and check in on the mental health of quarantined patients via video conferencing facilities such as Skype.

  • On April 5, the government issued cluster containment measures to stop the transmission, morbidity, and mortality associated with the further spread of COVID-19. This was in response to the large number of imported infections from the attendees of the Nizamuddin conference in Delhi. 

  • Resource Management: On March 27, the Chief Minister announced an additional COVID-19 related recruitment of doctors and lab technicians. The recruited members were to join within three days of the notification. On April 25, an additional 1,323 nurses were also recruited.

  • A two-month extension was announced to the tenures of medical professionals retiring on March 31 and April 30.

  • The government also instructed District Authorities to ensure the protection of doctors and other hospital staff who are being forcefully evicted from their houses by landlords. As a measure to develop immunity against COVID-19, the government, on April 25, also recommended providing Zinc and Vitamin tablets, and herbal powder to all personnel on frontline duty in containment areas. 

Other Measures

  • Administrative: Eleven committees have been formed to coordinate implementation of various welfare programmes. In all districts, Crisis Management Committees have been formed under the district collector. 

  • Education: The conduct of semester examinations in universities and colleges is postponed to the beginning of the next academic year, as and when the institutions reopen. Private colleges and schools were also instructed to not compel students/parents to pay pending dues for 2019-20 or advance fees for 2020-21. 

  • Industry: On April 22, the government released a list of industries classified as continuous process industries. These are companies where the production lines are functioning 24/7. The list includes (i) refineries, (ii) large steel plants, (iii) large cement plants, (iv) sugar mills, (v) large paper mills, (vi) tyre manufacturers etc. 

  • Technology: The government launched a Whatsapp Chat Bot for providing latest information and guidance related to COVID-19 in both Tamil & English.

For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.

The draft Direct Taxes Code Bill seeks to consolidate and amend the law relating to all direct taxes and will replace the Income Tax Act, 1961.  The draft Bill, along with a discussion paper, was released for public comments in August 2009.[1] Following inputs received, the government proposed revisions to the draft Bill in June 2010. The table below summarises these revisions.  The government has not released the changes proposed in the form of a revised draft bill however, but as a new discussion paper.  The note is based on this discussion paper.[2] The Code had proposed a number changes in the current direct tax regime, such as a minimum alternate tax (MAT) on companies’ assets (currently imposed on book profits), and the taxation of certain types of personal savings at the time they are withdrawn by an investor.  Under the new amendments, some of these changes, such as MAT, have been reversed.  Personal savings in specified instruments (such as a public provident fund) will now continue to remain tax-free at all times.  The tax deduction on home loan interest payments, which was done away with by the Code, has now been restored. However, the discussion paper has not specified whether certain other changes proposed by the Code (such as a broadening of personal income tax slabs), will continue to apply.

Issue Income Tax Act, 1961 Draft Direct Taxes Code (August 09) Revisions Proposed (June 2010)
Minimum Alternate Tax (MAT) MAT currently imposed at 18% of profits declared by companies to shareholders. To be imposed on assets rather than profits of companies.  Tax rate proposed at 2% (0.25% for banks) MAT to be imposed on book profit as is the case currently.  Rate not specified.
Personal Saving / retirement benefits Certain personal savings, such as public provident funds, are not taxed at all. Such savings to be taxed at the time of withdrawal by the investor. Such savings to remain tax-exempt at all stages, as is the case currently.
Income from House Property Taxable rent is higher of actual rent or ‘reasonable’ rent set by municipality(less specified deductions). Rent is nil for one self-occupied property. Taxable rent is higher of actual rent or 6% of cost /value set by municipality (less specified deductions). Rent is nil for one self-occupied property. Taxable rent is no longer presumed to be 6% in case of non-let out property. Tax deductions allowed on interest on loans taken to fund such property.
Interest on Home loans Interest on home loans is tax deductible Tax deductions on home loan interest not allowed. Tax deductions for interest on loans allowed, as is currently the case.
Capital Gains Long term and short term gains taxed at different rates. Distinction between long and short term capital gains removed and taxed at the applicable rate; Securities Transaction Tax done away with. Equity shares/mutual funds held for more than a year to be taxed at an applicable rate, after deduction of specified percentage of capital gains. No deductions allowed for investment assets held for less than a year. Securities Transaction tax to be ‘calibrated’ based on new regime. Income on securities trading of FIIs to be classified as capital gains and not business income.
Non-profit Organisations Applies to organizations set up for ‘charitable purposes’. Taxed (at 15% of surplus) only if expenditure is less than 85% of income. To apply to organizations carrying on ‘permitted welfare activities’. To be taxed at 15% of  income which remains unspent at the end of the year.  This surplus is to be calculated on the basis of cash accounting principles. Definition of ‘charitable purpose’ to be retained, as is the case currently. Exemption limit to be given and surplus in excess of this will be taxed.  Up to 15% of surplus / 10% of gross receipts can be carried forward; to be used within 3 years.
Units in Special Economic Zones Tax breaks allowed for developers of Special Economic Zones and units in such zones. Tax breaks to be done away with; developers currently availing of such benefits allowed to enjoy benefits for the term promised (‘grandfathering’). Grandfathering of exemptions allowed for units in SEZs as well as developers.
Non-resident Companies Companies are residents if they are Indian companies or are controlled and managed wholly out of India. Companies are resident if their place of control and management is situated wholly or partly in India, at any time in the year.  The Bill does not define ‘partly’ Companies are resident if ‘place of effective management’ is in India i.e. place where board make their decisions/ where officers or executives perform their functions.
Double Taxation Avoidance Agreements In case of conflict between provisions of the Act, and those in a tax agreement with another country, provisions which are more beneficial to the taxpayer shall apply The provision which comes into force at a later date shall prevail.  Thus provisions of the Code would override those of existing tax agreements. Provisions which more beneficial shall apply, as is the case currently.  However, tax agreements will not prevail if anti-avoidance rule is used, or in case of certain provisions which apply to foreign companies.
General Anti-Avoidance Rule No provision Commissioner of Income Tax can declare any arrangement by a taxpayer as ‘impermissible’, if in his judgement, its main purpose was to have obtained a tax benefit. CBDT to issue guidelines as to when GAAR can be invoked; GAAR to be invoked only in cases of tax avoidance beyond a specified limit; disputes can be taken to Dispute Resolution Panel.
Wealth Tax Charged at 1% of net wealth above Rs 15 lakh To be charged at 0.25% on net wealth above Rs 50 crore; scope of taxable wealth widened to cover financial assets. Wealth tax to be levied ‘broadly on same lines’ as Wealth Tax Act, 1957. Specified unproductive assets to be subject to wealth tax; nonprofit organizations to be exempt.  Tax rate and exemption limit not specified.
Source: Income Tax Act, 1961, Draft Direct Taxes Code Bill (August 2009), New Discussion Paper (June 2010), PRS

[1] See PRS Legislative Brief on Draft Direct Taxes Code (version of August 2009) at  http://prsindia.org/index.php?name=Sections&id=6 [2] Available at http://finmin.nic.in/Dtcode/index.html