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News Direct Tax-Income Tax

  • Jul 12, 2018
  • HSBC Geneva a/c case: ITAT sends back case involving NRI for further investigation

    The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has sought further investigation into one of the cases linked to HSBC’s Geneva branch involving a US-based NRI, Rahul Rajnikant Parikh. A list of people of Indian origin having bank accounts in Geneva was handed to India by France in 2011. More than 1,000 deposit holders of Indian origin in HSBC’s Geneva branch are under the scanner of tax and other investigating agencies for holding black money.

  • Jul 10, 2018
  • I-T dept sells part of Cairn Energy's shares in Vedanta to recover tax dues

    The Income Tax department has sold a portion of Cairn Energy’s shares in Vedanta Ltd in a bid to recover some of the tax dues. In a statement to the exchanges, Cairn Energy said, “Cairn has now been notified by the IITD (Indian Income Tax Department) that it has sold part of Cairn’s shareholding in VL (Vedanta Ltd), realising and seizing proceeds of $216 million. Following this sale, Cairn’s retained holding in VL is now approximately 3 per cent. It is possible that the IITD may make further sales.”

  • Jul 05, 2018
  • I-T refunds worth Rs 70,000 crore issued, 99% claims processed: CBDT

    Income Tax refunds worth over Rs 70,000 crore have been issued to the taxpayers and nearly all refund claims pending as on June-end has been processed, the Central Board of Direct Taxes (CBDT) said today. The Income Tax Department had observed a dedicated fortnight from June 1-15, which was later extended to June 30 in certain regions, to expeditiously clear pending matters of appeal effect and rectification. More than 20,000 such matters were disposed of and refunds were issued to the taxpayers, wherever due.

  • Jul 05, 2018
  • I-T's record recovery of Rs 1 trn contributes 10% to direct tax collection

    The income tax (I-T) department made record recoveries of Rs 1 trillion in 2017-18, contributing 10 per cent to the total direct tax collection last financial year. In a first, the department resorted to a slew of coercive measures like selling assets, which resulted in 33 per cent growth in arrears and tax recovery, the highest-ever, according to I-T officials. In 2016-17, growth in recoveries was 10 per cent at around Rs 750 billion. Besides selling movable and immovable assets to make recoveries, taxmen filed prosecution cases against those not paying the demand.

  • Jul 05, 2018
  • IT companies to benefit from currency, lower visa applications in Q1

    The recent currency fluctuation is expected to show some positive gains for the IT sector in their first quarter (Q1FY19) results starting next week. The June quarter results of IT firms usually witness a strong impact of employee costs in the form of visas expenses as well as incremental wages. However, given the lower visa applications this year as well as a slowdown in hiring, these impacts won't be that evident this year, note analysts. The impact of visa issues might also manifest in hiring numbers for these companies.

  • Jun 30, 2018
  • Q1 numbers: PIT advance tax up 44%, indirect taxes up sharply

    The Centre’s fiscal deficit in April-May stood at 55.3% of Rs 6.24 lakh crore estimated for all of 2018-19, compared with 68.3% of the relevant annual estimate in the year-ago period, in what reflected a relative moderation in front-loading of revenue spending. Indirect tax receipts, a proxy of consumption in the economy, grew at robust 59% in the two-month period; however, huge corporate tax refunds led to a year-on-year decline in direct tax collections.Union minister Arun Jaitley wrote in a blog that “the first big news for this year is that the advance tax deposit during the first quarter of this year has seen a gross increase of 44% in the personal income tax category and 17% in the corporate tax category”.But the minister added that after repayment of refunds due to some excess tax paid in earlier years, usually paid back in the first quarter, the net advance tax amount would be somewhat less. “But if the same trend continues in the next three quarters, one expects a significant increase in the direct tax collection this year,” he wrote.

  • Jun 30, 2018
  • Jubilant Foods will have to pay 10% tax on royalty, says ITAT

    The Income Tax Appellate Tribunal (ITAT) has rejected tax officials’ demand of a 40 per cent tax on sales at Jubilant Foods stores, and instead allowed the chain to pay 10 per cent tax on royalty. Jubilant Foods runs the chain of Domino’s Pizza stores in India.The issue relates to permanent establishment (PE) of multinational corporations (MNCs) when these companies have a franchisee agreement with Indian players. The ITAT has turned down the revenue department’s appeal that Jubilant Foods constitutes a permanent establishment of US-based Domino’s Pizza .

  • Jun 30, 2018
  • Cos' directors to furnish personal mobile numbers for verification: Govt

    Directors at companies will soon be required to share their personal mobile numbers and e-mail ids with the government as part of verifying their credentials, amid continuing efforts to weed out bogus directorships.In a significant move, the corporate affairs ministry has decided to carry out KYC (Know Your Customer) process for all directors, including those who have been disqualified.A new electronic form is set to be introduced specifically for the directors through which all required details have to be submitted to the ministry, according to a communication.

  • Jun 30, 2018
  • Can’t levy local taxes on MNCs using franchises, rules Income Tax tribunal

    In what could bring relief to MNCs operating in the country using the franchise model, the Income Tax tribunal has ruled that such companies cannot be deemed to be located in India, meaning they don’t have a permanent establishment to be levied local tax rates. Giving its ruling in the case of Domino’s Pizza, the Mumbai bench of the Income Tax Appellate Tribunal held that the firm is a US-based company and cannot be subjected to Indian taxes.Permanent establishment, or PE, is a thumb rule used by the tax department while deciding whether a company can be taxed domestically and at what rate. The difference between tax rates for a domestic company and a foreign firm can be as much as 30%.

  • Jun 28, 2018
  • Govt to ask CAs to update information on directors during filing of annual results

    In its bid to crack down on shell companies, the Ministry of Corporate Affairs (MCA) will soon ask the company secretary and chartered accountant of the companies concerned to update the information related to their directors at the time of filing of annual results, a senior MCA official said.The information will include details such as passport, PAN number and contact details along with the physical address of directors.The official said the ministry is expecting more than 30 lakh companies and directors to register.Earlier this month, the task force on shell companies identified 2.25 lakh companies as shell firms. These companies are being struck off under section 248 of the Companies Act 2013 for not filing financial statements for 2015-16 and 2016-17.The Registrar of Companies is in the middle of issuing notices to these entities, and if they fail to file returns over the next few months, they may get de-registered.

  • Jun 28, 2018
  • India finally brings clarity on income tax computation for foreign firms

    The government has notified rules for computation of income tax for foreign companies if they have place of effective management in the country. According to tax experts, it brings clarity on various aspects of the new place of effective management (POEM) regime.Central Board of Direct Taxes (CBDT) has notified a mechanism for calculation of written-down value, and computation of brought-forward loss and unabsorbed depreciation.It has said a company would continue to be treated as a foreign company even after it becomes resident in India."The notification has provided clarity to the foreign companies which shall be considered as a resident in India owing to its POEM being in India,” said Rakesh Nangia, managing partner at tax consultancyNSE 0.00 % Nangia Advisors LLP. “It provides guidance in case any conflict arises in the application of provisions of the Act to such foreign company qualifying as a resident company vis-à-vis a domestic resident company,” he said.

  • Jun 27, 2018
  • Say goodbye to share certificates, you have time till December to go demat

    The mouse that had quietly entered the Mumbai bull-ring more than two decades ago has taken about a quarter of a century to put the paper scrip finally out of business.About 2.3 per cent of India’s $2-trillionplus market capitalisation is still held in the form of physical stock even more than two decades after Mumbai exchanges went online. Holders of these shares in listed companies now face a December deadline to convert them into dematerialised form if they have to transfer or sell them.The Listing Obligations and Disclosure Requirements (LODR), which the market regulator tweaked earlier this month, have made the conversion mandatory for all classes of investors. Many investors, especially senior citizens, still hold shares in physical form.

  • Jun 27, 2018
  • GST provisions on TDS/TCS, reverse charge mechanism deferred by 3 months till September

    The revenue department has decided to keep in abeyance GST provisions relating to reverse charge mechanism, tax deducted at source (TDS) and tax collected at source (TCS) for another three months till September-end. The GST Council in its meeting on March 10 had suspended the provision for deduction of TDS and collection of TCS, as well as the implementation of the reverse charge mechanism (RCM) till June 30.A senior revenue official said the GST Implementation Committee (GIC), headed by the Revenue Secretary, has decided to keep in abeyance the TDS/TCS provision and GST by way of RCM by another three months. “The GIC has decided to postpone by three months the TDS/TCS and RCM provisions. Notification will be issued shortly. The GIC decision has been circulated to the states for issue simultaneous notification, the official told PTI.

  • Jun 26, 2018
  • Benami properties of Rs 43 bn attached; Jaipur and Mumbai top the list

    The income-tax (I-T) department has attached over 1,500 unaccounted properties worth Rs 43 billion across the country within one and a half years of the introduction of the revised benami legislation. Jaipur and Mumbai top the list, with attachments of 200 properties each.Patna has seen the least number of attachments at 30, followed by Lucknow at 50, while in Kolkata, Chandigarh, and Hyderabad, 144, 110, and 100 properties got attached, respectively, says a finance ministry official. “The I-T department has worked swiftly in identifying benamitransactions since the enactment of the revised legislation. Over 1,500 properties have been attached so far. Many are on the radar.

  • Jun 18, 2018
  • Cost inflation index FY 2018-19 used for LTCG calculation notified by government

    The Finance Ministry has notified 280 as the cost inflation index (CII) number for FY 2018-19. This CII number is important as it will be used to compute inflation adjusted long-term capital gains (LTCG) on assets such as house, gold, debt mutual funds etc. accrued in FY 2018-19 and consequently impacts the amount of tax payable on them. Tax on such LTCG is calculated at the rate of 20 percent of the gain after indexation.The notification for the CII for FY 2018-19 is dated 5 June, 2018.CII number is used to compute the inflation-adjusted purchase cost of an asset in order to calculate LTCG on it when it is sold. Therefore, it is important to save these numbers as you will require them while calculating LTCG for assets you will sell in FY 2018-19.

  • Jun 14, 2018
  • Taxpayers' appeals in ITAT must mention amount locked up in dispute

    Income tax payers filing appeals before ITAT will have to provide information relating to the amount locked up in dispute along with a brief case history and the relief claimed. The Income Tax Department today came out with a draft notification saying it is amending Form 36, 36A and Rule 47 under the I-T Act to seek information about pending disputes with a view to reframing its litigation policy.

  • May 30, 2018
  • Income-tax appeal limits may be raised to cut litigation

    In a move that will lead to more concentrated efforts in resolving tax litigation involving around Rs 5 trillion, the Central Board of Direct Taxes (CBDT) is planning to increase the threshold for filing appeals by income-tax (IT) authorities. The CBDT is planning to increase the limit for appeals to the Income Tax Appellate Tribunal (ITAT) from Rs 1 million to Rs 2 million. It also plans to increase limits for filing income-tax appeals in high courts and the Supreme Court from the current Rs 2 million and 2.5 million, respectively.

  • May 29, 2018
  • I-T department bars CAs from valuing shares of closely held firms

    The income tax (I-T) has barred all chartered accountants (CAs) from valuing shares of closely-held companies. Earlier, the fair market value of unlisted equity shares was calculated at the option of the company on either the book value on the valuation date or by the discounted cash flow method. Calculated by a merchant banker or a CA. However, the Central Board of Direct Taxes has removed the CAs from the list of authorised professionals in this regard. From Thursday, only a merchant banker may do this.

  • May 26, 2018
  • Acute staff crunch at tax department threatens to delay APA process

    India put in place the regime of advance pricing agreements (APAs) — which allows setting the prices of cross-border transactions (transfer pricing) in advance — in 2012 and it has since been touted as a runaway success. But an acute staff crunch with the tax department is threatening to spoil the party. While as many as 220 APAs, including 20 bilateral pacts, between the tax departments have been signed so far, over 500 applications are remaining unresolved as there is not enough personnel to evaluate them. “We are concerned about the paucity of manpower and have communicated the same to the board (CBDT). But it is not easy to get the right personnel for a very niche field,” a senior tax department official said, on condition of anonymity.

  • May 26, 2018
  • All 7 ITR forms released for e-filing: Income Tax department

    The Income Tax Department on Saturday launched and activated all the seven ITR forms for e-filing by taxpayers, after more than a month of them being notified. The Central Board of Direct Taxes had notified the new Income Tax Return forms for the assessment year 2018-19 on April 5. "All ITRs for AY 2018-19 are now available for e-filing," the department said in a statement. The tax department has launched the ITR forms gradually since April 5 as the taxpayers have been looking forward to file their returns before the stipulated deadline of July 31.