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News Direct Tax-Income Tax

  • Oct 19, 2019
  • Bombay High Court directs tax department to refund Rs 788.39 crore to Vodafone-Idea

    The Bombay High Court has directed the income tax department to refund Rs 788.39 crore to Vodafone Idea Ltd. (VIL) within three weeks, bringing some relief to the loss-making telecom operator which has also sought the government’s help to ease its financial stress. The refund order – more than Rs 630 crore due to Vodafone India and over Rs 150 crore to Idea Cellular – was issued by the court last week. The tussle between the telco – formed following the August 2018 merger of Vodafone Idea and Idea Cellular – and the IT department erupted from the assessment order for 2017-2018 financial year, when the two companies together suffered losses of more than Rs 6,600 crore. The IT department had held back the refund on the grounds that they had declared income of nearly Rs 287 crore during the assessment year 2016-2017 but incurred a big loss the next year, and therefore their returns for 2017-2018 should be investigated.

  • Oct 17, 2019
  • Tax department issues ITR scrutiny notices. Here’s what to expect and how to file a reply

    A little more than 58,000 taxpayers, who filed their income tax returns (ITR) for financial year (FY) 2017-18, have been served notices of scrutiny. The income tax department has selected 58,322 cases for scrutiny, under the first phase, under the e-Assessment Scheme 2019 for income tax returns (ITR) filed for FY18 or assessment year (AY) 2018-19. The e-notices were served before 30 September 2019.

  • Oct 14, 2019
  • Foreign companies may be protected from retro changes

    After cutting corporate tax rates, India is now examining if it can provide some assurance to foreign investors that there will be no retrospective policy action. It is also proposing to create a special mechanism under which investors looking to set up a base in the country would be handheld till the stage of groundbreaking. "Most foreign investors are wary of any retrospective policy change … This issue is under serious consideration as a part of the policy to promote investments," said Guruprasad Mohapatra, the secretary at the Department of Promotion of Industry and Internal Trade.

  • Oct 12, 2019
  • Number of income tax payers jumps 13.8% to 84.5 million

    The number of income tax payers rose to 84.5 million in the 2018-19 assessment year, a jump of 13.8% from the previous year in line with double-digit growth in tax receipts and the number of returns filed, official data showed on Friday. Data also showed that since the roll-out of the goods and services tax (GST) in 2017, the share of income tax in the central government’s total tax receipts has also gone up.

  • Oct 11, 2019
  • OECD proposal: Global tech firms’ tax liability here may rise

    The basic framework to tax digital companies as released by Organisation for Economic Co-operation and Development (OECD) could potentially bring companies like Google, Facebook and Netflix among others under larger tax liabilities than what they currently pay in jurisdictions like India. The proposal would be finalised by end of next year with formulae to calculate allocation of profits and corresponding taxing rights to countries and jurisdictions. An internal document of the tax department had earlier proposed a line similar to the new ‘unified approach’ laid out in OECD’s consultation documents by seeking to establish nexus rule for companies which would not be defined by mere physical presence. Instead, the department said, the tax liability for such digital firms in India would arise once they breach a certain revenue threshold from consumers here. This would be applicable to highly digitalised businesses and consumer facing businesses, both business to business (B2B) and business to consumer (B2C).

  • Oct 10, 2019
  • Govts may get more power to tax MNCs like Google, Facebook

    Countries around the world, including India, will get more power to tax big multinationals such as Google, Apple and Facebook doing business within their borders under a proposed overhaul of decades-old rules. The Organisation for Economic Co-operation and Development (OECD) has proposed to expand government rights to tax multinationals, especially big internet firms, by releasing a methodology for such taxation.

  • Oct 09, 2019
  • India Gets First Tranche of Swiss Account Details, Will Help Govt Uncover Black Money

    India has received the first tranche of details about financial accounts of its citizens in Swiss banks under a new automatic exchange of information framework between the two countries. The sharing of the data that was prepared by all Switzerland-based banks under a direction from the Swiss government marks a significant milestone in the fight against black money suspected to be stashed abroad. India figures among 75 countries with which Switzerland's Federal Tax Administration (FTA) has exchanged information on financial accounts within the framework of global standards on AEOI, an FTA spokesperson told news agency PTI.

  • Oct 09, 2019
  • Income tax: National e-assessment centre launched

    With the launch of National e-Assessment Centre (NeAC) on Monday, the income-tax department would undertake the first phase of faceless assessment from Tuesday. The scheme is expected to result in better quality of assessment orders while reducing potential harassment to taxpayers. In the first phase, the income tax department has selected 58,322 cases for scrutiny, for which e-notices have been served before September 30, belonging to cases of Assessment Year 2018-19, the department said in a statement.

  • Oct 05, 2019
  • Companies strategise to avail MAT credit, benefit from lower corporate tax

    Many conglomerates and companies are looking to create strategies and structures around utilising unused Minimum Alternate Tax (MAT) credit lying on their books and also availing lower corporate tax rates, even when the government recently said they could do only one of the two. Some of the largest companies that have thousands of crores lying on their balance sheets in the form of unused MAT credit are looking to go for setting up new companies, demerging current ones or exploring to go for a slump sale. These companies basically want to utilise the MAT credit but also not let go of lower tax rates, said industry insiders. For many companies MAT credit is as high as Rs 1,500 crore. MAT credit is something similar to advance taxes paid and could be set off against future tax liabilities arising for the company.

  • Oct 04, 2019
  • MAT credit not available to companies opting for lower corporate tax rate

    Companies looking to switch to the just-lowered 22% corporate tax rate without exemptions, will not be able use accumulated credit of minimum alternate tax. The Central Board of Direct Taxes (CBDT) has issued a detailed circular that MAT credit will not be available to a company that opts for lower corporate tax rate of 22%. However, companies will have the option to go for the new regime after completely utilising MAT credit. ET on Monday reported about CBDT clarifying that MAT credit will not be allowed. “...Tax credit of MAT paid by the domestic company exercising the option under Section 115BAA of the Act shall not be available consequent to exercising of such option,” said Wednesday’s circular. Brought forward loss on account of additional depreciation shall also not be available to companies. Finance minister Nirmala Sitharaman had on September 20 slashed the corporate tax rate to 22% without exemptions or incentives from current 30% offering a Rs.1.45 lakh crore boost to the economy, which grew by its slowest pace in six years in April-June, 2019-20 at 5%.

  • Oct 04, 2019
  • I-T dept has to quote DIN to taxpayer

    The Central Board of Direct Taxes (CBDT) has launched a computer-generated documentation identification number (DIN) system which provides for a transparent and recorded communication between the income tax department and taxpayers. A DIN will be mandatory for every type of communication with the income tax department, be it a notice, a letter, an order and summon, or any other correspondence. Without it, the document and communication will be deemed invalid, said a CBDT statement. “From now onwards (October 1), every CBDT communication will be required to have a documentation identification number. The system would ensure greater accountability and transparency in tax administration,” finance minister Nirmala Sitharaman had tweeted. On Tuesday, the first day of operation, 17,500 DINs were issued, the statement said. Revenue secretary Ajay Bhushan Pandey said, “Any communication from income tax department without a computer-generated DIN will be invalid.”

  • Oct 03, 2019
  • Corporate tax cuts: No MAT credit under new regime

    A sizeable cross-section of Corporate India will likely opt out of the regime of 22% headline tax rate, as the government on Wednesday made it clear that those switching to the new dispensation can’t avail of their accumulated minimum alternate tax (MAT) credit. Companies taking MAT credits as assets will have to now write these off and take a big hit on profits if they adopt the new regime, negating the recent tax cuts’ purpose of boosting the cash flows of firms and encouraging them to invest. According to tax experts, the companies to be hit by the latest Central Board of Direct Taxes (CBDT) circular are the ones whose effective tax rates have risen in recent years, with their exemptions and incentives being phased out. These firms, including those in power, oil & gas, mining and pharmaceutical industries, used to pay MAT but over the last 2-3 years have moved to the marginal tax, with removal of tax reliefs. However, they still have huge amounts of accumulated MAT credits which can be used to mitigate the tax outgo. The denial of MAT credit for the new regime would mean the earlier dispensation would be more attractive for them.

  • Oct 03, 2019
  • CBDT starts sending communication via DIN

    The Central Board of Direct Taxes (CBDT) would now communicate with taxpayers using the unique document identification number (DIN), which is expected to bring transparency and accountability to the process as such correspondence would leave an identifiable trail, the government said. On the first day of the mandatory use of DIN on October 1, the income tax department generated 17,500 DIN-compliant notices, letters, orders, summons and other correspondence. “From now onward, every CBDT communication will be required to have a documentation identification number. The system would ensure greater accountability and transparency in tax administration,” finance minister Nirmala Sitharaman said in a tweet.

  • Sep 28, 2019
  • Income tax: Faceless assessment not mandatory for users without e filing account/PAN

    The income-tax department will start faceless assessment from October 8, 2019 but it won’t be mandatory for taxpayers who don’t have an e-filing account or a PAN, a directive from the Central Board of Direct Taxes (CBDT) issued on Thursday stated. Further, in cases where the department has conducted raids and instances categorised under ‘extraordinary circumstances’ will also not be covered under the e-assessment system. Additionally, e-assessment will also not be necessary in cases which involve administrative difficulties, or have certain extraordinary circumstances and these will be exceptions for the new system, the circular said. Naveen Wadhwa, DGM at Taxmann said, “Every year income-tax department prescribes guidelines to be followed by the assessing officers for conducting e-assessment through e-filing portal. For the financial year 2019-20, similar guidelines have been issued.

  • Sep 28, 2019
  • Operation Clean Money: CBDT extends deadline to December 31

    In view of lakhs of individuals and companies who have made suspicious cash deposits during the demonetisation, but have not yet complied with the Income Tax Department notices, the Central Board of Direct Taxes (CBDT) has once again extended deadline of Operation Clean Money (OCM) to December 31, so that the IT officers get more time to investigate the cases and complete the tax assessment process. The previous deadline was September 30. A senior IT official said that the CBDT is again forced to extend the deadline due to the non-compliance to the notices by taxpayers.

  • Sep 26, 2019
  • 400,000 taxpayers to face scrutiny under new e-assessment system

    The income-tax (I-T) department has identified about 400,000 taxpayers who will face scrutiny under the new faceless assessment scheme. Notices were being served to a little over 100,000 assesses, seeking explanation on the returns filed within 15 days, said an official privy to the development. However, about 10,000 such letters were undelivered and, in some cases, bounced back. The deadline of sending scrutiny letters ends on September 30. The tax department is learnt to have finalised computer-assisted scrutiny selection (CASS) cycle for the current year and has selected about 100 parameters to scrutinise returns under the new system.

  • Sep 25, 2019
  • Direct tax growth just a third of target

    Against a full-year growth target of 17.4% for direct tax collections, the mop-up (net of refunds) between April 1, 2019, and September 17, 2019, this fiscal has come in at Rs 4.5 lakh crore, just about 6% higher than collections in the same period a year ago, sources said. Refunds amounting to Rs 1 lakh crore have been disbursed during this period, which is about the same as last year. The total advance tax collected during this period stood at Rs 2.2 lakh crore which is 7.3% more than the year-ago period. During the same period last year, the advance tax collection had grown by 18%. Corporate assessees and certain categories of individual taxpayers are required to pay 45% of advance tax by September 15, which is the second of the four instalments in a year. Advance tax paid by corporate taxpayers is nearly six times that of other categories.

  • Sep 25, 2019
  • Infra companies, SEZ units unclear on use of MAT credits

    Infrastructure companies and businesses operating in special economic zones are unclear whether to migrate to the new regime of lower corporate tax. There is confusion whether — and, to what extent — these companies can use the accumulated credit on account of minimum alternate tax (MAT) paid by them when their tax holiday comes to an end or when they choose to opt for the new, reduced tax regime. While the ordinance enacting the lower tax does not ban companies from availing MAT credit will be allowed under the present law. The government, feel senior tax professionals, should clear the fog by amending the law.

  • Sep 25, 2019
  • Talks on to extend SEZ sunset clause

    After slashing corporate tax, India is re-looking at the special economic zones framework to make it more attractive for investors. Commerce and revenue departments have initiated discussions on extending the sunset clause for the scheme that ends March 31, 2020, two government officials familiar with the deliberations told ET. “Discussions are on various aspects of the special economic zones,” said one of the officials quoted above. The government cut minimum alternate tax to 15% from 18.5% and slashed corporate tax rate to 22% from 30% last Friday as part of the Rs 1.45 lakh crore mega stimulus package to pump prime growth that touched a six year low at 5% in first quarter.

  • Sep 24, 2019
  • Income tax relief: Govt shelves big cuts due to huge revenue impact

    Last week’s corporate tax cuts involving annual revenue loss of Rs 1.45 lakh crore among the Centre and state governments have almost nullified the chances of an overhaul of the personal income tax (PIT) structure, as recommended by the tax force on Direct Taxes Code (DTC) in the current fiscal. According to a person with direct knowledge of what the task force has advocated, the recommended changes on the PIT front would require governments to forgo a similar amount of revenue in a year as the recent tax breaks for Corporate India do. The person added that the tax force reckoned that the loss of the revenue from its PIT reliefs could be made up for in three years by the resultant improvement in compliance.

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