The income tax (I-T) department has introduced a crucial functionality on its website allowing taxpayers to discard their previously filed but unverified Income Tax Returns (ITR). Earlier, taxpayers were allowed to revise the ITR only in case of error or omission.

“The income tax portal has introduced a new feature that enables users to ‘Discard ITR’ for unverified original, belated, or revised ITRs starting from the assessment year 2023-24. It is a good move by the income tax department as it will increase the scope for taxpayers for revision of their income tax return, which was earlier limited to omission and error. However, so far there is no provision in law for discarding the ITR hence going forward its legal validity can be questioned,” said Tarun Kumar Madaan, Tax Head at Coherent Advisors.

On the 25th September 2023, the Central Board of Direct Taxes (CBDT) released Notification No. 81/2023, which brings amendments to Rule 11UA. This rule outlines the procedures for evaluating investments made by both resident and non-resident investors in closely held companies (e.g., start-ups). This valuation process plays a crucial role in deciding whether Angel Tax will be applicable to these start-ups. Prior to this release, the board had issued a preliminary draft of the rule and sought feedback and comments from stakeholders and the general public.

India has joined 125 countries to vote in favour of a resolution calling for a 'UN tax convention' that would transform the global tax stratosphere.
Tax experts in India and global think tanks view it as a historic move that will shift the reins of decision making from OECD, whose 38 members are dominated by rich countries, to a more equitable platform.

What disclosure requirements are required to be made by Indian investors at the time of furnishing of tax return where investments are made in foreign stocks? And, what are the relevant consequences if such disclosure requirements are not fulfilled?

Answer by Dr Suresh Surana, Founder, RSM India: Every Indian resident (and ordinarily resident) taxpayer who owns or has a beneficial interest in assets abroad or derives income from foreign sources is required to disclose in Schedule FA details of such foreign assets or accounts held or foreign income derived at any time during the relevant calendar year period.

A survey conducted by the Confederation of Indian Industry (CII) revealed that 89 percent of individuals and 88 percent of firms were of the view that there has been a significant reduction in the waiting time to get an income tax refund in the last five years, between 2018-2023.

The survey was conducted in October 2023 among 3531 respondents out of which 56.4 percent were individual respondents and 43.6 percent were firms/enterprise/organisation-level respondents. The survey was conducted at the pan-India level where maximum participation came from the major states.

Responding to a bunch of writ petitions, for the financial years 2015-16 and 2016-17, the Delhi high court has recently held that the extended period of ten years, for re-opening of Income-tax (I-T) assessments should be applicable only in cases involving serious tax evasion where evidence of concealing income is above Rs. 50 lakh. This judgement is expected to help thousands of taxpayers.
The Delhi high court had to decide the validity of the notices issued to the petitioners under section 148, keeping in view the period of limitation (period within which notices for re-opening of cases can be issued).

Experts have called for a review of the faceless tax audit scheme, seeking a more relaxed timeline for reconciliation between goods and services tax (GST) and income tax returns as well as more understanding on business transactions that may not fit the specified format.

At a virtual session on Thursday organised by public policy think tank Empower India, Ajay Rotti, Founder and CEO, Tax Compaas, said the requirement for detailed turnover reconciliations between GST and ITR pose several challenges, including short deadlines, excessive documentation, and partial understanding of GST laws. “This often results in unwarranted adjustments despite comprehensive explanations and documentation provided by taxpayers,” he said.

A Right to Information (RTI) response from the Central Board of Direct Taxes (CBDT) has revealed that a total of 11.5 crore PAN cards were deactivated for failing to be linked with Aadhaar cards by the June 30 deadline.
India has 70.24 crore PAN card holders, of which 57.25 crore have successfully linked their PAN cards with Aadhaar. More than 12 crore PAN cards remain unlinked, with 11.5 crore facing deactivation due to non-compliance, said reports last week. The RTI was filed by Madhya Pradesh activist Chandra Shekhar Gaur.

The German parliament on Friday approved the implementation of a global minimum corporate tax, as part of an international deal to ensure large companies pay a minimum tax rate of 15%.
Multinational firms will have to pay that level of tax on all of the profits they make worldwide, regardless of where the profits are generated.
In 2021 almost 140 countries agreed to an Organisation for Economic Cooperation and Development deal they are meant to implement from next year to prevent big companies like Alphabet's Google or Amazon avoiding taxation by transferring profits to low-tax countries.

The government’s direct tax collections, net of refunds, came in at Rs 10.60 trillion up to November 9 in the current fiscal year, a release issued by the finance ministry said on Friday. The collections during the period were 21.8% higher year-on-year and constitute 58.2% of the Budget estimates for Direct taxes in FY24.

A growth rate of 21.8% is sharply higher than 11.6% growth rate pegged in the Budget. The Budget has estimated total direct tax collections, which includes Corporate Income Tax and Personal Income Tax, at Rs 18.23 trillion.

The Income Tax Appellate Tribunal (ITAT) has dismissed the revenue department's appeal in a transfer pricing case related to BBC World (India) Pvt Ltd for AY 2004-05. The Delhi bench of ITAT upheld the CIT(A)'s ruling that advertisement expenses between group entities should be treated as pass-through costs for AY 2004-05.

"The expenses relating to advertisement were on buying of advertisement space in the newspapers; that in such activities, the cost involved is too high and the effort required to buy such space is not much. On these reasonings, ld. CIT (A) held that they should be treated as a pass-through cost," the ITAT said in its order while dismissing the revenue department's appeal.

The Bombay high court on Wednesday directed I-T authorities to refund Vodafone Idea Rs 1,128 crore paid in taxes in 2016-17, holding an assessment order against the telecom major “unsustainable and time-barred”.
On August 31, 2023, an assessing officer passed an order against Vodafone Idea, two years after a dispute resolution panel (DRP) issued directions to the company.

Growth in personal income tax (PIT) collections may slow a bit in the second half of the current financial year from the impressive 31% seen in the first, as the income tax ((I-T) department aims to make tax refunds to the tune of Rs 2 trillion in the remainder of the year, an official source told FE. “The second-half refunds are likely to be higher than in the year-ago period by around Rs 50,000 crore. This would mean that the refunds in the whole of FY24 would be above Rs 3.5 trillion, as against a little over Rs 3 trillion last year,” the source added.

The taxman is snooping around for Indians behind foreign institutional investors (FPIs).

In a slew of unusual and probing questions, tax authorities have asked several offshore funds to spell out how they go about raising money, share of Indian investments in the fund pools, and details of top investors in a fund. At least a dozen FPIs have received notices over the past few weeks from the income-tax (I-T) department trying to extract information on who was running the funds and from where, two persons familiar with the queries told ET.

Resident Indians can only invest in FPIs whose exposure to India is less than 50% while total subscription by non-resident Indians (NRI) cannot exceed 50% of a fund corpus.

A record 76.5 million income tax returns were filed for assessment year 2023-24 (FY23) till the due date of October 31, 11.7% higher than 68.5 million returns filed for AY2022-23 (FY22) till the respective due date, the tax department said on Wednesday.

Further, total number of ITRs filed this fiscal all assessment years stood at 78.5 million, an all-time high again. Around 77.8 million ITRs were filed in FY 2022-23.

The Financial Action Task Force (FATF), an inter-governmental body that sets anti-money laundering standards, has removed offshore tax haven Cayman Islands from its ‘grey list’. Besides Cayman, Panama, Jordan, and Albania have been removed from the list, which requires jurisdictions to be placed under increased monitoring until the identified deficiencies are resolved in their framework.
In its review published on October 27, FATF has added Bulgaria in the grey list.
Such steps are taken to ensure that countries strengthen their anti-money laundering (AML), counter terrorism financing (CFT) and proliferation of financing systems.
Cayman was added to the grey list in 2021. The Caribbean Island was in the news during the probe into charges made by Hindenburg Research against the Adani group. Some foreign portfolio investors (FPIs) linked to the investigation were domiciled there.

A total of 74.1 million income tax returns (ITRs) have been filed for assessment year (AY) 2023-24 till date, which includes 5.3 million first time filers, the Central Board of Direct Taxes (CBDT) said in a release on Thursday.

“This is an indication of the widening of tax base subsequent to various reform measures put in place by the department. In fact, while the overall number of returns of individual taxpayers has shown an increase over the years, there is also an increase in number of returns filed by individual taxpayers across various ranges of gross total income,” CBDT said in a release.

The income tax department on Thursday said I-T returns filed by individual taxpayers have risen 90 per cent in 8 years to 63.7 million in AY 2021-22, indicating a widening of the taxpayer base.
The returns filed by individual taxpayers have increased from 3.36 crore in Assessment Year (AY) 2013-14 to 6.37 crore in AY 2021-22, registering an overall increase of 90 per cent. During the current fiscal too, 7.41 crore returns have been filed for AY 2023-24 till date, including 53 lakh first-time filers, the Central Board of Direct Taxes (CBDT) said in a statement.
Giving a breakup of the returns filed by individual taxpayers across various ranges of gross total income, the CBDT said the ITRs filed by individual taxpayers earning between Rs 5 lakh and Rs 10 lakh have increased 295 per cent during the period from AY 2013-14 to AY 2021-22.

Question: We are an Indian-based entity with various group companies in foreign jurisdictions. There are many intercompany transactions with such group companies which are subjected to a lower withholding tax rate in accordance with the relevant treaty owing to MFN. Kindly highlight the recent Supreme Court judgement in the case of applicability of the Most Favoured Nation MFN.

The Bombay high court has quashed an ITAT order that upheld additional ‘unaccounted income’ as taxable for an individual who is alleged to have engaged in rigging of stocks, observing the tribunal has gone beyond its scope.
The Income TaxAppellate Tribunal (Mumbai bench) had upheld the addition of ‘unaccounted income’ of Rs 90 crore in the hands of a defaulting taxpayer, Naresh Manakchand Jain, purported to have engaged in rigging of prices of select scrips and in money laundering by providing bogus entries like tax-exempt long-term capital gains to other parties.