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News Direct Tax-Income Tax

  • Nov 24, 2020
  • Tax holiday: Start-ups to not get extra relief

    The finance ministry is learnt to have turned down a proposal of the department for the promotion of industry and internal trade (DPIIT) to extend the cutoff date for the incorporation of start-ups to be eligible for the income tax holiday by five years from April 2021. This has dashed hopes of industry executives who were eyeing extended tax relief to help proliferation of start-ups. Currently, start-ups that are incorporated between April 1, 2016, and March 31, 2021, are allowed to apply for the I-T relief and the eligible ones get it for a block of three out of the first 10 years.

    The revenue department believes that in sync with the government’s policy objectives in recent years, the myriad exemptions need to be phased out and tax rates rationalised so that a much simpler and more efficient tax regime can be ushered in. Already, the cutoff date was once extended by two years through March 2021. In its proposal for the FY22 Budget, the DPIIT, however, wanted the relaxation to continue for another five years to enable a wider pool of start-ups to get the benefits, especially in the light of the Covid-19 pandemic.

    Meanwhile, industry executives complain that only about a very tiny section of the start-ups has so far got the tax benefit, thanks to a “rigid” approval process. Usually, an inter-ministerial board (IMB) headed by a senior DPIIT official vets the applications and issues the eligibility certificates. Upon its clearance, start-ups get the benefits under Section 80-IAC of the I-T Act.

  • Nov 21, 2020
  • Income Tax Return filing: Tax changes to keep in mind while filing ITR for AY2020-21

    The ITR filing due date for AY 2020-21 stands extended to 31 December 2020, and 31 January 2021 for tax audit cases. The ITR forms notified carry some significant changes such as in reporting requirements, tax deductions and changes introduced in Budget 2019. Taxpayers should bear in mind these changes while filing their ITR for AY 2020-21 (FY 2019-20).

    The Budget 2019 introduced interchangeability of PAN and Aadhaar. An individual who does not have a PAN can quote Aadhaar number at various places in the ITR. For example, the ITRs enable quoting of Aadhaar in the case of a buyer of immovable property, a tenant while reporting income from house property, ITR filing by representative assessee etc.

    The ITR also incorporates new criteria introduced for mandatorily filing of tax return even though the gross total income of the individual is below the basic exemption limit. The compulsory filing is applicable in case any of the below criteria are satisfied:

    1. Deposited in one or more current account(s) an amount or aggregate of amounts exceeding Rs 1 crore during the FY 2019-20

    2. Expenditure on travel to a foreign country incurred of an amount exceeding Rs 2 lakh in aggregate for self or any other person

  • Nov 19, 2020
  • Govt nets Rs 72,480 cr under Vivad se Vishwas scheme

    The government has received Rs 72,480 crore in taxes under the dispute resolution scheme ‘Vivad se Vishwas’ from 45,855 cases so far, finance ministry sources said. The total revenue demand made by the income-tax department from these cases was nearly Rs 1.32 lakh crore.

    The Central Public Sector Units (CPSUs) came forward to resolve disputes with revenue implication of over Rs 1 lakh crore, sources said. This improves the prospect of the government’s target to reach tax revenue collection of last year. The scheme was launched to liquidate nearly 9.5 lakh crore revenue stuck in direct tax disputes at different forums in nearly 5 lakh cases.

    “This amount is the initial mandatory payment made by taxpayers who have opted for the scheme as the rest of the payment can be made till March 31,” a source said. The government has extended the date for the scheme to December 31.

    The scheme provides for withdrawal of all appeals both by taxpayer and the income-tax department on resolution of cases. Vivad se Vishwas was launched earlier this year for settlement of disputed tax, interest, penalty and fees in relation to an assessment or reassessment order on payment of 100% of the disputed tax and 25% of the disputed penalty or interest or fee.

  • Nov 19, 2020
  • I-T refunds worth Rs 1.36 lakh cr issued to 40.19 lakh taxpayers till Nov 17

    The Income Tax department has issued refunds worth over Rs 1.36 lakh crore to over 40 lakh taxpayers so far this fiscal.

    This includes Personal income tax (PIT) refunds amounting to Rs 35,750 crore and corporate tax refunds of over Rs 1 lakh crore during this period.

    “CBDT issues refunds of over Rs 1,36,066 crore to more than 40.19 lakh taxpayers between 1st April, 2020 to 17th November, 2020. Income tax refunds of Rs 35,750 crore have been issued in 38,23,304 cases and corporate tax refunds of Rs 1,00,316 crore have been issued in 1,95,518 cases,” the I-T department tweeted.

  • Nov 17, 2020
  • I-T Act change: Property sale at lower than circle rate to be exempt from tax

    The government on Friday said it would amend the income-tax law to exempt real-estate developers and homebuyers from tax liability if the actual consideration for an asset is lower than the stamp duty value (circle rate) by not more than 20%.

    The changes would be applicable only to primary sale of residential properties not exceeding Rs 2 crore in value.
    Without the relaxation, the developer selling the flat at a price lower than the circle rate would be liable to pay tax on profits calculated on the basis that the flat/home was sold at the circle rate.

    Similarly, the buyer would be taxed on differential amount between the circle rate and the actual consideration under section 56(2)X — which is an anti-evasion provision and brings to tax consideration that deviates from fair market value.

  • Nov 17, 2020
  • Income-Tax portal showing GST turnover to better compliance: Govt

    The revenue department on Monday clarified that the GST turnover details available to taxpayers on income-tax portal (Form 26AS) is aimed at providing additional information to the assessees without any extra compliance burden.

    Further, the details would force dishonest taxpayers to report correct GST turnover and pay the resultant income-tax on it. The department said that data analytics has detected several cases where a person shows “turnover of crores of rupees in GST and doesn’t pay a single rupee of income tax.”
    The I-T system generates Form 26AS for each assessee which till a year ago had limited information related to tax deducted at source and interest income from saving bank accounts.

    However, from this year onwards, the scope of information available has been expanded to turnover from GST-registered businesses, cash deposit/withdrawal from saving bank accounts, sale/purchase of immovable property, time deposits and credit card payments, among other transactions.

  • Nov 13, 2020
  • FM Sitharaman announces tax relief on some home deals; stimulus tops Rs 30 lakh cr

    Finance Minister Nirmala Sitharaman on Thursday announced tax relief on select home sale deals, enhanced credit guarantee programme for small businesses and provide incentives for new job creation as the government widened stimulus measures to boost the economy.
    The measures, that also include additional fertiliser subsidy and already announced production-linked inventive scheme for manufacturing units, totalled Rs 2.65 lakh crore, taking the cumulative stimulus package announced since the lockdown to almost Rs 30 lakh crore, or 15 per cent of the Gross Domestic Product (GDP).

    It also includes additional funding for real estate developers and contractors, a new employment scheme and additional spending on the rural jobs plan.
    Sitharaman cited data, including increase in tax collections for goods and services, rise in energy consumption and improvement in bank credit to state that the economy was seeing “strong recovery” taking root.
    The Indian economy has recovered from its worst-ever contraction of 24 per cent in the April-June quarter but will end up shrinking by close to 10 per cent in the fiscal year to March 2021.
    But she saw hope in the Reserve Bank of India predicting a strong likelihood of growth in the current quarter.
    Doubling down on the previously announced measures, she said income tax law will be relaxed to allow primary or first sale of housing units of up to Rs 2 crore at a price that can be 20 per cent below the stamp duty circle rate.
    Currently, the law restricts differential between circle rate and agreement value at 10 per cent, and “the move will help reduce hardships faced by both home-buyers and the developers and help clear unsold inventory,” she said.
    Under the new job creation scheme, the government will provide a subsidy equal to the contribution that an employee and the employer have to make towards the retirement fund (totaling 24 per cent of the wages) to establishments that hire new employees or re-hire those it fired during COVID-19 pandemic, she said.

  • Nov 12, 2020
  • Income Tax: Deduction of expenses deemed to be claimed under presumptive tax scheme

    I have pension and interest income. Last year I joined a bank on a contract basis and it paid remuneration under Section 194 C. This income is less than Rs 50 lakh. Can I claim expenses under Section 44ADA for this income?
    —YK Chugh
    We are assuming that you are engaged in a profession eligible for computation of profits on a presumptive basis. If gross receipts from such profess-ion do not exceed Rs 50 lakh, you may declare income on presumptive basis under Section 44 ADA. A sum equal to 50% of the total gross receipts shall be deemed as ‘profits and gains from business or profession’. However, all expenses shall be deemed to have been allowed and no further deduction of any expense shall be permissible. Therefore, you shall not be entitled to claim deduction.

    Section 194C governs deduction of TDS on payment to contractors and not professionals. If your income does not qualify as ‘professional’ income, you may declare income on presumptive basis under Section 44AD, wherein 8% of total turnover or gross receipts shall be deemed as profits and gains from business (6% if turnover or gross receipts are received by way of account payee cheque or account payee bank draft or use of electronic clearing system through a bank account). In this case too, you shall not be entitled to claim deduction of expenses.

  • Nov 05, 2020
  • I-T department allows condonation of delay in filing audit reports by trusts, institutions

    The Income Tax Department has allowed condonation of delay in filing audit reports by trusts, institutions, universities and hospitals who claim tax exemption.

    Any funds, trusts, institutions including educational and medical universities or hospitals claiming income tax exemption will have to get their accounts audited if their total income of that year exceeds the maximum amount not chargeable to tax.

    Income tax law mandates that such institutes can claim tax benefits available to them only after furnishing the tax audit report in form 10BB before the prescribed time.

    The Central Board of Direct Taxes (CBDT) in a circular said that income tax commissioners would admit belated applications in filing Form 10BB for years prior to assessment year (AY) 2018-19 for "condonation of delay".

    "The commissioner, while entertaining such applications regarding filing form 10 BB, shall satisfy themselves that the applicant was prevented by reasonable cause from filing such application within the stipulated time. Further all such applications shall be disposed of by March 31, 2021," it said.

  • Nov 05, 2020
  • I-T refunds worth Rs 1.29 lakh cr issued to 39.49 lakh taxpayers

    The Income Tax department has issued refunds worth over Rs 1.29 lakh crore to more than 39 lakh taxpayers so far this fiscal.

    This includes Personal Income Tax (PIT) refunds amounting to Rs 34,820 crore and corporate tax refunds aggregating to Rs 94,370 crore during this period.

    "CBDT issues refunds of over Rs 1,29,190 crore to more than 39.49 lakh taxpayers between 1st April, 2020 to 3rd November, 2020. Income tax refunds of Rs 34,820 crore have been issued in 37,55,428 cases & corporate tax refunds of Rs 94,370 crore have been issued in 1,93,059 cases,” Income Tax department said in a tweet.

  • Nov 04, 2020
  • Working from home? Its tax implications may take you by surprise

    The year 2020 will go down in history as the year of uncertainty and volatility as the covid-19 pandemic outbreak led to business shutdowns and cessation of economic activity on a global scale. The socio-economic impact of the pandemic on people across the economic and social spectrum was unprecedented in terms of increasing livelihood crises and a drop in earnings. Moreover, on account of the worldwide lockdown and global travel restrictions, people were stuck in different countries and could not fly back home giving the concept of work from home a new dimension. As populations around the world focused increasingly on taking care of their health and ensuring the well-being of their families, ascertaining the impact of tax on incomes has taken a backseat.

    There have been several instances where the Covid-19 induced lockdown led to additional tax compliances on individuals working from remote locations in foreign countries. Employees based in India and working for overseas employers qualify as Resident and Ordinarily Resident (ROR) of India. Their global income is subjected to tax in India. However, the residency provisions for FY 2019-20 were relaxed by the Indian Government, restricting the cut-off date for considering one’s physical presence to 22 March 2020 instead of 31 March 2020, thereby excluding the COVID-19 lockdown phase.

  • Nov 04, 2020
  • Abu Dhabi sovereign fund first to get 100% tax exemption in infra

    In line with the Budget announcement, the government has allowed income-tax exemption to Abu Dhabi’s sovereign wealth fund (SWF), MIC Redwood 1 RSC, for making long-term investments in India in specified priority sectors of infrastructure.

    It is the first foreign SWF to get 100 per cent tax exemption in the case of income from interest, dividend, and long-term capital gains for its investment in infrastructure.

    The Central Board of Direct Taxes (CBDT) on Monday announced this.

    The government, under the Finance Act, 2020, had allowed tax exemption for SWFs and pension funds in the case of incomes from investment in 34 key infrastructure sectors, including hotels, cold chains, educational institutions, hospitals, and gas pipelines.

    Under the scheme, investment has to be made before March 31, 2024 and with a minimum lock-in period of three years.

    “Any income in the nature of dividend, interest, or LTCG (long-term capital gains) arising from an investment made by Abu Dhabi’s SWF on or after November 2, 2020, but on or before March 31, 2024, shall be entitled to exemption if specified conditions are met,” said a government official.

    The sub-sectors under the scheme include infrastructure for special economic zones, textile parks and agriculture markets, telecom towers, electricity generation, and transmission and distribution, besides ports and airports.

    The other areas include ports, stadiums, tourism, theme-based parks including food parks,multi-modal logistics parks, and textile parks.

  • Oct 30, 2020
  • People opting for lower tax regime not eligible for LTC stimulus: Govt

    People who opted for the lower tax regime provided in the Budget for 2020-21 are not eligible for the new incentive package through leave travel concession (LTC), said the finance ministry clarified on Thursday.

    "...as this exemption is in lieu of the exemption provided for LTC fare, an employee who has exercised an option to pay income tax under concessional tax regime... shall not be entitled for this exemption," said the revenue department, which come under the ministry.

    The department clarified this point while expanding the scheme to employees of the private sector, the public sector units and state governments.

    The clarifications said non-central government employees will get tax exemption on cash allowance subject to a maximum of Rs 36,000 per person as deemed LTC fare.

    Other rules like spending three times the deemed LTC fare on those goods which attract goods and services tax (GST) remain the same as were there for central government employees.

  • Oct 30, 2020
  • Google tax: Compliance norms amended for e-commerce firms

    The government on Thursday notified the changes in the manner of collection of the 2% equalisation levy on earnings originating from India for non-resident e-commerce platform operators. While deducting and depositing the levy — which came into effect on April 1– has hitherto been the obligation of resident recipient of services, the onus has now been shifted to the non-resident operator; the obligation will have to be met on a quarterly basis.
    Also, according to an amendment to the annual statement forms and appeal documents required to be furnished by relevant firms, it is mandatory for them to obtain permanent account number (PAN) in India. The industry had represented to the government earlier to reconsider the provision for non-residents to obtain PAN.

    “The challans for payment of e-commerce equalisation levy were notified in July 2020 and required furnishing of PAN and Indian bank account for remittance of levy,” Sandeep Jhunjhunwala, partner at Nangia Andersen LLP said. He added that a new electronic code for the person verifying the annual statement has also been introduced but it wasn’t clear if it would be an alternative to PAN.
    Further, the government has also retained the aspect of limited appeal against only the amount of penalty levied in case of non-payment of the levy but not the quantum of tax assessed itself.
    Equalisation levy, also referred to as Google Tax was first introduced by Finance Act, 2016, at the rate of 6% on payments for digital advertisement services received by non-resident companies without a permanent establishment there, if these exceeded a threshold. The levy is designed to nullify the advantage of foreign e-commerce firms sans a physical presence in India over local competitors.

  • Oct 29, 2020
  • Income Tax refunds of Rs 1.26 lakh crore issued to 39.14 lakh taxpayers till October 27

    The Income Tax department has issued refunds worth over Rs 1.26 lakh crore to over 39 lakh taxpayers this fiscal so far. This include personal income tax (PIT) refunds amounting to Rs 34,532 crore and corporate tax refunds amounting to Rs 92,376 crore during this period.

    "Rs 1,26,909 crore tax refunds issued. 39.14 lakh taxpayers got refunds. Income tax refunds of Rs 34,532 crore have been issued in 37,21,584 cases. Corporate tax refunds of Rs. 92,376 crore have been issued in 1,92,409 cases (till 27th Oct,2020)," the Office of Minister of State for Finance Anurag Thakur tweeted.

  • Oct 28, 2020
  • Vivad Se Vishwas scheme: Payment deadline extended

    The government on Tuesday extended for the third time the deadline for making payment under the direct tax dispute settlement scheme 'Vivad Se Vishwas' by three months to March 31, 2021.

    As per a Central Board of Direct Taxes (CBDT) notification, declaration under the Vivad se Vishwas Scheme shall be required to be furnished latest by December 31, 2020.

    However, only in respect of the said declarations made, the payment without additional amount can now be made up to March 31, 2021.

    "In order to provide further relief to the taxpayers desirous of settling disputes under Vivad se Vishwas Scheme, the Government today further extended the date for making payment without additional amount from 31st December 2020 to 31st March 2021.

  • Oct 26, 2020
  • Centre extends the deadline to file tax returns to Dec 31

    In a relief to taxpayers, the government on Saturday further extended the deadline for filing returns by individual taxpayers for financial year 2019-20 by a month till December 31.

    Also, the due date of furnishing Income Tax Returns (ITRs) for taxpayers whose accounts require to be audited has been extended till January 31, 2021.

    The government had earlier in May extended various due dates for filing ITRs for FY 2019-20 from July 31 to November 30, to give compliance relief to taxpayers due to the Covid-19 pandemic.

    In a statement, the Central Board of Direct Taxes (CBDT) said, “The due date for furnishing of Income Tax Returns for the other taxpayers [for whom the due date (i.e. before the extension by the said notification) as per the Act was July 31, 2020] has been extended to December 31, 2020.”

    The due date for furnishing of ITRS for “the taxpayers (including their partners) who are required to get their accounts audited [for whom the due date as per the I-T Act is October 31, 2020] has been extended to January 31, 2021”, it added.

    Also the due date for furnishing of ITRs for the taxpayers who are required to furnish report in respect of international/specified domestic transactions has been extended to January 31, 2021.

    “The date for furnishing of various audit reports under the Act, including tax audit report and report in respect of international/specified domestic transaction, has been extended to December 31, 2020,” the CBDT said.

    Further, in a relief to small and middle-class taxpayers in the matter of payment of self-assessment tax, the due dates for payment have been extended.

    The CBDT said in view of the “constraints being faced by taxpayers due to Covid-19”, the deadlines have been extended to “provide more time to taxpayers for furnishing of Income Tax Returns”.

  • Oct 23, 2020
  • Form 3CD: Income Tax Department releases New Tax Audit utility, Schema Version 1.21

    The Income Tax Department notifies ‘Form 3CD Schema Changes’ under e-Filing Project released New Tax Audit utility, Schema Version 1.21. Form 3CD consists of the statement of particulars required to be furnished under section 44AB of the Income-tax Act, 1961. The department released the document which tracked various the changes done in Form 3CD Schema post first release.

    The Schema changes as on 22nd October, 2020 on Part A wherein new section code was added namely Clause 8a; Clause 18(ca); Clause 18(cb).

    Form No. 3CD and 3CEB have been modified to accommodate the newly added provisions of 115BA, 115BAA, 115BAB, 115BAC and 115BAD. In form 3CD clauses have been added to provide information regarding the exercising of the option by the assessee and provide further adjustments in WDV if the same is exercised and in transfer pricing form new clause have been added to provide for the specified domestic transactions entered into by the assessee with the persons who have availed the option under section 115BAB which has resulted in more than ordinary profits expected to arise in such business.

  • Oct 21, 2020
  • Dividend taxation puts India in quandary; is it justified to impose additional tax on dividends?

    India’s dividend taxation policy has witnessed many changes over the years, guided by varied policy objectives and administrative convenience. India introduced a very unique way to tax dividends by levying Dividend Distribution Tax (DDT) on the companies declaring dividends rather than shareholders, way back in 1997 (leaving one intervening year). We have now from April 2020 reverted to the classical regime of taxing dividends in the hands of shareholders and it is a sweet coincidence that the first major and direct ruling on DDT is out just when we reverted to this classical system.

    While some sporadic litigation was going on at various levels, it was always perceived that a tax treaty may not be relied upon for reducing the rate of DDT, and accordingly, no treaty benefit was to be given for dividends paid to foreign companies/non-residents.

    However, in a path-breaking, landmark ruling pronounced last week, Delhi ITAT in the case of Giesecke & Devrient [India] Pvt Ltd. held that beneficial rate of tax on dividend under DTAA shall prevail over DDT rate under the domestic law. The ruling traces the historical journey of DDT up to the Finance Act, 2020, concludes that it was a tax on shareholders, the levy of which was shifted upon dividend-paying companies for administrative convenience.

  • Oct 21, 2020
  • ITAT: Indirect transfer of Indian assets will not attract LTCG tax

    The Delhi bench of Income Tax Appellate Tribunal (ITAT) has held that indirect transfer of Indian assets will not face long-term capital gains tax.

    The ruling was in the context of the sale of Singapore-based Accelyst Pte Ltd (Freecharge) by Singapore startup incubator Augustus Capital PTE Ltd to Snapdeal’s holding company Jasper Infotech Pvt Ltd (JIPL) in FY16.

    The decision comes as a relief to foreign funds and entities being subjected to tax demands for earlier years, according to experts.

    The crux of the issue lies in the addition of Rs 36.3 crore as long-term capital gains (LTCG) by the assessing officer (AO) against a claim of nil income by Augustus Capital, stating that the transaction was not taxable in India.

    As per an amendment to Section 9 of the IT Act in 2012, if any share or interest in a foreign entity derives its value substantially from the assets located in India, then such share or interest is deemed to be situated in India and any income arising from transfer of such share or interest is deemed to arise in India.

    Explanation 6, which was later added to the Finance Act, clarified that the word ‘substantially’ meant the fair market value (FMV) of assets located in India exceed Rs 10 crore and the FMV of assets located in India represent at least 50% of the FMV of total assets of the foreign entity.