ITR Filing Process Online: Filing the income tax return is among the most important chores for a business in a year. Typically, income from a profession or a business under a proprietorship set up, wherein the taxpayer is a proprietor (both audit and non-audit cases) have to file the ITR-3 form. In contrast, partnership firms or individuals with a total income of up to Rs 50 lakh in a year and who have opted under the presumptive taxation scheme have to file the ITR-4 form.

Since MSMEs, as per the government’s definition, are businesses with annual turnover ranging from up to Rs 5 crore to Rs 250 crore, below is the structure of the ITR-3 form to be filled online from the income tax portal using your digital signature.

The Central Board of Direct Taxes (CBDT) on Tuesday launched “e appeal” scheme announced in the budget to reduce pendency of appeals related to Tax Deducted at Source (TDS) default issues and tax collection at source (TCS).

The scheme empowers the Joint Commissioner (Appeals) for disposing of appeals filed before it or allocated or transferred to it, with power to send show cause notice, initiate penalty under the relevant provisions of the Act.

US-based multinationals, British companies and leading French industrial groups that have closely held subsidiaries in India will face so-called angel tax scrutiny if they bring in fresh equity capital.

The government provided a blanket exemption from angel tax to various structures such as pension and sovereign wealth funds, among others investing in India from 21 countries, but corporate entities were left out, making them potentially liable to the levy.

The I-T department's draft rules on valuation of funding in unlisted startups for calculating 'angel tax' will bridge the gap between the rules outlined in FEMA and the Income Tax, but the 10 per cent safe harbour which is proposed for equity investment should be extended to convertible preference shares, experts said.

The Central Board of Direct Taxes (CBDT) on May 26 issued draft rules providing more flexibility for valuation of equity investments made in unlisted startups.

For non-resident investors the valuation methods provided under the rules are: book value or net asset value method, valuation by a merchant banker using DCF (discounted cash flow), and valuation at which a venture capital fund/specified fund has invested in a Venture Capital Undertaking (VCU).

Additionally, a 10 per cent leeway or safe harbour is provided where investment valuation is 10 per cent more than the valuation determined under above rules.

The Income Tax department has come out with guidelines for selection of cases for scrutiny, under which cases wherein assessees have not responded to I-T notices will be picked up for compulsory examination. The department will also undertake cases for scrutiny where specific information regarding tax evasion has been provided by any law enforcement agencies or regulatory authorities.

As per the guidelines, tax officers will have to send a notice under section 143(2) of the I-T Act by June 30 to the assessee regarding discrepancies in income.

The assessee will then have to produce relevant documents.

It said that where no return has been furnished in response to a notice u/s 142(1) of the Act, the case would be sent to the National Faceless Assessment Centre (NaFAC) which will take further action.

Section 142(1) empowers tax authorities to issue a notice seeking more clarification or further details about where a return has been filed, or if the return has not been filed, then to furnish the required information in a prescribed manner.

The new valuation methods proposed by the income tax department for computation of fair market value (FMV) for angel tax is expected to provide flexibility to investors. Experts, however, said implementation would be the key to these measures as valuation can often be subjective and called for some more leeway for investments into domestic startups through compulsorily convertible preference shares (CCPS).

The Central Board of Direct Taxes (CBDT) had on May 26 invited comments on the draft rules relating to the method of computation of FMV of unquoted equity shares for the purpose of angel tax. It has sought comments from the public by June 5.

The income tax department on Friday invited comments from stakeholders on rules for valuing non-resident investment in unlisted startups.The Central Board of Direct Taxes (CBDT) has issued a draft notification inviting comments on the draft rule 11UA of Income-tax Rules, 1962, pertaining to the method of computation of fair market value (FMV) of unquoted equity shares for the purposes of section 56(2)(viib) of Income-tax Act, 1961.Suggestions/Comments have been invited from stakeholders & general public on the draft rules, which can be sent to ustpl2@nic.in, latest by June 5, 2023, the CBDT tweeted.The rules would be effective from April 1, 2023.The CBDT was expected to come out with valuation guidelines for valuing non-resident investment in unrecognised startups for the purpose of levying income tax.

The Income Tax (I-T) department asked the entities under the obligation to file a statement of financial transactions (STF) to submit a report latest by May 31 to avoid penalty.

Taking to Twitter, the tax department wrote, "Kind Attention SFT filers! Last date to file Statement of Financial Transactions (SFT) for FY 2022-23 is May 31st, 2023." It further added, "Delay in filing SFT may entail penalty upto ?1000 for each day of default. Non-filing or filing inaccurate statement may also lead to levy of penalty. Please file your SFT within the due date."

According to a report in LiveMint, STF is an annual report that entities like banks, non-bank lenders, cooperative banks, and companies issuing a dividend have to file with the I-T department regarding the transactions done above their specified monetary threshold.

The Central Board of Direct Taxes (CBDT) has issued guidelines on how online gaming companies have to deduct tax from an individual's winnings. The guidelines have been issued via a circular and notification dated May 22, 2023. The guidelines come after the government removed the threshold for deducting TDS on winnings from online games in the Budget 2023.

According to the latest announcement, online game companies are required to deduct TDS on every rupee earned from winning an online game. This rule kicks in from April 1, 2023, and is applicable from FY 2023-24. Till the previous financial year (FY 2022-23), TDS on winnings from online games was applicable if the winning amount exceeded Rs 10,000 in a financial year.

Now the TDS will be deducted under the newly introduced Section 194BA of the Income Tax Act, 1961. The TDS rate on winnings from online games is 30% under Section 194BA.

The government is attempting to link tax collected at source for payments made by individuals with tax deducted from their income sources, a move that will help in ensuring cash flows of the individual taxpayers are not impacted, according to a senior official.

The move also comes at a time when the government is set to impose a 20 per cent Tax Collection at Source (TCS) on certain international spends from July 1.

Generally, TCS is the tax collected by a seller at the time of sale of goods or services while Tax Deducted at Source (TDS) is the amount levied as tax by the government.

The government has exempted transactions up to Rs 7 lakh from the TCS, providing relief to small taxpayers. So, bulk of the transactions made by most will not be covered under 20 per cent TCS, Chief Economic Advisor (CEA) V Anantha Nageswaran has said.

Defending the decision, he said, "And it (government) also attempts to link the TCS with your TDS such that if there are TCS payment made by you it has to reflect a lower TDS. Such that it simply is a matter of making sure that you are not affected from a cash flow perspective."

It will also provide a huge amount of relief for people who are concerned about this annoyance or irritation of seeing this TCS apart from TDS, he said at industry body's CII's event on Thursday.

The 20 per cent TCS levy on international credit card spends is to come into force from July 1.

Leave Salary Encashment Limit Hike: The Central Board of Direct Taxes (CBDT) has notified the increase of the leave salary encashment limit for non-Government employees to Rs 25 lakh. The previous limit was just Rs 3 lakh.

The increased leave encashment limit will be applicable from FY 2023-24, starting from April 1, as per the notification.

The Finance Ministry has notified 21 countries, including the US, UK and France, from where non-resident investment in unlisted Indian startups will not attract angel tax. The list, however, excludes investment from countries like Singapore, Netherlands and Mauritius.

The government had in the Budget brought overseas investment in unlisted closely held companies, except DPIIT recognised startups, under the Angel Tax net.


Following that, the startup and venture capital industry sought exemption for certain overseas investor classes.

Search and survey cases, income tax notices where no return was furnished as well as cases, where specific instances of tax evasion was detected will be taken up for complete scrutiny during the current financial year by the income tax department.

“Cases, in respect of which specific information pointing out tax evasion for the relevant assessment year is provided by any law-enforcement agency, and the return for the relevant assessment year is furnished by the assessee,” listed the Central Board of Direct Taxes (CBDT) as one of the parameters for compulsory selection of returns for complete scrutiny during the fiscal 2023-24.

Amid summer holidays that vacationers prefer to spend in cooler climes overseas, the government’s recent move to levy Tax Collected at Source (TCS) on international transactions using credit cards came as an unpleasant surprise.

The Ministry of Finance notified that such transactions would come under the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme (LRS) with effect from May 16, 2023. And by virtue of that, these transactions are now subject to 5 percent TCS until June 30 and thereafter, at 20 percent.

Following much opposition, the government clarified that TCS would apply on international spending via debit or credit cards only beyond the threshold of Rs 7 lakh a year.

In this backdrop, we bring you this Q&A with Sandeep Jhunjhunwala, Partner at Nangia Andersen LLP, explaining what TCS is, what all transactions it applies to, and more. Edited excerpts:

Income tax authorities have been asked to compulsorily pick up cases, where there is specific information of tax evasion on returns, for complete scrutiny during the current financial year, as part of the guidelines issued by the Central Board of Direct Taxes (CBDT) .

In a significant relief to charitable and religious trusts, the Central Board of Direct Taxes (CBDT) said on Wednesday that they can now apply for registration and approval to avail income tax exemption until September 30 this year.

The Finance Act, 2023 had amended the Income Tax Act to provide that the accreted income of the trusts that had not applied for registration or approval, within the specified time, would be liable to tax. The amendment came into effect from April 1 this year and applies to assessment year 2023-24 and subsequent ones.

After releasing the Excel utility of income tax return (ITR) forms 1 and 4 on April 25, 2023, the income tax department has now enabled the online forms for ITR-1 and 4. As per the income tax website, “Income-tax Returns Form ITR 1 and ITR 4 are enabled at the portal in Online mode with prefilled data.”

The online ITR forms available on the e-filing website come with pre-filled data such as income from salary (as mentioned in Form 16), interest income from a savings account, fixed deposits etc. and so on

The online forms are different from the Excel utility, as in the latter the taxpayer is required to download the form, fill in the form with the required information and then upload the same on the e-filing website

The online ITR form makes it easier for individuals to file their income tax returns as they are just required to cross-check the data available in the online form with the documents that they have. Further, this information must be cross-checked with the Annual Information Statement (AIS) and Form 26AS as well. This is to ensure that the data available with the income tax department matches with what taxpayers have.

Also Read: Excel utility of ITR-1, 4 is available for ITR filing

ITR forms were notified by the Central Board of Direct Taxes (CBDT) in February this year. Currently, the income tax return is being filed for FY 2022-23 (AY 2023-24). The last date for filing ITR for salaried individuals and taxpayers whose accounts are not required to be audited is July 31, 2023 (unless the date is extended by the government).

Fundraising for small businesses and startups would become easier with the Government notifying certain classes of persons being non-resident investors to whom provisions of angel tax not be applicable.

According to a statement by the Central Board of Direct Taxes, this includes, Government and Government related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies including entities controlled by the Government or where direct or indirect ownership of the Government is 75% or more.

Banks or Entities involved in insurance business where such an entity is subject to applicable regulations in the country where it is established or incorporated or is a resident are also excluded.

The statement added that any entity, which is a resident of a certain country or specified territories having robust regulatory framework, like entities registered with Securities and Exchange Board of India as Category-I Foreign Portfolio Investors and Endowment Funds associated with a university, hospitals or charities will also be excluded.

“The notification from CBDT and MF has been well received by the PE/VC industry as it provides more clarity to Indian startups and investors in relation to section 56(2)(viib). The proposed norms aim to expand valuation methodologies and eliminate price differentials between resident and non-resident investors. We thank the Finance Ministry for actively addressing the industry's concerns and acknowledging a broader range of institutional investors in the exempted list. This inclusive approach will facilitate ongoing investments in the country,” sais Karthik Reddy, Managing Partner, Blume Ventures & Chairperson, IVCA.

The Central Board of Direct Taxes (CBDT) has released guidelines on the computation of taxes on income made from online games, as per the changes introduced in Union Budget 2023-24 which aimed to bring clarity to the matter.

The CBDT has clarified that in cases where net winnings comprised in the amount withdrawn does not exceed Rs 100 in a month, the applicable tax need not be deducted. This also extends to scenarios where the balance in the user account at the time of tax deduction under section 194BA of the Act is not sufficient to discharge the tax deduction.

Travellers wanting to swipe their credit cards to book a foreign holiday package will be badly hit by recent announcements from the Ministry of Finance. Until May 15, credit card spending overseas was not considered part of the Liberalised Remittance Scheme (LRS), which sets limits on how much foreign exchange can be remitted overseas. This changed from May 16.

International credit card spends now come under the LRS limit and a 20 percent tax collection at source (TCS) will kick in from July 1 if the expenses abroad exceed Rs 7 lakh ($8,445). Until June 30, TCS at the rate of 5 percent beyond the threshold of Rs 7 lakh will apply. The move is aimed at curbing evasion of the LRS limit via the use of credit cards, according to the government.