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  • Sep 22, 2020
  • Taxpayers have to disclose details of share sales in AY21

    Taxpayers will be required to provide information on every share they have sold in the previous fiscal in their 2020-21 tax returns—with experts likening the extent of details sought to the questions put to someone facing scrutiny.

    Individuals other than businessmen or professionals who use ITR-2 form have to fill up finer details of share sales. This includes the international securities identification number (ISIN), share name, quantity, sale and purchase price as well as fair market value at the end of January 2018, in all cases.

    Experts said the e-filing form does not offer the option of giving a summary or the aggregate capital gain figures, which would have eliminated the need for filling up the details over 13 columns for each item—cumbersome in cases where data is voluminous.

    The information sought in the tax return, experts said, is similar to the kind of details sought at the time of a tax scrutiny.

    A government official said the details are being sought as part of the income tax department’s goal of raising the level of disclosures. The department is particularly keen to find cases where individuals have made high-value share market transactions, yet reported meagre taxable income.

    The number of people who file tax returns claiming no tax liability has become a major problem for the department, an issue flagged by Prime Minister Narendra Modi in August while scaling up the faceless assessment scheme.

  • Sep 21, 2020
  • TDS relief expected for MSMEs transacting through e-commerce platforms

    The government is considering provision of relief to micro, small and medium enterprises (MSMEs) hit by the Covid-19 pandemic, sparing them from a 1% tax on gross sales through e-commerce platforms, which takes effect on October 1, officials said.

    The tax exemption limit could be increased from the existing Rs 5 lakh for small businesses. The tax deducted at source (TDS) mechanism would continue to check tax evasion by entities using e-commerce platforms to sell goods and services, two officials working in different ministries said, requesting anonymity.

    “The provision has been introduced in the Budget 2020-21 to make e-commerce transactions tax-compliant. Hence it has a clause related to PAN [permanent account number] or Aadhaar number,” one of the officials said.

    Finance minister Nirmala Sitharaman, in her budget speech on February 1, 2020 introduced a TDS mechanism for e-commerce transactions. “In order to widen and deepen the tax net, it is proposed to provide that e-commerce operators shall deduct TDS on all payments or credits to e-commerce participants at the rate of 1% in PAN/Aadhaar cases and 5% in non-PAN/Aadhaar cases,” she said.

  • Sep 21, 2020
  • Tax Bill to expand faceless assessment scheme, provide relief to taxpayers

    The Lok Sabha has passed a taxation Bill aimed at expanding the faceless assessment scheme and to provide compliance-related relief to taxpayers. The legislation includes extension of deadlines for return filing and linking of PAN and Aadhaar. The Bill was passed by a voice vote after stiff opposition on issues pertaining to tax treatment and transparency of PM Cares Fund and the GST compensation issue.

    The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020, will replace the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 promulgated in March under which time limits for statutory compliances under goods and services tax, and income tax act were extended in the wake of the Covid-19 pandemic.

    The legislation provides tax exemption for contributions made to PM-CARES Fund, which was set up in March. Besides, it makes faceless assessment applicable to at least 8 processes under the IT Act, including assessment, collection and recovery of tax, appeals, revisions, gathering of information, etc. With the amendment, transfer pricing assessments and litigation, and dispute resolution panel have been brought under the faceless scheme.

    Finance Minister Nirmala Sitharaman said that faceless assessments and appeals will bring in tax transparency and bring an end to tax terrorism using technology. “We’re bringing in tax transparency through law because it is extremely important for the country,” she said.

    The sunset clause for claiming a tax holiday for already approved special economic zones units has been extended by another year to March 31, 2021.

  • Sep 21, 2020
  • India’s burgeoning SaaS business face tax spanner

    These days there is significant change in the way software products are offered. Earlier, purchasing software implied heavy investment in infrastructure, installation, on-boarding, etc. However, the software-as-a-service (‘SaaS’) model, being cost effective and efficient in many ways compared to traditional software products, has fast become quite popular. The ease with which software services/ subscriptions can be provided remotely and the easy maintenance are some of the salient features of SaaS, which have contributed to its growing popularity.

    India’s SaaS business too has shown tremendous growth. Growing at a compounded annual growth rate of 30%, revenue from Indian SaaS business reached $ 3.5 billion as of FY 2019-20. Further, even in overseas markets, Indian SaaS products are quite popular, which is evident from the fact that in the past couple of years, 75% of the demand for Indian SaaS products came from overseas.

    The present talent pool, comprising of both technically skilled engineers and product managers, are the primary drivers for the success of Indian SaaS products. The first generation of Indian SaaS startups has already established a robust presence in the market.

  • Sep 21, 2020
  • Advance tax mop-up declines 25%

    Advance tax collections from top jurisdictions have fallen by around 25 per cent on average, as against about 40 per cent decline seen in the first quarter (Q1), indicating optimism on earnings of corporate houses as the economy gradually recovers from the lockdown.

    Overall, net direct tax collection after the advance tax payments stood at Rs 3.28 trillion, down 25 per cent from last year’s Rs 4.4 trillion.

    Gross collections are down 20.1 per cent to Rs 4.33 trillion and refunds up 4 per cent to Rs 1.05 trillion as of September 16.

    Incidentally, while Beng­aluru had shown 10 per cent growth rate till a couple of days ago, an 18 per cent decline in advance tax mop dragged overall direct taxes growth in the city to just over 1 per cent.

    Never­theless, the IT city was the only jurisdiction that showed growth in net direct tax collection.

    Mumbai, which contributes about 30 per cent of country’s direct collections, saw the rate of contracti­on in advance tax collection lo­wer to 20 per cent as against an over 33 per cent decline in Q1.

    “The rate of decline in advance tax payments has certainly come down in Q2 and is on expected lines, with the eco­nomy reviving with the unlocking process.

    "The trend is in line with the 24 per cent contraction in GDP in Q1.

    "The next quarter will see further improv­ement with companies seeing impro­ve­ment in earnings forecast,” said a government official.

    Advance tax is paid as and when the money is earned, rather at the end of the fiscal year.

    It is considered an indication of economic sentiment.

    The first installment or 15 per cent of advance tax is to be paid by June 15, the second by September 15 (30 per cent), third by December 15 (30 per cent) and the rest by March 15.

    The rate of decline in Delhi reduced to 30 per cent from 45 per cent contraction in Q1 on a year-on-year basis.

  • Sep 19, 2020
  • Government looks to extend faceless assessment scheme to 8 more I-T proceedings

    The government has proposed to extend the faceless assessment scheme to almost all proceedings under the income tax law, including for collection and recovery of tax and gathering of information.

    The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020, introduced in the Lok Sabha on Friday proposes to extend faceless assessment scheme to at least eight processes in income tax law.

    It proposed faceless assessment of income escaping assessment, faceless rectification, amendments and issuance of notice or intimation.

    Besides, faceless collection and recovery of tax, faceless revision and effect of orders and faceless approval or registration are proposed.

    The legislation also proposes faceless inquiry or valuation and faceless collection of information.

    Implementation of faceless scheme in these would eliminate the interface between the income tax authority and the assessees. It would also optimise utilisation of the resources through economies of scale and functional specialisation.

    Also, it would help introduce a team-based exercise of powers by the tax authorities.

    The Bill also proposes to formulate a scheme for 'faceless jurisdiction of income-tax authorities' which would "impart greater efficiency, transparency and accountability".

    Currently, faceless scheme is already implemented for scrutiny assessment and would be extended to appeal cases beginning September 25.

  • Sep 19, 2020
  • Govt proposes special tax incentives for FPIs choosing Gift City over Singapore & Mauritius

    Changes to the tax regulations introduced by the government on Friday will provide special incentive for foreign funds who choose to shift their base from Singapore or Mauritius to International Financial Services Centre (IFSC), Gift City, Gandhinagar.

    As a part of the Taxation and Other Laws Bill tabled in the Parliament, the Government has proposed to introduce a new regime for taxation of off-shore funds choosing Gift City. As per the proposed changes, profits and business income earned by such funds from Gift City will be tax exempt. Tax experts say, the changes are comparable to taxation of foreign funds domiciled in Fund jurisdictions such as Singapore and Ireland.

    Currently, funds coming from Singapore and Mauritius don’t pay any taxes on derivative trades. However, in the recent past the tax department has gone after some of such FPIs – especially those based out of Mauritius – from tax avoidance point of view. This has prompted several foreign funds to look at creating a domestic structure so that they comply with tax avoidance laws like General Anti-Avoidance Rules (GAAR). However, to do that they will have to forgo the tax exemption on derivatives that they enjoy under Mauritius and Singapore tax agreements.

    Going forward, such funds can set up an Alternative Investment Fund (AIF) in Gift City and invest in contracts traded on NSE and BSE without having to forgo the tax incentive. At the same time, these funds needn’t worry about the tax avoidance angle if they are based out of Gift City, since there will be no need to apply for tax treaty exemptions.

  • Sep 18, 2020
  • Direct taxes: Receipts fell in FY20, but refunds rose

    As a fraction of direct taxes collected, refunds of such taxes peaked at 16% in FY17, the demonetisation year, but have since fallen and touched 12.4% in FY19, according to data reviewed by FE. However, the rate, given the available data, seemed looking up again in FY20. The refunds in April-January last fiscal were Rs 1.71 lakh crore or close to 14% of the collections in the whole of FY20 and may have risen further in February-March. FY20, it may be noted, saw the uncommon phenomenon of year-on-year decline in tax receipts, owing to a deep cut in corporate tax rate and a steep decline in economic growth.

    The Parliamentary Standing Committee on Finance had raised an alarm over ‘excess’ advance tax payments in the last two financial years, drawing inference from the ‘high’ component of interest payouts in the funds refunded. The panel attributed the perceived trend to the taxman, in his drive to meet the revenue targets, apparently pushing the taxpayers to pay excess taxes. While this is certainly not true of FY19, refunds as a share of collections have of course risen in FY20, but perhaps not at a rate necessitating an alarm.

  • Sep 15, 2020
  • Over 35,000 direct tax disputes resolved under Vivad Se Vishwas

    The government on Monday said that 35,074 direct tax-related disputes have been resolved under the Vivad se Vishwas scheme as on September 8. This is even as nearly 6 lakh such cases are pending in different forums, including commissioner of appeals, tribunals, high courts and the Supreme Court.

    The dispute resolution scheme meant for direct taxes was passed as an Act earlier this year but the deadline for the scheme to avail concessional settlement provision has since been extended to December 31 due to Covid-19. A tax official said that a large number of cases would come under the scheme closer to the deadline.

    The government is hoping that a substantial portion of over Rs 10 lakh crore in revenue stuck in these cases can be unlocked through the scheme as it offers exemption from payment of penalty and interest on the disputed tax amount. The penalty and interest often amount to twice as much as the original tax demand.

    In case the appeal is filed by the department, the taxpayers choosing to settle dispute and make payment before December 31 will only have to pay half the disputed amount while penalty and interest would be waived off. However, if the case is related to dispute of penalty and interest then only 12.5% of the amount is payable.

  • Sep 14, 2020
  • CBDT deploys two-third of its workforce for faceless assessment scheme

    The Central Board of Direct Taxes (CBDT) has deployed two-third of its workforce to deal with the faceless assessment scheme.

    "Now, the National e-Assessment Centre (NeAC) which is headed by Principal Chief Commissioner of Income Tax is having a team of 32 Commissioners, 96 Principal Commissioner, 261 Assistant and Deputy Commissioners and 1274 Income Tax Officers," senior Income Tax officers told ANI.

    Faceless Assessment Scheme was inaugurated as Phase 1 on October 7, 2019, with 58,320 assigned cases. On August 13 this year, Prime Minister Narendra Modi launched the platform for transparent taxation.

    All cases other than those assigned to the Central charges (Serious frauds, Major Tax Evasion, Sensitive and Search matters, Black Money and Benami cases) and International Tax charges to be done through faceless assessment.

    According to officials, Regional e-Assessment Centre (ReAC) has also been increased to 34 from 8 earlier.

    Last year, NeAC has 8 ReACs at New Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Ahmedabad, Pune and Bengaluru. Now, Mumbai has 5 ReAC, Kolkata has 4 ReAC, Delhi has 3 and Chennai has ReAC. New ReAC centre has been set up after the Prime Minister launched the faceless assessment, taxpayers charter on August 13.

    New, ReACs have been set up in Vijayawada, Vishakhapatnam, Ranchi, Ahmedabad, Vadodara, Bengaluru, Panaji, Indore, Panchkula, Shimla, Nashik, Thane, Jodhpur, Trichi, Bareily and Dehradoon after the approval of Finance Minister Nirmala Sitharaman on August 13.

  • Sep 10, 2020
  • From October 1, 5% tax on foreign fund transfer

    Any amount sent abroad to buy foreign tour packages, and every other foreign remittance made above Rs. 7 lakh, will attract a tax-collected-at source (TCS) beginning 1 October unless you are making the remittance from income that is already tax-deducted at source (TDS). .

    While the tax on foreign tour packages will be 5% for any amount, for other foreign remittances, the tax will kick in only for the amount spent above Rs. 7 lakh.

    For education-related foreign remittances funded by loans, though, the tax will be just 0.5% for the amount above Rs. 7 lakh, considering many Indian students take loans to pursue education abroad.

    Under the Reserve Bank of India’s liberalized remittances scheme, individuals can remit a maximum of $250,000 abroad every year. The provision to collect tax on remittances was introduced in the Finance Act of 2020 subject to riders and notified on 27 March to take effect from 1 October.

    Many financial institutions have communicated the applicability of tax-collected-at source on remittances from October to customers.

    The Union finance ministry has been extending the scope of both tax-deducted at source and tax-collected-at source, and encouraging electronic payments in order to have a better idea of transactions in the Indian economy and to be able to match the spending pattern of assessees with their reported taxable income.

  • Sep 10, 2020
  • I-T Dept issues refunds worth Rs 1.01 lakh crore to 27.55 lakh taxpayers till September 8

    The Income Tax Department on Wednesday said it has issued refunds of over Rs 1.01 lakh crore to 27.55 lakh taxpayers between April 1 to September 8.

    This include personal income tax (PIT) refunds amounting to Rs 30,768 crore issued to 25.83 lakh taxpayers and corporate tax refunds amounting to Rs 70,540 crore issued to over 1.71 lakh taxpayers during this period.

    “CBDT issues refunds of over Rs 1,01,308 crore to more than 27.55 lakh taxpayers between 1st April,2020 to 08th September,2020. Income tax refunds of Rs. 30,768 crore have been issued in 25,83,507 cases &corporate tax refunds of Rs.70,540 crore have been issued in 1,71,155 cases,” the Central Board of Direct Taxes (CBDT) tweeted.

    The government has emphasised on providing tax related services to taxpayers without any hassles during the Covid-19 pandemic, and accordingly has been clearing up pending tax refunds.

  • Sep 09, 2020
  • Covid-19: The changing landscape of tax

    It is almost six months in India, and more than eight months in other parts of the globe, that the Covid-19 pandemic has played havoc. Whenever this gets over, life isn’t going to be the same for everyone. There has been a paradigm change, from an office-going culture to work from home culture, face-to-face interactions to online meetings/interactions. The world of tax is no exception, and the government has already announced the roll-out of faceless assessment in income-tax. It is time for industry to commence assessing the impact of the lockdown on various aspects of business.

    While these are early days to assess the overall impact, already, the World Bank and leading credit agencies have raised red flags with regards to large economies of the world, India included. The largest economies are going to contract this year, and the immediate focus is now on survival rather than growth. Growth is still a couple of quarters away, and given the dwindling of demand for goods and services, businesses are relooking at their cost structures and negotiating new rates to be effective for future transactions. The impact of the pandemic on domestic as well as international transactions is humongous. In India, we have already seen the GDP contract in the April-to-June quarter.

  • Sep 08, 2020
  • Digital companies including Amazon, Facebook seek clarity on ecommerce transactions tax

    Top digital companies including Amazon, Flipkart, Bookmyshow and Facebook have sought clarity from the government on how a 1% tax on ecommerce transactions announced in the previous budget would be levied.

    The first instalment of the new tax is due in October and there is some ambiguity over how it is to be calculated, experts said.

    Companies want the government to come out with precise rules for this tax, which they are to deduct before payments to vendors, and how certain transactions should be treated.

    The new section that includes the 1% tax says, “Where sale of goods or provision of services of an ecommerce participant is facilitated by an ecommerce operator through its digital or electronic facility or platform (by whatever name called), such ecommerce operator shall, at time of credit of amount of sale or services or both to the account of an ecommerce participant or at the time of payment thereof to such ecommerce participant by any mode, whichever is earlier, deduct income tax at the rate of 1% of the gross amount of such sales or services or both.”

  • Sep 05, 2020
  • I-T dept prepares to implement faceless income tax appeals from September 25: Finance secretary

    Finance secretary Ajay Bhushan Pandey said preparations are being made to implement faceless income tax appeals from September 25. The income tax department has already rolled out pan-India faceless assessment facilities for all taxpayers from August 13.

    “It is completely doable… there may be some teething troubles, but they can be addressed,” Pandey said at a webinar on Transparent Taxation organised by ET Markets and FICCI on Friday.

    The department is studying whether cases of penalty and transfer pricing could be included in the faceless regime, he said when asked about procedures for transfer pricing and penalties. He added that pending appeals, cases will be resolved without direct interaction with the tax authorities, with a technical unit to help the appellate officer.

    India’s taxation system will have to be aligned with the challenges of global mobility of people, the finance secretary said in response to a question on the need for simplification of taxes for non-resident Indians.

    The government or the Central Board of Direct Taxes will have to be more aligned to such problems because these are recent phenomena and this problem will get highlighted more,” he said.

    The faceless system will ease compliance and widen the tax base while doing away with discretion and subjectivity at the hands of tax officers, Pandey said.

    “The move to a faceless system will lead to reduced compliance burden, lower cost of compliance and reduced litigation,” he said. “The faceless system will improve the ease of doing business and more people will come into the tax stream.”

  • Sep 02, 2020
  • I-T authorities can share info with scheduled commercial banks, CBDT says

    The CBDT has said the income tax authorities can share information with scheduled commercial banks, a move that would ease the lenders’ hassle of deciding TDS deductibility on various payments to their customers.

    In a notification dated August 31, the Central Board of Direct Taxes (CBDT) included ‘scheduled commercial banks’, listed in the second schedule of the Reserve Bank of India Act, 1934, under Section 138 of Income Tax Act for sharing of information.

    CBDT is the apex tax body on personal income tax and corporate tax.

    Section 138 of the Income Tax Act empowers income tax authorities to share information/ details of its taxpayers with other agencies.

    Nangia Andersen LLP Partner Sandeep Jhunjhunwala said the addition of these banks in the list of bodies with which the tax authorities can share information received from the taxpayers should ease a lot of administrative hassles currently faced by the banking industry in the country.

    “This addition to Section 138 of Income Tax Act would surely ease the burden of scheduled commercial banks for deciding TDS deductibility on various payments to its customers,” he said. The move will especially help in cases such as TDS under Section 194N, which requires multiple income tax related information and declaration from customers making withdrawal, Jhunjhunwala added.

  • Sep 02, 2020
  • Filing ITR to be a tiring task for equity/MF investors doing SIP, STP, SWP

    Filing Income Tax Returns (ITRs) is a relatively easy task for salaried individuals having total income up to Rs 50 lakh, income from one house property and income from other sources like interest income, as they need to file the simple ITR-1, provided such a taxpayer is not a director of any company, has not invested in unlisted shares and/or don’t have any income from business or profession.

    However, apart from non-fulfillment of any of the above conditions, if a salaried individual redeems his/her equity share(s) – be it a listed share – and/or equity-oriented mutual fund (MF) unit(s), he/she will have to file ITR-2, provided the taxpayer doesn’t have any income from business or profession.

    Not only ITR-2 excel utility has 28 pages compared to just 8 pages in ITR-1, but from this year, instead of filling the consolidated capital gain (CG) amount, investors need to fill Schedule 112A for each transaction amounting to long-term capital gain (LTCG) from sale of equity share in a company or unit of equity-oriented fund or unit of a business trust on which STT is paid under Section 112A of the Income Tax Act.

    The Schedule 112A page was introduced in July last year during the peak of tax filing session for the Assessment Year (AY) 2019-20 with almost half of the taxpayers already filed their return of income. As a result, Schedule 112A was optional last year and investors were allowed to provide consolidated LTCG on the CG page.

  • Aug 31, 2020
  • Don’t collect levy charges on electronic payments, says finance ministry

    The Union Ministry of Finance has advised all the banks not to collect any charges on transactions or payments made through electronic mode, the Central Board of Direct Taxes (CBDT) said in a statement on Sunday.

    According to the CBDT, some representations were made that some banks are imposing and collecting charges on transactions carried out through UPI.

    A certain number of transactions were allowed free by these banks beyond which every transaction bears a charge, the CBDT noted.

    “This is in violation of the Circular no 32/2019 dated December 30, 20219, which was issued by CBDT to clarify that based on section 10A of (Payment and Settlement System (PSS) Act, any charge including MDR (Merchant Discount Rate) shall not be applicable on or after January 1, 2020 on payments made through electronic modes,” the release said.

    Hence, it said that the Ministry has advised the banks to immediately refund the charges collected, if any, on or after January 1, 2020, on transactions carried out using electronic mode prescribed under section 269SU of the IT Act and not to impose charges on any future transactions carried through electronic mode.

  • Aug 29, 2020
  • Income Tax Department to intimate taxpayers under scrutiny about faceless assessment

    The income tax department will soon start sending out intimation to assessees undergoing scrutiny that such cases would now be handled under faceless assessment, a tax official said on Friday.

    CBDT Additional Commissioner Jaishree Sharma also said that domestic transfer pricing cases too will be covered under the faceless assessment mechanism.

    Asked whether the previous notices still stand valid, Sharma said, "Previous notices will not become redundant. First, an intimation would be sent out that your case would now be assessed under faceless assessment scheme and if the Assessing Officer of the Assessment Unit feels that he needs some more information, he will send fresh (notice) under 142(1)."

    A Section 142(1) notice is sent to an assessee to inquire about details and documents before making assessment under the Income Tax Act.

    Speaking at a webinar organised by industry body PHDCCI, Sharma said reassessment cases would also be part of the faceless scheme.

    "So all the 148 cases that were going on, they have been transferred to the faceless assessment scheme and NeAC will be sending out intimation in all such cases which would now be assessed under the faceless assessment scheme. So by September 15 or before that, you can expect an intimation from NeAC," Sharma said.

  • Aug 22, 2020
  • IT Department to map digital behaviour of taxpayers to create profiles

    The income tax department will map the digital behaviour of taxpayers to create their profiles under faceless scrutiny assessment in electronic mode, a senior official said, as all interactions of a taxpayer with the tax authority will be logged.

    Faceless assessment will be a complete shift from the earlier practice where taxpayers could sit with the assessing officer and resolve issues at one go, following a single notice of demand, and even seek adjournment for hearings over telephone calls.

    “If I give you a requisition for five things, you (taxpayer) respond to one, and take adjournment to respond to the other, that’s assessee behavior that is being mapped, which in the manual days was not being mapped,” Smita Jhingran, chief commissioner of income tax at Regional e-Assessment Centre, Delhi, said on Friday at a webinar organised by industry body FICCI and Dhruva Advisors.

    “A lot has changed. Now you're leaving a digital footprint of everything …,” she said in response to a question.