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Mar 12, 2020

Rent from children not a tax evasion tool, rules ITAT

Receiving rent from your children will not be treated as tool for tax evasion, provided it is for genuine tax-saving arrangement, Income Tax Appellate Tribunal (ITAT) has ruled.

ITAT is a quasi judicial institution set up in January, 1941 and specialises in dealing with appeals under the Direct Taxes Acts, such as Income Tax Act 1961. The orders passed by the ITAT are final, an appeal can be made to the High Court only if a substantial question of law arises for determination. An order by ITAT is binding on the concerned parties and can be used as persuasive in similar matter.

The said matter here involves an income-tax assessment order where the official did not accept the claim of the assesee, who is the petitioner. He had claimed a loss of Rs. 15,32,120 on account of interest (on borrowed capital) at Rs. 21,62,120, adjusting it against the rental income of Rs. 9 lakh. The said rent was, on the basis of a field enquiry by the Assessing Officer (AO), found to be from the assessee’s major son and daughter, Neha Pathan, residing along with the other family members.

 Mar 12, 2020

FinMin flags 17 ‘areas of dissatisfaction’ with Infosys-designed GSTN

The finance ministry has flagged 17 ‘areas of dissatisfaction’ with Infosys-designed GST Network, including transition issues for taxpayers in Jammu and Kashmir, Aadhaar verification and lack of scalability of server. The other areas which the ministry has flagged as “unresolved or late resolved” with Infosys include delay in providing software for blocking of e-way bill generation in cases of non-filers of GSTR-3B.

Besides, new supply code for point of sale outside India, or deploying a feature that would allow assigning registration application to the same jurisdictional officer after past rejection (a decision on which had been taken in early 2019), were also flagged by the ministry.

Infosys, which in 2015 won the contract for managing backend for GST Network (GSTN), has drawn flak from the ministry over the tech glitches, some of them have been unresolved for almost two years.

The finance ministry has sought an urgent resolution plan from the Bengaluru-based software giant to address these tech glitches and the 17 areas have been highlighted by the government, sources said.

Mar 11, 2020

Govt may halve dividend income tax rate for big local investors

The government may consider effectively halving the tax rate on dividend income for individuals in the highest tax bracket, two people familiar with the development said, likely boosting stocks that are facing a rout globally.

The government is looking to tweak the current regulations to bring down the tax on dividends to about 20% from up to 43% for Indian individual investors. The government may offer the concession by offering a flat 20% tax on dividend income.

After a change in the budget, dividend income is now taxable up to 43% in the hands of the recipient from April this year.

Foreign companies, on the other hand, would have to pay anywhere around 5% to 15% tax on dividends depending on the tax treaty that India has with the country from where the investment is routed.

Mar 09, 2020

E-invoicing under GST may be deferred

The government is considering deferring the implementation of e-invoicing under goods and services tax (GST) by three months to July 1, two officials aware of the development said, adding that the Goods and Services Tax Council may consider such a proposal at its meeting on Saturday.

“It (deferment) is being considered… The Council has to take up the matter at the meeting… they may announce it after the meeting and consultation with states,” one of the officials said, asking not to be named.

Trials to upload e-invoices on the GST Network (GSTN) — introduced in January — have seen lukewarm response, and barely 1% of registered businesses under the GST regime used it, the other official said.

“We need feedback… if only a few companies upload e-invoices now, we will not know the shortcomings of the system. When it becomes mandatory from April 1, a deluge will inundate the system, and then people will say that the government’s systems are not working,” the official added, requesting anonymity.

Mar 05, 2020

Companies send SOS to tax and audit experts for Vivad se Vishwas scheme

Several companies, including public sector units, are still reluctant to settle all their tax litigations through the Vivad se Vishwas scheme despite government prodding due to cash flow issues and likely impact on balance sheet, people privy to the development said.

These firms have reached out to their tax and audit advisors to help resolve these two issues, they said.

The scheme introduced in the recent Union budget allows taxpayers to settle disputes by paying outstanding taxes while getting a waiver of interests and penalties.

However, experts said, many firms lack the required cash flow while many are worried that availing the scheme would substantially impact their earnings per share (EPS).

Further, many companies, including ONGC, Gail Ltd, Power Finance Corporation, REC Ltd and Indian Oil Corporation, will be required to take approval from their shareholders if they decide to take advantage of the new scheme, they said.

Mar 03, 2020

GST receipts get a compliance boost as efforts to increase collections pay off

Goods and Services Tax (GST) collections, in aggregate, are still way below the targets set by the authorities, but their efforts to improve compliance, check excessive use of input tax credits and frustrate frauds like fake invoicing are paying off, albeit gradually.

Since the Centre cut its own budget estimate for GST by over 8% to Rs 6.1 lakh crore, it would likely meet the revised estimate, even with the current pace of collections; but in order to be able to meet the gross collections target, which includes fully compensating the states for any revenue shortfall from the assured annual-growth level of 14%, the March mop-up requires to be an impossibly high Rs 1.4 lakh crore. The compliance rate of monthly returns filing by the registered taxpayers rose to over 80% in February (for January transactions), from just 59% in May 2019. Since the filing of the GSTR 3B, the monthly return, involves discharge of the self-assessed tax liability, the increase in filing of these returns has pushed up collections, especially in the four months to February.

Mar 02, 2020

You may be fined Rs 10,000 if you fail to link PAN with Aadhaar by the end of this month

You may face double trouble if you fail to link your Aadhaar with PAN by the end of this month. First, your PAN will become inoperative and second, you may be fined Rs 10,000 if you use an inoperative PAN.

The income tax department has said that PAN card holders may face penal action under the Income Tax Act if they fail to link it with Aadhaar before the deadline. Any person found using canceled PAN card, could be fined up to Rs 10,000 under Section 272B of the Income Tax Act. Further, if you do not link your PAN with Aadhaar by March 31, then your PAN will become inoperative from April 1. Central Board of Direct Taxes (CBDT), through a February 13, 2020 notification, had said that a PAN not linked with Aadhaar by March 31, 2020 will become inoperative.

An individual having an inoperative PAN may face trouble in several financial transactions like banking transactions, buying or selling of a property, investments in stocks and mutual funds. A non-operative PAN is the same as not having a PAN.

However, your inoperative PAN will become operative once again when you link it with Aadhaar.

Feb 29, 2020

GST: Changes and method to claim Input Tax Credit answered

Ever since the GST came into effect on July 1, 2017, the Indian economy has seen a plethora of regulations implemented by the GST council. Now the department is using analytics to keep tab on the errant taxpayers who are claiming excess input tax credit or to track some taxpayers who are not serious about the matching of their GSTR – 3B with their GSTR – 2A. The Input Tax Credit (ITC) is one of those regulations that is causing some confusion among the masses. Here is a brief explanation of what ITC means, how it will affect the masses- especially small business owners, and what are the necessary steps needed to be taken.

What is ITC?
Input tax credit (aka ITC) is the subtraction of the tax money you have paid on inputs on the final output bill.

Who can avail of ITC?
ITC is available to an entity only when it is covered under the GST Act. Any manufacturer, supplier, agent or e-commerce operator aggregator must be registered under the GST if it is to become eligible to claim the ITC on their purchases which are used in the course and furtherance of business.

Feb 26, 2020

Companies, FPIs stare at tax confusion

Many companies and foreign portfolio investors (FPIs) are expected to find themselves in each other’s crosshairs over the issue of taxing dividend.

The onus is on companies to tax dividends of their investors before the pay-out. The question is at what rate should the FPIs be taxed — should they be taxed as per India’s tax treaties with the countries they are based at, or as per the domestic tax rates.

Also, even if they are taxed at lower rates under the tax treaties, that can only be applied to FPIs that are ultimate beneficiaries and not just passthrough vehicles registered in locations like Singapore or the Netherlands. This could become a point of dispute between companies and FPIs — investors would want taxes to be deducted as per tax treaties but the companies could seek clarity over their structure before doing so.

“There is no clarity as to whether companies declaring dividends need to withhold tax at 20 per cent or at the higher rate of 30 per cent or 40 per cent as per TDS (tax deducted at source) rates prescribed in the Income Tax Act. It is also unclear whether the benefit of lower withholding under tax treaties can be extended to FPIs,” said Himanshu Parekh, the head of corporate and international tax at KPMG.­

 Feb 06, 2020

Note ban cases to add over Rs 2.5 lakh crore to Income Tax disputes

Amounts involved in personal income tax (PIT) disputes could jump by a massive Rs 2.5-3 lakh crore in the current financial year from close to Rs 4 lakh crore at the end of FY19 for the sole reason of post-demonetsation cash deposits in banks by about 90,000 individuals that have to date remained unexplained by them to the taxman’s satisfaction. That could present a chance for the government to net a tidy sum in FY20 if sections of these recalcitrant individuals opt to use the new Vivad Se Vishwas scheme to avoid much higher tax liabilities that could potentially befall on them in the normal course of dispute resolution involving tax adjudicators and courts.

According to a senior official, having exhausted the procedures involved before dispute stage like sending e-mails and SMS messages to these individuals to elicit their responses and explanations within specified periods, the cases of the above 90,000 people have started getting classified as ‘disputes’ and by the end of February, most of them will be termed so. This will make these individuals eligible to use the Vivad Se Vishwas scheme by paying 75% of the cash deposited by March 31, 2020 to nullify chances of any further liabilities that could otherwise arise from holding the unaccounted cash.

Feb 06, 2020

No interest or penalty till March end

The Direct Tax Vivad Se Vishwas Bill, 2020, tabled in the Lok Sabha on Wednesday seeks to cut down on nearly 4.8 lakh tax disputes involving an amount of Rs 9.32 lakh crore (up to November 30, 2019) by giving the taxpayers the facility to escape interest on the disputed tax amount and any penalty. All direct tax-related cases pending before the Commissioner (Appeals), Income Tax Appellate Tribunal, high courts or the Supreme Court as on January 31, 2020 are eligible for the scheme.

The scheme provides that if a taxpayer avails it by March 31, 2020, then he would get complete waiver of interest and penalty. However, a taxpayer who chooses the scheme post this cut-off date will have to pay the disputed tax and 10% of it extra.

Further, if the tax arrears relate to disputed interest or penalty only, then only 25% of disputed penalty/interest is payable if scheme is availed by March 31. Cases coming for resolution after this date would have to pay 30% of penalty and interest.

Introducing the Bill, finance minister Nirmala Sitharaman said it emphasises on trust building. The scheme, she said, would not be open-ended. The government will later notify the end date for the scheme.

Rakesh Nangia, chairman, Nangia Andersen Consulting, said: “This can be a very beneficial scheme for settlement for cases such as additions of unexplained cash deposited during demonetisation period, additions for penny stocks, etc.

Feb 06, 2020

Will meet FY20 direct tax target of Rs 11.7 lakh cr: Mody

The tax department will meet the revised direct tax target of Rs 11.7 lakh crore in the ongoing financial year, Central Board of Direct Taxes (CBDT) chairman PC Mody said, owing to high tax collections expected in the fourth quarter, which has been the trend for the past years.

In the next financial year, the department will use artificial intelligence and data mining to enhance revenue collections, which will help it meet the target for FY21as well. “Whatever estimates have now been given, I think there is absolute realism to that… I am reasonably confident that we will be able to meet this year’s target,” Mody said at a CII post-budget interaction Wednesday.

“We are going to make use of technology in a big way. We are doing data mining, using artificial intelligence very very extensively. And the results of that will be visible in the time to come

Feb 05, 2020

‘Nothing adverse’ in overseas remittance data, says CBDT

High net-worth individuals transferring funds abroad under the Liberalised Remittance Scheme (LRS) can breathe easy. The Central Board of Direct Taxes (CBDT), which examined LRS data from several banks in Mumbai and Delhi, has found “nothing adverse” in the cases it scrutinised, according to an internal report that ET has seen.

“The Directorate of Intelligence & Criminal Investigation (I&CI) of the income tax department during August and September 2019 obtained LRS data from several banks in Mumbai and Delhi and verification of the top 100 cases was undertaken. However, nothing adverse was found,” said the report, which was submitted to the special investigation team (SIT) probing black money earlier this year.

The LRS is extensively used by HNIs to transfer funds abroad up to the permitted limit of $250,000 in a financial year.

Feb 04, 2020

Centre to release GST compensation to states in 2 instalments

The Centre will release all due GST compensation to states in two instalments, Union Minister Anurag Thakur said in Lok Sabha on Monday.

The reply came after MPs from Telangana and Odisha complained during Question Hour that their states were not getting the share of the Goods and Services Tax (GST) and Integrated Goods and Service Tax (IGST).

“All due GST compensation will be given to states in two instalments,” Thakur, union minister of state for finance, said.

The minister said GST (Compensation to States) Act, 2017 provides for compensation to States/UTs (UT with legislature only) on account of revenue loss due to implementation of GST on a bi-monthly basis.

Accordingly, he said, the states have been paid GST compensation on a bi-monthly basis with effect from July, 2017.

Thakur said the GST Compensation has been released till September, 2019 and the next bi-monthly GST Compensation is due for October-November, 2019.

The minister said a total of Rs 2,10,969.49 crore has been released as GST compensation to states so far including UTs of Delhi and Puducherry after implementation of GST with effect from July 1, 2017.

Feb 04, 2020

Leaner tax structure more beneficial

The government will, in a few days, bring a law on the direct tax amnesty scheme, which will offer protection from prosecution to those willing to settle, Central Board of Direct Taxes chairman PC Mody said. The chief of the apex direct taxes body told Gulveen Aulakh and Deepshikha Sikarwar in an interview that the new exemption-less lower tax slabs will simplify matters and should be seen as a step towards an exemption-free regime. Edited excerpts:

What will the structure of the proposed scheme to settle disputes be?
We want to reduce litigation and disputes. Taking a step in that direction, we raised monetary limits for filing of appeal at various appellate fora. We also issued circulars to reduce litigation. Continuing with that exercise, we have taken this step to give a one-time window to taxpayers to settle disputes pending at the Commissioner (Appeals), the Income Tax Appellate Tribunal, high courts or the Supreme Court.

Feb 04, 2020

Not just TDS, Form 26AS to show property, shares, MF transaction details

As the union Budget has proposed rationalisation of provisions relating to Form 26AS, taxpayers will now get a detailed information statement beyond the tax deducted at source (TDS) such as sale/purchase of immovable property, share transactions, etc. This will help make filing of income tax returns (ITR) easier.

At present, under Section 203AA of the Income Tax Act, the income-tax department delivers Form 26AS to every person, showing details of TDS and other prepaid taxes. The Budget has now proposed to introduce a new Section 285BB that requires it to upload a comprehensive annual information statement in respect of the taxpayer.

“Such statement will also include other financial information such as sale or purchase of immovable property and shares in possession of the income-tax authority. Consequently, Section 203AA will be deleted and Form 26AS will be replaced by the comprehensive annual information statement,” the Finance Bill’s provisions relating to direct taxes notes. This proposed amendment will be effective from June 1, 2020 and the form and manner of the annual information statement will be prescribed by the government later separately.

Feb 04, 2020

Taxpayers’ charter will empower citizens to get time-bound services from I-T dept: CBDT chairman

The taxpayers’ charter announced in the Budget will have a statutory status and it will “empower” citizens by ensuring time-bound services by the Income-Tax Department, the CBDT chief has said. CBDT Chairman Pramod Chandra Mody said the charter will be notified very soon and once operationalised, India will be only the “third or fourth” country to have such a tax administration.

The Central Board of Direct Taxes frames policy for the I-T Department.

“The underlining theme with which we have been working till now is that we trust the taxpayers and from purely an enforcement agency, we are shifting our focus to being a service-oriented department,” Mody said in an interview to the Press Trust of India.

Feb 03, 2020

Direct tax collection target scaled down in budget; new slabs to benefit taxpayers: CBDT chairman

The direct tax collection target has been downward revised to Rs 11.80 lakh crore in the Union Budget after making a “realistic assessment” of various economic factors, a top government official said.

The set target for revenue collection (personal income tax, corporate tax and others) was Rs 13.35 lakh crore for the 2019-20 financial year that ends on March 31.

“Those (earlier) estimates have been revised in the budget and our new target would be about Rs 11.80 lakh crore which I am pretty confident that we will achieve it,” CBDT Chairman P C Mody told in a post-budget interview.

Asked about the reasons for the recalibration of the target, Mody said, “It was just a realistic assessment of what is achievable and also it has to be taken into account that we have had a lot of revenue forgone.”

The revenue foregone is essentially on two accounts – huge refunds issued and cut in corporate tax. “It is a realistic assessment of the whole system.”

Feb 01, 2020

Govt nets Rs 1.1 lakh cr from GST in January

Goods and services tax (GST) collection has crossed the Rs 1 lakh crore-mark for the third month in a row in January on the back of anti-evasion steps taken by tax officers.

This is second time since introduction of GST in July 2017 that the monthly revenues have crossed Rs 1.1 lakh crore.

The GST collection is in line with the target set by Revenue Secretary Ajay Bhushan Pandey after a high-level meeting with senior tax officials earlier this month.

During the month, GST revenue from domestic transactions has shown a growth of 12 percent over the revenue during January 2019, according to an official statement.

Taking into account the integrated goods and services tax (IGST) collected from imports of goods, the total revenue during January 2020 has increased by 8 percent in comparison to the revenue during January 2019, it said.

However, the IGST on import of goods has shown a negative growth of (-)3% as compared to January, 2019.

“The gross GST revenue collected January 2020 is Rs 1,10,828 crore, of which CGST is Rs 20,944 crore, SGST is Rs 28,224 crore, IGST is Rs 53,013 crore (including Rs 23,481 crore collected on imports) and Cess is Rs 8,637 crore (including Rs 824 crore collected on imports),” it said.

The GST collection stood at Rs 1.02 lakh crore in January 2019, as per the official statement.