There are 88,000 appeals pending before the Income Tax Appellate Tribunal (ITAT) and efforts are being made for their speedy disposal, its chairman said on Wednesday.

Of the total appeals, 24,000 are pending before the Delhi bench followed by Mumbai bench (15000-16000), ITAT Chairman Justice PP Bhatt told reporters here.


As part of the endeavour to dispose the pending appeals expeditiously, 41 vacancies in the tribunal will be filled in the coming days, Bhatt said.

It is likely to take one-and-a-half month to fill the vacant positions, he added.

A new circuit bench will be inaugurated in Dehradun by Union Law and Justice Minister Ravi Shankar Prasad on Thursday. After that, 800 income tax related appeals from Uttarakhand pending before the tribunal's Delhi bench will be transferred to the circuit bench of Dehradun.

Indian jewellers have received surprise tax notices asking them to turn over money they made from customers who scrambled to buy gold after Prime Minister Narendra Modi's 2016 ban on high-currency notes, according to a dozen jewellers and tax officials.

When Modi announced a sudden ban on Rs 500 and Rs 1,000 notes on November 8, 2016 to weed out undeclared cash, clients thronged the store of one Mumbai-based jeweller, clamouring for necklaces, rings, bullion - anything gold.

The jeweller - who asked to only be identified by his surname, Jain, to avoid retribution - said he sold his entire stock at a steep premium that day and pocketed revenue usually earned in two weeks.

Three months ago, he received a tax notice asking for the source of those earnings and ordering him to turn in all revenue made that night, under suspicion that black money was behind the purchase.

India is pushing for a major change at Organisation for Economic Cooperation and Development (OECD) on methodology at determining taxability in every jurisdiction hoping to tap a larger share of tax from multinationals such as Google, Facebook, Amazon and Netflix.

OECD recently said that income tax collections of major digital companies could go up by around $100 billion if new tax regulations are formed and adopted by all countries.

With a hope of getting larger chunk of $100 billion in global taxes to be paid by digital companies, India is pushing that number of users should determine taxes payable by digital majors in a country. The OECD under its Base Erosion and Profit Shifting (BEPS) initiative has come up with a number — $ 100 billion — in additional taxes digital majors need to pay globally.

“There are companies generating billions of dollars in revenue from India but manage to pay abysmal amount in taxes. All we want is that these companies cough up what’s only India’s fair share,” said an official aware of the development. He added that the government has been pushing for this and would be submitting its proposals to the OECD soon.

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.

About 70-80% of the direct tax disputes – nearly 5 lakh involving tax demands of Rs 9.5 lakh crore at last count and piling up – may get resolved in one stroke, as the government has decided to move the Supreme Court, pleading for definitive rulings on 20 issues identified by the tax department as being at the heart of these disputes, revenue secretary Ajay Bhushan Pandey said on Monday. He also said that even though the lenient 15% corporate tax rate for new manufacturing units was for a limited window (till FY23-end), the government was taking efficient steps to widen the tax base, which could facilitate further pruning of various tax rates including those for corporate and dividend incomes, in the coming years.

The idea is the apex court rulings would accord finality to who is in the right in the intractably fractious disputes between the taxman and taxpayers, helping mass disposal of about 4 lakh cases lingering on, at various fora – from the commissioner (appeal) level to the tax tribunals to courts and arbitration panels.

Salaried people can choose either of the two income tax regimes at the time of filing their returns irrespective of the choice they have given to the employer at the beginning of the financial year, a senior government official said.

The budget for the next fiscal has proposed to add a new tax regime to the existing one.

From April, taxpayers will have the option to choose the proposed lower tax rates with no exemptions, or the existing regime that allows for deductions and exemptions.

Employees can switch if they feel they had paid more tax under the regime that they had indicated to the employer at the beginning of the financial year to deduct tax at source, the official said.

The CBDT has decided to honour the best income tax department investigator, revenue collector and innovator among others working in the recently launched e-assessment scheme. As per an order issued on February 20 by the policy-making body of the department, there will be five categories of honours on a monthly and yearly basis and the winning tax personnel will be honoured on 'Income Tax Day' celebrated in July every year.

Their names and photos will also be displayed on a 'Wall of Fame' that will be created at a prominent location in the department.

The officers will be categorised under five 'prime' categories of best investigator, best revenue collector, best administrator, best auditor and best innovator.

This is being done by the Central Board of Direct Taxes to "promote and appreciate the outstanding work of officers/officials or group of officers/officials in e-assessments for each Principal Chief Commissioner of I-T region".

E-commerce companies have sought more time to implement a government proposal to levy a new tax, although they have, in principle, agreed to its imposition.

The ecommerce entities, including Amazon.com and Walmart-owned homegrown etailer Flipkart, have said they need time to upgrade IT systems in order to enable them to collect the 1% tax deduction at source (TDS) from sellers, a senior government official said.

“They’ve made representations, they're fine with the tax deduction plan, but they want the date to be at a later time...They want to upgrade their IT system, which will take time," the official said asking not to be named since the discussions were ongoing.

The income tax department plans to bring the unorganised sector into the tax net and widen the overall tax base. The move to tax e-commerce transactions at source was one way to reduce litigation, officials said. E-commerce companies said they were seeking more clarity on the new rule.

European Union finance ministers added Panama, the Seychelles, the Cayman Islands, and Palau to the EU's blacklist of tax havens while giving Turkey more time to avoid being listed, an EU document said on Tuesday. The list, which was set up in 2017 after revelations of widespread tax evasion and avoidance schemes, now includes 12 jurisdictions.

Adding financial centers like the Cayman Islands and Panama marks a shift for the EU. Several reviews had left on the list mostly Pacific and Caribbean islands with almost no financial relationship with the EU - drawing criticism for being too lenient on tax havens. The other listed jurisdictions are Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the three U.S. territories of American Samoa, Guam, and the U.S. Virgin Islands.

Those on the blacklist face reputational damages, higher scrutiny in their financial transactions and risk losing EU funds.

The Madras High Court in a recent order has opined that the faceless tax-assessment system “can lead to erroneous assessment, if officers are not able to understand the transactions and statement of accounts of an assessee without a personal hearing”.

The court, however, said electronic-assessment — introduced to curb cases of corruption and harassment of tax payers by officials— was a laudable initiative.

The HC made the observations while hearing a writ petition filed by a Coimbatore-based chit fund company against certain additions made by the assessing officer, over cash deposits of Rs 67.37 lakh made by the company during the demonetisation period.

The judge remarked that the assessing officer should have at least called for an explanation in writing before concluding that the amount collected and deposited by the petitioner was unusual.

Multinational companies in India have reached out to their tax advisers seeking to know the exact tax payable on dividends under existing tax treaties and if the status of most favoured nation would lead to additional benefits.

Several persons in the know said multinationals are analysing the total tax on the dividends with respect to the tax treaties and the most favoured nation status of the source country. Many would now fall back on the tax treaties and could be looking to postpone their dividend payouts till April this year.

Under most tax treaties India has with other countries, multinationals will be liable to pay 5% to 15% tax on dividends against 20% earlier. However, multinationals from countries such as Switzerland and France will even get to set off additional 5% tax against liabilities in their home country.

“Following the recent changes in the budget around dividends, most multinationals would look to give dividends after March end as that would mean tax of anywhere between 5-15% depending on the tax treaty. For countries like France and Switzerland that have MFN status, the rate would be 5% tax. Further, in either case set-off would be available, said Girish Vanvari, founder of tax advisory firm, Transaction Square.

Finance minister Nirmala Sitharaman on Monday said that the government was considering suggestions received on taxation liability imposed on unit holders of REITS and InvITs after the Budget reverted to the classical system of taxing dividend in the hands of recipient. She was speaking at a post-Budget session with industry representatives in Bengaluru.

Expert said that with the change in the dividend distribution tax (DDT), the foreign investors in REITs/InvITs were at a disadvantage now. Hitherto, dividend received by REIT/InvIT from 100% SPV was not liable to DDT and not taxable either in the hands of REIT/InvIT or investors. This was based on the rationale that the SPV paid tax on rental and other incomes earned and hence there cannot be multiple points of taxation. But as per Budget proposal, the unit holders will need to pay tax on dividend income received from such SPVs and distributed by REIT/InvIT leading to double taxation in the hands of SPV and unit holders.

“This will adversely impact return in the hands of unit holders. The government needs to relook at this proposal and restore the single point of taxation as prevailed earlier.

Taxpayers availing of the Vivaad Se Vishwas Scheme will have to pay only half of the disputed amount in cases where the income tax department has filed an appeal, as per recent amendments to the Direct Tax Vivad Se Vishwas Bill that were cleared by the Cabinet.

The scheme, which was announced in the Budget to resolve pending disputes worth Rs. 9.32 lakh crore in over 4.8 lakh cases, has segregated the terms of payment on the basis of appeals having been filed by the tax department or the taxpayer.

The Bill, which was introduced in the Lok Sabha during the just-concluded Budget session, is expected to come up for passage in the next session beginning March 2.

In case of appeals made by the taxpayer, the full amount of disputed tax will have to be paid till March 31, and 25% more in case of search cases. Penalty and interest will be waived. In case the amount of penalty, interest or fee is the matter of dispute, then only 25% of that amount will have to be paid, while the rest will be waived off.

After March 31, however, the taxpayer will have to pay 10% more on top of the full disputed tax amount, and 35% more in case of search cases. Similarly, in case the amount of penalty, interest or fee is the matter of dispute, 30% will have to be paid.

Finance Minister Nirmala Sitharaman on Sunday said the idea behind introducing second alternative tax slabs sans exemptions is to take the country towards "a simplified, exemption-free and reduced rate of tax regime."

However, there was no time frame set by the government to remove all exemptions, she told reporters here after an interactive session with trade representatives and intellectuals on the Union budget.

"At the moment we only started a second alternative with some exemptions removed or some exemptions included, although the original intention was to remove all exemptions and give a clear simplified reduced rate of income tax," the finance minister said.

The budget 2020-21 has introduced more tax slabs and offers higher limits provided the taxpayer is ready to forego all the existing exemptions and deductions including home loan interest, other tax savings investments.

Given the time constraints, the finance ministry is fine-tuning rules to make the Vivad se Vishwas scheme accommodative for those declaring money involved in disputes and paying tax on them over just a fortnight in March.

Besides instructing officers with the job of clearing applications online within a day once the Vivad se Vishwas Bill is enacted in March, the tax department will allow assessees to join the scheme without waiting for the withdrawal of cases from various judicial bodies.

India is examining whether a carveout can be provided to real estate and infrastructure investment trusts (REITs, InvITs) under the proposed regime for taxation of dividends.

The budget proposes to scrap dividend distribution tax (DDT) and shift the taxation of such payouts to recipients.

Industry has already taken up the issue with the government as it could adversely impact these increasingly popular investment vehicles for the real estate and infrastructure sectors that rely on steady dividend income.

Moreover, sections within the government are also worried that the move could impact its own asset-monetisation plan, especially in the roads sector.

“There have been representations — the issue is being examined,” a senior government official said.

To maximise revenue mobilisation via the direct tax ‘Vivad Se Vishwas’ scheme, the Central Board of Direct Taxes (CBDT) has made tax officers’ performance under the scheme a vital criterion for their annual appraisals for 2019-20 and future postings. “Details of the number of disputed cases, amount involved in disputed cases as well the number of cases resolved and the amount collected under the scheme may be reported in the self-appraisal,” CBDT said. The performance of officers in respect of the scheme “will be specifically commented upon by the reporting and the reviewing officers and shall be an important factor in determining their future postings,” the tax board said in an office memorandum.
Assessing officers, range heads and other zonal heads would come under the revised appraisal norms.

The scheme, announced in the recent Budget, seeks to dispose of nearly 4.8 lakh cases, involving disputed tax amounts of Rs 9.32 lakh crore (as on November 30, 2019). All direct tax-related cases pending before the commissioner-appeals, Income Tax Appellate Tribunal, High Courts or Supreme Court as on January 31, 2020 are eligible for the scheme.

The income tax (I-T) department has notified forms for companies to avail the reduced corporate tax rates that were announced in September last year.

The Central Board of Direct Taxes (CBDT) has notified Forms 10-IC and 10-ID for existing companies that want to avail lower I-T rate and new manufacturing firms, respectively.

In September 2019, the government announced a cut in base corporate tax for existing companies to 22 per cent from the current 30 per cent; and for new manufacturing firms, incorporated after October 1, 2019, and starting operations before March 31, 2023, to 15 per cent from the current 25 per cent. Companies opting for these new tax rates will have to forego all exemptions and incentives.

The effective tax rate for existing units, after considering surcharges and cess such as Swachh Bharat cess and education cess -- which are levied on top of the income and corporate tax rates, will be 25.17 per cent as compared to 34.94 per cent now. For new units, it will be 17.01 per cent as against 29.12 per cent now.

From sending emails to tax assesses locked in a dispute with the tax authorities to setting up outreach programmes targeted at the trading community, chartered accountants and the like, the income tax department has made elaborate plans on how to implement the Vivadse-Vishwas scheme, people in the know told ET.

Importantly, the I-T department has made the scheme a part of the department’s Annual Performance Assessment Report (APAR) and has conveyed all its field officers that they may ask their personnel to provide details of their performance in implementing the scheme in their self-appraisal APAR of FY 19-20, said a official privy to the communication issued by the Central Bureau of Direct Taxes (CBDT) on Thursday. “The performance of officers in respect of the scheme will be specifically commented upon the Reporting and the Reviewing officers and shall be an important factor in determining their future posting,” as per the communique.
The 'Direct Tax Vivad se Vishwas Bill, 2020' introduced in the budget seeks to resolve disputed tax cases worth Rs 9.32 lakh crore.

Mumbai, which contributes one-third of the total tax collections, has already started working on implementing the scheme and has identified around one lakh cases which could come under the ambit of the tax amnesty once it gets the President’s assent.

According to sources, in Mumbai, over 60,000 cases are before the Commissioner of Incometax (Appeals), over 22,000 cases are before the Income Tax Appellate Tribunal and over 13,000 cases before the Supreme Court and the Bombay High Court.

The Central Board of Direct Taxes (CBDT) said only 2,200 persons disclosed annual income of more than Rs 1 crore from their professional work in FY19. They include doctors, chartered accountants and lawyers and this is as per returns filed in the current financial year for income generated in the previous one, it said, backing up statements made by Prime Minister Narendra Modi that led to a debate on social media.

This income from their professions did not include that from other sources such as rent, interest and capital gains, the department said in a series of tweets. “Certain misinformation is being circulated in Social Media pertaining to individual return filers,” CBDT said.

The statements came a day after PM Modi said that a very small number out of a total 1.3 billion Indians were paying tax.

“In the last five years, over 1.5 crore cars were sold in India – that too expensive ones. Over three crore Indians went abroad for business or tourism. But in a country of 130 crore people, only 1.5 crore people pay income tax,”he said at a TIMES NOW event on Wednesday.