The income tax department had notified the launch of pre-filled returns for ease and accuracy of filing.

To facilitate this process, CBDT issued a circular on March 12, 2021, authorising various entities to report such transactions to the income tax department. These specified entities will be responsible for providing the details of capital gains transactions, dividend and interest income of the taxpayers.

Currently, section 285BA of Income-tax Act 1961 governs the reporting of some specified financial transactions (SFT) by specified entities to the income tax authority. The section provides a list of transactions, their nature and threshold limit of a transaction pertaining to a particular taxpayer, beyond which the transacting entity shall have to report its details to the income tax authorities.

The Centre collected a net amount of Rs 9.45 lakh crore as direct taxes in 2020-21, up Rs 40,000 crore or 4.4% from the revised estimate (RE) presented in the Budget on February 1, thanks to improved collections in the second half of the year, especially in the fourth quarter. Had the government not been liberal with refunds – up Rs 78,000 crore or 42% on year at Rs 2.61 lakh crore – the net collections would have been even higher.

This, coupled with revenue from ‘Union excise duties’ likely being higher than the respective RE by Rs 30,000 crore, would likely allow the Centre to rein in the fiscal deficit at a level slightly lower than the RE of 9.5% (RE) of the GDP, at the RE levels of expenditure and other revenue streams. The National Statistical Office in the second advance estimate predicted a narrower contraction in nominal GDP of 3.8% in FY21, against a 4.2% fall estimated earlier; if this holds true, it would have a further salutary effect on the fiscal numbers. Robust GST collections in recent months have brightened the prospects of the Central GST collections being higher than the RE.

Terming it “arbitrary and discriminatory”, the Supreme Court has partially struck down a provision of the income tax law that did not allow further extension of stay on assessment beyond 365 days even if the assessee was not responsible for any delay in hearing of appeals before a tribunal.

While upholding the Delhi High Court’s May 2015 judgment that ruled in favour of assesses, a Bench led by justice RF Nariman said that “…there can be no doubt that the third proviso to Section 254(2A) of the Income Tax Act, introduced by the Finance Act, 2008, would be both arbitrary and discriminatory and, therefore, liable to be struck down as offending Article 14 of the Constitution of India”.
“We have already seen how unequal have been treated equally so far as assessees who are responsible for delaying appellate proceedings and those who are not so responsible, resulting in a violation of Article 14 of the Constitution of India. Also, the expression “permissible” policy of taxation would refer to a policy that is constitutionally permissible. If the policy is itself arbitrary and discriminatory,

Tax on an individual's income depends on its source and the residential status in India. The residential status of an Indian citizen needs to be determined individually for every financial year which may vary from year to year.

As per the residency rules laid down in the Income Tax Act, if an individual is determined to be a 'Non-resident', then they are liable to pay tax only on the income earned or accrued in India. In short, if any income received has a direct or indirect source of origination from India, then the income will be considered as accrued in India.
Till FY 2019-20, NRIs would include individuals of Indian origin who have visited India for less than 182 days in a particular financial year. However in Budget 2020, the residency period was reduced to 120 days for the NRIs whose Indian income is more than Rs 15 lakhs.

After the faceless assessment scheme was rolled out about a year ago, the Income Tax department has settled about 1.15 lakh assessment orders or 58% of the cases allocated for such resolution, Central Board of Direct Taxes (CBDT) chairman PC Mody said.

According to him, after the scheme was launched in August 2020, 57,985 legacy cases and 1,36,001 new cases were allocated in faceless assessment scheme. Out of these, 46,822 legacy cases and 59,552 new cases have been disposed of.
“Where there was a case to raise tax demand, it was done and where there was no need to raise demand, no tax claim was made,” Mody said.

The Centre’s tax resolution scheme ‘Vivad Se Vishwas’ has resolved nearly a third of all direct tax disputes and has netted Rs 54,005 crore in tax revenue, 51% of which are from the central PSUs, Central Board of Direct Taxes (CBDT) chairman PC Mody told FE.

Although the expectations regarding the scheme was much higher — the government had originally set a target to collect Rs 2 lakh crore by the end of March 2020, but the Covid-19 pandemic upset the calculations — the government still flags the scheme as a success, citing that a 1998 scheme could only mop up Rs 739 crore with a resolution of a few thousand disputes and another one in 2016 managed to resolve just 8,600 cases involving a tax demand of `631 crore.
“The numbers suggest that the scheme has been a “very successful” in terms of reduction of legacy disputes. With assessments happening in a fairer and objective manner now, disputes generation will be less going forward,” Mody said.

Under the Employees Provident Fund (EPF) scheme, an employer has to pay up to 12% of the basic monthly salary towards the fund and the employee has to make an equal contribution towards the fund. On retirement, the employee gets a lump sum amount along with interest for all the contributions made by both the employer and the employee.

Though the limit for contribution by the employer is 12% of the salary, the employee may make voluntary contributions under the scheme in excess of 12%. Till the year 2020-21, as per Section 10(11) of the Income Tax Act, 1961, the interest earned on the contributions made in the EPF scheme was tax-free.

The Central Board of Direct Taxes (CBDT) has come out with new income tax returns (ITRs), aligning them with the changes made in the Finance Act, 2020. However, the department has not changed ITRs significantly, considering Covid-19 crisis.

Naveen Wadhwa, expert at Taxmann, said one of the amendments carried out in the Finance Act, 2020, allowed to defer the payment of tax on Employees’ Stock Option (ESOPs) allotted by eligible start-ups.


Subsequently, rules were amended to provide that these assesses will not be eligible to furnish their returns of income in ITR-1 and ITR-4. Corresponding changes have been made to these two forms, Wadhwa said.

Introduction to ITR Offline utility
The assessment Year 2021-22
ITR-1 and 4

For those who have not filed their income tax return (ITR) but their income is liable for TDS deduction, there will be a levy of TDS at a higher rate. And, in case one does not have the PAN, the rate of tax deduction will even be higher. This new TDS rule will be effective from July 2021 as per the Budget announced by the Finance Minister. Archit Gupta, Founder and CEO, ClearTax explains the new TDS rule, whom it will impact and who all are excluded from it.

The Income Tax Department has issued refunds worth over Rs 2.62 lakh crore to more than 2.38 crore taxpayers in 2020-21.

This include Rs 87,749 crore personal income tax refunds to 2.34 crore taxpayers and Rs 1.74 lakh crore worth corporate tax refunds in 3.46 lakh cases.

The refunds issued in 2020-21 marks an increase of almost 43.2 per cent, the I-T department said in a statement.

Central Board of Direct Taxes (CBDT) has issued refunds of more than Rs 2.62 lakh crore to more than 2.38 crore taxpayers from 1st April, 2020 to 31st March, 2021, the statement said.

The total refunds issued in 2019-20 were worth Rs 1.83 lakh crore.

Finance Minister Nirmala Sitharaman on Thursday said salary income earned by non-resident Indians in Gulf countries would continue to be exempt from tax in India. Quoting a tweet of TMC MP Mahua Moitra, Sitharaman clarified that the Finance Act 2021 has not brought in any new or additional tax on Indian workers in Saudi/UAE/Oman/Qatar.

The minister said the said amendment in the Finance Act, 2021, has merely incorporated general definition of the term “liable to tax” in the Income Tax Act to provide clarity. “This amendment has not altered the taxability of salary income earned by non-resident Indian citizens in Gulf countries. Their salary income earned in Gulf countries would continue to be exempt in India,” the Office of Finance Minister Nirmala Sitharaman tweeted.

The ITR forms for filing income tax returns (ITR) for the assessment year 2021-22 has been notified by the government. CBDT has notified all ITR Forms 1 to 7 for AY 2021-22 as per the Notification No. 21/2021 in G.S.R 242(E) dated March 31, 2021. To facilitate taxpayers and to minimize the compliance burden, no significant changes have been made in the ITR Forms this year as compared to last year’s Forms.

In May 2020, the government reduced TDS and TCS rates for interest income, dividend income, rent payments and other non-salary payments by 25%. This was done to increase liquidity in the hands of individuals, especially those going through financial hardships caused by the coronavirus-induced lockdown. The reduction in TDS and TCS rates on non-salary payments came into effect on May 14, 2021, and will be applicable till March 31, 2021.

Thus, effective from April 1, 2021, the TDS and TCS rates on these non-salary payments will be back to their original (higher) levels.

This would mean that, for instance, if the interest paid on a bank FD exceeds Rs 40,000 between April 1, 2021, and March 31, 2022, then the bank would deduct tax on the interest paid at the rate of 10% instead of 7.5% in the previous financial year 2020-21.

The income tax department has sent SMSes to taxpayers on 29 March, related to mismatches between income tax returns (ITR) filed for FY2019-20 and high-value transaction. The department has asked taxpayers to either file a revised ITR by today or reply to the query on the compliance portal by 31 March.

Three of the chartered accountants Mint spoke to confirmed that their clients have received such SMSes from the tax department.
Tarun Kumar, a Delhi-based chartered accountant, said some of his clients have received this SMS. “The SMS has caused panic among taxpayers as the deadline to reply is very shorthand as 31st March is the last date to file a revised return. Taxpayers effectively had two days to reply or file revised returns. It will be difficult for people to do it without professional help."

The central government might extend Vivad Se Viswas, the direct tax resolution scheme, after March 31 if Cairn Energy wishes to settle the retrospective tax dispute through it.

During a meeting with finance ministry officials in February, the Edinburgh-based energy major was offered an immediate refund of $300 million if it chose to settle the tax dispute under the Vivad Se Vishwas scheme, Business Standard reported.

Under the scheme, the principal tax demand on Cairn will be reduced by half to Rs 5,100 crore, and interest and penalty will be waived, the report said.

The government has also offered to return the 1.8 percent company shares it had seized, the report said. According to the proposal, since the government had sold Cairn Energy shares worth Rs 6,500 crore, it will refund the remaining amount.

PAN Aadhaar Link Deadline 2021: Central Government has extended the last date for linking of Aadhaar number with PAN from 31st March, 2021 to 30th June, 2021, in view of the difficulties arising out of the COVID-19 pandemic. Date for issue of notice under section 148 of Income-tax Act,1961, passing of consequential order for direction issued by the Dispute Resolution Panel (DRP) & processing of equalisation levy statements also extended to 30th April, 2021, the Income Tax department tweeted.

While extending the PAN-Aadhaar linking deadline, the Income Tax Department said it had received representations from taxpayers that the last date for intimating the Aadhaar number may further be extended in the wake of the on-going COVID-19 pandemic.

With the beginning of the new financial year on April 1, a number of significant changes will take place with regards to the tax rules. All of these important tasks will have to be undertaken by the taxpayers in the new financial year. Some of these changes are in accordance with the announcements made by finance minister Nirmala Sitharaman in the Union Budget 2021.

Notably, March 31 is also the deadline set by the government to link Permanent Account Number with the Aadhaar card, otherwise, PAN will become inoperative from April 1. Taxpayers also have to fill the revised income tax return (ITR) by March 31.

In a bid to provide a level-playing field, the government has decided not to levy 2% digital service tax if goods and services are sold through Indian arm of foreign e-commerce players. The amendment to Finance Bill 2021 clarifies that offshore e-commerce platforms don't have to pay 2% equalisation levy if they have permanent establishment or they pay any income tax here.

However, foreign companies who are not paying any tax will have to pay.

The digital tax introduced in April 2020, applies only to non-resident companies with annual revenues in excess of ?2 crore, and covers online sales of goods and services to Indians.

"Through the government amendment... I intend to clarify that this equalisation levy is not applicable on consideration for goods which are owned by Indian residents," Finance Minister Nirmala Sitharaman had said why replying to a debate Finance Bill 2021 in Lok Sabha on Tuesday.

Finance Minister Nirmala Sitharaman has plugged the loophole on sale of an undertaking by one entity or person to another, which may have repercussions for business transfers as well as mergers and acquisitions.

At present, consideration of slump sale is the amount agreed between seller and buyer, which often leads to leakage of tax. Slump sale refers to sale of an entire undertaking instead of individual assets.


Amendments to the finance Bill, 2021, say that fair market value (FMV) will be taken as consideration of the sale.

Current provisions sometimes result in a situation where valuable assets were transferred at lower prices, resulting in tax leakage, said Shailesh Kumar, partner at Nangia & Co LLP said.