As taxpayers face issues in accessing the e-filing portal, the Income Tax department on Saturday said software provider Infosys is taking “proactive measures” to deal with the ‘irregular traffic’ on the portal.

“It has been noticed that taxpayers are facing issues in accessing ITD e-filing portal. As informed by @Infosys, they have observed some irregular traffic on the portal for which proactive measures are being taken,” the I-T department tweeted.

Within two days after a ruling that had put a question mark on several investment structures, the Mauritius Revenue Authority (MRA) on Friday clarified its earlier stand to assure global investors who were worried over the tax impact on investments by tax haven entities in private equity (PE) funds in India.

MRA clarified that any income which is distributed by a foreign "fiscally transparent entity" will retain its initial character in Mauritius. Thus, capital gains booked by a PE Fund in India, where a Mauritius vehicle has invested, will remain capital gains when funds are distributed by the PE to the Mauritius entity.

A few days ago, MRA, which is the apex tax body in Mauritius, had in a private ruling said that such distributions would be be treated as 'income' (and not capital gains) --- and therefore taxable in Mauritius. The ruling which was posted in the MRA website had unsettled many international investors who put money in Indian PEs through a feeder vehicle in the tax haven.

Gift cards, vouchers, mileage points, reward points, and loyalty cards will be excluded from the definition of virtual digital assets (VDAs), Central Board of Direct Taxes (CBDT) said in a notification issued late Thursday.

This will ensure that these products do not face the tax applicable on VDAs such as cryptocurrencies and non-fungible tokens (NFTs), introduced this budget.

CBDT said the exemption will include gift card or vouchers that may be used to obtain goods or services on a discount on goods, mileage points, reward points or loyalty card under an award, and reward, benefit, loyalty, incentive, rebate or promotional programme that may be used or redeemed to obtain goods or services or a discount on goods or services.

It will also include subscription to website or platform or application, the notification, which comes into effect Thursday, said.

Analytics & new tools are making the tax administration move towards efficient services and comprehensive use of data

The influence of technology-based inputs for the taxman is becoming deeper. Its use has grown exponentially as the taxman is using data analytics to increase tax collection, target compliance and improve efficiency of its services. The most visible example of this is online tax filing and the processing of returns.

With July comes a few new changes to income tax rules applicable to different taxpayers. Here is a look at three important income tax related changes that will come into effect from July 1, 2022.

TDS on cryptocurrencies
Earlier this year, the Finance Minister Nirmala Sitharaman proposed a 1% tax deducted at source (TDS) on any payment made in exchange for the transfer of virtual digital assets (VDAs), often known as cryptocurrency and non-fungible tokens (NFTs). For transactions totaling more than Rs 10,000, the TDS rule will go into effect on Friday, July 1.
The tax at the time of transfer of VDA will be deducted at the rate of 20% if the deductee (buyer's) PAN is not readily available. Additionally, if the payer is not one of the specified people, TDS will be withheld at a higher rate of 5% (as opposed to the usual rate of 1%) if the individual has not submitted his or her income tax return.

PAN Aadhaar linking fine
A fee of Rs 1,000 would be applicable if the PAN-Aadhaar link is completed on or after July 1, 2022. Earlier, till June 30, the charge was Rs. 500. So when an individual links their PAN and Aadhaar, they first have to pay the penalty and request to link PAN aadhaar once the payment reflects in the e-filing site.

The Central Board of Direct Taxes (CBDT) given clarification regarding how the tax will be deducted (TDS) on peer-to-peer transactions related to buying/selling of Virtual Digital Assets (VDAs) and crypto under section 194S of the Income-tax Act, 1961. Peer-to-peer transactions are those transactions where buying and selling have taken place without the involvement of a third party (E.g., an exchange).

As per the latest circular issued on June 28, 2022, "According to section 194S of the Act, any person who is responsible for paying to any resident any sum by way of consideration for transfer of VDA is required to deduct tax. Thus, in a peer-to-peer (i.e., buyer to seller without going through an Exchange) transaction, the buyer (i.e., person paying the consideration) is required to deduct tax under section 194S of the Act."

Thus, the circular has clarified that the buyer of the VDA is required to deduct tax at the time of paying money to the seller of the VDA, even if no third party is involved.

Crypto trading is going to be difficult in India from next month. The 1% TDS rule for cryptocurrency and virtual digital assets (VDAs) transactions will come into effect from the 1st of July 2022.

The Central Board of Direct Taxes (CBDT) recently released guidelines explaining who will be responsible for deducting TDS in different types of transactions.

Foreign investors betting on India by putting money into private equity (PE) funds here are taken aback by a recent observation by the Mauritius Revenue Authority (MRA), raising a hitherto ignored angle on tax – and in the process questioning investment structures that have been in vogue for years.

According to a private ruling by MRA, investment vehicles in Mauritius, used by global investors to enter India, will have to pay tax in Mauritius on ‘capital gains’ they receive from a PE or debt fund in India when the latter exits an investment. Till now, a Mauritius entity paid tax to the Mauritius government only on ‘income flows’, like dividends and interest distributed by funds in India --- but not on capital gains booked in India.

However, MRA, in a matter related to a global investor, has ruled that “all income distribution” made by AIF (alternative investment funds) Category II and III “will be treated as dividend income and therefore not retain their initial characteristics”.

Banks will soon move the government as they find themselves caught in the tax net while settling and rejigging loans to give distressed borrowers a second chance.

Slices of loans waived to lessen the strain on defaulting borrowers are being interpreted as 'benefits' that lenders are passing on to borrowers under the new provisions the government has come out on tax deducted at source (TDS).

Even though there is no transfer of cash from the bank to the borrower, the extent ofhaircuts taken by lenders is imputed as 'income' for the borrower.

IRS officer Nitin Gupta has been appointed as the new CBDT chairman, a recent government order said. Gupta, an Indian Revenue Service (IRS) officer of the 1986 batch of the Income Tax cadre, is serving as the Member (investigation) in the Board and is scheduled to retire in September next year.

The order issued on June 25 said the “Appointments Committee of the Cabinet has approved the appointment of Shri Nitin Gupta, IRS (IT:86), Member Central Board of Direct Taxes (CBDT) as chairman, Central Board of Direct Taxes from the date of assumption of the post.” The post of the CBDT chief was being held in an additional capacity by Board member and 1986-batch IRS officer Sangeeta Singh after J B Mohapatra retired on April 30.

The Central Board of Direct Taxes (CBDT) issued a circular on June 22, 2022 explaining how tax will be deducted on transfer of virtual digital assets (VDA) and cryptocurrencies. The new rules of TDS on VDA and crypto will come into effect from July 1, 2022.

What does the law on TDS on VDA, crypto say?
As per the new law, the purchaser of a virtual digital assets (VDA) is required to deduct 1% of the amount paid to the seller ( resident Indian) as income tax deducted at source (TDS). The tax is required to be deducted at the time of credit of amount or at the time of payment to the resident individual, whichever is earlier. The tax will be deducted only if the amount paid exceeds the specified limit, stated CBDT.

Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, "Effective from July 1, 2022, any person (resident individual, non-resident individual or Exchange) making payment to resident individual at the time of buying crypto, VDA or NFT (as notified by the govt), will be required to deduct TDS on the amount paid at the rate of 1%.

The Income Tax Department has notified the disclosure norms for Tax Deducted at Source (TDS) for virtual digital assets (VDAs). From July 1, a TDS of 1% will be levied on any transactions exceeding Rs 10,000 in a year on crypto assets under the newly introduced Section 194S of the I-T Act.
IT Department’s Central Board of Direct Taxes (CBDT) on June 21 notified of the changes in rules pertaining to filings of TDS returns in Form 26QE and Form 16E.
CBDT clarified that TDS collected under Section 194S shall be deposited within 30 days of the month in which the deduction is made. This will reflect in challah-cum-statement Form 26QE, it added.
Nangia Andersen LLP Partner Neeraj Agarwala told PTI that to furnish Form 26QE, taxpayers would be required to mention the date of transfer of VDAs, value of consideration, mode of consideration, whether cash or kind or in exchange of another VDA etc.

Looking to address the concerns of taxpayers about high-pitched assessments under the faceless scheme, the revenue department has asked the Central Board of Direct Taxes (CBDT) to initiate strict action against officials for slapping notices on taxpayers without following procedures, or cross-checking facts.

The department has also asked CBDT to ensure that all local committees that have been formed to look into complaints by taxpayers provide a quarterly report on actions taken, people aware of the matter told ET.

The move comes following observations by various courts that addition of income and imposition of penalty for underreporting of income were being done without following procedure.

Reflecting an uptick in economy, net direct tax collections between April and mid-June jumped 45 per cent to over Rs 3.39 lakh crore, the Income Tax department said on Friday.

The improved collections are mainly due to a 47 per cent growth in TDS mop-up and a 33 per cent rise in advance tax realisation for April-June quarter.
The net direct tax collection of over Rs 3.39 lakh crore included Corporation Tax (CIT) of over Rs 1.70 lakh crore and Personal Income Tax (PIT), including Security Transaction Tax (STT), of more than Rs 1.67 lakh crore.

Allotment of shares to directors, providing cars to them, and a sponsored business trip or conference by a company will attract 10% tax deducted at source (TDS) from July 1.

The Central Board of Direct Taxes (CBDT) on Thursday issued a detailed guidelines on deduction of tax at source under Section 194R of the Income Tax Act. It requires deduction of TDS at the rate of 10% by any person providing any benefit or perquisite, exceeding ?20,000 in a year to a resident.

The provision was introduced in the last budget.

The income tax department on Thursday said it has issued revised instruction, which provides for initiation of suitable administrative action against the officer concerned, in cases of high-pitched assessments.

In 2015, the Central Board of Direct Taxes (CBDT) had provided for the constitution of ‘local committees to deal with taxpayer grievances from high-pitched scrutiny assessment’ in each principal commissionerate region. Considering the implementation of faceless assessment regime, the CBDT has now issued a revised instruction regarding constitution and functioning of these committees.

The Central Board of Direct Taxes (CBDT) on Thursday issued guidelines seeking to address likely issues emanating from application of the newly introduced section 194R of the Income Tax Act for withholding 10% tax (TDS) on benefits or perquisites from non-salary sources.

The new provision part of the Finance Act 2022 will become effective from July 1.

The net direct tax collections, which include income tax and corporate tax, reached Rs 2.58 lakh crore as of June 14 in financial year 2022-23 against Rs 1.86 lakh crore YoY, according to a CNBC-TV18 report, reigniting hopes of sustained economic recovery, despite inflationary concerns and the disruption caused by geopolitical tensions.

The net direct tax collection has increased by around 53.2 percent from April 1 to June 14 over the year-ago period.

The advance collection of corporate tax and personal income tax in the first quarter witnessed a healthy growth over last year, initial trends indicated.

The government expects the advanced tax collection in the first quarter to grow around 50 to 60 percent over last year.

The Income Tax Department has notified the cost inflation index for the current fiscal to calculate long-term capital gains arising from the sale of immovable property, securities and jewellery. The cost inflation index (CII) is used by a taxpayer to compute gains arising out of the sale of capital assets after adjusting for inflation.

The Cost Inflation Index for FY 2022-23 relevant to AY 2023-24 is 331.

AMRG & Associates Senior Partner Rajat Mohan said the CII will help taxpayers to compute long-term capital gains tax, enabling them to remit advance tax on time.

The last date of filing income tax return (ITR) for the financial year 2021-22 is July 31, 2022. Until, FY 2019-20 if a taxpayer missed the ITR filing deadline, the maximum penalty he/she had to shell out was Rs 10, 000. However, with effect from FY 2020-21 (AY 2021-22) i.e., last year, the penalty amount has been reduced by half, i.e., a maximum penalty of up to Rs 5,000.