The Income Tax (I-T) Department's Foreign Asset Investigation Unit (FAIU) has reportedly sent notices to local companies, including some listed entities enquiring about the hidden assets overseas. The bid to hunt for black money by FAIU was earlier limited only to individuals but has now expanded to companies, a report by the Economic Times (ET) said.

The intelligence unit has sent notices to at least eight Mumbai firms and asked for information on their directors. Earlier, FAIU's enquiries were limited to residents' hidden assets, including their bank accounts and shareholding in foreign firms and trusts.

"But now, the FAIU is enquiring into payments by Indian companies to overseas persons and entities. Probably, they may have found cases where there were reasons to believe that the foreign recipients of the money were just intermediaries," a senior tax practitioner told ET.

Another tax expert said that such transactions are usually tracked by the Enforcement Directorate (ED), and it is currently unclear what aspects the FAIU will investigate. The cases will reportedly be investigated under the Black Money Act.

There is need for further reforms in the direct and indirect tax regimes, revenue secretary Tarun Bajaj said.

With regard to direct taxes, there is a need to "fix the capital gains on all fronts. Second is the personal income tax and the third is to rewrite the code itself to simplify it," Bajaj told ET in an interview. "If you do that, litigation will reduce," he said, laying down the agenda for reform.

He said the goods and services tax (GST) needs to be rationalised and there is a case for making the exemption-less personal income tax regime better than the old one. In the case of GST, the number of slabs needs to be reduced and another look taken at exemptions. "We are reaching a stage in our economy where we need to give complete stability to the tax structures on both sides," he said.

Bajaj said increased compliance is providing a boost to revenue and the scheme to allow updated returns has been successful. "We have got about 4.5 lakh updated returns and some corporates have also filed updated returns," Bajaj said.

The finance ministry is looking at rationalising long-term capital gains tax structure by bringing parity between similar asset classes and revising the base year for computing indexation benefit to make it more relevant, an official said on Friday.

Currently, shares held for more than one year attract a 10 per cent tax on long-term capital gains.

Gains arising from sale of immovable property and unlisted shares held for more than 2 years and debt instruments and jewellery held for over 3 years attract 20 per cent long term capital gains tax.

The revenue department is now looking at rationalising the tax rates as well as holding period for calculating long-term capital gains and an announcement is likely in the 2023-24 Budget to be presented in Parliament on February 1.

The double tax avoidance agreement (DTAA) ratified by Australian Parliament, along with its trade deal with India, may come into force on April 1 next year, the finance ministry informed the commerce ministry on Wednesday.

The DTAA is expected to eventually lead up to $1 billion in savings for Indian information technology (IT) companies operating in Australia, from the present-day $200 million.

“The Australian government has communicated to us that the DTAA will likely come into effect on April 1, 2023. Our finance ministry has also agreed to it since our fiscal year begins from that date,” said a government official.

To provide real-time and personalised support, income tax department offers an option of Co-browsing, which is also referred to as collaborative browsing. This enables helpdesk representatives to work alongside the taxpayer's browser in real-time and agents can monitor the taxpayer's browser screen and lead them interactively. Here is a quick look at what is cobrowsing and how it helps tax payers, according to the income tax department’s website FAQs.

1. What is Co-Browsing and how does it help Taxpayer service?
Co-browsing, also known as collaborative browsing, allows the Helpdesk agents to collaborate with the taxpayer’s browser in real-time, just at the click of a button. Agents can view and securely co navigate the Taxpayer’s browser screen and guide them interactively to deliver real-time and personalized support.

In exercise of powers conferred by sub-clause (vi) of clause (b) of Explanation 1
to clause (23FE) of section 10 of the Income-tax Act, 1961 (43 of 1961)

The government is considering tightening the Tax Deducted at Source (TDS) framework for the online gaming sector to ensure that a better audit trail can be established for the money spent and earned from such activities and check evasion.

Also, given the buoyancy in tax collections, the budget target for the next fiscal (2023-24) is likely to be higher, Central Board of Direct Taxes (CBDT) chairman Nitin Gupta said on Tuesday.

"TDS provision needs a tweak for better audit trail," Gupta said on the sidelines of the inauguration of Taxpayers Lounge at India International Trade Fair (IITF).

The direct tax collection in the current fiscal is likely to exceed the budget target of Rs 14.20 lakh crore by about 30 per cent, a senior official said on Tuesday.

Central Board of Direct Taxes (CBDT) Chairman Nitin Gupta also said that the Budget for next fiscal could bring about some tweaks in the TDS provision for online gaming to check tax evasion.

“Currently there is a provision for deduction of TDS on online gaming. There is existing provision, if it needs to be modified or retained in the same way that needs to be seen,” he said.

Tax authorities in India are investigating under-invoicing of goods imported from China after the trade data highlighted a glaring difference of around $12 billion in the data sourced from China and India, the Economic Times reported.

On comparison, the trade data from the two countries show invoiced imports into the country are far less than exports from China to India. Taking cognizance of the same, the customs authorities have issued tax-evasion notices to 32 importers since September. Tax authorities suspect a tax evasion of more than Rs 16,000 crore through under-invoicing by businesses from April 2019 to December 2020. And more such notices are likely to be issued by the tax authorities in the coming days, the report said.

In a 2019 report, a US-based think tank Global Financial Integrity said that India lost a staggering $13 billion, over Rs 90,000 crore, to trade mis-invoicing and it said most of it relate to imports from China.

New Delhi, The 'local committees' formed to deal with taxpayers' grievances arising out of 'high-pitched' scrutiny assessments shall submit their report within about two months, the CBDT has reiterated in a public communication. A set of "revised" guidelines were issued by the Board in this context in April and these were applicable for cases being scrutinised under both the faceless and non-faceless assessment system.

The local committees have been created in each region of the income tax department, that are headed by a principal chief commissioner rank officer (Pr. CCIT), and will comprise three officials of the I-T department in the rank of principal commissioner or commissioner.

The tax compliance requirements for companies are changing as the tax department wants more information. It will, therefore, be the responsibility of companies to provide all necessary data including detailed information on partners and suppliers. In such a scenario, reporting will increasingly be driven by technology.

“The tax compliance processes have to be embedded in the internal business processes for each taxpayer. The degree of integration will depend on the size of business or the specific sectors,” said Sanjeev Singh, Principal Commissioner of Income Tax, Bangalore, said.

It is possible that after filing income tax return (ITR), you might realise that you have forgotten to report certain incomes or that the tax payable in the other tax regime is lower than what has been paid. The question then is can you switch your income tax regime (old to new or vice versa) while filing a revised income tax return?

ET Wealth spoke to various tax experts and chartered accountants to shed more light on this issue. Do read it, but also remember that the last date of filing revised ITRs is December 31, 2022, for FY 2021-22 (AY 2022-23).

Do note that if you are filing or have filed belated income tax return, then you are not eligible to opt for new income tax regime as per income tax laws. Hence, if you revise your belated ITR, then also you cannot opt for new tax regime.

Taxpayers should check their annual information statement every quarter and flag any discrepancies to help curb instances of wrongful HRA deductions, a senior finance ministry official said on Monday.

The income tax department had in November last year rolled out a new Annual Information Statement (AIS) on its portal that provides a comprehensive view of taxpayer information and an option to submit feedback.

The finance ministry on Tuesday proposed to come out with a user-friendly common income tax return form for all taxpayers, under which income from virtual digital assets will have to be disclosed under a separate head.

All taxpayers, except trusts and non-profit organisations, can file returns with the proposed new common ITR form, on which the Central Board of Direct Taxes (CBDT) has invited stakeholder comments by December 15.

Currently, there are 7 types of income tax return (ITR) forms which are filed by different categories of taxpayers.

Several high net worth charities and trusts run the risk of losing their tax-exempt status, owing to two recent Supreme Court (SC) rulings, unless they undertake suitable internal restructuring, tax experts said. However, since the rulings are prospective in operation, these entities won’t need to pay higher amounts as taxes, for this reason, for past periods.

In a ruling on October 19, the SC held that educational institutions or trusts can claim benefits of tax exemptions only if they ‘solely’ engage in education and not in any other activity of profit. For this, they cannot even have objects unrelated to education, the apex court ruled, adding that if the objective of an institution appeared to be profit-oriented, such institutions could not get approval under Section 10(23C) of the Income Tax Act.

India is expected to surpass its tax collection goal by more than Rs 2 lakh crore ($24.3 billion) in the current fiscal year, according to two officials with knowledge on the matter.

Strong revenue receipts is giving Prime Minister Narendra Modi’s government leeway to contain the budget deficit within 6.4% of gross domestic product amid a ballooning subsidy bill, said the two officials. A finance ministry spokesperson declined to comment on the matter.

Steady collections and measures to reduce tax evasion are helping bolster revenue against a target of Rs 19.34 lakh crore rupees, they said. The government will likely collect this financial year an additional Rs 300 billion-400 billion rupees from windfall tax imposed on export of some fuels and local production of crude oil from July, the officials said.

The Central Board of Direct Taxes on Thursday extended the deadline for filing quarterly TDS statement in Form 26Q for the June quarter by a month till November 30. Form 26Q is used for quarterly filing of TDS returns on payments other than salary.

"Considering the difficulties in filing of TDS statement in the revised and updated Form 26Q, the Central Board of Direct Taxes (CBDT) has extended the due date of filing of Form 26Q for the second quarter of financial year 2022-23 from 31st October, 2022 to 30th November, 2022," CBDT said in a statement.

The form captures details of total amount paid and tax deducted on such payments during the quarter. It would include payments on account of interest on securities, dividend, winnings from lotteries and crossword puzzles, rent, interest other than interest on securities, fees for professional or technical services.

The Finance Ministry on Wednesday extended the deadline for filing income tax returns for the assessment year 2022-23 by businesses till November 7. The last date for filing ITR by companies who are required to get their accounts audited was October 31.

The Central Board of Direct Taxes (CBDT), the apex decision-making body in matters of income and corporate tax, in a notification said since it had last month extended the deadline for filing audit reports, hence the ITR filing due date too is extended.

The Centre’s direct tax revenues may rise 25-30% on year, allowing it to net an additional Rs 2.5 trillion over the budget estimate (BE) after the mandatory devolution to states, a senior finance ministry official told FE. The extra receipts would give a cushion to the government, which is looking at an additional subsidy expenditure of Rs 2.8 trillion over the budgeted level, the official said.

He added that the indirect tax collections will also see a marginal increase over the BE, despite the excise duty cuts on petrol and diesel announced in May.

The Supreme Court on Thursday held that a general public utility (GPU) cannot engage in any trade or commercial activity if it wants to claim income tax exemptions available to organisations doing charitable work.

However, statutory corporations, boards, authorities, commissions, etc, in the housing development, town planning, industrial development sectors with objects of GPU are entitled to be considered as charities in the GPU categories for taxation purpose, even when they are involved or engaged in activities in the nature of trade, commerce or business, it added.