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News Direct Tax-Income Tax

  • Apr 13, 2024
  • Relief for taxpayers going abroad on business visa: ITAT Ruling

    Some Indians go abroad as employees, while others choose to work for themselves. Being Indian citizens, both are subject to the income tax laws of the country. But, will ’employment’ will be governed by similar tax laws as ‘self-employment’ for these taxpayers generating overseas income?

    Mumbai ITAT Rules that the term “Employment” under Section 6 – Explanation 1(a) of the Income Tax Act, 1961 shall include “Self-Employment”

  • Apr 13, 2024
  • Amendments to Mauritius tax treaty not notified: CBDT

    The income tax department on Friday said amendments to the India-Mauritius double tax avoidance treaty (DTAA) have not been ratified and notified under the Indian law.
    "As and when the protocol comes into force, queries, if any, will be addressed, wherever necessary," CBDT said in a social media post. Earlier this month, India and Mauritius had signed a protocol to amend the treaty raising concerns over how it would affect new and old investments routed to the country.

  • Apr 12, 2024
  • CBDT issues FY25 interim action plan to ensure quick disposal of appeals

    The income tax department has come out with an interim action plan for 2024-25 fiscal year, which include identification of potential cases of prosecution, wherein there is short-payment of TDS and faster disposal of appeals.
    The action plan also stipulates timeline for approval of refunds, identification of cases where seized assets are due for release and release the same by June 30, 2024.

  • Apr 11, 2024
  • India-Mauritius sharpen focus on tax avoidance with amended treaty

    The amendments to the double taxation avoidance agreement between India and Mauritius are aimed at dissuading tax avoidance, believe experts, but note that there remain some areas of ambiguity, especially with regards to its applicability.

    “The recent Protocol to the India-Mauritius DTAA, which incorporates the Principal Purpose Test (PPT), represents a move by India to align with global efforts against treaty abuse, particularly under the BEPS Action 6 framework. The introduction of the PPT aims to curtail tax avoidance by ensuring that treaty benefits are only granted for transactions with a bona fide purpose,” said Rakesh Nangia, Chairman, Nangia Andersen India.

  • Apr 09, 2024
  • Relief for taxpayers on HRA claims! Income Tax Department clarifies no special drive to reopen mismatch cases

    HRA claims: The CBDT has clarified that there is no special drive to review mismatched HRA cases, refuting concerns of retrospective taxation. Instances of information mismatch have been identified, prompting the department to notify taxpayers to rectify any discrepancies.
    HRA claims relief: The Central Board of Direct Taxes (CBDT) has clarified that there is no special drive to reopen cases related to House Rent Allowance (HRA) claims. The income tax department stated that there is no ongoing special drive to review mismatch cases. Concerns have emerged about potential retrospective taxation and reopening cases related to HRA claims.

  • Apr 09, 2024
  • ITAT: Joint-ownership in existing flat will not bar tax benefit on investments in another house

    It is quite common to include the name of a spouse in the ownership of a flat. A recent decision of the Mumbai-bench of the Income-tax Appellate Tribunal (ITAT) will prove useful to many. The ITAT has held that such joint-ownership will not impact the spouse’s eligibility to claim tax benefits under section 54-F of the Income-tax (I-T) Act, relating to long-term capital gains, when he/she sells another asset (say land, shares etc) and reinvests the sale proceeds in another flat.

    When a taxpayer earns long-term capital gains from sale of any asset (other than a house property), the tax arising on the gains can be saved by investing the net sale proceeds in a residential property.

  • Apr 08, 2024
  • New vs old tax regime for TDS on salary: Choosing wrong tax regime in April can lead to higher tax

    April 1, 2024, marks the beginning of the new financial year i.e. 2024-25. However, the old income tax laws applicable last financial year (FY 2023-24) will continue to apply in FY 2024-25 as the government has not changed the income tax laws. It is possible that some changes in the income tax laws may be announced in the full budget to be presented by the new government after elections are over but till then the old laws continue.

    April is an important month for salaried individuals from a tax planning perspective - for 2024-25 in this case. This is because salaried individuals are required to inform their respective employers of the tax regime - old or new - that they wish to opt for during FY2024-25 in April itself. The tax regime a salaried individual opts for will decide the amount of tax that the employer will deduct from his/her salary income during the financial year.

  • Apr 06, 2024
  • PAN-Aadhaar linking for TDS deduction: Deductee must verify the status on deduction date - here’s why

    TDS deduction: Tax Deducted at Source (TDS) plays an important role in the Indian tax system, ensuring that taxes are collected at the source of income itself. It's important to not only deduct TDS at the specified rate but also to ensure the accurate deduction based on one's PAN-Aadhaar linking status. Failing to do so can lead to higher TDS rates if the PAN is inoperative or inactive due to non-linkage with Aadhaar.
    As per an ET report, the TDS deductor or collector may face legal consequences and tax penalties for failing to check the dedutee's PAN status and deducting a lower TDS amount than required.

  • Apr 06, 2024
  • Why you need not rush to file your ITR immediately

    Around 23,000 taxpayers filed their income tax returns (ITR) in the first three days of Assessment Year (AY) 2024-25 (Financial Year 2023-24) after the Income-tax Department for the first time opened return filing utilities on its portal from the first day of the assessment year, that is, April 1, 2024.

    Last year, even though the returns had been notified early, they became available for filing on the IT portal only in May (for Assessment Year 2023-24 or Financial Year 2022-23).

    Filing functionalities were available from May 20, 2023 for salaried individuals (ITR-1) and individuals, HUFs, and partnership firms generating an income from a business or profession (ITR-4). The filing utility for individuals and HUFs having income other than income from profits and gains from business or profession was available from May 30 (ITR-2).

  • Apr 05, 2024
  • CBDT enables ITR filing for FY24; 23,000 returns filed in 4 days

    The Income Tax department on Thursday said ITRs 1, 2, 4 and 6 have been made available on e-filing portal from April 1, 2024, and about 23,000 returns have already been filed for the 2023-24 fiscal year.

    This is for the first time in recent years that the Income Tax department has enabled taxpayers to file their I-T Returns on the first day of the new financial year and, is a step towards ease of compliance and seamless taxpayer services.

  • Apr 04, 2024
  • ITR e-verification time limit: Tax department notifies changes in ITR Verification form

    The Central Board of Direct Taxes (CBDT) has notified certain changes in the ITR-V form. ITR-V form stands for ‘Income Tax Return-Verification’ Form.

    The ITR-V form is a single-page document sent to taxpayers via email after they e-file their tax return without using a digital signature.It also mentioned that if the return of income is uploaded but e-verification or ITR-V is submitted after 30 days of uploading, the date of e-verification/ITR-V submission will be treated as the date of furnishing the return of income. “All consequences of late filing of return under the Act shall follow, as applicable,” the I-T department’s notification said.

  • Apr 02, 2024
  • HRA tax exemption: HRA fraud with illegal usage of PANs detected by tax dept; how to avail House Rent Allowance, proofs

    The income tax department has uncovered a scheme involving fraudulent use of Permanent Account Numbers (PAN) by individuals to falsely claim house rent allowance (HRA), despite not being tenants, stated a Times of India (ToI) news report. As per initial findings, around 8,000-10,000 significant cases have been identified, with amounts exceeding Rs 10 lakh in many instances. The investigation began when authorities stumbled upon purported rent receipts totaling approximately Rs 1 crore under an individual's PAN. However, upon questioning, the individual disavowed any knowledge of these transactions. Subsequent inquiry revealed that the individual had not actually received the rent attributed to them.

  • Apr 01, 2024
  • Key income tax changes effective April 1: All you need to know

    As the new financial year begins on April 1, 2024, this is the right time look back at your investments made in the past and make plans for the new fiscal year. April holds much importance as it witnesses the implementation of most Budget 2023 proposals regarding income tax. You, therefore, must prepare for the new tax changes that will take place in the financial year 2024-2025.

    In her last Union Budget speech, Finance Minister Nirmala Sitharaman had outlined various changes set to take effect from this day onward, impacting our finances. Here’s a breakdown of some key changes to be aware of, including expanded basic exemption limits and more.

  • Mar 30, 2024
  • 'Angel tax aimed at hawala-like deals'

    Commerce and industry minister Piyush Goyal on Friday said that the angel tax was introduced because fly-by-night entities were using this route to inflate value and create capital. The minister said he would like to see more domestic funding for startups as foreign investors pick up ideas of bright young people and end up owning most of the companies.

  • Mar 29, 2024
  • Domestic startups come under income tax glare for their recent funding

    Several new economy ventures, primarily in the fintech sector, have received income tax notices in recent weeks with respect to venture capital raised by them, according to people in the know. The notices — served under Section 68 of the Income Tax Act — have clubbed the investments received by these startups with the income earned by them, and tax and penalties have been levied on the combined amount, the sources said.

    So much so that one startup, registered with the Department for Promotion of Industry and Internal Trade (DPIIT) - has been asked to pay Rs 37 crore in tax and penalty on funding of Rs 40 crore by venture capital investors, they added.

  • Mar 23, 2024
  • UN tax committee to design a model blueprint for wealth tax

    A UN model law on wealth tax, which would enable countries across the world to introduce consistent and straight forward legislation is now on the cards.
    The task will be undertaken by the UN tax committee (a committee of experts on international cooperation in tax matters), whose members are nominated by, but not formally representative of, the UN-member countries.The UN guidance will provide countries with a blueprint to implement, giving them both the technical know-how and political backing to tax the wealth of the richest members of society – something that most countries have shied away from under fierce lobbying pressure.
    The agreement on the guidance signals a historic shift in global consensus on taxing extreme wealth and is the latest demonstration of the UN’s ability to push the needle on tax reform at a globally inclusive scale.

  • Mar 23, 2024
  • ITR Filing: Double taxation the biggest challenge for NRIs while filing tax return in India

    In recent years, India has elevated to a stage where it has acquired the status of having the world’s largest overseas diaspora, with approximately 32 million NRIs and OCIs. Amongst the broad spectrum of India’s NRI network, Gulf countries continue to acquire the largest concentration, along with other countries like Singapore, the US, Canada, the UK, etc. With a plethora of NRIs moving abroad in search of better job opportunities and education, it is important to note that NRIs are taxed in India on the income generated within the country itself.

    Following the steady influx of NRIs, a recent survey by SBNRI, a one-stop investment platform for NRIs and OCIs, unveiled the nuances of navigating taxes for NRIs and OCIs in 2024. In tandem, the government of India continues to work on making the process of taxation as seamless as possible for NRIs, but despite their strong efforts, the taxation landscape for NRIs continues to be permeated by a series of bottlenecks.

  • Mar 22, 2024
  • Royalty rate under Spain DTAA notified

    India has notified the tax rates on royalties and fees for technical services (FTS) under the India-Spain double taxation avoidance agreement (DTAA) at up to 10%, lower than specified in its domestic law.

    New Delhi has notified lower tax rate on most-favoured nation basis to Spain.

    As per the notification, royalties and fees for technical services may also be taxed in the contracting state in which they arise, according to the law of that state."If the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed 10% of the gross amount of royalties or fees for technical services," the notification said. Tax rate under the domestic law can go up to 20%, as per a provision that is effective from the assessment year 2024-25.

    The notification holds importance especially in view of the recent Supreme Court judgement in the case of Nestle wherein it was held that the Most favoured Nation clause is not auto-executory. "The notification ensures availability of the benefit of lower Tax Rate with respect to Royalty income & FTS under the India Spain Tax Treaty," Pranav Sayta, Partner & Leader International Tax and Transaction Services, EY India said.

  • Mar 22, 2024
  • Income Tax dept asks many individuals to explain high value transactions of FY20-21 as Updated ITR deadline nears

    Many individuals have in recent times received email communication from the Income Tax Department about certain significant or high-value transactions being visible in the taxpayer's Annual Information Statement (AIS). If you want to know the exact transaction related to this communication, go to the AIS/Compliance Portal and go to “e-Campaign”According to Naveen Wadhwa, VP, Taxmann, “The communication visible in the AIS/Compliance Portal under the e-campaign tab is an intimation that the tax department has found certain information that does not match or is not commensurate with the income disclosed by the taxpayer in his ITR.”
    Updated Income Tax Return can be filed by eligible taxpayers who want to rectify errors or omissions in previously filed income tax return (ITR) and wherein additional tax liability will arise on preparing revised computation of income. The due date to file an updated return for FY 2020-21 (AY 2021-22) is 31st March, 2024

    “Since the deadline to file ITR-U is near, the tax department is sending emails pertaining to FY 2020-21 to some of the taxpayers stating that their case has been selected for e-Verification under e-Verification scheme 2021 visible under the tab "e-Campaign" after clicking "Notices" tab of the Compliance Portal. Mails are sent to those taxpayers who have not filed ITR or the information disclosed in the ITR filed does not match with the information available with the Department,” says chartered accountant Mihir Tanna, associate director-direct tax, S.K Patodia LLP, a CA firm.