Good news for taxpayers looking to file income tax return (ITR) for the Financial Year 2019-20. The Central Board of Direct Taxes (CBDT) has notified the new Income Tax Return (ITR) forms for FY 2019-20/ AY 2020-21 (i.e. ITR 1 Sahaj, 2, 3, 4 Sugam, 5, 6, 7 and ITR-V), vide Income-Tax (12th Amendment) Rules, 2020, in line with the amendments made by the Finance Act, 2019, according to CA Club.

Usually, the Income Tax Department notifies the ITR forms in the first week of April of the relevant assessment year. However, “this year, due to the exceptional circumstances, the Dept. has notified all ITR forms in the last week of May. The Dept. has notified the forms without the return filing utility. Thus, a taxpayer, who is required to file the return, cannot do so until the return filing facility is made available on the e-filing portal,” says CA Naveen Wadhwa, DGM, Taxmann.

It should be noted that for the assessment year 2020-21, the I-T Dept. has notified the ITR forms twice. In the month of January 2020, the Dept. had notified two ITR forms (ITR-1 and ITR-4). Now, in the month of May 2020, all ITR Forms (ITR-1 to ITR-7) have been notified which eventually replace the two previously notified forms.

The government has provided certain relaxation in lockdown 4.0 but sectors that depend on human resources shall take time to recover. From small businesses to corporates, malls and cinemas, every segment is facing heat of this prolonged lockdown in the country due to the global pandemic.

The Finance Minister has announced certain relaxations in terms of reduced rate of interest for tax payments which are due for payment from 20-03-2020 to 29-06-2020 from 1.5% to 0.75% for every month or part thereof if it is paid on or before 30-06-2020. Further, in the press conference held on May 13, 2020, the Finance Minister has also reduced the rates of TDS/TCS in respect of specified payments/receipts by 25%.

In general, the tax deducted between April to February has to be deposited on or before 7th day of the next month and for March it has to be deposited by 30th April. The Finance Minister hasn’t provided any relief in the due date of tax payments. If the deductor fails to deposit tax at source, he shall be liable to pay interest at the rate of 1.5% for every month or part thereof on the amount of tax he failed to deposit to the credit of the Central Govt. The interest shall be calculated for the period starting from the date on which tax is deducted and ending on the date on which such tax is deposited.

Tax authorities will now have information regarding taxpayers’ transactions in stocks and property, along with other financial transactions, in any given year after the Central Board of Direct Taxes (CBDT) notified the new form 26AS — an annual information statement — on Thursday.

Details in the new document will include taxes paid by a taxpayer, details of pending as well as completed income tax proceedings, status of income tax demand and refund along with details of specified financial transactions undertaken by taxpayer during a particular financial year.

“With all the information/ details available at one place, it will assist tax authorities in e-assessment with none or limited interaction with taxpayers, as tax authorities will be able to easily compare information available in Form 26AS vis-a-vis information reported by taxpayer in income-tax return (ITR). Any mismatch may be easily flagged by the systems to tax authorities,” Rakesh Nangia, chairman, Nangia Andersen Consulting, said.

Finance Minister Nirmala Sitharaman today formally launched the facility for instant allotment of PAN through Aadhaar based e-KYC (on near to real-time basis). The Income Tax department tweeted that the process of applying for the instant PAN is very simple. You can go to the e-filing website of Income Tax Department for generating the PAN instantly.

The Income Tax department said that the process for applying for instant PAN is extremely simple. “The applicant may go to the e-filing website of the Income Tax Department to provide her/his valid Aadhaar no & submit the OTP generated on the Aadhaar registered mobile no.”

“On completion of this process, a 15-digit acknowledgement no is generated. The status of the request can be checked anytime by providing the valid Aadhaar no &once allotted, the e-PAN can be downloaded. e-PAN is also sent to the applicant on the email id, if registered with Aadhaar,” the tax department said.
The instant PAN facility was announced by the Finance minister in the Union Budget. The Ministry of Finance said in a statement that the instant PAN facility is now available for those PAN applicants who possess a valid Aadhaar number and have a mobile number registered with Aadhaar. The allotment process is paperless and an electronic PAN (e-PAN) is issued to the applicants free of cost.

The income tax department on Thursday notified the revised Form 26AS, containing details of tax collected or deducted at source which will now include information pertaining to property and share transactions.
With this, Form 26AS has now been revamped to an ‘Annual Information Statement’ which apart from the TDS/ TCS details, shall now contain comprehensive information relating specified financial transactions, payment of taxes, demand/ refund and pending/completed proceedings undertaken by a taxpayer in a particular financial year that has to be mentioned in the income tax returns.

To implement this, the Budget 2020-21 had introduced a new Section 285BB in the Income Tax Act. The revamped Form 26AS will now come into effect from June 1, the Central Board of Direct Taxes (CBDT) said.
Form 26AS is an annual consolidated tax statement that can be accessed from the income-tax website by taxpayers using their Permanent Account Number (PAN).

Gross direct tax collections recorded a 13 per cent fall up to May 23 this year, compared to the same period last year. This came on the back of economic disruption caused by the outbreak.

However, a sharp decline in disbursement of refunds by the tax department has bumped up net collections, which rose 39 per cent during the period.

Gross tax collections declined to Rs 91,646 crore between April 1 and May 23, compared to Rs 1.05 trillion in the corresponding period of FY20. Refunds worth Rs 16,242 crore were issued during this period, a 68 per cent fall compared to the Rs 51,655 crore disbursed last year.

The government should consider keeping in abeyance the 2 per cent equalisation levy on e-commerce companies as there are ambiguities surrounding its applicability, tax experts said.

Budget 2020-21, presented in February, expanded the scope of “equalisation levy” to include consideration received by e-commerce operators from e-commerce supply or services.

The 2 per cent levy came into effect from April 1, 2020.

Nangia Andersen Consulting Chairman Rakesh Nangia said the first instalment of equalisation levy would be payable in July 2020, but unsorted aspects such as double whammy caused on account of Section 10 (50) of the Income Tax Act, meaning and scope of consideration received or receivable, tax registrations and compliances may create hardship to the non-resident taxpayers.

“The provisions of equalisation levy, as notified, has left lot of ambiguities in terms of its application and procedures. Added to this is the business turmoil on account of COVID-19.

“In the best interest of business, the ideal approach should be to keep applicability of equalisation provisions in abeyance until issuance of necessary clarifications,” Nangia said.

Last month, a group of nine business bodies,representing mostly American, European, Australian and Asian foreign companies, had written to Finance Minister Nirmala Sitharaman seeking deferment of 2 per cent tax imposed on non-resident e-commerce companies by nine months due to the crisis triggered by COVID-19.

The income tax department has notified the 'safe harbour' rates for 2019-20 fiscal for calculation of transfer pricing by foreign companies in India.

The Central Board of Direct Taxes (CBDT) has notified changes to Rules 10TD and 10TE of Income Tax Rules relating to Safe Harbour Rules. It said rates applicable from Assessment Year (AY) 2017-18 to 2019-20 will continue to apply for AY 2020-21.


Transfer pricing implies the prices at which various overseas divisions of a company transact with each other. Generally, safe harbour is defined as circumstances in which the tax authority shall accept the transfer price declared by the taxpayer to be at arm's length.

Following the best practices of international tax jurisdiction, the Indian government introduced the concept of Safe Harbour Rules (SHR) in Finance Act 2009. Post that, the first round of SHR provisions were introduced in August 2013 for a period of three years, followed by revision in 2017 in the SHR which was applicable till financial year 2019-20.

Different rates were prescribed for different category of international transactions. Of these, the category of software development, ITeS and KPO were popularly opted for.

The Central Board of Direct Taxes (CBDT) has pruned the list of electronic payments methods wholesalers can offer, in a bid to make payment options more relevant to a business’ customer base.

CBDT said in a circular that wholesalers need not offer certain electronic payment methods, such as debit cards powered by RuPay, unified payments interface (UPI) and UPI quick response code, which are generally used by retail customers. They were made compulsory for businesses in 2019 with the aim of promoting a less-cash economy.

The move to exempt wholesalers from compulsorily offering these payment options is based on industry suggestions that these modes are more suitable for retail transactions and usually have a maximum payment limit per transaction, or per day, which do not apply to wholesalers, who receive payments through other electronic modes such as real-time gross settlement.

Not furnishing PAN/Aadhaar for income tax purposes? The benefit of latest reduction in the rates of tax deducted at source and tax collected at source will not apply to those not furnishing PAN or Aadhaar. In view of the COVID-19 pandemic, the Central government has reduced rates of TDS and TCS on various transactions by 25 per cent. However, it won’t apply to those who have to pay higher tax on account of not furnishing the PAN or Aadhaar numbers.
In an official notification, the Central Board of Direct Taxes said, “there shall be no reduction in rates of TDS or TCS, where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar. For example, if the tax is required to be deducted at 20% under section 206AA of the Income-tax Act due to non-furnishing of PAN/Aadhaar, it shall be deducted at the rate of 20% and not at the rate of 15%”.

The rates of Tax Deduction at Source (TDS) for some non-salaried specified payments made to residents has been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021 to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic.
As per the CBDT notification, the TDS on the amount paid or credited during the period from 14th May, 2020 to 31st March, 2021 will be deducted at the reduced rates specified. Also, the tax on the amount received or debited during the period from 14th May, 2020 to 31st March, 2021 will be collected at the reduced rates specified in the notification.

Clarification on TDS, TCS cut: The government today clarified the decision on TDS, TCS cuts announced yesterday. In a press conference today, Ajay Bhushan Pandey, Revenue Secretary, said that TDS has been cut on 23 items such as securities, bank accounts, securities, payments to professionals etc. Also, TCS on 12 items have been cut. He said that the rates at which TDS and TCS were cut on various transactions have been reduced by 25 per cent. This has been done so that more money is left at the disposal of the people.
The CBDT has also notified various rates for TDS and TCS. As per the notification, no reduction in rates of TDS or TCS will be available where the tax is required to be deducted or collected at a higher rate due to the non-furnishing of PAN/Aadhaar.

On Wednesday, Finance Minister Nirmala Sitharaman had made the announcement of a reduction in the rate of tax deducted at source (TDS) and tax collected at source (TCS) for non-salaried payments. Today, the Central Board of Direct Taxes (CBDT) notified revised rates that will be applicable from May 14, 2020, to March 31, 2021. Sitharaman had announced a slew of measures to help companies and taxpayers tide over hardships caused by coronavirus lockdown. She had stated that the reduction in TDS/TCS rate would release about Rs 50,000 crore in the hands of people.

The Finance Ministry is considering the deferment of the ‘Google Tax’ (technically known as equalisation levy) on e-commerce companies by up to six months during the current fiscal. This levy came into effect from April 1.
The Finance Ministry has received several representations seeking relief from this levy. “It is being contemplated to give certain relaxation to e-commerce companies,” a source told BusinessLine. Once decided, it would be in line with most income tax-related compliance timelines, the source said.
The levy, first introduced in 2016-17 and was applicable to payments for digital advertisement services received by non-resident companies without a permanent establishment (PE) here, if these exceeded ?1 lakh a year. Rate of tax for this purpose is 6 per cent. The companies using these services are required to withhold the tax amount.
In the 2020-21 Budget, the Government widened the ambit of the levy by including e-commerce companies. The applicable tax rate is two per cent (plus a surcharge) on amount of consideration received/receivable by an e-commerce operator.

Keeping in view PM Modi's vision of a "self-reliant India", FM Nirmala Sitharaman announced a slew of personal finance measures to boost demand in the country, which is ravaged by the pandemic. Here are the five announcements made by her:
1) Due date for all income tax returns has been extended to 30 November from 31 July.
2) TDS, TCS rate for non-salaried payments for period up to March 31, 2021 has been slashed by 25%, a move that will release Rs.50,000 crore into the system, said Sitharaman.
"In order to provide more funds at the disposal of taxpayers, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates," the Finance Minister said.
Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc shall be eligible for this reduced rate of TDS.

Good news for taxpayers who are yet to file their income tax return for FY 2019-20. The income tax return filing deadline for FY19-20 has been extended to November 30. This was announced by Finance Minister Nirmala Sitharaman today while sharing the details of the stimulus package announced by PM Narendra Modi to revive the economy on Tuesday.
The FM, in her press conference today, announced various direct tax-related measures for taxpayers. The FM said, “Due date for all income-tax return for FY 2019-20 will be extended from 31 July 2020 to 30th November 2020 and tax audit from 30th September 2020 to 31st October 2020.”

Experts say as the government had earlier extended the deadline from June 10, 2020, to June 30, 2020, for receiving the Form-16, this relief for taxpayers was expected.
Archit Gupta, Founder, and CEO, ClearTax says, “Extension of tax filing deadline was expected due to extension of dates to claim tax benefits for FY 2019-20. There will also be a likely extension for providing Form 16 by employees. All of this requires the date of return submission to be extended.”

The extension of the due date of ITR from existing 31st July and 31st October to 30th November 2020, experts say will give a significant time post lockdown to taxpayers to compile their data required for preparation of income tax return. Gopal Bohra, Partner, NA Shah Associates LLP says, “The extension of the due date will also enable the taxpayer to defer the payment of self-assessment tax (not more than 10 per cent of the annual tax liability) without attracting any interest thereon.”

India’s trade ministry is proposing a tax holiday for companies bringing new investments as the government explores measures to support the economy amid the coronavirus pandemic, according to people familiar with the matter.
The proposal to give a 10-year full tax exemption to companies making new investment upwards of $500 million is being evaluated by the finance ministry, said the people, who asked not to be identified citing rules. The plan requires companies to start operations within three years from June 1, and will cover sectors including medical devices, electronics, telecom equipment and capital goods, they said.
Another variant of the programme will be to provide a four-year tax holiday to companies that invest $100 million or more in labour-intensive sectors such as textiles, food processing, leather, and footwear.

A lower corporate tax rate of 10 per cent is proposed for the next six years, the people said. The proposal has to be approved by the finance ministry and, so far, it hasn’t taken a decision.

Consider this. If a company defers an employee’s salary or a vendor’s payment, say by six months, tax is applicable on such salaries or payments under current taxation laws, tax experts said, since it is a promise of income in future.

As companies defer salaries to staff and payments to suppliers and vendors due to cash flow constraints because of the Covid-19 pandemic and resultant lockdown, it is clear that deferring the expense does not mean that tax, too, can be postponed, the experts said.

They say, as per current tax regulations, companies will have to provide for any deferral under Section 192 of the Income Tax Act in their books and tax will have to be deducted on that. So, irrespective of whether the recipient receives a salary or payment, tax is applicable.

And, if the deferred payments are never paid or postponed beyond March 2021, the recipient would have to pay taxes for the current fiscal year on money never received the current financial year.

The government has asked its tax officers to start collecting and analysing data on all major tax disputes as they are unable to hit the ground due to Covid19 pandemic.

The Central Board of Direct Taxes (CBDT) has asked the tax officers to not issue any notices for now but collect data that will help settle half the pending litigation.

In a note to the tax officers CBDT said that identifying issues in all major tax issues would be crucial during next three months.

Many suspect that due to the increased ground work by the revenue department the tax demands may become more in-depth and lead to more companies paying up.

“There is a major shift in the approach of the government wherein the emphasis is more towards qualitative rather than quantitative measures. The focus is more on identification and strong preparation of cases which are worth picking up for reassessment, said Rahul Garg, partner, Asire Consulting.

Notification No. 24/2020 [F. No. 176/8/2017/ITA-I] / SO 1434(E)

To provide speedy dispute resolution for investors, the Central Board of Direct Taxes (CBDT) has modified the norms for Mutual Agreement Procedures (MAP) by prescribing two years as the average time-frame for resolving cases.

What is MAP?
MAP is aimed at bringing in certainty via an alternative dispute resolution mechanism. It forms part of a tax treaty wherein competent authorities of respective countries enter into discussions to resolve the dispute that has arisen by any action of a tax authority that is not in accordance with the tax treaty.

Earlier, there were two rules, 44G and 44H. 44G dealt with a case of an Indian resident taxpayer who was aggrieved by the action of the tax authority of another country, which was not in accordance with the tax treaty. 44H prescribed a case of reference from a competent authority of another country as regards action by the Indian income tax authority, wherein the competent authority of India called and examined the records to give his response to the competent authority of the other country in an effort to resolve the dispute. Now, CBDT has amended 44G and omitted 44H.

Direct tax collection surged 36.5 per cent to Rs 34,784 crore in the first month of fiscal year 2020-21, despite a nationwide lockdown, thanks to a 63 per cent year-on-year (YoY) fall in tax refunds in April.

Without accounting for refunds, the collection contracted 5.4 per cent, indicating muted economic activity as the Covid-19 pandemic and subsequent curbs paralysed most sectors.

Refunds of Rs 6,772 crore were about a third of the amount disbursed in the same month last year, at Rs 18,474 crore, which boosted net collection.

Incidentally, the government last month announced expediting refunds up to Rs 5 lakh to improve cash flows for individuals and small and medium enterprises amid coronavirus-related disruptions in the economy.

“A sharp fall in refund disbursement can be credited for the high double-digit net direct tax collection growth seen in April. The gross figure, on the other hand, paints the real picture, where collection has fallen,” said a government official.

Coming months will see net collections under pressure as the base effect will wean off, and economic growth is at a standstill.