Salaried people can choose either of the two income tax regimes at the time of filing their returns irrespective of the choice they have given to the employer at the beginning of the financial year, a senior government official said.

The budget for the next fiscal has proposed to add a new tax regime to the existing one.

From April, taxpayers will have the option to choose the proposed lower tax rates with no exemptions, or the existing regime that allows for deductions and exemptions.

Employees can switch if they feel they had paid more tax under the regime that they had indicated to the employer at the beginning of the financial year to deduct tax at source, the official said.

The CBDT has decided to honour the best income tax department investigator, revenue collector and innovator among others working in the recently launched e-assessment scheme. As per an order issued on February 20 by the policy-making body of the department, there will be five categories of honours on a monthly and yearly basis and the winning tax personnel will be honoured on 'Income Tax Day' celebrated in July every year.

Their names and photos will also be displayed on a 'Wall of Fame' that will be created at a prominent location in the department.

The officers will be categorised under five 'prime' categories of best investigator, best revenue collector, best administrator, best auditor and best innovator.

This is being done by the Central Board of Direct Taxes to "promote and appreciate the outstanding work of officers/officials or group of officers/officials in e-assessments for each Principal Chief Commissioner of I-T region".

E-commerce companies have sought more time to implement a government proposal to levy a new tax, although they have, in principle, agreed to its imposition.

The ecommerce entities, including Amazon.com and Walmart-owned homegrown etailer Flipkart, have said they need time to upgrade IT systems in order to enable them to collect the 1% tax deduction at source (TDS) from sellers, a senior government official said.

“They’ve made representations, they're fine with the tax deduction plan, but they want the date to be at a later time...They want to upgrade their IT system, which will take time," the official said asking not to be named since the discussions were ongoing.

The income tax department plans to bring the unorganised sector into the tax net and widen the overall tax base. The move to tax e-commerce transactions at source was one way to reduce litigation, officials said. E-commerce companies said they were seeking more clarity on the new rule.

European Union finance ministers added Panama, the Seychelles, the Cayman Islands, and Palau to the EU's blacklist of tax havens while giving Turkey more time to avoid being listed, an EU document said on Tuesday. The list, which was set up in 2017 after revelations of widespread tax evasion and avoidance schemes, now includes 12 jurisdictions.

Adding financial centers like the Cayman Islands and Panama marks a shift for the EU. Several reviews had left on the list mostly Pacific and Caribbean islands with almost no financial relationship with the EU - drawing criticism for being too lenient on tax havens. The other listed jurisdictions are Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the three U.S. territories of American Samoa, Guam, and the U.S. Virgin Islands.

Those on the blacklist face reputational damages, higher scrutiny in their financial transactions and risk losing EU funds.

The Madras High Court in a recent order has opined that the faceless tax-assessment system “can lead to erroneous assessment, if officers are not able to understand the transactions and statement of accounts of an assessee without a personal hearing”.

The court, however, said electronic-assessment — introduced to curb cases of corruption and harassment of tax payers by officials— was a laudable initiative.

The HC made the observations while hearing a writ petition filed by a Coimbatore-based chit fund company against certain additions made by the assessing officer, over cash deposits of Rs 67.37 lakh made by the company during the demonetisation period.

The judge remarked that the assessing officer should have at least called for an explanation in writing before concluding that the amount collected and deposited by the petitioner was unusual.

Multinational companies in India have reached out to their tax advisers seeking to know the exact tax payable on dividends under existing tax treaties and if the status of most favoured nation would lead to additional benefits.

Several persons in the know said multinationals are analysing the total tax on the dividends with respect to the tax treaties and the most favoured nation status of the source country. Many would now fall back on the tax treaties and could be looking to postpone their dividend payouts till April this year.

Under most tax treaties India has with other countries, multinationals will be liable to pay 5% to 15% tax on dividends against 20% earlier. However, multinationals from countries such as Switzerland and France will even get to set off additional 5% tax against liabilities in their home country.

“Following the recent changes in the budget around dividends, most multinationals would look to give dividends after March end as that would mean tax of anywhere between 5-15% depending on the tax treaty. For countries like France and Switzerland that have MFN status, the rate would be 5% tax. Further, in either case set-off would be available, said Girish Vanvari, founder of tax advisory firm, Transaction Square.

Finance minister Nirmala Sitharaman on Monday said that the government was considering suggestions received on taxation liability imposed on unit holders of REITS and InvITs after the Budget reverted to the classical system of taxing dividend in the hands of recipient. She was speaking at a post-Budget session with industry representatives in Bengaluru.

Expert said that with the change in the dividend distribution tax (DDT), the foreign investors in REITs/InvITs were at a disadvantage now. Hitherto, dividend received by REIT/InvIT from 100% SPV was not liable to DDT and not taxable either in the hands of REIT/InvIT or investors. This was based on the rationale that the SPV paid tax on rental and other incomes earned and hence there cannot be multiple points of taxation. But as per Budget proposal, the unit holders will need to pay tax on dividend income received from such SPVs and distributed by REIT/InvIT leading to double taxation in the hands of SPV and unit holders.

“This will adversely impact return in the hands of unit holders. The government needs to relook at this proposal and restore the single point of taxation as prevailed earlier.

Taxpayers availing of the Vivaad Se Vishwas Scheme will have to pay only half of the disputed amount in cases where the income tax department has filed an appeal, as per recent amendments to the Direct Tax Vivad Se Vishwas Bill that were cleared by the Cabinet.

The scheme, which was announced in the Budget to resolve pending disputes worth Rs. 9.32 lakh crore in over 4.8 lakh cases, has segregated the terms of payment on the basis of appeals having been filed by the tax department or the taxpayer.

The Bill, which was introduced in the Lok Sabha during the just-concluded Budget session, is expected to come up for passage in the next session beginning March 2.

In case of appeals made by the taxpayer, the full amount of disputed tax will have to be paid till March 31, and 25% more in case of search cases. Penalty and interest will be waived. In case the amount of penalty, interest or fee is the matter of dispute, then only 25% of that amount will have to be paid, while the rest will be waived off.

After March 31, however, the taxpayer will have to pay 10% more on top of the full disputed tax amount, and 35% more in case of search cases. Similarly, in case the amount of penalty, interest or fee is the matter of dispute, 30% will have to be paid.

Finance Minister Nirmala Sitharaman on Sunday said the idea behind introducing second alternative tax slabs sans exemptions is to take the country towards "a simplified, exemption-free and reduced rate of tax regime."

However, there was no time frame set by the government to remove all exemptions, she told reporters here after an interactive session with trade representatives and intellectuals on the Union budget.

"At the moment we only started a second alternative with some exemptions removed or some exemptions included, although the original intention was to remove all exemptions and give a clear simplified reduced rate of income tax," the finance minister said.

The budget 2020-21 has introduced more tax slabs and offers higher limits provided the taxpayer is ready to forego all the existing exemptions and deductions including home loan interest, other tax savings investments.

Given the time constraints, the finance ministry is fine-tuning rules to make the Vivad se Vishwas scheme accommodative for those declaring money involved in disputes and paying tax on them over just a fortnight in March.

Besides instructing officers with the job of clearing applications online within a day once the Vivad se Vishwas Bill is enacted in March, the tax department will allow assessees to join the scheme without waiting for the withdrawal of cases from various judicial bodies.

India is examining whether a carveout can be provided to real estate and infrastructure investment trusts (REITs, InvITs) under the proposed regime for taxation of dividends.

The budget proposes to scrap dividend distribution tax (DDT) and shift the taxation of such payouts to recipients.

Industry has already taken up the issue with the government as it could adversely impact these increasingly popular investment vehicles for the real estate and infrastructure sectors that rely on steady dividend income.

Moreover, sections within the government are also worried that the move could impact its own asset-monetisation plan, especially in the roads sector.

“There have been representations — the issue is being examined,” a senior government official said.

To maximise revenue mobilisation via the direct tax ‘Vivad Se Vishwas’ scheme, the Central Board of Direct Taxes (CBDT) has made tax officers’ performance under the scheme a vital criterion for their annual appraisals for 2019-20 and future postings. “Details of the number of disputed cases, amount involved in disputed cases as well the number of cases resolved and the amount collected under the scheme may be reported in the self-appraisal,” CBDT said. The performance of officers in respect of the scheme “will be specifically commented upon by the reporting and the reviewing officers and shall be an important factor in determining their future postings,” the tax board said in an office memorandum.
Assessing officers, range heads and other zonal heads would come under the revised appraisal norms.

The scheme, announced in the recent Budget, seeks to dispose of nearly 4.8 lakh cases, involving disputed tax amounts of Rs 9.32 lakh crore (as on November 30, 2019). All direct tax-related cases pending before the commissioner-appeals, Income Tax Appellate Tribunal, High Courts or Supreme Court as on January 31, 2020 are eligible for the scheme.

The income tax (I-T) department has notified forms for companies to avail the reduced corporate tax rates that were announced in September last year.

The Central Board of Direct Taxes (CBDT) has notified Forms 10-IC and 10-ID for existing companies that want to avail lower I-T rate and new manufacturing firms, respectively.

In September 2019, the government announced a cut in base corporate tax for existing companies to 22 per cent from the current 30 per cent; and for new manufacturing firms, incorporated after October 1, 2019, and starting operations before March 31, 2023, to 15 per cent from the current 25 per cent. Companies opting for these new tax rates will have to forego all exemptions and incentives.

The effective tax rate for existing units, after considering surcharges and cess such as Swachh Bharat cess and education cess -- which are levied on top of the income and corporate tax rates, will be 25.17 per cent as compared to 34.94 per cent now. For new units, it will be 17.01 per cent as against 29.12 per cent now.

From sending emails to tax assesses locked in a dispute with the tax authorities to setting up outreach programmes targeted at the trading community, chartered accountants and the like, the income tax department has made elaborate plans on how to implement the Vivadse-Vishwas scheme, people in the know told ET.

Importantly, the I-T department has made the scheme a part of the department’s Annual Performance Assessment Report (APAR) and has conveyed all its field officers that they may ask their personnel to provide details of their performance in implementing the scheme in their self-appraisal APAR of FY 19-20, said a official privy to the communication issued by the Central Bureau of Direct Taxes (CBDT) on Thursday. “The performance of officers in respect of the scheme will be specifically commented upon the Reporting and the Reviewing officers and shall be an important factor in determining their future posting,” as per the communique.
The 'Direct Tax Vivad se Vishwas Bill, 2020' introduced in the budget seeks to resolve disputed tax cases worth Rs 9.32 lakh crore.

Mumbai, which contributes one-third of the total tax collections, has already started working on implementing the scheme and has identified around one lakh cases which could come under the ambit of the tax amnesty once it gets the President’s assent.

According to sources, in Mumbai, over 60,000 cases are before the Commissioner of Incometax (Appeals), over 22,000 cases are before the Income Tax Appellate Tribunal and over 13,000 cases before the Supreme Court and the Bombay High Court.

The Central Board of Direct Taxes (CBDT) said only 2,200 persons disclosed annual income of more than Rs 1 crore from their professional work in FY19. They include doctors, chartered accountants and lawyers and this is as per returns filed in the current financial year for income generated in the previous one, it said, backing up statements made by Prime Minister Narendra Modi that led to a debate on social media.

This income from their professions did not include that from other sources such as rent, interest and capital gains, the department said in a series of tweets. “Certain misinformation is being circulated in Social Media pertaining to individual return filers,” CBDT said.

The statements came a day after PM Modi said that a very small number out of a total 1.3 billion Indians were paying tax.

“In the last five years, over 1.5 crore cars were sold in India – that too expensive ones. Over three crore Indians went abroad for business or tourism. But in a country of 130 crore people, only 1.5 crore people pay income tax,”he said at a TIMES NOW event on Wednesday.

The Direct Tax Vivaad se Vishwas Bill, 2020 will now cover pending litigation in debt recovery tribunals (DRTs) as well besides those in various courts and tribunals, the Union cabinet said while approving the change to the bill.

“It has been decided to cover disputes pending in DRTs also,” Union minister Prakash Javadekar said after the Cabinet meeting. “Disputes of search and seizure where the recovery is below Rs 5 crore can be taken in this scheme," he added.

The Cabinet also approved a scheme to recapitalise three public sector general insurance companies — National Insurance Company, Oriental Insurance Company and United General Insurance Company — to raise the solvency ratio and bring it in line with sector regulatory norms.

The Income Tax (I-T) department will share all taxpayers' data like PAN (permanent account number) information with Sebi (Securities and Exchange Board of India) in order to help the capital market regulator in its probe against various entities, including those involved in 'stock market manipulation', an official order has said.

The Central Board of Direct Taxes (CBDT), which frames policy for the tax department, had issued an order in this context on February 10 under section 138 (1) of the I-T ACT.

The sharing of information will be under three broad heads: request-based exchange of data, suo moto and automatic.

The two organisations are expected to ink a Memorandum of of Understanding (MoU) soon in order to implement the decision and chalk out modalities of exchange of data, maintenance of confidentiality, mechanism for safe preservation of data and weeding out after usage.

Amounts involved in personal income tax (PIT) disputes could jump by a massive Rs 2.5-3 lakh crore in the current financial year from close to Rs 4 lakh crore at the end of FY19 for the sole reason of post-demonetsation cash deposits in banks by about 90,000 individuals that have to date remained unexplained by them to the taxman’s satisfaction. That could present a chance for the government to net a tidy sum in FY20 if sections of these recalcitrant individuals opt to use the new Vivad Se Vishwas scheme to avoid much higher tax liabilities that could potentially befall on them in the normal course of dispute resolution involving tax adjudicators and courts.

According to a senior official, having exhausted the procedures involved before dispute stage like sending e-mails and SMS messages to these individuals to elicit their responses and explanations within specified periods, the cases of the above 90,000 people have started getting classified as ‘disputes’ and by the end of February, most of them will be termed so. This will make these individuals eligible to use the Vivad Se Vishwas scheme by paying 75% of the cash deposited by March 31, 2020 to nullify chances of any further liabilities that could otherwise arise from holding the unaccounted cash.

The Direct Tax Vivad Se Vishwas Bill, 2020, tabled in the Lok Sabha on Wednesday seeks to cut down on nearly 4.8 lakh tax disputes involving an amount of Rs 9.32 lakh crore (up to November 30, 2019) by giving the taxpayers the facility to escape interest on the disputed tax amount and any penalty. All direct tax-related cases pending before the Commissioner (Appeals), Income Tax Appellate Tribunal, high courts or the Supreme Court as on January 31, 2020 are eligible for the scheme.

The scheme provides that if a taxpayer avails it by March 31, 2020, then he would get complete waiver of interest and penalty. However, a taxpayer who chooses the scheme post this cut-off date will have to pay the disputed tax and 10% of it extra.

Further, if the tax arrears relate to disputed interest or penalty only, then only 25% of disputed penalty/interest is payable if scheme is availed by March 31. Cases coming for resolution after this date would have to pay 30% of penalty and interest.

Introducing the Bill, finance minister Nirmala Sitharaman said it emphasises on trust building. The scheme, she said, would not be open-ended. The government will later notify the end date for the scheme.

Rakesh Nangia, chairman, Nangia Andersen Consulting, said: “This can be a very beneficial scheme for settlement for cases such as additions of unexplained cash deposited during demonetisation period, additions for penny stocks, etc.

The new direct tax dispute settlement scheme will not cover cases related to undisclosed overseas assets initiated on the basis of information from another country. Neither will it apply to prosecutions under the Prevention of Money Laundering Act (PMLA), the Benami Transactions (Prohibition) Act and the income tax Act.

Those applying for the scheme can’t appeal against the decision of the tax authorities and liability computations will be final.

Finance minister Nirmala Sitharaman introduced the Direct Tax Vivad Se Vishwas Bill, 2020, in the Lok Sabha on Wednesday, which she had announced during her February 1 budget speech.

The legislation is aimed at resolving disputed tax cases involving Rs 9.32 lakh crore that has been stuck for more than a year through 483,000 cases pending in various courts.

“This Bill emphasises on trust building,” the finance minister said, adding that the scheme will reduce needless litigation expenditure for the government and taxpayers.