The income-tax department has introduced changes to the form used to pay equalisation levy, to include the option of paying up the new 2% levy on digital transactions conducted in India by foreign e-commerce companies.

The new levy was introduced in the Union Budget and was made effective from April 1, with the first instalment payment due on July 7.

The IT department has amended the challan ITNS 285 – which is used to pay the levy – through an online mechanism. The changes now include ‘e-commerce operator for e-commerce supply or services’ under type of deductor category, and permanent account number of PAN of the deductor or the e-commerce company has been sought.

Importantly, the modified challan provides for 'Outside India' option while seeking the address details of the payee, enabling foreign companies to key in details and make the payment due.

The move comes as government authorities stood their ground on implementation of the new levy, even as the United States has opened an investigation into evaluating whether the digital taxes imposed by India and nine other countries, discriminates against US-based companies.

Expediting the process of issuing income tax refunds during the coronavirus pandemic, the income tax department issued tax refunds at the speed of 76 cases per minute from 8th April to 30th June.

"During this period of just 56 weekdays, the Central Board of Direct taxes (CBDT) has issued refunds in more than 20.44 lakh cases amounting to more than Rs. 62,361 crore," the finance ministry said in a release today.

Income tax refunds amounting to Rs. 23,453.57 crore have been issued in 19,07,853 cases to taxpayers and corporate tax refunds amounting to Rs. 38,908.37 crore have been issued in 1,36,744 cases to taxpayers during this period.

"Refunds of this magnitude and numbers have been issued completely electronically and have been directly deposited into the bank accounts of the taxpayers. Unlike what used to happen some years ago, in these refund cases, no taxpayer had to approach the department to request for release of refund. They got refunds directly into their bank accounts," the ministry said.

India figures among the top-three countries getting detailed information from Switzerland about bank accounts and beneficiary ownership of entities established by their residents in the Alpine nation, according to the latest study by OECD's Global Forum on transparency and exchange of information for tax purposes.
In its latest peer review report on the exchange of information on request, the Global Forum, which is tasked to assess the standard of exchange of information on request by various jurisdictions worldwide and their compliance, said Switzerland is rated 'largely compliant'.
India is also rated as 'largely compliant' by this OECD (Organisation for Economic Cooperation and Development) body.
The Global Forum review said Switzerland has made "significant improvements in the areas of availability of legal ownership information, exchange of information on deceased persons and requests based on stolen data".
It, however, said some challenges remain with regard to the availability of beneficial ownership information and proper implementation of rights and safeguards to ensure effective exchange of information and confidentiality requirements.

The Union Budget 2020 had introduced a new income tax regime under Section 115BAC of the Income Tax Act, giving an option to individual taxpayers and Hindu Undivided Families (HUFs) to pay income tax at lower rates. The new system is applicable for income earned between April 1, 2020 and March 31, 2021 (FY 2020-21), which relates to AY 2021-22.
Now, in a bid to give further relief to taxpayaers, the CBDT has amended Rule 2BB, notifying that a salaried employee who opts for the new income tax regime can claim certain exempt allowances.

It may be noted that Section 115BAC(2) of the Income Tax Act prescribes the list of deductions /exemptions which are not available for deduction while computing total income if a taxpayer opts for the concessional tax regime. However, the provision empowers the CBDT to prescribe certain exemptions available under Section 10 which can be availed by the employees.

Several direct tax deadlines including those for linking of PAN with Aadhaar, completing tax saving investments for financial year 2019-20 and for companies to issue Form 16 to employees, have been extended again. This has been done to give further relief to individuals due to on-going coronavirus pandemic.

As per the notification issued by the government dated June 24, 2020 (effective from June 30, 2020), the deadline to file belated and/or revised tax return for FY 2018-19 has been extended to July 31, 2020. The deadline for making tax-saving investments and expenditures to claim tax breaks under Section 80C, 80D etc for FY 2019-20 has also been further extended to July 31 from the earlier time limit of June 30,2020. The date for issuance of TDS certificates i.e. Form 16, Form 16A etc. has been extended to August 15, 2020.

For those taxpayers who failed to complete their tax planning exercise for the financial year 2019-20 by March 31, 2020, the last date is nearing. Even though there is no change in the financial year, the taxpayer will still be able to save tax for the FY 2020. Due to nationwide lockdown, many of us were unable to make a payment towards various tax-saving investment options.

The government had extended the last date till June 30, 2020 for the investors to save tax for FY 19-20. One has, therefore, a few days left to claim tax benefits under Section 80C, 80D, and 80G.

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For saving tax and growing wealth, you can start a National Pension Scheme (NPS) account. NPS is regulated by PFRDA. It is a tool to accumulate lumpsum and monthly income for living life post-retirement.

Several Mauritius-based foreign portfolio investors are relooking at their investment company structures, after a recent order by a quasi-judicial body denying benefits of grandfathering provisions under the India-Mauritius Double Tax Avoidance Agreement treaty to private equity firm Tiger Global.

Some of them are making sure that investment decisions are made in Mauritius. Entities that normally hire common directors on boards are also now replacing them. In many cased, tax officials have pointed out that companies rope in some professionals who are directors of hundreds of such firms in Mauritius.

Even some of the smallest things like book keeping or holding quarterly meetings have started In Mauritius and Singapore, say people in the know.

The first quarter advance tax collection from India Inc has been revised upward to Rs 39,880 crore from initial mop up of Rs 8,572 crore as payments by some heavyweight companies have come late due to Covid-19 limitations, said CBDT sources. In some cases, banks are still updating the final figures.

According to the latest numbers, the corporation advance tax payments showed a dip of 40 per cent as on June 17 over Rs 65,558 cr in the same period a year ago.

Personal income advance tax payments declined almost 48 per cent at Rs 6,775 crore from Rs 13,025 crore over the same period.

As such, the rate of fall in the advance tax collections shown till June 15 declined.

Interestingly, the initial collections reported on Tuesday showed a decline of 76 per cent from the collection from corporate.

With this, the gross direct tax collection came to Rs 1,73,970 crore, down 24.4 per cent as on June 17 this financial year against Rs 2,30,245 crore of the same period in the previous year.

Factoring in refunds of Rs 48,903 crore against the Rs 62,813 crore in this period, net direct collections fell by 25.3 per cent to Rs 1,25,065 crore from Rs 1,67,432 crore over the period under review.

Reflecting the economic contraction in the pandemic-hit first quarter of the current fiscal year, gross direct tax collections so far for the June quarter were a nearly third lower than the year-ago period at Rs 1.38 lakh crore. Corporate advance tax collections were down 79% on year in the period while advance payments of personal income tax were lower by 65%.

The total collections of advance taxes, a mechanism used by the large individual and corporate taxpayers, were just Rs 11,714 crore till the June 15 deadline, less than a quarter of Rs 48,917 crore collected in the year-ago period.

Apart from Covid-19 lockdown which brought economic activities to a grinding halt in early April, the collections in the current quarter are also impacted by the lower rates for corporate tax and minimum alternate tax (MAT) announced last year.

The Central Board of Direct Taxes has recently notified the income tax returns for the AY 2020-21. The tax returns are in line with the Finance Act amendments for the FY 2019-20 and include relief measures announced due to COVID-19. For the FY 2019-20, the government had earlier provided relief by extending the time for making tax-saving investments until 30 June 2020.

The notified income tax return forms enable taxpayers to claim tax deductions for tax-saving investments, payments, donations and investments for capital gains exemption, made during the extended period until 30 June 2020. The income tax returns consist of a separate schedule (Schedule DI) requiring a taxpayer to specify the amount of the investment or expenditure in respect of which they wish to claim a deduction. The deduction is allowed within the aggregate eligible limits available for FY 2019-20 under the different provisions of the Income Tax Act.

The scope of filing income tax return has been expanded to include taxpayers who are individuals, Hindu Undivided Family (HUF) and partnership firms who are not otherwise required to file an income tax return. Such taxpayers should file a tax return if they meet any of the below criteria:

# Deposit of an aggregate amount which exceeds Rs 1 crore in one or more current accounts with a bank (including a co-operative bank).

Due to the coronavirus pandemic, the government has extended the date till June 30 for making various investment/payment for claiming deduction for FY 2019-20. It includes National Pension Scheme (NPS) and other Section 80C investments like PPF and NSC. From April, new income tax rates came into effect. However, the old tax slabs will also remain in effect, giving a choice to the individual to opt between the two.

Under the new tax rates, there is zero tax for income up to Rs. 2.5 lakh; 5% for income between Rs. 2.5 lakh and up to Rs. 5 lakh; 10% for income between Rs. 5 lakh and up to Rs. 7.5 lakh; 15% for income between Rs. 7.5 lakh and up to Rs. 10 lakh; 20% for income between Rs. 10 lakh and up to Rs. 12.5 lakh; 25% for income between Rs. 12.5 lakh and up to Rs. 15 lakh; 30% for income above Rs. 15 lakh.

1) You will not be eligible for some of the tax benefits on NPS contribution if you opt for the new tax rates.

2) If you opt for the new tax rates, you can still claim income tax deduction on employer contribution towards employee’s NPS account. If your employer is contributing towards your NPS account, a deduction of up to 10% of salary (basic + DA) irrespective of any limit qualifies for income tax deduction under Section 80 CCD(2).

3) Central government employees enjoy a higher limit of 14% of the salary. For others, the limit is 10%.

4) This benefit is also available if you stick to the old income tax regime.

5) If you stick to the old income tax regime, you can claim exclusive deduction of Rs. 50,000 under Section 80CCD (1B).

Finance Minister Nirmala Sitharaman on Monday said the government will consider an extension in the deadline for availing the lower 15 per cent corporate tax rate on new investments, due to the COVID-19 pandemic.

In the biggest reduction in 28 years, the government in September last year slashed corporate tax rates by up to 10 percentage points to attract private investment and push sagging economic growth.

Base corporate tax for existing companies was reduced to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for new manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023.

“I will see what can be done. We want industry to benefit from the 15 per cent corporate tax rate on new investments and I take your point for considering an extension in the deadline of March 31, 2023,” Sitharaman said.

Addressing members of FICCI, the minister assured the industry of all possible government support with the intent of supporting Indian business and reviving the economy.

Sitharaman clarified that the COVID-19 Emergency Credit Facility covers all companies and not just micro, small and medium enterprises (MSMEs).

On the question of liquidity, she said, “We have fairly clearly addressed the issue of liquidity. There is definitely the availability of the liquidity. We will look into it if there are still issues.” She also said every government department has been told to clear dues and if there is any issue with any department, the government will look into it.

The direct tax buoyancy — a ratio of tax collection growth to nominal GDP growth — would stand at 1.12 for FY20 if revenue forgone due to corporate tax cuts is taken into account, the Central Board of Direct Taxes (CBDT) said. The government’s argument is that formalisation of the economy, aided by the GST and demonetization, has had a positive bearing on the tax buoyancy, even when the economy is witnessing growth pangs.
Of course, FY20 buoyancy was still lower than 1.21 achieved in FY19. Tax buoyancy is a measure of efficiency of tax mobilisation or ‘tax effort’, and if it is greater than 1, it indicates collections are rising faster than the GDP.

The gross direct tax collection (without deducting refunds) was Rs 12.34 lakh crore in FY20, lower than Rs 12.98 lakh crore in FY19.
The corporate tax cuts announced in September lowered collection by an estimated Rs 1.45 lakh crore. Additionally, in the Budget last year, income of up to Rs 5 lakh was exempted from tax, impacting collection by about Rs 23,000 crore, the CBDT said.

Tax saving is one of the incentives that encourages people to go for long-term investments. Although one shouldn’t invest only to save tax but also to meet his/her financial goals, but taxes saved through tax-saving investments provide instant return as per the tax bracket in which the investor falls.
For example, a person in the highest tax bracket may get 30 per cent return (excluding cess and surcharge, if any) in the form of tax saving / refund in the same year, in which the investments are made. Similarly, a person in the 20 per cent tax bracket may get an instant return of 20 per cent (excluding cess), which is a big incentive to motivate a taxpayer to invest.

However, many investors failed to make their last-minute tax-saving investments for the Financial Year (FY) 2019-20, as the year ended amid the nationwide lockdown that was imposed to contain the spread of highly contagious Novel Coronavirus COVID-19.

Refuting media reports that the growth in direct tax collection for FY 2019-20 has fallen drastically, the Modi government today said that the fall in the collection of direct taxes is on expected lines and these reports are not true.
The Ministry of Finance in a statement said, “There are reports in a certain section of media that the growth of direct taxes collection for the FY 2019-20 has fallen drastically and buoyancy of the direct tax collection as compared to the GDP growth has reached negative. These reports do not portray the correct picture regarding the growth of direct taxes.”

It is a fact that the net direct tax collection for the FY 2019-20 was less than the net direct tax collection for the FY 2018-19. However, this fall in the collection of direct taxes is on expected lines and is temporary in nature due to the historic tax reforms undertaken and much higher refunds issued during the FY 2019-20.
“This fact becomes more apparent if we compare the gross collection (which removes anomalies created by the variation in the amount of refund given in a year) after taking into account the revenue foregone estimated for the bold tax reforms undertaken, which have a direct impact on the direct taxes collection for FY 2019-20.

The user can file the Income Tax Return (ITR) in two ways:
In offline mode: Download the applicable ITR, fill the form offline, save the generated XML file and then upload it. To e-File the ITR using the upload XML method, the user must download either of the following ITR utility: Excel Utility/Java Utility

After you download the excel or the java version of the utility form, extract the downloaded utility ZIP file and open the Utility from the extracted folder. Then provide your information, fill the applicable and mandatory fields of the ITR form. Validate all the tabs of the ITR form and Calculate the Tax. Then generate and Upload the XML to e-Filing portal by entering user ID (PAN), Password.Click on the 'e-File' menu and click 'Income Tax Return' link and Submit the ITR.

Collect documents such as Form 16, salary slips, and interest certificates and Form 26AS. Keeping them handy will help you compute your gross taxable income and will provide you with the details of tax deducted at source (TDS) from your income in 2019-20.

The government is exploring changes to the equalisation levy, and may stop charging the tax on digital transactions either partially or in its entirety for a year as it works on the options, people with direct knowledge of the matter said.

The government is doing a cost-benefit analysis and has reached out to stakeholders to figure out if it needs to suspend or shelve the 2% equalisation levy imposed this fiscal year on any purchase by an Indian or India-based entity through an overseas ecommerce platform, they said.

Many Indian startups and stakeholders are also pushing to shelve or reduce the 6% equalisation levy, the so-called Google tax, charged on the advertising revenue that overseas companies such as Google, Facebook and Netflix generate from India. The burden of this tax eventually falls on the local startups and others who advertise on these platforms, as most digital majors pass on it to them. The government is looking at this as well.

The Central Board of Direct Taxes (CBDT) on Saturday assigned jurisdiction to officers from its international tax division over assessees coming under the purview of ‘equalisation levy’ on e-commerce companies. Experts said the CBDT’s move is a sign that the government is moving ahead with the levy, which came into force on April 1, despite several representations from industry bodies on behalf of foreign companies calling for deferment of the tax due to the fear that the wide-ranging scope of the law may end up taxing even non-digital transactions, leading to possible double taxation.
“As the first due date for payment of equalisation levy is just a month away on July 7, the income tax authorities seem to be working steadily towards the implementation and chances of deferment look bleak,” Sandeep Jhunjhunwala, partner at Nangia Andersen, said.

Tax experts said the finance ministry was expected to defer the levy as it was unclear whether non-resident e-commerce operators need to have income tax registration in India for payment of levy, if tax would be levied on gross consideration or commission income for platform-based business models and corresponding exemption under the Income Tax Act to avoid double taxation.

After almost five months after notifying Income Tax Return (ITR) Forms ITR-1 (Sahaj) and ITR-4 (Sugam) on January 3, 2020, ITR-1 has been uploaded on the income tax portal incometaxindiaefiling.gov.in on June 2, 2020. However, ITR-4 has not been uploaded on the portal yet.
Availability of the ITR-1 on the income tax portal has paved way for the Resident individuals, especially salaried taxpayers, to start filing their returns subject to fulfillment of certain criteria.

According to the income tax portal, ITR-1 is meant for Individuals being a Resident (other than Not Ordinarily Resident) having Total Income up to Rs 50 lakh, having Income from Salaries, One House Property, Other Sources (Interest etc.), and Agricultural Income up to Rs 5 thousand (Not for an Individual who is either Director in a company or has invested in Unlisted Equity Shares).
Filing ITR is mandatory for assessees having gross total income over Rs 2,50,000 and/or in case any tax is deducted at source (TDS) while making any payment to the assessees.

The deadline for various compliances, including that of tax-saving investments, have been extended from March 31, 2020 to June 30, 2020 to provide relief to investors, many of whom have missed the deadline because the Financial Year 2019-20 ended in the midst of the nationwide lockdown that was imposed to contain the spread of highly contagious Novel Coronavirus COVID-19.
The extension provided opportunity to the investors not only to make up any shortfall in investments, including minimum investments, but to claim tax benefits on the investments made during the extended period as well.

As the annual limit of Rs 1.5 lakh u/s 80C gets exhausted due to a number of investment options and expenditures like tuition fee of children, interest on home loan as well as mandatory PF/NPS deductions etc crowd the section, many people make voluntary investments in Tier 1 Account of National Pension System (NPS) to get additional tax benefits up to Rs 50,000 over and above the 80C limit.
Accordingly Nitesh (name changed), who missed NPS investment due to some issue in his bank account, looks to invest in the extended period as offices open after relaxation in lockdown. Similarly, burdened by large tax outgo, Asish (name changed) opened a new NPS Account during the extension period to reduce his tax burden a bit.