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  • Sep 18, 2020
  • Direct taxes: Receipts fell in FY20, but refunds rose

    As a fraction of direct taxes collected, refunds of such taxes peaked at 16% in FY17, the demonetisation year, but have since fallen and touched 12.4% in FY19, according to data reviewed by FE. However, the rate, given the available data, seemed looking up again in FY20. The refunds in April-January last fiscal were Rs 1.71 lakh crore or close to 14% of the collections in the whole of FY20 and may have risen further in February-March. FY20, it may be noted, saw the uncommon phenomenon of year-on-year decline in tax receipts, owing to a deep cut in corporate tax rate and a steep decline in economic growth.

    The Parliamentary Standing Committee on Finance had raised an alarm over ‘excess’ advance tax payments in the last two financial years, drawing inference from the ‘high’ component of interest payouts in the funds refunded. The panel attributed the perceived trend to the taxman, in his drive to meet the revenue targets, apparently pushing the taxpayers to pay excess taxes. While this is certainly not true of FY19, refunds as a share of collections have of course risen in FY20, but perhaps not at a rate necessitating an alarm.

  • Sep 15, 2020
  • Over 35,000 direct tax disputes resolved under Vivad Se Vishwas

    The government on Monday said that 35,074 direct tax-related disputes have been resolved under the Vivad se Vishwas scheme as on September 8. This is even as nearly 6 lakh such cases are pending in different forums, including commissioner of appeals, tribunals, high courts and the Supreme Court.

    The dispute resolution scheme meant for direct taxes was passed as an Act earlier this year but the deadline for the scheme to avail concessional settlement provision has since been extended to December 31 due to Covid-19. A tax official said that a large number of cases would come under the scheme closer to the deadline.

    The government is hoping that a substantial portion of over Rs 10 lakh crore in revenue stuck in these cases can be unlocked through the scheme as it offers exemption from payment of penalty and interest on the disputed tax amount. The penalty and interest often amount to twice as much as the original tax demand.

    In case the appeal is filed by the department, the taxpayers choosing to settle dispute and make payment before December 31 will only have to pay half the disputed amount while penalty and interest would be waived off. However, if the case is related to dispute of penalty and interest then only 12.5% of the amount is payable.

  • Sep 14, 2020
  • CBDT deploys two-third of its workforce for faceless assessment scheme

    The Central Board of Direct Taxes (CBDT) has deployed two-third of its workforce to deal with the faceless assessment scheme.

    "Now, the National e-Assessment Centre (NeAC) which is headed by Principal Chief Commissioner of Income Tax is having a team of 32 Commissioners, 96 Principal Commissioner, 261 Assistant and Deputy Commissioners and 1274 Income Tax Officers," senior Income Tax officers told ANI.

    Faceless Assessment Scheme was inaugurated as Phase 1 on October 7, 2019, with 58,320 assigned cases. On August 13 this year, Prime Minister Narendra Modi launched the platform for transparent taxation.

    All cases other than those assigned to the Central charges (Serious frauds, Major Tax Evasion, Sensitive and Search matters, Black Money and Benami cases) and International Tax charges to be done through faceless assessment.

    According to officials, Regional e-Assessment Centre (ReAC) has also been increased to 34 from 8 earlier.

    Last year, NeAC has 8 ReACs at New Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Ahmedabad, Pune and Bengaluru. Now, Mumbai has 5 ReAC, Kolkata has 4 ReAC, Delhi has 3 and Chennai has ReAC. New ReAC centre has been set up after the Prime Minister launched the faceless assessment, taxpayers charter on August 13.

    New, ReACs have been set up in Vijayawada, Vishakhapatnam, Ranchi, Ahmedabad, Vadodara, Bengaluru, Panaji, Indore, Panchkula, Shimla, Nashik, Thane, Jodhpur, Trichi, Bareily and Dehradoon after the approval of Finance Minister Nirmala Sitharaman on August 13.

  • Sep 10, 2020
  • From October 1, 5% tax on foreign fund transfer

    Any amount sent abroad to buy foreign tour packages, and every other foreign remittance made above Rs. 7 lakh, will attract a tax-collected-at source (TCS) beginning 1 October unless you are making the remittance from income that is already tax-deducted at source (TDS). .

    While the tax on foreign tour packages will be 5% for any amount, for other foreign remittances, the tax will kick in only for the amount spent above Rs. 7 lakh.

    For education-related foreign remittances funded by loans, though, the tax will be just 0.5% for the amount above Rs. 7 lakh, considering many Indian students take loans to pursue education abroad.

    Under the Reserve Bank of India’s liberalized remittances scheme, individuals can remit a maximum of $250,000 abroad every year. The provision to collect tax on remittances was introduced in the Finance Act of 2020 subject to riders and notified on 27 March to take effect from 1 October.

    Many financial institutions have communicated the applicability of tax-collected-at source on remittances from October to customers.

    The Union finance ministry has been extending the scope of both tax-deducted at source and tax-collected-at source, and encouraging electronic payments in order to have a better idea of transactions in the Indian economy and to be able to match the spending pattern of assessees with their reported taxable income.

  • Sep 10, 2020
  • I-T Dept issues refunds worth Rs 1.01 lakh crore to 27.55 lakh taxpayers till September 8

    The Income Tax Department on Wednesday said it has issued refunds of over Rs 1.01 lakh crore to 27.55 lakh taxpayers between April 1 to September 8.

    This include personal income tax (PIT) refunds amounting to Rs 30,768 crore issued to 25.83 lakh taxpayers and corporate tax refunds amounting to Rs 70,540 crore issued to over 1.71 lakh taxpayers during this period.

    “CBDT issues refunds of over Rs 1,01,308 crore to more than 27.55 lakh taxpayers between 1st April,2020 to 08th September,2020. Income tax refunds of Rs. 30,768 crore have been issued in 25,83,507 cases &corporate tax refunds of Rs.70,540 crore have been issued in 1,71,155 cases,” the Central Board of Direct Taxes (CBDT) tweeted.

    The government has emphasised on providing tax related services to taxpayers without any hassles during the Covid-19 pandemic, and accordingly has been clearing up pending tax refunds.

  • Sep 09, 2020
  • Covid-19: The changing landscape of tax

    It is almost six months in India, and more than eight months in other parts of the globe, that the Covid-19 pandemic has played havoc. Whenever this gets over, life isn’t going to be the same for everyone. There has been a paradigm change, from an office-going culture to work from home culture, face-to-face interactions to online meetings/interactions. The world of tax is no exception, and the government has already announced the roll-out of faceless assessment in income-tax. It is time for industry to commence assessing the impact of the lockdown on various aspects of business.

    While these are early days to assess the overall impact, already, the World Bank and leading credit agencies have raised red flags with regards to large economies of the world, India included. The largest economies are going to contract this year, and the immediate focus is now on survival rather than growth. Growth is still a couple of quarters away, and given the dwindling of demand for goods and services, businesses are relooking at their cost structures and negotiating new rates to be effective for future transactions. The impact of the pandemic on domestic as well as international transactions is humongous. In India, we have already seen the GDP contract in the April-to-June quarter.

  • Sep 08, 2020
  • Digital companies including Amazon, Facebook seek clarity on ecommerce transactions tax

    Top digital companies including Amazon, Flipkart, Bookmyshow and Facebook have sought clarity from the government on how a 1% tax on ecommerce transactions announced in the previous budget would be levied.

    The first instalment of the new tax is due in October and there is some ambiguity over how it is to be calculated, experts said.

    Companies want the government to come out with precise rules for this tax, which they are to deduct before payments to vendors, and how certain transactions should be treated.

    The new section that includes the 1% tax says, “Where sale of goods or provision of services of an ecommerce participant is facilitated by an ecommerce operator through its digital or electronic facility or platform (by whatever name called), such ecommerce operator shall, at time of credit of amount of sale or services or both to the account of an ecommerce participant or at the time of payment thereof to such ecommerce participant by any mode, whichever is earlier, deduct income tax at the rate of 1% of the gross amount of such sales or services or both.”

  • Sep 05, 2020
  • I-T dept prepares to implement faceless income tax appeals from September 25: Finance secretary

    Finance secretary Ajay Bhushan Pandey said preparations are being made to implement faceless income tax appeals from September 25. The income tax department has already rolled out pan-India faceless assessment facilities for all taxpayers from August 13.

    “It is completely doable… there may be some teething troubles, but they can be addressed,” Pandey said at a webinar on Transparent Taxation organised by ET Markets and FICCI on Friday.

    The department is studying whether cases of penalty and transfer pricing could be included in the faceless regime, he said when asked about procedures for transfer pricing and penalties. He added that pending appeals, cases will be resolved without direct interaction with the tax authorities, with a technical unit to help the appellate officer.

    India’s taxation system will have to be aligned with the challenges of global mobility of people, the finance secretary said in response to a question on the need for simplification of taxes for non-resident Indians.

    The government or the Central Board of Direct Taxes will have to be more aligned to such problems because these are recent phenomena and this problem will get highlighted more,” he said.

    The faceless system will ease compliance and widen the tax base while doing away with discretion and subjectivity at the hands of tax officers, Pandey said.

    “The move to a faceless system will lead to reduced compliance burden, lower cost of compliance and reduced litigation,” he said. “The faceless system will improve the ease of doing business and more people will come into the tax stream.”

  • Sep 02, 2020
  • I-T authorities can share info with scheduled commercial banks, CBDT says

    The CBDT has said the income tax authorities can share information with scheduled commercial banks, a move that would ease the lenders’ hassle of deciding TDS deductibility on various payments to their customers.

    In a notification dated August 31, the Central Board of Direct Taxes (CBDT) included ‘scheduled commercial banks’, listed in the second schedule of the Reserve Bank of India Act, 1934, under Section 138 of Income Tax Act for sharing of information.

    CBDT is the apex tax body on personal income tax and corporate tax.

    Section 138 of the Income Tax Act empowers income tax authorities to share information/ details of its taxpayers with other agencies.

    Nangia Andersen LLP Partner Sandeep Jhunjhunwala said the addition of these banks in the list of bodies with which the tax authorities can share information received from the taxpayers should ease a lot of administrative hassles currently faced by the banking industry in the country.

    “This addition to Section 138 of Income Tax Act would surely ease the burden of scheduled commercial banks for deciding TDS deductibility on various payments to its customers,” he said. The move will especially help in cases such as TDS under Section 194N, which requires multiple income tax related information and declaration from customers making withdrawal, Jhunjhunwala added.

  • Sep 02, 2020
  • Filing ITR to be a tiring task for equity/MF investors doing SIP, STP, SWP

    Filing Income Tax Returns (ITRs) is a relatively easy task for salaried individuals having total income up to Rs 50 lakh, income from one house property and income from other sources like interest income, as they need to file the simple ITR-1, provided such a taxpayer is not a director of any company, has not invested in unlisted shares and/or don’t have any income from business or profession.

    However, apart from non-fulfillment of any of the above conditions, if a salaried individual redeems his/her equity share(s) – be it a listed share – and/or equity-oriented mutual fund (MF) unit(s), he/she will have to file ITR-2, provided the taxpayer doesn’t have any income from business or profession.

    Not only ITR-2 excel utility has 28 pages compared to just 8 pages in ITR-1, but from this year, instead of filling the consolidated capital gain (CG) amount, investors need to fill Schedule 112A for each transaction amounting to long-term capital gain (LTCG) from sale of equity share in a company or unit of equity-oriented fund or unit of a business trust on which STT is paid under Section 112A of the Income Tax Act.

    The Schedule 112A page was introduced in July last year during the peak of tax filing session for the Assessment Year (AY) 2019-20 with almost half of the taxpayers already filed their return of income. As a result, Schedule 112A was optional last year and investors were allowed to provide consolidated LTCG on the CG page.

  • Aug 31, 2020
  • Don’t collect levy charges on electronic payments, says finance ministry

    The Union Ministry of Finance has advised all the banks not to collect any charges on transactions or payments made through electronic mode, the Central Board of Direct Taxes (CBDT) said in a statement on Sunday.

    According to the CBDT, some representations were made that some banks are imposing and collecting charges on transactions carried out through UPI.

    A certain number of transactions were allowed free by these banks beyond which every transaction bears a charge, the CBDT noted.

    “This is in violation of the Circular no 32/2019 dated December 30, 20219, which was issued by CBDT to clarify that based on section 10A of (Payment and Settlement System (PSS) Act, any charge including MDR (Merchant Discount Rate) shall not be applicable on or after January 1, 2020 on payments made through electronic modes,” the release said.

    Hence, it said that the Ministry has advised the banks to immediately refund the charges collected, if any, on or after January 1, 2020, on transactions carried out using electronic mode prescribed under section 269SU of the IT Act and not to impose charges on any future transactions carried through electronic mode.

  • Aug 29, 2020
  • Income Tax Department to intimate taxpayers under scrutiny about faceless assessment

    The income tax department will soon start sending out intimation to assessees undergoing scrutiny that such cases would now be handled under faceless assessment, a tax official said on Friday.

    CBDT Additional Commissioner Jaishree Sharma also said that domestic transfer pricing cases too will be covered under the faceless assessment mechanism.

    Asked whether the previous notices still stand valid, Sharma said, "Previous notices will not become redundant. First, an intimation would be sent out that your case would now be assessed under faceless assessment scheme and if the Assessing Officer of the Assessment Unit feels that he needs some more information, he will send fresh (notice) under 142(1)."

    A Section 142(1) notice is sent to an assessee to inquire about details and documents before making assessment under the Income Tax Act.

    Speaking at a webinar organised by industry body PHDCCI, Sharma said reassessment cases would also be part of the faceless scheme.

    "So all the 148 cases that were going on, they have been transferred to the faceless assessment scheme and NeAC will be sending out intimation in all such cases which would now be assessed under the faceless assessment scheme. So by September 15 or before that, you can expect an intimation from NeAC," Sharma said.

  • Aug 22, 2020
  • IT Department to map digital behaviour of taxpayers to create profiles

    The income tax department will map the digital behaviour of taxpayers to create their profiles under faceless scrutiny assessment in electronic mode, a senior official said, as all interactions of a taxpayer with the tax authority will be logged.

    Faceless assessment will be a complete shift from the earlier practice where taxpayers could sit with the assessing officer and resolve issues at one go, following a single notice of demand, and even seek adjournment for hearings over telephone calls.

    “If I give you a requisition for five things, you (taxpayer) respond to one, and take adjournment to respond to the other, that’s assessee behavior that is being mapped, which in the manual days was not being mapped,” Smita Jhingran, chief commissioner of income tax at Regional e-Assessment Centre, Delhi, said on Friday at a webinar organised by industry body FICCI and Dhruva Advisors.

    “A lot has changed. Now you're leaving a digital footprint of everything …,” she said in response to a question.

  • Aug 22, 2020
  • Income tax refunds issued: Govt returns Rs 88,652 crore to over 24 lakh taxpayers

    Are you awaiting your Income Tax refund? Over 24 lakh taxpayers may have got, or will soon get their refunds as the Income Tax department has issued refunds worth Rs 88,652 crore so far this fiscal. This includes personal income tax refunds for over 23 lakh taxpayers and corporate tax refunds to over 1.58 lakh taxpayers during this period. “CBDT has, so far, issued refunds of over Rs 88,652 crore to more than 24.64 lakh taxpayers from 1st April, 2020 onwards. Income tax refunds of Rs 28,180 crore have been issued in 23,05,726 cases & corporate tax refunds of Rs 60,472 crore have been issued in 1,58,280 cases,” the Income Tax department said in a tweet on Friday.

    Prime Minister Narendra Modi-led government recently launched a platform ‘Transparent Taxation — Honoring the Honest’ and made tax rules easier and friendlier. PM Modi also announced faceless assessment, appeal, taxpayer charter to make the taxation process more transparent. Launching the platform on 13th August, PM Modi exhorted taxpayers. “Ask your conscience and pay tax honestly,” he said. He even asked those who don’t fall in the tax net yet to think of ways of contributing and pay taxes too. Stating that the number of taxpayers is very small in the country as compared to its large population, PM Modi said that fundamental reforms are needed in the Indian tax system.

  • Aug 22, 2020
  • I-T dept to use video conference sparingly in faceless assessment scheme

    The income-tax department’s faceless assessment regime will leave room for interaction between a taxpayer and officials through video conference (VC) in specific circumstances but the government’s intention is to use it sparingly, so that the new system built on anonymity isn’t jeopardised, senior tax officials said in a webinar on Friday.
    The webinar on faceless assessments was organised by Dhruva Advisors and Ficci .

    The system of fully digitised and anonymous assessment and appeal was launched by Prime Minister Narendra Modi last week. The regime seeks to eliminate the interface between taxpayers and the tax official, which is expected to cut the discretionary power enjoyed by the officials while also restricting the opportunity for the taxpayers to enter into illegal arrangements with their assessors.

    However, this has unnerved many taxpayers who have asked the department whether the absence of oral or physical hearing would rob the proceedings of ‘fair exchange of information’ as only written submission would be allowed. “Can the taxpayer be assured that their written points would be understood by the tax officer and taken into consideration, and therefore can the taxpayer be assured of justice in the current scheme,” S Nageswari, tax head at Tata Group, asked the tax officials at the webinar.

  • Aug 21, 2020
  • Taxpayer Charter: A roadmap for mutual trust and respect

    Last week, the PM unveiled the Taxpayers Charter, a two-way document containing 14-point obligations of the revenue and 6-point duties of the taxpayer. While the analysis of each is yet to be translated into actionable goals, the announcement is an outcome of the amendment in the Finance Act of 2020. The building blocks for a statutory adoption of the taxpayer charter is predicated on nation-building through progressive tax policy and honouring the honest taxpayers.

    The institutional framework for the protection of taxpayer rights can be traced to the 1998 Citizen’s Charter, a first step towards the implementation of Sevottam (Service excellence—a combination of two Hindi words: seva and uttam). With continuous improvements, the charter was revised multiple times. The Kelkar Task Force in 2002 suggested methods to instil accountability in the functioning of the tax department, via an ombudsman reporting to Parliament. However, the Ombudsman framework introduced by way of administrative guidance with no statutory basis proved to be an ineffective body.

  • Aug 21, 2020
  • Towards a faceless, fair and fearless tax system — a radical reform India needed

    Prime Minister Narendra Modi’s move to reward taxpayers by introducing the taxpayers’ charter, which is a part of the broader reform agenda, would usher in a transparent tax environment in the country.

    In the Union Budget 2019, the finance minister had announced the launch of the faceless e-assessment scheme, whereby there would be total removal of any interface between the assessing official and the assessee. This would bring in several advantages to the tax assessee. The PM also informed that the number of people filing returns has gone up by 25 million in the last 6-7 years. With this new initiative, the government aims to widen the tax net from the current 15 million.

    Firstly, scrutiny of a tax assessee is a very cumbersome process, as she is expected to satisfy all the queries of the income-tax official concerned. She may have to physically visit the income-tax department several times, till all the questions are not resolved.

    Tugging at the souls of non-taxpayers, the PM urged them to be a part of the nation-building exercise to make it self-reliant. Since the last one year, the government has been undertaking several measures towards introducing a transparent and a hassle-free tax regime in the country. On these lines, the central government has reduced the corporate tax and abolished the dividend distribution tax.

  • Aug 20, 2020
  • Decoding equalisation levy for e-commerce sector: E-retailers may pass cost burden to sellers, consumers

    Equalisation Levy (EL) was introduced in India in 2016. However, it became more intensive in scope and reach, and was slipped surreptitiously into the Finance Act, 2020 just before passage of the Budget, without any debate and discussions. The new EL was to come into effect from April 1, 2020, giving foreign companies operating in the digital space less than 10 days’ notice. The scope and reach of the revised EL came as a bolt from the blue for all stakeholders, as the broadest digital tax currently levied or proposed across the globe. In its present form, the EL proposes to levy 2 per cent tax on all non-residents engaged or facilitating the online sale of goods or services subject to certain conditions, in addition to the existing levy of 6 per cent on online advertisements. The EL is required to be paid directly by the non-resident, implying that no grossing up is possible.

  • Aug 20, 2020
  • Faceless assessment: CBDT top brass assures taxmen of no disruption

    The Central Board of Direct Taxes (CBDT) top brass assured tax department officials that the faceless assessment regime would not lead to any large-scale movement of personnel and would be implemented without draining the existing resources at the department’s disposal, the finance ministry sources said. The meeting on Wednesday was aimed at dispelling any misgiving or apprehensions among I-T officials about the scheme.

    During the online meeting, the chairman of the board also emphasised the need of the new system to turn around the image of tax officials from what is currently perceived with negative undertones.

    Recently, the I-T employees’ associations had written to the Board that a majority of the workforce felt left out due to the possible disruption to the employees caused by the restructuring of the department, owing to the implementation of the faceless assessment scheme.

  • Aug 18, 2020
  • Lack of clarity over restructuring under faceless assessment scheme leads to chaos

    Income tax field offices are yet to receive orders from the top on re-organisation of units under faceless assessment scheme, leading to uncertainty.

    The Central Board of Direct Taxes (CBDT) sub-sections are working on identifying officers that will be moved to different locations as part of the re-organisation, said people aware of the developments, adding that the exercise would have to be completed within two days.

    “Orders are expected by 19th, but which officers will have to move and to which locations is still unclear,” said an official, asking not to be named.

    Another official said that many officers were continuing to work from home amid the Covid 19 pandemic, but may still have to shift locations when the re-organisation orders come in. “Faceless assessments can be done from anywhere, so shifting of officers may not be needed, but as part of the re-organisation several are expecting transfers,” the official said, requesting anonymity.