Finance minister Nirmala Sitharaman on Tuesday urged the income tax department to assess tax returns and process tax refunds even faster and redress pending grievances of assessees as she set a new three-point governing principle for the tax department.


The minister acknowledged that with use of technology, tax returns are now assessed and refunds are issued quickly but further improvements in this will fetch more goodwill to the department. The minister also told officials to resolve pending grievances.

With Rs 58,000 crore prize money won in the last three years, the income tax department has started issuing notices to individuals who have played and won online games, CBDT Chief Nitin Gupta said on Tuesday.

The department has started alerting the winners on the tax compliance dashboard wherever there is a mismatch in income and tax payments.

"We have mounted an action in this (online gaming) sector and determined that Rs 58,000 crore winnings were there in last 3 years. The data is with us. We are in the process of issuing notices," Gupta said.
He said the notices are being put up on the tax compliance portal and winners are being nudged to pay due taxes.

"They are expected to voluntarily comply to payment of taxes," Gupta said.

He also said the department undertakes enforcement action wherever it finds that data is backed by evidences and in such cases notices are issued.

Finance minister Nirmala Sitharaman on Tuesday asked the Income-Tax department to quickly process tax returns, issue refunds and redress grievances.

Sitharaman said pending cases need to be resolved expeditiously and that the department could run a campaign for this on the lines of public sector banks

Despite Covid-19 related challenges,she said direct tax collections had sustained the momentum and use of technology had closed the gap between direct tax and indirect tax collections.
She outlined three 'R's that the department should follow -- quicker processing of returns, speedier refunds and redressal of grievances. "What is well within you and never going to change and never needs anything more are these three 'R's," Sitharaman said at an event of the CBDT.

The net direct tax collection has increased 23 per cent to Rs 7.04 lakh crore so far this fiscal, the income tax department said on Tuesday.

Central Board of Direct Taxes (CBDT) Chairman Nitin Gupta said the income and corporate tax collections were at a record high of Rs 14.09 lakh crore in 2021-22.

“The momentum of the last fiscal continues in this fiscal with net direct tax collection of Rs 7.04 lakh crore so far, which is a growth of 23 per cent over the same period last fiscal,” Gupta said.
At the Finance Minister’s Award ceremony for CBDT officers, Gupta said the I-T e-filing portal has stabilised and it has facilitated 5.83 crore tax return filing as of July 31. A record 72 lakh returns were filed on the portal on a single day.

July 31 was the last date for filing ITRs for salaried individuals for income earned in the 2021-22 fiscal.

Ease of doing business for MSMEs: A pan India survey of small businesses and startups by community social media platform LocalCircles on Monday said 42 per cent of 5,788 respondents are finding it difficult to meet September 30 deadline to file their tax return and audit report. 16 per cent of respondents said “it will be a significant effort” filing by this month-end while 26 per cent admitted it would be “impossible to file” by September 30 and hence requested an extension by 30-45 days. In contrast, 49 per cent of respondents said they have already filed their tax returns and audit reports.

The trend of increase in income tax collection is expected to continue in the coming months on increased compliance, higher corporate profitability and increased trade in festive season, experts said.

The gross direct tax collection grew 30 per cent to Rs 8.36 lakh crore in the April to mid-September period of the current fiscal on increased corporate tax and personal income tax (PIT) mop up due to increased economic activity.

Gross direct tax collections grew 30 per cent to Rs 8.36 lakh crore till September 17 of current fiscal year on increased advance tax mop-up, the finance ministry said on Sunday.

“The gross collection of direct taxes (before adjusting for refunds) for FY 2022-23 stands at Rs 8,36,225 crore compared to Rs 6,42,287 crore in the corresponding period of preceding financial year i.e. 2021-22, registering a growth of 30 per cent over collections of 2021-22,” the ministry said in a statement.

To facilitate Ease of Doing Business and decriminalisation of offences, the Income Tax department today said it has relaxed several norm related to compounding of offences under the I-T Act. The I-T department said it has allowed compounding in cases where the applicant has been sentenced to up to two years of imprisonment. Compounding allows the person to accept his offence and pay specified charges to avoid prosecution.

Issuing the revised guidelines for Compounding of offences under the Income-tax Act, 1961, the Central Board of Direct Taxes (CBDT) said: "The scope of eligibility for compounding of cases has been relaxed whereby case of an applicant who has been convicted with imprisonment for less than 2 years being previously non-compoundable, has now been made compoundable."

The Centre’s advance direct tax collections grew by about 22% on year to Rs 1.81 trillion in the second quarter of the current financial year, CNBC TV18 reported.

A senior revenue department official, however, told FE that the data was ‘premature’ as it was still being tallied. The due date for advance tax for September quarter was 15th of the month.
The government’s advance direct tax collections from companies, LLPs and individuals in the first quarter (June quarter) was up 33% on year at about Rs 1.01 trillion.

The Centre’s direct tax collections (post-refunds) grew by a robust 30% on year till September 8 of the current financial year even as refunds rose sharply by 65% during the period.

Both personal income tax (PIT) and corporate income tax (CIT) performed much better than anticipated, thanks to higher compliance and a favourable base effect.

The Centre’s direct tax collections are expected to exceed the FY23 Budget target of Rs 14.2 trillion by a substantial amount, as the target for the year is at par with actual receipts of last fiscal.

If you planned your taxes according to the new tax regime but missed filing your income tax returns (ITR) before the July 31, 2022 deadline, then there is some bad news. As per current income tax laws, you cannot claim the benefit of the new tax regime while filing belated ITR. Not only, you will have to pay taxes according to the old tax regime while filing belated ITR, but there may be chances of a higher income tax liability as well.

What income tax laws say about filing ITR with new income tax regime
Once the deadline to file ITR is missed, then the individual can file a belated ITR using only the old income tax regime. The Finance Bill, 2020, introduced the new income tax regime and it came into effect from FY 2020-21 (April 1, 2020). The Finance Bill makes it clear that in order to avail benefits under the new regime, an individual has to file their ITR within the due date (usually July 31 unless extended by the government) under Section 139(1) of the Income-tax Act,1961. If the income tax returns are filed belatedly, the taxpayer will not be able to claim the benefit of the lower tax rates, as provided for in the new tax regime and the existing, old income tax rates would apply.

Banks will not be required to deduct 10% tax at source (TDS) on one-time settlement (OTS) or loan waivers, the Central Board of Direct Taxes said on Tuesday.

CBDT said in a detailed clarification that OTS or loan waiver by a bank will not be treated as a benefit or a perquisite and not face Tax Deducted at Source as they would have to bear the additional cost of tax deduction besides the haircut. The exemption will be available to all public financial institutions, scheduled banks, cooperative banks, rural development banks, state financial corporations, and state industrial investment corporations.

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has frowned upon a “hyperpedantic approach” adopted by an I-T officer in denying a long-term capital gains (LTCG) exemption claimed by a non-resident taxpayer. The rejection was merely because she quoted a wrong section in her I-T returns against her claim.
Under the I-T Act, two key sections — section 54 and 54-F — provide for an exemption from long-term capital gains arising on sale of an asset (this original asset can be shares, tenancy rights or residential property) if an investment is made in a house property.

Gross direct tax collections in the ongoing fiscal year till September 8 totaled `6.48 lakh crore, up 35.46% compared with the tax collected in the same period of the last fiscal year. Net of refunds, direct tax collections since April 1 increased 30.17% to Rs 5.29 lakh crore, data showed.

The net collection is 37.24% of the direct tax collection estimated in the budget for this fiscal year, the Central Board of Direct Taxes said in a statement.

"After adjustment of refunds, the net growth in corporate income tax collections is 32.73% and that in personal income tax collections (including securities transaction tax) is 28.32%," the statement said.

The Income Tax Department has issued refunds amounting to Ra 1.19 lakh crore, 65.29% higher than in the yearago period. The Centre expects its net direct tax collection to exceed the Rs 14.20 lakh crore target set in the budget for this fiscal. “As the economy continues to recover from the Covid downturn, the efforts at nudging taxpayers to better compliance through a combination of technology intervention and data reporting are paying off, and tax collections continue on their upward trajectory,” said Rohinton Sidhwa, partner, of Deloitte India.

Next time if you pay your income tax via the new income tax portal website, then be aware that you will be liable to pay for convenience charges and Goods and Services Tax (GST) for using certain payment methods. For example, you can get charged Rs 300 for paying income tax of Rs 30,000 using some of the payment modes.

The convenience charges and GST will be applicable if income tax is paid using the ‘payment gateway’ on the e-filing income tax website. If you pay using ‘Payment Gateway’ -which is one of the five payment options as shown below then transaction charges will be applicable for certain modes of payment.

The Income Tax Department has said that it has issued refunds worth over Rs 1.14 lakh crore to more than 1.97 crore taxpayers in the first five months of this fiscal year that started April 1, 2022.
"Income tax refunds of Rs. 61,252 crore have been issued in 1,96,00,998 cases & corporate tax refunds of Rs. 53,158 crore have been issued in 1,46,871 cases," the Income Tax Department tweeted.

The Centre’s direct tax collection as on August 30 stood at Rs 4.8 trillion, which is 33 per cent more than the Rs 3.6 trillion collected in the same period last year, Nitin Gupta, chairman of the Central Board of Direct Taxes (CBDT), told Business Standard.

Gupta said if the trend continued, direct tax collection for FY23 could exceed the Budget target of Rs 14.20 trillion.


“We have a healthy net collection after accounting for a higher refund outgo. There is a good buoyancy of tax collection so far,” Gupta said. “If this trend continues in the second instalment, we expect a fairly good tax collection over and above the targets laid down in the Budget,” he said.

The Financial Intelligence Unit (FIU), a key unit of the multi-agency probe into the 2021 global offshore investigation called the Pandora Papers, has received responses from its counterparts in over three-fourths of the requests it sent to 33 foreign jurisdictions.

Officials said that using the network of FIUs in mostly the offshore havens mentioned in The Indian Express investigation (October 4-16, 2021), the FIU sent out 160 requests to foreign jurisdictions and has received responses in 125 cases so far.

Section 194R of the Income Tax Act, 1961, which makes it necessary to deduct 10 per cent tax at source on the value of any benefit or perquisite received by a resident Indian, was introduced by the government to widen the tax base and reduce tax evasion in the country. Experts, however, have flagged several complications around it.

"The threshold prescribed under section 194R does not sync with threshold prescribed under section 56," said Ravi Mehta, Managing Director and Head (Transaction Tax), and Amrita Bhatnagar, Associate Director, at RBSA Advisors.
Under section 56, if the receipt of benefits by an individual or a Hindu Undivided Family (HUF) exceeds Rs 50,000 in a year, they are liable to pay a tax on it. However, under section 194R, the limit is Rs 20,000.

"At the very instance, this would lead to tax outflow which is actually exempt in the hands of the recipient," they added.

The section will not apply if the value of "benefit" or "perquisite" provided is less than 20,000. "The term 'benefit' or 'perquisite' is not defined in the Act," Akhil Chandna, partner, Grant Thornton Bharat, told Business Standard.

The government had earlier stated that the receipt may be in cash or kind, but no clear definition was provided.

If you have won money playing online games in the previous financial year, then as per the Central Board of Direct Taxes (CBDT), you must file an updated ITR (i.e., ITR-U) and pay taxes on the online game winnings accordingly.

The CBDT chairman Nitin Gupta, in an interview with PTI, said that ITR-U could also be utilised by those categories of taxpayers who have income from online games, lotteries and betting etc. "This is a provision for them to come forward and pay taxes rather than face the consequences of penalty or any other legal action under the income tax law," the CBDT chairman said.
ITR-U stands for income tax return - updated; announced by the finance minister Nirmala Sitharaman in her Budget 2022 speech. ITR-U is filed under section 139(8A) of the Income-tax Act, 1961. ITR-U or updated return was introduced to give taxpayers an easy route to correct mistakes related to estimating their incomes on which tax is payable.

ITR-U provides an opportunity to update one's income tax returns within two years after the end of the relevant assessment year. ITR-U provides an opportunity for taxpayers to include any income they forget to pay tax on while filing their ITR. It is important to note that additional tax is payable at 25% to 50% on the additional income.

With few takers for the income tax regime without exemptions even after two years of its introduction, the government may consider allowing some basic deductions and make the slabs more graded to make it more attractive to taxpayers under different brackets, analysts say.

However, the dual regime tax regime may continue for another 2-3 years until the new regime finds acceptability through a mix of deductions and lower tax rates.