Real estate developers are contesting the 18% Goods and Services Tax (GST) levy on the transfer of development rights within joint development agreements (JDA) between developers and landowners. They believe the JDA does not involve any sale of land and hence the transfer of the rights is not taxable. Earlier this week, a developer filed an appeal in the Supreme Court (SC) against a ruling of a Telangana High Court, which held that JDAs should be taxed. The apex court has issued a notice to Centre to seek its response and will hear the matter on September 9. As no stay has been given on the Telangana High Court order, landowners and the developers will have to pay the taxes after valuing the service till the matter is finally decided.
Read More →Finance Minister Nirmala Sitharaman said on Tuesday that the government will repeal the changes made to Section 43B of the Income Tax Act if MSMEs want to continue operating with uncertainty on payment timelines from their buyers. Interacting with MSMEs and local industries in Ludhiana, Sitharaman said the government added the 45-day payment rule effective since 2008 to the Income Tax Act on the request of MSMEs facing delays in payment from their buyers beyond 45 days. “If MSMEs want relaxation in payment made by their buyers without the 45-day limit, whether over 45 days, 150 days or a year and further, then it is easy to make the changes. We will change it and go back to the original rule,” Sitharaman said. The government in last year’s budget had proposed to add a new clause h under Section 43B of the Income Tax Act to address the challenge of delayed payments faced by MSMEs in the country, hindering the flow of working capital and overall business growth. The clause (h), which came into effect on April 1, 2024, with 2024-25 as the assessment year (that is financial year 2023-24), allows expenses to buyers on invoices from micro and small enterprises only if paid within 45 days (where agreement exists) and within 15 days if there is no agreement in the year of actual payment instead of the year when it was incurred as an expense.
Read More →Finance Minister Nirmala Sitharaman on May 28 hinted at the possibility of the government reconsidering changes made to the income tax rules mandating payments to micro, small and medium enterprises (MSMEs) within 45 days, failing which companies will have to pay tax on the amount due. This mandate came into effect on April 1, 2024. She urged MSMEs to send representations on the same, adding that the government will "surely do something about it in the July Budget." Speaking at an event in Ludhiana, Punjab, Sitharaman said the changes mandating the 45-day payment window was introduced as per requests from MSMEs themselves.
Read More →The income tax department on Tuesday asked taxpayers to link PAN with Aadhaar by May 31 to avoid tax deduction at a higher rate. As per income tax rules, if a Permanent Account Number (PAN) is not linked with biometric Aadhaar, TDS is required to be deducted at double the applicable rate. Last month, the income tax department issued a circular stating that no action will be taken for short deduction of TDS in case the assessee links his/her PAN with Aadhaar by May 31. "Please link your PAN with Aadhaar before May 31, 2024, if you haven't already, in order to avoid tax deduction at a higher rate," the department posted on X. In a separate post, the I-T department asked reporting entities, including banks, forex dealers, to file SFT by May 31 to avoid penalties.
Read More →The Union Finance Minister has noted that the Central Board of Direct Taxes (CBDT) has exempted the Reserve Bank of India from the special provisions of the Income Tax Act, 1961, regarding the tax deducted at source, and the tax collected at source for non-filers of an income-tax return. In a notification, the Finance Ministry said: "In exercise of the powers conferred by clause (ii) of the provison to sub-section (3) of section 206CCA of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the Reserve Bank of India to be a person referred to in the said clause." The ministry also issued a notification along the same lines under section 206AB of the Income Tax Act. Section 206CCA of the Income Tax Act, 1961, provides tax collection at source (TCS) on amounts received by a specified person at rates higher than specified in the act. Under this, the tax is collected at twice the rate specified in the relevant provision of the Act, or at the rate of 5%, whichever is higher. The tax shall be collected at source (TCS) on higher of the following: > 2 times the rate given in the Income Tax Act or Finance Act or. > 5% If the person provides the PAN but has not filed the return for the last assessment year and the due date for filing has been expired and the aggregate of TDS or TCS in his case is Rs. 50,000 or more then the above rate shall apply. Just to save from this, if he doesn’t provide the PAN then tax shall be collected at 20% or a much higher rate as per section 206CC.
Read More →The income tax department has notified the cost inflation index (CII) for FY25, relevant to assessment year 2025-26, at 363, which is higher than 348 for FY24, and 331 for FY23. The CII is a tool used to measure inflation for computing long-term capital gains on the sale of assets, including immovable property, securities and jewellery. The CII adjusts the purchase price of assets to reflect current inflation, ensuring that taxpayers are taxed on real gains rather than nominal gains inflated by general price increases. This adjustment is essential for maintaining a fair and reflective tax system. Without it, taxpayers could face disproportionate tax liabilities on gains that are primarily due to inflation rather than actual economic growth, experts say. When selling assets such as immovable property, securities, or jewellery, the profit or gain from these assets tends to be high due to their increased sale price compared to the purchase price. As a result, assessees have to pay higher income tax on these gains. “Taxpayers can use this (CII) to calculate gains for the long term capital assets sold during FY25 and reduce the tax liability accordingly,” said Sandeep Sehgal, partner-tax, AKM Global.
Read More →A taxpayer can now know exactly why his/her income tax return (ITR) has been selected for scrutiny (close examination) by the Income Tax Department. This is because the Central Board of Direct Taxes (CBDT) has released guidelines via a circular dated May 3, 2024, which are to be followed for compulsory selection of ITRs for complete scrutiny for FY 2024-25. "Since the last few years, CBDT has issued similar circulars on an annual basis providing criteria for mandatory/ compulsory selection of ITRs for scrutiny and recently this circular was issued for FY 2024-25. These circulars issue guidelines for compulsory selection of ITRs for complete scrutiny as well as for the procedure for compulsory selection in such specified cases," says Dr Suresh Surana, founder, RSM India, a tax and business consultancy group.
Read More →Apr 12, 2024 Supreme Court upholds NCLAT order against errant auditors In a boost to the National Financial Reporting Authority (NFRA), the regulator for auditors and audit firms dealing with large and listed companies, the Supreme Court has upheld an order by the National Company Law Appellate Tribunal (NCLAT) related to disciplinary action against errant auditors. Last month, the apex court dismissed an appeal filed by chartered accountant Sam Varghese, partner at K Varghese & Co.
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