Banks to move government on TDS on loan waivers

• Jun 28, 2022

Banks will soon move the government as they find themselves caught in the tax net while settling and rejigging loans to give distressed borrowers a second chance. Slices of loans waived to lessen the strain on defaulting borrowers are being interpreted as 'benefits' that lenders are passing on to borrowers under the new provisions the government has come out on tax deducted at source (TDS). Even though there is no transfer of cash from the bank to the borrower, the extent of haircuts taken by lenders is imputed as 'income' for the borrower.

Tax Deduction at Source

Foreign investors worried over new Mauritius tax angle on PE funds

• Jun 29, 2022
  Foreign investors betting on India by putting money into private equity (PE) funds here are taken aback by a recent observation by the Mauritius Revenue Authority (MRA), raising a hitherto ignored angle on tax – and in the process questioning investment structures that have been in vogue for years.According to a private ruling by MRA, investment vehicles in Mauritius, used by global investors to enter India, will have to pay tax in Mauritius on ‘capital gains’ they receive from a PE or debt fund in India when the latter exits an investment. Till now, a Mauritius entity paid tax to the Mauritius government only on ‘income flows’, like dividends and interest distributed by funds in India --- but not on capital gains booked in India.

• However, MRA, in a matter related to a global investor, has ruled that “all income distribution” made by AIF (alternative investment funds) Category II and III “will be treated as dividend income and therefore not retain their initial characteristics”.

General

• Jun 29, 2022
  
  

• Crypto trading is going to be difficult in India from next month. The 1% TDS rule for cryptocurrency and virtual digital assets (VDAs) transactions will come into effect from the 1st of July 2022. The Central Board of Direct Taxes (CBDT) recently released guidelines explaining who will be responsible for deducting TDS in different types of transactions.

Tax Deduction at Source

TDS on crypto, VDAs: CBDT issues new circular on peer to peer transactions

• Jun 30, 2022

• The Central Board of Direct Taxes (CBDT) given clarification regarding how the tax will be deducted (TDS) on peer-to-peer transactions related to buying/selling of Virtual Digital Assets (VDAs) and crypto under section 194S of the Income-tax Act, 1961. Peer-to-peer transactions are those transactions where buying and selling have taken place without the involvement of a third party (E.g., an exchange).
  As per the latest circular issued on June 28, 2022, "According to section 194S of the Act, any person who is responsible for paying to any resident any sum by way of consideration for transfer of VDA is required to deduct tax. Thus, in a peer-to-peer (i.e., buyer to seller without going through an Exchange) transaction, the buyer (i.e., person paying the consideration) is required to deduct tax under section 194S of the Act."

  
  
  

Tax Deduction at Source

3 income tax changes effective from July 1

• Jun 30, 2022
  
  

• With July comes a few new changes to income tax rules applicable to different taxpayers. Here is a look at three important income tax related changes that will come into effect from July 1, 2022.Earlier this year, the Finance Minister Nirmala Sitharaman proposed a 1% tax deducted at source (TDS) on any payment made in exchange for the transfer of virtual digital assets (VDAs), often known as cryptocurrency and non-fungible tokens (NFTs). For transactions totaling more than Rs 10,000, the TDS rule will go into effect on Friday, July 1.
  The tax at the time of transfer of VDA will be deducted at the rate of 20% if the deductee (buyer's) PAN is not readily available. Additionally, if the payer is not one of the specified people, TDS will be withheld at a higher rate of 5% (as opposed to the usual rate of 1%) if the individual has not submitted his or her income tax return.
  A fee of Rs 1,000 would be applicable if the PAN-Aadhaar link is completed on or after July 1, 2022. Earlier, till June 30, the charge was Rs. 500. So when an individual links their PAN and Aadhaar, they first have to pay the penalty and request to link PAN aadhaar once the payment reflects in the e-filing site.

Income Tax

Taxman Readies for a More Tech-driven Administration

• Jun 30, 2022

• Analytics & new tools are making the tax administration move towards efficient services and comprehensive use of data The influence of technology-based inputs for the taxman is becoming deeper. Its use has grown exponentially as the taxman is using data analytics to increase tax collection, target compliance and improve efficiency of its services. The most visible example of this is online tax filing and the processing of returns.

General

Gift cards, reward points not virtual digital assets, says CBDT

• Jul 01, 2022
  
  

• Gift cards, vouchers, mileage points, reward points, and loyalty cards will be excluded from the definition of virtual digital assets (VDAs), Central Board of Direct Taxes (CBDT) said in a notification issued. This will ensure that these products do not face the tax applicable on VDAs such as cryptocurrencies and non-fungible tokens (NFTs), introduced this budget.CBDT said the exemption will include gift card or vouchers that may be used to obtain goods or services on a discount on goods, mileage points, reward points or loyalty card under an award, and reward, benefit, loyalty, incentive, rebate or promotional programme that may be used or redeemed to obtain goods or services or a discount on goods or services.

Income Tax

Taxpayers face issues accessing e-filing portal; Infosys taking measures, says IT dept

• Jul 04, 2022

As taxpayers face issues in accessing the e-filing portal, the Income Tax department on Saturday said software provider Infosys is taking “proactive measures” to deal with the ‘irregular traffic’ on the portal. “It has been noticed that taxpayers are facing issues in accessing ITD e-filing portal. As informed by @Infosys, they have observed some irregular traffic on the portal for which proactive measures are being taken,” the I-T department tweeted.

Income Tax