Record keeping rules for charitable institutions get tighter

• Aug 12, 2022
  
  
  All charitable trusts, institutions, universities and other educational trusts and medical institutions are required to keep and maintain books of account, original bills of payment, PAN card, Aadhar card and address of voluntary donors and trustees, along with details of loan taken and investment made by them. Trusts and institutions are also required to maintain record of projects undertaken, voluntary contributions received, every fund transferred to others, incomes from assets and investments, and all purchases made by the trust.
  

• The Central Board of Direct Taxes (CBDT) on Thursday mandated all charitable trusts to maintain the records for 10 years from the assessment years for better tax scrutiny. In addition, all donations from overseas are required to be maintained strictly, it said. The trusts have to keep "application of income outside India containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made", the CBDT said in a notification.

General

Tax appellate tribunal ruling: FPI income not subject to MAT provisions

• Aug 12, 2022
  
  

• A ruling by the Mumbai Income Tax Appellate Tribunal this week has held that the provisions of the Minimum Alternate Tax, or MAT, do not apply to foreign companies, including foreign portfolio investors (FPIs).
  Tax experts reckon this is a welcome judgment for FPIs which are foreign banks or reinsurance companies also having an Indian branch. It affirms the view that income of overseas branches of foreign banks, registered as FPIs, will not be automatically subject to MAT provisions, and that treaty provisions override the provisions of the IT Act, which include MAT provisions.
  “Foreign companies in general will fund this ruling to be a reaffirmation of the principle that MAT does not apply to them. In any case, the decision that MAT does not apply to income that does not get recorded in the books of account will be useful to all taxpayers,” Anish Thacker, partner at EY India, said.The case is for AY2015-16 and pertains to the Singapore branch of Credit Suisse, a Swiss bank, which is registered with Sebi as an FPI.

International Tax

CBDT issues SOP for faceless assessment to cut tax litigation, clear doubts

Aug 12, 2022

The Central Board of Direct Taxes has issued a detailed standard operating procedure (SOP) for officials for dealing with the faceless scheme, in a move aimed at reducing litigation and confusion about the scheme. The board has mandated the officials to grant personal hearing to the assesses within 2-3 days of receiving such a request.
The SOP was issued following a spike in litigation and adverse comments by various courts against the department over its handling of the scheme. "This will put an end to many unnecessary litigation. The SOP has been prepared carefully after taking all the feedback from both assesses and officials," an official told ET. Field officials have been asked to send a centralised communication to the taxpayers in case of non-responsiveness to the notices. It has also been suggested that a physical letter be sent at the latest known address along with text messages to the assesses.

Income Tax

CBDT notifies ITR-U for AY21 & AY22

• Aug 13, 2022

A taxpayer who did not file income tax return in the past or missed to report correct income can now rectify the same by filing updated returns (ITR-U) by paying additional charge for the assessment years (AY) 2020-21 and 2021-22.The Central Board of Direct Taxes (CBDT) notified forms for updated returns for those taxpayers who missed to report correct particulars of Income for previous two assessment years. While the ITR-U allows the taxpayers to be compliant by rectifying mistakes, it does not allow taxpayers to file for refund of taxes or reduction of total income. The Budget 2022-23 has allowed taxpayers to update their ITRs within two years of filing, subject to payment of taxes, a move aimed at helping correct any discrepancy or omissions and reduce litigation.

Income Tax

Taxman disallows Rs 4.5L TDS, irks ITAT

• Aug 16, 2022
  

  The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has come down heavily on the I-T department for its failure to take cognisance of a tax deducted at source (TDS). The TDS was on professional income earned by a taxpayer and, consequently, the I-T department also raised a tax demand on her — along with penal interest.

  A majority of taxpayers invariably incur TDS against their income — be it against salary, professional income or interest income. To carry on with this illustration, it is the employer organisation, the client and the bank which are respectively responsible for deducting tax at source and depositing it with the government.

Tax Deduction at Source

Finance Ministry plans to review exemption-free tax regime to make it more attractive

Aug 16, 2022

The finance ministry is proposing to soon review the exemption-free new tax regime with a view to making it more attractive for individual income taxpayers, sources said. Eventually, sources said, the government aims to establish a system where there are no exemptions and the complex old tax regime with exemptions and deductions is terminated.The Union Budget 2020-21 introduced a new tax regime. Taxpayers were given the option to choose between the old regime with various deductions and exemptions and the new tax regime that offered lower tax rates without exemptions and deductions.

General

India to take up IT firms’ tax issue with Australia

• Aug 17, 2022
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  India will ask Australia to amend its domestic law swiftly for the resolution of the tax issue being faced by Indian IT companies under the double-taxation avoidance agreement (DTAA), when trade ministers of both nations meet here next month, sources told FE.

International Tax

Tax department seeks to make faceless assessment smoother

• Aug 18, 2022

From setting up review panels to giving assesses time to respond to show cause notices and establishing a parallel verification system, the income tax department has worked out fresh checks and balances in its faceless assessment scheme to make it more robust.
Tax officers said that some of the changes were implemented at the start of the financial year itself, when 20 committees were set up to address concerns over high-pitched assessment that some of the taxpayers had raised. “Based on a review by the committees, we will establish whether the assessments are fair or not,” a senior officer said.

General