Experts raise several red flags around section 194R of the Income Tax Act

• Aug 30, 2022
  
  

• 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.

Income Tax

Most foreign jurisdictions reply to Pandora queries

• Sep 02, 2022
  
  

• 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.

International Tax

Direct tax collections may exceed budget targets, CBDT chief says

• Sep 02, 2022
  
  

• 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.

Income Tax

Income-Tax Department issues tax refunds worth Rs 1.14 lakh crore so far this fiscal

• Sep 03, 2022
  
  

• 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.

Income Tax

Now pay convenience charges, GST on income tax payments if you choose this payment mode

• Sep 05, 2022
  
  

• 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.

GST

Gross direct tax collections up 35.46% y/y to touch Rs 6.48 lakh crore till September 8

• Sep 10, 2022
  
  

• 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.

Income Tax

ITAT comes to rescue of taxpayer over filing error

• Sep 13, 2022

• 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.

Income Tax

Loan waiver not a benefit, banks exempt from 10% TDS for one-time settlement

• Sep 14, 2022

  
  

  • 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.

Tax Deduction at Source