IT dept to come out with modified valuation norms for taxing foreign investments in unlisted companies

Feb 13, 2023

The Income Tax Department is likely to come out with modified valuation rules under the IT Act for ascertaining the fair market value (FMV) of shares of unlisted companies for the purpose of levying tax on non-resident investments, an official said.

The Finance Bill, 2023 has proposed amending Section 56(2)(viib) of the IT Act, thereby bringing overseas investment in unlisted closely held companies, excepting DPIIT-recognised startups, under the tax net.

The official said that amendments are needed as IT Act and FEMA provide different methodologies for calculating the FMV of shares of unlisted companies.

"Rule 11UA of IT rules will be re-prescribed taking into account the concerns expressed by stakeholders to harmonise it with the FEMA regulations," the official told PTI.

Income Tax

New tax regime may impact charity donations owing to higher exemption limit

Feb 11, 2023

The announcement of higher exemptions under the new tax regime in Budget 2023 is likely to reduce retail donations to charities.

Based on the government’s expectations, nearly two-thirds of taxpayers are expected to opt for the new tax regime, which has now become the default option. The increased rebate limit could discourage people from making charitable donations, said organisations working closely with NGOs.

Many young people joining the workforce are informed about various instruments as a result of tax exemptions — like ELSS, life insurance and health insurance. Charitable donations are similar in nature. The youth become aware of charitable donations not only as a way to save tax but also impact society and make a difference and thus, over a period of time, become more engaged with causes. By making the new tax regime (without exemptions) the default one, the government will snatch these valuable learnings from those just entering the workforce  

Income Tax

ITR filing rules for children 2023: When is it mandatory to pay taxes and file returns?

Feb 10, 2023

Age is not an excuse when it comes to Income Tax Return (ITR) filing. Not many taxpayers are aware that children/minors are also required to pay taxes and file returns if they are making some income. But there are some conditions and exceptions. More than 4800 minors aged below 18 years filed their ITR in FY 2022-23 till 31st January 2023. This article looks at the ITR filing and taxation rules for children/minors aged below 18 years.

Tax experts say that young individuals with a source of income, including kid influencers, in India are expected to pay taxes on their earnings, just like any working individual.

Income Tax

CBDT revises norms for processing of equalisation levy

Feb 09, 2023 

The Central Board of Direct Taxes has introduced fresh norms for filing of statements for equalisation levy by companies that would allow the tax commissioner to reject returns that they deem to be invalid and has said that personal appearance of assessees for clarifications is not needed. The provisions are part of the Centralised Processing of Equalisation Levy Statement Scheme, 2023 notified by the CBDT recently.

Equalisation levy or Google tax, as it is often called, was introduced in 2016 to tax the digital economy. While it was initially levied at 6% of the gross consideration on online advertisements and digital advertising space, its scope was widened in 2020. It is levied at 2% on the consideration amount paid to non-residents who own, operate or manage an e-commerce facility or platform. Companies have to file the equalisation levy statement by June 30 of a financial year. 

Income Tax

Why the new income tax regime has limited appeal?

• Feb 08, 2023
  
  
• Ever since the finance minister presented the budget on 1 February, most investors have been trying to figure out whether they should shift from the old income tax regime to the new one. Shubham Asawa, 29, though, was quick to calculate his tax liability under the new tax slabs proposed in the concessional regime. “The reduced tax rates look quite lucrative. But, after considering the deductions and exemptions that I claim, I will still benefit under the old tax regime," he said.
  

Income Tax

Tax reins tightened, charitable trusts have no margin of error

• Feb 04, 2023
  
  
• The Budget proposes a slew of amendments that would cost a charitable trust dearly for even the slightest slip — such as a few days’ delay in filing a renewal application. Tax exemption could be lost if there is a delay in filing the I-T return.
  Tightening of controls will make an already difficult existence for trusts even more challenging, state experts.
  

Income Tax

CBDT will issue scheme for Budget proposal to dispose small appeals: Chairperson Nitin Gupta

• Feb 04, 2023
  
  
• The Central Board of Direct Taxes (CBDT) will soon come out with a scheme on the Budget announcement of reducing pendency of appeals related to TDS default issues, board chairperson Nitin Gupta said.
  
  In her Budget speech on Wednesday, Union Finance Minister Nirmala Sitharaman said she proposes to deploy about 100 joint commissioners of the Income Tax department for disposal of small appeals and to reduce the pendency of appeals at the commissioner level.
  

Income Tax

No angel tax on past foreign investments in startups

• Feb 04, 2023
  
  
• India will provide grandfathering to past investments by non-residents in startups and the proposed changes to the angel tax provision were prospective said Central Board of Direct Taxes (CBDT) chairman Nitin Gupta in an interview to ET. He said past investments will be grandfathered unless there was some incriminating information.
  
  "The provision would apply prospectively," he said.
  
  The government has proposed to amend the so-called angel tax provision or the Section 56(2) (viib) of the income tax act in the budget. The provision states that any premium paid by an investor in excess of the fair market value (FMV) of the shares of an unlisted company is taxable in the hands of the company at a rate of 20% or above.
  

Income Tax