GAAR probe begins on companies suspected of tax avoidance

• May 20, 2022
  
  

• The revenue department has launched investigations under the anti-tax avoidance law, General Anti-avoidance Rule (GAAR), into companies and entities that may have used creative methods to avoid paying taxes.
  A Hyderabad-based company, Ekge Retail, has received a notice in which the department has applied Section 96(1)(d) of the Income-tax Act, which deals with impermissible agreements undertaken to avoid taxation.
  The company has now approached the high court for state of Telangana at Hyderabad challenging the applicability of the section for some transactions undertaken by it in 2018 and 2019. The notice was issued to the company in February 2022.

General

New ITR-U: 10 things you should know about Updated Income Tax Return filing

• May 21, 2022

• Updated ITR Filing 2022: The Income Tax Department recently announced a new form for filing of Updated Income Tax Returns. A new concept of updated return was introduced in Budget 2022. It allows taxpayers to amend their ITRs within two years from the end of the relevant assessment year. The new provision is expected to help taxpayers who often commit errors or make some omissions while filing ITR.
  1. In the form for Updated ITR, taxpayers are required to declare the purpose for filing as well as the amount of income to be taxed in the updated return.
  2.Taxpayers are not required to provide a break up of the income reported in the ITR (Updated).
  3. Taxpayers can now use the new form ITR-U to file the updated income tax return for financial years 2019-20 and 2020-21.
  4. Certain taxpayers are required to file the Updated ITR electronically using a digital signature or an electronic verification code. The taxpayer has to file the ITR Forms of the relevant assessment year and submit it along with the new ITR-U.
  5. The ITR-U has to be filed within two years of the end of the relevant assessment year. For doing this, taxpayers are also required to provide reasons for updating the ITR. According to Tax2Win, the reasons for filing ITR-U may be many, including previous return not filed, income not reported correctly , wrong heads of income choses, reduction of a carried forward loss etc.

Income Tax

MNCs under I-T lens over Esops to staff in India

• May 31, 2022
  
  

• Multinationals that allotted employee stock options (esops) to their India employees have come under the taxman's lens for tax applicability on these transactions. The tax department is questioning the Indian arms of multinationals on withholding tax when they make such payments to their parents. In most cases, employees around the world get stock options in the multinational's parent company, which is located outside India. "Many multinationals allocate global esops to employees and they tend to charge this amount to their Indian entities. The tax department is questioning whether any tax should be withheld on this amount when it's paid back to the foreign entity by the Indian entity," said Shefali Goradia, partner at Deloitte.

General

Clarity likely on taxing NFT as virtual digital asset

• Jun 06, 2022
  
  

• Ahead of the first due date of advance tax payment on June 15, the government is likely to release guidelines on what will be covered within the ambit of virtual digital assets (VDA). To remove any ambiguity in the recently established tax framework for asset holders, the Central Board of Direct Taxes (CBDT) is currently preparing guidelines, said government officials in the know. The apex direct tax body will define non-fungible tokens (NFTs) and whether or not they fall within the purview of VDA.

Income Tax

Infosys directed to fix glitches in income tax e-filing portal

• Jun 08, 2022

• The Income Tax department on Tuesday directed vendor Infosys to address fresh technical glitches on the tax department’s e-filing portal. “Issue relating to the search functionality of the e-filing website has come to our notice. The Income Tax Department is seized of the matter. @Infosys has been directed to look into it & @Infosys has confirmed that they are resolving the issue on priority. @SalilParekh,” the department tweeted.
  No taxpayer data has been breached, a finance ministry spokesperson said. Taxpayers and consultants have been complaining about the new e-filing portal since it was launched in June 2021. With technical problems affecting taxpayer services eight days after the launch of the new income tax e-filing portal in June 2021, senior finance ministry officials held an interactive meeting with Infosys officials on the glitches. But, the glitches persisted for a long.

Income Tax

Rate of TDS on virtual digital assets shall be 1 per cent, clarifies government

• Jun 09, 2022
  
  

• The government in a late evening circular, clarified that the rate of TDS on Virtual Digital Assets continues to be 1 per cent, debunking earlier media reports that rate of TDS on Virtual Digital Assets(VDA) has been reduced to 0.1%. The 1% TDS is set to be applicable starting July 1 and has been the key reason for a drastic drop in volumes on Indian crypto exchanges, worsened by the global crypto crash. Earlier in the day, media reports mentioned that the TDS rate for virtual digital assets has been dropped to 0.1% from 1% as announced earlier in the budget. However, after the change was noticed by many the website updated the document rectifying the error. "Some media reports have come to the notice of CBDT claiming that the rate of TDS on Virtual Digital Assets(VDA) has been reduced to 0.1%. It is hereby clarified that there is no change in the rate of TDS on VDA, which continues to be 1%, " read the official clarification

Tax Deduction at Source

Centre moots ruling authority to fix direct tax liability, settle disputes

• Jun 11, 2022

• The revenue department is considering the setting up of a ruling authority like the Advance Pricing Agreement (APA) or Dispute Resolution Panel (DRP) to ascertain tax liabilities and settle tax disputes. This will allow the Income-Tax Department and taxpayers to sit together and resolve disputes, and agree on the tax to be paid.The direct tax claims locked in litigation are about Rs 5 trillion. The concept is part of the minutes of the meeting circulated internally last month, when the revenue department discussed measures and the road map in line with its vision 2047.Business Standard has reviewed the minutes, which are being prepared following the annual conference attended by officials of the finance ministry and Central Board of Direct Taxes, and senior revenue officers.
  At present, APA deals with transfer-pricing cases that determine tax liabilities in advance to avoid any dispute. The DRP is an alternative mechanism that deals mainly with international taxation cases.
  Experts say various Authorities for Advance Ruling (AARs) take up issues from a technical standpoint and do not cover wider matters of income tax. Also AAR decisions have not helped in containing litigation because most of the matters go for appeal.
  “Such a process of optional and non-binding mediation can be helpful in eliminating tax disputes, particularly those relating to transfer pricing and other matters as well,” said Akhilesh Ranjan, advisor on tax policy at PwC and former member of the CBDT. Among other measures, the department is looking to tax the corporate sector in agriculture, phase out exemptions, and tap new and emerging sectors like crypto assets, to increase the tax-GDP ratio to 15-20 per cent.

Income Tax

Fine for missing ITR filing deadline halved

Jun 13, 2022

The last date of filing income tax return (ITR) for the financial year 2021-22 is July 31, 2022. Until, FY 2019-20 if a taxpayer missed the ITR filing deadline, the maximum penalty he/she had to shell out was Rs 10, 000. However, with effect from FY 2020-21 (AY 2021-22) i.e., last year, the penalty amount has been reduced by half, i.e., a maximum penalty of up to Rs 5,000.

Income Tax