The MSME enterprises, especially micro and small enterprises faced significant delays in receiving payments. To mitigate this difficulty, the Indian Government has made significant amendments under Section 43B(h) of the Income Tax Act, 1961 by incorporating provisions for disallowances for delay in payments to micro and small enterprises. Let’s understand in detail what are these...
The income tax authorities conduct assessment proceedings if they do not agree to the tax information and submissions by the assessees. However, the government has provided a long time after the end of the relevant financial year till which assessment can be done by the tax authorities. It might happen that the assessee company itself...
Trusts are created for social, charitable and religious purposes in India. However, they are not limited to those purposes. Apart from the trusts that can accept donations from the public at large and created for welfare activities, people can create private trusts as well. However, the tax implications for private trusts differ from that of...
Taxes form an important component of the Indian Government’s revenue that is used to create the necessary infrastructure and other facilities to develop and run the country. However, tax evasion is still a challenge that the government faces. Certain taxpayers employ strategies and questionable tactics to bend the taxation laws or outright evade taxes. Further,...
Non-Resident Indians (NRIs) are subject to TDS if they earn any income from India. If the NRIs are looking to prevent TDS deduction in India, then they are required to obtain Tax Deduction at Source (TDS) certificates from the revenue authorities. The Central Board of Direct Taxes (CBDT) has recently implemented a revised procedure to...
As the demand for international financial services increase, there is a strong need to set up businesses in a business-friendly and well-established environment. The government is also actively promoting this by setting up International Financial Services Centres (IFSC). For instance, the Gujarat International Finance Tec-City (GIFT City) was set up that quickly gain popularity among...
As we progress, new investment avenues are emerging and are becoming popular among investors. New ways of conducting business and raising finances are on the rise and what follows are the taxation provisions. Business trust is one such concept that has become mainstream in the last few years. It is similar to the concept of...
India has entered into tax treaties with multiple countries to avoid instances of double taxation of income. Non-residents can reap benefits of these tax treaties by submitting the necessary documents. Tax Residency Certificates and Form 10F play an important role in this regard. The government recently bought a major change in favour of NRI Tax...
In most cases, fundraising becomes more of a necessity than a choice if you wish to build, grow or expand your operations as a startup. However, valuation becomes an important parameter to consider as the shares of these companies are not listed and the valuation at which the funds are raised is dependent upon the...
Transfer pricing and permanent establishment concepts are core to international taxation. The complexity arises as more than one nation is responsible for collecting tax and therefore, revenue sharing and allocation of profits becomes tricky here. The Organization for Economic Cooperation and Development (OECD) published a new Manual on Handling of Multilateral Mutual Agreement Procedures (MAP)...
Till 31st March 2020, the dividend income was exempt in the hands of shareholders because the company used to pay tax in the form of Dividend Distribution Tax (DDT). Thus, the shareholders received dividends net of taxes, providing them the tax exemption. This was also applicable on dividends received by the non-resident shareholders. However, from...
In certain cases, the taxpayers’ income might have escaped assessment owing to non-disclosure or simply missing out. To deal with such cases, the income tax law has special provisions to deal with incomes escaping assessment. Section 148 of Income Tax Act, 1961 (ITA) empowers the Assessing Officer (AO) to issue a notice to a taxpayer...
International taxation is one of the most complex areas of taxation as it not only involves national taxation laws but also international agreements between two or more countries, what we commonly call Double Taxation Avoidance Agreement (DTAA). Two of the most common concepts that arise in international taxation are DTAA and the foreign tax credit....
Giving unsecured loans to others is a routine transaction conducted by most people. However, to ensure that loans do not act as a catalyst for tax evasion, the government has inserted Section 269SS and section 269T under Income Tax Act, 1961 that deals with the payment and repayment of loans. This is to ensure that...
Tax audit season is getting started and it’s important to relook at the applicability and detailed provisions of the income tax audits. A tax audit is a detailed compliance carried on during the financial year or after it ends. The aim is to analyse the transactions of the business to determine whether they are in...
Taxpayers have to pay taxes in the country of their residence or from which they accrue or receive income. Therefore, if you are a resident of India and earn income from multiple countries, you might end up paying taxes in all such countries, including India. Foreign nations also follow the concept of withholding tax like...
Dividends are one of the most lucrative passive incomes and benefits of investing in stocks. However, the tax on dividend income in India was subject to a major change after the Finance Act 2020. It shifted the taxability of the dividend income from the hands of the company to the hands of the shareholders. This...
The Ministry of Finance (MoF) of the United Arab Emirates (UAE) released a new Corporate Tax Law on 9th December 2022 to implement the corporate tax regime in the UAE. The new regime will come into effect for the accounting periods beginning on or after 1st June 2023 The Corporate Tax Law shall be applicable to...
The Global Anti-Base Erosion (GloBE) proposal is a part of the Base Erosion and Profit Shifting (BEPS) developed by the Organisation for Economic Co-operation and Development (OECD) to address the tax challenges arising from the digitalisation of the economy. The OECD released these GloBE Rules, also known as Global Anti-Base Erosion Rules to prevent Multi...
Social security obligations are an essential aspect of employment law that governs the rights and obligations of employees and employers with respect to social welfare benefits. In India, expatriates or foreign nationals who work in the country are also subject to certain expat social security benefits & obligations like Indian employees. These obligations are in...
Expats are those people who are seconded or deputed to the sister concerns whether in the same country or another country. One of the key aspects of such an arrangement is the legal and taxation analysis for expats. For instance, suppose an employee is working in a foreign entity and is seconded to its Indian...
Common public understanding of the taxation law states that charitable trusts have been exempted from taxes in India. But this is not absolute and to truly understand the actual taxation of charitable trust, it is important to carefully read the provisions of the Income Tax Act, 1961 and the rules thereunder related to the taxation...
Relocating to another country temporarily or permanently for work or settlement is not an uncommon occurrence. When it is for the purpose of work, the people shifting are known as expats. Immigration laws of India come into play to ensure complete transparency and security of the nation. However, what do the immigration laws in India...
Secondment or deputation of expats is not an uncommon arrangement. However, things get complicated when the secondment is in another country. Multiple laws, taxation and agreements – various factors come into play in case of secondment of expats into another country. One of the key aspects is dual employment cases. Dual employment for expats can...
Whenever taxpayers receive income from multiple countries, taxation becomes an important aspect. Both the source country (from which the income is generated) as well as the home country (where the taxpayer is resident) can tax such transactions leading to double taxation of the same income. Taxpayers are often in receipt of doubly taxed income. This...
It’s not uncommon that a person visits any country (in our case India) and generates income such that such s/he becomes taxable in such country. If it happens in India, then such a person is required to obtain a tax clearance certificate from the income tax authorities. People who are required to obtain tax clearance...
Budget 2023 by Nirmala Sitharaman was presented on 1st February 2023 and it was indeed a revolutionary budget, especially for the taxpayers and middle class. The long-pending wish was fulfilled after a reduction in the tax rates in Budget 2023 followed by a consequent increase in the tax slabs. It can be said that the...
The OECD i.e., the Organisation for Economic Co-operation and Development recommended a three-tier documentation as part of the Base Erosion and Profit Shifting (BEPS) package – Action Plan 13. The three-tier documentation includes the following: Country by Country Report (CbCR) Master File Local File Following this, India introduced the provisions relating to Country-by-Country Reporting under the Income Tax Act,...
The United Arab Emirates (UAE) issued a corporate tax law that will impose a 9% corporate tax in UAE beginning from 1st June 2023. Corporate taxes are essentially the taxes levied on profits earned by corporate entities. UAE is bringing a series of tax reforms in a bid to diversify its tax revenues and move...
The income tax law has explicit provisions when it comes to charitable and religious organization's Registration. Such organisations have been provided exemption from the income tax provided they have obtained Charitable Trust Registration under the law. Further, donors of Charitable Trust organisations are provided with a deduction for the number of donations made provided the organization...
Whenever an entity undertakes any international transaction or specified domestic transaction, the transfer pricing regulations of income tax become applicable. This attracts multiple compliances as well as requirements to maintain information and documents. When it comes to the maintenance of records, Section 92D lays down the explicit requirements. This has also been emphasised in BEPS...
International tax treaties are complicated agreements involving multiple legal protocols. One of the most important clauses of these treaties is the Most Favoured Nation clause. There has been a recent ruling by the Delhi High Court on Most Favoured Nation Clause that can result in multiple litigations and has created ambiguity in the minds of...
Businesses usually pass on certain benefits and perquisites to their stakeholders that are usually not traceable. However, the businesses take a deduction of the same as business expenditure. In order to streamline this activity, the government came up with a new TDS Section 194R in Budget 2022. Section 194R of the Income Tax Act will...
Salaried individuals in India are one of the highest taxpaying citizens. Therefore, they are often in search of tax saving opportunities. A person whose salary falls in the highest income slab (income above Rs. 10 lakhs) has to pay tax @ 30% plus applicable surcharge and cess. Therefore, tax planning is a crucial part of their...
The provisions relating to reassessment have undergone multiple changes over the past two years. While they became more assessee friendly, a peculiar yet debatable situation arose after the issue of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (herein referred to as TOLA) that extended the time limit for various income...
The income tax act has laid down certain provisions to tap the non-filers of return of income. Section 206AB and 206CCA of the income tax act are prominent in this regard. Section 206AB states that in respect of amounts paid or payable to specified persons, the TDS shall be deducted at higher of the following...
Section 80G of the income tax act provides deductions to the assessees in case donations are made to eligible institutions, charitable organizations, and funds approved by the government (herein referred to as donee). However, the government noticed that there was no mechanism in place to counter-check whether the assessees claiming deduction under section 80G actually...
While people carry out transactions in securities, most are always in a dilemma as to tax on the sale of securities. The taxation on the sale of securities depends upon the head under which the income is classified. While the transaction in securities is itself liable to the Securities Transaction Tax, the gains are taxable...
The government has increased the scope of filing returns of income. It inserted four additional conditions by issuing Notification No. 37/2022 dated 21st April 2022 thereby notifying the Rule 12AB through Income-tax (Ninth Amendment) Rules, 2022. Therefore, now the assessee (other than companies and firms) will have to file their income tax returns even if...
What is the Faceless Assessment Scheme? The income tax department introduced the faceless assessment scheme to meet the shortcomings of the existing assessment methods. Considering that the assessments did not require a physical interface with the income tax officials, the faceless assessment scheme 2020 was launched. As per the scheme, the entire assessment proceedings shall be...
While filing income tax returns, certain errors and omissions may crop up. The same can be rectified by filing a revised return as per Section 139(5) of the income tax act. However, the government has come up with a new concept of ‘Updated Return’ in Budget 2022 sparking conversation among the taxpayers and professionals. A...
As the world witnesses a transition to Web 3.0 technology, blockchain-based assets are the assets of the future. The government introduced the concept of virtual digital assets representing the class of digital assets that are primarily based on blockchain technology. It includes cryptocurrencies, Non-Fungible Tokens (NFTs), etc. The Finance Bill, 2022 created a buzz among the...
It’s March Ending! FY 2021-22 is about to get over. It’s high time you review your income and take steps to minimize your tax liability. If you want to make any investment, 31st March 2022 is the last date. Following are the ways in which you can minimize your tax liability before 31st March: Through Section 80C...
Income Tax Act, 1961 works on a self-assessment basis where the assessee shall furnish the details of his income to the department which then will scrutinize and take decisions accordingly. The issue arises when the department goes skeptical regarding certain aspects of the details and information furnished. This gives rise to assessment which may go...
Usually, charitable activities are undertaken by forming a separate entity. This can be a trust, a society, or a Section-8 company registered under the Companies Act, 2013. Forming a charitable and religious trust is the most preferred option. In this guide, we have discussed the procedure for the formation of the trust and the compliances...
The Income Tax Department rolled out the new Annual Information Statement (AIS) on 1st November 2021. It is a detailed statement encompassing details of the financial transactions undertaken by the taxpayer during the Financial Year. The AIS is introduced with the aim to provide a comprehensive report to the taxpayer on financial transactions as well...
Expatriates in India exhibit that while we talk about brain drain from our country, many times, a reverse trend happens where foreign nationals arrive in India for employment and work. In such cases, taxation cannot be neglected. Here’s a complete guide to expatriate taxation in India. Who is an Expat? An expat or expatriate is an individual...
A transfer price is a price that is used to value transactions between affiliated enterprises. In other words, it is the price paid for goods or services by one company to a related party situated in a different country. A higher price increases the seller’s income and decreases the buyer's income, and a lower price decreases...
What is an Advance Pricing Agreement (APA)? An Advance Pricing Agreement (also known as an APA) is an agreement between a Taxpayer (known as assessee) and tax authority of the country regarding ascertainment of the arm’s length price for future intercompany transactions with its Associated Enterprises for the upcoming years in advance. The power to issue an...
The CBIC vide Circular No. 157/13/2021-GST dated 20th July 2021 clarifies extension of limitation under GST law in terms of Hon’ble Supreme Court’s Order dated 27.04.2021. 1. The Government has issued notifications under Section 168A of the CGST Act, 2017, wherein the time limit for completion of various actions, by any authority or by any person,...
In order to track digital transactions and consider the use of technology in the growing economy of India, the income tax department has launched a new website for the electronic filing of returns. The launch of the new website is considered the second generation of income tax e-filing and named income tax e-filing portal -...
In light of the adverse circumstances arising on account of the COVID-19 pandemic and considering several requests made by taxpayers, tax consultants, and other stakeholders from across the country that various compliance dates may be relaxed, CBDT vide circular 09/2021 dated 20-May-2021 has provided certain relaxations in the below compliance timelines- Sl. No. Compliance Original due date Extended due...
In light of the adverse circumstances arising on account of the COVID-19 pandemic and considering several requests made by taxpayers, tax consultants, and other stakeholders from across the country that various compliance dates may be relaxed, CBDT vide circular 08/2021 dated 30-Apr-2021 has provided certain relaxations in the below compliance timelines- Sl. No. Particulars Previous due date Extended due...
The Central Board of Direct Taxes (Board), in exercise of its powers u/s 119 of the Income-tax Act,1961 (Act), with an objective of streamlining the process of selection of cases for issue of notices u/s 148 of the Act, hereby directs that the following categories of cases be considered as ‘potential cases’ for taking action...
The controversy on taxability foreign software relates to the characterization of income in the hands of the non-resident payee i.e. whether the payments received by the non-resident payee for giving license of computer software is chargeable to tax as ‘royalty’ or it is ‘sale’. The Revenue seeks to tax these payments as royalty and subject...
Section 17(2)(vii) of the Income-tax Act, 1961 (‘ITA’) provides that employer’s contribution to the account of an employee in a recognized provident fund, national pernsion scheme and superannuation fund in excess of ? 750,000 in aggregate for all the three funds shall be treated as perquisite in the hands of the employee and accrodingly, chargeable...
A new Rule 86B has been inserted into CGST Rules, 2017 vide Notification No. 94/2020-Central Tax Dated 22nd December 2020. After the introduction of this new rule, the restriction has been imposed on the use of electronic credit ledger. Now, the registered person will be able to use only 99% of the electronic credit ledger...
With the globalization of businesses, interdependence amongst group companies has increased substantially. Transactions are frequently undertaken to achieve cost efficiency and not necessarily with the intention of making a profit. Some of the prevalent practices include allocation of common costs such as those related to information technology and procurement, cross-charge of personnel and other types...
The Central Board of Direct Taxes (‘CBDT’) vide notification 82/2020 dated 01.10.2020 has brought in certain amendments with effect from 01.10.2020, as per the following: Amendment in Rule 5 of the Income-tax Rules, 1962 (‘Rules’); Introduction of two new rules, namely, Rule 21AG and Rule 21AH for concessional tax regime under section 115BAC and section 115BAD respectively. Amendment...
With effect from 1 October 2020, two sections introduced by Finance Act, 2020 becomes operative: Section 194-O casting an obligation on the e-commerce operator to deduct income-tax at the rate of one percent of the gross amount of sale of goods or provision of services or both, facilitated through its digital or electronic facility or platform,...
Prime Minister Narendra Modi on 13 August 2020 launched a ‘Transparent Taxation – Honouring the Honest’ platform aimed at easing compliance and expediting refunds, benefitting honest taxpayers. Three main features of the platform are: Introducing faceless assessment; Adopting taxpayer’s charter; and Introducing faceless appeals. While the faceless assessment scheme and taxpayers’ charter were introduced on 13 August 2020, the...
If you are a seller whose turnover or gross receipts in previous financial year exceeds INR 10 Crore then effective 1 October 2020, a recently introduced section 206C(1H) regarding TCS (Tax Collected Source) becomes applicable on you. Finance Act 2020 introduced section 206C(1H) which provides the seller of goods whose gross receipts or turnover in the...
The assessees need to be very careful while reporting the values and giving declarations to the government authorities. There already exists memorandums between various government departments wherein the departments are officially allowed to share the details of assessees from their records. Now, On 8th July 2020, a new Memorandum of Understanding (MOU) has been signed...
The Indian Government had extended various due dates in the month of March 2020 under the Income Tax Act on account of the covid crisis in the country by issuing the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (hereinafter referred to as the ‘Ordinance 2020’). Since the crisis has not been fully contained,...
Form 26AS is an annual consolidated credit statement issued by the I-T department under section 203AA. The Central Board of Direct Taxes (‘CBDT’) vide notification no. 30/2020 dated 28 May 2020 has replaced Form 26 AS with a comprehensive form with a view to widen the coverage of information available to the taxpayers. On account...
Recently the Union Finance Minister Smt. Nirmala Sitaraman has announced the INR 20 lakh crore economic package to the country wherein the due dates for filing the income tax returns for the AY 2020-21 have also been extended to 30 November 2020. Now the Central Board of Direct Taxes (‘CBDT’) has notified the fresh income...
The Direct Tax Vivad se Vishwas Act, 2020 (hereinafter referred to as ‘VsV’) is a Direct Tax Dispute Settlement Scheme which has received the assent of the Honourable President of India on March 17, 2020. Recently a similar scheme was introduced to settle the pending disputes under the Indirect Taxes, post successful results of which,...
On account of the global pandemic (here used for Covid-19), the Prime Minister of India, Shri Narendra Modi had announced a 21 Day lockdown on the evening of March 24, 2020 to be observed in the entire nation. Various notifications and orders have since been issued under different finance and tax laws prevailing in India...
CBDT has recently vide Notification 10 dated February 12, 2020, issued Income-tax (4th Amendment) Rules, 2020, effective from April 01, 2020. As per the amended rules, a person, being a domestic company, exercising an option for a concessional corporate tax rate of 22 percent under sub-section (5) of section 115BAA, for any previous year relevant...
The Indian economy, which is buffeted with several challenges, is expected to grow 6-6.5 percent in 2020-21, according to the Economic Survey tabled in Parliament on Friday. This GDP growth forecast is seen as somewhat ambitious, given that Indian economy is widely expected to close current fiscal with 5 per cent growth. The latest Economic...
Clarifications on Electronic - In continuance to the declared policy objective of the Government to encourage digital economy and move towards a less-cash economy, a new provision namely Section 269SU was passed in the Income-tax Act 1961, vide the Finance (No. 2) Act 2019, which offers that every person having a company turnover of more...
In furtherance to the declared policy objective of the Government to encourage digital economy and move towards a less-cash economy, a new provision namely Section 269SU was inserted in the Income-tax Act 1961, vide the Finance (No. 2) Act 2019, which provides that every person having a business turnover of more than Rs. 50 Crore...
Corporate tax Cut: The government is estimating a hit of around Rs 1 lakh crore due to a reduction in corporation tax, against Rs 1.45 lakh crore calculated when the move was announced in September. The official said this estimate was based on an analysis of advance tax payments and will provide a much-needed cushion...
The issue of interim dividend may come up for discussion in the next RBI board meeting as the government struggles to meet its ambitious fiscal deficit target of 3.3 percent amid revenue shortfall, sources said. Government finances have come under pressure due to moderation in revenue collection and a slew of measures taken to lift growth...
Infusion for PSU - The government is unlikely to announce capital infusion for the public sector banks (PSBs) in the upcoming Budget and will rather encourage them to expedite recovery of bad loans and raise funds from the market. Besides, sources said, banks may also look for divesting or selling their non-core business as part...
Recently CBDT has vide notified Notification No. 104/2019 dated December 18, 2019, revised FORM No. 10DA under rule 19AB of Income Tax Rules vide. Form 10DA contains the format of the report prescribed under section 80JJAA of the Income-tax Act, 1961 (‘the Act’). Form 10 DA has been prescribed in accordance with Rule 19 AB of Income...
Income Tax Scrutiny - In the recent ongoing scrutiny assessments for financial year 2016-17, one of the main items of verification, particularly in cases of individual taxpayers, has been that of the source of cash deposited by taxpayers in their bank accounts. The rationale for this is the fact that large cash deposits were made during...
Implications of Withholding tax - Withholding tax is an amount that is deducted directly from the employee’s income by the employer and paid to the government as a part of a person’s tax liability. These taxes are directly paid to the central government of India. In India, the Central Government is accountable and authorized to...
In its bid to increase tax compliance, the income tax department has now launched a new campaign to convince all those who did not file their income tax return (ITR) for the last financial year to do it now. The tax department keeps a track of all those who skip filing their ITR in a...
IMF Supports India's Corporate Tax - India should address continued fiscal consolidation, the International Monetary Fund (IMF) said. Washington: The International Monetary Fund on Friday supported India's recent decision to reduce corporate income tax, saying it has a positive impact on investment. It, however, said India should address continued fiscal consolidation and secure long-term stability of the...
Mumbai|New Delhi: Digital multinationals such as Facebook, Google, Uber and LinkedIn with operations in the country may create new domestic companies, change the ownership pattern to become compliant with new tax laws that the country may frame in the wake of a global agreement on taxation of such multinationals. India, with other members of the...
On September 20, Finance Minister (FM) Nirmala Sitaraman delivered a pleasant surprise to India Inc. by slashing corporate taxes in order to bolster the sagging Indian economy. Much to the surprise of bears, the stock market which was reeling under pressure till then, witnessed a huge short-covering rally, which led to massive up move on...
In the current scenario, the International business is changing at a very fast pace and this alteration in business has brought several modifications in the structure, function, and taxation of a company. International Taxation consulting firms aid companies in meeting the international tax requirements which shall be beneficial for an organization to grow in the...
For income tax purpose, a senior citizen is an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year. Today is the Senior Citizen day. World over the Senior Citizen Day is celebrated on August 21. With increasing life expectancy, people are living longer and...
Direct taxation is characterized as tax imposed upon the individual who is proposed to be the last conveyor of the burden of payment. Today’s Income Tax is based on direct tax collection, or, in other words, the administration demands taxation on individual or companies. Sales Taxes implies that we are compliant to pay them by...
Businesses across the nation are changing with the fast pace with innumerable advancement in terms of technology, market size, and taxes. Mergers and Acquisition are gaining its popularity with an increased number of Businesses and Private corporate house. This in return is putting India into many challenges in regards to taxation which requires sustainable changes...
ITR has a prearranged set of IT forms which comprises of income details earned by an individual in a financial year and the amount of taxes paid on specific income. The revised version of ITR forms has made many changes in ITR forms which a taxpayer must cautiously note before filing ITR. According to the newly...
Transfer Pricing: Arm’s length principle Transfer Pricing was introduced in India in 2001 and since then it has gone through numerous changes in respect to amendments for the purpose of strengthening the rule. In simple words, if one was to define transfer pricing’s ‘Arm’s Length Principle’, it is a deal between two interrelated or enterprise associates...
List of applications admitted by NCLTs under the Insolvency and Bankruptcy Code, 2016 with details of public announcements inviting claims SNo NCLT Corporate Debtor Name of Insolvency Professional Insolvency Commencement Date Last Date For Submission Of Claims Status 635 Mumbai Top Right Group India Knowledge Services Pvt. Ltd. (voluntary liquiation) Mohd Nazim Khan 20-03-18 18-04-18 – 634 Mumbai Hannam & Partners (India) Private Limited (voluntary liquiation) Vishram Narayan Panchpor 07-03-18 05-04-18 – 633 Hyderabad AKANA Software Engineering India Pvt....
India is fast moving ahead towards increasing its growth trajectory and consolidating foreign investments in India. With this regard, the move towards easy taxation like GST has been proposed, and Transfer Pricing regulations too have been eased down. Given a situation where India has a large volume of inter-company dealings, there exists a huge demand...
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