Dear Readers,

We are delighted to share our 167^th E-Newsletter “Weekly Taxation Newsletter” dated 31^st December, 2024 from 02^nd Dec. 2024 to 15^th Dec.,  2024 with you. This E – Newsletter is a weekly reference / compilation of interesting and latest news related to tax including upcoming Timelines / Due Dates, Notifications / Press Information, Case Laws, International Taxation etc.                        

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• Due Dates under IT Act 1961

Sl.	Compliance Particulars	Due Dates
1	​Due date for deposit of Tax deducted [except under section 194-IA, section 194-IB, section 194M, or section 194S (by specified person)] or collected for the month of December, 2024. However, all the sum deducted/collected by an office of the government	07.01.2025
2	Due date for deposit of TDS for the period October 2024 to December 2024 when Assessing Officer has permitted quarterly deposit of TDS under Sections 192, 194A, 194D or 194H	07.01.2025

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• Under the GST, 2017

A. Non Resident Tax Payers, ISD, TDS & TCS Taxpayers

Form No.	Compliance Particulars	Timeline	Due Date
GSTR -6	Every Input Service Distributor (ISD)	13th of succeeding month	13.01.2025
GSTR -7	Return for Tax Deducted at source to be filed by Tax Deductor	10th of succeeding month	10.01.2025
GSTR -8	E-Commerce operator registered under GST liable to TCS	10th of succeeding month	10.01.2025

• Weekly Departmental Updates: Income Tax

1. Property tax exemption for Kochi Metro Rail Limited

The LSG department issued an order formalising the exemption, citing a condition in the tripartite agreement governing KMRL operations. In a significant decision, the Kochi Metro Rail Limited (KMRL) has been exempted from paying property tax on its station buildings and ancillary structures, as levied by local bodies.

The LSG department issued an order formalising the exemption, citing a condition in the tripartite agreement governing KMRL operations. As per the agreement, the state government is obligated to either exempt KMRL from taxes imposed by the state or local bodies or reimburse the same.

The order issued by Anupama T V, special secretary, LSG department, followed a formal request from KMRL’s MD, seeking relief from property tax to offset operational losses.

• To read more Click Here

2. Income tax budget on ITR filing: Will FM Nirmala Sitharaman announce tax relief for taxpayers earning up to ₹15 lakh?

Every year, India’s salaried class eagerly awaits relief in income tax. This year, the middle class is also penning all their hopes for FM Nirmala Sitharaman, when she presents Budget 2025 on February 1. According to a Reuters report, the government is actively considering tax relief for the middle class, particularly earning up to ₹15 lakh annually. The 2025 Budget, to be tabled on February 1, may include an announcement on the tax breaks. This action is intended to boost consumer spending and stimulate the economy. Livemint couldn’t independently verify the information.

Income tax budget: Who will benefit?

If this is implemented, millions of taxpayers might benefit greatly, especially city dwellers struggling with high living costs. According to the Reuters report, those choosing the 2020 tax scheme, which excludes exclusions like those for housing rents, would be eligible for this.

Two tax options for income taxpayers

Two options are now available to Indian taxpayers: the Old and New Tax Regime. Under the Old Tax Regime, rent and insurance exemptions are allowed, among other expenses. The New Tax Regime lowers tax rates while doing away with most exemptions. The choice that best fits their financial situation is up to the taxpayers to choose.

New income tax regime

Individuals earning up to ₹3 lakh annually are exempt from income tax under the new tax regime that was implemented in 2020. Income between ₹3 and 7 lakh will be subject to a 5% tax, income between ₹7 and 10 lakh to a 10% tax, and income between ₹10 and 12 lakh to a 15% tax. Furthermore, income between ₹12 and ₹15 lakh would be subject to a 20% tax, while income over ₹15 lakh will be subject to a 30% tax.

Budget 2025

Finance Minister Nirmala Sitharaman is expected to table the Union Budget 2025 on February 1, 2025. The July presentation of Budget 2024 included many modifications to the income tax laws.

• To read more Click Here

3. 15 income tax rule changes in 2024 that will impact your ITR filing in 2025

The year 2024 saw income tax changes in the middle of the year. This happened because the government presented the Union Budget 2024 in July due to General elections held between April and June, 2024. As the budget was presented in the middle of the year, many taxpayers may have forgotten the income tax law changes that were announced in July 2024. Most of the income tax changes announced in July 2024 are effective from the current financial year 2024-25. These changes will also impact the tax deductions and exemptions that can be claimed while filing an income tax return (ITR) in July 2025.

1. New income tax slabs changed under new tax regime

The government has changed the income tax slabs under the new tax regime. The changes in the income tax slabs under the new tax regime will help individuals and other taxpayers to save more income tax for FY 2024-25.

Impact: The changes made in the income tax slabs under the new tax regime will allow taxpayers to save income tax up to Rs 17,500 in a financial year.

2. Standard deduction limit hiked

Along with changes in the income tax slabs the government hiked the standard deduction limit under the new tax regime. If an individual opts for the new tax regime for FY 2024-25, he/she can claim a standard deduction of Rs 75,000 instead of Rs 50,000 earlier.

The standard deduction limit has been hiked to Rs 25,000 from Rs 15,000 for family pensioners as well under the new tax regime.

There is no change in the standard deduction limit if an individual opts for the old tax regime for FY 2024-25 (AY 2025-26). Under the old tax regime, an individual can claim a standard deduction of Rs 50,000 (as a salaried and pensioner) and Rs 15,000 (as a family pensioner).

Impact: The hike in standard deduction limit under the new tax regime will help salaried people and pensioners claim a higher standard deduction and thereby lower their tax outgo if they are opting for the new regime. A standard deduction from gross salary income can be claimed (before calculating tax levy) if an individual is receiving either salary, pension, or family pension.

Standard deduction cannot be claimed for pension received from insurance companies.

• To read more Click Here

4. Karnataka registration scam: 1,471 vehicles evade Motor Vehicle tax at Bengaluru Central RTO, cause over Rs 15 crore loss to state exchequer

As many as 1,471 vehicles, including luxury cars, registered between April 2015 and November 2021 at the Bengaluru Central Regional Transport Office (RTO), have evaded lifetime tax, causing an estimated loss of Rs 15.2 crore to the state exchequer, Moneycontrol has learnt.

Sources told Moneycontrol that the HSR Police Station has begun issuing notices to vehicle owners registered at Bengaluru Central RTO (formerly Koramangala RTO) to recover the evaded amount, after a first information report (FIR) was registered on October 24, 2024.

“We have summoned the vehicle owners involved in the case to submit all necessary documents and cooperate with the investigation,” said a police officer.

Sources said the scam potentially runs into hundreds of crores, but the verification of documents has only been conducted only in one RTO so far. Karnataka has around 70 RTOs.

“A CID/Lokayukta investigation covering all RTOs across the state will reveal the full extent of the scam,” a source said.

Sources said that many vehicle owners, particularly those with luxury cars, registered their vehicles without paying the lifetime tax. In some cases, owners paid money to agents or officials, but the funds were never deposited with the government. The scam involves not paying road tax, issuing fake challans, or undervaluing the vehicle with official connivance.

• To read more Click Here

• Important Circulars and Notifications:

Sl	Particulars of the Notification(s)	File No. / Circular No.	Notification Link(s)
1	Circular No. 19/024 :​Guidance Note 2/2024 on provisions of the Direct Tax Vivad se Vishwas Scheme, 2024	Circular No. 19/2024	Click Here

Weekly Departmental updates:

• GST Updates

1. Customers likely to gain as high-end hotels get GST options on dining

The GST Council decided to suitably amend the CGST Act to link GST on restaurant services with actual room tariff provided by the hotel.

In a major change for the hospitality industry and in what could be a good news for diners, the Goods and Services Tax (GST) Council has decided to allow high-end hotels to choose between two indirect tax rates for restaurant services provided on their premises.

Starting April 1 next year, according to the GST Council’s decision last week, such hotels will have the option to choose between two GST rates: 5 per cent without Input Tax Credit (ITC) or 18 per cent with ITC, if the value of accommodation rented out exceeds Rs 7,500 per unit a day in.

• Read more at: Click Here

2. GST, Visa Fees, Mobile Data Charges & More: Key Changes From January 1 That Will Affect Your Finances And Planning

As 2024 is coming to an end in a few days, plans are already in motion for 2025 to begin. Along with the new year and new calendar, a number of important changes (Rule Changes from January 1) will go into force countrywide, affecting households, professions, travellers, and money all throughout the nation. These modifications cover a wide range of topics, including data charges, visa procedures, and GST.

Here’s a sneak peek at the major changes affecting your budget and planning beginning January 1, 2025.

Important Changes in GST Compliance

A number of key changes in GST compliance will come into effect starting from January 1, 2025, which would affect companies in India:-

1: Mandatory MFA: MFA shall become mandatory for all taxpayers. This is to make security on GST portals tighter than ever.

Preparation: Update mobile numbers for OTPs, train employees, enable MFA early, and ensure IT system compatibility.

2: E-Way Bill Restrictions: E-Way Bills (EWBs) can only be generated for base documents not older than 180 days.

Preparation: Align invoicing and logistics with the 180-day rule, automate EWB reminders, and coordinate inventory with supply chain teams.

These changes aim to streamline processes and reduce fraud.

ITC Hotels demerger to come into effect from January 1, 2025

The multifaceted conglomerate ITC, based in Kolkata, has already said that once all necessary permits are obtained, the demerger of ITC Hotels will take effect on January 1, 2025.

Key Rule Changes for Jio, Airtel, Vodafone, and BSNL Users from January 1, 2025

The Department of Telecommunications released the Telecommunications (Right of Way) Rules, 2024 commonly known as RoW rules on 19 September, 2024. In effect from January 1, 2025, these regulations are established to control the construction, use, and maintenance of underground communications facilities on public property. Companies will be in a better position to boost their services with the aid of Right of Way regulations. The new regulation specifies the locations for new mobile tower installations by telecom providers such as Jio, Airtel, Vodafone, and BSNL. (Read more at: Click Here)

3. GST on selling old cars: How does 18% tax on used vehicles affect you? Explained

After the public backlash over the increased tax on caramelised popcorn, the 18 per cent Goods and Services Tax (GST) on selling old vehicles has now caught the public’s attention, sparking discussions and also confusion among potential sellers on how this would affect them.

The GST Council in its meeting last week decided to prescribe a single rate of 18 per cent on sale of all old and used vehicles including all EVs, earlier leviable at different rates. As the confusion among the car owners built up, a video of finance Minister Nirmala Sitharaman explaining the 18 per cent GST on selling of old cars surfaced on social media.

18% GST PAYABLE ONLY ON MARGINS

“It is on that margin, the value between purchased price and resale price. Bought it for ₹12 lakh, selling it for ₹9 lakh in the name of a second-hand used vehicle, on the margin only this 18% has been put, as would be for any used car. So it is on the margin and not the entire amount at which the car is being sold,” Nirmala Sitharaman is heard explaining.

The 18 per cent GST would not be applicable if an individual sells old and used car to another individual.

If a GST registered person has claimed depreciation, the tax is payable only on the value representing the margin – the difference between selling amount and the depreciated value of such goods. Also Read: Instagram influencer’s humorous take on GST hike leaves netizens in splits. (Read more at: Click Here)

• Important Notifications under

Excise / Custom/ GST:

• GST Updates

Sl. No	Particulars of the Notification(s)	File No. / Circular No.	Notification Link(s)
1	Advisory for Entry of RR No./eT-RRs in EWB system Post EWB-FOIS Integration	GSTN 562	Click Here
2	Advisory for Entry of Receipt Numbers Pertaining to Leased Wagons in the E-Way Bill System	GSTN 563	Click Here
3	Seeks to extend the due date for furnishing FORM GSTR-3B for the month of October, 2024 for registered persons whose principal place of business is in the district of Murshidabad in the state of West Bengal.	30/2024-Central Tax	Click Here

Custom / Excise Updates

Links	Notification Particulars
Click Here	Seeks to amend Notification 64/2023-Customs to extend concessional duty on Yellow Peas till 28th February 2025.
Click Here	Appointment of Common Adjudicating Authority for the purpose of finalization of Provisional Assessment in SVB case w.r.t. M/s HD Hyundai Construction Equipment India Pvt. Ltd.-reg
Click Here	Seeks to impose ADD on Digital Offset Printing Plates from China PR, Japan, Korea RP, Taiwan and Vietnam for 5 years, pursuant to final findings of DGTR- reg.
Click Here	Enabling Voluntary Payment electronically on ICEGATE e-payment Platform

• Important Case-laws

• Income Tax

• ITAT ruling: Cryptocurrencies now recognised as capital assets for taxation

In a landmark ruling, the Income Tax Appellate Tribunal (ITAT) in Jodhpur has provided clarity on the tax treatment of cryptocurrencies in India. The decision, which recognises cryptocurrencies as capital assets, impacts how gains from cryptocurrency sales are taxed, especially for transactions that occurred before the government introduced specific regulations for Virtual Digital Assets (VDAs) in 2022.

The ITAT ruled that cryptocurrencies are assets and that profits from their sale should be classified as capital gains rather than income from other sources. This distinction is significant because, before the ruling, there was no clear direction on whether cryptocurrency profits should be treated as capital gains or under the head of “income from other sources.”

For investors, this means that profits made from the sale of cryptocurrencies are subject to capital gains tax rather than higher-income tax rates. The ruling sets the precedent that cryptocurrency sales, especially those made before the formal regulations for VDAs were introduced in 2022, should be treated as sales of capital assets.

The case at hand:

The case that the ITAT was hearing involved a person who bought cryptocurrencies worth Rs 5.05 lakh in 2015-16 and sold them in 2020-21 for Rs 6.69 crore, making a significant profit.

Since the person held the cryptocurrency for more than three years, the ITAT agreed that the profit should be treated as long-term capital gains. This is important because long-term capital gains usually have lower tax rates than short-term capital gains.

The ITAT directed the tax officer to allow the person the deduction benefits available under the law for long-term capital gains. This means that the taxpayer could claim deductions or exemptions that apply to long-term investments, reducing the amount of tax they have to pay.

“ITAT’s decision offers the required guidance for transactions before AY 2022-23, which had no specific rates or definitions under the IT Act. Basis the ITAT’s decision, gains from the sale of cryptocurrencies may be treated as capital gains rather than income from other sources, thus subjecting them to capital gains tax. Additionally, taxpayers may claim exemptions associated with capital gains. For instance, in this case, the taxpayer held Bitcoin for more than 36 months and thus availed of the exemption under Section 54F of the IT Act, which pertains to cases where capital gains arising from the transfer of long-term capital assets are used for the purchase or construction of a residential house, subject to various conditions,” said Kunal Savani, Partner, Cyril Amarchand Mangaldas.

Implications for Crypto Investors:

• Pre-2022 Sales: If you made a profit before the 2022 tax rules came into play, those profits should be treated as capital gains (not income) for tax purposes, and you’ll need to follow the capital gains tax rates.
• Post-2022 Sales: Any profits made after April 1, 2022, will be taxed at 30%, a substantial flat rate, with no deductions allowed.
• Record Keeping: Crypto investors must keep detailed records of their transactions, including the dates of purchase and sale, as well as the profits made. This will help in calculating the tax liabilities correctly.

Why is this important?

This ruling provides much-needed clarity for cryptocurrency investors in India. Before this, there was confusion over how cryptocurrency profits should be taxed, as the government did not have clear guidelines on virtual digital assets (VDAs). Now, with this decision, it’s clear that cryptocurrencies are treated like any other capital asset and will be taxed accordingly.

• Source: Click Here

• Important Case-laws

• GST Cases:

 

1. GST on caramel popcorn sold in theatres to stay at 5%, govt clarifies

Amid outrage in the social media over 18 per cent Goods and Services Tax (GST) on caramelised popcorn, government sources on Tuesday clarified that popcorn served in theatres will continue to be charged at 5 per cent.

“Generally, Popcorn is served to customers in theatres in loose form and hence will continue to attract a rate of 5 per cent as applicable to ‘restaurant service’ as long as supplied independent of the cinema exhibition service,” official sources privy to the matter said, requesting anonymity.

“There has been no increase in the GST rate on popcorns in the recently held GST Council meeting. A request was received from the State of Uttar Pradesh to clarify the classification and GST rate applicable on popcorn mixed with salt and spices. This issue was taken to the 55th GST Council and the Council recommended to clarify the same,” sources said.

“As a measure of simplification, the Council recommended to unify and prescribe a single rate of GST on the sale of all old and used vehicles including EVs at 18 per cent which was leviable at different rates earlier,” government sources said. Importantly, they clarified that the Council has not recommended any “no new taxes” on these transactions. Source: Click Here

• International Taxation   Corner (ITC)

1. Unwelcome regulations, high taxes push more Indians to offshore crypto exchanges

The deregulated market of virtual digital assets (VDAs) seems to have received further push due to the ironically imposed regulations from India, with web traffic to nine blocked exchanges jumping 57 per cent from January 2024 to October 2024, according to an update published by Delhi-based technology policy thinktank, Esya Centre, this month.

In a special issue titled ‘The Impact of India’s VDA Tax Policy: An Update’, the centre further elaborated on the report ‘Taxes and Takedowns: An Assessment of India’s Key Policy Tools for Virtual Digital Asset Markets’ (Gautam and Sharma 2024) published back in May this year.

Between December 2023 and October 2024, Indians traded a whopping Rs 2.63 lakh crore on offshore platforms, the update said. This included blocked exchanges. In line with the latest taxation rules, this meant that Rs 2,634 crore was owed in TDS by the offshore platforms.

This also sums up to more than Rs 6,000 crore owed to India by offshore exchanges in uncollected TDS since the implementation of the Tax Deducted at Source system for VDAs in July 2022.

While domestic exchanges saw a marked improvement when the year began, it could be “potentially attributable to enforcement actions against offshore platforms in January 2024,” said the report.

An overhaul in VDA tax policy may benefit India

The study, however, sees 82 per cent of Indian users returning to trading through domestic or compliant platforms if the TDS is cut to 0.01 per cent (like securities and commodities) and the domestic platform asset share reverts to levels before February 2022. This shift could generate tax revenue between Rs 9,169 crore and Rs 18,338 crore over the next five years (assuming 50-100 per cent of VDA profits traded annually), projected the research.

The Esya Centre update recommended amendments to certain subsections of the income tax act, including defining “intermediaries such as exchanges as ‘persons responsible’ for deducting TDS on VDA transactions, even if they do not directly handle payments” and introducing “provisions mandating that offshore platforms comply with local tax laws, irrespective of their physical presence in India” (subsections 194S and 115BBH of the IT Act).

Lastly, the report also bats for establishing a registration regime for VDA intermediaries and introducing consumer protection requirements. The last set of recommendations may be tricky given that most VDA are regulated cryptocurrencies, and they do not take lightly to any centralised regulations.

Read more at: Click Here

2. UK to funnel £1.5 billion into public education with private school tax reform

The UK will end a tax exemption for private schools on Wednesday, the centre-left Labour government has announced, in a move set to raise over £1.5 billion ($1.9 billion) for public education.

After years of worsening educational inequalities, from January 1, private schools will have to pay 20 percent value added tax on tuition fees, which will be used to fund thousands of new teachers and improve standards in state schools.

“It’s time things are done differently”, finance minister Rachel Reeves said in a statement on Sunday.

The funding will “go towards our state schools where 94 percent of this country’s children are educated”, she said.

The policy was promised by Labour in its election campaign and officially laid out in its inaugural budget in October.

Tuition fees in private schools already average £18,000 a year, according to the Independent Schools Council, which represents private schools.

That figure is set to rise, with the government estimating that tuition fees will increase by around 10 percent, with schools taking on part of the additional cost.

“High and rising standards cannot just be for families who can afford them,” said education secretary Bridget Phillipson. Opponents of the reform say state school enrolment will explode if the private sector is lost, increasing the cost to the government.

The Institute for Fiscal Studies calculated that the number of children in state schools will actually fall by 2030 due to a projected population decline. Several research centres also point out that the disparity between private and state schools widened sharply under the 14-year Conservative rule.

• Read more at: Click Here

• Knowledge Bucket for NRI’s

1. An individual’s qualification as a resident in India for tax purposes in a given Financial Year (April-March) under the Income Tax Act, 1961 (IT Act) hinges on two primary factors: the period of stay in India and income earned or accrued in India.
2. Any income earned and accrued in India is taxable, regardless of whether it is received within the country or abroad.
3. Income earned, accrued, and received entirely outside India is not subject to Indian taxation.
4. Determining the tax residency status of Indian citizens working as crew members on international waters involves specific criteria. The stay in India during the Financial Year is calculated based on their Continuous Discharge Certificate (CDC) or passport.

• Do you know ??

1. India has Double Taxation Avoidance Agreements (DTAA) with over 90 countries to prevent NRIs from being taxed twice.
2. The surcharge is an extra tax imposed on the base income tax when the taxable income exceeds ₹50 lakh.
3. In addition to the surcharge, there is a health and education cess levied at 4% on the total of the base income tax and the surcharge. This applies to both regimes and is consistent for all income levels.

•    Disclaimer:

Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information. *(We consider various sources including ET, BS, HT, Taxmann etc.)

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Newsletter

Weekly Taxation

31.12.2024 – Vol. 167*

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