E – Newsletter Latest Weekly upcoming Timelines / Due Dates, Notifications / Press Information, Case Laws, International Taxation etc

Dear Readers,

We are delighted to share our 88th E-Newsletter “Weekly Taxation Newsletter” dated 31st August, 2022 from 19th August, 2022 to 31st August, 2022 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.

  Stay updated, Stay connected

  • Due Dates under IT Act 1961
 

 

Sl.

 

Compliance Particulars

 

Due Dates

1

Due date of depositing TDS/TCS liabilities under Income Tax Act, 1961 for the previous month.

07.09.2022

  • Under the GST, 2017

1. GST Refund

Form No.

 

Compliance Particulars

Due Date

RFD -10

Refund of Tax to Certain Persons

18 Months after the end of quarter for which refund is to be claimed

  • Weekly Departmental Updates: Income Tax

1. -T dept going into new areas to check tax evasion: CBDT chairman

 The Income-Tax department is going into “new areas” of the economy to check tax evasion even as its investigation units are using analytics to sift through voluminous data on Indians holding assets abroad, CBDT Chairman Nitin Gupta has said.

The Central Board of Direct Taxes, the administrative body for the tax department, undertakes search and seizure operations to check instances of tax evasion apart from

performing its regular task of collecting revenue for the government under the direct taxes category.

“We are covering a variety of sectors of the economy (while undertaking searches and raids). We are not limiting ourselves to real estate or developers only…our action is spread across sections of economy right from healthcare to pharma to developers to industries, manufacturers, service providers etc.

While the CRS is a global uniform standard for automatic exchange of financial account information, FATCA is a tax information reporting regime between India and the US which requires financial institutions to identify their US accounts through enhanced due diligence reviews and report them periodically with each other.

“We have got information thorough Panama, Paradise and Pandora Papers (global tax data leaks of asset holding by various individuals and entities) and while they are limited number of cases, we are ‘populating’ this information into the CRS and FATCA to cull out data for our use,” the CBDT chairman said.

2. CBDT urges gamers to file income tax returns under updated scheme

The Central Board of Direct Taxes (CBDT) has asked winners of online games to update their income tax returns to file taxes on winnings of online games.

Nitin Gupta, Chairman of CBDT, said on Thursday that just one online gaming portal had awarded more than Rs 58,000 crore in winnings in FY20-FY22, but hardly any winners had paid taxes on their winnings. With tax evasion being one of the more serious crimes in the country, the CBDT has urged winners to update their income tax returns (ITR) under the updated income tax returns (ITR-U) scheme.

“ITR-U should be utilised by the winners of such games from other gaming portals also, as it would be an efficient provision for them to come forward and pay taxes rather than face the consequences of penalty,” Gupta said.

Winners will have to pay 30 percent tax on the winnings without any rebates, along with interest due on the tax as well as the penalties associated with the ITR-U scheme in order to comply with their tax liabilities.

What is the scheme?

 The Finance Act 2022 brought several changes to the Income Tax Act, one of which was the ability to update or revise income tax returns. The ITR-U scheme was brought forth to allow taxpayers to make corrections in the ITRs that they have submitted for the previous two financial years. Currently, taxpayers can use the scheme to revise their ITRs for the financial years 2019-20 (FY20) and 2020-21 (FY21). Using the scheme allows taxpayers to comply with their tax liabilities without facing any legal action.

3. Have income tax refunds? Keep deduction proofs ready or get ready to pay 200% penalty

Taxpayers are getting intimations generated automatically online from the Income Tax Department, if additional deductions are claimed in Income Tax Return (ITR) resulting in income tax refund out of the tax deducted at source (TDS) by the employers. Such intimations get auto generated in case there are discrepancies in the figures mentioned in Form 16 and the figures entered in ITR resulting in tax refund.

Following issuance of the auto-generated intimation, the recipients will get 15 days time to revise the returns to remove the discrepancies with Form 16 or will have to pay a 200 per cent penalty if deductions are claimed falsely.

In case of genuine claims, you need to keep ready the proofs of investments (like subscriptions/investments to NPS, PPF, SSY, NSC, SCSS, tax-saving FD, ULIP, ELSS etc.) and/or expenses (like payment of life/health insurance premium, tuition fee receipts of children, home loan interest and repayment of home loan principal etc.) and/or proof of donations given etc. This is because you may get a proper Income Tax Notice after manual verification of the auto-generated intimation, if the ITR is not revised within the 15-day period.

4. Income tax dept collects Rs 28 cr in taxes from new ITR-U filing

The abbreviation ITR-U stands for ‘income tax return-updated’ and is available to taxpayers for filing updated returns for 2019-20 and 2020-21 financial years or assessment years 2020- 21 and 2021-22.

 The Income-tax department has collected around Rs 28 crore in taxes after about 1 lakh returns were filed by taxpayers under the newly introduced return filing form called ITR-U, that was notified this year as part of the Budget 2022-23.

CBDT Chairman Nitin Gupta said the scheme was brought by the Union government for the benefit of taxpayers so that they can comply with their tax responsibilities without getting into hassles of the law.

The abbreviation ITR-U stands for ‘income tax return-updated’ and is available to taxpayers for filing updated returns for 2019-20 and 2020-21 financial years or assessment years 2020-21 and 2021-22.

Taxpayers filing this form, which can be filed within 2 years of the end of the relevant assessment year, will have to give reasons for updating the income — return previously not filed or income not reported correctly or wrong heads of income chosen or reduction of carried forward loss.

The Budget presented by the Union government this year in February permitted taxpayers to update their ITRs within two years of filing, subject to payment of taxes, a move aimed at helping correct any discrepancy or omissions. A taxpayer would be permitted to file only one updated return per assessment year. Source: Read full at Click Here

  • Important Circulars and Notifications:
Sl.

 

Particulars of the Notification(s)

File No. /

Circular No.

Notification

Link(s)

1

The Income-tax (27thAmendment) Rules, 2022

Notification No. 100/2022

Click Here

2

The Income-tax (Twenty Eighth Amendment) Rules, 2022

Notification No. 101/2022

Click Here

3

The Andhra Pradesh Pollution Control Board (PAN AAAJA1610Q)

Notification No. 103/2022

Click Here

Weekly Departmental updates:  

             GST Updates

1.GST’s ‘give-and-take’ attitude has dried India needs a system overhaul

 The Goods and Service Tax (GST) Council has been hailed as a model federal institution, where both states and the centre are represented, and consensus is arrived through a detailed deliberative process.

Until the 38th GST Council meeting in December 2019, there had not been a single instance of voting, despite strong differences of opinion voiced on many issues. They were settled in a spirit of give and take. That acrimonious meeting on the modification of the existing rate structure of lotteries was indeed a sign of changing times. By the end of the next year, the Council was on the brink of a serious disruption with the centre and states sharply diverging in their stand regarding the payment of GST compensation.

The emergence of GST has been the most important event in the history of centre–state relations since the adoption of the Indian Constitution. According to the Constitution, powers to levy personal income tax, corporation tax, excise (other than on alcohol for human consumption), customs duties and service tax were the domain of the centre. The responsibility for taxes on intra-state purchase and sale of goods lay with the respective states. The tax on intra-state trade took the form of sales tax, turnover tax, surcharges, luxury tax and various types of entry taxes. Sales tax, which was imposed at the first point of sale, and for some commodities at multiple points of sale, was replaced by value added tax (VAT).

Nevertheless, GST has been hailed by some as an exhibition of robustness of Indian federalism, because this major change was brought about by avoiding acrimonious controversies through elaborate negotiations in a spirit of give and take between centre and states, and between states. The first objective of this paper is to broadly outline this process.

We shall then go on to examine the functioning of GST during the last four years to assess whether the high expectations of GST have been realised in terms of revenue buoyancy, ease of doing business and positive impact on growth. The outcomes have been far from expectations. Worse, the give-and-take attitude that characterised the run-up to the new taxation system has virtually evaporated. (Read more at: Click Here)

 2.GST Council to take up proposal for issuance of circular related to removing IGST on ocean freight

 GST Council to meet in Madurai next month

 The GST Council, in its next meeting, is expected to take up a proposal to implement Supreme Court ruling regarding IGST (Integrated Goods & Service Tax) on ocean freight. The meeting is scheduled to take place in Madurai for which date is yet to be finalized.

In its ruling the apex court upheld the ruling by the Gujarat High Court and accordingly struck down levy of IGST on transportation of goods by vessel from a place outside India to a place in India. The same ruling also observed on the non-binding nature of recommendations by GST Council on Centre and States.

“There is no thinking on filing review petition. Accordingly, the Council will take up a proposal to issue a circular quashing the provision of levying IGST on ocean freight,” a senior Finance Ministry official told BusinessLine. Further, the circular is also likely to talk about refund. Last month, relying on Supreme Court order, Gujarat High Court ordered refund of IGST within six weeks along with interest.

The issue

 The issue begun after issuance of two notifications and a corrigendum. Notification No. 8 of 2017 dated June 28, 2017 provided that the IGST at the rate of 5 per cent shall be levied on inter-state supplies of services when the goods are transported in a vessel, etc., with the commencement of the levy of GST.

Another Notification No. 10 of 2017 dated June 28, 2017 was issued notifying that in respect of services supplied by a person located in the non-taxable territory by way of transportation of goods by vessel from a place outside India up to the Custom Clearance Station in India, the entire IGST shall be paid on the reverse charge basis by the importer.

A corrigendum dated June 30, 2017 was issued. The IGST was set to be collected at a rate of 10 per cent of the cost, insurance, and freight (CIF) value.

3. Input tax credit on edible oil: Oil millers seek reversal of GST panel’s

decision to not allow refund, writes to PM

The state body of oil millers and oilseed traders wrote to Prime Minister Narendra Modi Thursday demanding a rollback of the decision taken by Goods and Services Tax Council to not allow refund of accumulated input tax credit (ITC) on edible oils.

The GST Council’s decision has led to price inflation of edible oil and went against the government’s strategy to soften prices of oils in the country, stated Gujarat State Edible Oils and Oil Seeds Association (GSEOOSA).

Currently, oil millers purchase their raw material at 18 per cent GST but can only charge a GST of 5 per cent on their produced goods, resulting in a surplus of 13 per cent that remains with the government. The GST Council in June decided not to refund the surplus on edible oils, resulting in, according to the association, “an indirect hike” in GST on edible oils.

“The government is facing severe flak for rising prices of essential items. Rising prices of edible oils has worried the government most. Under such circumstances, by not allowing refund of input tax credit to edible oil industry, the Central government has indirectly raised GST rates on edible oils,” the letter stated.

4.Tenants will have to pay 18% GST on house rent? Know the truth behind this claim

There was a lot of confusion regarding payment of GST on housing rent. However, the government has clarified on the issue concerning new GST rules on payment of rental. The new GST rule on rent came into effect from 18th July. However, it also led to certain misinformation with reports stating that tenants need to pay 18% GST on house rent.

Rebutting the claims, PIB tweeted that renting of residential unit taxable only when it is rented to business entity. PIB has listed out three important things concerning GST on rent.

  • Renting of residential unit taxable only when it is rented to business entity
  • No GST when it is rented to private person for personal use
  • No GST even if proprietor or partner of firm rents residence for personal use.

If you get any such suspicious message, you can always know its authenticity and check if the news is for real or it is a fake news. For that, you need to send the message to https://factcheck.pib.gov.in. Alternatively you can send a WhatsApp message to

+918799711259 for fact check. You can also send your message to pibfactcheck@gmail.com The fact check information is also available on https://pib.gov.in

5. TAX TALK: GST on guest house rent may impact staff perks

The uncertainty in input tax credit availability to firms on GST paid for rental of building used by employees for residence may lead to changes in such perquisites.

From July 18, 2022, GST at 18% has been made applicable on lease rent paid for rental of residential dwellings to registered persons under GST. The change came on the back of recommendations of the 47th GST Council Meeting held on June 29, 2022. In order to understand what changes for the common man on account of the amendment, it is essential to understand the levy of GST on renting of residential dwellings.

In terms of the GST legislation, every supply is generally taxable unless notified as ‘exempt’. ‘Services by way of renting of residential dwelling for use as residence’ were exempt since the introduction of the GST regime. Such services were exempt in the pre-GST era as well. Here, the keyword is ‘residential dwelling for use as residence’. Accordingly, service of renting of commercial dwellings or renting of residential dwellings for commercial use were taxable even prior to July 18, 2022 as well.

It is yet to be seen whether ITC on such renting could also be denied citing it as ‘used for personal consumption of employees’. The uncertainty in ITC availability and upfront payment of GST under RCM may lead to changes in such perquisites to employees. Hence, analysis of rental agreements for residential dwellings may be required from a legal standpoint to avoid potential litigations.

  Important Notifications under Excise / Custom/ GST:

   GST UPDATES
Sl.

 

No.

 

Particulars of the Notification(s)

File No. / Circular No.

Notification Link(s)

1

NA

NA

NA

CUSTOM / EXCISE UPDATES

Links

 

Notification Particulars

Click Here

Seeks to amend Customs (Compounding of Offences) Rules 2005

Click Here

Simplification for procedure for compounding of offences under Customs Act, 1962 – regarding

Click Here

Applying CAROTAR maintaining consistency with the provisions of relevant trade agreement or its Rules of Origin – reg.

Click Here

Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022 to decrease the Special Additional Excise Duty on production of Petroleum Crude and increase Special Additional Excise Duty export of Aviation Turbine Fuel

Click Here

Seeks to further amend No. 04/2022-Central Excise, dated the 30th June, 2022 , to increase the Special Additional Excise Duty on Diesel

Important Case-laws

 income tax

1. Case Details: Dr Swati Mahesh Vinchurkar v. DCIT

Citation: [2021] 130 taxmann.com 320 (Surat-Trib.)

 Sum reflected in Form 26AS can’t be taxed unless it was established that the assessee was the actual beneficiary

 The Surat Tribunal has ruled that a payment reflected in Form-26AS could not be brought to tax if it could not be established that the assessee was the actual beneficiary of said payment. Once the assessee denied the transaction reflected in Form 26AS, the onus was on the revenue to establish that the assessee had entered into any such transactions.

It was held that the assessee had no concern or casual connection or any relation with the alleged deductor. The entry of TDS in the Form-26AS issued to the assessee was wrong. The assessee submitted her response to CPC Bangalore, and before CIT(A), she specifically denied having earned such income.

Further, it was submitted by the assessee that it is far from the imagination that the assessee served such organisation, which is 1,000 KM away from the residence of the assessee.

Once the assessee denied such transaction, the onus was on the revenue to establish that the assessee had entered into any such transactions. The CIT(A) had not made any verification or tried to verify such transactions. There was the possibility of entering the wrong PAN, which belonged to the assessee, and the assessee had been unnecessarily put under mental pressure by making such additions despite denying such income. Thus, addition merely based on TDS reflected in the Form-26AS, ignoring the submissions of the assessee, was liable to be deleted.

2. Case Details: Central Board Of Direct Taxes v. Lakshya Budhiraja

Citation: [2021] 131 taxmann.com 51 (SC) CBDT considering modification in faceless appeal scheme, 2020

 The assessee challenged the Faceless Appeal Scheme, 2020, alleging that the scheme was discriminatory, arbitrary, and illegal to the extent it provided a virtual hearing as per circumstances to be approved by administrative authorities under Income-tax Act, 1961.

The instant petition was filed to transfer cases challenging Faceless Appeal Scheme, 2020, from High Courts to the instant Supreme Court.

The Additional Solicitor General submitted before the Supreme Court that the department is having a second look at the matter on the issue of Faceless Appeal Scheme, 2020. He may be granted a period of three months as it may require changing the law.

Important Case-laws

GST Cases:

1.In relief to tenants, AAR allows tax credit on GST paid on upfront lease premium

An Authority for Advance Ruling (AAR) judgement saying tax credit should be allowed on goods and services tax (GST) paid on upfront lease premium could give a breather to companies and even corporate individuals. Tax authorities have been disallowing the tax credit up until now. The AAR ruling means that many tenants would now be able to challenge the taxman’s stance, experts said.

“Generally, tax authorities are disallowing input credit on upfront lease premium on the ground that same is in relation to immovable property, hence restricted, or where tenants undertake some renovation or construction work before they use the property, the credit is denied on the logic of input service of lease being used for construction,” said Harpreet Singh, partner at KPMG India.

Hence, tax credit should be allowed on this upfront payment of rent, it said. Upfront lease premiums are essentially a non- refundable amount similar to a down payment paid by the tenant to the owner of a property. In most cases, the lease premium is part of the transaction value, especially in certain areas where there is a seller’s market.

2. Medicine purchases by inpatients exempt from GST: Tamil Nadu AAR

Medicines and consumables used in the course of providing health care services to a patient admitted in the hospital will be exempt from the Goods and Services tax (GST), according to a recent ruling by Tamil Nadu’s Authority for Advance Ruling (AAR).

On the other hand, an outpatient will be charged GST for medicines and consumables bought that were prescribed in the course of providing health care services, the AAR said.

There are different rates for different medicines. In the case of inpatients, room rent is exempt from GST only up to Rs 5,000 per day with effect from July 18. For availing the exemption for medicines and consumables, a composite bill has to be raised, the authority ruled. This is so because medicines and consumables to inpatients are a composite supply with treatment whereas those provided to outpatients are not, the AAR clarified. The ruling was delivered on a petition by Kumaran Medical Centre which sought to know from the AAR whether the supply of medicines, drugs and other surgical goods used in the course of There are different rates for different medicines. In the case of inpatients, room rent is exempt from GST only up to Rs 5,000 per day with effect from July 18. For availing the exemption for medicines and consumables, a composite bill has to be raised, the authority ruled. This is so because medicines and consumables to inpatients are a composite supply with treatment whereas those provided to outpatients are not, the AAR clarified. The ruling was delivered on a petition by Kumaran Medical Centre which sought to know from the AAR whether the supply of medicines, drugs and other surgical goods used in the course of providing health care services to outpatients by the pharmacy unit of the centre for diagnosis or treatment would be considered as composite supply of health care services under the GST and consequently eligible for exemption.

However, the supply of prosthetics and mobility aids, being in the nature of independent supply, are to be considered as individual supplies and are to be taxed, the AAR ruled.

  • International Taxation Corner (ITC)

1.HNIs more cautious on foreign investment after new rules kick in

High net individuals (HNIs) can no longer sidestep the rules and regulations to trade in stocks, cryptocurrency and derivatives abroad. With the new rules and regulations, they are now required to be more careful with foreign investments, according to a report by Economic Times.

According to the new rules of the Liberalised Remittance System (LRS), an Indian resident can now invest $250,000 a year in foreign stocks, debt etc. It is regulated by the Reserve Bank of India (RBI). Till now, a person could invest only 10 per cent in a foreign unlisted company.

Investment in cryptocurrencies and financial derivatives abroad is banned under the LRS.

“The reason for this change seems to be to discourage accumulation and flight of uninvested Indian capital outside the country, which could also then remain untracked, and be used for purposes not intended under the LRS,” Parul Jain, head of international tax and fund formation practices at Nishith Desai Associates was quoted as saying by ET.

The new rules also prohibit HNIs from investing in foreign fixed deposits (FDs) as they come under unlisted debts. Read more at: Click Here

2.Indonesia—Top Tax Issues for Multinational Companies

At the end of 2020, Indonesia passed the “Omnibus Law” to attract foreign investment to sustain future economic growth. As part of the Omnibus Law, some of the tax laws were also amended. The most notable changes which may have a direct impact on foreign investors are the reduction in the corporate income tax rate from 25% to 22%—although the further decrease to 20% as per 2022 was revoked in the Harmonization of Tax Regulations Law, the “HPP Law,” of October 2021—and the introduction of an obligation for certain foreign companies to charge, report and collect value-added tax on the sale of digital goods and the delivery of digital services.

The HPP Law of October 2021 amended various tax laws, and some of the amendments relevant for foreign investors will be discussed below.

Corporate Income Tax

Indonesia taxes resident companies on their worldwide income. A company is considered a resident if it is established or domiciled in Indonesia. In addition to companies, Indonesia also treats partnerships, permanent establishments of foreign companies, and foundations as taxable companies for CIT purposes. The general corporate income tax rate is 22%. The corporate tax is levied on the net income (gross income minus business expenses) of the company. Public companies that satisfy a minimum listing requirement of 40% and fulfill some other conditions are entitled to a tax cut of 3%, leading to an effective tax rate of 19%.

Most Indonesian companies are subject to thin capitalization rules (some industries are excluded from these rules, like banking and infrastructure). Under the thin capitalization rules, companies should adhere to a maximum debt-to-equity ratio of 4:1. The debts include both related and unrelated party debts.

In the HPP law, a provision was introduced that gives the authorities the possibility to introduce other type of thin capitalization rules, based on a percentage of earnings before interest, taxes, depreciation, and amortization (EBITDA). However, to date no implementing regulations have been issued in this respect.

Corporate Income Tax—Final Tax

Certain revenue is subject to final tax (which is also a CIT). This means that the gross income is taxed at a lower rate, but the company cannot deduct any expenses. For example, the income from the rental of real property is taxed at 10% on the gross rental income. Any costs regarding the renting out of property cannot be deducted.

Companies earning both normal taxed income and income subject to final tax should ideally have separate bookkeeping for both activities. If they do not, because it is administratively quite cumbersome, they should make a cost allocation. Indirect costs should be allocated on a pro rata basis.  To read more Click Here

Knowledge Bucket for NRI’s 

  • An person is treated as PIO if he or either of his parents or grandparents were born in undivided
  • An NRI can claim exemption in respect of Long Term Capital Gains (LTCG) on the eligible assets if he invests the sale consideration received to acquire any of specified

assets within six months from date of sale. The exemption available will be proportionately reduced if full consideration is not invested.

  • If you purchase a property from a Non-Resident Indian (NRI), you need to deduct tax (TDS) under Section 195 of the Income-tax Act, 1961 (ITA).
  • In case the property is purchased from a resident, then tax is not required to be deducted if the sale value does not exceed Rs 50 lakh (Section 194IA).

DO YOU KNOW ??                                                      

  1. Deduct TDS: When you as a buyer deduct TDS, it is required to be deposited with the Income Tax department within seven days from the end of the month in which the deduction has been initiated.
  2. TDS must be deposited using Challan No./ITNS 281. e-Payment of TDS can be initiated online through the following website: e-Payment for TIN ( egov-nsdl.com)
  3. The Income-tax department has collected around Rs 28 crore in taxes after about 1 lakh returns were filed by taxpayers under the newly introduced return filing form called ITR-U, that was notified this year as part of the Budget 2022-23.
  4. Self-assessment tax collection rose by a massive 275% in April-July to ₹43,500
  5. Within four months of the introduction of the updated returns scheme, nearly 75,000 revised income tax returns have been filed voluntarily, even as several online gamers have come under the scanner for failing to pay taxes for previous years.

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.)

    Leave a Comment

    Your email address will not be published.