Dear Readers,

We are delighted to share our 104th E-Newsletter “Weekly Taxation Newsletter” dated 07th March, 2023 from 28th February, 2023 to 06th March, 2023 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 for deposit of Tax deducted/collected for the month of February, 2023. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan  07.03.2023
2.​Fourth instalment of advance tax for the assessment year 2023-24​              15.03.2023
3​​Due date for payment of whole amount of advance tax in respect of assessment year 2023-24 for assessee covered under presumptive scheme of section 44AD / 44ADA​15.03.2023
  4​Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of February, 2023 has been paid without the production of a Challan​  15.03.2023
  • Under the GST, 2017

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

Form No.Compliance ParticularsTimelineDue Date
  GSTR -7Return for Tax Deducted at source to be filed by Tax Deductor10th of succeeding month  10.03.2023
GSTR -8E-Commerce operator registered under GST liable to TCS10th of succeeding month10.03.2023
GSTR -6Every Input Service Distributor (ISD)13th of succeeding month13.03.2023

B. Filing Form GSTR-1:

Tax periodDue DateRemarks
Monthly return (February, 2023)11.03.20231. GST Filing of returns by registered person with aggregate turnover exceeding INR 5 Crores during preceding year.   2. Registered person, with aggregate turnover of less then INR 5 Crores during preceeding year, opted for monthly filing of return under QRMP.

C. GSTR – 1 QRMP monthly / Quarterly return

Form No.Compliance ParticularsTimeline Due Date
  Details of outward supply-IFF &   Summary of outward supplies by taxpayers who have opted for the QRMP scheme.GST QRMP monthly return due date for the month of April, 2022 (IFF). Applicable for taxpayers with Annual aggregate turnover up to Rs. 1.50 Crore.   Summary of outward supplies by taxpayers who have opted for the QRMP scheme.        13th of succeeding month  – Monthly   Quarterly Return    13.03.2023
  • Weekly Departmental Updates: Income Tax

1. (Tax) scrutiny not nice… will deal with it cooperatively, professionally: BBC

The tax department’s action came weeks after the British broadcaster had, on January 17, released a documentary on the 2002 Gujarat riots.

REFERRING TO the Income Tax department’s surveys at its offices in Mumbai and Delhi last month, BBC’s Deputy CEO and Director of News Jonathan Munro has said that while such scrutiny is “not nice”, the British broadcaster will “deal cooperatively and professionally with any aftermath”.

Speaking to The Indian Express on Friday, Munro said: “It’s not nice for any organisation to have that sort of scrutiny, uninvited as it were. But everybody knows that we’ve got a responsibility to obey the law and that’s what we’ll do… We are here to obey the law and comply with all the regulations and cooperate with anything that needs to be dealt with.”

In a statement after the surveys on February 14-16, the BBC had said: “We will continue to cooperate with the authorities and hope matters are resolved as soon as possible… The BBC is a trusted, independent media organisation and we stand by our colleagues and journalists who will continue to report without fear or favour.”

The tax department’s action came weeks after the British broadcaster had, on January 17, released a documentary on the 2002 Gujarat riots. On January 20, the central government ordered YouTube and Twitter to take down links sharing the documentary, with officials saying it was found to be “undermining the sovereignty and integrity of India” and had “the potential to adversely impact” the country’s “friendly relations with foreign states” and “public order within the country”.

“It wasn’t a shock to us that there were people who took issue with the programmes, of course,” said Munro. The BBC had reached out to Prime Minister Narendra Modi’s office, as is standard practice, and it was disappointing that he declined the invitation, he said. “Whenever you talk about anybody, we always give them what’s known in the trade as a right to reply,” he said.

To tackle fake news, the BBC now has disinformation specialists in London and around the world, including in Delhi, he said. “This began really in the Trump era in the US, and I don’t mean to say that this wouldn’t have happened without that particular president. What I mean is the political velocity of social media was accelerated at that time, and that became a worldwide phenomenon,” he said.

2. FY23 fiscal deficit: FinMin monitoring daily receipts, expenses in March

The finance ministry has started daily monitoring of the revenue receipts, including tax collections, as well as expenditure beginning March 1, with an aim to keep fiscal deficit in check during the current fiscal. Although the government is expected to meet the revised tax revenue estimates, meeting the Rs 50,000 crore target from disinvestment receipts could be a challenge.

According to officials, the daily monitoring of tax and non-tax revenue collections will help the government in taking timely corrective actions, wherever needed.

“In order to keep a close track of receipts, expenditure and involving fiscal position of the central government in the month of March, 2023, it is necessary to have updated information on a day-to-day basis,” the Controller General of Accounts (CGA) under the finance ministry said in an office memorandum dated March 1.

The Ministry has also asked the Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes and Customs (CBIC) to report flash figures. Besides, other non-tax and disinvestment receipts too would have to be reported on a daily basis, as per the memorandum.

The Centre has set a target of 6.4 per cent for fiscal deficit, which is the difference between government revenues and spending, in the current financial year ending March 31.

Till January, the fiscal deficit has touched 68 per cent of the Budget estimates at Rs 11.91 lakh crore.

Net tax receipts rose to Rs 16.89 lakh crore while total expenditure was Rs 31.68 lakh crore. Mop up from disinvestment stood at Rs 31,106 crore so far this fiscal, as against the full year estimates of Rs 50,000 crore. To read more Click Here

3. Facing existential crisis due to Rs 10,000 crore tax: Tech Mahindra

ech Mahindra (formerly Satyam Computers) on Wednesday lamented that it faced an existential crisis twice in the last 12 years. Once, when Satyam scam broke out and later when the income tax (I-T) department started raising huge impractical tax demands to the tune of 5,000 crore.

“Together with interest and penalties, this may have gone beyond 10,000 crore now. This is secondary victimization,” senior counsel Arvind Datar, who appeared for the company, on Wednesday pleaded before a bench of Chief Justice Ujjal Bhuyan and Justice N Tukaramji of the high court when the company’s petition seeking restatement of its accounts between 2002 and 2008 came up for hearing.

“We are seeking correction of the balance sheets of these years because that was the period during which Ramalinga Raju falsified the accounts and furnished inflated accounts to the authorities at various levels to project the company as a huge corporate entity with heavy income flows, etc. Despite clear findings from CBI, SFIO, and the trial court that this was a fraud perpetrated by the erstwhile management led by Raju, the tax sleuths are raising unrealistic tax demands that will push the company towards another crisis,” Arvind said.

Arvind Datar said that it was the Centre’s ministry of corporate affairs that had roped in Tech M as a strategic investor to restore the corporate image of the country that received a severe drubbing after the scam surfaced. “Even now, the Union government, CBI and the trial court too are of the opinion that the company is a victim of fraud and not the perpetrator. However, I-T wing alone is thinking in a strange manner,” he said. To read more Click Here

4. Calculate your income tax under new regime in the IT calculator: Check how to use it

The Income Tax department has released a “tax calculator” to assist taxpayers in calculating the tax and determine which tax regime they are comfortable with. The new income tax system was proposed in the Budget 2023 by the Finance Minister Nirmala Sitharaman. 

A tweet from the tax department stated that a dedicated tax calculator is available on the website of Income tax to compare the old and new tax regimes for individuals and for everyone as per Section 115 BAC.

What exactly is an online tax calculator?

Depending on a person’s income, taxes can be calculated with the use of an internet tool called an income-tax calculator. Taxes on those in the taxable income bracket must equal a predetermined portion of their net annual income.

Pros of Tax Calculator

  • One may create a financial budget by calculating your income tax.
  • One can budget their spending and make appropriate savings decisions when one knows how much tax one will need to pay.
  • One can prevent going into debt and overspending by doing this.
  • One can claim tax deductions for particular costs when figuring up income tax.

The finance minister approved a baseline deduction of Rs 50,000 under the current tax system, which was also available under the old one. For individuals who choose the new tax system and earn up to Rs 7 lakh yearly, the decision will result in savings of Rs 33,800. Savings of Rs 23,400 would be made for incomes up to Rs 10 lakh, and Rs 49,400 would be made for incomes up to Rs 15 lakh.

How to use a tax calculator in the IT department to calculate income tax?

  • Type of Taxpayer
  • Male, Female, Senior, or Super Senior Citizen
  • Status as a residence
  • Income not from Salaries and Special Income
  • Interest in Property with Self-Occupied property
  • Deductions permitted under both regimes, including section 57’s family pension deduction and sections 80CCH(2), 80CCD(2), and 80JJAA (iia)

The portal will display the figure under both the old and new tax regimes as soon as you submit the aforementioned information. To read more: Read full at Click Here

5. How to File Nil Income Tax Return for ITR-4

Filing income tax returns is mandatory for every individual or entity earning income. However, when a business or individual has no income to report, they can file a Nil income tax return. Filing a Nil income tax return is a simple process that can be completed online.

Here, we will discuss how to file a Nil income tax return for a business using ITR-4.

Benefits of Filing ITR-4:

Filing an ITR-4 is necessary for freelancers, small businesses without registration, and service-based professions. Filing an ITR-4 can be beneficial in several ways. It can be used as proof of income while applying for credit cards, loans, or scholarships. Therefore, it is essential to file an ITR-4 even when the income is Nil.

Prerequisites for Filing Nil Income Tax Return:

To file a Nil income tax return, one needs to have an online ITR account. If you don’t have an account, you can register on the Income Tax e-filing portal using your PAN details and mobile number.

Also, you will need a bank statement for the relevant financial year and a linked Aadhaar and PAN card.

Important points to remember when filing ITR-4:

If you are filing a Nil income tax return, you should ensure that your gross income is not more than Rs 2.5 lakh. Moreover, filing a Nil return is a self-assessment-based filing. Therefore, it is advisable to file a return with an income below Rs 2.5 lakh in the first year and increase it gradually each year.

Follow these steps to file a Nil income tax return using ITR-4:

Login to the Income Tax e-filing portal using your PAN card.

Go to the ‘e-File’ section and click on the ‘Income Tax’ tab.

Click on the ‘File Income Tax’ button and select the relevant assessment year.

Select the mode of filing as ‘Online’ and click on ‘Continue.’

Click on ‘Start New Filing.’

Select ‘Individual’ in the ‘Status’ tab and click on ‘Continue.’

Choose ‘ITR-4’ as the return form and click on ‘Proceed with ITR-4’

Click on ‘Let’s Get Started.’

Choose ‘Other’ in the ‘Why are you filing this income tax’ tab and click on ‘Continue.’

Select ‘Nature of Business’ and choose ‘Other’ as a freelancer.

Click ‘No’ in the new tax regime and select ‘Not Opting’ if you have not claimed any deductions in the current year or ‘Opting Now’ if you have.

Click on ‘Next.’

Skip the quiz on the ‘Gross Total Income’ page and click on ‘Add Details’ under ‘Income from Business or Profession.’

Click on ‘Business’ or ‘Profession’ tab based on your work.

Enter your name and fill in the ‘Gross Turnover’ column with your earnings in the financial year. Add the cash income and under Section 44AD, add the capital amount, which is not deducted from the expenses. In the cash section, subtract the expenses and input the net amount (minimum 6%) and click on ‘Confirm.’

  • Complete the ‘Gross Income’ tab.
  • Click on the new tab called Disclosure and Exempt Income.
  • Go to the Financial Particulars of the business and click on “Add Details”.
  • Scroll down and select “Balance with Bank”.
  • Fill in the Financial Year’s last month, the exact amount you have in your bank, and how much cash you have on hand. Fill in all other mandatory fields with zero.
  • Click on the “Add” button.
  • Click on the “Confirm” button to complete this tab.
  • Ignore the “Total Deduction” tab as it is a nil return.
  • Skip the “Tax Paid” tab as well.
  • The last tab will appear as “Total Tax Liability”. Fill in the details assuming that the gross income is below 2.5 lakhs, and therefore the tax liability is zero.
  • After completing all the tabs, click on the “Proceed” button.
  • In the next tab, review the summary of all the details provided.
  • Click on the “Preview Return” button to generate the PDF of the ITR-4 form.
  • Click on the “Proceed to Validation” button to check for any errors or mistakes.
  • If there are any errors, fix them and proceed by clicking on the “Proceed to Verification” button.
  • Verify your details by entering the Aadhaar OTP.
  • Finally, submit the form and wait for the acknowledgement receipt.

Finally, when filling a nil return in ITR-4, ensure that the income shown is below 2.5 lakh. If the income is actually being shown, ensure that it is below 7 lakh to avoid paying any taxes.

  • Important Circulars and Notifications:
Sl.Particulars of the Notification(s)File No. / Circular No.Notification Link(s)
  1The Central Government hereby notifies for the purposes of the said clause, Karnataka State Building and Other Construction Workers Welfare BoardNotification No. 12/2023  Click Here

Weekly Departmental updates:

  • GST Updates

1. GST mop-up rises 12% to ₹1.5 lakh crore in Feb

India’s goods and services tax (GST) collections rose 12% to ₹1.5 lakh crore in February from the year earlier, indicating that economic activity remained steady, according to official data released Wednesday.

A separately released private monthly survey showed that the manufacturing sector was little changed. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) was at 55.3 in February, against 55.4 in January, albeit the lowest in four months. Meanwhile, domestic passenger vehicles sales rose 10.6% to a record for February amid sustained consumer demand and improved supplies from automakers.

2. GST registration: No compromise on required documents

Navneet Goyal, chief commissioner of the Central GST (CGST) of MP and Chhattisgarh, has said that no compromise can be made regarding the required documentation for the GST registration. He also assured that very soon the Appellate Tribunal of the GST would be set-up in the State.

Senior IRS officer said this while addressing the meeting of regional GST grievance redressal committee held virtually on Thursday. State GST commissioner, Lokesh Kumar Jatav, additional commissioner CGST Dinesh Bisen, additional commissioner, state GST, Tanvi Hooda and other top ranking officers were also present in the meeting.

Chief Commissioner CGST Goyal and the state GST Commissioner Jatav have seriously taken into account the problems, difficulties and suggestions presented in the meeting. They assured that meaningful efforts will be made to find out the solutions of the problems presented in the meeting. These would be presented before the GST Council.

The members of the committee submitted their suggestion for improving the bottlenecks present in the GST regime. Goyal also took  suggestion to increase the GST collection from the current level of around Rs 1.50 lakh cr. per month to Rs 2.00 lakh cr. or above.

CA Krishna Garg, suggested such commodities and services, wherein there are more changes of tax evasion should be considered in the reverse charge mechanism (RCM). Tarun Vyas, Secretary of Association of industries of Madhya Pradesh, Ramesh Khandelwal, president of Ahilya Chamber of Commerce and Industry also presented their suggestions.

3. Adhia bats for bringing CNG under GST

Principal Advisor to the Gujarat Chief Minister Hasmukh Adhia on Saturday said high revenue and high demand fuels like CNG should be brought under GST regime.

Adhia, who is also the Chairman of Bank of Baroda said, was speaking at the valedictory function of the two-day International Conference on Business, Law and Public Policy at GNLU Gandhinagar,

“They (petroleum products) should be brought in (under GST)…but one by one. I think CNG can be easily brought in under GST. Second could be the aviation turbine (fuel) and the last two should be petrol and diesel…In economies like in a state like Gujarat where (revenue from) CNG is running into crores and in states like those with good demand, some mechanism of compensation after introduction of GST (has to be worked out)…But that should be possible after some time. It’s best (that CNG) be brought in ultimately.”

4. GST rate reduced on pencil sharpeners, rab

By another notification, the National Testing Agency has been exempted from GST for services relating to conduct of entrance examination for admission to educational institutions.

The goods and services tax rates for pencil sharpeners and rab has been lowered following the decisions taken at the GST Council meeting on February 18. The GST rate on pencil sharpeners has been lowered to 12%, according to a recent notification. Liquid jaggery or rab sold in loose form has been exempted from GST while the tax will be levied at 5% if it is sold in pre-packaged and labelled form.

“For removal of doubts, it is clarified that any authority, board or body set up by the Central Government or state government including National Testing Agency for conduct of entrance examination for admission to educational institutions shall be treated as educational institution for the limited purpose of providing services by way of conduct of entrance examination for admission to educational institutions,” said the notification.

As decided by the Council, courts and tribunals have also been brought under the reverse charge mechanism in respect of taxable services supplied by them such as renting of premises to telecommunication companies for installation of towers, renting of chamber to lawyers.

  • Important Notifications under

Excise / Custom/ GST:

  • GST Updates
Sl. No.  Particulars of the Notification(s)File No. / Circular No.Notification Link(s)
1Advisory : GSTN launches e-invoice registration services with private IRPsGSTN 573  Click Here
2Advisory on opting for payment of tax under the forward charge mechanism by a Goods Transport Agency (GTA)    GSTN 572  Click Here
  3Seeks to amend notification no. 2/2017-Central Tax (Rate), dated 28.06.2017.  03/2023-Central Tax (Rate)  Click Here
4Seeks to amend notification no. 1/2017-Central Tax (Rate), dated 28.06.2017  03/2023-Central Tax (Rate)  Click Here
    5Seeks to amend notification No. 13/2017- Central Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.  02/2023- Central Tax (Rate)  Click Here
    6Seeks to amend notification No. 12/2017- Central Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.    01/2023- Central Tax (Rate)    Click Here

Custom / Excise Updates

LinksNotification Particulars
  Click HereSeeks to amend notification No. 50/2017- Customs, dated 30.06.2017, in order to reduce the BCD on Tur Whole to Nil.
  Click HereSeeks to amend notification No. 30/2022- Customs, dated 24.05.2022, in order to discontinue the specified TRQ rate after the 31st March 2023.
  Click HereFixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver-regarding
  Click HereAuthorization of Booking Post Offices and their corresponding Foreign Post Offices in terms of the Postal Export (Electronic Declaration and Processing) Regulations, 2022- Reg.
Click HereExtension of Requirement of Health Certificate to be accompanied with the import of food consignments.
Click HereCompletion of Data Entry in DIGIT for uploading on CBIC website under Instructions section.
  1. Important Case-laws
  • Income Tax

1. Lost FD certificate? Interest still taxable

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently came across an instance where a Singapore entity had not declared interest on fixed deposits held by it in a bank because it had lost those certificates. The tax tribunal held that the assessing officer rightly sought to tax this interest income.

The matter, in the case of Smiths Detection Asia Pacific Pte, which was heard by the ITAT, primarily dealt with international tax transactions. Tax officials whom TOI spoke with stated that even individual taxpayers need to pay heed to the aspect of interest income which has been decided by the ITAT. According to them, form 26AS (which largely provides details of tax deducted at source) and the annual information statement (which provides details of a broad spectrum of income of a taxpayer, including bank interest income and dividends) facilitates reporting of correct income by taxpayers.

In this case, the income tax (I-T) officer noticed that according to the form 26AS, the taxpayer had received interest income of Rs 71.5 lakh from Canara Bank. However, only interest of Rs 62.9 lakh had been declared in the I-T returns. Accordingly, the I-T officer added the difference of Rs 8.6 lakh and treated it as taxable income. The company submitted before the ITAT that it had misplaced the relevant fixed deposit certificates. As these investments were a capital asset, it had written off the same. Thus, there was no question of earning any income.

The ITAT bench remarked, “We are of the considered view that this contention is not only illogical but also unacceptable…” Form 26AS showed the fixed deposits with Canara Bank and the tax that had been deducted at source against the interest income. The company could seek duplicate fixed deposit certificates, the ITAT bench pointed out. Thus, it upheld the addition to taxable income made by the I-T officer. (Source: Click Here)

2. DIT (Exemptions) v. Meenakshi Amma Endowment Trust (2013) 354 ITR 219 (Kar.)

  • Where a charitable trust applied for issuance of registration under section 12AA within a short time span (nine months, in this case) after its formation, can registration be denied by the concerned authority on the ground that no charitable activity has been commenced by the trust?

The High Court observed that, with the moneys available with the trust, it cannot be expected to carry out activity of charity immediately after its formation. Consequently, in such a case, it cannot be concluded that the trust has not intended to do any activity of charity.

In such a situation, the objects of the trust as mentioned in the trust deed have to be taken into consideration by the authorities for satisfying themselves about the genuineness of the trust and not the activities carried on by it.

Later on, if it is found from the subsequent returns filed by the trust, that it is not carrying on any charitable activity, it would be open to the concerned authorities to withdraw the registration granted or cancel the registration as per the provisions of section 12AA(3). The registration cannot be denied on the ground that the trust has not carried out any charitable activity so far in the short span of time after its formation.

  1. Important Case-laws
  • GST Cases:

 

1. GST rates. Frozen food supplied to airlines, hotels, other firms to attract 18% GST, rules Karnataka AAR

This ruling came on an application by SATS Food Solutions Limited (SFSI), a wholly owned subsidiary of SATS (Singapore Airport Terminal Services) Limited. Frozen food supplied to airlines, hotels, and other firms will attract Goods & Services Tax (GST) at the rate of 18 per cent, Karnataka’s Authority for Advance Ruling (KAAR) has said.

This ruling came on an application by SATS Food Solutions Limited (SFSI), a wholly owned subsidiary of SATS (Singapore Airport Terminal Services) Limited. In their application, SFSI said they are proposing to set up a highly automated food factory in Bangalore to provide food solutions to the Aviation Industry, Institutional, Quick Service restaurants, hotels, food aggregators, ghost and cloud kitchens, online restaurants, and cafes.

These products are not fit for immediate human consumption and need further processing such as thawing, final cooking (in case of processed and semi-processed), portioning, re-heating, and re-packing with MRP. These activities are undertaken by the businesses or customers of SFSI to whom the frozen-in bulk institutional packs are supplied. The minimum thawing time for frozen products is 36 to 48 hours.

The company sought an advance ruling on the applicable GST rates on their products. They submitted that since SFSI does not supply the products directly to end consumers over the counter, their activity is not a ‘restaurant service’ for charging lower rate of tax. On the other hand, considering the bulk supplies to B2B (Business-to-Business), it may attract a higher rate of tax and allow input tax credit. Furthermore, SFSI will not be applying for any licenses specific for running restaurant business.

After going through all the facts, submission, and arguments, AAR said that since the applicant is into the manufacture of ready-to-eat and ready-to-cook food products, these are covered under explanation to tariff heading 2106, which is “preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption” Accordingly, these products will attract GST at the rate of 18 per cent, AAR ruled.  Reference: Click Here

2. No input tax credit for liquor sales: GST-AAR

Restaurants that have offset input tax credit (ITC) in respect of liquor sales will be impacted by a recent goods and services tax (GST) advance ruling given by the West Bengal bench. In this regard, the GST-Authority for Advance Rulings (GST-AAR) has held that the applicant would have to reverse the ITC. While advance rulings do not set a judicial precedent, they do influence tax assessments.

Karnani FNB Specialities, the applicant, operated a lounge bar called ‘The Grid’. It also provided catering services as well as banquet renting services. It submitted to the AAR that as sale of liquor (aka, alcohol meant for human consumption) was outside the ambit of the GST, it is not liable to reverse the ITC. The AAR bench did not agree with this view.

The AAR bench held that section 17 (2) of the GST Act, read with rule 42, allows a GST-registered taxpayer to utilise ITC to the extent of input tax paid on inputs and input services that are used for making taxable supplies including zero-rated supplies. However, credit of input tax attributable to exempt supplies is to be reversed according to the prescribed formula. As the AAR bench held the sale of liquor to be an exempt supply, it ruled that the applicant would have to reverse the ITC attributed to the exempt supply.

“Practically, we understand most of the restaurants are not claiming ITC related to liquor sales. Further, restaurants other than those situated in large hotels (charging more than Rs 7,500 per night as room rent) are in any case not eligible for any ITC. However, if a restaurant has claimed ITC for the past periods, it will be liable to reverse the credit. If the credit was already utilised for discharging other taxes, it would also be required to pay interest,” stated Gabhawalla.

  • International Taxation  Corner (ITC)

1. UAE’s decision on ‘tax residency’ comes into effect

The UAE’s Ministry of Finance on Wednesday issued a decision on determining tax residency for people living in the Emirates. For consideration on tax purposes, an individual’s ‘usual place of residence’ will be in the UAE if this is where he normally or habitually resides, the ministry clarified.

This was a key point in the ministerial decision no. 27 of 2023 on implementation of certain provisions of cabinet decision no. 85 of 2022 on determination of tax residency.

The decision clarifies certain rules set out in the Cabinet Decision No. 85 of 2022 on determination of tax residency for natural persons and legal persons, which was issued in September 2022. For instance, the decision states that an individual’s ‘centre of financial and personal interests’ will be in the UAE if this is where their work, personal, economic relationships or other connections are the strongest.

The resolution also specifies that all days or parts of a day in which an individual is physically present in the UAE will be counted in determining whether the 183-day or 90-day thresholds are met. In addition, according to the decision, an individual does not need to own his ‘permanent place of residence’, but such place must be continuously available to them.

The UAE cabinet decision No. 85 of for 2022, which came into force on Monday, provides domestic definitions and rules for determining whether an individual or a legal entity may be considered a tax resident of the UAE.

2. Sri Lanka’s proposed tax rates are in line with international comparison – IMF

The International Monetary Fund Mission in Sri Lanka says that efforts to increase tax revenues should be pursued in a growth-friendly manner while protecting the poor and most vulnerable.

Peter Breuer, Senior Mission Chief for Sri Lanka, and Masahiro Nozaki, Mission Chief for Sri Lanka noted that it is however also important that those who can most afford it, make commensurate contributions to the financing of the necessary government expenditures.

The tax package the authorities have introduced, including the new tax rate schedule for the personal income tax, helps to meet these objectives, the statement added.

Peter Breuer, Senior Mission Chief for Sri Lanka, and Masahiro Nozaki, Mission Chief for Sri Lanka, also noted that the tax rates proposed under the authorities’ program are also in line with international comparison.

“Only with appropriate tax receipts will the Government will be able to fund essential expenditures, and avoid further slashing of critically important outlays. These reforms will also help regain confidence of creditors,” it added.

“The current economic crisis has a number of origins, including the government’s inability to meet government spending needs through its revenue collections. Sri Lanka is among the countries to collect the least amount of fiscal revenue in the world, with tax revenue to GDP ratio at only 7.3 percent in 2021. External creditors are not willing to provide financing to fill this gap,” the statement added. To read more Click Here

  • Knowledge Bucket for NRI’s
  1. For income generated in India, non-resident Indians (NRIs) are required to file income tax returns.
  2. The deduction of income tax from payments made to non-residents is mandated under Section 195 of the Income Tax Act of 1961. This is applied if a person receives interest or other payments from India as a source of income.
  3. Depending on the nature of taxable income, NRIs should pay TDS under Section 195 in the range of 10% to 30%.
  4. Section 195 of Income tax Act, 1961 (hereinafter referred to as ‘IT Act’) requires that a person responsible for making any payment to any Non- Resident (NRI) should be liable to deduct TDS from such payment provided such payment constitutes income of the NRI in India.
  5. In case of sale of immovable property by NRI, the buyer is under an obligation to deduct tax @ 20% u/s 195 of the IT Act on the amount of long term capital gains.
  • Do you know ??
  1. ITR-V stands for income tax return – verification form. It is a document sent by the department when a return is filed online without using a digital signature. The purpose of ITR-V is to verify the authenticity of tax return. One can download the form from the department’s website or from the mail ID on which the department has sent.
  • An interim dividend or final dividend is an additional income received by a stock market investor that does not require the sale of portfolio stock. As a result, it is considered additional income by the investors, and it is added to one’s annual income at the time of income tax return (ITR) filing, and income tax is levied based on the income tax slab in which the taxpayer falls after adding these dividends to one’s annual income.
  • Section 115QA of the IT Act states that any domestic company which buyback its own shares is liable to pay tax at 20 per cent plus surcharge at 12 per cent plus applicable cess.
  • “Buyback is taxed at the company level at 20 per cent on the difference between the buyback price and issue price of the share. It is an exemption in the hands of the shareholder,” said Chintak Shah.
  • Dividend shares should be shown as Income from Other Sources of vehicle filing ITR.
  • In case of bonus shares, nothing to be shown in ITR, and talking about the Buyback of shares, this should be shown as Exempt Income in ITR.

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  •    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.)

He has contributed in ICAI, ICSI and MCCI and other various Newsletters. He is also a speaker at various platforms including seminars / webinars.