E-Newsletter “Weekly Taxation Newsletter”

Dear Readers,

We are delighted to share our 99th E-Newsletter “Weekly Taxation Newsletter” dated 10th January, 2022 from 28th December, 2022 to 09th January, 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  
  1Due date for deposit of Tax deducted/collected for the month of December, 2022. However, all the 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  07.01.2023
  2.​Due date for deposit of TDS for the period October 2022 to December 2022 when Assessing Officer has permitted quarterly deposit of TDS under section 192, section 194A, section 194D or section 194H07.01.2023
3​Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of November, 202214.01.2023
4​Due date for issue of TDS Certificate for tax deducted under section 194-IB in the month of November, 202214.01.2023
5​Due date for issue of TDS Certificate for tax deducted under section 194M in the month of November, 202214.01.2023
  6​Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of December, 2022 has been paid without the production of a challan​15.01.2023
7​Quarterly statement of TCS for the quarter ending December 31, 202215.01.2023
8​Quarterly statement in respect of foreign remittances (to be furnished by authorized dealers) in Form No. 15CC for quarter ending December, 2022​15.01.2023
9​Due date for furnishing of Form 15G/15H declarations received during the quarter ending December, 202215.01.2023
  • Under the GST, 2017

A. Filing Form GSTR-1:

Tax periodDue DateRemarks
Monthly return (December, 2022)11.01.20231. 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.

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

Form No.Compliance ParticularsTimelineDue Date
GSTR-5 & 5ANon-resident ODIAR services provider file Monthly GST Return20th of succeeding month 20.01.2023
GSTR -6Every Input Service Distributor (ISD)13th of succeeding month13.01.2023
  GSTR -7Return for Tax Deducted at source to be filed by Tax Deductor  10th of succeeding month  10.01.2023
  GSTR -8E-Commerce operator registered under GST liable to TCS10th of succeeding month10.01.2023

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      13.01.2023

D. GST Refund:

Form No.Compliance ParticularsDue Date  
RFD -10Refund of Tax to Certain Persons18 Months after the end of quarter for which refund is to be claimed
  • Weekly Departmental Updates: Income Tax

1. CBDT looking to expand amnesty scheme, may allow self-declaration to settle tax demands: Sources

The Central Board of Direct Taxes (CBDT) is looking at offering a chance for self-declaration to settle tax demands, CNBC TV-18 reported on January 6, citing sources aware of the new amnesty proposals that are being deliberated ahead of the rollout of the Budget 2023. The taxation body could also expand the ambit of amnesty scheme to cases which are under appeal at various forums, the news channel said.

The sources said the CBDT was contemplating whether it should allow the withdrawal of appeals on the payment of full tax and interest along with the penalty amount. It may propose amnesty with a penalty of 10 percent on the disputed tax amount if the matter is pending with the Commissioner of Income-Tax (Appeals).

For matters pending before Income Tax Appellate Tribunal (ITAT), an amnesty with a penalty of 20 percent on the disputed tax amount is being considered, the sources said.

The report comes less than a month before the government is due to present the Budget for the fiscal year 2023-24 in Parliament. India’s net direct tax collection during the April-November 2022 period grew 24 percent year-on-year to Rs 8.77 lakh crore. The amount collected is nearly 62 percent of the Budget 2022-23 estimates. To read more Click Here

2. Budget 2023: Rs 5 lakh income tax deduction on home loan to tweak in LTCG rules, what homebuyers want

Back-to-back repo rate hikes in the last few months have significantly impacted borrowers, especially those who have taken floating-rate loans such as home loans. To fight surging inflation, the Reserve Bank of India (RBI) has increased the repo rate by 225 basis points between April 2022 and December 2022. Due to this, banks have also passed on these rate hikes to the loan borrowers by raising interest rates. Moreover, further rate hikes by the central bank are not completely off the chart.

Amid this and surging inflation, homebuyers are eagerly waiting for some relief from Finance Minister Nirmala Sitharaman in the upcoming Union Budget 2023.

Increase in tax deduction limit on home loan interest under Section 24 (b)

Currently, homebuyers can claim an income tax deduction on the interest paid on their home loan under Section 24 (b) of the Income-tax Act, 1961. The maximum amount of deduction that can be claimed is Rs 2 lakh per financial year for a self-occupied property.

Separate tax deduction section on principal repayment of housing loans other Section 80 C

Homebuyers can also claim income tax deductions on the principal repayment of their home loan under Section 80C of the Income Tax Act. The maximum amount of deduction that can be claimed is Rs 1.5 lakh per financial year. However, various deductions for other investments such as Public Provident Fund (PPF), equity-linked savings schemes (ELSS), life insurance premiums, and Sukanya Samriddhi Account are clubbed under Section 80C of the Income-tax Act, 1961. Experts are now demanding to increase the tax deduction limit of Section 80C to provide some relief to home loan borrowers.

“At present, Section 80 C of the Income Tax Act does not provide for a focused benefit on home loans.

Relaxation of capital gains criteria to support homebuyers

Under Section 54 of the Income-tax Act, long-term capital gains from sales of the existing house can be utilized in buying or constructing a new property. If the investment for exemption is done through an under-construction property, it can be claimed only if the construction of the property is completed within three years of the sale of the earlier house.

3. Income Tax: 10 key steps to plan your taxes in 2023

The earlier you plan your taxes the more you save! Every salaried individual is liable to pay taxes that are imposed on income and gains arising from other sources. Taxes occupy a major chunk of your hard-earned money. But there are tax sops available for citizens to avail during income tax return (ITR) filing. However, it isn’t a new mystery that in the day-to-day hustle and bustle chances are that many taxpayers end up in a last-minute rush for claiming these tax benefits which can lead to the possibility of errors. Thereby, it is required to have systematic planning to save more on taxes.

Tax planning is among vital measures for financial planning as the main objective is to reduce tax liability at the fullest and maximum level to save more on hard-earned money while simultaneously adhering to legal obligations and requirements. Timing is among the forefront factors that matter while doing tax planning! With the year 2023 in full swing, let’s understand how to plan your taxes and why is it important to begin in the initial days!

Here are 10 key steps to plan your taxes and minimise your tax outgo as per Tax2win CEO:

  1. Start Early: Planning on taxes at the last minute may lead to costly investment mistakes. Early tax planning is always beneficial as it is when your tax investments and expenses start.
  2. Choose a Tax Preparer: If this is the first time you file ITR, ensure the tax preparer you choose is educated enough to handle your tax files. If you already have a Chartered Accountant, meet him in person at least a few weeks before the end of the financial year so they can suggest any further scope for lowering your taxes. Many tax filing companies also offer you to file taxes yourself by following a few steps and providing relevant information. These fintech companies can also help you with their experts or CAs that can guide you from level 1 to further.
  3. 3. Gather all documents: The documents required to file ITR should be gathered beforehand like salary slips, Form – 16, Form16A/ Form-16B/ Form- 16C, Form 26AS, Interest Income docs, and Other Interest Certificates, Home Loan Statements, Details of Investment in Shares, Proofs of deductions and investments that can be claimed under section 80C, 80D, 80E, 80TTA, etc and others.
  4. 4. Selecting the right tax-saving option for you: This method is beneficial as it helps you achieve your financial goals in time. There are numerous tax-saving options under Chapter VIA of the Income Tax Act, 1961, and beyond that. Choose the one that fits you well as per your investment strategy and risk appetite. In addition, many tax planning optimizer tools are available on tax filing sites that can also help you select the right tax-saving option.
  5. Compute the Gross Total Income: Under this step, you have to list the total income earned during a financial year from various sources like-Salary, IOther Sources (various types of interest income or dividend income are included here), Capital gains, House Property, Business or Profession, etc. To read more Click Here

4. Missed Income Tax Return filing due date for AY 2022-23? Here’s one more chance

Did you fail to rectify errors or report omissions in your Income Tax Return (ITR) by December 31? There is one more chance for you to do so now. You can now use the ITR-U option. This article looks at how this option will help you.

As per Section 139 (1) of Income Tax Act, the original deadline for ITR filing for FY 2021-22 (AY 2022-23) was July 31 2022. For those who missed the original due date, December 31 was the last date to file belated returns. Taxpayers were also allowed to file revised returns to rectify errors and omissions by December 31.

What is ITR-U?

The Government of India introduced the ITR-U option in Budget 2022. This facility can help all those taxpayers who have not filed their ITR or made mistakes in their previous returns.

With ITR-U, taxpayers can correct errors or omissions in their ITRs up to two years from the end of the relevant assessment year. For AY 2021-22, ITR-U can be filed by 31 March 2024. Similarly, for AY 2022-23, ITR-U can be filed by 31st March 2025.

ITR-U can be used for reporting any income that you may have failed to report in your previous return. Moreover, this facility is available for anyone who may or may not have filed an original, belated or revised ITR. It can be used even when someone has missed filing ITR in a specific financial year.

Penalty for filing ITR-U

There is some penalty linked to ITR-U filing. If you missed reporting an income, you will have to pay an additional tax of 25% of the tax and interest due on the income missed to be reported. This needs to be done within one year from the end of the relevant assessment year. In case you are filing ITR-U after 1 year and within 2 years of the relevant assessment year then the rate of the penalty will go up to 50%.

5. Income Tax: Received a ‘defective return’ notice under Section 139(9)? Here’s how to respond to it

The most prevalent and significant government action to redistribute money among people is taxation. It is an effort to use a progressive taxation system to distribute the cost of economic growth. To lessen the burden of taxation, the government has numerous measures whereby credits are given to taxpayers in the form of refunds when they complete their income tax returns (ITR).

However, many people become anxious at the mere mention of taxes and notices from the Income Tax Department. But there’s nothing frightening about it. When you do something you don’t do frequently or aren’t used to doing, like submitting income tax forms, it’s normal to make a few mistakes.

The I-T Department frequently sends letters to taxpayers for a variety of reasons. Sometimes, forgetting to input specific data or any other discrepancy can lead to a ‘defective return’ notice.

What is a defective return?

Your return is regarded as a “defective return” under certain circumstances when you miss out on a piece of information or enter wrong data. In such case, the I-T Department will issue a notice of defective return in accordance with Section 139(9) to correct the inaccuracies.

According to Section 139(9) of the Income Tax Act of 1961, you have 15 days to make the necessary corrections when the A.O. finds a discrepancy in your return. These errors, if not corrected on time, might have adverse implications.

How to respond to a defective return notice?

  • Step 1: Visit the Income Tax Department website to get the ITR Form.
  • Step 2: Choose the option “In response to a notification under Section 139(9) when the originally filed return was a defective return” on the income tax return.
  • Step 3: Enter the reference number, which may be found on the notice, the acknowledgment number, and the original return filing date.
  • Step 4: Finish filing the income tax return, making any necessary corrections.
  • Step 5: Create the XML file, then post it to the Income Tax Department website.
  • Step 6: Under “e-File,” choose “e-File in response to notification u/s 139(9),” and then upload the corrected XML using the notice’s password.
  • Step 7: Upon successful upload, a confirmation message and an acknowledgment number are shown on the website.

Your ITR for the relevant assessment year will be regarded as invalid if you fail to reply to the income tax notice for a defective return. In this situation, the tax office will assume that you have not submitted your return and will not process your refund if any. Hence, it is advised to clearly respond to the notice following the aforementioned steps. To read more: Click Here

  • Important Circulars and Notifications:
Sl.Particulars of the Notification(s)File No. / Circular No.Notification Link(s)
  1Clarification for the purposes of clause (c) of Section 269ST of the Income-tax Act, 1961 in respect of dealership/distributorship contract in case of Co-operative Societies – reg.  Circular No. 25/2022  Click Here
  2: Extension of time limit for compliance to be made for claiming any exemption under Section 54 to 54GB of the Income-tax Act,1961 (‘ Act’) in view of the then-Covid-19 pandemic -reg.  Circular No. 1 of  2023  Click Here
  • Weekly Departmental updates:
  • GST Updates

1. Subsuming electricity into GST

Improving the business environment is key to India’s development. Indian economic ambitions cannot be realized without cheap and reliable electricity for industry. According to the International Energy Agency (IEA), the electricity cost faced by the Indian industry is much higher as compared to other countries.

For energy-intensive industries, high electricity prices play a crucial role in increasing their cost of doing business and adversely affecting their global competitiveness.

One of the main reasons for the high electricity prices faced by Indian industries is the exclusion of electricity from GST. The exclusion of electricity from GST means that there is no mechanism to get an input tax refund for taxes paid on the inputs used for generating electricity. It is important to note that in India the applicable GST rate on coal is 5 per cent. In addition, 5 per cent GST is also payable on transportation of coal by trains. Since electricity is out of the purview of GST, this entire amount is passed on by generators to end consumers as power producers cannot claim credit for taxes and cess paid on coal and transportation of coal. All this leads to a high electricity tariff.

Subsuming electricity into GST will not only make the input tax credit available to energy-intensive industries but will also end the cross-subsidization of electricity prices. If electricity is subsumed under GST, then all sectors across all states will pay a uniform GST tax. Moreover, as per Article 279A (5) of the Constitution, electricity can be easily subsumed into GST without requiring any amendment in the constitution; it can be done just by the recommendation of the Goods and Services Tax Council.

Moreover, it is important to note that the existing power subsidies (for the agriculture and residential sector) are highly regressive in nature as well. Tongia (2021) argues that in India the richer households capture much more in benefits from these power subsidies than the poorest. Because upper-income households consume a lot more energy-consuming appliances and gadgets than poor ones. Providing cash transfers to the poor instead of power subsidies to all households and farmers may prove to be a better equity instrument. Therefore, we believe that subsuming electricity into GST will not only improve economic efficiencies and reduce the cost of doing business but will also help the government to more efficiently serve its equity objective. (Read more at: Click Here)

2. Spate of GST changes to come into effect from today

Goods and services Tax will not have to be paid by a proprietor of a registered proprietorship on a housing unit rented for his residential usage. This, along with a number of tax changes, will come into effect from the New Year effective January 1, after notifications by the Central Board of Indirect Taxes and Customs (CBIC).

“For the purpose of exemption… this entry shall cover services by way of renting of residential dwelling to a registered person where the registered person is proprietor of a proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence; and such renting is on his own account and not that of the proprietorship concern,” said the CBIC, adding that this will come into effect from January 1, 2023.

The CBIC also notified lower GST rate of 5% for ethyl alcohol supplied to refineries for blending with motor spirit (petrol), effective January 1. The GST Council had decided to reduce the rate from the earlier 18%.

The GST on husks of pulses, including chilka and concentrates, including chuni/churi, khandahas, has been cut to nil from the earlier rate of 5%. It has also prescribed 12% GST on ‘Fruit pulp or fruit juice based drinks’ (other than carbonated beverages). Further clarification, following a key decision on a uniform definition of sports utility vehicles for the purpose of compensation cess of 22% is still awaited.

3. Delhi GST collection rises 22 pc to Rs 41,351 cr in Apr-Dec

The Delhi government’s goods and services tax (GST) collection increased 22 per cent to Rs 41,351 crore for the first three quarters (April-December) this fiscal, officials said on Tuesday. In 2021-22, the government’s GST collection in the first three quarters was recorded at Rs 33,691 crore.

The tax collection of the Delhi government plummeted during the last two fiscals due to interruptions of the COVID pandemic.

The Delhi government has projected a total receipt of Rs 47,700 crore as tax revenue in its budget for 2022-23. With the average monthly collection now hovering around Rs 4,500 to Rs 4,600, officials said an increase of 15-20 per cent in revenue collection than the estimated amount is expected by the end of the financial year. To read more Click Here

4. Offences decriminalisation, setting up tribunals likely on GST Council table

Decriminalisation of offences, report on setting up of appellate tribunals and proposed amendment in rules for Aadhaar-based biometric authentication for registrants will be taken up for discussion in the Goods and Services Tax (GST) Council meeting on Saturday. The meeting, to be chaired by Union Finance Minister Nirmala Sitharaman, will be held virtually after a gap of nearly six months with the last meeting held on June 28-29.

The Council will also take up discussion on the feasibility of implementation of the earlier recommendation of e-way bill generation for movement of gold and precious stones. It is learnt that the officers committee looking at the legal aspects of GST has suggested increasing the monetary threshold for launching prosecution for GST offences. The Council will also take up pending recommendations of the fitment committee related to some goods in the highest 28 per cent slab such as sports utility vehicles along with reviewing the GST revenue position of all states/union territories and the Centre.

The Council has not listed the report on online gaming, casinos and horse racing in its agenda. The GoM is yet to submit its report to the Union Finance Minister. It is expected that the panel may submit it before the Council on Saturday. The GoM is understood to have recommended a GST levy of 28 per cent on online gaming, irrespective of whether it is a game of skill or chance but no consensus had emerged between the members on whether the tax would be levied on only the fees charged by the portal or the entire consideration, including the bet amount received from participants.

With regard to setting up of Goods and Services Tax Appellate Tribunals (GSTATs), the GoM has suggested that the tribunals should consist of two judicial members, and one technical member each from the Centre and states, besides a retired Supreme Court judge as President. The Council will also discuss the report of the committee on levy of penal interest on delayed remittances of GST by the banks to the government accounts in the RBI during the initial period of GST implementation.

5. Tata Group moves High Court on Rs 1,500 crore GST claim

Tata Group has approached the Bombay High Court seeking to contest a Rs 1,500-crore goods and services tax (GST) notice from the Directorate General of GST Intelligence (DGGI). The claim relates to a 2017 dispute settlement with NTT Docomo, sources told The Economic Times.

After approaching the government to mediate, Tata Sons has now tapped the high court through a writ petition to challenge the Rs 1,500 crore claimed on GST liabilities on its payments to Docomo, as per the report. Tata had settled $1.27 billion in payments to the Japanese telco in 2017. Tata approached the court in November under Article 226, and the hearing is scheduled on January 9, the report added.

The company has on its part claimed that the settlement was reached in a London court and hence GST was not applicable. A senior official told the paper that “it is an arbitration case that was paid and closed”.

DGGI has levied its claim as per Schedule 2 of the CGST Act, which treats the payment of loans as a service rendered. And a senior official said Tata Sons is thus liable to pay 18 percent GST on behalf of Tata Teleservices.

  • Important Notifications under

Excise / Custom/ GST:

  • GST Updates
Sl. No.  Particulars of the Notification(s)File No. / Circular No.Notification Link(s)
1Seeks to make fifth amendment (2022) to CGST Rules26/2022-Central TaxClick Here
2Notification under sub-rule (4B) of rule 8 of CGST Rules, 201727/2022-Central TaxClick Here
3Seeks to amend notification No. 12/2017- Central Tax (Rate)15/2022-Central Tax (Rate)Click Here
4Seeks to amend notification No. 4/2017- Central Tax (Rate)14/2022-Central Tax (Rate)Click Here
5To assign powers of Superintendent of central tax to Additional Assistant Directors in DGGI, DGGST and DG Audit.01/2023-Central TaxClick Here

Custom / Excise Updates

LinksNotification Particulars
  Click HereHealth Warning on both sides of the tobacco product packages covering 85% of display area – reg.
Click HereImplementation of E-Waste (Management) Rules, 2022 in supersession of E-Waste (Management) Rules, 2016 – reg.
Click HereSeeks to further amend Notification No. 61/94-Customs (N.T.) dated the 21st November 1994.
Click HereSeeks to extend levy of ADD on Fishing Net originating in or exported from China PR
Click HereInstruction regarding Consolidated list of animal feed additives/premix/ supplements for Import into India- reg.
Click HereSeeks to levy ADD on Jute Products originating in or exported from Nepal and Bangladesh (SSR)
  1. Important Case-laws
  • Income Tax

1. Assistant Commissioner of Income Tax v. Dhariya Construction [2010] [328 ITR 515]

Reopening of the assessment based on valuation cell report

In the above case, the Supreme Court held that a valuation report could not be treated as information for the purpose of invoking jurisdiction under section 147 of the Income-tax Act.

Reference may also be made to the Supreme Court decision in the case of “Sargam Cinema v. ACIT4” in the context of the categorical finding of the Tribunal that where the books of account are not rejected, reference to department valuation officer is misconceived.

2. Techno Shares and Stocks Limited v. Commissioner of Income Tax [2010] [327 ITR 323]

Admissibility of depreciation allowance on Bombay Stock Exchange membership card

On a question whether BSE membership card to trade in share was a “licence” or “any other business or commercial right of a similar nature” owned by the assessee and used for the business purpose in terms of section 32(1)(ii) of the Income-tax Act, the Hon’ble Supreme Court quoting extensively the provisions of the Act and the Bombay Stock Exchange Rules held that the right of membership conferred upon the member under the Bombay Stock Exchange Membership Card is a “business or commercial right” which gives a non-defaulting continuing member a right to access the Exchange and to participate therein and in that sense it is a licence or akin to licence in terms of section 32(1)(ii) of the Income-tax Act which has an economic and money value. Accordingly, held that the depreciation is allowable on cost of Bombay Stock Exchange membership card under section 32(1)(ii) of Income-tax Act.

However, the Supreme Court struck a note of caution that its decision was strictly confined to the right of membership conferred upon the member under the BSE membership card and should not be understood to mean that every business or commercial right would constitute a “licence” or a “franchise” in terms of section 32(1)(ii) of the Income-tax Act.

  1. Important Case-laws
  • GST Cases:

1. GST not payable on house rented to proprietor for residential purpose: CBIC

From January 1, GST would not be payable on housing units rented to the proprietor of a proprietary concern for residential usage only, the CBIC has said. The Central Board of Indirect Taxes and Customs (CBIC) also notified amendments in GST rates effective from January 1, 2023 for certain goods and services, as per the recommendations of the GST Council in its meeting on December 17.

Ethyl alcohol supplied to refineries for blending with motor spirit (petrol) will attract 5 per cent GST from January 1, lower than the 18 per cent currently. Also, tax rate on husks of pulses has been cut to nil, from 5 per cent. The notification further prescribes 12 per cent GST on ‘Fruit pulp or fruit juice based drinks’ (other than carbonated beverages).

The CBIC has also notified that with effect from January 1, 2023, no GST would be payable where the residential accommodation is rented to a proprietor of a registered proprietary concern if such accommodation has been rented in his individual capacity to be used as his residence only.

However, the proprietor would though be liable to pay GST on reverse charge mechanism (RCM) basis at 18 per cent in case such accommodation is being used for his proprietary concern. Reference: Click Here

2. Ordering Or Eating Out, GST Will Be Levied On ‘restaurant Made’ Food; Check For Details

Food and drinks made in a restaurant will be subject to 5% GST whether consumed there, takeaway or doorstep deliveries, according to Gujarat’s Authority for Advance Ruling (GAAR). The Gujarat Authority Advance Ruling ruled this in the case of ‘Riddhi Enterprises’, the applicant which is a stand-alone restaurant.

Chocolates do not qualify as “restaurant services”

The AAR panel during the hearing provided additional clarifications regarding the GST charge on over-the-counter supply of “readily available” food and drink items. These non-restaurant prepared items, including chocolates, chips, or bottled drinks, do not qualify as “restaurant services” and will therefore be subject to the applicable GST rate.

Along with a recent circular released by the Central Board of Indirect Taxes and Customs (CBIC) and Customs, the AAR bench referenced a 2017 GST council meeting in support of its decision. The notice which was issued last year in October clarified that takeaway and doorstep delivery services fall within the ambit of ‘restaurant services’.

Another such judgment was made by the Telangana GST Authority of Advanced Ruling (AAR) in 2017, which made it clear that ready-to-eat popcorn will be subject to an 18% GST. Another AAR had stated that a higher GST will be levied on pizza toppings. The Haryana body said that since toppings are not pizza, 18 per cent higher GST should be applied on them.

  • International Taxation  Corner (ITC)

1. UAE sourced income and application of corporate tax on it

In the first category, the law describes that if the person is earning any income from the resident person, it will be considered UAE-sourced income. We have already discussed that the resident person includes the juridical person incorporated or otherwise established or recognised in the UAE, the juridical person incorporated or otherwise established or recognized out of the UAE but controlled and managed in the UAE, the natural person who conducts business or business activity in the UAE or any other person defines in the cabinet decision. So, if the income is earned from these persons, it will be considered UAE-sourced income.

For example, P Ltd is registered in Australia, but the management of P Ltd is based in the UAE, from where all decisions are being taken related to P Ltd, so it will be assumed that P Ltd is a resident person in the UAE for corporate tax purposes. if the USA company is providing any goods/services to P Ltd, and earning any income, then as per the provision of the UAE CT law, the income of the USA company earned from P Ltd, will be subject to tax in the UAE.

In the second category, the law says that the income derived from a non-resident person and connected with or attributable to a PE of that non-resident person in the UAE shall be considered UAE-sourced income. In this income class, the connectivity of the income with the PE of a non-resident person is critical. If the income is not attributable to the PE of a non-resident person in the UAE, it will not be considered UAE-sourced income.

In the third category, UAE CT law says that activities like the sale of goods, provision of services, execution, or performance of contracts etc. if being performed in the UAE, any income generated from these activities will be considered UAE-sourced income. In the same way, if the assets, moveable or immovable, are located in the UAE, then the income generated from these assets will also be assumed UAE-sourced income. Read more at: Click Here

2. Dubai suspends alcohol tax as regional competition heats up

Dubai, United Arab Emirates, started the new year by suspending its 30% tax on alcohol, a move that could help the Gulf emirate attract more tourists and businesses amid growing regional competition. Dubai removed the tax Sunday, along with the fee for a license that individuals need to buy alcohol, local beverage distributors said.

Offering significantly cheaper liquor is likely to bolster Dubai’s position as the Middle East’s center for tourism and business at a time when economists are warning of a global economic slowdown that could dent spending on travel and leisure.

More than 90% of Dubai’s population are foreign residents, and alcohol has been widely available in the emirate for years, unlike nearby Saudi Arabia and Kuwait — where it remains banned — and Qatar, where its purchase is more restricted. But the hefty municipality tax drove up alcohol prices in the city-state, where residents complain about the rising cost of living and tourism is often oriented toward luxury.

It was not immediately clear how Dubai’s removal of the alcohol tax would affect the government’s finances. The emirate does not collect personal income tax, but unlike neighboring Abu Dhabi, has no significant oil resources, and relies on revenue from other taxes and fees, including the levy on alcohol. The United Arab Emirates plans to introduce a 9% corporate income tax later this year. To read more Click Here

3. Tax Havens Obscured at Least $1.4 Trillion of Foreign Investment in China

US and European investment into mainland China has largely been channeled through offshore vehicles set up by Chinese companies in tax havens, according to newly-published research, suggesting that foreign exposure to Chinese assets is much larger than recorded by official statistics.

US and European investors’ holdings of equities and bonds issued by offshore vehicles controlled by Chinese companies such as Alibaba Group Holding and Tencent Holdings reached $1.4 trillion at the end of 2020, according to new estimates from the Global Capital Allocation Project based at Columbia and Stanford universities.

The data shows the depth of the financial links between the world’s second-largest economy and the major developed economies, making any decoupling a challenging prospect. Those links also mean that foreign companies are more exposed to China than previously thought, and US and European governments will need to pay greater attention to potential risks from investment in Chinese companies routed through these offshore entities, the researchers suggested.  

Chinese companies tend to use tax havens less as a tax avoidance mechanism and more as a means to circumvent Chinese government restrictions on foreign ownership in some sectors, and because foreign investors often see foreign courts as more reliable than China’s, the researchers said.

  • Knowledge Bucket for NRI’s
  1. Section 89A of the IT Act, 1961 provides relief to NRI taxpayers wrt their income from retirement benefit accounts. Rule 21AAA notified. The notified countries are Canada, UK & USA.’
  2. To file income tax returns as a Non Resident Indian (NRI), you must have a PAN Card. If you have taxable income in India, you must have a PAN Card.
  3. Standard Chartered Bank enables all its NRI clients to enjoy both inward and outward remittance services. And this typically ranges to and from their Standard Chartered Bank accounts. The remittance solution of this bank enables you to acquire all the competitive deals at any point of the day.

Some of the benefits associated with their remittance service are:

  • You stand a chance to obtain preferential and personalised rates for all your remittances to India.
  • You also have the opportunity to remit online from particular geographical locations at super-fast speed.

4. A person is treated as PIO if he or either of his parents or grandparents were born in undivided India.

5. 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. Similar exemption is not available to a resident taxpayer in respect of LTCG on financial assets by reinvesting in any other financial asset. This exemption option makes this scheme very attractive for an NRI. The newly acquired assets purchased to claim the LTCG exemption has to be retained for a minimum period of three years else the LTCG exemption claimed earlier gets reversed and taxed as LTCG in the year of sale/transfer of the newly acquired assets.

6. Non-resident taxpayers who do not have a permanent account number (PAN) or are not required to have one are now exempt from compulsory electronic filing of Form 10F till March 2023. NRIs file this form to claim benefits of the tax-treaty with respect to any income earned in India.

  • Do you know ??

Every person who is required to file an income tax return or who intends to engage in an economic or financial transaction in which the PAN must be quoted must have a PAN. The following transactions requires PAN:

  1. The purchase or sale of a motor vehicle or vehicle other than a two-wheeled vehicle.
  2. Opening an account with a banking company or a co-operative bank [other than a time deposit and a Basic Savings Bank Deposit Account referred to in point No. 7].
  3. Establishing a demat account with SEBI with a depository, participant, securities custodian, or any other person.
  4. Amounts in excess of Rs. 50,000 paid to a Mutual Fund for the purchase of its units.
  5. Payment of more than Rs. 50,000 to a company or institution for the purchase of debentures or bonds issued by that company or institution.
  6. A time deposit of more than Rs. 50,000 or more than Rs. 5 lakh made during a fiscal year with a banking company or a co-operative bank; a Post Office; a Nidhi as defined in Section 406 of the Companies Act, 2013; or a non-banking financial company holding a certificate of registration under Section 45-IA of the Reserve Bank of India Act, 1934 to hold or accept public deposits.
  7. Payment of more than Rs. 50,000 in life insurance premiums to an insurer in a fiscal year.
  8. A contract to sell or buy securities (other than shares) for more than Rs. 1 lakh per transaction.
  9. Any transaction in which a person sells or buys shares in a company that is not listed on a recognised stock exchange for more than Rs. 1 lakh.
  10. The sale or purchase of any immovable property for more than Rs. 10 lakh, as determined by the stamp valuation authority mentioned in Section 50C of the Act.

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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.)

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