We are delighted to share our 97th E-Newsletter “Weekly Taxation Newsletter” dated 20th December, 2022 from 13th November, 2022 to 20th December, 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.
- Due Dates under IT Act 1961
Compliance Requirements – Dec. 2022
|Sl.||Compliance Particulars||Due Dates|
|1||Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IB in the month of November, 2022||30.12.2022|
|2||Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194M in the month of November, 2022||30.12.2022|
|3||Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA in the month of November, 2022||30.12.2022|
|4||Furnishing of report in Form No. 3CEAD for a reporting accounting year (assuming reporting accounting year is January 1, 2021 to December 31, 2021) by a constituent entity, resident in India, in respect of the international group of which it is a constituent if the parent entity is not obliged to file report under section 286(2) or the parent entity is resident of a country with which India does not have an agreement for exchange of the report etc.||30.12.2022|
|5||Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194S in the month of November, 2022 Note: Applicable in case of specified person as mentioned under section 194S||30.12.2022|
|6||Filing of belated/revised return of income for the assessment year 2022-23 for all assessee (provided assessment has not been completed before December 31, 2022)||31.12.2022|
- Under the GST, 2017
A. Non Resident Tax Payers, ISD, TDS & TCS Taxpayers
|Form No.||Compliance Particulars||Timeline||Due Date|
|GSTR-5 & 5A||Non-resident ODIAR services provider file Monthly GST Return||20th of succeeding month||20.12.2022|
B. Filing of GSTR –3B / GSTR 3B QRMP
a) Taxpayers having aggregate turnover > Rs. 5 Cr. in preceding FY
|Tax period||Due Date||Particulars|
|November, 2022||20th December, 2022||Due Date for filling GSTR – 3B return for the month of September, 2022 for the taxpayer with Aggregate turnover exceeding INR 5 crores during previous year. Due Date for filling GSTR – 3B return for the quarter of January to March 2022 for the taxpayer with Aggregate turnover up to INR 5 crores during the previous year and who has opted for Quarterly filing of return under QRMP.|
b). Taxpayers having aggregate turnover upto Rs. 5 crores in preceding FY (Group A)
|Tax period||Due Date||Particulars|
|November, 2022||22nd December, 2022||Due Date for filling GSTR – 3B return for the month of September, 2022 for the taxpayer with Aggregate turnover upto INR 5 crores during previous year and who has opted for Quarterly filing of GSTR-3B|
|Group A States: Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, Daman & Diu and Dadra & Nagar Haveli, Puducherry, Andaman and Nicobar Islands, Lakshadweep|
c). Taxpayers having aggregate turnover upto Rs. 5 crores in preceding FY (Group B)
|Tax period||Due Date||Particulars|
|November, 2022||24th December, 2022||Annual Turnover Up to INR 5 Cr in Previous FY But Opted Quarterly Filing|
|Group B States: Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, Jammu and Kashmir, Ladakh, Chandigarh, Delhi|
C. Monthly Payment of GST – PMT-06:
|Compliance Particular||Due Date|
|Due Date of payment of GST for a taxpayer with Aggregate turnover up to INR 5 crores during the previous year and who has opted for Quarterly filing of return under QRMP.||25.12.2022|
D. 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. India’s AlcoBev apex body concerned about high taxation
The International Spirits and Wines Association of India (ISWAI), the apex body of the premium AlcoBev sector, has expressed concern on the high taxation on the industry, claiming that it is threatening the future of the beverages market.
According to the association, taxation accounts for 67 per cent-80 per cent of AlcoBev product prices, “leaving little for suppliers and trade to sustain and manage” their operations. ISWAI CEO Nita Kapoor said in a statement that the sector is in deep crisis due to inflation on one hand and high taxation on another.
“Unless swift action is taken to reverse the situation by decreasing taxes or increasing the product prices, India could soon be facing a situation that will be akin to killing the proverbial golden goose. Every manufacturer –from automobile to pharmaceuticals– have raised prices, but the AlcoBev industry has been crippled because of lack of pricing freedom,” she said.
ISWAI estimates that alcoholic ingredients such as Extra Neutral Alcohol (ENA) and Barley are 12 per cent and 46.2 per cent more expensive than last year, while the cost of packaging material such as glass and mono cartons rose by 24.9 per cent and 19 per cent respectively, he said, adding the paring of taxes at both central government and state government would also go a long way in helping the beleaguered AlcoBev manufacturers in the country.
- To read more Click Here
2. Income Tax exemption limit change from Rs 2.5 lakh to Rs 5 lakh expected from Budget 2023
Union Budget 2023 expectations: The Income Tax exemption limit is currently Rs 2.5 lakh for the assessees. This means individuals earning up to Rs 2.5 lakh/year do not have to pay any taxes. Though taxable income up to Rs 5 lakh is also practically tax-free due to the rebate provided by Section 87A, income above Rs 5 lakh increases the tax liability of the individual taxpayer. Therefore, there is a demand for raising the income tax exemption limit from Rs 2.5 lakh to Rs 5 lakh.
Associated Chambers of Commerce and Industry of India (ASSOCHAM) has proposed that the Government should increase the income tax exemption limit to Rs 5 lakh in Budget 2023 so that individuals will have more disposable income in their hands.
Is it possible to raise the Income Tax Exemption limit?
During an interaction with the media on December 15, ASSOCHAM President Sumant Sinha said that buoyancy in both the direct and indirect taxes should give enough elbow room to the government for raising the income tax exemption limit.
”Boosting consumption by leaving more money in the hands of the consumers, is a low-hanging fruit for a further recovery in economic growth, ” said Deepak Sood, Secretary General ASSOCHAM.
GST Relief: While suggesting another relief measure, ASSOCHAM said the interest for late payment of the GST should be reduced to 12 per cent from 18 per cent. ”The penal interest rate of 18 per cent is too high, particularly for the MSMEs,’ it said.
- To read more Click Here
3. India’s aviation market has opportunities but taxation an issue: IATA chief
India’s civil aviation market has exciting and significant opportunities but taxation has always been an issue which also makes the industry less competitive, according to IATA chief Willie Walsh.
The International Air Transport Association (IATA) is a global grouping that represents around 300 airlines, including those from India, and its members account for nearly 83 per cent of the global air traffic.
“The market in India… The opportunity in India has to be considered to be very very significant. There are issues in India not unique to aviation but the regulatory regime and bureaucracy can hinder the pace (of growth),” Walsh said during an interaction with reporters from the Asia Pacific region earlier this week, reported news agency PTI.
After being severely impacted by the pandemic, the country’s civil aviation sector is on the recovery path. “When you look at India, I see massive opportunities, the size, population, growing wealth, lack of other alternative infrastructure for travel.
“It is tailor made for a competitive, very significant aviation market. And you don’t need to incentivise it or tax it, you just need to stand back and allow it to happen. Let the infrastructure be developed, let the airlines develop, grow and compete,” Walsh said.
- To read more Click Here
4. Govt gets Rs 60.46 cr tax from TDS on virtual digital assets
The government on Tuesday said an amount of Rs 60.46 crore has been received in tax from entities for transactions in virtual digital assets (VDAs), including cryptocurrencies, since the introduction of TDS provisions in July. The government, from April 1, has brought in a 30 per cent income tax plus surcharge and cess on transfer of crypto assets, like Bitcoin, Ethereum, Tether and Dogecoin.
Also, to keep a tab on the money trail, a 1 per cent Tax Deducted at Source (TDS) under section 194S of I-T Act has been brought in on payments over Rs 10,000 towards virtual digital currencies from July 1.
“Post insertion of Section 194S in the Income-tax Act, 1961 through Finance Act, 2022, a total of 318 direct tax challans having TDS code 194S have been received having total amount of Rs 60.46 crore,” Chaudhary said.
Under the Income-tax Act, 1961, Section 194S has been inserted through the Finance Act, 2022 for deduction of tax at source in respect of transfer of VDAs which is to be complied with by any person engaged in transactions related to VDAs.
The minister further said currently, crypto assets are unregulated in India and the government does not register foreign crypto exchanges.
- To read more: Read full at Click Here
5. TDS on salary: CBDT issues IMPORTANT circular on salary income, check details
The circular basically explains the obligation of employers with regard to the deduction of tax at source from salaries u/s 192 of the Income-tax Act, 1961 for Financial Year 2022-23.
The Central Board of Direct Taxes (CBDT) in a circular related to TDS deduction from salaries has said that any person responsible for paying salary must deduct income tax while paying the amount.
The circular said that the tax should be deducted at the average rate calculated, based on the rates in force for the current financial year, on the estimated salary income of the recipient for that year.
The circular basically explains the obligation of employers with regard to the deduction of tax at source from salaries under section 192 of the Income-tax Act, 1961 for Financial Year 2022-23.
As per Section 192, the person responsible for paying salary income must provide the recipient with a statement giving correct and complete particulars of perquisites or profits in lieu of salary provided to him and the value thereof.
- To read more: Read full at Click Here
- Important Circulars and Notifications:
|Sl.||Particulars of the Notification(s)||File No. / Circular No.||Notification Link(s)|
|1||Partial relaxation with respect to electronic submission of Form lOF by select category of taxpayers in accordance w ith the DGIT (Systems) Notification No. 3 Of 2022.||F. No. DGIT(S)-ADG(S)-3/e||Click Here|
|2||Answer Keys of Objective type papers of ITI/ITO for Departmental Examination – 2022 – reg.||Updates||Click Here|
- Weekly Departmental updates:
- GST Updates
1. Big Change In Tax On SUVs In GST Council’s Latest Meeting
Currently cars with engine capacity exceeding 1500 cc, length exceeding 4000 mm and having ground clearance of 170 mm attract a GST of 28% and a 22% cess.
The Goods and Services Tax (GST) Council on Saturday decided to have a single definition across all states in the country for sports utility vehicles, attracting a higher tax rate.
Currently cars with engine capacity exceeding 1500 cc, length exceeding 4000 mm and having ground clearance of 170 mm attract a GST of 28% and a 22% cess, taking the effective tax rate to 50%. However, states do not have a consistent definition define a vehicle as a SUV, leading to confusion among automakers.
The council, composed of state finance ministers and chaired by the Union Finance Minister, decided that all the criteria including engine capacity, length and ground clearance has to met for a vehicle to be classified as a SUV.
- (Read more at: Click Here)
2. GST Council Meeting Highlights: No tax increase on any item; GST on biofuel down from 18% to 5%
GST Council Meeting Live Updates: Finance Minister Nirmala Sitharaman virtually chaired the 48th meeting of the goods and services tax (GST) Council meeting on December 17.The GST Council recommended three types of offences be decriminalized. No decision on taxation of tobacco and gutka was taken, despite it being among the prominent issues on the Council meeting’s agenda today.
The Council also announced that insurance companies’ no claim bonus will not attract GST from now. The finance minister said that no tax increase has been declared on any item today.
In another key decision, the Council has doubled the threshold for launching prosecution from Rs 1 crore to Rs 2 crore. It has further decided to reduce the compounding amount from the present range of 50 to 150 percent of tax amount to the range of 25 to 100 percent.
- No tax increase on any item was announced at today’s meeting. Revenue Secy said GST on online gaming and casinos was not discussed as the report of GoM on the issue submitted its report only a couple of days back. The report of the GoM was not even circulated to GST Council members, he added.
- GST reduction on husk on pulses was announced. Tax on husk reduced to nil from five percent. Ethyl alcohol or biofuel- supplied to refineries for blending with motor spirit (petrol) down to five percent from 18 percent. (Read more at: Click Here)
3. GST panel relaxes prosecution norms
The Goods and Services Tax (GST) Council on Saturday decided to decriminalise certain offences that are not directly linked to tax evasion and doubled the threshold for launching prosecution to Rs 2 crore, but stopped short of accepting the businesses’ demand for a much more lenient approach on both aspects.
The council also sought to clear ambiguity over the definition of ‘sports utility vehicle’ (SUV), a product that is subject to a higher 22% compensation cess, in addition to the 28% marginal GST rate. The GST fitment panel would review whether mutli utility vehicles (MUVs) too can be added to this definition to come under the higher cess.
Currently, a taxpayer can be punished with six-month imprisonment or fine or both in case he/she tampers with evidence or obstructs the officer to perform his/her duty or provides false information. The council’s decision means these offences will be decriminalised with necessary changes in the Central GST and state GST acts. To be sure, these offences won’t lead to arrest or jail term of the taxpayer, but will only attract penalties once the laws are amended.
However, more serious offences like issue of fake invoices, suppression of sales, wrongful use of input tax credit or not depositing the tax collected with the government will continue to lead to arrests and attract jail terms above the tax value threshold of Rs 2 crore.
Currently, specified offences involving tax amount of Rs 1-2 crore can attract jail term of up to one year. Also, the jail term can be up to three years if tax amount involved is Rs 2-5 crore and up to five years if the amount is higher than Rs 5 crore; the offence becomes non-bailable for serious offences like fake invoicing.
The council clarified the rates on various items reduced the GST on ethyl alcohol supplied to refineries for blending with petrol to 5% from the current 18% and exempted husk of pulses including chilka and concentrates including chuni/churi, khanda from the levy of the tax, and also brought supply of mentha arvensis under reverse charge mechanism as has been done for mentha oil. To read more Click Here
4. Centre, state govts to focus on efforts to widen GST base: FM Sitharaman
Finance minister Nirmala Sitharaman stated on Saturday that the central and state governments will now concentrate on efforts to broaden the Goods and Services Tax (GST) base, indicating that this would be a major strategy in keeping revenue collections at a robust level.
After the GST Council’s Saturday virtual meeting, Sitharaman addressed the media. In response to a query about how to maintain revenue growth in the wake of a normalising economic growth rate, the minister noted that many members of the GST Council believe that the tax base needs to be expanded even further. This includes increasing the number of GST-registered organisations. There are currently 14 million GST-registered entities.
“We need revenue, we are getting it. We are trying to stabilise it at some number and all, that is there. Instead of I speculating on what that number would be which you can comfortably place your finger and say that is what is for sure going to be the average tax collection, I think there should now be—and most of us agree–we should at every level, attempt to widen the GST base. So, the focus will be on how much effort all of us are putting towards that so that the states plus the Centre put an effort consciously to widen the tax base,” the minister explained.
Vivek Johri, the chairman of the Central Board of Indirect Taxes and Customs (CBIC), stated on the sidelines that expanding the tax base would entail expanding the scope of data collection and combining data from various sources to find those who should be included in the tax base but aren’t. To read more Click Here
5. U.T. seeks extension of GST compensation
Minister for Public Works K. Lakshminarayanan on Saturday requested the Central government to extend the compensation for Goods and Services Tax to the Union Territory.
Participating virtually in the 48th GST council meeting, the Minister said the extension of GST compensation was a necessity for Puducherry taking into account the financial constraints faced by the U.T. administration. He also urged the council not to increase the GST for pump set motors, cooking utensils, pencils and sharpeners. The items are now taxed at 12%. The tax for the items should not be increased to 18%, the Minister’s office said in a release.
He was representing the Chief Minister who also holds the Finance portfolio at the council meeting. Finance Secretary M. Raju and Commissioner of Commercial Taxes M. Rajasekar also attended the virtual meeting.
- (Read more at Click Here)
- Important Notifications under
Excise / Custom/ GST:
- GST Updates
|Sl. No.||Particulars of the Notification(s)||File No. / Circular No.||Notification Link(s)|
|1||Advisory regarding extension of due date for furnishing form GSTR-1 for certain districts of Tamil Nadu||GSTN update 563||Click Here|
|2||Seeks to extend the due date for furnishing FORM GSTR-1 for November, 2022 for registered persons whose principal place of business is in certain districts of Tamil Nadu.||25/2022-Central Tax||Click Here|
Custom / Excise Updates
|Click Here||Notifying Kakrawah as LCS for clearance of any class of goods imported or exported by land by amendment of Principal Notification No. 63/1994-Customs (N.T.) dated 21st November, 1994.|
|Click Here||Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver- Reg|
|Click Here||Postal Export (Electronic Declaration and Processing) Regulations, 2022 and implementation of PBE Automated System|
|Click Here||Sugar Policy and Sugar Mill wise export quantity of sugar for export in sugar season 2022-23 – reg.|
- Important Case-laws
- Income Tax
1. AO Can’t Pass Rectification Order to Disallow Set-off Of Loss By Invoking Section 79 of Income Tax Act, On Change In Assessee’s Shareholding: ITAT
- Case Title: M/s. Birla Edutech Limited versus ITO
- Dated: 10.11.2022 (ITAT Mumbai)
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that Section 154 of the Income Tax Act, 1961 can only be exercised by the Assessing Officer for rectification of mistake which is apparent on the face of record.
The Bench of Pramod Kumar (Vice President) and Aby T. Varkey (Judicial Member) held that the issue whether Section 79 of the Income Tax Act was applicable in the case of the assessee where there was a change in its shareholding, was a debatable issue which involved interpretation of various sections and provisions of law, including the Income Tax Act, 1961 as well as the Companies Act, 1956.
Thus, the ITAT ruled that the Assessing Officer could not have exercised jurisdiction under Section 154 to reverse his assessment order and disallow assessee’s claim for set off of losses, by invoking Section 79.
The Assessing Officer (AO) passed an order under Section 154 of the Income Tax Act, 1961, reversing his assessment order, and disallowed the assesseeM/s. Birla Edutech Limited’s claim for set off of carried forward losses and unabsorbed depreciation. Section 154 confers the AO the jurisdiction to pass an order rectifying any mistake apparent on record. The AO opined that since there was a major change in the shareholding pattern of the assessee company as per the provisions of Section 79 of the Income Tax Act, the loss cannot be set- off. Against the order of the AO, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) (CIT(A)), who dismissed the appeal. The assessee challenged the rectification order passed by the AO before the ITAT.
Therefore, the ITAT concluded that the assessment order allowing set-off of losses, where there was a change in shareholding, was not a mistake apparent from record which could be rectified under Section 154. The Tribunal added that it involved a debatable issue and thus, the AO could not have passed any rectification orders.
“Thus, we find considerable force in the submission of the Ld. AR that AO erred in invoking Section 154 of the Act to disallow the losses u/s 79 of the Act which in any case can be termed to be mistake apparent on record. From the discussion (supra) it can be seen that not only provisions of Income Tax Act but also Companies Act need to be considered for adjudicating the issue on which several judicial precedents are there on the issue and which is mixed questionn of fact and law and therefore, certainly it cannot be rectified by AO u/s 154 of the Act.” To read more in details: Click Here
2. PROVISIONS OF SEC 43B NOT APPLICABLE ON SERVICE TAX WHEN SAME HAS NOT BEEN ROUTED THROUGH P&L: ITAT
Brief facts of the case are that in this case, in the order passed under section 143 (3) of the Income-tax Act, 1961 (for short ‘the Act’), AO noted that there were unpaid service tax amounting to Rs.1,79,91,057.80. AO opined that provisions of section 43B are applicable.
Ld. Counsel of the assessee submitted that the issue is squarely covered in favour of the assessee by several case laws in which it has been held that provisions of section 43B of the Act are not attracted in the case of service tax. In this regard, he referred to following case laws:
(i) CIT vs. Noble and Hewitt (I) (P) Ltd. (2008 305 ITR 324 (Del.);
(ii) Srikakollu Subba Rao & Co. & Ors. Vs. UOI & Ors. (1988) 173 ITR 708 (AP HC);
(iii) India Carbon Ltd. vs. Inspecting Assistant Commissioner of Income- tax (1993) 200 ITR 759 (Gau HC);
(iv) CIT vs. Everest Litho Press (2006) 285 ITR 297 (Mad HC);
(v) ACIT vs. Biotech Consortium India Ltd. ITA no.2841/Del/12 dated 09.08.2012, ITAT Delhi Bench;
(vi) ACIT vs. Real Image Media Technologies (2008) 114 ITD 573, ITAT Chennai Bench;
(vii) Wadhwa Residency (P) Ltd. vs. ACIT (2018) 95 taxmann.com 294, Mumbai Bench;
(viii) DCIT vs. M/s. M.C. Retail Pvt. Ltd., ITA No.419/Mum/2017 dated 28.09.2018, ITAT Mumbai Bench;
(ix) Envision Enterprise Solutions Pvt. Ltd. vs. ITO, ITA No.315/Hyd/2016, dated 12.08.2016, ITAT Hyderabad Bench;
(x) Vijay Associates Wadhwa Construction Pvt. Ltd. vs. Addl.CIT, ITA No.5460/Mum/2015 dated 16.01.2018, ITAT Mumbai Bench; and
(xi) Planet Advertising Pvt. Ltd. vs. ACIT, ITA No.1500/Del/2011 dated 05.07.2013, ITAT, Delhi Bench.
From the above case lodge it is clearly evident that provisions of section 43B are not applicable to the service tax liability. Accordingly, respectfully following the decisions as above the set aside orders of authorities below, and decide the issue in favour of assessee.”
Considering the same, the tribunal adjudged that. the provisions of section 43B are not applicable to the service tax liability as same has not been routed through P&L account.
- To read more in details: Click Here
- Important Case-laws
- GST Cases:
1. 18% GST Is Payable On Work Contract Service Of Constructing Warehouse And Cold Storage Godown: AAR
The Telangana Authority of Advance Ruling (AAR) has ruled that 18% GST is payable on work contract services for constructing warehouses and cold storage godowns for Telangana State Industrial Infrastructure Corporation Limited (TSIICL), which will rent out the facilities.
The two-member bench of S.V. Kasi Visweswara Rao and Sahil Inamdar has observed that TSIICL is a government entity. However, the original notification No. 11/2017 applied a concessional rate of tax to government entities and government authorities at the rate of 12% only if the construction is predominantly for use other than commerce, industry, or any other business or profession.
The applicant is in the business of working on contracts. The applicant is executing the construction of the building on the land provided by the TSIICL. The applicant is constructing warehouses and cold storage at the primary processing center.
The applicant submitted that TSIICL will be letting out godowns for rent, which amounts to business activity.
The AAR ruled that since the godowns will be rented by TSIICL, the concessional rate of tax is not applicable to the transaction, and the tax payable will be 9% CGST and SGST each. The entry was amended in November 2021, vide Notification No. 15/2021 dated November 18, 2021, and the phrases “government entity” and “government authority” were deleted from the entry at S.No. 3(vi) of Notification No. 11/2017 with effect from January 1, 2022. Thus, the works executed even for the “government entity” or “government authority” will be taxable at the rate of 9% CGST and SGST each. Reference: Click Here
2. Amount recovered to provide canteen facilities will be subject to GST, says U’khand bench
The nominal amount which is recovered from the employees in order to provide subsidised canteen facilities will be subject to goods and services tax (GST), stated the Uttarakhand unit of GST Authority for Advance Rulings (GST-AAR).
“The bench held that the applicant, Tube Investment of India, set up canteen facilities as mandated under the Factories Act and supplied food at a nominal cost through a third-party vendor. The supply of such food by the applicant company is a ‘supply of service’ to its employees,” stated a TOI report.
A similar view was taken into consideration in the case of Kothari Sugars and Chemicals by the Tamil Nadu bench. Meanwhile, in the case of RITES, the Haryana bench had taken the opposite view which said it was mandatory for the company to provide canteen facilities under the Factories Act. Therefore, the transaction of recovering part payment of the meals from the staff is outside the purview of ‘scope of supply’ and no GST incidence arises.
“The Central Board of Indirect Taxes and Customs (CBIC) stated that perquisites provided under a contractual arrangement between employer and employee cannot be subject to GST. However, this circular has not covered the aspect of nominal recovery from employees in respect of the perquisite provided — be it for canteen facilities, or transport or parking,” said the TOI report. To read more: Click Here
- International Taxation Corner (ITC)
1. EU adopts global minimum 15% tax on multinationals
The European Union on Thursday adopted a plan for a global minimum 15 percent tax on multinational businesses, after leaders gave final approval following months of wrangling.
The landmark agreement between nearly 140 countries is intended to stop governments racing to cut taxes to lure the world’s richest firms to their territory.
The plan was drawn up under the guidance of the Organisation for Economic Cooperation and Development and already had the backing of Washington and several major EU economies.
But the implementation of the minimum tax in the 27-nation European Union has already been delayed as member states raised objections or adopted blocking tactics.
Most recently, this week Poland blocked formal adoption of the measure while arguing about unrelated measures, such as sanctions on Russia. < ..
- Read more at: Click Here
2. Japan set to ease 30% crypto tax on paper profits for token issuers
The Japanese government is set to ease tax requirements for local crypto firms, as it pushes to stimulate growth in the domestic finance and tech sectors.
At present, Japanese firms that issue crypto are required to pay a set 30% corporate tax rate on their holdings, even if they haven’t realized a profit through a sale. As such, a number of domestically founded crypto/blockchain firms and talent have reportedly chosen to set up shop elsewhere over the past few years.
Japan’s ruling party, the Liberal Democratic Party’s (LDP) tax committee held a meeting on Dec. 15 and approved a proposal — initially tabled in August — which removes the requirement for crypto companies to pay taxes on paper gains from tokens that they have issued and held. The softer crypto tax rules are expected to be submitted to parliament in January, and go into effect for Japan’s next financial year starting on April 1.
Prime Minister Fumio Kishida emphasized in October that nonfungible tokens (NFTs), blockchain and the metaverse will play important roles in the nation’s digital transformation. The PM cited the digitization of national identity cards as an example.
In October, the Japan Virtual and Crypto Assets Exchange Association also announced plans to walk back the stringent screening process for listing new tokens on exchanges, something which Kishida had called on the self-regulatory organization to do back in June.
SBTs refer to a proposal from Ethereum co-founder Vitalik Buterin concerning the use of tokens to represent people’s digital identities. To read more Click Here
3. UAE businesses will have up to nine months to comply with corporate tax
UAE businesses will get a “generous” window of time to file their tax returns, the Ministry of Finance has said.
“Businesses in the UAE will have up to nine months from the end of the relevant tax period to submit their tax return and pay the federal corporate tax,” the ministry said.
The UAE issued its federal corporate tax law on Friday that will levy a headline 9 per cent rate on taxable income exceeding Dh375,000 ($102,000).
Taxable profits below the threshold will not be taxed. No corporate tax will apply on salaries or other personal income from employment — be it in the government, semi-government, or private sector, the Ministry of Finance said last week. The corporate tax will be effective for financial years starting on or after June 1, 2023.
The UAE’s corporate tax regime is based on a self-assessment principle which means businesses are required to ensure that the documents submitted to the Federal Tax Authority are correct and comply with the law.
The new tax regime allows a generous compliance period, for example, businesses with a financial year starting on June 1, 2023, and ending on 31 May, 2024, will have until February 28, 2025, to file their returns and make payments. To read more Click Here
- Knowledge Bucket for NRI’s
- The government has extended the time for non-residents (NRs) to file Form 10F online, which offers benefits under the Double Taxation Avoidance Agreement (DTAA), until March 2023. NRs require an income tax account to submit Form 10F digitally. Those without a permanent account number (PAN) or who don’t need one may find it hard to open an income tax account.
- NRs faced additional compliance burden for e-filing Form 10F. They must obtain a PAN card in India and a digital signature certificate (DSC), which has to be renewed periodically.
- With this partial relief, NRI taxpayers who do not have a PAN card can still use the physical method of filing Form 10F. So, until the CBDT figures out a way to get NRs to file Form 10F electronically without a PAN or Income Tax account, the old physical form submission process will be the way to go.
- As per the provisions of India Singapore DTAA jurisdiction for taxing the capital gains arising in the hands of NRI is in Singapore and not in India.
- There is not much clarity on how gains from crypto will be taxed if an Indian investor becomes a non-resident Indian (NRI).
- Do you know ??
- Section 115QA of the Income Tax Act, 1961 was introduced in statute by Finance Act, 2013 with effect from 1-6-2013, payment made by assessee on account of purchase of its own shares prior to 1-6-2013 could not be termed as dividend as per provisions of section 115QA.
- The taxation framework for crypto assets, or virtual digital assets (VDAs), which was introduced by the government on April 1, has made both investors and traders more cautious about this new asset. In the 2022-23 union budget, the government had said that gains arising out of crypto assets would be taxed at 30 percent irrespective of the individual’s income tax slab rate. In addition, a 1 percent tax deducted at source (TDS) was made applicable on transfer of such assets.
- According to Deloitte, the revision of tax slab rates in Budget 2023 should be as follows:
- For income above Rs 20 lakh, the tax rate should be reduced from the current 30% to 25%.
- For income in the Rs 10-20 lakh bracket, the tax rate should be reduced from the current 30% to 20%.
- In the new tax regime, the slab rate for income in the range of Rs 10-Rs 20 lakh bracket should be reduced from the current 30% to 20%.
- For income above Rs 20 lakh, the tax rate under the new regime should be reduced from the current 30% to 25%.
- To tax Crypto, a new section 115BBH was introduced in the 2022 budget. This section imposes a 30% tax (plus applicable surcharge and 4% cess) on profits made from Crypto trading (starting from April 1, 2022). This rate is the same as India’s highest income tax bracket (excluding surcharge and cess). Private investors, commercial traders, and anyone else who transfers Crypto assets in a given fiscal year are subject to this tax (subject to conditions).
- The gross direct tax collections have grown 26 per cent to over Rs 13.63 lakh crore so far this fiscal, aided by TDS deductions and healthy corporate advance tax mop-up, as per an official statement. After adjusting for refunds, the net direct tax collection so far this fiscal stands at Rs 11.35 lakh crore, which is about 80 per cent of the full-year Budget target. The Budget had estimated direct tax collection of Rs 14.20 lakh crore this financial year, higher than the Rs 14.10 lakh crore collected last fiscal (2021-22). Tax on corporate and individual income makes up for direct taxes. Refunds worth about Rs 2.28 lakh crore have been issued till December 17, 2022, a growth of 68 per cent over the year-ago period.
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.)