Latest Income Tax & GST Weekly Due Dates, Notifications / Press Info, Case Laws, etc

Dear Readers, We are delighted to share our 67th E-Newsletter “Weekly Taxation Newsletter” dated 15th March, 2022 from 08th March, 2022 to 14th March, 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. 

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Sl. Compliance Particulars Due Dates 
1 Due date for payment of 4th instalment of advance tax for FY 2021-22. 15.03.2022 
 2 Due date for payment of whole amount of advance tax in respect of FY 2021-22 for assessee covered under presumptive scheme of section 44AD / 44ADA. 15.03.2022 
    3 Due date for filing of return of income for the assessment year 2021- 22 if the assessee (not having any international or specified domestic transaction) is (a) corporate-assessee or (b) non-corporate assessee (whose books of account are required to be audited) or (c) partner of a firm whose accounts are required to be audited or the spouse of such partner if the provisions of section 5A apply. The due date for furnishing of return of income for Assessment Year 2021-22 has been extended to February 28, 2022, vide Circular no. 17/2021, dated 09-09-2021. The due date for filing of return of income has been further extended to March 15, 2022 vide Circular No. 01/2022, dated 11-01-2022.     15.03.2022 
 4 Due date of furnishing of Form 24G by an office of the Government where TDS/TCS for the month of February 2022, has been paid without the production of a challan.  15.03.2022 
   5 Return of income for the assessment year 2021-22 in the case of an assessee if he/it is required to submit a report under section 92E pertaining to international or specified domestic transaction(s). The due date for furnishing of return of income for Assessment Year 2021-22 has been extended to February 28, 2022, vide Circular no. 17/2021, dated 09-09-2021. The due date for filing of return of income has been further extended to March 15, 2022, vide Circular No. 01/2022, dated 11-01-2022.    15.03.2022 
6 Due date for issue of TDS Certificate for tax deducted under section 194- IA, 194-IB, and 194M in the month of February 2021. 17.03.2022 

CBDT extends due dates for filing of Income Tax Returns and various reports of audit for Assessment Year 2021-22 

Type of Compliance Requirement (AY 2021-22) Original Due Date Extension vide Circular 9/2021 Extension vide Cir. 17/2021 Extension vide Circular 1/2022 
Income Tax Return (Assessees subject to Audit): u/s 139(1) of the Income Tax Act, 1961   31/10/2021   30/11/2021   15/02/2022   15/03/2022 
Income Tax Return (Assessees subject to Transfer Pricing Report): u/s 139(1) of the Income Tax Act, 1961    30/11/2021    31/12/2021    28/02/2022   15/03/2022 
Belated/ Revised Income Tax Return: u/s 139(4)/ 139(5) of the Income Tax Act, 1961   31/12/2021   31/01/2022   31/03/2022  No Change 31/03/2022 

A. Filing of GSTR –3B 

a). Taxpayers having aggregate turnover > Rs. 5 Cr. in preceding FY

Tax period Due Date No interest payable till Particulars 
  February, 2022  20th March, 2022   – Due Date for filling GSTR – 3B return for the month of June, 2021 for the taxpayer with Aggregate turnover exceeding INR 5 crores during previous year 

b). Taxpayers having aggregate turnover upto Rs. 5 crores in preceding FY (Group A)

Tax period Due Date No interest payable till Particulars 
   February, 2022    22nd March, 2022  Due Date for filling GSTR – 3B return for the month of June, 2021 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 
  1. Taxpayers having aggregate turnover upto Rs. 5 crores in preceding FY (Group B) 

 

Tax period Due Date No interest payable till Particulars 
February, 2022 24th March, 2022   
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 
  1. GST payment for the month of February 2022 under QRMP scheme. 
Tax period Due Date Particulars 
   February, 2022   25th March, 2022 Due Date for Payment of Tax Liability for the taxpayer with Aggregate turnover up to INR 5 crores during previous year and who has opted for Quarterly filing of return under QRMP. 

B. 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 20.03.2022 

C. 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 

D. GSTR – 1 QRMP monthly / Quarterly return

Form No. Compliance Particulars Timeline 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 February, 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    13.03.2022 
  • Major Update:  

Attention: Window to opt in for composition for the FY 2022-23 is made available at GST Portal. The eligible taxpayers, who wish to avail the composition scheme may opt in for composition before 31st March 2022. 

Weekly Departmental updates: Income Tax 

  1. Income tax refunds of over Rs 1.83 lakh crore issued so far this fiscal: CBDT 

Refunds worth over Rs 1.86 lakh crore have been issued to more than 2.14 crore taxpayers during the current financial year, the Income Tax department said on Thursday. This includes refunds of Rs 67,442 crore in 2,11,76,025 cases under the personal income tax category and corporate tax refunds of Rs 1,19,235 crore in 2,31,654 cases, the department said in a series of tweets. 

“CBDT issues refunds of over Rs 1,86,677 crore to more than 2.14 crore taxpayers from 1st Apr, 2021 to 07th March, 2022,” it said. “This includes 1.74 crore refunds of AY (assessment year) 2021-22 amounting to Rs 35,296.86 crore,” it said. (Read more at: Click Here) 

  1. I-T dept offices to open on all Saturdays in March after FM’s rap 

Offices of the income tax department across the country will remain open on all Saturdays this month after Union Finance Minister Nirmala Sitharaman directed them to do so in order to resolve taxpayers’ issues and grievances, a senior official said on Friday. 

Sitharaman early this week rapped the policy-making boards of the I-T department (CBDT) and that for the Customs and GST department (CBIC) during an event in Bengaluru for allegedly not responding to the grievances of assessees. 

All offices of the I-T department up to the level of Principal Commissioner of Income Tax will remain open on all Saturdays this month. This will start from tomorrow, March 12, a senior I- T department officer told PTI. To read more Click Here 

  1. Income Tax Alert: Taxpayers Must Complete This Compliance By March 31, 2022 

This reminder is regarding those taxpayers, whose cases are under scrutiny and need to complete the process by March 31, 2022. 

In a tweet, the income tax department said, “Gentle reminder to taxpayers whose cases are under scrutiny, to be completed by 31.03.2022! Pl ensure timely compliance with notices issued by ITD calling for information/details. Failure to comply with the notice may result in Best Judgment assessment based on material on record.” 

This reminder is regarding those taxpayers, whose cases are under scrutiny and need to complete the process by March 31, 2022. 

Those who have filed returns are advised to check on the income tax compliance portal whether there is any notice issued by the department against them. In case there is any income tax notice for you, then you need to reply to this notice by March 31, 2022 otherwise the department will do the best judgment assessment on the papers available to them. To read more Click Here 

  1. Deadline to link PAN with Aadhaar card is March 31: How to do it 

Aadhaar card is right around the corner. As per Central Board of Direct Taxes (CBDT), you can link your PAN card with Aadhaar card till March 31. For those who are unaware, in 2017 CBDT announced that all Indian citizens must link their PAN card with Aadhaar card. The move allows the income tax department to detect any form of tax evasion and it also helps to reduce the issuance of multiple PAN cards that many use to defraud the government. 

It is worth noting that the first deadline issued by CBDT to link PAN card and Aadhaar card was 5 August 2017, however, the department kept on extending the deadline due to various reasons. The latest deadline issued by CBDT is 31st March 2022. 

Process in brief: 

  1. Visit e-filing portal of Income Tax department – www.incometaxindiaefiling.gov.in 
  1. Log in the portal by using your user ID, password, and date of birth. If you are not registered on the portal, you can easily do it by using your PAN card. 
  1. On the Menu bar, click on ‘Profile Settings’ and select ‘Link Aadhaar’. 
  1. Check that details mentioned on the screen as per your PAN card match the ones mentioned in your Aadhaar card. 
  1. If there is a mismatch, you need to get it corrected in either of the documents. If the details match, enter your Aadhaar 

Source: Read more at Click Here 

  • Quick Steps to filing your income-tax returns smoothly 
  1. Visit Click Here for e-filing the return of income. 
  1. Create you login Id and Password on Income tax portal. (Register Yourself). 
  1. Login to e-Filing portal by entering user ID (PAN), Password, Captcha code and click ‘Login’. 
  1. Click on the ‘e-File’ menu and then click ‘Income Tax Return’ link. 
  1. Select ‘Assessment Year’, Select ‘ITR Form Number’, Select ‘Filing Type’ as ‘Original/Revised Return, ‘Select ‘Submission Mode’ as ‘Prepare and Submit Online’ and then Continue. 
  1. Fill all the applicable and mandatory fields of the online ITR form. 
  1. Choose the appropriate Verification option in the ‘Taxes Paid and Verification’ tab. 
  1. Click on ‘Preview and Submit’ button, Verify all the data entered in the ITR. 
  1. Individuals should ensure that correct PAN, Aadhaar and TAN numbers are filed, and that the residential status is correctly determined and mentioned. They should also verify all the details filed in the ITR Form before final submission of the tax return. 
  1. ‘Submit’ the ITR after complete check. 
  1. The ITR filing process gets completed only on e-verification of ITR filed. There are various options available to e-verify tax return i.e. using Aadhaar OTP, using Net banking, using Demat account, using bank ATM, or by simply sending the signed physical copy of Form ITR-V to CPC Bangalore. 

The taxpayer must ensure that PAN and Aadhaar are linked (date for linking is currently extended to March 31, 2022) and the Indian mobile number is active to ensure smooth e-verification of returns filed. Once the e-verification is complete, tax authorities consider the return to have been filed.se one discovers any error after filing tax return, then there is the option to file a revised India tax return within a prescribed timeline.

  • Key Point Must remember: 

Provide your valid Email ID and mobile number while Registration. On Income Tax Return Page: PAN will be auto-populated. 

Use your Form 26AS to summarise your TDS payment for all the 4 quarters of the assessment year. 

Read the instructions carefully 

  • Income tax Return: Documents needed to file ITR 
  • You need to select appropriate ITR form. 
  • Primarily you need PAN, Aadhaar card and bank statements for the financial year. 
  • You also need the Form 16 issued by the employer and Form 16 issued by any other entity. 
  • You need Form 26AS (downloadable from the income tax portal) to check how much TDS was deducted and by who. 
  • Details of income from other sources. 
  • You also need capital gains and share trading statement. 
  • You may also need investment documents such as PPF (Public Provident Fund), NSC (National Savings Certificate), life insurance, medical insurance, NPS (National Pension System), investment in other tax-saving instruments. 
  • Interest and principal repayment certificates of housing loan and donation receipt is also needed while filing ITR. 

There is no need to worry if you are among taxpayers who have not filed ITR by the due date i.e. on or before 31.12.2021, as the process can be completed by March 31, 2022 by filing Belated ITR. 

Those who were not able to file their returns by the due date, i.e. by 31.12.2021 (extended due date) can still do so but they have to pay penalty fee for late ITR filing. From FY 21 or Assessment Year 2021-22 (AY22), the penalty amount for late filing beyond ITR filing deadline was reduced to Rs 5,000 from Rs 10,000 earlier. Due Date filing of belated ITR for AY 2021-22 is 31st March 2022. 

 Important Circulars and Notifications:

Sl. Particulars of the Notification(s) File No. / Circular No. Notification Link(s) 
1. -NIL   

GST Updates

  1. Window to opt in for composition for the FY 2022-23 is made available at GST Portal. The eligible taxpayers, who wish to avail the composition scheme may opt in for composition before 31st
    March 2022.
  1. Bommai hints at GST relief extension

Chief Minister Basavaraj Bommai on Thursday informed the Legislative Council that the Union Government is considering the request for extending the Goods and Services Tax (GST) compensation to the states by another three years and is likely to take the decision soon.
“The Centre is seriously looking into it and we may get good news very soon. We are confident of succeeding in our efforts for the extension of the GST compensation,” Bommai said indicating that the Centre is likely to accept the states’ request for extension of GST compensation.
On the GST compensation and loans, Bommai informed that Karnataka got Rs 10,754 crore in 2018-19, Rs 14,496.73 crore in 2019-20, Rs 26,196.25 crore in 2020-21 and Rs 25,267.29 crore in 2021-22 (up to February end). The CM informed the Council that the state is getting the GST funds that it is entitled to and now they are asking for the extension of the compensation period. (Read more at: Click Here)

  1. Lower GST on electronics to 18% for industry to grow, says Kodak’s 

partner 

The Indian electronics industry won’t take off until the sector is brought under a ‘comfortable and convenient’ tax regime, warned the Indian partner of New York-based Kodak, a technology and imaging business conglomerate. 

Electronic products attract 28% goods and services tax (GST) in the country, the highest such levy on the electronics sector globally, and the industry won’t grow if the tax is not immediately lowered to 18%, said Avneet Singh Marwah, CEO, Super Plastronics, the exclusive manufacturer of Kodak products in India. 

“The pandemic brought immense instability in the entire electronics sector. A massive chip shortage only worsened the situation. Tax rationalisation is critical as the sector is now going through extremely tough times. A reasonable reduction in levies will also raise customer sentiments and bring buoyancy in the market,” he anticipated. 

According to Mr. Marwah, Kotak continued to remain bullish on the Indian marketplace, making a wide variety of products such as smart TVs, washing machines and other appliances available across more than 80,000 pin codes in the country. “Kodak will invest ₹500 crore this year to expand our production capacity in India. We are also targeting to sell half-a-million units to achieve a revenue of over ₹700 crore in 2022.” To read more Click Here 

  1. West Bengal wants Centre to extend GST compensation period 

The West Bengal government has urged the Centre to extend the Goods and Services Tax (GST) compensation period to states for another three to five years. 

Chandrima Bhattacharya, state’s minister of state (independent charge), finance, on Friday presented the state’s budget. The minister, in her speech, stated that the GST (that came into effect in July 2017) is an important component of the overall revenues. The GST Act provides for compensation for five years. This was to cover for loss of revenue during the first five years on account of the GST’s implementation. 

The minister added that the Centre has, so far, refused to propose to the GST Council an extension of the compensation to states. “We urge the Union Government through this August House that the GST compensation period must be extended for at least another three to five years beyond June 2022, to help all states tide over the financial stress triggered by the pandemic,” the budget statement adds. 

The home buyers were offered exemption of two per cent rebate on stamp duty and 10 per cent rebate on circle rate of land, or property, in the current financial year. The exemption has been extended for six months, up to 30 September, in the next financial year. 

To read more Click Here 

  1. GST authorities expand probe into alleged tax evasion by BharatPe 

GST authorities have expanded the probe into alleged tax evasion by fintech firm BharatPe to include reported issuance of fake invoices by those close to the firm’s ousted co-founder Ashneer Grover, an official said. GST authorities are now scrutinising BharatPe books of the last four years to see if bogus invoices were issued for services as well. 

BharatPe had stripped Grover and his wife Madhuri Jain of all positions after a preliminary report of an external audit commissioned by the fintech firm’s board showed that the duo indulged in alleged misdeeds and financial irregularities. 

GST officials have since last year been investigating the books of BharatPe for alleged issuance of invoices without any actual supply of goods and the Directorate General of GST Intelligence (DGGI) in October last year had conducted a search operation at the fintech firm’s head office. 

BharatPe, which allows shop owners to make digital payments through QR codes, last week stripped Grover of all titles and positions over his alleged “misdeeds” and may take further legal action, including clawing back of some of his shareholding. (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 Webinar on Smart Search HSN- An Enhanced search HSN functionality for taxpayers. GSTN Circular : 529 Click Here 
2 Enhanced Registration application user interface (UI) GSTN Circular : 530 Click Here 

CUSTOM / EXCISE UPDATES

Notification No. & date of Issue Links Notification Particulars 
15/2022-Customs (NT) Click Here Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver- Reg. 

Important Case-laws

Income Tax

  1. HC notice to Centre over tax on bank withdrawals 

The high court has issued notice to the centre and CBDT on the provision of deducting TDS on cash withdrawal from a bank account. 

The court has asked the Union Finance Ministry Secretary, CBDT Chairman, and the Principal Chief Commissioner of Income Tax , Rajasthan to respond to the notice in four weeks. A division bench of Acting Chief Justice MM Srivastava and Justice Samir Jain gave this 

direction on PIL by Abhay Singla. The PIL said that the Central Government amended Section 194N of the Income Tax Act on September 1, 2019, and implemented it from April 1, 2020. 

Under section 194N, if a person withdraws cash of more than one crore rupees from his bank account in a financial year, then two percent TDS will be deducted on it. Apart from this, if the person does not file the return for three consecutive financial years and withdraws cash amount from Rs 20 lakhs to Rs 1 crore there will be a TDS deduction at 2% and over Rs 1 crore attracts TDS of 5%. 

The petitioner said this provision of income tax is unconstitutional as according to section 196 of the Income Tax Act, income tax can be levied only on income. To read in full: Click Here 

  1. Application For Compounding Of Offence Under Section 276CC Income Tax Act Cannot Be Rejected If Conviction Is Set Aside By The Special Judge:Delhi HC 

Case Title: Jai Singh Goel Versus Chief Commissioner Of Income Tax(Central) 

A Bench of the Delhi High Court, consisting of Justices Manmohan and Navin Chawla, has ruled that an application seeking compounding of the offence under Section 276CC of the Income Tax Act, 1961 could not be rejected on the ground that the Assessee had not been acquitted of the criminal charges, if his conviction with respect to the given offence has been set aside by the Special Judge, CBI. 

The Assessee had filed an application before the Chief Commissioner of Income Tax (Appeals) (CCIT(A)) seeking compounding of offence under Section 276CC of the Income Tax Act, 1961. The said application was rejected by the CCIT (A) on the ground of expiry of limitation period and the conviction of the Assessee by the Additional Chief Metropolitan Magistrate (ACMM), Delhi. 

Thereafter, the Assessee had filed an appeal against the order of the ACMM before the Special Judge, CBI who had set aside the conviction order and had directed the ACMM to consider the fresh documents filed by the Assessee and pass a fresh order. Simultaneously, the Assessee had filed an application before the CCIT (A) seeking review of the order rejecting the application for compounding of offence, which was rejected by the CCIT (A) on the ground that the conviction of the Assessee was still open for adjudication and that he had not been acquitted of the criminal charges. The Assessee had filed an appeal before the Delhi High Court against the impugned order of the CCIT (A) rejecting the review application. 

The High Court held that in view of the CBDT circular of 2019 the objection on the ground of limitation raised by the CCIT (A) could not survive. Also, the High Court held that in view of the order passed by the Special Judge in which it had set aside the conviction of the Assessee, the impugned order of CCIT (A) dismissing the application seeking review was untenable in law. The High Court held that the application seeking compounding of the offence could not be rejected on the ground that the Assessee had not been acquitted of the criminal charges in view of the fact that his conviction was set aside by the Special Judge. 

To read more: Click Here 

  • GST Law: 
  1. GST to be applicable on partner’s property 

firm for business: AAR 

Goods & Services Tax (GST) is required to be paid for the properties rented out by the partner to his partnership firm, Tamil Nadu Authority for Advance Rulings (TNAAR) has said. This will be applicable even if there is NIL rent. 

The applicant, Chennai based Shanmuga Durai is the Managing Partner of a partnership firm and also owns certain properties. The firm in which he is partner is carrying out businesses in those properties, free of rent. In his application, he stated that under the Income Tax Act, it is clear that when the partner uses his property for businesses carried out by the firm, then deemed rent does not arise. The applicant sought clarity from AAR under GST law for the same. 

After going through all the facts and arguments, AAR ruled that where the supply is between related persons, the value of such supply will be the open market value of that. In case open market value is not available, the value of supply of goods and or services of like kind and quality will be the taxable value. 

Further, it said that in this particular matter, the property being rented, and the supplier and recipient are related. Accordingly, Rule 28 (related with determining value of supply of goods/services or both between distinct or related persons) of GST Act will apply. Accordingly, value should be arrived at for the purpose of taxation. 

AAR ruling is applicable only on the applicant and the jurisdictional tax officer in that particular matter. However, it can be relied upon in similar matters. Also, Central Board of Indirect Taxes and Custom (CBIC) uses verdicts by AAR and Appellate Authority (AAAR) in making changes in rules for everyone. Reference: Click Here 

  1. Refund Rs 27.5 crore GST to Swiggy: Karnataka HC to Centre 

The GST amount was reportedly collected during the course of investigation without following the procedures prescribed under the CGST Act. 

The Karnataka High Court on Friday directed the Union Government to refund Goods & Services Tax (GST) of Rs 27.51 crore to BundL Technologies Pvt Ltd, which operates the e- commerce platform Swiggy. The GST amount was reportedly collected during the course of investigation without following the procedures prescribed under the CGST Act. 

A division bench of Justices Alok Aradhe and M G S Kamal passed the order while dismissing an appeal filed by the Union Government, Directorate General of Goods and Services Tax Intelligence and others against the order of a single-judge bench. 

GST component paid against fraudulent invoices: Probe 

“In the present case, the only provision which permits depositing an amount during the pendency of an investigation is Section 74 (5) of the CGST Act, which was not applied in the case. Therefore, it is evident that the amount has been collected from Swiggy in violation of Articles 265 and 300-A of the Constitution. Therefore, the contention of the Department that the amount be made subject to the outcome of the pending investigation cannot be accepted. 

The Department, therefore, is liable to refund the amount to the company”, the court said. The tax amount collected from Swiggy was deposited with the government, pending investigation with regard to services provided to the company by a third party, Green Finch Team Management (P) Ltd. 

The investigation was launched on the ground that Green Finch was a non-existent entity and accordingly, the input tax credit availed by Swiggy and the GST component paid by it against the invoices raised by Green Finch were fraudulent. During the course of the investigation, Rs 15 crore was deposited by Swiggy under the GST and also Rs 12.51 crore to secure the release of three directors of the company. To read more: Click Here 

1. Mexican tax reform and its impact on the M&A market 

Tax reforms introduced in 2022 aim to tackle tax loopholes and strengthen mechanisms enabling tax authorities to perform audits and collect taxes, as Federico Scheffler and Sebastián Ayza of Galicia Abogados explain. 

These included substantial changes regarding the tax regime applicable to foreign tax transparent entities or arrangements as well as controlled foreign companies regulations; stringent limitations regarding the deductibility of certain expenses, such as a new earnings- stripping rule; non-deductibility of payments to related parties that are deemed subject to preferential tax regimes or by means of structured arrangements; regulations with respect to hybrid mismatches; and the incorporation of mandatory disclosure obligations. 

This is because the main objectives of the 2022 tax reform are: (i) tackling practices that the regulators have identified as tax loopholes, and (ii) strengthening the legal mechanisms that enable tax authorities to perform audits and collect taxes more efficiently, particularly in respect of cross-border transactions. 

Amendments in respect of debt-funded transactions 

  1. Limitations on the applicability of reduced withholding tax rates: Pursuant to the MITL, interest income sourced in Mexico is generally subject to withholding taxes. The withholding tax rates applicable to Mexican-sourced interest income range from 0% to 40% depending on 

 

specific characteristics of the transaction, such as the identity and tax regime of the lender and/or the borrower or the nature, terms and conditions of the loan. 

The 2022 tax reform addressed these structures by clarifying that the limitation under Article 166 was intended to prevent related parties from benefiting from the reduced withholding tax rates in any type of financing transaction and not only in regard to interest paid on securities in the context of capital market transactions. The provision was amended accordingly. 

  1. Thin capitalization: In accordance with thin capitalisation rules under the MITL, the debt- to-net equity ratio allowed for Mexican entities is 3:1, though some exceptions apply. Interest paid in excess of that ratio would be considered as non-deductible for income tax purposes. 
  1. Taxation of capital gains derived from transfer of Mexican shares: Income tax due on Mexican-sourced items of income derived by foreign tax residents is generally levied by withholding on the gross proceeds, with the Mexican party of the transaction acting as withholding agent. However, under specific circumstances, foreign tax residents are allowed to pay income tax on a net basis. 
  1. Joint liability under the Federal Tax Code 

Under the 2022 tax reform, several amendments were made to Article 26 of the Federal Tax Code in connection with the scenarios under which the taxing authorities may claim a joint liability. Some of the most important amendments, in addition to the joint liability to which legal representatives of foreign residents may be subject. 

Read more at: Click Here 

  1. Check these tax filing deadlines off your to do list – Canada 
  • Tax filing deadline for individuals: May 2, 2022 

Payment deadline for individuals: Unless there   are   special   circumstances   that require instalment payments (such as a second job, rental income, etc.), any balance owing must be paid by May 2, 2022.  

  • Tax filing deadline for self-employed taxpayers (and their spouses): June 15, 2022. 

Payment deadline for self-employed taxpayers (and their spouses): Despite their later filing deadline, self-employed taxpayers (and their spouses) are still required to pay any balance owing by May 2, 2022. 

Tax filing and payment deadline for deceased taxpayers:  

If the death occurred from January 1 to October 31, 2021, the return must be filed no later than May 2, 2022. If the death occurred from November 1 to December 31, 2021, the return must be filed within six months after the date of death. 

Tax filing and payment deadline for deceased taxpayers who carried on a business at the time of their death:  

If the death occurred from January 1 to December 15, 2021, while the business was in operation, the return is due by June 15, 2022. If the death occurred from December 16 to 

  • FILING METHODS AND PROCESSING TIME 

Again this year, the Canada Revenue Agency (CRA) encourages taxpayers to sign up for direct deposit and file their 2021 return online as paper returns will be processed in the order they are received. 

Read more at: Click Here) 

  1. Department of Finance (Canada) Releases Significant Draft Tax Legislation 

On February 4, 2022, the Department of Finance (Finance) released draft legislation to amend the Income Tax Act (ITA) and the Excise Tax Act (ETA). Much of the draft legislation implements some of the significant business tax measures first announced in the 2021 Canadian federal budget (Budget 2021) (see our Blakes Bulletin: 2021 Federal Budget – Selected Tax Measures | Blakes). As Budget 2021 unusually did not include proposed legislation to implement several measures, this is the first opportunity to review such measures in detail. 

The draft proposals would also implement measures announced in previous budgets to: 

  • Enhance the tax reporting requirements for trusts in order to improve the collection of beneficial ownership information; and 
  • Update rules that address tax planning relating to allocations to redeeming fund unit holders in the mutual fund industry. 

Draft proposals would address an error in the current law for the COVID-19 GST Credit Top- up so that it is consistent with the original intent of the measure as announced in March 2020 by the Government of Canada and how it has been administered by the CRA. In addition, draft proposals would ensure the proper functioning of the revocation tax with respect to organizations that have their registration as a charity revoked due to being listed as a terrorist entity. 

To clarify the GST/HST treatment of crypto asset mining, draft proposals would specify that crypto asset mining would generally not be considered a “supply” for GST/HST purposes. This would mean that the GST/HST would not apply to the provision of crypto asset mining and input tax credits would not be available to the person providing the mining. 

Note that references to “Announcement Date” in the draft proposals, and the accompanying explanatory notes, refer to February 4, 2022. In addition to draft legislative proposals, sample notifiable transactions are detailed in the backgrounder Income Tax Mandatory Disclosure Rules Consultation: Sample Notifiable Transactions for the measure relating to mandatory disclosure rules. 

Submissions on the following measures should be received by April 5, 2022: 

  • Taxes applicable to Registered Investments; 
  • Mandatory Disclosure Rules; 
  • Avoidance of Tax Debts; 
  • Audit Authorities; 
  • Reporting Requirements for Trusts; 
  • Mutual Funds: Allocation to Redeemers; and 
  • Crypto Asset Mining. 

Submissions specifically relating to the Interest Deductibility Limitation measure will be accepted until May 5, 2022. Submissions on all other measures should be received by March 7, 2022. Source: Click Here 

      Knowledge Bucket for NRI’s  

  1. The withholding tax provisions differ for a non-resident. For a non-resident seller, tax is required to be deducted at source at 20% (plus applicable surcharge and cess) in case of sale of long-term property and at 30% (plus applicable surcharge and cess) in case of sale of short-term property. 
  1. An NRI can sell any property (Including an agricultural land or farm house) to a person resident in India. However, in case the NRI wishes to sell the inherited agricultural land or farm house the same can only be sold to an Indian resident. 
  1. As an NRI you can inherit any number of properties including agricultural land and farm house in India from a resident Indian whether relative or no. In order to get the property transferred in your name, you have to get the mutation of the property done in your name in the records of the local authorities like municipality or the gram panchayat where the property is situated by submitting the copy of application for mutation with appropriate proof of you having inherited the property. 
  1. The capital gains on sale of inherited assets will be taxed at the same rate whether you sell it to an Indian resident or to an NRI. The tax treatment will depend on the holding period for which the property was held by the NRI along with the period it was held by the previous owner who had acquired it for a consideration. 

In case the sale consideration exceeds 10 lakh USD the balance can be deposited in your NRO account as long as you wish. 

  • DO YOU KNOW ??  
  1. ESOPs are taxed on the amount which is calculated as a differential between the exercise price and market price on the date of such exercise of ESOPs. Such difference is treated as perquisite in the hands of the employee and taxed under the head salary. 
  1. ESOP income taxed as employment income at the first stage is taxed at normal slab rate plus applicable surcharge and education and health cess. Whereas, income is taxed as capital gains at the second stage. 
  1. “In order to save tax on LTCG, employees can explore saving capital gains tax by reinvesting the capital gains into specified securities u/s 54EE (Maximum limit Rs. 50 lakhs) of the Act or investing the sales consideration in a residential house u/s 54F 

the Act, subject to meeting the specified conditions as contained in Section 54EE and 54F respectively,” – Kumar of Price Waterhouse & Co LLP. 

  1. The government has proposed a new tax regime for the taxpayers in the Union Budget 2022. Crypto investors now need to pay 30 per cent tax on their profits. This 30 per cent tax on profit also takes into account a 1 per cent Tax Deducted at Source (TDS) deposited by the facilitator, exchanges, or a person who is responsible for paying the consideration on every crypto transaction. 
  1. West Bengal Government in their Budget for 2022-23 has proposed exemption of registration fee, road taxes for two years for battery-operated and CNG vehicles. 
  1. The Patna Municipal Corporation (PMC) has decided to seize and sell property (movable and immovable) of such entities and individuals who have not paid their holding taxes for a long time. A decision in this regard was taken at the civic body’s meeting on Thursday. 
  • 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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