Tag: Finance Ministry

Supreme Court Asks for FinMin Reply on STT’s Constitutional Validity

Supreme Court Seeks Response from Finance Ministry on Securities Transaction Tax Challenge

New Delhi: The Supreme Court on Monday sought a response from the finance ministry regarding a petition challenging the constitutional validity of the securities transaction tax (STT). This tax is a direct levy on the purchase and sale of securities transacted on recognized stock exchanges in India.

A bench led by Justice JB Pardiwala issued a notice to the Centre in response to a plea by Aseem Juneja, a trader, who alleges that the STT is illegal, uncons titutional, and violates the principle of double taxation. According to Juneja, a stock market trader is required to pay capital gains tax on profits from market transactions, in addition to the STT levied on the same transactions.

Juneja’s petition argues that this situation amounts to double taxation, emphasizing that “STT is the only tax in India imposed on the mere act of carrying out a profession” and must be paid regardless of whether a profit is made.

This aspect, he claims, makes the tax almost punitive or deterrent by nature. Unlike other taxes in India, which are assessed on profits at the year’s end, the STT applies even when a stock market trader incurs losses. Juneja contends that this punitive nature of the STT discourages participation in stock trading.

He further alleges that the STT violates several constitutional rights, including the right to equality, the right to trade or earn a livelihood, and the fundamental right to live with dignity.

The plea alleged that the securities transaction tax violated the principle of double taxation.

Income Tax Bill 2025: Key Highlights and Simplifications

The new Income Tax Bill, 2025, aimed at simplifying language and modernising the six-decade-old tax law, took 60,000 man-hours to draft. Speaking on Income Tax Day, Finance Minister Nirmala Sitharaman said the bill represents a long-overdue overhaul of the Income Tax Act, 1961, which had become burdened with layers of amendments and legal complexity.

“60,000 man hours were needed in drafting the new Income Tax Bill. Since 1961 it has not been touched and layers and layers got added to it. A comprehensive review had not happened. So, that work which was taken up required that many hours,” the Finance Minister said.

Bill simplifies legal jargon

Sitharaman also praised the Central Board of Direct Taxes (CBDT) for reducing the word count, simplifying legal language, and ensuring the bill was less open to varied interpretations. “I appreciate the CBDT for giving their best to reduce the number of words, simplify the language, and ensure that there are clear sections,” she said.

The bill, over 4,000 pages long, has gone through an extensive parliamentary review. It was introduced in the Lok Sabha in February 2025 and examined by a select committee, which submitted 566 observations. The Finance Minister assured that the committee’s suggestions would be considered seriously.

The Income Tax Bill, 2025, is expected to simplify tax compliance and administration. The department is now working on drafting the rules and forms that will define how the law is implemented in practice.

Sitharaman’s message to taxpayers

Sitharaman delivered a stern message to tax officials over delays in issuing Orders Giving Effect (OGEs), the official enactment of favourable rulings for taxpayers. “The delay in OGE issuance is just not explainable… unpardonable,” she said, stressing the need for strict internal protocols.

Her concerns come amid a November 2024 report by the Comptroller and Auditor General (CAG), which found delays of up to 11 years in some cases. Despite favourable rulings, many taxpayers had yet to receive benefits due to bureaucratic lags.

The minister identified five operational goals: speedy tax demand disposal, timely refunds, withdrawal of minor appeals, addressing grievances, and regional performance tracking. She urged tax officers to “set protocols” to avoid further delays and to restore citizen confidence.

Finance Ministry Confirms No GST Rate Cuts Until Group of Ministers’ Report Is Released

GST Rate Reduction Not on the Horizon, Confirms Finance Ministry

On Monday, the Ministry of Finance unequivocally ruled out any immediate reduction in Goods and Services Tax (GST) rates as a means to alleviate consumer burdens. The ministry noted that decisions regarding GST rates fall within the jurisdiction of the GST Council, which is currently awaiting a pivotal report on rate rationalization.

During a response to an unstarred question in the Lok Sabha, Minister of State for Finance, Shri Pankaj Chaudhary, emphasized that GST rates are determined by the GST Council—a constitutional body representing both the Centre and the States/Union Territories. Addressing a query from Samajwadi Party MP, Shri Ujjwal Raman Singh, regarding possible GST rate reductions for the benefit of the common man, the Minister stated:

“GST rates are prescribed on the recommendations of GST Council, which is a constitutional body comprising of representatives from States/UTs and Centre. In its 45th meeting held on September 17, 2021, the GST Council has constituted a Group of Ministers (GoM) on GST Rate Rationalisation. The Group of Ministers have not submitted its report to the Council.”

In light of the absence of the GoM’s recommendations, the Minister concluded that questions concerning the magnitude of any proposed rate cuts or their timelines “do not arise.” This clarification comes amidst growing consumer demands for tax relief, particularly in the context of ongoing inflationary pressures.

Expectations for a possible revision in GST rates had recently surged following reports that the GoM on rate rationalization might be contemplating a comprehensive overhaul of the existing multi-slab structure to enhance efficiency and equity. The current GST framework operates with four primary tax slabs—5%, 12%, 18%, and 28%—alongside special rates for certain goods and services.

Over the years, numerous stakeholders, including industry bodies and policy experts, have urged the Council to simplify the GST structure by merging tax slabs and addressing inverted duty anomalies. The rate rationalization initiative, which began in 2021, has faced delays due to political transitions in several states and changing economic conditions. The recommendations from the GoM are anticipated to play a crucial role in shaping the future landscape of GST reforms.

Finance Ministry gives relief in GST to advertising agencies and automobile dealers

FINANCE MINISTRY GRANTS GST RELIEF TO AD AGENCIES AND AUTOMOBILE DEALERS

The Union finance ministry on Wednesday issued a set of circulars giving relief to the automotive industry, advertising agencies providing services to foreign clients, data hosting services providers and exporters of goods.

The Finance Ministry has provided GST relief to ad agencies and automobile dealers in India. This relief is expected to boost these industries and provide them with much-needed financial support.

Key Points:

  • GST Deductions for Demo Vehicles: The Finance Ministry has clarified that automobile dealers can claim GST deductions on demo vehicles used for promotional purposes. This decision provides relief to the automotive industry.   
  • Export Benefits for Ad Agencies: Advertising agencies providing services to foreign clients will now be eligible for export benefits under the GST regime. This will reduce their tax burden and promote India as a preferred destination for advertising services. 
  • GST Exemption for Foreign Clients: Advertising agencies providing services to foreign clients will now be eligible for GST exemption. This move is expected to boost the competitiveness of Indian ad agencies in the global market.
  • Clarification on Intermediary Services: The circular has also clarified the GST treatment of intermediary services provided by ad agencies. This will help resolve potential disputes and ensure consistent tax compliance.

Impact on the Industry:

  • Reduced Costs for Ad Agencies: The GST relief for ad agencies will help them reduce their operating costs, making their services more competitive.
  • Boost to Automotive Sales: The GST deductions for demo vehicles will incentivize dealers to invest in more demo units, potentially leading to increased sales.
  • Positive Impact on the Economy: These measures are expected to contribute to the overall growth of the Indian economy by stimulating business activity in the advertising and automotive sectors.

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. 

Tax Certificate Requirement Abolished for International Travel, Confirms Finance Ministry

New Rules for Indians Traveling Abroad: Tax Clearance Certificate Mandatory for Some Residents

The Union finance ministry recently announced new rules pertaining to Indian residents traveling abroad, particularly in the context of financial irregularities and tax obligations. According to the ministry, a tax certificate is now mandatory for individuals involved in significant financial irregularities or carrying substantial tax dues.

This development was prompted by the inclusion of the Black Money Act in the list of laws enabling residents to settle their tax liabilities, as proposed in the Finance Bill of 2024. Effective from October 1, the new rule mandates Indians with direct tax arrears exceeding Rs 10 lakh, unless their case has been stayed by any relevant authority, to obtain a tax-clearance certificate before departing the country.

The primary objective of this regulation is to combat tax evasion related to undisclosed foreign assets. Notably, the issuance of a tax-clearance certificate requires the recording of reasons for such a request and approval from the principal chief commissioner or chief commissioner of income tax.

It is important to clarify that not all residents are required to obtain a tax-clearance certificate under the proposed amendment (Section 230 of the Income-Tax Act). The ministry emphasized that the requirement is applicable only in specific circumstances, as outlined in a 2004 notification by the Income Tax Department.

Furthermore, the ministry underscored that the issuance of a tax-clearance certificate is solely necessary for individuals domiciled in India under certain conditions. The certificate must confirm that the individual has no liabilities under the Income Tax Act, the Wealth Tax Act of 1957, the Gift Tax Act of 1958, or the Expenditure Tax Act of 1987. Therefore, this verification serves as evidence that the individual has no tax liabilities or has made suitable arrangements to settle dues before departing India.

These new regulations aim to reinforce financial compliance among Indian residents and enhance measures against tax evasion concerning foreign assets. It is imperative for affected individuals to familiarize themselves with these requirements to ensure seamless travel experiences and adherence to the specified tax laws.

A #FAKE document is doing rounds on social media claiming resumption of DA to CG employees & Dearness Relief to CG pensioners .

The Finance Ministry on said that #NO order relating to the payment of increments in dearness allowance for central government employees and dearness relief for pensioners has been issued.

A document is doing rounds on social media claiming resumption of DA to Central Government employees & Dearness Relief to Central Government pensioners .

This OM is #FAKE. No such OM has been issued by GOI.

The additional instalments of DA and Deamess Relief due from 1st July, 2020 and 1st Jan 2021 shall be paid in three instalments.

Finance Ministry refutes news media reports of alleged black money held by Indians in Switzerland

Certain reports have appeared in the media on 18.06.2021 stating that funds of Indians in Swiss Banks have risen to over Rs 20,700 crore (CHF 2.55 billion) at the end of 2020 from Rs 6,625 crore (CHF 899 million) at the end of 2019, reversing a 2 year declining trend. It has also been stated that this is also the highest figure of deposits in the last 13 years.

Media reports allude to the fact that the figures reported are official figures reported by banks to Swiss National Bank (SNB) and do not indicate the quantum of much debated alleged black money held by Indians in Switzerland. Further, these statistics do not include the money that Indians, NRIs or others might have in Swiss banks in the names of third–country entities.

However, the customer deposits have actually fallen from the end of 2019. The funds held through fiduciaries has also more than halved from the end of 2019. The biggest increase is in “Other amounts due from customers”. These are in the form of bonds, securities and various other financial instruments.

India and Switzerland are signatories to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC) and both countries have also signed the Multilateral Competent Authority Agreement (MCAA) pursuant to which, the Automatic Exchange of Information (AEOI) is activated between the two countries for sharing of financial account information annually for calendar year 2018 onwards.

Exchanges of Financial Account information in respect of residents of each country have taken place between both countries in 2019 as well as 2020. In view of the existing legal arrangement for exchange of information of financial accounts (which has a significant deterrent effect on tax evasion through undisclosed assets abroad), there does not appear to be any significant possibility of the increase of deposits in the Swiss banks which is out of undeclared incomes of Indian residents.

 

Further, the following factors could potentially explain the increase in deposits:

  1. Increase in the deposits held by Indian companies in Switzerland owing to increased business transactions
  2. Increase in deposits owing to the business of Swiss Bank branches located in India
  3. Increase in Inter- bank transactions between Swiss and Indian Banks
  4. A capital increase for a subsidiary of a Swiss Company in India and
  5. Increase in the liabilities connected with the outstanding derivative financial instruments

The Swiss Authorities have been requested to provide the relevant facts along with their view on possible reasons for increase/decrease in the light of the media reports highlighted above.