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To beat the last minute rush, some taxpayers start filing ITRs early

editor — Sat, 20 Apr 2024 10:40:49 +0000

To beat the last minute rush, at least some taxpayers have started filing their income tax returns for assessment year 2024-25 after the Central Board of Direct Taxes (CBDT) enabled functionalities for commonly used income tax returns from April 1 this year.

According to data with the income tax department, as many as 119,000 income tax returns for assessment year 2024-25 had been filed by April 10 and 109,000 returns had also been verified. As many as 2,940 returns for AY24-25 had also been verified.

To help taxpayers file their returns for AY24-25, the CBDT had made ITR-1, ITR-2 and ITR-4, which are commonly used by taxpayers, available on the e-filing portal from April 1. Companies can also to file their ITRs through ITR-6 from April 1 onwards.

Experts noted that this is the latest in a series of initiatives taken by the CBDT to facilitate the tax return compliance. It had earlier started initiatives such as prefilled tax return forms, or the expeditious processing of the tax returns, or quick issue of refunds particularly to the small taxpayers.

“This will help the taxpayers, who do not expect any deduction of tax at source (TDS) in the last quarter of FY 2023-24 and are not subject to any audit, in filing their returns immediately. Such taxpayers may consider filing their returns forthwith without waiting more and getting the tax refund, if any, sooner,” an expert said.

However, the taxpayers, who expect deduction of TDS in the last quarter – which are typically, the salaried taxpayers and the taxpayers expecting interest income in the last quarter, would be required to wait till June 2024 to file their tax returns, he noted.

The due date of deposit of TDS in the government kitty for the last quarter of FY 2023-24 is April 30, 2024, and the due date of filing the TDS return for the quarter is May 31, 2024. Considering this, the TDS deducted in the last quarter may not reflect in the taxpayers’ tax credit statement (Form 26AS) before June 1, 2024. Consequently, the returns filed before this may be processed with demands and taxpayers may have to file rectifications applications / revised returns later.

He noted that corporate taxpayers would be required to wait for completion of their statutory audit, followed by tax audit (if applicable), amongst others. Non-corporate taxpayers subject to tax audit would also be required to wait, unless they are able to get the tax audit done much before the due date for the same, he further said.

Source: https://www.businesstoday.in/personal-finance/tax/story/to-beat-the-last-minute-rush-some-taxpayers-start-filing-itrs-early-425778-2024-04-16

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Extended Period of Limitation: Understanding and Challenging Sec. 74

editor — Sat, 20 Apr 2024 07:48:40 +0000

In the realm of taxation, navigating through various sections and provisions can be daunting. One such area of concern for taxpayers is the extended period of limitation, particularly concerning the issuance of notices and the implications under Section 74. Understanding the nuances of this provision and the scope for challenging it is crucial for taxpayers and professionals alike.

1. Supreme Court Precedents

2. CESTAT Chandigarh Insights

3. Precedents from CESTAT Ahmedabad

Dinesh Chandra R Agarwal Infracon Pvt. Ltd: The case of Dinesh Chandra R Agarwal Infracon Pvt. Ltd. highlighted the importance of proof of intentional revenue suppression or misdeclaration for the validity of orders under Section 73(1) of the Finance Act, 1994.
Arya Logistics: In line with the above, Arya Logistics emphasized that in the absence of suppression of fact, a show cause notice issued after the prescribed limit of one year is not sustainable.

4. Insights from CESTAT Delhi

5. Precedents from CESTAT Allahabad

6. Perspectives from Delhi High Court

ITD-ITD CEM JV: Delhi High Court's stance, as seen in the case of ITD-ITD CEM JV, emphasized the necessity of recording reasons to believe in writing for assessment orders passed within the extended period.
H.M. Industries: H.M. Industries reiterated that the absence of assertions regarding concealment or failure to disclose full particulars negates the applicability of the extended period of limitation.

7. Insights from Mumbai CESTAT

Understanding these precedents is pivotal for taxpayers and professionals aiming to navigate through the intricacies of tax laws effectively.

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Identifying Instances Leading to Income Tax Notices in Real Estate Deals and Credit Card Transactions

editor — Sat, 13 Apr 2024 13:21:14 +0000

Tracking Financial Activities:

The Income Tax Department meticulously monitors all financial transactions carried out by individuals, utilizing various data sources to ensure adherence to tax regulations. Certain transactions may trigger heightened scrutiny from tax authorities.

High-Value Cash Transactions:

The tax department pays particular attention to high-value cash transactions. For instance, if an individual receives a cash deposit exceeding Rs 10 lakh in a savings account within a fiscal year, this could prompt the department to issue a notice seeking clarification regarding the source of funds.

Mandatory Reporting by Banks:

As per the Central Board of Direct Taxes (CBDT) directives, banks are mandated to report instances where an individual deposits Rs 10 lakh or more across one or more time deposit accounts during a financial year, excluding deposits made through the renewal of another time deposit. Additionally, all banks, including cooperative banks, must report cash deposits of Rs 10 lakh or more across one or multiple accounts of an individual, excluding current accounts and time deposits.

Scrutiny of Securities Transactions:

Financial institutions and companies issuing bonds or debentures are obligated to report receiving Rs 10 lakh or more from any individual in a financial year for acquiring such securities. This measure is aimed at detecting potential instances of tax evasion or undisclosed income associated with significant cash movements.

Credit Card Transactions:

Several instances of credit card transactions may trigger Income Tax notices:

Cash deposits exceeding Rs 10 lakh for savings accounts and Rs 50 lakh for current accounts, along with substantial withdrawals, may prompt inquiries into the origin and intended use of the funds.
Real estate transactions exceeding Rs 30 lakh may come under the scrutiny of the tax department, which seeks detailed information about the transaction and involved parties.
Investments surpassing Rs 10 lakh in stocks, mutual funds, or bonds may attract scrutiny if the origin of funds appears inconsistent with reported income.
Although the Income Tax department does not actively monitor individual credit card transactions, cash payments exceeding Rs 1 lakh towards credit cards or substantial debt settlements exceeding Rs 10 lakh made in cash may undergo scrutiny and investigation. Ensuring transparency in significant transactions with verifiable fund sources is imperative, as unaccounted cash inflows may trigger investigations.

Mismatch of Declared Income:

Discrepancies between declared income and bank data may prompt notifications from the tax department, highlighting the importance of maintaining accurate financial records.

Foreign Exchange Transactions:

Any purchase of foreign exchange totaling Rs 10 lakh, including travelers’ checks, forex cards, or debit/credit card transactions, must be reported to ensure compliance with tax regulations.

Source: https://www.businesstoday.in/personal-finance/tax/story/real-estate-deals-credit-card-transactions-6-times-one-can-get-income-tax-notice-425280-2024-04-12

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Income tax refund will be available soon and the seized properties will also be returned

editor — Sat, 13 Apr 2024 10:52:23 +0000

If you pay tax then it is a matter of relief for you. The Income Tax Department will dispose of the appeals related to TDS payment and tax from the current financial year i.e. 2024-25 as soon as possible. With this you will also get income tax refund soon. The department is preparing an action plan for this, which will be implemented soon. The Central Board of Direct Taxes (CBDT) has asked the Income Tax Department to prepare an action plan by which possible tax-related issues are identified and resolved immediately. In this scheme, there will be a fixed time limit for returning the seized property. The department said that such properties will be returned by June 30, 2024. It aims to finalize pending compounding proposals by March 31, 2024, and dispose of at least 150 appeals by June 30.

You can file a case before the Assessing Officer: Under the new decision of the Income Tax Department, taxpayers will now have to file an application for pending refund before the Assessing Officer. Processing of applications for nil/reduced TDS or TCS certificates under section 195/197/206C will be expedited. They will be resolved within a month of receipt of applications from April 1, 2024.

Priority for disposal of appeals filed before April 1, 2020: The department said that disposal of appeals filed before April 1, 2020 will be given priority. After this, appeals filed after April 1, 2020 will be disposed of. This decision is an important step towards increasing administrative efficiency. Immediate measures have been initiated for resolution of complaints through e-redressal and CPGRAMS platforms.

Source: https://www.internationalnewsandviews.com/income-tax-refund-will-be-available-soon-and-the-seized-properties-will-also-be-returned/

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Reinstatement of GST Numbers Contingent on Clearing Dues Highlights Tax Adherence and Procedural Flexibility

editor — Tue, 09 Apr 2024 12:22:39 +0000

Introduction:

This case law concerns a judgment from the High Court of Jammu & Kashmir and Ladakh, which offers a lifeline for GST compliance by restoring GST registration upon the settlement of dues.

Facts of the Case:

The petitioner’s GST registration was canceled following their failure to respond to a show cause notice issued by tax authorities on November 16, 2021. Subsequently, the petitioner’s appeal was dismissed due to their absence before the Appellate Authority.

Issue:

The main issue was whether the petitioner’s GST registration, canceled due to non-compliance with the show cause notice and absence during the appeal, could be reinstated upon their commitment to clear outstanding taxes, penalties, and interest as per GST laws.

Petitioner’s Argument:

The petitioner advocated for the restoration of their GST number, pledging to settle all dues, including taxes, penalties, and interest, in accordance with the GST Act, 2017, upon reinstatement.

Respondent’s Argument:

The Respondent, represented by the Advocate General, did not oppose the petitioner’s proposal to settle dues and reinstate the GST number.

Held:

Considering the unique circumstances and lack of objection from the Respondent, the High Court of Jammu & Kashmir and Ladakh disposed of the case by instructing the petitioner to approach the concerned Officer for GST number restoration within seven days. Upon restoration, the petitioner must settle taxes, penalties, and interest within another seven days, as mandated by the GST Act, 2017.

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Entitlement to Interest Commences After Sixty Days from Refund Application Until Credited to Bank Account

editor — Sat, 06 Apr 2024 05:35:52 +0000

In a significant ruling by the Hon’ble Delhi High Court, Raghav Ventures vs. Commissioner of Delhi [W.P.(C) NO. 12209 OF 2023 dated March 01, 2024], the issue of entitlement to interest on delayed GST refunds was examined. The case sheds light on the statutory provisions and clarifications regarding the payment of interest under the Central Goods and Services Tax Act (“the CGST Act”).

Facts of the Case:

M/s Raghav Ventures ("the Petitioner") engaged in exporting mobile phones and accessories to M/s AZ Logistic, Dubai, UAE, thereby paying Integrated Goods and Services Tax ("IGST").
During the Impugned Period (December 2022, February 2023, March 2023, and May 2023), the Petitioner paid IGST totaling significant amounts i.e. Rs. 1,63,16,851/-, Rs. 50,46,889/-, Rs. 17,26,288/-, and Rs. 13,85,382/-, respectively.
The Petitioner filed refund applications for the IGST paid during the Impugned Periods in accordance with the prescribed procedure under the CGST rules.
Despite receiving acknowledgments for the refund applications, the refunds were not processed within the stipulated time frame.
The IGST refunds were eventually sanctioned and credited into the Petitioner's bank account but without any accompanying interest.
The Petitioner subsequently filed an application to the Revenue Department seeking interest on the delayed refunds.

Issue:

Whether the Petitioner is entitled to interest on the delayed refund of IGST as per statutory provisions?

Held:

The Hon’ble Delhi High Court, in the Writ Petition (C) NO. 12209 OF 2023, held the following:

Interest becomes payable under Section 56 of the CGST Act if the refund ordered under Section 54(5) is not processed within 60 days from the date of the refund application.
The payment of interest under Section 56 is a statutory provision and does not rely on any claim made by the assessee.
Circular No. 125/44/2019-GST dated November 18, 2019, clarifies that interest accrues from the date immediately after the expiry of sixty days from the date of the refund application until the amount is credited to the applicant's bank account.
Consequently, the Petitioner is entitled to statutory interest at the rate of 6% from the date following the expiry of sixty days from the date of the refund application until the refund is credited to the bank account.
The Court directed the Revenue Department to process the refund of interest and credit the same into the Petitioner's account within four weeks.

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GST Implications on Lump Sum Transfer Charges for Leasehold Rights

editor — Sat, 06 Apr 2024 04:51:43 +0000

In a recent ruling by the Uttar Pradesh Authority for Advance Rulings (AAR), Remarkable Industries (P.) Ltd. sought clarification regarding the GST implications on lump sum upfront premium paid as transfer charges for leasehold rights. The case, identified as Advance Ruling No. UP/ADRG/41/2023, offers significant insights into the classification and applicable GST rate concerning the transfer of leasehold rights.

Facts of the Case:

Remarkable Industries (P.) Ltd. ("the Applicant") operates in the manufacturing and selling of various products.
The Applicant acquired an industrial plot from the Noida Authority under a lease deed for a 99-year period.
The lease involved the payment of a lump sum upfront premium and subsequent annual lease charges.
After utilizing the plot for manufacturing purposes, the Applicant decided to transfer its leasehold rights to M/s S K Industries ("the Assignee") for consideration.
The transfer process required permission from the Noida Authority, payment of transfer charges by the buyer, and the execution of a fresh lease deed with the Assignee.
Notably, the transfer did not entail sub-leasing or creation of fresh benefits from the land; it solely involved the transfer of existing leasehold rights for consideration.

Issue:

Whether the activity of transferring leasehold rights by the Applicant constitutes sub-leasing and, if not, what is the appropriate classification and applicable GST rate for the said activity?

Held:

The Uttar Pradesh, AAR in Advance Ruling No. UP/ADRG/41/2023 held as follows:

The activity of the Applicant is akin to agreeing to transfer one's leasehold rights and does not amount to sub-leasing.
The transfer represents compensation for agreeing to transfer the leasehold rights to the Assignee without creating additional benefits from the land.
As per the CGST Act and Schedule II, the transaction is classified as a service rather than a transfer of immovable property.
The Applicant's right under the lease deed is extinguished after assignment, and there is no creation of fresh benefits from the land.
The transaction falls under "Other miscellaneous service" (SAC 999792) and is taxable at an 18% GST rate as per Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017.

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Income Tax Dept. issued Updated TDS Rate Chart for FY 24-25/Ay 25-26

editor — Thu, 28 Mar 2024 04:20:53 +0000

The Income Tax Department has published a revised TDS Rate Chart for the Financial Year 2024-25 (Assessment Year 2025-26).

You can access the complete TDS rate chart at: https://www.nyca.in/wp-content/uploads/2024/03/IT_TDS-Chart_2024-25.pdf

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A Closer Look at the Significant Tax Adjustments Coming into Force on April 1, 2024

editor — Tue, 26 Mar 2024 07:04:10 +0000

April 1 signifies the start of a fresh fiscal year and holds great importance for personal finances, as many income tax adjustments from the Budget come into effect on this date. Additionally, various other alterations are also implemented, potentially influencing individual financial situations. These modifications were unveiled by Finance Minister Nirmala Sitharaman during her Budget speech this year. Let’s delve into some significant changes you need to know, such as the widened basic exemption thresholds, among others.

New Tax Regime Default Adoption

The default choice of the new tax regime is a significant alteration aimed at simplifying tax filing and encouraging more people to opt for the new regime.
The new regime offers reduced tax rates but fewer deductions and exemptions.
Taxpayers still have the option to continue with the old tax regime if it suits them better.

Elevated Basic Exemption Limit and Rebate

Effective from April 1, 2023, the basic exemption limit was raised to ₹ 3 lakh from ₹ 2.5 lakh under the new tax regime.
The rebate under Section 87A of the Income Tax Act, 1961, was increased to ₹ 7 lakh from ₹ 5 lakh.
Individuals with a taxable income up to ₹ 7 lakh under the new regime will receive a full tax rebate, exempting them from paying any income tax.

New Tax Slabs

Income between ₹ 3 lakh and ₹ 6 lakh will be taxed at 5%.
Income between ₹ 6 lakh and ₹ 9 lakh will be taxed at 10%.
Income between ₹ 9 lakh and ₹ 12 lakh will be taxed at 15%.
Income between ₹ 12 lakh and ₹ 15 lakh will attract a 20% tax.
Income above ₹ 15 lakh will be taxed at 30%.

Restoration of Basic Deduction

Reduced Surcharge

Life Insurance Taxation

Exemption of Enhanced Leave Encashment

Source: https://www.ndtv.com/india-news/new-tax-rules-to-come-into-effect-from-april-1-all-you-need-to-know-5283150

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Assessee is entitled to interest from the date immediately after the expiry of sixty days from the date of receipt of the GST refund application

editor — Tue, 26 Mar 2024 06:28:11 +0000

The Hon’ble Delhi High Court, in the case of Raghav Ventures vs. Commissioner of Delhi [Writ Petition (Civil) No. 12209 of 2023 dated March 01, 2024], held that the payment of 6% interest under the Section 56 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) is statutory and does not depend if the claim made by the Assessee. It is automatically payable if the GST refund is not made within 60 days from the date of receipt of the application.

Facts of the case:

Raghav Ventures, referred to as “the Petitioner,” engaged in exporting mobile phones and accessories to M/s AZ Logistic, Dubai, UAE, and paid Integrated Goods and Services Tax (IGST). The normal procedure for claiming GST refunds involved submitting shipping bills, which Customs processed through ICEGATE.

In December 2022, exports amounted to Rs. 9,06,49,174/- with IGST payment of Rs. 1,63,16,851/-. In February 2023, exports totaled Rs. 2,80,38,271/- with IGST payment of Rs. 50,46,889/-. Similarly, in March 2023, exports amounted to Rs. 95,90,489/- with IGST payment of Rs. 17,26,288/-, and in May 2023, exports of mobiles and accessories worth Rs. 76,96,568/- were made, with IGST payment of Rs. 13,85,382/-.

According to Sub-Rule (2) of Rule 96 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”), export invoice details from Form GSTR-1 are electronically transmitted to Customs. Once the system confirms export, GST refunds are processed through ICEGATE under Rule 96(3) of the CGST Rules.

The Petitioner submitted GST returns in Form-GSTR-3B and refund applications for the mentioned periods via Form-GST-RFD-01. Acknowledgments were received via Form-GST-RFD-02, confirming receipt of the GST refund applications.

While the writ petition was pending, the IGST refund for the period was credited to the Petitioner’s bank account on December 4, 2023, without any interest. On December 6, 2023, the Petitioner applied to the Special Commissioner, Department of Trade & Taxes (“the Respondent”), seeking 6% interest from the refund application date until December 3, 2023.

Therefore, aggrieved by these circumstances, the present writ petition was filed, requesting the Respondent to grant the total IGST refund of Rs. 2,44,75,410/- for the tax periods of December 2022, February 2023, March 2023, and May 2023, along with interest as per Section 56 of the CGST Act.

Issue:

Does the Assessee have a statutory entitlement to interest on delayed GST refunds?

Held:

The Delhi High Court, in Writ Petition (Civil) No. 12209 of 2023, ruled as follows:

It was observed that interest payment under Section 56 of the CGST Act is mandatory and not contingent upon the Assessee's claim. It automatically becomes due if the GST refund is not issued within 60 days from the date of application receipt. Denial of GST refund based on waiving interest claims in FORM GST-RFD-01 is unjustifiable. Additionally, interest is only applicable if the refund isn't granted within 60 days from the application date, making interest payment obligatory and automatic.
It was also noted that Circular No. 125/44/2019-GST dated November 18, 2019, clarifies that interest calculation starts from the day immediately following the 60-day period from the application receipt until the amount is credited to the applicant's bank account.
The court held that the Petitioner is entitled to statutory interest at a rate of 6%, starting from the day immediately following the expiry of the 60-day period from the application receipt until the refund is credited to the Petitioner's bank account. The Respondent was instructed to process the refund of interest and credit it to the Petitioner's account within four weeks. Consequently, the petition was resolved along with the pending application.

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