CA in Jaipur | CA. Yogesh Jangid |ITR Filing 2023 | Company Registration | NGO Registration | Income Tax Raid Cases | Audit | Inc Incroporation | CPA in India | Subsidy | Project Funding | GST | GST Raid Cases | Income Tax Notice Faceless | DRI Cases |

CBDT Notifies Income Tax Exemptions for Various Organizations under Section 10(46) | July 2024

editor — Fri, 26 Jul 2024 04:25:47 +0000

The CBDT has issued Notifications Nos. 94 and 95 on July 24, 2024, granting income tax exemptions under section 10(46) of the Income-tax Act, 1961 (“the IT Act”). The exemptions apply to the ‘Punjab Skill Development Mission Society, Chandigarh,’ ‘Himachal Pradesh State Load Despatch Centre, Shimla,’ and ‘Society for Applied Microwave Electronics Engineering & Research (SAMEER), Mumbai.’

The notifications are available at: CBDT Notifications Nos. 94 to 96.

category

Indian Chamber of Commerce Urges Overhaul of Income Tax Act 1961 and Customs Duties Review

editor — Sat, 20 Jul 2024 04:56:51 +0000

The Indian Chamber of Commerce (ICC) has urged the central government to form a commission to thoroughly review and simplify the Income Tax Act 1961.

“This Act is outdated. The annual Budget amendments have made it increasingly complex and difficult to comprehend. These changes have created numerous anomalies, resulting in a surge of legal cases,” the chamber explained.

Additionally, the ICC suggested a restructuring of customs duties in key sectors such as steel, solar, aluminium, and lithium-ion batteries to enhance domestic manufacturing.

Finance Minister Nirmala Sitharaman is set to present the annual budget on July 23.

The ICC President stressed the need for a “comprehensive rationalization” of customs duties, asserting that this move has the potential to transform India into a global manufacturing hub.

He pointed out that current levies on raw materials unfairly disadvantage domestic players, particularly downstream businesses.

He proposed addressing the inverted duty structure by reducing the tax on liquefied petroleum gas (LPG) from 5 percent to 2.5 percent.

“To support domestic manufacturing, we must increase duties on polymers such as PVC, PET, PP, and polyesters to 10 percent,” he stated, emphasizing the goal of achieving self-sufficiency in the petrochemical sector.

Regarding the aluminium foil sector, the president highlighted that the domestic industry has been facing significant losses due to an anti-dumping duty on raw materials, while finished goods from China are not subject to any import duties.

Source: The Telegraph India

category

CBDT Extends Income Tax Exemptions for Sovereign Wealth and Pension Funds to March 2025

editor — Sat, 20 Jul 2024 04:39:42 +0000

On July 18, 2024, the Central Board of Direct Taxes (CBDT) released Notifications No. 54 to 65/2024, amending earlier notifications under Section 10(23FE) of the Income Tax Act, 1961. These amendments extend the applicability date from March 31, 2024, to March 31, 2025, for various sovereign wealth funds and pension funds.

Summary of Key Amendments:

The full text of the notifications can be accessed here: CBDT Notifications

category

CBDT Issues New Guidelines for Section 148 Income Tax Notices

editor — Tue, 09 Jul 2024 05:59:47 +0000

The Central Board of Direct Taxes (CBDT) issued guidelines on June 26, 2024, via F.No.299/10/2022-Dir(Inv.III)/1522, detailing the procedure for issuing notices under Section 148 of the Income Tax Act, 1961.

Here are the key points:

Credible Information Requirement: The Assessing Officer (AO) can issue a notice under Section 148 only if credible information suggests that income has escaped assessment. This information may come from risk management systems, audit objections, information exchange agreements, whistleblower schemes, or court orders.
Approval for Extended Cases: For reassessments extending beyond three years from the relevant assessment year, approval from a specified authority is required to ensure thorough scrutiny and prevent frivolous reassessments.
Enclosures and Documentation: Notices must include relevant information and supporting documents. Details from the Investigation Wing or law enforcement agencies should be appropriately redacted if necessary. The notice must also mention the AO's name, designation, and any judicial orders relied upon.
Show Cause Notice: Before issuing a final reassessment notice, the AO must provide the assessee with a show cause notice under Section 148A, explaining the reasons for reassessment and offering an opportunity to respond.
Time Limits and Thresholds: Reassessment notices must generally be issued within three years from the end of the relevant assessment year. This period can be extended to ten years if the escaped income exceeds Rs. 50 lakh, ensuring the focus remains on cases with significant tax implications.

The complete guidelines can be accessed at the provided link:

https://www.nyca.in/wp-content/uploads/2024/07/CBDT_Guidelines_S148.pdf

category

Who Needs to Pay Advance Tax in India?

editor — Mon, 17 Jun 2024 05:17:20 +0000

Advance tax involves paying income tax in installments throughout the year instead of a lump sum at the end. The first installment for this fiscal year is due on June 15, 2024. Individuals with a net income tax liability exceeding ₹10,000 in any financial year are required to make advance tax payments. This amount is the estimated tax minus TDS within the financial year. To avoid penal interest as per the Income Tax Act, 1961, individuals must make four quarterly payments.

Who is exempt from paying advance tax?

Taxpayers must make four quarterly advance tax payments between June 15 and March 15 of the financial year. However, those who opt for the presumptive taxation scheme can make a single payment by March 15. Senior citizens (aged 60 or above) who do not have income from business or profession are exempt from paying advance tax.

Due dates for Advance Tax payments:

On or before June 15: 15% of the net estimated tax liability.
On or before September 15: 45% of the net estimated tax liability minus advance tax already paid.
On or before December 15: 75% of the net estimated tax minus advance tax already paid.
On or before March 15: 100% of the net estimated tax minus advance tax already paid.

Penalties for missing advance tax payments:

If you fail to pay advance tax, penal interest is charged under sections 234B and 234C at 1% per month or part thereof for each section.

How to pay advance tax:

You can pay advance taxes through the income tax department’s e-filing portal, either online or with an offline bank challan.

Source: Hindustan Times

category

I-T Dept Issues Reminder: Link PAN with Aadhaar by May 31 to Avoid Higher TDS; Here’s How

editor — Fri, 31 May 2024 05:18:14 +0000

The Income Tax Department has issued a crucial reminder for taxpayers: link your Permanent Account Number (PAN) with your Aadhaar by May 31, 2024. This announcement, shared on X (formerly Twitter), highlights the significance of this deadline to avoid increased tax deductions at source (TDS).

Key Reminder from the I-T Department

On May 28, 2024, the Income Tax Department took to social media to emphasize this critical deadline. The department’s message was clear: failure to link your PAN with Aadhaar by May 31 will result in higher TDS rates.

“Kind attention taxpayers, please link your PAN with Aadhaar before May 31, 2024… Linking your PAN with your Aadhaar by May 31 ensures you don’t face higher tax deduction/tax collection under Section 206AA and 206CC of the Income Tax Act, 1961, due to an inoperative PAN for transactions entered into before March 31, 2024,” read the post.

Implications of Missing the Deadline

Taxpayers who do not link their PAN with Aadhaar by the deadline will face significant financial consequences. Specifically, they will be subject to higher tax deductions and collections as per Sections 206AA and 206CC of the Income Tax Act, 1961. This mandate is designed to enforce compliance and streamline tax administration.

Previous Circular from CBDT

This reminder follows an earlier circular issued on April 23, 2024, by the Central Board of Direct Taxes (CBDT). Circular No. 6/2024 detailed the regulations surrounding PAN-Aadhaar linking and outlined the penalties for non-compliance.

How to Link PAN with Aadhaar

Step-by-Step Guide

Visit the Official Website: Go to the Income Tax Department's official website: incometaxindiaefiling.gov.in.
Navigate to 'Quick Links': Select the ‘Link Aadhaar’ option under the ‘Quick Links’ section.
Enter PAN and Aadhaar Details: Input your PAN and Aadhaar numbers, then click on the ‘Validate’ button.
Provide Additional Information: Enter your name as it appears on your Aadhaar card and your mobile number, then click on the ‘Link Aadhaar’ button.
Complete the Verification: Enter the OTP sent to your mobile number and click the ‘Validate’ button to complete the process.

How to Check PAN and Aadhaar Linkage Status

Step-by-Step Guide

Visit the Official Website: Go to incometax.gov.in.
Select 'Link Aadhaar Status': Under the ‘Quick Links’ section, select ‘Link Aadhaar Status’.
Enter Details: Input your PAN and Aadhaar numbers, then click on the ‘View Link Aadhaar Status’ button.
View Status: Your linkage status will be displayed. If the UIDAI is still processing your request, check back later.

Source

For more details, refer to the official source: LiveMint Article

category

Section 43B of Income Tax Act: Expenses Businesses Can Cover Apart from Payment to MSMEs

editor — Tue, 14 May 2024 04:56:26 +0000

Introduction

India’s business landscape is closely monitored by regulatory frameworks, including the Income Tax Act of 1961. Section 43B of this act, while serving as a tool for tax compliance, has recently stirred debates among MSMEs and traders due to a significant amendment. Let’s explore the implications and intricacies of this section.

Concerns Over Section 43B Amendment

The recent addition of clause h to Section 43B has sparked concerns among MSMEs and traders. This clause imposes strict timelines on payment settlements, particularly affecting industries like textiles, exports, and trading. Businesses now face challenges in meeting the stipulated payment deadlines, potentially impacting their cash flow and operations.

Overview of Section 43B

Section 43B of the Income Tax Act delineates permissible deductions for businesses and professionals while computing taxable income. It outlines various expenses that can be claimed as deductions, offering relief to taxpayers under specific circumstances.

Allowed Deductions under Section 43B

Under Section 43B, businesses can claim deductions for various expenses incurred during the financial year. These include payments made towards taxes, employee welfare funds, bonuses, interest on loans, and other specified expenditures. The provision allows businesses to deduct these expenses from their taxable income, reducing their overall tax liability.

Importance of Payment Timing

The timing of payments under Section 43B is crucial for businesses seeking deductions. Payments must be made within specified timelines to qualify for deductions, highlighting the significance of timely financial management and compliance with statutory obligations.

Impact on MSMEs and Traders

The amendment to Section 43B, particularly clause h, has raised concerns among MSMEs and traders. These entities operate within tight financial constraints and may face challenges in adhering to the stringent payment deadlines prescribed by the amended provision. The potential impact on cash flow and operational efficiency necessitates a closer examination of the amendment’s implications.

Detailed Analysis of Deductible Expenses

Section 43B allows deductions for a range of expenses incurred by businesses, including taxes, employee benefits, interest payments, and obligations to statutory bodies like the Indian Railways. Each category of deductible expenses has specific criteria and conditions outlined under the Income Tax Act, emphasizing the importance of meticulous financial planning and documentation.

Source: https://www.financialexpress.com/business/sme/section-43b-of-income-tax-act-expenses-businesses-can-cover-apart-from-payment-to-msmes/3483290/

category

Provision of TDS and TCS on Purchase & Sell of Goods

editor — Sat, 11 May 2024 06:13:06 +0000

In the Indian tax system, two key concepts govern tax collection at source: Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). While they share some similarities, they differ in who collects the tax and on what type of transactions they apply. This article focuses on TCS on the purchase and sale of goods, particularly transactions exceeding ₹50 lakhs.

Understanding TCS

TCS is a mechanism where the seller of specific goods is responsible for collecting tax at source from the buyer at the time of sale. This collected tax is then deposited by the seller to the government. The objective of TCS is to widen the tax net and ensure better tax compliance.

When does TCS apply on purchase of goods?

In India, TCS on the purchase of goods is governed by Section 206C(1H) of the Income Tax Act, 1961. This provision applies when the following conditions are met:

Understanding the Difference: TDS vs. TCS

TDS (Tax Deducted at Source): This applies when a payer deducts tax from certain payments they make to a payee. The payer then deposits this deducted tax with the government on behalf of the payee. Common examples include TDS on salary, rent, and professional fees.
TCS (Tax Collected at Source): Here, the tax is collected by the seller (collector) from the buyer (payer) at the time of sale. The seller then deposits this collected tax with the government.

Important Points to Remember:

TCS is applicable on the amount exceeding ₹50 lakhs. So, if you purchase goods worth ₹60 lakhs, TCS will be calculated on ₹10 lakhs (₹60 lakhs - ₹50 lakhs).
The current TCS rate (as of March 2024) is 0.1%.
If the buyer fails to provide their Permanent Account Number (PAN) or Aadhaar number, the seller has to collect TCS at a higher rate of 1%.

Example:

Company A purchases goods worth ₹75 lakhs from Company B in a financial year. Company B has a turnover exceeding ₹10 Crore.

TCS will be applicable on the amount exceeding ₹50 lakhs, which is ₹25 lakhs (₹75 lakhs – ₹50 lakhs).

TCS rate = 0.1%

TCS amount = ₹25 lakhs * 0.1% = ₹2500

Who is Responsible for TCS Compliance?

What happens if the buyer does not provide PAN/Aadhaar?

If the buyer fails to provide their Permanent Account Number (PAN) or Aadhaar number, the seller is required to collect TCS at a higher rate of 1%.

Seller’s Responsibilities:

Collect TCS from the buyer at the designated rate.
Issue a certificate to the buyer mentioning the amount of TCS collected.
Deposit the collected TCS to the government within the specified timeframe (usually by the 7th of the following month).
File TCS return with the Income Tax Department.

Buyer’s Considerations:

While the seller collects TCS, the buyer can claim credit for this tax deducted at source while filing their income tax return, reducing the buyer’s overall tax liability.

The buyer needs to obtain a TCS certificate from the seller for claiming the credit.

Difference between TCS and TDS on purchase of goods:

There’s a common misconception that TDS applies to the purchase of goods. However, there’s no provision under the current tax laws for TDS on the purchase of goods. TDS is generally applicable on income payments such as interest, rent, and professional fees.

Key Differences Between TCS and TDS:

Feature	TCS	TDS
Who deducts the tax?	Seller	Buyer
On what type of transaction?	Sale of specific goods (above Rs 50 Lakh)	Payment for specific services, rent, interests
Purpose	To widen tax net and ensure advance tax collection	To ensure the tax is deducted at source and deposited with the government

Additional Considerations:

In Conclusion:

Understanding TCS on the purchase of goods, particularly for transactions above ₹50 lakhs, is crucial for businesses to ensure proper tax compliance. By being aware of the threshold limit, collection responsibility, and calculation methods, businesses can avoid penalties and contribute effectively to the tax system.

category