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Approval of outstanding refunds must be completed by April 30, Income Tax Department.

editor — Wed, 10 Apr 2024 04:45:35 +0000

The Income Tax Department has announced a positive development for individuals awaiting their income tax refunds. They have set a firm deadline of April 30 for the approval of all pending refunds.

Since the opening of the portal for the Assessment Year 2024-25 on April 1, there has been considerable activity, with over 46,000 income tax returns filed within the initial five days. Out of these, close to 3,000 returns have already undergone processing.

The Department has devised an interim action plan for the current fiscal year, outlining specific timelines for addressing various taxpayer-related matters. Immediate attention has been directed towards the approval of pending refunds, particularly those withheld under section 241A due to potential adverse effects on revenue, following the completion of scrutiny assessments and necessary orders. Despite the issuance of refunds exceeding ₹3.36 lakh crore in the fiscal year 2023-24, complaints persist regarding pending refunds from previous fiscal years.

Officials emphasize the importance of approving all pending refunds related to e-returns filed on the Income Tax Business Application (ITBA) for all assessment years by April 30. Additionally, a deadline of June 30 has been set for resolving penalties in at least half of the cases that will become time-barred by March 31, 2025.

Furthermore, attention has been drawn to cases involving Tax Deducted at Source (TDS), with a one-month timeframe provided for disposing of all pending applications as of April 1, 2024, for NIL or lower TDS/TCS. Additionally, orders are expected to be issued by June 30 for cases where TDS surveys were conducted up to March 31, 2024.

Source: https://www.thehindubusinessline.com/economy/it-department-sets-april-30-as-deadline-for-approval-of-pending-refunds/article68042765.ece

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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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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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ITC Transition not to be denied in case of Input Service Distributor (ISD)

editor — Sat, 23 Mar 2024 06:22:00 +0000

In the case of Siemens India Ltd. v. Union of India [Writ Petition No. 986 of 2019 dated February 09, 2024], the Hon’ble Bombay High Court, drawing upon sub-section (7) of Section 140 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), postponed the proceedings for further examination. The court upheld the temporary halt granted to the Assessee, who is an Input Service Distributor (“ISD”), emphasizing that Input Tax Credit (ITC) legitimately available to the Assessee before the Appointed Day should not be forfeited due to the absence of an effective procedural mechanism for transferring ITC to the Electronic Credit Ledger for utilization. This situation could lead to the permanent loss of such ITC.

Facts of the case:

Siemens India Ltd. (“the Petitioner”), registered as an Input Service Distributor (ISD), initiated a writ petition regarding the transition of Input Tax Credit (ITC) available to them on July 1, 2017 (“the Appointed Day”). The petition contested the Revenue Department’s (“the Respondent”) refusal to allow transition or utilization of ITC in the Electronic Credit Ledger, citing a defective electronic mechanism.

These proceedings stemmed from a Supreme Court order dated March 24, 2023, in Union of India and Ors. v. Siemens Ltd. and Ors [SLP (Civil) Diary No. 7213 of 2023], directing a fresh consideration of the case, taking into account relevant contentions and legal provisions.

Issue:

Is an Input Service Distributor (ISD) entitled to transition ITC available on the Appointed Day?

Held:

The Bombay High Court, in Writ Petition 986 of 2019, made the following determinations:

The primary concern revolves around the legal ramifications of sub-section (1) and sub-section (7) of Section 140 of the CGST Act, outlining transitional arrangements for the carry-forward and utilization of ITC by ISDs.
Citing sub-section (7) of Section 140 of the CGST Act, the Court emphasized that legitimately available ITC with the Petitioner before the Appointed Day cannot be forfeited due to the absence of an effective procedural mechanism for transferring ITC to the Electronic Credit Ledger for utilization, thus preventing permanent loss of such ITC.
The Court suggested that a thorough examination of these issues by the GST Council would aid in the adjudication process.
It was decided that interim relief granted to the Petitioner would remain in force.
The case was adjourned until August 9, 2024.

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Guidelines Regarding Cash Limits in Home under Tax Regulations

editor — Fri, 22 Mar 2024 06:29:06 +0000

Under the provisions of the Income-Tax Act (ITA) of 1961, there exists no stipulation on the maximum amount of cash permissible to be kept within one’s residence. However, during an income tax inspection, individuals must provide verifiable sources for the cash in their possession.

This particularly applies to funds that must be accounted for in terms of income. If the documentation provided by an individual does not align with the amount of cash found at their residence, income tax authorities possess the authority to penalize them. In such instances, unaccounted cash can be seized, with penalties reaching as high as 137% of the total amount.

It is imperative to consider the subsequent regulations regarding cash, as mandated by the income-tax department:

Prohibition on accepting cash amounts of Rs 20,000 or more for loans or deposits: The income-tax department strictly prohibits individuals from accepting cash sums of Rs 20,000 or higher in relation to loans or deposits.
Compulsory presentation of Permanent Account Number (PAN) for transactions exceeding Rs 50,000: According to the directives of the Central Board of Direct Taxes (CBDT), individuals are required to furnish a PAN card for transactions involving deposits or withdrawals exceeding Rs 50,000 at a time.
Scrutiny by investigative agencies for cash-based asset transactions surpassing Rs 30 lakh: Indian citizens involved in cash transactions exceeding Rs 30 lakh concerning the purchase or sale of assets may come under scrutiny by investigative agencies.
Investigation into credit or debit card transactions surpassing Rs 1 lakh: Any single transaction exceeding Rs 1 lakh made through credit or debit cards is likely to attract the attention of investigative agencies.
Imposition of a 2% Tax Deducted at Source (TDS) on withdrawals surpassing Rs 1 crore: Individuals withdrawing over Rs 1 crore in cash from banks within a financial year are subject to a 2% TDS deduction.
Penalty for cash transactions surpassing Rs 20 lakh: Cash transactions exceeding Rs 20 lakh in a year may lead to penalties, while the purchase or sale of cash-based property worth more than Rs 30 lakh could prompt investigations by regulatory bodies.
Restrictions on cash payments: Limits include refraining from making cash purchases exceeding Rs 2 lakh without PAN and Aadhaar details, as well as restrictions on credit or debit card transactions exceeding Rs 1 lakh.
Regulations on familial transactions and loans: Accepting cash sums exceeding Rs 2 lakh from a relative in a single day or obtaining loans exceeding Rs 20,000 in cash from any individual are prohibited.

Adhering to these regulations is essential to avoid legal consequences and ensure full compliance with income tax laws and regulations.

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Guidelines on Cash Limits and Tax Implications for Individuals

editor — Wed, 20 Mar 2024 10:26:48 +0000

As per the Income-Tax Act (ITA), 1961, there is no restriction on the amount of money stored in the house; in case of an income tax raid, an individual is required to present the source of the money.

This is especially true for the money should not be unaccounted for in income. In case an individual’s documents do not match the amount of money stored in the house, then income tax officials can penalise the individual. In such cases, income tax personnel are authorised to seize the unaccounted money, and the fine can be as high as up to 137% of the total money.

It is important to take into account the following rules related to cash mandated by the income-tax department:

No Cash Transactions Above Rs 20,000 for Loans or Deposits:

The income-tax department strictly prohibits any individual from accepting an amount of Rs 20,000 or more in cash related to loans or deposits.

PAN Mandatory for Transactions Over Rs 50,000:

As per the Central Board of Direct Taxes (CBDT), individuals must provide a PAN card for deposits or withdrawals of over Rs 50,000 at a time.

Scrutiny for Cash-Based Asset Transactions Over Rs 30 Lakh:

Indian citizens engaging in the purchase or sale of assets through cash of more than Rs 30 lakh may come under the lens of investigating agencies.

Investigation into Credit-Debit Card Transactions Over Rs 1 Lakh:

Any payment transaction exceeding Rs 1 lakh paid through credit or debit cards at a time is likely to draw the attention of investigating agencies.

2% Tax Deducted at Source (TDS) for Withdrawals Exceeding Rs 1 Crore:

Individuals withdrawing more than Rs 1 crore in cash from the bank in a financial year are subject to shell out a 2% TDS.

Penalty for Cash Transactions Over Rs 20 Lakh:

Cash transactions exceeding Rs 20 lakh in a year are likely to attract penalties, while the purchase and sale of cash property of more than Rs 30 lakh can draw the attention of investigative agencies.

Caps on Cash Payments:

Limits include not paying over Rs 2 lakh in cash for purchases without PAN and Aadhaar information and restrictions on transactions more than Rs 1 lakh with credit-debit cards.

Family Transactions and Loans:

Receiving over Rs 2 lakh in cash from a relative in a day or taking a loan of more than Rs 20,000 in cash from any individual else is prohibited.

An individual is required to be abreast of these rules to avoid any legal repercussions and ensure total compliance with the income tax rules and regulations.

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CBDT Issues Guidelines on Income Tax Appeal Filing to Reduce Litigation

editor — Tue, 19 Mar 2024 06:24:06 +0000

The Central Board of Direct Taxes (CBDT) has issued Circular No. 5/2024 dated March 15, 2024, under Section 268A of the Income-tax Act, 1961, providing guidelines for the Department’s appeal filings before the Income Tax Appellate Tribunal (ITAT), High Courts (HCs), and for Special Leave Petitions (SLPs)/appeals before the Supreme Court (SC) with the aim of reducing litigation. This circular supersedes Circular No. 3/2018 from July 11, 2018, Circular No. 17/2019 from August 8, 2019, and a board letter dated August 20, 2018.

In line with the guidelines, monetary limits and other conditions for filing departmental appeals under the Income-tax Act, 1961 have been specified for ITATs, HCs, and SC. However, exceptions have been provided where the decision to appeal or file an SLP shall be based on merits without regard to the tax effect and the monetary limits.

These exceptions include cases where:

It contained Any provision of the Act or the Rules or notification issued thereunder has been held to be constitutionally invalid.on both external and internal assets generated or acquired during the relevant financial year under various tax categories such as CGST, SGST & IGST, and HSN codes.
Any order, notification, instruction, or circular of the Board or the Government has been held to be illegal or ultra vires the Act.
The assessment is based on information related to any offence received from law enforcement or intelligence agencies.
Prosecution has been filed by the Department in the relevant case and the trial is pending.
Strictures/adverse comments have been passed against the Department.
The tax effect is not quantifiable or not involved, such as in the case of registration of trusts or institutions.
Addition relates to undisclosed foreign income/undisclosed foreign assets.
Cases involving organized tax evasion or accommodation entries.
Mandated by a Court’s directions.
Writ matters.
Matters related to wealth tax, fringe benefit tax, equalization levy, and other matters outside the Income Tax Act.
Litigation arising out of disputes related to TDS/TCS matters.

The Circular further clarifies that appeals or SLPs shall not be filed in cases where the tax effect does not exceed specified monetary limits for ITAT, HCs, and SC. The tax effect is defined as the difference between the tax on the total income assessed and the tax that would have been chargeable had the total income been reduced by the amount of income in respect of the disputed issues.

Additionally, procedures for calculating the tax effect in cases involving TDS/TCS are outlined, and reporting mechanisms are established to ensure compliance with the Circular’s provisions.

The Circular aims to streamline the appeals process, reduce unnecessary litigation, and provide clarity to taxpayers on their Income-tax assessments. It emphasizes the importance of deciding on appeal filings based on the merits of each case and encourages the resolution of disputes in a fair and efficient manner.

Source: https://www.nyca.in/wp-content/uploads/2024/03/Circular-No.-5-2024-Filing-of-appeals-by-Dept.pdf

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Key JSON Schemas for ITR-1 and ITR-4 Issued by Income Tax Department for Assessment Year 2024-25

editor — Tue, 19 Mar 2024 05:43:06 +0000

ITR-1 Schema:

The Income Tax Department has recently unveiled the JSON Schema for ITR-1 for the Assessment Year 2024-25, corresponding to the Financial Year 2023-24.

This schema caters to individuals who are residents (excluding not ordinarily residents) with a total income of up to Rs. 50 lakh. It applies to individuals with income from salaries, one house property, other sources (such as interest), and agricultural income up to Rs. 5 thousand.

ITR-4 Schema:

The Income Tax Department has also released the JSON Schema for ITR-4 for the Assessment Year 2024-25, corresponding to the Financial Year 2023-24.

Designed for individuals, Hindu Undivided Families (HUFs), and firms (excluding Limited Liability Partnerships) who are residents and have a total income of up to Rs. 50 lakh. This schema is applicable to those with income from business and profession computed under sections 44AD, 44ADA, or 44AE, along with agricultural income up to Rs. 5 thousand.

ITR-1 Schema:

Document: https://www.nyca.in/wp-content/uploads/2024/03/ITR-1_2024_Main_V1.0.zip

Date of Initial JSON Schema Release: 18th March 2024

ITR-4 Schema:

Document: https://www.nyca.in/wp-content/uploads/2024/03/ITR-4_2024_Main_V1.0.zip

Date of Initial JSON Schema Release: 18th March 2024

Source: IncomeTaxPortal

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CBDT Orders Income Tax Offices to Operate on March 29-31, 2024

editor — Tue, 19 Mar 2024 04:39:58 +0000

The Central Board of Direct Taxes (CBDT) has issued an Order dated March 18, 2024, announcing the extension of working days for all Income Tax Offices in India. This extension applies to March 29, 30, and 31, 2024, with the aim of facilitating the completion of pending work.

Given that the Financial Year 2023-24 concludes on March 31, 2024, which falls on a Sunday, and March 30, 2024, is a Saturday, and March 29, 2024, is a closed holiday, this decision has been made to ensure that pending departmental tasks can be effectively addressed.

This directive, issued under section 119 of the Income-tax Act, 1961, by the Central Board of Direct Taxes, is aimed at providing administrative convenience and ensuring that necessary tasks are completed within the stipulated time frame.

For further details, the complete Order can be accessed at: https://www.nyca.in/wp-content/uploads/2024/03/CBDT-Order-18.3.2024.pdf

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