Publisher:A GUIDE TO FIXED INCOME SECURITIES | ACADEMY TAX4WEALTH
Sep 19,2020
A Guide to Fixed Income
The types of investment security under which the investors get paid fixed interest or dividend payments until their maturity date are broadly called Fixed Income. The investors get paid the amount they have invested known as the principal amount at the maturity date. The most common types of Fixed Income products are Government and Corporate Bonds.
The major difference between Fixed Income securities and equities or variable-income securities is that the payment for Fixed Income securities is known in advance and will remain fixed throughout the period till maturity whereas equities might not pay any cashflows to the investors or when payments could change based on factors such as short-term interest rates.
What are the types of Fixed Income products?
As we have established before, the most commonly known Fixed Income security is a Government Bond or Corporate Bond. Government securities are mostly those that are issued by the U.S. government and are called Treasury Securities. Furthermore, these Fixed-Income securities are not limited to U.S Government only rather they are also provided by non-U.S. Governments and corporations.
Below mentioned are some of the types of Fixed-Income Products
✅ Treasury bills, also known as T-bills
✅ Treasury notes, also known as T-notes
✅ Treasury Bonds, also known as T-bonds
✅ Treasury Inflation-Protected Securities (TIPS)
✅ A Municipal Bond
✅ Corporate Bonds
✅ Junk Bonds
✅ Certificate of Deposit (CD)
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Publisher:SECTION 194Q – TAX DEDUCTION ON THE PURCHASE OF GOODS | ACADEMY TAX4WEALTH
Jun 23,2021
Section 194Q – Tax Deduction on The Purchase of Goods
Section 194Q of the Income Tax Act, 1961, was introduced by the Finance Act, 2021. This Act is about Tax Deducted at Source (TDS) on the purchase of goods but not the provisions relating to services.
Applicability of Section 194Q
Section 194Q of the ITA begins to apply on July 1, 2021. Consequently, only purchases after July 1, 2021, must be subject to TDS. However, Beginning April 1, 2021, a threshold of Rs 50 lakh must be taken into account when making a purchase.
Applicability on the buyers in the following cases:
✅ A buyer having, in the preceding financial year, a Turnover or Gross Receipt or Sales more than Rs. 10 Crore.
✅ A buyer who has made a payment of a sum to the Resident Seller, and Any such payment has to be made only on the purchases of goods aggregating a value exceeding Rs. 50 Lacs.
Also, read; How to File TDS Return Online?
What is the rate of TDS under this provision?
On sales exceeding Rs 50 Lacs in a financial year from a seller that the buyer has purchased goods worth more than Rs 50 Lacs, tax is to be deducted at source at the rate of 0.1%.
Calculation of Tax Deducted at Source (TDS):
Following are the conditions on which Tax is to be Deducted at Source:
✅ When the purchase from a seller in a financial year is above Rs 50 Lacs
✅ TDS will be calculated and deducted after the deduction of Rs 50 Lacs from the total value of the purchase of goods.
✅ As the threshold limit is Rs 50 Lacs, it is a seller-wise deduction in every Financial Year.
Also,Learn; How TDS is Calculated?
Rules Regarding GST:
Calculation of TDS by keeping in mind the impact of GST-
✅ Turnover shall be calculated excluding GST
✅ However, the Calculation of TDS at the rate of 0.1% shall be including GST.
When exactly is TDS deducted?
TDS is to be deducted at the point at which the seller receives the payment or when he receives credit for it.
Thus, if you did not make an advance payment, then this TDS has to be deducted at the time of purchase. If you have made an advance payment, however, you must deduct TDS immediately.
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Publisher:FIVE TAX SAVING TIPS FOR SMALL BUSINESS OWNER IN INDIA | ACADEMY TAX4WEALTH
Jul 07,2021
Five Tax saving tips for small business owner in India
Benefits of Tax savings:
Entrepreneurs, servicemen, business owners, and government employees are liable to pay income tax on the basis of their income scale to the government of the country. Being a taxpayer is important and is one of the best ways to keep your income records clean and transparent.
Paying your tax on time should not be treated as a mere obligation but a responsibility that an individual needs take care of in order to ensure a country’s economy works well and with transparency. This will also help the government to function smoothly and the country to develop on a broader aspect. The tax you pay is depending on your income scale and can be a considerable sum. There are ways in which you can get deductions and exemptions to minimize the tax you need to pay. All you need to do is have some tax-saving tips in mind.
Why is it necessary to pay taxes on time?
Every financial year, taxpayers are supposed to file their returns and pay their fair share of taxes to the government. The Indian government has also made some provisions that can help taxpayers to reduce their taxable incomes by making investments. If you are a taxpayer, you should always take care of the tax being paid at the right time and also pay it as per your income, don’t overdo it or just underpay it. If you are no expert, you can take the help of a chartered accountant to guide you once and get clarity on the components and benefits of filing tax and saving tax.
How positively do small businesses get affected by tax savings?
Who doesn’t want to save money? We all do and tax-saving tips can be considered when we want to reduce the payable amount to the government while filing taxes and use the same for other purposes.
Tax-saving tips have been found to be the most beneficial for people involved in small businesses. Tax-saving tips can be an excellent resource for small businesses in India. This will not only help the business to flourish but also increase the chances of making more out of the existing resources. Saving the payable tax is one of the best ways to help your money grow and be transparent with your income at the same time. With the help of tax-saving tips, you can also avail of deductions for various essential long-term purchases. For example, you can get tax-saving deductions in the Income Tax Act for the interest accumulated on your home loan or education loan as well as for your savings account.
Below mentioned are five tax-saving tips for small business owners in India: Apart from home loans, medical insurance is also a tax saver. A specified amount paid for medical insurance is eligible for tax deductions under section 80C. This applies only if the individual has purchased medical insurance and not on the employee's insurance. You can only know about tax-saving tips for small businesses once you start exploring the facts. Don’t forget the fact that the more you save, the better future will wait for you!
Tax Saving Tips:
Make Your Own Family Members and Relatives a part of your business
Contribute to the National Pension System
Housing loans and healthcare needs
Make Donations/Charity
Business Utilities
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Publisher:INCOME TAX CERTIFICATION COURSES FOR BEGINNERS IN INDIA | ACADEMY TAX4WEALTH
Jul 12,2021
Best income tax courses for beginners in India -Updated
First of all, it is necessary to understand that Income Tax Courses are a medium to supply a clearer picture of the concepts related to it. In addition, the idea behind such courses is to let one be at the best knowledge ground.
We all are not unaware of the significance of paying one’s taxes on time and the beneficial factors of doing so for one’s future financial life. If you wish to have a secured financial life in future then make sure to pay your taxes in due time and the return, as per the eligibility, is required to be filed. There are experts available to seek guidance via Income Tax Courses for beginners or Seek consultation from Chartered Accountants.
Certificate on Income Tax:
Income Tax is a vast concept resulting in various Income Tax Courses available in the market for people who are interested in pursuing a career in Income Tax Department. Certificate on Income Tax is a program designed to help students understand the basic terminology related to income tax.
The focus of this course is to deliver clarity on the distinction between the various aspect of Income Tax such as the calculation, the terms related to the concept, helping with the familiarity of terminology, etc. It is very important to have a proper understanding of the details of the process as tax planning is a necessary process for individuals as well as corporates.
For beginners of the Income Tax Courses are provided with the terms related to tax planning for example: Filling necessary compliances, Handling the assessment, Tax Calculation, Limiting Tax, disputes, etc. This course is divided into 12 parts with more than 20 hours of time duration and comes with a Certificate after the completion of the course.
Income Tax Certification Course:
The Income Tax Certification Course is one of the basic Income Tax Courses that are also available to be proceeded to be taken via e-books or a pen drive according to the choice of users. This is a course where it encourages a better understanding of the Act and the uses of varying terms. It helps the users to create a clean image of the related concepts such as clubbing of income set-offs carrying forward losses, deductions, TDS and its usage, TCS, etc. by illustrating the concept of clubbing of income set-offs and losses.
Taking Guidance through these Income Tax Courses might prove to be a huge help for beginners as this course would be very useful for people possessing basic knowledge or understanding of Income Tax in order to create a base in the same field in future as a career goal.
Indian Income Taxes:
Income Tax Courses not only enable beginners to have a better understanding of Income Tax Provisions but also help in creating career goals for a prosperous future in the same field. The major advantage of this course is that it delivers an in-depth description of Income Tax.
Academy Tax4wealth's Income tax courses for beginners are great for gaining knowledge and for describing the terms in detail. Interested in a career in income tax? This could be your key to understanding the assessment and helping you to build a career.
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Publisher:TAXATION OF DIGITAL ECONOMY | ACADEMY TAX4WEALTH
Aug 27,2021
Taxation of Digital Economy- [Updated]
Introduction
A digital economy refers to an economy that is based on digital computing technologies. Although these days there is an increase in the perception regarding the concept of the digital economy while conducting business in the markets based on the world wide web and the internet. In simple words, the digital economy is also known as the web economy or internet economy. To be more specific it is referred to as an economy based on digital technology.
Over the past few years, there has been a sea change in the way of conducting business. This can be better understood with the help of an example. For example, one of the biggest providers of cab services Uber is not the owner of all the cabs that it engaged in the services of the customers. Likewise, there are so many frontiers including Amazon, Paytm, Makemytrip, Flipkart, etc to name a few. All of the aforesaid companies are not engaged in providing conventional business but they contribute a lot to the digital economy and its development.
The existing rules of tax in India as well as internationally were revised a few years ago considering the functions of the brick-and-mortar economy. However, it is undoubtedly evident that the introduction of the digital economy in the current regime of tax is quite redundant. Today, digital businesses are making profits at an alarming rate but there are no commensurate tax laws in respect of the aforesaid profits earned by the businesses. Considering the same, this can be regarded as the need of the hour not only for India but also for all countries across the globe to revamp and revise their respective taxation law as it can be clearly seen that the digital economy is at its peak for the consideration of taxation.
An Overview of Taxation in India
The Direct Tax in India is administered and governed by and under the Income-tax Act, 1961. The residents and non-residents are taxed on their income earned in India and worldwide respectively. There are separate conditions to determine the residential status of the companies. The companies will be treated as a resident during a particular financial year provided they satisfy the following conditions;
The company is incorporated in India
The company has a place of business in India
Considering the above-mentioned two conditions, it is clear that if a company is incorporated outside India and does not have a place of business in India, it will be considered a non-resident company for income tax purposes.
The taxation of non-residents is regulated under sections 5 and 9 of the Income Tax Act 1961 and also under the provisions of the Double Taxation Avoidance Agreement. Accordingly, the income generated from the business is regulated under section 9 of the Income Tax Act 1961, where the income is deemed to arise or accrue in India as a result of the business having a place of business in India. Under the provisions of the Double Taxation Avoidance Agreement, The profits of the business are attributed to a Permanent Establishment which is considered a separate and distinct entity under the regulation of Articles 5 and 7 of the Double Taxation Avoidance Agreement.
The business profits can be taxed on the fulfillment of a condition which is that if there is a business connection or permanent establishment in India at a rate of 40%, until and unless the income can be treated as fees or royalty for the technical services provided and the same will be taxed at 10% on the gross amount. Under the provisions of section 90(2) of the Income Tax Act, a non-resident is eligible to claim the advantageous provisions that exist between the Double Taxation Avoidance Agreement and the Income Tax Act, 1961.
Considering the existing rules and regulations and accordingly addressing the concerns of tax in respect of the digital economy the following two issues need to be analyzed;
Treatment of Income and its Characterization
Permanent Establishment and Attribution Of Profits
Treatment of Income and its Characterization
There are many differences while we consider the treatment of tax of a particular income based on its characterization. There are three categories under which the income of a non-resident can be categorized namely Fees Royalties and Business Income. The rate of tax for each of the aforesaid incomes completely depends on its characterization. In case a taxpayer has provided an incorrect classification of the income which is not according to the provisions of the international principles then that case the taxpayer may face consequences as a result of double taxation in separate jurisdictions and also ultimately can face litigation prosecution. The aforesaid aspect is generally applied in the case of a non-resident taxpayer. The taxation aspect of a non-resident taxpayer on his income is provided below;
Nature of Income
In case of no Permanent Establishment
In case of having a Permanent Establishment
Royalty/ FTS
Taxable at 10% on gross amount or rate of DTAA, whichever is lesser
Taxable at 40% on the net amount
Business Income
Not taxed
Further, in the case of Wipro Ltd., the High Court of Karnataka held that the payments made to a non-resident taxpayer to obtain the license for the usage of the database will be regarded as granting the right for access to the database or transferring the right for the usage of copyright. Thus, the income will be taxable under the classification of royalty and will not be trated as business income. There can be several times when the taxation authorities will have different and contradictory opinions on some of the similar payment transactions made to the non-resident taxpayer for access to a database. However, in some cases, the royalty earned can be categorized as business income and will not be treated as royalty.
Similarly, in the case of IMG Media Ltd, the Mumbai Tribunal held that the amount paid to an assessee in respect of delivery and capture of live audio and coverage of visuals in the IPL cricket matches will not be considered as Fees for technical services. It was analyzed that the BCCI has no technical expertise from the assessee which is can help them to provide live coverage of the match on their own at the end of the IPL. Considering the aforesaid aspects the Mumbai Tribunal held that the BCCI is the owner of the program content and as there is no transfer of broadcasting rights, the payments made will not be treated as royalty.
However, it is to be noted that the aforesaid ruling can be applicable on a case-to-case basis. Thus, it is necessary on the part of the judicial authorities to follow an approach that is consistent in nature and according to the principles which are internationally acceptable. This will ultimately will help to create a conducive environment for the taxpayers. Apart from that, there are various others payments related to data retrieval, data warehousing., web hosting, etc. to name a few which are still not discussed in the courts. The reason behind the same maybe there is very minimum guidance and regulation or no regulation to bring this aspect into the ambit of taxation. Thus, it is an essential aspect that must be discussed in respect of the transactions related to technology and that the user of the same may not escape to pay taxes.
Permanent Establishment
The income can be featured based on the nature of the transaction which includes royalty or Fees for technical services. Taxes can be levied basing the rate as prescribed in the above-mentioned table. However, when an income is featured as a business income, then in that case until and unless a Permanent establishment is created in India or there is a business connection in India. The income will not be taxed considering it as a foreign company or non-residnet. The term business connection completely depends and refers to the source of income and the base of the same. The source of income and place for generating the business provides a right to tax the income that arises from the activities carried on in a specific country.
For example, if a foreign company based out of India has been receiving the publishing content and advertisement fees of a taxpayer who is an Indian resident on its search portal. It is worth consideration is that the business model of such companies who are using this type of search engine completely relies on intellectual property rights. Thus, it provides then the advantage to function in any lower tax jurisdiction across the globe. Moreover, the advertising fees received from any such search engine based out of India will not be considered as fees received for technical services, and accordingly, it is not taxable in India as there is no permanent establishment of the aforesaid foreign company in India. Apart from that the foreign company is a tax resident of its home country and is also not liable to pay any tax in any other country in which it has been providing its services. Thus, the establishment of a Permanent Establishment in India or providing an analysis of business connections in India is one the most complex thing specifically when the business model is related to digital technology. However, It completely depends on the tax authorities if they can provide a demonstration that there is a concept called business connection and permanent establishment in India.
Attribution Of Profit
The next aspect that needs to be analyzed is the attribution of profits to the permanent establishment of the non-resident taxpayer. In addition to this, until and unless the current rules of attribution which are globally applicable are amended substantially, there may not be a significant tax structure on income in India. According to Article 7 of the Organization for Economic Co-operation and Development (‘OECD’) Model Tax Convention, When a person maintains books of accounts, then the permanent establishment has to be regarded as a distinct and separate entity, and accordingly, the profits of the business need to be apportioned as per the arm length principle. The profits cannot be determined if separate books of accounts are not being maintained. In that case, the tax authorities may implement Rule 10 of the Income-tax Rules, 1962 and determine the profits in either of the following manners;
Turnover Percentage
The proportion of Total Profit
Another manner as the Assessing Officer thinks appropriate
Considering the above-mentioned issues, unilateral amendments are suggested which should be adopted by both foreign jurisdictions and India. However, there are some limitations and recommendations that can be more useful for the final implementation of the amendments. From the analysis made above, it can be seen that non-resident companies do not have an adequate physical existence in the source country, and thus to tighten the tax structure in India the concept of equalization levy was introduced.
Unilateral Measures and their Evolution
At the time of the G-20 Summit, the countries of G-20 mainly focused on the need for the division of laws related to taxing the business model in respect of digital technology. Today, the business model related to doing digital business is a reality and there has been a consequential change in doing business not only in India but also globally. Accordingly, there has been consequential in the taxation sphere, especially in income tax. Considering the aforesaid facts, the Summit ordered the OECD to find a way to fill the gaps in the taxation system worldwide. Further, OECD published and suggested an action plan named Base Erosion and Profit Shifting (BEPS) In July 2013 containing 15 plans. The final report of the aforesaid action plan was published in the year 2015. In the first place, the BEPS curbed the evasion of taxes and double non-taxation and referred to the same as the strategies of tax avoidance so that it can exploit the gap and mismatch the rules of tax to shift the profits to non-tax jurisdictions artificially.
Out of 15 Action Plans, the first plan containing the challenges that can be posed by the taxation of the digital economy was published. The following are some of the possible options suggested to face the challenges of taxation of the digital economy;
Equalization Levy
To Withhold the tax on some of the digital transactions
Implementation of Nexus-based approach
However, none of the aforesaid suggestions or options was mentioned in the report. Consequently, the OECD made an acknowledgment that until and unless the world sensus provides a view on this issue, the countries across the globe can adopt any of the provided options for implementation of their domestic tax regime. However, the countries must respect the obligations as treaties while adopting any of the aforesaid options. Apart from that, they can also include bilateral tax treaties after their due negotiation. Provided the modification of treaties may take ample time, most countries over the past three to four years have already adopted interim measures in the domestic tax regime to overcome the challenges of tax.
Equalization Levy
India introduced the concept of Equalization Levy under the Finance Act, of 2016 as a part of domestic tax law. The aforesaid levy came into force on 1 June 2016. According to the provisions, when a nonresident or resident taxpayer having a permanent establishment in India pays for a certain service to a non-resident who does not have a permanent establishment in India, and the consideration amount aggregate exceeds 10 Lakhs in a particular financial year, then, in that case, the taxes will be levied at 6% rate on the total amount of consideration.
The term Specified Service has been defined accordingly which includes digital advertisement, online advertisement, and any other service related to online advertising as notified and prescribed by the government. Furthermore, in most cases when a service provider who is a non-resident and does not have a permanent business in India will not agree to the imposition of the new levy, the service receiver, a resident taxpayer may opt of grossing up the consideration considering the additional economic burden. On the other hand, there are also some necessary and relevant amendments in the Finance Act with the stipulation that when the receipt of the service provider is considered for equalization levy, then the receipt of the same will be exempted for the preview of the Act and thus, will not be considered as a part of total taxable income.
Regulation and Compliances
Further, when the recipient of the service fails to get a credit in respect of the levy collected to the government treasury, then in that case the recipient has to pay the simple interest at 1% for such levy each month. In case the recipient of service fails to deduct the equalization levy, then the service recipient will be liable to pay the penalty which may be equal to the amount of equalization levy apart from the original amount of equalization levy. An assessee who is aggravated by the order of penalty imposition by the Assessing Officer can appeal to the Commissioner of Income Tax (Appeals) within 30 days from the date of passing of the order by the Assessing Officer. Apart from that, the assessee can also appeal at the Appellate Tribunal within 60 days from the date of passing of the order by the Commissioner of Income Tax (Appeals).
Nexus based approach
In 2016, after the introduction of the Equalization levy, India became one of the first countries across the globe to introduce the concept called Significant Economic Presence, otherwise known as SEP in its domestic tax regime. Accordingly, the term business connection was defined which is contained in section 9 of the Finance Act. Thus, it brought the income generated by a non-resident taxpayer in the form of SEP under the tax net in India. The Finance Act, 2018, describes the SEP in the following manner;
The transaction made in respect of goods in India are above the provided value which includes digital goods
OR
The transaction made in respect of services in India are above the provided value which includes digital services
OR
The transaction made in respect of any property in India is above the provided value which includes downloading software or data
OR
Continuous and systematic engagement with the provided number of users on digital media platforms
OR
Continuous and systematic socialization of businesses from India with the provided number of users on digital media platforms
It is worth discussing that the specific value can be an aggregate based on the value of a single transaction. The Finance Act further provides that in case of non-existence of the place of business of resident or place of business of non-resident. It will still provide a business connection if comes under the definition of SEP.
For qualifying as SEP, the threshold limits are yet to be decided and notified by the CBDT. The CBDT is also inviting and asking for suggestions from the general public and stakeholders in this regard to prescribing a threshold limit according to the quantum of revenue and the number of users and accordingly the SEP of a non-resident in India can be determined. Further, The OECD even works the get public views on the proposals which are meant to address of tax challenges of the digital economy. Therefore, it is necessary to devise the rules of nexus so that the profits can be allocated to a specific jurisdiction considering the scope of value creation.
Publisher:CBDT INTERIM ACTION PLAN | ACADEMY TAX4WEALTH
Aug 30,2021
CBDT Interim Action Plan
Introduction
In the first quarter of the financial year 2020-21 on 8 May 2020, Central Board of Direct Taxes (CBDT) has issued and announced an Interim Action Plan directing the income tax department that it should not issue any adverse communication with regards to payment of income tax to the assessee during the period of COVID-19 pandemic in the country. The Action Plan also suggest that the income tax department must wait for the fresh guidelines in this regard issed by the Board.
Each year Central Board of Direct Taxes CBDT issued a Central Action Plan in a comprehensive manner for the first quater of the financial i.e. in the month f April and May by providing some targets to the formation of the fields in the Key Results Area (KRA).
However, this year things are different and as a result of the unexpected situation arised in the country due to COVID-19, CBDT has issued a shorter Interim Action Plan for the first quarter of the financial year 2020-21 as compared to the past financial years. The main objective of the Interim Action Plan is to get ready and prepared to work when then things returns to normalcy in the country hopefully sooner than the later. It also act as a in-house cleaning mechanism.
Interim Action Plan or Short Central Action Plan:
Generally, a Centrail Action Plan which is considered as a vision document released by the CBDT every year providing a direction to the officer’s of the income tax department for certain actions that needs to be taken with regard to the Key Results Areas (KRA). This also includes the target collection of the demanded arrears, arrears in demand reduction, management of litigation ( passing of appeal effect orders, scrunity assesssment related to tasks, disposal of different nature of application as made by the assessee, disposal of prosecution cases, disposal of appeals at the level of CIT, various reports preparation, audit objection settlement etc.)
The time frame that is prescribe for the execution of the action can be anlaysed and emphasized in the Central Action Plan.
However, as a result of sudden lockdown in the country since the begining of the current financial year 2020-21 due to COVID-19 pandemic, the CBDT has released a short Central Action Plan or Interim Action Plan in the first quarter of the financial year from April 2020 to June 2020. The primary aim of this Interim Action Plan is to get raedy and preapred for work once the situation get back to normal.
Also read; Role of CBDT in Indian Taxation System
General Discussion Regarding Interim Action Plan:
Some of the main highlights of the Interim Action Plan is to debarred the income tax departement from the issuance of the communication to the taxpayers or assessee which can have an adverse impact on the taxpayer or assessee during the first quareter of the teh current financial year i.e. 2020-21 till 30 June 2020. Once the current situation in the country prevails, the Board will accordingly issue fresh guidelines in this regard tentativley after 30 June 2020. Here, the term communication to the assessee refers to the compliance notice, scrunity notice, show cause notice, intimation for the adjustments etc according to the perspective of the income tax regime.
In this regard, it has been noticed that the CPC has issued notices under section 245 prior to processing of the return of income under section 143(1) in case any refund is due to the assessee. Accordingly, the income tax department has informed all the assesseees that they should respond to notices as soon as possible so that refund can be processed immediatelt as the government has already announced to release all the refunds that are pending up to Rs. 5 Lakh during the current tough and hard time.
Hence, the aforesaid restrictions basically aims to prevent the income tax department from issuing any sort of show case notice or scrunity assessment or any smilar notice there to so that the panic among the taxpayers can be avoided. Considering this, the Interim Action Plan approaches the income tax department for the identification of cases where the notices under section 148 can be issued within dated 30 June 2020. However, it can be debarred the department from issuance of any further notice under section 148 untill further communication by the CBDT in this context.
Apart from all of the aforesaid facts, it is also to be noted that the taxation and other laws including the (Relaxation of certain provisions) Ordinance 2020 has also increased the time limit for issuing the notices from 31st March 2002 to 30th June 2020.
A few days ago the IRS Officers Association had released known as “FORCE” and accordingly suggested many hard and harsh measures so that it can boost the collection of revenue with the increase in the surcharge and cess with the introduction of some taxes which is already repealed. The government has already rejected some reports and refused its role in respect of making the aforesaid reports. Some disciplinary actions needs to be taken against some officers in this regard. The department of tax has alraedy faced some huge criticism in those report prepared by the IRS group of officers since the same created panic among the taxapayer during this time when the country is already facing a tough situation both economically and non-economically.
In 75% of cases in Final Settlement of Revenue and Internal Audit Objections, the objections was raised till 31st March 2019. Likewise, about 50% of the objections was raised up to 31st March 2020. In most of the search cases, the eligible or qualified cases will be transferred to the central charge in the same city. In case there is a possibility of inter-city transfer is there, the same must be kept on hold. The officers of income-tax needed to dispose the rectified applications filed by the assessee by 30th June 2020. Further, the effected order will be passed in the cases which are eligible.
Further, the plan also provides direction for the disposal of the application under section 12AA or 80G of Income Tax Act, 1961 for the grant of the registration. The disposal of all the condonation petitions which were delayed in filing process in respect of Form 10 and Form 10B by 30th June 2020. The Central Board of Direct Taxes (CBDT) has also allowed the extension for the compliance dates relating to switch to the new proceedure for registration as introduction by the Finance Act, 2020 starting from 1st June 2020 to 1st October 2020.
All the grievances related to CPGRAMS which are more than 30 days old will be disposed of accordingly. However, in the aforesaid cases, the specific time limit that is given was by 30th June 2020. Apart from all these, there are various other measures that are directed in the Interim Action Plan. An overview of the action plan for 2021-22 has been discussed in the below mentioned section.
An Overview of Interim Action Plan issued by CBDT:
The Key Result Areas and the prescribed time frame as mentioned in the Interim Action Plan for the financial year 2021-22 dated 10 June 2021 are given as under:
Key Result Areas Time Limit
A. Charges of Assessment, Jurisdictional Assessing Officer and Exemption Charges
(i)
Verification of Demand:
(i) To check all the demand according PAN and year from the system, TMS or AST or any manual demand which ever is remained and also remove the duplicate entries.
(ii) Certification and verification in CPC Financial Accounting System (FAS) in some of the cases which are notified under section 245 as issued by CPC till March 31, 2021
(i) 31.07.2021
(ii) 15.07.2021
(ii)
Redressal for Grievances:
Disposal of CPGRAM and Electronic Nirvana (E-nivaran) exceeding 30 days
30.06.2021
(iii)
Survey Reports Uploading:
To upload all reports of surveys, scanned copies of extracted documents procured during the survey but the same are not impunded to any other document that are relevant to complete and initiate under section 143(3)/148.
31.07.2021
(iv)
Objection of Audit:
To identify and further process of;
Final settlement minor and major revenue in 75% and objections in internal audit raised till 31.03.2020
Final settlement of minor and major revenue of 50% and 75% respectively and objections in internal audit raised till 31.03.2021
15.07.2021
31.07.2021
(v)
Effects of Rectification and Appeal:
Theapplications disposal under Ws 154 submitted by the assessees and accordingly providing the effects of appeal in all eligible cases as on 01.04.2021
31.07,2021
Jurisdictional Assessing Officer
(vi)
To upload the related and case documents for assessment including set aside cases.
Immediate
(vii)
To Identify and process all the cases inlcuding the case of 153C, search cases, TR and FT Cases, Flack money Act cases. These need centralization in the central charges.
30.06,2021
(viii)
Passing of orders in partial set-aside cases that must be atleast 25% cases of total pendency till 01.04.2021
31.07.2021
Exemption Units:
(ix)
The cases that are falling under CCIT jurisdiction that are still termed as incorrect jurisdiction for identification and transfer to respective CSIT.
As far as possible
(x)
Disposal of apetitions that are submitted up to 31.03.2021 to seek condonation for delay in filing Form 10 & 10B
30.06.2021
(xi)
To complete the consequential rectification made by assessing officers in all cases in which condonation has been provided by the CIT for delay in filing Form 10 & 10B.
31.07.2021
B. NAFAC
Disposal of penalties and assessment of at least 30% in case that are barred as on 30.09.2021
31.07.2021
C. TDS Units
(1)
For reduction in TDS demands as on 01.04.2021 which includes demands that are not fallen due by 25%
The collection out of demands of TDS demands as on 01.04.2021 that also inlcudes demand not fallen due by 10%
31.07.2021
(ii)
The examination of first 30 top short payment case according to Assessing Officer and also according to MIS report (SP with unconsumed challans)
(iii)
The reconciliation cases that are brought forward (as on dated 01.04.2021) of TDS as reported by AINs with payment by State through OLTAS and basing on the report provided on TRACES portal.
(iv)
Seminars and awareness campaigns has to be conducted with the help of webinars
(v)
Disposal of applications under section 154 of the Income Tax Act as submitted by the assessee up to 31.03.2021
(vi)
Passing of order under section 201(1)/(IA) for cases that are fallling under the TDS survey conduct report conducted up to 31.03.2021
(vii)
The disposition of l pending applications for lower or nil deduction as on 30.06.202 under section u/s 197 and 206C (9) with TDS or TCS certificates
D. CIT(AUs)
(i)
Atleast 100 draft appellate orders Passing
31.07.2021
(ii)
Appeals for V5V regarding form 5 that is received must be disposed
Within one week from the receiving of Form
E. CIT(Audit)
(i)
The disposition of pending references in respect of certificates needed for the disposition of reward claims of informants.
31.07.2021
(ii)
To conduct a meeting with level of Pr. CIT (Audit) and Pr. Director (Audit) to settle the pending objections as soon as possible.
31.07.2021
(iii)
To take action for settlement IAP objection of at least 20% that are raised in the financial year 2020-21
31.07.2021
Conclusion:
To sum up, it can be seen that the interim action plan of the Government of India has taken a major shift where emphasis has been given to qualitative measures as compared to quantitative measures. Here, the focus has been provided more on the preparation and identification of cases as provided by the Directorate of Systems which can be picked for reassessment under section 147 of the Income Tax Act as a result of leakage of revenue. In the past as well, there were numerous cases which came to WRIT courts basing on the ground for lack of jurisdiction by the assessing officers, in this regard there is a restrictive provision in the eyes of law to reopen the case and the record of success is that much encouraging due to weak groundwork done by the field officers including recording of exact reason which can be believed to initiate such a proceedings. This is a primary and basic requirement apart from the technical requirement for a lawful initiation of the proceedings.
While there are number of cases are reopening can be litigated still basing on the merits of the case by the payer of taxes but the main objective of CBDT seems to have the basic proceedings and rights which are not required by the court of law basing on the technical grounds. It is to be noted it may a case of reopening within and after the 4 year of the assessment year. This must cut the required time for the tax department, taxpayer and also the litigating courts in such matters in different levels and rounds.
The traditional example of this type of unending litigation is the latest decision of the Supreme Court that was concluded in April 2020 in the matter of NDTV. In this case, even though the Court has decided the matter for the reopening in the favor of the taxpayer on the ground of lack of jurisdiction as the disclosure of the materials by NDTV was not able to prove it reasonably in the first round of the regular assessment. However, the court has handed over the aforesaid matter to the Authority of Revenue to reopen the case according to the provision of section 147 of the Act where it states that the officers are provided more powers to reopen a certain case. The aforesaid case can be avoided amicably if the reliance on the provisions was recorded according to the reason.
The other provision in relation to the records verification so that the rectification applications which are pending will be disposed off and impact of the same will be given by the tax officers to the appellate orders, in all the cases which are eligible. This can significantly help the taxpayers save time and have the pending refunds as determined by the tax officers. The Board has also ordered the officers to reconcile the all the demands year wise and PAN wise within the system and thus alternate demands can be removed. This ultimately will help and a right step which improve the records quality and will keep the House in order, accordingly the time of both taxpayer and officers can be saved without litigating the ineffective and unenforceable demands and accordingly the courts also do not pay emphasis with the unnecessary stay of applications.
For an effective use of the period of lockdown, the Board has also ordered the senior officers for disposal of the applications that are filed by the trusts received as on 31 March 2020 to seek registration as per section 80G and 12AA of the Income Tax Act for income tax exemptions by 30 June 2020. This can help to bring a certainty for the both tax payers and tax officers so that they can analyze the applications in details to make sure that all the activities of trusts are completely true and according to the requirement of law. The aforesaid aspect is an essential considering the large impact and focus of CBDT to curb tax evasions and avoidance by the entities.
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