Understanding the CBDT's Order on Extinguishment of Tax Demands

1. Introduction

   - Finance Minister Nirmala Sitharaman, in the Union Budget 2024 speech, announced the extinguishment of tax demands until Assessment Year 2015-16.

   - Following the announcement, the Central Board of Direct Taxes (CBDT) released an order outlining the remittance and extinguishment process for tax demands under the Income Tax Act, 1961, Wealth Tax Act, 1957, or Gift Tax Act, 1958.

 

2. Monetary Limit for Waiver of Demand

   - Until AY 2010-11, demands up to Rs. 25,000 per entry are eligible for waiver.

   - From AY 2011-12 to AY 2015-16, the waiver applies to demands up to Rs. 10,000 per entry.

 

3. Maximum Ceiling of Rs. 1 Lakh

   - Remission and extinguishment of eligible demands are capped at Rs. 1,00,000 per assessee, regardless of the total eligible amount across assessment years.

 

4. No Waiver for TDS/TCS Demands

   - Waiver of demand doesn’t apply to demands raised against tax deductors or collectors under TDS or TCS provisions of the Income Tax Act, 1961.

   - Outstanding demand for eligible assessment years will be exclusive of demands arising from TDS/TCS provisions.

 

5. Tax Demand Components

   - Outstanding demand comprises principal tax under the Act plus interest, penalty, fees, cess, or surcharge as per Act provisions, with the ceiling limit as applicable.

 

6. Exclusion of Interest on Delayed Payment

   - Interest under section 220(2) isn’t considered for calculating demand entry amount or ceiling limit of Rs. 25,000, Rs. 10,000, or Rs. 1,00,000, respectively.

 

7. No Right to Claim Credit or Refund

   - Remission of outstanding demands doesn’t grant the assessee the right to claim credit or refund under the Income Tax Act or any other legislation.

 

8. No Impact on Criminal Proceedings

   - Waiver of demand won’t impact ongoing or completed criminal proceedings against the assessee and doesn’t provide any benefit, concession, or immunity under such proceedings. 

Supreme Court Declares Electoral Bond schemes as "Unconstitutional"

On February 15, a unanimous decision by a five-judge bench of the Supreme Court declared the electoral bond scheme unconstitutional.

Here's a summarized breakdown of the Supreme Court of India verdict on the electoral bonds scheme:

1. 1. Unconstitutionality: The Supreme Court struck down the electoral bonds scheme and related amendments as unconstitutional and manifestly arbitrary.

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3. 2. Violation of Right to Information: The scheme and amendments were found to violate voters' right to information about political funding under Article 19(1)(a) of the Constitution.

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5. 3. Directive to State Bank of India (SBI): SBI was ordered to immediately cease issuing electoral bonds and submit details of bonds purchased from April 12, 2019, till date to the Election Commission of India (ECI).

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7. 4. Disclosure of Information: SBI must disclose details including the date of purchase, buyer's name, and bond denomination to the ECI by March 6, 2024, for publication on its website by March 13, 2024.

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9. 5. Return of Electoral Bonds: Electoral bonds with a validity period of 15 days and yet to be encashed must be returned by political parties or purchasers to SBI for refund.

GST Applicable On Fees Collected From Nurses For Imparting Practical Training - AAR Karnataka

The Karnataka Authority of Advance Ruling (AAR) ruled on several questions posed by M/s SPANDANA PHARMA, a healthcare service provider. Here's a summary of the ruling:

1. 1. Medicines, Drugs, and Consumables: The supply of medicines, drugs, and consumables used in providing healthcare services to in-patients during diagnosis and treatment qualifies as a "Composite Supply" of healthcare services. It is exempt from GST under entry No. 74(a) of Notification No. 12/2017-Central Tax (Rate) dated: 28.06.2017, subject to specified conditions.

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3. 2. Supply of Food to In-patients: Similarly, the supply of food to in-patients is considered a "Composite Supply" of healthcare services and qualifies for exemption from GST under the same entry and conditions mentioned above.

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5. 3. Retention Money: GST is not applicable on money retained by the applicant.

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7. 4. Fees for Practical Training: However, GST is not exempted on fees collected from nurses and psychologists for imparting practical training. This means that the fees collected for such training are subject to GST.

In essence, while certain aspects of healthcare services provided by M/s SPANDANA PHARMA are exempt from GST, fees collected for practical training are not exempt and are subject to GST.

Now Form 26AS shows whether the PAN is active and operational.

The Income Tax Department has introduced a new update for taxpayers, where Form 26AS will now display whether your Permanent Account Number (PAN) is active and operative. This update allows taxpayers to easily check the status of their PAN through the Traces portal.

It's important to note that the deadline for linking PAN with Aadhaar has passed on June 30, 2023. 

If taxpayers have not linked their PAN with Aadhaar, their PAN will become inoperative. However, the Central Board of Direct Taxes (CBDT) has issued a clarification on this matter shortly before the deadline expired.

According to the income tax department's tweet, individuals who have paid the penalty for linking their PAN with Aadhaar and have obtained consent but have not completed the linking process by June 30, 2023, will be reviewed by the income tax department before considering their PAN inoperative.

External Confirmation - Documents to keep in record

 

Under auditing standards, external confirmations are a commonly used procedure to obtain audit evidence directly from third parties. When conducting an audit, the following documents shall be kept in relation to external confirmations

Here are the main documents:

1. Confirmation Requests: These are the letters or messages auditors send to third parties, asking them to confirm specific information or balances. 

2. Confirmation Responses: These are the written responses auditors receive from third parties. These responses confirm or dispute the information provided by the company being audited, or they may provide additional details. 

3. Follow-up Communications: Sometimes, auditors need to ask third parties for more information or clarification. These additional conversations or messages should be saved. 

4. Confirmation Tracking: Auditors keep a record of the confirmation requests they send, including dates, expected response dates, and actual response dates. 

5. Reconciliation or Analysis: Auditors may need to compare the confirmation responses with the company's records or other evidence. They document these comparisons.

6. Exceptions or Disputes: If there are any differences or disagreements between the confirmation responses and the company's records, auditors document them and investigate further.

7. Management Representations: Auditors may ask the company's management for written statements about the accuracy and completeness of the information provided to third parties for confirmation. These statements are also saved.

The specific documents may vary depending on the audit engagement and the requirements of the auditing firm or regulatory authorities.

Carry Forward of Losses: Bombay High Court's Landmark Decision on Filing Returns Beyond Due Date

 

You are all well aware that if a return is filed beyond the due date, any loss suffered by the assessee cannot be carried forward for set off in the following         years. It is important to understand that the responsibility of filing the ITR lies with the taxpayer and not with a Chartered Accountant.

Consider a scenario where an assessee files their ITR after the due date, citing that their Chartered Accountant was preoccupied with their sister's wedding. Will the loss in such a case is allowed to be carried forward though filed belatedly? Read the interesting judgment by the Bombay High Court.

The Bombay High Court recently has condoned a delay in filing a loss return by a company M/s ADCC Infocom Private Limited. The company had suffered a loss during the financial year 2019-2020 and was required to file its return within the specified due date. However, the return was filed 36 days after the due date.

However, in this case, the Bombay High Court accepted the petitioner's argument of genuine hardship and condoned the delay in filing the return.

The company cited the COVID-19 pandemic and the heavy workload of its Chartered Accountant as reasons for the delay. Additionally, the Chartered Accountant's sister's wedding, which took place on February 16, 2021, further contributed to the delay as she was occupied with the arrangements and attending to relatives.

 

So the company's loss can still be carried forward and set off against future income.

It’s an Important judgment to keep in our memory.

 

Form 15CA - 5 essential facts one must know.

The need for cross-border transactions and payments to non-residents has become increasingly common nowadays as businesses are expanding globally. Such payments may attract tax obligations, and to ensure compliance, the Indian Income Tax Department requires the submission of Form 15CA and 15CB.

In this article, we will explore the key aspects of Form 15CA in facilitating international payments.

 

1. What is Form 15CA?

Form 15CA is a declaration form mandated by Section 195 of the Indian Income Tax Act. It applies to individuals or entities making payments to non-residents or foreign companies, where the sum is subject to income tax.

2. Parts of Form 15CA:

The information required for payment to non-residents or foreign companies is divided into four parts: 

a) Part A: Applicable when the remittance or aggregate remittances during the financial year do not exceed INR 5 lakh.

b) Part B: Applicable when the remittance or aggregate remittances during the financial year exceed INR 5 lakh, and an order/certificate under Section 195(2)/(3)/197 of the Income Tax Act has been obtained.

c) Part C: Applicable when the remittance or aggregate remittances during the financial year exceed INR 5 lakh, and a certificate in Form 15CB from a Chartered Accountant has been obtained.

d) Part D: Applicable when the remittance is not chargeable to tax under the Income Tax Act.

 

3. Who needs to file Form 15CA?

As per Rule 37BB, any person responsible for making payments to non-residents or foreign companies must furnish the required information in Form 15CA. This responsibility lies with the individual or entity making the payment.

 

4. Mandatory submission of Form 15CB:

Form 15CB is not mandatory for all cases. It is an event-based form that needs to be filled only if the remittance or aggregate remittance amount exceeds INR 5 lakh during a financial year and requires a certificate from a Chartered Accountant.

  

5. Cases where Form 15CA is not required:

Form 15CA is not required for certain transactions, as specified in sub-rule (3) of Rule 37BB. These include remittances made by individuals that do not require prior approval from the Reserve Bank of India (RBI) and remittances falling under the specified purposes code defined by the RBI.

 

        By providing the necessary details before remittance, this form facilitates  transparency and accountability in cross-border transactions. As businesses continue to engage in global operations, understanding and adhering to the requirements of Form 15CA is quite important.



https://www.incometax.gov.in/iec/foportal/help/statutory-forms/popular-forms/form-15ca-faq