WEEKLY TAX GYAN (w-03)

1] NO DISALLOWANCE U/S 40A(ia)

If the payer fails to deduct the TDS on payments/ credits to deductees for which TDS is applicable such expenses shall be disallowed to the extent of 30% of the amount debited to the statement of Profit and Loss while computing the Total Income of the Deductor. But, there won’t be any disallowance u/s 40a(ia) if the deductee has obtained Form 26A from the deductee in accordance with Rule 31ACB.

 

2] PERIOD OF HOLDING FOR CALCULATING THE STCG/LTCG

The Period of holding of immovable property has to be reckoned from the date of the allotment letter. May times, assessees wrongly compute the period of holding from the date of executing the absolute sale deed and end up paying higher taxes.

 

3] GST ON VALUE REPRESENTING THE MARGIN OF THE SUPPLIER

Generally, the GST is collected on the Value of Supply. CBIC vide Notification number 8/2018- Central Tax (Rate) has allowed the suppliers of old used vehicles to pay GST on value representing their margin instead of the sale consideration. The said relaxation can be availed if the supplier has not availed of any GST Input Credit.

 

4] INTEREST ON REFUND OF SELF ASSESSMENT TAX PAID WITH RETROSPECTIVE EFFECT

FINANCE ACT, 2016 has provided that the assessee is eligible for Interest on the excess of Self-Assessment Tax paid from the date of payment of such taxes to the date of receiving the refund. Though the provision is inserted in the Finance Act 2016, the Delhi Tribunal in Bimla Devi V/s. ACIT has held that the section is curative in nature and is to be applied retrospectively.

 

5] INTEREST ON DELAYED PAYMENT OF TDS

Interest paid on delayed remittance of TDS is not a penalty in nature to disallow u/s 37(1). Also, it cannot be classified as the Income Tax liability of the assessee to disallow. The payment is interest is compensatory in nature. Hence the interest paid on delayed remittance of TDS is an allowable expenditure u/s 37(1). Karnataka High Court in CIT V/s. Oriental Insurance Company (2009).

 

6] EXCLUSION FROM THE DEFINITION OF VIRTUAL DIGITAL ASSETS (VDA’S)

The Income from transacting in VDAs is subject to tax at the rate of 30%. However, CBDT vide Notification No. 74/ 2022 dt. 30^th June 2022 has excluded Gift Cards or vouchers, Mileage Points, and Loyalty points from the definition of Virtual Digital Assets (VDAs).

 

7] TOLERANCE LIMIT FOR COMPUTING THE ARM LENTH PRICE IN CASE OF TRANSFER PRICING

A tolerance limit of 1% for wholesale trading and 3% for all other cases has been fixed for determining the tolerance limit for the Assessment Year 2022-23.

 

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CA Ramakrishna Sanjay