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

The extension of due date to file form CSR-2

The Ministry of Corporate Affairs (MCA) introduced the Companies (Accounts) Amendment Rules, 2022, effective from February 11, 2022. A notable change brought about by this amendment is the introduction of Form CSR-2.

This is a new reporting requirement for companies covered under Section 135 of the Companies Act, 2013, which mandates compliance with Corporate Social Responsibility (CSR) provisions.

 

Key Points:

1. Reporting Obligation: Companies covered under Section 135(1) must submit Form CSR-2 as an addendum to Form AOC-4.

2. Filing Deadline for FY 2020-21: Form CSR-2 must be filed separately on or before March 31, 2022, after submitting Form AOC-4 for the preceding financial year.

3. Filing Requirement for Subsequent Years: From FY 2021-22 onwards, Form CSR-2 should be submitted as an addendum to Form AOC-4 by the applicable due date.

However, for the FY 2022-23 Form CSR-2 shall be filed separately on or before 31^st March, 2024 after filing form AOC-4.  This is as per the Companies (Accounts) Second Amendment Rules, 2023 dated 31^st May, 2023.

 

 

 

 

 

 

Understanding the Liberalised Remittance Scheme (LRS) for Indian Residents

The Liberalised Remittance Scheme (LRS) introduced by the Reserve Bank of India (RBI) has made it easier for Indian residents to remit funds abroad for various purposes. This scheme allows individuals to send up to USD250,000 per financial year outside of India for permissible current and capital account transactions.

In this blog post, we will have an understanding of the LRS, including its eligibility criteria, permissible transactions, and important considerations.

 

Eligibility for the LRS

The LRS is available to Indian residents as defined by the Foreign Exchange Management Act (FEMA).

However, it is important to note that corporations, partnership firms, Hindu Undivided Family (HUF), trusts, and NRIs are not eligible to utilize the LRS.

 

Permissible Current Account Transactions

The LRS allows Indian residents to undertake various current account transactions, including:

1. Private visits (excluding Nepal & Bhutan): Remitting funds for personal travel abroad.

2. Gift or donation to NRIs: Sending gifts or donations, including rupee gifts, to close relatives who are NRIs.

3. Emigration: Remitting funds for the purpose of emigrating to another country.

4. Overseas business trips: Sending funds for business-related travel abroad.

5. Medical treatment abroad: Remittances for medical treatment and related expenses outside India.

6. Pursuing studies abroad: Sending funds for educational expenses incurred by individuals studying overseas.

7. Going outside India for employment: Remittances for individuals moving abroad for employment purposes.

8. Maintenance of close relatives abroad: Sending funds for the support and maintenance of close relatives residing outside India.

 

Permissible Capital Account Transactions

Under the LRS, Indian residents can engage in certain capital account transactions, which include:

 

1. Opening a foreign currency account abroad: Individuals can open and maintain foreign currency accounts with banks located outside India.

2. Purchase of foreign property: Remittances for acquiring properties located outside India.

3. Investments in overseas shares, securities, mutual funds, etc.: Investing in foreign stocks, securities, mutual funds, and similar financial instruments.

4. Extending INR loans to NRIs who are relatives: Providing loans in Indian Rupees (INR) to NRIs who are considered relatives.

Limits and Permissions

 

The LRS has a limit of USD250,000 per financial year for remittances. However, higher amounts may be remitted for emigration, medical treatment, and overseas education if required, subject to certain conditions. Any remittances exceeding the USD250,000 limit for other purposes require prior permission from the RBI.

 

Key Considerations

1. Currency Choice: Remittances under the LRS can be made in any freely convertible foreign currency.

2. Remittance Frequency: There is no restriction on the number or frequency of transactions in a financial year. However, the cumulative amount of all transactions should not exceed the current LRS limit.

3. Minors and LRS: Minors are eligible to utilize the LRS, but their natural guardian may need to sign Form A2.

4. PAN Card Requirement: Providing your Permanent Account Number (PAN) is mandatory for all LRS transactions.

 

The Liberalised Remittance Scheme (LRS) is a beneficial scheme for Indian residents to remit funds abroad for various purposes. By understanding the eligibility criteria, permissible transactions, limits, and key considerations associated with the LRS, individuals can make informed decisions and effectively utilize this scheme.

Stay updated with the latest regulations and guidelines issued by the RBI regarding the LRS to ensure compliance and smooth remittances. Consider consulting your professional to make an informed decision.

Government Advisory Prohibits Shopkeepers to Request Mobile Numbers to Generate Bills.

The Ministry of Consumer Affairs in India has advised retailers to refrain from compelling customers to provide their personal contact details for generating a bill.

This advisory aims to protect consumer privacy and address concerns raised by customers who have experienced refusal of services due to not sharing the contact numbers.

 

Reasons for the Issuance of the Advisory

Ø Unfair Practice:

Retailers demanding personal contact details before generating a bill is considered an unfair trade practice. It goes against the Consumer Protection Act and restricts customer choices and rights without valid justification.

 

Ø Privacy Concerns:

The collection of personal contact details raises privacy concerns. Customers have the right to protect their information and decide how it is used. Mandating disclosure infringes upon their privacy rights. The advisory emphasizes the need for retailers to respect consumer privacy.

 

Ø Empowering Consumers:

The advisory empowers consumers by allowing them to refuse providing personal contact details for generating a bill. By eliminating the mandatory disclosure requirement, consumers can freely protect their privacy, promoting transparency and strengthening consumer confidence.

 

                             The advisory by the Ministry of Consumer Affairs to retailers is a significant step to safeguard consumer privacy in India. It is crucial for consumers to be aware of their rights and make informed choices to protect their privacy in business transactions.

Bootstrapping vs. Crowdfunding: Analysis of Start-up Funding Options

When it comes to funding a start-up, entrepreneurs have a range of options to explore. Two popular approaches are bootstrapping and crowdfunding.

Both methods offer distinct advantages and disadvantages, making them worth considering depending on the specific needs and circumstances of a start-up.

In this blog post, we will delve into the key aspects of bootstrapping and crowdfunding, providing a comparative analysis of their benefits and disadvantages.

 

Bootstrapping:

Bootstrapping refers to the practice of self-funding a start-up or relying on personal savings, friends, and family for financial support. It involves using minimal external funding sources while focusing on revenue generation and controlling costs. Here are the key benefits and disadvantages of bootstrapping:

 

Benefits of Bootstrapping:

1. Ownership and Control: By bootstrapping, entrepreneurs retain full ownership and control over their start-up. They are not accountable to external investors or obligated to meet certain expectations, giving them the freedom to make decisions according to their vision.

 

2. Resourcefulness and Financial Discipline: Bootstrapping forces entrepreneurs to be resourceful, creative, and frugal in managing their limited resources. This can foster financial discipline and encourage finding innovative solutions with fewer financial dependencies.

 

3. Proof of Concept: By relying on organic growth and revenue generation, bootstrapping provides a solid proof of concept. It demonstrates that the start-up can survive and thrive without significant external funding, which can be attractive to investors in the future.

 

 

Crowdfunding:

Crowdfunding involves raising capital by soliciting small investments from a large number of individuals through online platforms. It allows entrepreneurs to pitch their ideas, products, or services to potential backers, who contribute varying amounts of money. Let's explore the benefits and disadvantages of crowdfunding:

 

Benefits of Crowdfunding:

1. Access to Capital and Market Validation: Crowdfunding provides a platform to access capital from a diverse group of individuals who believe in the start-up's potential. It can validate market demand and generate early customer interest, offering a proof of concept.

 

2. Marketing and Exposure: Running a crowdfunding campaign can generate significant media attention and publicity. This exposure can attract potential customers, strategic partners, and even traditional investors who may have previously overlooked the start-up.

 

3. Feedback and Engagement: Crowdfunding platforms enable direct interaction with backers, allowing entrepreneurs to gather feedback, build a community around their product or service, and gain valuable insights for product development and improvement.

 

Choosing between bootstrapping and crowdfunding depends on the start-up's financial situation, growth goals, and how much control the entrepreneur wants to keep. Sometimes, using a combination of both methods can work well. It's important for entrepreneurs to carefully consider the pros and cons of each approach and decide which funding strategy is best for their start-up.

Exploring Sovereign Gold Bonds

 

Buying physical gold in the form of jewellery can come with additional expenses such as making charges. To overcome these challenges and enjoy the benefits of gold investments in the long run, investing in Sovereign Gold Bonds (SGBs) can be an excellent alternative.

In this blog, we will explore the basic features, benefits, and essential facts about Sovereign Gold Bonds.

  

What are Sovereign Gold Bonds?

Sovereign Gold Bonds were introduced by the Government of India in 2015 as part of the Gold Monetisation Scheme.

These bonds are issued by the Reserve Bank of India (RBI) on behalf of the government. They are denominated in multiples of grams, with 1 gram being the minimum unit.

Investors receive an annual interest rate of 2.50%, paid semi-annually.

 

What are the key Features and Benefits of Sovereign Gold Bonds:

1. Flexibility: SGBs can be held in either paper form or demat form, providing convenience to investors.

 

2. Multiple Weight Denominations: Investors have the option to buy gold bonds in various weight denominations, with a minimum weight of 1 gram.

 

3. Choice of Investment Amount: SGBs offer flexibility in choosing the amount you wish to invest, allowing you to tailor your investment according to your financial goals.

 

4. Interest Earnings: The bonds provide an opportunity to earn interest on your investment semi-annually, enhancing the overall returns.

5. Convenient Storage: Unlike physical gold, SGBs are issued in certificate or demat form, eliminating the need for storage and security concerns.

 

6. Government Backing: SGBs are backed by the Government of India, ensuring the purity and reliability of the gold investment.

 

7. Premature Withdrawal: Although the bonds mature after eight years, investors have the option to exit after five years, providing some liquidity.

 

Please note that it is important to check for any updates or changes in the scheme's terms and conditions as per the current guidelines issued by the Government of India and the Reserve Bank of India. Always consult with a financial advisor or conduct thorough research before making any investment decisions.