Weekly Tax Gyan(W-07)

Form 26AS and IAS Update

Form 26AS will only display TDS/TCS data starting with Assessment Year 2023–24, according to an update from the Income Tax Department and an annual information release. Other information such as advance tax, self-assessment tax, rebate, and so forth, would be accessible only in the AIS.

FAQs on PAN-Adhaar Link

The Income Tax Department has issued FAQs on the PAN-Aadhaar Link. The FAQs are provided in the link mentioned below.

https://www.incometax.gov.in/iec/foportal/help/e-filing-link-aadhaar-faq

Income Tax exemption to IBBI u/s 10(46)

CBDT notifies Exemption to Insolvency and Bankruptcy Board of India with respect to certain specified incomes. The exemption is provided u/s 10(46) with respect to specified incomes listed below.

(a) Grants-in-aid received from Central Government;

(b) Fees received under the Insolvency and Bankruptcy Code, 2016 (31 of 2016);

(c) Fines collected under the Insolvency and Bankruptcy Code, 2016 (31 of 2016); and

(d) Interest income accrued on (a), (b) and (c) above.

 

 

 

Weekly Tax Gyan(W-06)

 1. Geo Location

A new feature "Geolocation" has been enabled by the Goods and Services Tax Network (GSTN). Now providing the geolocation is made mandatory.

This feature enables users to to update their place of business easily and accurately. This feature is to be used update their addresses during new registration as well as during any address changes made in an existing registration.

2. UPI and Paynow Integration 

The integration of India's Unified Payment Interface (UPI) and Singapore's PayNow real-time payment systems is expected to be completed shortly. 

The PayNow-UPI connection will allow users to make instant, low-cost fund transfers between Singapore and India.

3. Option to pay GST on FCM to GTAs

In 47th GST Council meeting an option has been provided to Goods Transport Agencies to pay GST on Forward Charge Mechanism. 

Now this option is enabled in GST Portal.

The Goods Transport Agency (GTA) must submit its declaration in Annexure V for the Financial Year 2023–2024, by 15th March 2023 to opt to pay GST on Forward charge mechanism.

4. Social Audit Standards

The ICAI has released the final version of its "Social Audit Standards (SASs)," as well as the framework. 

Social Auditors must adhere to these 16 SASs in social audits beginning on or after January 14, 2023.

Weekly Tax Gyan(w-05)

 1.    Reduction of time limit for verification of Income tax returns to 30 days.

The time limit for verification of income tax returns has been reduced to 30 days from 120 days, effective from 1^st August 2022. All the returns filed on or after 1^st August 2022 have to be verified within 30 days. If the returns are not verified within the said 30 days, then the date of verification shall be considered as the date of filing the income tax returns, and interest and penalty as applicable shall be levied accordingly.

 

2.    Income Taxpayers are no longer eligible to participate in the Atal Pension Yojana

Beneficiaries of the Atal Pension Yojana receive a monthly minimum guaranteed pension ranging from Rs. 1,000/-to Rs. 5,000/-. after attaining the age of 60 years depending upon the amount of contributions made. However, with effect from 1^st October 2022, any citizen of India who is or has been an income tax payer shall be ineligible to join Atal Pension Yojana.

 

3.    Exemption of money received from employer or other people by family members of the deceased individual due to Covid-19.

CBDT vide notification no. 92/2022 dated 5^th August 2022 has exempted the money received from the employer by family members of the deceased u/s 56(2)(x) of the Income-tax Act, 1961. However, if the money is received from any other persons (other than the employer), the exemption amount shall be limited to rupees ten lakhs in aggregate. The details of the amount so received shall be furnished in Form A to the Income Tax department on or before 31^st December 2022.

 

 

4.    Exemption of amount received for Covid-19 treatment from any person.

CBDT vide notification no. 91/2022 dated 5^th August 2022 has exempted the money received by an individual from any persons, in respect of expenditure incurred by him on his medical treatment or any member of his family in respect of any illness related to Covid-19 u/s 56(2)(x) of the Income-tax Act, 1961. The details of the amount so received shall be furnished in form no 1 to the Income Tax department on or before 31^st December 2022.

 

5.    Taxability of income earned from letting of factory building along with plant and machinery therein.

The assessee has ceased business operation and leased out the Factory building as well as the plant and machinery, through separate lease deeds. In Flotherm Engineers Private Limited V/s. DCIT dated 3^rd August 2022, ITAT Chennai held that income from letting of the inseparable factory building, plant, and machinery is taxable under the head Income from Other Sources and consequently all related expenses u/s 57 (iii) are allowed.

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CA Ramakrishna Sanjay

WEEKLY TAX GYAN(w-04)

 1.    TDS Applicability on peer-to-peer VDA (Virtual Digital Assets) Transactions

Budget 2022, has brought VDAs within the ambit of tax. Income Tax at the rate of 30% is to be paid on gains on the transfer of VDAs. There is also a requirement to deduct TDS at the rate of 1% on payment towards VDAs w.e.f. 1^st July 2022. When the transaction is happening through the Exchange, the concerned exchange is required to deduct the TDS. When there is a peer-to-peer transaction, the buyer will have to discharge the TDS liability. In a peer-to-peer transaction, one VDA is transferred against another. Technically, both the party to a transaction are the buyer as well as the seller. Hence both are required to deduct TDS @ 1%.

 

2.    Cost Inflation Index for the Financial Year 2022-23

The Central Board of Direct Taxes vide notification no. 62/2022, dated 14-06-2022, fixed the Cost Inflation Index 331 for the Financial Year 2022-23.

 

3.    No TDS under section 194I on lease rent paid to International Financial Services Centre.

Lease rent or supplementary lease rents paid by any persons to a unit located in the International Financial services centre for the lease of an aircraft is not subject to TDS. The lessor is required to furnish a statement cum declaration to the lessee for the ten consecutive assessment years for which he opts to claim deduction u/s 80LA of the Income Tax Act. The lessee is required to furnish the details of payments made to the lessor in its quarterly TDS returns.

 

4.    Exemption from capital gains to NTPC Limited

The government in exercise of the powers conferred under section 47(viiaf) of the income tax act 1961, exempts the capital gains from the transfer of a capital asset from NTPC Limited to NTPC Green Energy Limited.

 

5.    Denial of the deduction under section 54 when the return of income is not filed.

The 6^th Proviso to section 139(1) is applicable from the assessment year 2020-21. As per the 6^th proviso to section 139(1) an assessee is required to file the return of income when total income exceeds the maximum amount not chargeable to tax without giving effect to the provisions of sections 10(38), 10A, 10B, 10BA, 54, 54B, 54D, 54EC, 54F, 54G, 54GA, 54GB or Chapter VI-A. The said 6^th proviso is applicable from AY 2020-21. The proviso does not have any retrospective effect.

ITAT Rajkot in Rajendrasinh Zala V/s. CIT. Date of Order 30^th Septemeber, 2021.

  

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CA Ramakrishna Sanjay

 

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

 

 

 

THE WEEKLY TAX GNAN (w-02)

1)    Non-deduction of TDS on freight charges paid to a non-resident shipping company will not be disallowed u/s 40a(ia). Non-resident shipping companies are covered u/s 172 of the Income Tax Act, 1961. Section 172 is the overrides section 40a(ia).

 

2)    Though the payments made to the unapproved gratuity fund are dis-allowed u/s 40A(7), the same shall be allowed as deduction u/s 37(1). Bangalore Tribunal in Dy. CIT vs. ADC India Communication Limited.

 

3)    An application with the Dispute Resolution Committee shall be filed within 30 days from the date of the aggrieved order. Assessee whose Total Income is less than Rs. 50 lakhs or the amount of variation in an order passed is less than Rs. 10 lakhs can file an application.

 

4)    GST is applicable to voluntary payments made by the members of the housing societies. Payment is nothing but the consideration received by the society for various services rendered by it during the period of stay of member, repairs, shifting charges, etc. – Maharashtra AAR in the matter of Monalisa Co-operative society.

 

5)    The non-compete fees paid by the assessee is eligible for depreciation as intangibles. Payment is in the nature of “any other business/commercial rights” and the same shall be capitalized; hence, the depreciation on such payments is allowed as intangibles. Dy. CIT in Milacron India Private Limited.

 

6)    Interest paid on the purchase of house property can be claimed as the cost of acquisition while computing the Capital gains arising on the sale of the property. The deduction u/s 24b and u/s 48 can be claimed simultaneously. ITAT Chennai in ITO V/s Smt. R Aishwarya.

 

7)    The interest received by the land owners on enhanced compensation u/s 28 of the land acquisition act is exempt in the hands of the land owners. So, TDS u/s 194A is not required to be deducted on payment of such interest.

 

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CA Ramakrishna Sanjay

 

THE WEEKLY TAX GNAN (w-01)

 

1)    The day of arrival must be ignored while calculating the period of stay in India to determine the residential status of an assessee.

2)    Cars imported into India as Completely Built Units (CBUs) are subject to 100% customs duty.

3)    Period of holding of a flat has to be reckoned from the date of the Allotment Letter though the Absolute sale deed is executed later – ITAT Bengaluru, in Sri Mahendra Singh Ramsingh V/s ITO.

4)    Depreciation cannot be denied for non-deduction of TDS – Karnataka High court in Tally Solutions Private Limited V/s CIT(Appeals).

5)    The rate of depreciation on the iPad is 15%. Though the device has some computing capabilities, it is not a computer and hence not eligible for a higher rate of depreciation @ 40% - ITAT Amritsar in Kohinoor Indiana Private Limited.

6)    Higher rate of depreciation @ 40% can be claimed on UPS as Computers cannot run without UPS. – Expeditors International (India) Private Limited V/s CIT Delhi.

7)    Prior period expenses can be claimed as business expenditure if the related bills are received in the current financial year. ACIT Hyderabad in Hill Country Properties Limited case.

8)    Income earned from allowing to fix the Antenna Tower on the Terrace of the building shall be taxed as “Income from House Property” and the standard deduction of 30% can be claimed. ACIT, Mumbai, in Maker Tower Premises Co-operative Societies Limited.

9)    ROC Costs and professional fees paid to increase the authorized share capital are considered Capital expenditures and cannot be allowed as a deduction while computing the Total Income. Abhishek Steel and Power Limited V/s. CIT, Delhi.

10)        Income earned from hoarding advertisements placed on foot over bridges and bus shelters is eligible for deduction u/s 80-IA since the building of the foot over bridge and bus shelter qualifies as infrastructural facility for the purpose of section 80-IA – Calcutta High Court.

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CA Ramakrishna Sanjay