CBDT extends due dates for filing of various forms

The Central Board of Direct Taxes (‘CBDT’) has extended the due dates for filing of forms taking into consideration the difficulties reported by the taxpayers and other stakeholders. For your ease of reference, we have listed below in brief the details –

Capital Gain Tax on landowner share in case of JDA

 1. Joint Development Agreement (JDA) is a registered agreement in which a person owning land or building or both, agrees to allow another person to develop a real estate project on such land or building or both, in consideration of a share, being land or building or both in such project, whether with or without payment of part of the consideration in cash.

Exchange of Information under tax treaty.

 another interesting thread in the saga of Treaty analysis, which has recently caught the attention of the Indian Tax authorities, is the dictum passed by the Canadian Federal Court of Appeal with respect to Article 26 of the Canada-France tax treaty.

New Rules of NPS.

In a huge relief to pension subscribers in National Pension Scheme (NPS), the Pension Fund Regulatory and Development Authority (PFRDA) has revised the rules for those joining it after 65 years of age. In a set of new rules, PFRDA has permitted them to allocate up to 50% of the funds in equity, besides easing the exit norms. The pension fund has revised the guidelines on entry and exit following an increase in the maximum age for joining the NPS from 65 years to 70 years of age. The entry age for NPS has been revised to 18-70 years from 18-65 years. Any Indian citizen and Overseas Citizen of India (OCI) in the age group of 65-70 years can also join NPS and continue up to the age of 75 years, according to a PFRDA circular on the revised guidelines. The maximum equity exposure, however, will be only 15%, if subscribers joining NPS beyond the age of 65 years decide to invest under the default 'Auto Choice'. The subscriber, joining NPS beyond the age of 65 years, can exercise the choice of PF (pension fund) and asset allocation with the maximum equity exposure of 15 per cent and 50 per cent under Auto and Active Choice, respectively

Interplay of Section 194Q, 206C(1H) AND 194O

·         Transactions in securities and commodities through defined recognised stock exchanges and recognised clearing corporation located in IFSC are exempt u/s 194Q.

·         Transactions in electricity, renewable energy certificates and energy saving certificates traded through power exchanges are exempt from provisions of section 194Q. This implies purchase of electricity which has been held as goods by Hon’ble SC are tax deductible u/s 194Q. The manufacturing units or the service providers paying electric bills above Rs.50 lacs purchased by the defined buyers are covered under provisions of section 194Q.

Discount as an additional consideration!

Introduction

 

The concept of discounts has always been associated with sales. The same has been used by businesses, both large and small to increase the revenue. Such discounts on most occasions are given directly and at the behest of the manufacturers. In supply structures involving a manufacturer, a distributor and a dealer/customer, discounts are generally routed through the distributor and can partake two forms i.e., pre-supply and post supply discounts.

Payment for online advertising not tax taxable as Royalty .

 In a relief to Urban Ladder Home Décor Solutions, the Bangalore ITAT ruled that Payments made for online advertising and marketing to non-resident payees such as Facebook, Amazon Web Services (AWS) for advertising, marketing does not tantamount to payment of ‘Royalty’ under the relevant tax treaties.

ITAT relying on the SC’s dictum in ‘Engineering Analysis Centre of Excellence Private Limited’ held that beneficial DTAA provisions are to be considered for determining the taxability of income. On perusal of agreements with the non-resident payees, ITAT observed that mere usage of facility provided by Facebook or Rocket Science does not render the payment as ‘Royalty’, as copyright attached to the facility is not parted with. In the case of AWS, the payment is made only for using information technology infrastructure facilities on a rental basis. Hence the question of transferring the copyright over those facilities does not arise at all. Thereby, concluding that payments made to non-residents do not give rise to any income chargeable in India, and thus there was no requirement to deduct tax at source u/s 195. The judgement brings with it good tidings for the non-resident recipient companies, as erstwhile it was becoming challenging for the companies to claim credit in their home country, if tax was perceived as wrongly withheld in the source country (in this case India). The ruling would also go a long way in reinstating the foreign investors’ confidence in the taxation & legislative prowess of the country.

Why is ITC of GST denied on land leased for the purpose of setting up a manufacturing facility?

 

A recent AAR has denied ITC of the GST paid by the recipient towards leasing of land to be used for setting up a manufacturing facility.​ ​The AAR is of the view that ​the leased-land cannot be a part of the Plant & Machine​ry​, ​hence, ​ITC cannot be claimed as per the restriction placed u/s 17(5)(d).

Tax Treaties & Equalization levy

Today we discuss the interplay of Equalization levy (EL) and the treaty provisions. Observing that the EL has been specifically kept out of the Income tax provisions, the author ponders over the question as to whether the EL can be kept outside of the income tax treaties as well.The author makes a comparative analysis of OECD model treaties and Indian treaties, discusses Article 2 and 24 of the tax treaties, elucidates on whether EL can be treated as covered tax under Article 2. Comparing the EL provisions with Income tax, the authorstates “the only de-link between EL and income tax is the PE. Income tax needs PE to tax an income and EL does exact opposite i.e. taxes where PE is absent.” The author also analyses if the EL is discriminatory in terms of Article 24. Further, the author states that introduction of Article 12B (similar to the EL) in the UN model and its commentary suggest that the treaties currently do not tax these specified services in absence of PE and hence the necessity of the new article has arisen. While signing off, the author remarks “We already have a wider definition of business connection, with introduction to Dependent Agent PE, and Significant Economic Presence in the income tax Act. We also have the Equalisation Levy, it seem like Indian administration is not leaving no stone unturned in the attempt to tax the Digital Business.”

A Missed compliance- Can cost Crores

 

Making non-compliance an even costlier affair, Bangalore ITAT recently dismissed an assessee’s appeal seeking the rectification of disallowance by the CIT on grounds of non-furnishing of Form 10, of an amount set apart by the assessee. 
As a brief background, Navodaya Education Trust (assessee), registered under u/s 12A, had declared nil income for AY 2015-16 after setting apart INR 6.99 cr. for the purposes specified in Section 11. The assessee, however, failed to submit Form 10 within the stipulated time, basis which the revenue made an addition of INR 6.99 cr. in its return. 
The assessee contented that although a manual copy of the said form was not submitted, however, the requisite facility for its online filing was also not available at the portal. The hon’ble ITAT, in response, opined that “it is mandatory to file Form 10 manually though not electronically before the due date of filing of return of income”. 
Further pronounced that, the relevant CBDT circular does not preclude the asseesee in filing form 10, but permits only its belated electronic filing, on satisfaction of the Commissioner that the assessee was prevented by reasonable cause in doing so within the stipulated time. 
Hence, asseverated that, non-furnishing of Form 10 by the Trust is not a rectifiable error u/s 154. 

Voluntary tax on Agricultural Income.

A 2019 Comptroller and Auditor General report has brought out glaring irregularities in the exemptions given to agricultural income for income tax purposes. Exempting large income on agriculture from taxation not only makes the agricultural sector a conduit for money laundering and concealment of black money but also holds back the much-needed modernisation and reform of the sector. Although everyone agrees on the desirability of taxing agricultural income, successive governments have shied away from it for electoral reasons.  The CBDT also admitted that giving exemption to agricultural income for income-tax purposes without verification of claims allows an avenue for bringing black money into the financial system as agricultural income.

IFSCA issues regulations on issue and listing of the securities in the IFSC in India

 The IFSCA has issued regulations on issue and listing of the securities in the IFSC in India (Regulation). The Regulation inter alia provides a framework on the following aspects:

 

·         Public offer of Specifies securities [IPO and FPO]

·         Listing of Start-up and SME companies

·         Secondary listing of Securities

·         Listing of Special Purpose Acquisition Companies (SPACs)

·         Listing of Depository Receipts

·         Listing of Debt Securities

·         Listing of Environment, Social and Governance (ESG) Debt Securities

 

The Regulation were issued on 16 July 202

Limited Liability Partnership (LLP) Amendment Bill, 2021

Following are some of the provisions:

 1. Small LLP: It is proposed to create a class of LLP called as “Small LLP” in line with the concept of Small Companies. Such Small LLPs would be subject to lesser compliances, lesser fee or additional fee and lesser penalties in the event of default.

Understand cryptocurrency

What is cryptocurrency?

Cryptocurrency is considered as a quasi-currency in digital forms and is often termed Digital Money. It is nothing more than a digital file that is created using the same methods as cryptography (i.e., the science of encrypting information).  It is believed to have a 'decentralized control' i.e., it is not controlled by one person or Government. There are normally three ways by which the transaction in cryptocurrency is undertaken:

A celebration of ten years of blogging, a celebration of you

 

 

Today is a very special day. It’s TENTH Blogging Anniversary!  I can hardly believe that it has been one decade already since I took my first baby steps into the Blogging world for sharing & gaining tax knowledge. It's been an amazing period and a great learning experience. Over this period, I have published thousands of articles and information on tax which has been liked by the majority of the readers.

And It would have never been possible without your support! On this special occasion, I would like to thank all my blog readers, family members, friends, mentors and followers on Social Media. YOU are my inspiration.

The Journey so far.

·         From the beginning, I had a passion for tax and I have already published many articles in various other private tax portals. My professional colleague Kuldeep advised me to start my blog and thus I decided to start my blog. With no knowledge of how the blog works, I  started my blog in the name of TAXBYMANISH.     

 

·         I was continuously  blogging and over a while, TAXBYMANISH started gaining popularity among tax professionals. The blog is also liked by students, tax officers, entrepreneurs, etc.

 

·         In these 10 years, I have published more than 7000 posts and there are more than 2.9 Million views so far.   There are readers not only from India but different parts of the world like USA, Russia, France, UK, Germany & others.    

 

 

Blog’s Objective.

·         To keep the articles simple and easy to understand 

·         To update blog readers with tax news and information on a real-time basis.

·         To publish unbiased views of common taxpayer

• To value my blog reader’s time.
• Try to respond  every genuine query/comment ASAP.

The Journey was not easy and this happened because of  YOU only. Kindly give your suggestion and opinions to make it better and keep reading. 

Thank you.   

 

Computation of Capital Gains on Dissolution or Reconstitution of a Partnership Firm

 

1. Introduction

Where a partner receives any amount of property on dissolution or reconstitution of the firm, the income-tax implications in the hands of the partner and the firm have been completely overhauled by the Finance Act, 2021. Section 9B has been inserted, and Section 45(4) has been amended by the Finance Act, 2021.

The Taxation Amendment Bill 2021

 

BACKGROUND: RETROSPECTIVE TAX ON INDIRECT TRANSFERS IN 2012

•                                  SC in 2012 in the case of Vodafone International Holdings B.V.: [2012] 17 taxmann.com 202 (SC) held