Covid-driven tax reliefs to cost government 2-3% of GDP

Source: The Economic Times, Mar 26, 2020

Taxation experts have welcomed the measures announced by the government, saying these steps will add up to 2-3 per cent of GDP but will go a long way in addressing the issue of liquidity and deferment of payment obligations. The government on Tuesday came out with a slew of relaxation in tax and payment compliances by reducing the quantum of penalties, extending the deadline to make clear the dues among others to help the public and corporates.

Some of the key measures include extension of tax filing/returns and accordingly all tax due arising between March 20, 2020 and June 29, 2020 now stand extended to June 30, 2020.

This is across income tax and GST, and would apply to all return filings, replies/appeal filings, and other compliance documents. For delayed payments, interest rates have been reduced to 9% under both income tax and GST.

Welcoming the measures, Deloitte said these measures will help ease the compliance pressure on businesses and individuals and provide necessary relief to critical sectors in view of the Covid outbreak.

Many analysts have said the lockdowns will shave off as much as Rs 9 lakh crore of the GDP.

Gokul Chaudhri of Deloitte India said, “These steps will certainly give a lot of confidence to corporates and different sectors of the economy.
The relief measures and easing of compliance deadlines will enable businesses to sustain themselves in the current atmosphere and is likely to have a positive impact on economic activities and more importantly remove uncertainty in the system.

“From the tax point of view, the reliefs like tax breaks, accelerated depreciation, reliefs on payrolls, payments-weighted deduction, relief on contribution to PF will add up to 2-3 percent of GDP, which is much needed to help address the issue of liquidity and deferment of payment obligations,” he said.

The move to ensure 24/7 trade facilitation at ports through the customs will not only promote ease of doing business but also ensure smooth flow of trade, he added.

Jiger Saiya, partner and leader for tax and regulatory services at BDO India, said the extension to the Vivad Se Vishwas scheme will go a long way in making the entire scheme a success as in the original form it was an impossibility to attain the objective.

“With the extension, taxmen will now have time to clarify more aspects and taxpayers will have reasonable time to evaluate and seek settlement of tax disputes, under the scheme,” Saiya said.

Veena Sivaramakrishnan of Shardul Amarchand Mangaldas & Co said the tax measures are a step in the right direction and indicate more such practical measures to come in the future.

KPMG India’s Rajeev Dimri said the various tax reliefs announced by the finance minister would provide the much needed succor to all in these unprecedented times.

Naveen Aggarwal of KPMG said extension of the deadline under Vivad Se Vishwas from March 31 to June 30 without paying additional tax of 10 per cent is a welcome move and is in line with the representations made by taxpayers and industry forums.

This would help companies save for possible financial difficulties faced by companies in this crises.

On the IBC changes, Manish Aggarwal of KPMG said changing the operative sections of the IBC will help avoid large scale insolvencies.

The government also needs to consider sector specific measures to address the cash flow & liquidity enhancement measures to help businesses withstand this period.

Stopping the process towards insolvency is necessary but not a sufficient condition to address fundamental issues facing the businesses now.

Rajesh Narain Gupta, managing partner of SNG & Partners the measures announced will lead to a positive direction and will give a boost to trade and commerce.

Tax officials ready with rules, forms to implement Vivad Se Vishwas scheme

Source: The Economic Times, Mar 16, 2020

New Delhi: Tax officials are ready with necessary rules and forms under the Vivad Se Vishwas Scheme to settle direct tax disputes, and will issue them soon after the law gets presidential assent, two officials told ET.

The Central Board of Direct Taxes has also directed its officers to be prepared with tax calculations for taxpayers to ensure speedy execution of the scheme, given the tight deadline of March 31, they said. It is also ready with the online system that will be used by taxpayers to avail the scheme.

Parliament had on Friday approved the Direct Tax Vivad se Vishwas Bill, 2020, which would give taxpayers an opportunity to settle their disputes by paying due taxes with complete waiver of interest and penalty until March 31. It would also allow dispute settlement with some additional payment till July 31.

“The forms and rules are ready,” a senior official told ET on condition of anonymity. “Once the bill is enacted, we will be able to issue them. Even the utility is also ready from the system side, so online declarations can be filed immediately after the bill is enacted.”

In order to make the process simpler for interested parties, the forms will specify the amounts that the taxpayer has to pay by March 31, and after that date, the official said.

The forms have been designed assessment year wise, where each year will show the disputed tax, the amount already paid, and balance whether refundable or payable. Such a mechanism has been adopted since setting off the refund of one assessment year will not be eligible for payment of tax for the next assessment year, the official said.

“Field officers have already done a lot of the calculations in various cases,” the person said. “When taxpayers or companies come for filing the declaration, the 15 days’ time is an outer limit, but field officers will be able to do it much earlier, because they’re already on the job.”

Another official said the department has decided to make chief commissioners in each jurisdiction as the designated authority for filing declarations, ensuring that a widespread network of officials is able to address issues that interested parties may have.

Direct tax mop-up at ₹7.52-lakh cr in Apr-January

Source: The Hindu Business Line, Mar 03, 2020

New Delhi: The government has collected over ₹7.52-lakh crore as direct taxes till January 31 of the current fiscal, Parliament was informed on Tuesday. The Revised Estimate (RE) has pegged the target for collection of direct taxes for the current fiscal, which ends on March 31, at ₹11.70-lakh crore. “The total amount collected under direct tax collection, as on January 31, 2020 is ₹7,52,472 crore,” Minister of State for Finance Anurag Thakur said in a written reply in the Rajya Sabha.

Direct Tax includes corporate and income tax. He said the last advance tax instalment is due in March 2020, and hence it is little premature to predict the final collection of direct taxes for the current year at this stage.

February GST mop-up at ₹1.05-lakh cr

Source: The Hindu Business Line, Mar 01, 2020

New Delhi: Goods and Services Tax (GST) collections crossed the ₹1-lakh crore mark for the fourth month in a row in February.

However, the February 2020 collection of ₹1,05,366 crore were lower than the January 2020 figure of ₹1,10,828 crore.

It was higher than December 2019’s ₹1,03,184 crore mop-up.

For February 2020, CGST stood at ₹20,569 crore, SGST at ₹27,348 crore, IGST at ₹48,503 crore (including ₹20,745 crore collected on imports) and cess at ₹8,947 crore (including ₹1,040 crore collected on imports).

The total number of GSTR 3B Returns filed for January up to February 29, 2020 is 83 lakh, an official release said.

The government has settled ₹22,586 crore to CGST and ₹16,553 crore to SGST from IGST as regular settlement.

The total revenue earned by the Centre and the State governments after regular settlement in February is ₹43,155 crore for CGST and ₹43,901 crore for SGST.

Domestic transactions

The GST revenues during February from domestic transactions grew 12 per cent year-on-year.

Taking into account the GST collected from import of goods, the total revenue was up 8 per cent year-on-year in February. During the month, the GST on import of goods contracted by 2 per cent as compared to February 2019.

States’ profile

The major States of Maharashtra, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh and Haryana recorded robust growth in GST revenues in February.

Maharashtra’s GST revenues in February grew 12 per cent to ₹15,735 crore (₹14,092 crore) and Gujarat’s GST revenue grew 11 per cent to ₹7,216 crore (₹6,507 crore).

Karnataka’s GST revenues grew 15 per cent to ₹7,414 crore (₹6,453 crore) and Tamil Nadu’s by 8 per cent to ₹6,427 crore (₹5,974 crore). Uttar Pradesh posted 13 per cent growth in GST revenues in February ₹5,776 crore (₹5,112 crore) and Haryana’s revenues grew by 8 per cent at ₹5,266 crore (₹4,873 crore) in the same period.

I-T detects Rs 2K-cr unaccounted income

Source: The Economic Times, Feb 14, 2019

New Delhi: Search and seizure operations undertaken by the Income Tax department across premises of three prominent infrastructure groups based in Andhra Pradesh and Telangana, has led to detection of unaccounted income of over Rs 2,000 crore.

The Central Board of Direct Taxes (CBDT) said in a statement Thursday, that search and seizure operations were carried out on February 6, across 40 premises in Hyderabad, Vijaywada, Cuddapah, Vishakhapatnam, Delhi and Pune.

Investigations have led to busting of a major racket of cash generation through bogus subcontractors, over-invoicing and bogus billing. The department did not name the companies or groups involved.
“Preliminary estimates suggest siphoning of more than Rs 2,000 crore through transactions that were layered through multiple entities with the last in the chain being small entities with turnover less than Rs 2 crore to avoid maintenance of books of accounts and tax audits,” the department said.

Govt makes tax dispute resolution scheme attractive, expands scope

Source: Business Standard, Feb 13, 2019

New Delhi: Making the direct tax dispute resolution scheme attractive, the Union Cabinet on Wednesday expanded its scope to cover litigation pending in arbitration forums and debt recovery tribunals (DRTs). The scheme will also include cases related to revision and small-value search disputes.

The Cabinet also reduced the disputed amount by half for those assessees who got favourable orders but the income-tax department challenged those.

The move comes a week after Finance Minister Nirmala Sitharaman introduced the Direct Tax Vivad se Vishwas Bill, 2020, in the Lok Sabha to resolve disputed tax cases, amounting to Rs 9.3 trillion, giving effect to the Budget announcement.

The scheme offers waiver of interest, penalty, and prosecution for settling tax disputes. It was earlier limited to cases pending before the commissioner (appeals), the Income Tax Appellate Tribunal, high courts or the Supreme Court as of January 31, 2020. Now, a complete waiver of interest and penalty will be given if tax dues are paid by March 31. An additional 10 per cent of the disputed amount will have to be paid after that.

Union minister Prakash Javadekar, briefing the media after the Cabinet meeting, said it had decided to cover disputes pending in DRTs, arbitration, tribunals, and courts, besides revision issues, under the scheme.

This means that high-profile cases like Vodafone and Cairn Plc, which are pending in arbitration, are eligible for the scheme. Queries sent to the two companies did not elicit any response.

Javadekar said the decision had been taken on the basis of suggestions received from various stakeholders. “After the Union Budget, the finance minister held discussions with stakeholders and sought suggestions from them. On the basis of their suggestions, there are now new amendments to be made in this session of Parliament,” he said.

Disputes related to search and seizure cases where recovery is below Rs 5 crore will also be taken up under this scheme. The whole purpose, Javadekar said, was to enlarge the scope of the Bill.

Amit Maheshwari, managing partner, Ashok Maheshwary & Associates LLP, termed it a welcome inclusion. “Including revisions, arbitrations, and DRP proceedings will help in garnering more revenue. There was no good reason to keep these proceedings out of the purview of the scheme, if the intention is to garner revenue and reduce litigation.”

On the inclusion of small-value search cases, he said, “This will unlock stuck tax revenues and help in reducing the pending litigation. A lot of search cases end up in litigation and this is a welcome step.”

While the scheme is open till June 30, those availing of it will be given a complete waiver of interest and penalty if they pay the entire amount by March 31. In the case of tax arrears pertaining to only disputed interest or penalty, 25 per cent of the disputed penalty/interest will need to be paid while settling appeals till March 31, and 30 per cent if payment is made after that.

Rajat Mohan of AMRG Associates said that after the debacle of the dispute resolution scheme of indirect taxes, the government was leaving no stone unturned to make the Vivad se Vishwas scheme a success and collect enough taxes to justify the time and energy spent on the scheme advocacy and bridge the current revenue deficit.

The scheme will apply to cases irrespective of whether demand in such cases is pending or has been paid. The pending appeal may be against disputed tax, interest or penalty in relation to an assessment or reassessment order or against disputed interest or fee where there is no disputed tax. Appeal may even be against tax determined on defaults in respect of tax deducted or collected at source.

However, it appears that cases related to undisclosed foreign income/assets and assessment or reassessment made on the basis of information received under the double taxation avoidance agreement are still out of the purview of the scheme. Also, a person facing prosecution under the Indian Penal Code, Prevention of Money Laundering Act, or Prohibition of Benami Property Transactions Act cannot avail of the scheme. The Budget scaled down the direct tax collection target to Rs 11.7 trillion from Rs 13.35 trillion, achieving which will require 2.9 per cent growth. However, even that seems challenging, considering that the growth in the first 10 months stands at a negative 6 per cent.

Government weaves tax net for internet’s global biggies

Source: The Economic Times, Feb 07, 2019

NEW DELHI: India has introduced an enabling provision that will make an overseas platform that advertises, streams or sells goods to an Indian IP address taxable in the country. This marks the first step toward a global digital tax and means that India will be ready to implement the levy once the Organisation for Economic Cooperation and Development (OECD) framework, currently under discussion, is finalised.

The government will then be able to tax revenues of ecommerce firms such as Amazon, Alibaba and Ebay selling goods or services based on data collected from residents and those engaged in targeted advertisements such as Facebook and Google, besides streaming services like Netflix. Those monetising data, through cookies for instance, will also be covered.

India had imposed a 6% equalisation levy, sometimes referred to as the ‘Google tax’, in 2016. But this latest development is a significant move toward capturing tax on incomes earned by overseas companies through consumption by Indians.

“The idea is to have an enabling framework in place so that once the OECD framework is ready, we can go ahead,” a senior government official told ET. The proposed changes will be implemented only after OCED unveils the global framework.

Readying Taxation System for Digital Economy
The Finance Bill has proposed changes to the income tax Act to add new source rules that deem certain types of a foreign assessee’s income to be of Indian origin and hence taxable in the country.

Toward this end, the government has introduced explanation 3A in Section 9 of the income tax Act on “income attributable to operations carried out in India”. This will incIude the income of non-residents from advertisements targeted at Indian customers or accessed through Indian IP addresses; income from the sale of data collected from an Indian resident or from a person using an Indian IP address; and income from the sale of goods or services using data collected from an Indian resident or from a person using Indian IP address.