​​ Sushil Chandra to be New CBDT Chief wef 01.11.2016

HC pulls up tax dept. for issuing unlawful block assessment notice; imposed costs on dept.

Where condition precedent to issue notice under section 158BC, viz. undisclosed income found during search proceedings was not satisfied, no notice under section 158BC could have been be issued to petitioner

• Action of the revenue in issuing section 158BC notice despite the appraisal report clearly stating that no incriminating material was found against petitioner was highly deplorable as it amounted to harassment of the taxpayer. The Officers of the Income Tax Department are obliged to proceed in accordance with the statutory provisions and cannot act on their whim and fancy. The Department should adopt a standard operating procedure to provide adequate safeguards before issuing notices under Chapter XVIB.

• The Respondents-revenue, i.e., the jurisdictional Chief Commissioner of Income Tax is directed to pay the costs of Rs. 20,000 to the petitioner within four weeks from today.

Refer:[2016] 74 taxmann.com 128 (Bombay)
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Tax officials are using an IDS provision to question transactions beyond six-year-limit

Income tax officials are said to be asking questions about transactions older than the six-year statute of limitations by invoking a provision that was put in place as part of the just-concluded Income Disclosure Scheme (IDS), throwing assessees into turmoil.

While no fresh notices are being issued on such assets, some income tax officials believe the IDS-related provision allows them to raise such matters when they conduct assessments of returns made within the six-year ceiling. “It’s not an unlimited power for the income tax department to go after whomsoever they want to go,” a tax official told ET.

“But tax officers can raise questions under ongoing assessments, even about properties bought say 20 years ago and source of income.” Section 197c, which was recently added to the Finance Act, allows tax officials to examine transactions much older than six years.

This was believed to have been solely related to IDS--the June-September programme aimed at persuading people to declare their black money holdings--but the tax department has in the past week begun questioning people about properties older than six years in some ongoing assessments.

“The government had introduced section 197c for the IDS, but now the concern is whether tax officials can still open assessments which are older than six years,” said Sanjay Sanghvi, tax partner at law firm Khaitan and Co.

“There is a view that the tax officials can do that, but this could lead to a lot of litigations going ahead as it contradicts provisions of Income Tax Act.” One instance relates to the New Delhi income tax department last week asking a tax payer for documents related to a house that was purchased more than six years ago.

The officials said it would be included in the past year’s income and penalties would be imposed, according to a tax adviser who was involved. “It’s a damaging provision of IDS which allows IT officers to go back several years to catch undisclosed income and deem it as current year’s income. This is not limited by time given under the income tax provisions,” said Amit Maheshwari, partner at Ashok Maheshwari and Associates.

It couldn’t be independently verified whether this was a view held by the department or just a few tax officers. ET also understands that income tax officers had raised the matter with the Central Board of Direct Taxed (CBDT) in July, with some making the point that litigation could follow as other regulations still bar assessments older than six years.

To be sure, Prime Minister Narendra Modi has made it clear to tax officials that they shouldn’t unnecessarily harass bonafide tax payers and encourage voluntary compliance.

“The government has not come out with clear regulations around using this provision but the thinking could be to go hard at the tax evaders,” another person close to the development said. Experts said some tax payers are worried their ancestral properties may also come under the tax net.

They wouldn’t have been too encouraged by the statement of a top government minister at a public event in Mumbai about a month back. “You want to enjoy the ancestral property but you don’t want to pay taxes on that. How can that happen?”

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Finance ministry keen to present Budget on February 2 or earlier

Looking at advancing the date of Budget presentation to February 2 or even earlier, the Finance Ministry today briefed a Parliamentary panel on the proposed change as also the government's decision to merge railway budget with general budget.

Explaining the objective behind the proposed budget reforms, sources said, Finance Secretary Ashok Lavasa informed the members of the Parliamentary Standing Committee on Finance of different aspects of the reform process.

As per the practice, the general budget is unveiled in Lok Sabha on the last working day of February.
Lavasa answered queries of members about the pros and cons of merging the Union and Railway budgets. Some members raised queries about the fate of dividend received by railways from its PSUs, sources said.

Railway Board Chairman is scheduled to brief the panel headed by former Union Minister and senior Congress leader Veerappa Moily on October 21.

As per the sources, Finance Ministry is contemplating to present the general budget between January 30 and February 2 with a view to completing the whole process by March 31.

The ministry said that advancing budget presentation date assumes significance as the GST would be implemented from the start of the new financial year from April 1, 2017, they added.

There is uncertainty about the revenue collection of the central government as there could be teething problems in the initial phase of the Goods and Services Tax (GST) roll out.

The government would need about 8-9 weeks for completing the budget process in Parliament.

As per government's plan, the budget could be presented latest by February 2 and then Parliament would go in for recess around February 10 and meet again around March 10.

Thereafter, the parliament would have time to discuss and pass the Budget and Finance Bill by March 31, the last day of the financial year.

The Cabinet last month approved the Finance Ministry's proposal on landmark budgetary reforms relating to merger of Railway Budget with the General Budget and the advancement of the date of presentation from the last day of February.

The Cabinet has also given its permission to the merger of the Plan and the Non-Plan classification in the Budget and Accounts.

The presentation of separate Railway budget started in 1924, and has continued after independence as a convention rather than under Constitutional provisions.
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Region-wise data on IDS is fraudulently circulated on social media; CBDT hasn't issued official list

While announcing the results of the Income Declaration Scheme 2016 on 1st October, 2016 at a press conference in Delhi, the Honourable Finance Minister Shri Arun Jaitley stressed that no break-up of these declarations on the basis of trades/cities/states shall be released in order to ensure absolute secrecy with respect to the identity of the declarants.
CBDT clarifies that no official list of region wise declarations has been issued. The Income Tax Department is committed to maintaining strict confidentiality of declarations made under the Income Declaration Scheme 2016. CBDT requests the general public not to pay any heed to such fraudulent messages circulating on social media.
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ICDS exemption for Individuals and HUFs not liable to tax audit; CBDT notifies revised ICDS

New Delhi, the 29th September, 2016 

S.O. 3079 (E) In exercise of the powers conferred by sub-section (2) of section 145 of the Income-tax Act, 1961 (43 of 1961, the Central Government hereby notifies the income computation and disclosure standards as specified in the Annexure to this notification to be followed by all assessees (other than an individual or a Hindu undivided family who is not required to get his accounts of the previous year audited in accordance with the provisions of section 44AB of the said Act) following the mercantile system of accounting, for the purposes of computation of income chargeable to income-tax under the head “Profits and gains of business or profession” or “Income from other sources”. 

2. This notification shall apply to the assessment year 2017-18 and subsequent assessment years.
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Conclusion of two GST Council Meetings

The Government of India is committed to implement GST by 1st April 2017. The Central Government is consistently making progress towards implementation of biggest tax reform in India.
On 12th September 2016, the Union Cabinet have approved setting up of the GST Council and its secretariat with its office at New Delhi in accordance with Article 279A of The Constitution of India.
The first meeting of the GST Council was held on 22nd and 23rd September, 2016. GST council marked consensus on some important issues:
  • Exemption threshold for GST is decided to increase to Rs 20 lakh from Rs 10 Lakh as envisaged in draft GST model law.
  • For Northeastern and hilly states, this exemption limit is increased to Rs 10 lakh from 5 lakhs. Northeastern and hilly states comprise 11 states i.e. Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
  • It is also decided that all cesses would be subsumed into GST.
  • States shall have administrative control over assessees with annual turnover of less than Rs 1.5 crore. For turnover of over Rs 1.5 crore, there will be jurisdictional assessment by cross empowerment between states and Centre leading to single interface.
  • On issue of compensating states for any potential revenue loss, the GST Council suggested to take an average of revenue growth for three out of last five years excluding two outliers with suggestion of fixing base year as 2015-16.
The second meeting of GST Council held on 30th September decided firstly on area-wise & industry-wise exemptions and secondly on draft rules of GST.
  • Currently, the exemption is given to various entity in 11 states in the northeast and hilly regions from excise duty. Consequently, many states gave tax incentive for setting up industry in its states. It was agreed that there would be a levy of tax under the GST system on all exempted entities. Once the tax is levied, the Central or State government, which gets that tax, would then reimburse the same to thise entities.
  • The Council also agreed on five subordinate legislations i.e draft rules and formats dealing with issues ranging from registration to invoicing under the new GST regime released on 26th and 27th September. (Refer DYKS dated 30/09/2016 for details)
Going Forward, discussions on crucial rate structure for GST along with service tax assessment and the formula for calculating compensation to states would be taken up at the next meeting on 18th-20th October.
Contributed By:
Atul Kumar Gupta
Central Council Member of ICAI (2016-2019)
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Black money haul: Rs 65,250 crore disclosed through Income Declaration Scheme

In the biggest ever blackmoney disclosure, at least Rs 65,250 crore of undisclosed assets were declared in the one-time compliance window, yielding Rs 29,362 crore in taxes to the government.

While the blackmoney declarations will go up once all the online and manual filings of undisclosed assets filed at the end of the four-month window on September 30 are compiled, the government will get nearly Rs 14,700 crore or half of the due taxes, this fiscal.

Announcing the declarations made under the Income Declaration Scheme (IDS), Finance Minister Arun Jaitley said 64,275 declarants disclosed an amount of Rs 65,250 crore.
"Some disclosures have not been tabulated... This figure could be revised upward once the final tabulation is done," he told a news conference here.

Government had offered a one-time chance to holders of income and assets that had illegally escaped taxes, to come clean by paying a tax and penalty of 45 per cent.

On the declarations compiled so far, the government will get Rs 29,362.5 crore in tax and penalty. The declarants can pay this amount in two instalments up to September 30, 2017. Half or Rs 14,681.25 crore will accrue this fiscal

Last year, under a similar scheme for foreign black money holders, 644 declarations of undisclosed foreign income and assets were received, and just Rs 2,428 crore was collected in taxes.

"We will maintain secrecy of these declarations," Jaitley said, adding the tax would accrue to the Consolidated Fund of India and would be used for welfare of public.
The average declaration per declarant comes to Rs 1 crore.

A total tax of Rs 9,760 crore was collected under the Voluntary Income Disclosure Scheme (VIDS) amnesty scheme brought by the then Finance Minister P Chidambaram in 1997.

"In 1997, the tax collected was Rs 9,760 crore," Jaitley said, adding that VDIS and IDS cannot be compared as the two schemes are different.

While IDS is not an amnesty scheme, VDIS provided blanket amnesty, he said. Taxation under IDS is charged at the rate of 45 per cent while the effective rate of tax in the 1997 scheme was in single digit.

Jaitley also listed out the steps taken by the government to unearth unaccounted money in over two years, including Rs 56,378 crore during search operation and Rs 16,000 crore from non-filers of tax returns.

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Extension of ‘due-date’ orders would apply to all assessees

CBDT Clarification dated 30th September 2016

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
North Block, ITA.II Division, New Delhi,

Dated : 30th of September, 2016

Order under Section 119 of the Income-tax Act, 1961 dated 9th September, 2016

In continuation of order u/s 119 of the Income-tax Act, 1961 dated 9th September, 2016 and clarification thereof dated 14th September, 2016, both vide F.No. 225/195/2016/ITA.II , it is further clarified that the extension of ‘due-date’ mentioned in these orders would apply to all assessees who are required to file their return of income by 30th September, 2016 as per clause (a) of Explanation 2 to sub-section (1) of section 139 of Income-tax Act, 1961.

(Deepshikha Sharma)

Director to the Government of India
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Small savings schemes interest rate cut by 0.1%

Rate of interest on small savings schemes have been cut marginally by 0.1%. The popular National Savings Certificate and Public Provident Fund (PPF) will see their interest rates come down to 8.0% in October-December quarter from 8.1% in April-Jul quarter. Interest rates for small savings schemes are reset every quarter now. 

The Kisan Vikas Patra will now pay out 7.7% instead of 7.8% and mature in 112 months instead of 110. 

Senior citizens deposit scheme will now fetch 8.5%. Interest rate on Monthly Income Account scheme will come down to 7.7% from 7.8% in the previous quarter. The new rates will come into effect from October 1 and will remain in force till December 31. Interest rate for savings deposit remains unchanged at 4%, according to the notification issued by the finance ministry late Thursday. 

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Building GSTN hell of a challenge, says Infosys' Vishal Sikka after meeting Jaitley

Infosys Ltd. Chief Vishal Sikka met Union finance ninister Arun Jaitley in the capital on Thursday for a review meeting of the Goods and Services Tax Network (GSTN), a key project which has been contracted to the country's second largest software firm.

Sikka has been learnt to have given a presentation to Jaitley about the progress in project so far. In an interview to ET Now, Sikka said, "It is a very important project for the country and it is something that the finance minister and the prime minister are extremely keen on and it is something that we are very proud of and so we are putting, Pravin (Rao, Infosys COO) and I are putting all our best efforts into that." He added that GSTN involves many moving parts.
"It is an extremely complex and ambitious exercise. It involves banks. It involves small businesses, big businesses, tax payers, states. Many states are not ready. Many small cities are not ready. So it is going to be a hell of a challenge but we are incredibly excited about it," he said.

GSTN is a not-for-profit entity owned by the Centre, states and non-government financial institutions, and is building the technology backbone for new tax regime. It has been mandated to handle the complex back-end processing when the revolutionary tax reform rolls out from April 1, 2017.

ET had reported in August that Testing of the software should start by October and a beta launch of the GST portal is planned for February. Infosys has been assigned the mandate to develop and run GSTN in a project worth Rs 1,380 crore. The portal itself will be a one stop for filing and processing of all taxes for almost 65 to 70 lakh tax-payers in the country and is being designed by a specialised design unit of Infosys.
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