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Direct Tax

USTR proposes tariffs against Indian goods in retaliation to a 2% equalization levy

[Excerpts from Business Standard, 27 March 2021]

The US administration has proposed an increase in the tariff rate on the import of goods from India in retaliation to the equalization levy. Last year, the US Trade Representative (USTR) concluded that India’s equalization levy was “actionable” under Section 301 of the Trade Act for being unreasonable, burdensome, and discriminatory against American companies and inconsistent with international tax principles. The proposed charge includes a 25% ad valorem-based tariff on goods like basmati rice, seafood, jewelry, bamboo, semi-precious stones and pearls.

The due date for linking PAN Card- Aadhaar card has been extended till 30 June 2021

[Excerpts from Financial Express, 31 March 2021]

In the wake of increasing COVID-19 cases, and difficulties arising due to the same, the Central Government has extended the due date for linking the Aadhaar number with PAN from 31 March 2021 to 30 June 2021.

Low tax jurisdictions preferred for routing outward FDI (overseas direct investment) by Indian businesses

[Excerpts from Businessline, 19 April 2021]

For attracting investment and encouraging fund managers and highflying corporate executives having overseas incomes to stay in the country, the foreign investors’ forum has bFY 2021 has seen a cut-back in investments by Indian investors. Although, investments in low tax jurisdictions have remained at the top, especially in countries like Singapore, with investments up to USD 3.4 billion under Overseas Direct Investments (ODIs). India is followed by the USA with approximate investments of USD 2.42 billion. Jurisdictions such as the Netherlands, Mauritius, Bermuda and the British Virgin Islands are among the top 10 investment destinations for Indian investors. The respective DTAAs of India with these investee countries have preferential provision, allowing lower or no taxation in India as well.

The Central Board of Direct Taxes (CBDT) further extends due dates to 30 June 2021

[Excerpts from Livemint, 24 April 2021]

In a recent statement, the CBDT stated the due dates, which were earlier extended till 30 April 2021 have extended to 30 June 2021. This includes an extension of due dates for making payments under the Vivad se Vishwas direct tax dispute settlement scheme without the additional tax of 10%, completion of assessment, re-assessment and re-computation of income as well as issuing notice under Section 148 (i.e., notice for reassessment) of the ITA.

Transfer Pricing

Relaxation in Master File and Country by Country Reporting (CbCR) Rules

The CBDT, vide notification dated 5 April 20212, provided the following amendments made in Rule 10DA and Rule 10DB of the Income Tax Rules, 1962:

Rule 10DA(4) - Where there are more than one constituent entities resident in India of an international group, Form No. 3CEAA may be furnished by any one of the constituent entities.

Amendment - Master File designation extended to nonresident constituent entities.

International groups that have multiple constituent entities filing their tax returns in India (resident and non-resident) are required to comply with the Master File compliances under rule 10DA. Formerly, all resident constituent entities in India of the same international group could designate any one of the resident constituent entities to abide by such compliances by furnishing Form No. 3CEAB. This restricted the designation for and by only resident constituent entities. Thus, any non-resident constituent entities were filing their tax returns in India were required to comply with these provisions separately. This process has been done away with to ease the compliance burden.

Rule 10DB(6) - For the purposes of sub-section (7) of Section 286, the total consolidated group revenue of the international group shall be-

Amendment - Thresholds revised for CbCR applicability.

International groups that have a consolidated group revenue exceeding a certain threshold are required to comply with the CbC Regulations under rule 10DB. The amendment replaces the threshold from ‘INR 55 billion to INR 64 billion.’

This would help align the CbCR filing threshold in India with global requirements.

These amendments are applicable on or after 1 April 2021 for Financial Year ending 31 March 2021 relevant to Assessment Year 2021-22.

This is a welcome move from the CBDT, as it will ease out the compliance-related processes in India and remove inconsistencies in global compliance requirements. This move is aligned with the Indian Government’s continuing efforts to promote ease of doing business in India.

Extension in Timelines

Considering the hassles and hardships faced by the taxpayers, the Government has once again extended certain due dates:

Former Due Date Extended Due Date Applicable for
30 April 2021 30 June 20213
  • Passing an order for assessment or re-assessment - including an order under u/s 144C(13)
  • Issuance of notice u/s 148
1 April 2021 or thereafter Up to 31 May 20214
  • Appeal to Commissioner (Appeals)
  • Objections to the Dispute Resolution Panel
  • Income Tax Return in response to notice u/s 148
  • Filing of belated tax return u/s 139(4) and revised return u/s 139(5)
By 30 April 2021 Up to 31 May 20214
  • Payment of tax deducted u/s 194-IA, 194-IB and 194 M and filing of challan-cum statement for such tax deducted
  • Statement in Form No. 61 containing particulars of declarations received in Form No. 60

2. Notification No. 31/2021 dated 5 April 2021 – Click Here
3. Notification No. 38/2021 dated 27 April 2021 – Click Here
4. Circular No. 8/2021 dated 30 April 2021 – Click Here

Indirect Tax

Real-time report on vehicles moving without e-way bills

[with excerpts from The Hindu]

E-way bill is mandatory under the GST law for transportation of goods valued over INR 50,000 (INR 1 lakh in certain States). The government is now planning to introduce real-time analysis reports on RFID to assist the GST officers in reducing tax evasion. The government is also working on a realtime report on vehicles moving without e-way bills for a few selected toll plazas to help the officers intercept vehicles that do not have e-way bills.

Customs Duty and Health Cess exemption on import of oxygen, oxygen related equipment and COVID-19 vaccines

[Notification No. 28/2021-Customs dated 24 April 2021]

In view of the COVID-19 pandemic, the government has exempted Customs Duty and Health Cess on import of critical medical items such as oxygen, oxygen-related equipment and COVID-19 vaccines, etc. These exemptions shall remain in force up to 31 July 2021.