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Direct Tax

Income Tax Department can share PAN data with Financial Intelligence Unit: 5 points

[Excerpts from Livemint, 22 July 2020]

Financial Intelligence Unit is a unit set up by the Government of India in 2004 as the central national agency responsible for receiving, processing, analyzing, and disseminating information relating to suspect financial transactions. The CBDT has announced that they will now be sharing the PAN data of persons with the FIU in order to allow the FIU to dig deeper into large cash/suspicious transactions at the bank. The CBDT discussed a few key points - A bank has to furnish a cash transaction report to the FIU over a certain monetary limit. The FIU has this right under the Prevention of Money Laundering Act. While sharing such information, the respective tax authority will have to form an opinion that the sharing of such information is, in fact, necessary for the purposes of enabling the FIU to perform its function.

Google tax 'very clear,' no need for FAQs: Finance secretary A B Pandey

[Excerpts from The Business Standard, 23 July 2020]

The Finance Act 2020 further expanded the scope of equalization levy to nonresident e-commerce operators by introducing a new levy of 2%. Since the introduction of the levy, major non-resident e-commerce firms have expressed their discomfort regarding such tax. Such firms were eagerly waiting for FAQs and clarifications from the government. The Finance Secretary has expressed that the law is very clear, and there is no need to issue a separate set of FAQs. With regard to revenue position, the Secretary said that tax collections from such tax were encouraging in the first quarter of FY 20-21.

Government extends the income tax return filing deadline till 30 September for FY 19

[Excerpts from Hindustan Times, 30 July 2020]

The taxpayers are facing hardships to comply with the due dates in light of the pandemic. Considering the current situation, the CBDT has published a new notification, further extending the due date for filing original or revised income tax returns for the financial year 2018-19. The due date has now been extended by another two months, i.e., to 30 September from 31 July.

CBDT provides relief to senior citizens on Self-assessment Tax

[Excerpts from The Business Standard, 30 July 2020]

Earlier, a relaxation was provided to individual taxpayers by extending the due date of filing their returns by 30 November this year against the earlier requirement of 31 July. However, the individual taxpayers having selfassessment tax liability exceeding INR one lakh in 2019-20 were required to pay the tax by 31 July to avoid interest at the rate of 1% per month. Now, the CBDT has provided relief to senior citizens, and they can pay part of their taxes by 31 July so that their remaining tax liability is not more than INR one lakh. Interest will not be charged if they pay the remaining tax by 30 November.

Now, foreign investors allowed to invest in 'Alternative Investment Fund' without PAN

[Excerpts from Financial Express, 12 August 2020]

Normally, under the Indian income tax provision, any person who has earned taxable income in the previous financial year must apply for the Permanent Account Number (PAN). The income tax department has amended rules to exempt non-residents investing in Category I and II alternate investment funds (AIFs), located in IFSCs, from obtaining PAN on a mandatory basis. The non-resident investors would have to provide declaration-containing name, address, country of residence, and tax identification number of the country or specified territory of their residence. Additionally, these funds are also required to deduct TDS on such income. Experts feel that this will ease compliance and make foreign investment more attractive. Also, the relevant rules with regards to TDS compliance have been amended accordingly (Rule 37BC).

Search and Seizure, International Tax cases out of Faceless Assessment Ambit: CBDT

[Excerpts from Economic Times, 13 August 2020]

The Prime Minister launched the 'Transparent Taxation – Honoring the Honest' platform via video conferencing recently, which is intended to further the journey of direct tax reforms in the country. The faceless assessment scheme introduced by the government is enabled for all assessments except the cases pertaining to central charges (i.e., matters dealing with search and seizure) cases and international tax cases. This exception is made merely because of the sheer complexity of issues generally involved in these cases, for which in-person interaction may still be required.

Indirect Tax

Businesses can now get GST registration in just three days

[Notification No. 62/2020 - Central Tax dated 20 August 2020]

Businesses applying for a new GST registration can now get the same within three days of application if they opt for authenticating their credentials using the Aadhar number. Further, businesses who fail to, or do not opt for Aadhar authentication will be granted GST registration only after physical verification of their place of business.

CBIC notifies amendment to Section 50 of the CGST Act limiting payment of interest on net cash liability

[Notification No. 63/2020 - Central Tax dated 25 August 2020]

The government, vide Section 100 of the Finance (No. 2) Act, 2019, inserted a proviso in Section 50(1) of the CGST Act, 2017. The proviso was added to provide that in case of belated filing of returns, interest shall be levied only on the tax liability paid in cash, i.e., the net tax liability after adjusting ITC available with the taxpayer. However, the said proviso was to be made effective from a notified date, but CBIC has notified that the said proviso will be in effect from 1 September 2020.

It is worth noting that the amendment has been notified prospectively, and not retrospectively as recommended in the 39th GST Council meeting held on 14 March 2020. However, the CBIC has issued a press release clarifying that the notification has been issued prospectively due to a technical limitation, and no recoveries would be made for the past period.