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Direct Tax

Income Tax department to validate UDIN given by chartered accountants in tax audit reports

[Excerpts from Economic Times, 26 November 2020]

In line with the ongoing initiatives of the income tax department for integrating with other government agencies and bodies, the income tax e-filing portal has completed its integration with the ICAI portal with respect to validation of UDIN generated from the ICAI portal by the chartered accountants for documents certified/attested by them. With effect from 27 April 2020, the Income-tax e-filing portal had already factored mandatory quoting of UDIN for documents certified/attested in compliance with the Income Tax Act, 1961 by a chartered accountant. This would help in weeding out fake or incorrect tax audit reports not duly authenticated with the ICAI.

Circle Rate and Stamp Duty: Income tax relief for real estate developers, home buyers

[Excerpts from Financial Express, 26 November 2020]

Up to 2018, Section 43CA of the Income-tax Act, 1961 provided for deeming the stamp duty value (circle rate) as sale consideration for the transfer of real-estate inventory if the circle rate exceeded the declared consideration. Consequentially, such stamp duty value was deemed as purchase consideration in the case of a buyer under Section 56(2)(x) of the Act. The Finance Act 2018 provided a safe harbor of 5%, i.e., these deeming provisions triggered only where the difference between the consideration and the circle rate was more than 5%. Further, the Finance Act, 2020 increased this safe harbor from 5% to 10%. As part of the Aatma Nirbhar Bharat Package 3.0, to provide certain income tax relief measures for real-estate developers and homebuyers. It has been decided to further increase the safe harbor from 10% to 20% under Section 43CA of the Act for the period from 12 November 2020 to 30 June 2021 in respect of only primary sale of residential units of value up to INR 2 crore. Consequential relief shall also be allowed to buyers of these residential units under Section 56(2)(x) of the Act for the said period. The intent is to boost demand in the real estate sector and give benefit to the homebuyers.

Faceless Income Tax appeals deter participation in Vivad Se Vishwas scheme

[Excerpts from Business Standard, 11 December 2020]

The faceless assessment scheme is operational and in full swing. However, taxpayers who wish to withdraw their appeals ad settle cases under the Vivad se Vishwas Scheme are facing a problem due to the absence of jurisdictional tax officers to approve the withdrawal requests. The process of withdrawal of appeals which are under the faceless assessment scheme, is not quite clear to the taxpayer. The department is now toying with the idea of releasing a clarification asking taxpayers to upload withdrawal request letters on the national faceless appeals system. As of now, several CIT(A)’s are getting requests for withdrawal of numerous cases, but they no longer hold any jurisdiction to act upon the same. Moreover, the cases have not yet been allocated under the faceless regime. A circular/clarification is expected to be issued soon considering the fast-approaching due date of filing the declaration under Vivad se Vishwas Scheme.

Income tax dept introduces ‘Jhatpat Processing’ feature; here’s all you need to know

[Excerpts from CNBC TV18, 22 December 2020]

The income tax department has introduced the ’Jhatpat Processing’ feature for ease in processing the income tax returns. It has already started for taxpayers who need to file ITR-1 or ITR-4. The benefits of the feature are possible only when the below conditions are satisfied:

  • Taxpayers’ ITRs are verified
  • Bank accounts are pre-validated
  • There are no income discrepancies
  • There is no TDS/challan mismatch

To e-verify returns, taxpayers can select one of these modes -- registered mobile number, net banking, demat account number, bank ATM, bank account number, Aadhaar OTP and e-mail id.

Indirect Tax

Extension of due dates of GSTR-9 and GSTR-9C for FY 2019-20

[Notification No. 95/2020-Central tax dated 30 December 2020]

In view of the business disruption caused by the pandemic, the government has extended the due date for filing of GSTR-9 (Annual Return) and GSTR-9C (reconciliation statement) for the financial year 2019-20 to 28 February 2021.

Key amendments to the GST law [w.e.f 1 January 2021]

The government has notified various amendments in the GST law through Notification No. 92/2020 and 94/2020 dated 22 December 2020. Some of the key amendments are as follows:

  • The utilization of ITC available is restricted to the extent of 99% of the monthly outward tax liability [subject to certain exclusions];
  • Reduction in claiming ITC to the extent of 105% of the invoices furnished in GST returns by the suppliers [from the earlier limit of 110%];
  • The procedure for the verification at the time of new GST registration is amended to provide for biometricbased Aadhar authentication along with a photograph or KYC documents based registration;
  • A taxpayer shall not be allowed to file GSTR-1 if he fails to file GSTR-3B for two subsequent months;
  • An e-way bill will be valid for 1 day for every 200 kilometers distance or part thereof, instead of the erstwhile limit of 100 kilometers per day;

GSTN launches ‘communication between taxpayer’ facility on portal

[Excerpts from Business Standard]

The GST Network (GSTN) has launched the ‘communication between taxpayer’ feature on its portal. Businesses can now communicate with their supplier on the GSTN portal in relation to invoice uploading or any deficiency therein. The suppliers can also send replies to the recipient through the same facility. Similarly, the supplier can also send a notification to the recipient about any document uploaded in the outward supply statement filed in GSTR-1.