Tax – Get Update, Types, Benefits, Policies in India

Taxation has been a fundamental aspect of civilisation since ancient times, with the Egyptians instituting one of the earliest known systems around 3000 BC. Taxes, essentially involuntary fees imposed by governments on individuals and businesses, serve as vital revenue sources to finance public expenditures. In India, both the central and state governments levy taxes on income according to the legislation enacted by the Parliament or State Legislature. 

These taxes, classified as direct and indirect, play pivotal roles in funding infrastructure development and welfare programs aimed at enhancing the well-being of citizens. Direct taxes are levied on income, while indirect taxes are imposed on goods and services. Together, they form the financial backbone supporting the nation's socio-economic growth and progress. Read ahead to learn more about taxes in India, types of taxes, benefits, and tax policies in the country.

Contents

• What is Tax?
• Types of Taxes:
• Direct Tax:
  • Income Tax:
  • Income Tax Slab Rates for <60 Years (FY 2019-20):
  • Income Tax Slab Rates for Individuals Between 60 and 80 Years of Age (FY 2019-20):
  • Income Tax Slab Rates for Individuals Above 80 Years of Age (FY 2019-20):
  • Corporate Tax:
  • Prerequisite Tax:
  • Capital Gains:
  • Securities Transaction:
  • Gift Tax Act:
  • Expenditure Tax Act:
  • Wealth Tax Act:
  • Interest Tax Act:
• Indirect Tax:
• Other Taxes:
• Types of Taxpayers
• Types of Income
• What is PAN?
  • PAN and tax activities
• What is TAN?
• Residents and non-residents
• Income Tax Return
• Benefits of Paying Tax:
• Penalty for Not Paying Taxes:
• FAQs About Tax in India:
• News Related to Tax:
  • Finance Ministry Announced New Slabs Under GST Regime
  • Tax Amnesty Scheme Extended in Kerala Until End of September
  • New Government Notifications Regarding NPS Tier II Account
  • Taxpayers Get One Time Relief to Verify ITR for Last Five Years
  • IT Department Introduces Tool for Post Offices and Banks to Ensure TDS on Cash Withdrawals
  • Taxpayers To Verify Returns For AY 2015-16 To 2019-20 Till September
  • Sovereign Wealth Funds Exempted From Tax To “Incentivise The Investment”
  • North Delhi Municipal Corporation Extended Deadline to Pay Property Tax
  • COVID-19: Government Extends Deadline for Various Tax Compliance
  • Finance Minister: Government May Extend Deadline For Availing Corporate Tax Rate Benefit
  • Income Tax Return (ITR-1) Now Available in IT Department Website
  • Disclosure of Cash Deposits Over Rs.1 Crore is Mandatory in New ITR Forms
  • IT Department Issues New Income Tax Returns Forms
  • Union Finance Ministry Releases Karnataka’s Instalment of Central Taxes for May
  • COVID-19: Property Tax Payment Deadline Extended by Punjab Government
  • Chandigarh MC: Pay Property Tax with Rebate Until End of July
  • Centre Cuts TDS by 25% on Rent and Insurance Premium
  • Finance Minister Announces Several Measures on EPF and Income Tax
  • Select Tax Regime on Time To Avoid Higher TDS Deductions
  • State Tax on Paper Lotteries Act 2005 Declared Unconstitutional by Kerala HC
  • Donations Towards Shree Ram Janmabhoomi Theerth Kshetra Will Get Tax Exemptions
  • IT Return Forms To Be Revised For 2020-21: CBDT
  • Tax Regime Needs to be Chosen for TDS From Salary
  • Donations By Employees Towards PM CARES Will Get 100% Tax Relief
  • IT Refunds of up to Rs.5 Lakh To Be Processed Immediately: Govt.
  • Deadline to Submit Form 15G and 15H for FY21 Extended to Avoid TDS
  • COVID-19: Lower Withholding Tax Orders Validity Extended By 3 Months
  • Equalisation Tax of 2% May Be Applicable on Overseas Ecommerce Companies
  • COVID-19: Govt. Extends Tax Saving Investment for FY 2019-20 to End of June 2020
  • GST on Mobile Phones Hiked by 4%
  • Donation Details to be Pre-Filled While Filing ITR

What is Tax?

The word ‘Tax’ is derived from the Latin word Taxo, and is a mandatory fee charged by the government on individuals or entities to increase revenue to boost the economy through several projects and schemes. Not paying tax is punishable under the predetermined law.

Types of Taxes:

Taxes are broadly divided into two types – direct and indirect taxes. This is further subdivided into other categories. There are different Acts that govern taxes under the Income Tax Act. Let’s review the types of taxes:

• Direct Tax:

Taxes paid directly to the central or state government is known as a direct tax. The Central Board of Direct Taxes (CBDT) overlooks the functioning of direct taxes in India.

• Indirect Tax:

Taxes levied on goods and services availed is known as an indirect tax. This type of tax is collected at the source that offers products or services. The current indirect tax the government charges is known as Goods and Service Tax (GST).

Direct Tax:

Paid to the government directly by the individual or entity, Direct Tax is further categorized into the following:

Income Tax:

Regulated by the Income Tax Act or the IT Act of 1961, the Act sets the rules and regulations of income tax in the country. Annual income through the form of salaries, investment gains, businesses, or from the property is paid directly to the government.

Also, read: Income Tax Calendar 2020 for Taxpayers with all Deadlines

Income Tax Slab Rates for <60 Years (FY 2019-20):

Income Tax Slab Rates for Individuals Between 60 and 80 Years of Age (FY 2019-20):

Income Tax Slab Rates for Individuals Above 80 Years of Age (FY 2019-20):

Corporate Tax:

Business entities or companies pay income tax to the government on profits earned, this type of tax is known as Corporate Tax. It is is further divided into several categories, they are:

• Banking Cash Transaction Tax: This form of tax existed between 2005 and 2009 and was levied on every banking transaction with a tax rate of 0.1%.

• Minimum Alternative Tax (MAT): Under Section 115 JA of the IT Act, the MAT was introduced. The current tax rate is 18.5% which entities pay to the Income Tax Department. Infrastructure and power sectors are exempt from paying this tax.

• Fringe Benefit Tax: Fringe benefits such as Leave Travel Allowance (LTA), employee welfare, accommodation, transportation costs, entertainment, ESOPs are taxed under the Fringe Benefit Tax.

• Dividend Distribution Tax: Based on the dividends paid by the company to its investors, tax is charged under the Dividend Distribution Tax. Currently, it’s charged at 15% on the net or gross income the investor receives from investment.

Prerequisite Tax:

Benefits or perks offered by the company to its employees are taxed under the Prerequisite Tax. The purpose and use, official or personal have to be defined under this taxation.

Capital Gains:

Money received through the sale of property or investment is taxed under the Capital Gains tax. Both short and long-term investment capital gains are taxed.

Securities Transaction:

Trading of stocks and certain securities are taxed under the Securities Transaction. The tax is calculated on the share price and on securities traded on the Indian Stock Exchange (ISE).

Gift Tax Act:

Under Section 56 (2) of the IT Act 1958, gifts received by an individual are taxed under the Gift Tax Act. However, this law was abolished in 1998. This was later introduced through the Finance Act 2004. Cash gifts of less than Rs.50,000 are exempted from tax. Property gifts such as land or building, the recipient has to bear the required income tax of the stamp duty value of the property is more than Rs.50,000.

Expenditure Tax Act:

Expenses incurred while availing the services of a hotel or a restaurant are taxed under the Expenditure Tax Act 1987. Certain costs are levied with this type of tax if the value is more than Rs.3,000 in a hotel or restaurant.

Wealth Tax Act:

Taxes on the net worth of an individual, entity or HUF (Hindu Undivided Family) is known as Wealth Tax, levied under the Wealth Tax, 1951; however, this has been replaced with the surcharge in recent times.

Interest Tax Act:

As per the Interest Tax Act, 1974, interest earned after the 31st of March 1983 will be taxable at 3.5% and credit institutions will be levied an interest of 2% of the taxable amount.

Indirect Tax:

Taxes collected at the sources that sell services or goods are referred to as Indirect Tax. It is added to the price of the goods or services and is currently known as the Goods and Service Tax (GST).

• GST: Implemented in 2017, the Goods and Service Tax (GST) replaced the Value Added Tax (VAT), sales tax, customs duty, excise, and Octroi form of taxation on goods and services. Some services and goods exempted from GST are petrol and diesel, electricity, and petroleum products.

Other Taxes:

Other taxes which are a lower source of funds through taxes paid to the government are:

• Property Tax: Local municipal bodies or authorities levy Property Tax for the maintenance and upkeep of civil services. Both commercial and residential properties attract this type of tax.

• Professional Tax: The Government of India levies the professional tax on individuals who are salaried or professionals such as doctors, lawyers, etc. The tax rate differs between states and not all states charge this tax.

• Registration Fees, Stamp Duty, Transfer Tax: In addition to the property tax, Stamp Duty, Registration Charges or Transfer fee is collected owing to the additional charges towards the transaction.

• Entertainment Tax: Taxes levied on television series, feature films, exhibitions, etc. are taxed under the Entertainment Tax. The gross collections from earnings are considered while calculating this type of tax.

• Toll and Road Tax: Road infrastructure developed by the government attracts toll for the purpose of maintaining the road and facilities.

• Education Cess: To fund the educational programmes initiated by the government, a cess of 2% is charged on an individual’s income.

• Entry Tax: Certain states in India collect Entry Tax on all goods that enter the state through the e-commerce establishment. The rate varies from 5.5% to 10%.

Types of Taxpayers

Under the Income Tax Act in India, filing income tax returns is mandatory for all individuals, residents and non-residents alike. Tax liability arises when income exceeds Rs 3 lakh annually. Taxpayers are categorised into groups including individuals, Hindu Undivided Families (HUFs), firms, companies, Associations of Persons (AOPs), Bodies of Individuals (BOIs), Local Authorities, and Artificial Judicial Persons. 

Residents are further divided into those below 60 years and those aged 60 to 80 years, each with specific tax rules. Residency status, determining global or India-based tax obligations, is assessed yearly based on time spent in the country, ensuring fair and consistent tax treatment.

Types of Income

Income tax applies to all earners in India, regardless of residency status. The Income Tax Department classifies income into five main heads for simpler understanding: Income from Other Sources covers earnings like interest from savings accounts, fixed deposits, and lottery winnings. Income from House Property includes rental income. Capital Gains Tax applies to profits from selling assets such as mutual funds, shares, or property. 

Income from Business and Profession encompasses earnings from self-employment, businesses, or professional services. Lastly, Income from Salary covers wages and pensions. Understanding these classifications helps individuals and entities fulfil their tax obligations accurately under the Income Tax Act.

What is PAN?

The Permanent Account Number (PAN) serves as a crucial identifier within the Indian tax system, providing a unique 10-digit alphanumeric code to taxpayers. This identifier is pivotal for various tax-related transactions and information management by the Income Tax Department. Whether it's paying advance tax or self-assessment tax, individuals are required to mention their PAN number to ensure proper tracking and documentation.

Beyond tax payments, PAN plays a significant role in financial dealings with entities like banks and mutual fund companies. By submitting their PAN, individuals enable these entities to report financial transactions to the income tax department, facilitating seamless information flow and aiding in tax compliance efforts. 

PAN and tax activities

The comprehensive linkage between PAN and tax activities enables the tax authorities to efficiently monitor and analyse taxpayers' financial behaviours. Through PAN, the taxman can access a wealth of information regarding an individual's financial transactions, helping to prevent tax evasion and ensure compliance with tax laws.

Overall, PAN serves as a linchpin in the Indian tax ecosystem, streamlining processes, enhancing transparency, and bolstering the government's efforts to enforce tax regulations effectively.     

What is TAN?

The Tax Deduction and Collection Account Number (TAN) is a critical identifier issued by the Income Tax Department of India, comprising a unique 10-digit alphanumeric code. Entities responsible for deducting Tax Deducted at Source (TDS) or collecting Tax Collected at Source (TCS) must obtain a TAN. 

TAN is mandatory for reporting TDS/TCS activities, as it must be quoted in TDS/TCS returns, payment challans, and certificates. This ensures proper documentation and facilitates seamless processing of tax-related transactions. By linking TDS/TCS activities to specific entities through TAN, the Income Tax Department can effectively monitor tax deductions and collections, promoting tax compliance and streamlining administrative procedures in the Indian tax system.  

Residents and non-residents

In India, the imposition of income tax hinges on the residential status of taxpayers. Residents are liable to pay taxes on their global income, including earnings from both domestic and international sources. This means income generated within India as well as abroad is subject to taxation. 

Conversely, non-residents are only taxed on income earned within India's borders. The determination of residential status is done annually for each financial year during which income and taxes are calculated. This distinction in tax liability based on residency status ensures that residents contribute taxes on their worldwide income, while non-residents are taxed solely on income generated within the Indian territory, reflecting a key aspect of India's tax policy aimed at equitable taxation.

Income Tax Return

Every year, taxpayers are required to file their income tax returns using forms prescribed by the income tax department. The government has designated seven different ITR forms to accommodate various types of income and taxpayer circumstances. It is incumbent upon the taxpayer to select the appropriate form that aligns with their income sources and file their tax return accordingly. 

This ensures compliance with tax regulations and facilitates accurate reporting of income, deductions, and tax liabilities. By adhering to this process, taxpayers contribute to the functioning of the taxation system, aiding in the collection of revenue vital for government operations and public services.

Benefits of Paying Tax:

The primary reason the government collects taxes from individuals and entities is to fund its welfare schemes, improve infrastructure, and towards the upliftment of the society. Below are some benefits of paying tax:

• Paying income tax regularly and on time ensures the government is able to provide services to citizens without any issues.

• Fund infrastructure projects to fuel the economy of the country.

• Develop the country and fund welfare projects.

• Fund expenditure arising out of defence.

• Salaries to state and central government employees.

• Provide public transportation.

• Fund pension schemes.

• Fund public education.

• Provide public utilities such as water, sewage treatment, waste management, etc.

Penalty for Not Paying Taxes:

By not paying taxes you could be imposed with penalties which can range from fines to imprisonment. It depends on the severity of the case. You will end up paying the tax along with fine and interest for the period of non-payment or maybe even imprisonment.

FAQs About Tax in India:

Here are some frequently asked questions about Taxation in India:

How to file income tax returns online for salaried employees?

Visit the e-filing website and log in with your Username and Password along with your Date of Birth (DOB) or the Date of Incorporation. Follow the procedure to upload your IT Returns. Choose the correct ITr, assessment year and the XML file. Upload the Digital Signature Certificate (if required), and click on Submit.

Should everyone in India pay income tax?

Everyone pays taxes in some form or the other. While income tax has exemption on a certain limit of income you earn, the same does not apply on GST, which is applicable to all goods and services rendered by an individual or an entity.

How much income tax should I pay?

Based on your age and the income you earn, the income tax is calculated. To know more about the income tax liability visit the official income tax website.

What is taxable income and exempt income?

Income which is chargeable for tax is known as taxable income, while exempt income is an exemption on certain income from tax by the IT department.

What is the difference between a financial year and assessment year?

Assessment year is the year during which you earn an income, while the following year is the financial year during which the income is calculated for tax.

How does the income tax department refund excess?

Once you file your income tax returns, you can claim refunds for the excess paid as tax.

What are the different types of income under which taxpayers are taxed?

Under Section 14 of the IT Act, 1961, income taxpayers are taxed under the below heads:1. Salary2. Profits and gains of business or profession.3. Income from house property.4. Income from capital gains.5. Other sources.

What is the difference between the gross total income and total income?

The total income from salary, capital gains, profits from business or profession, income from the property and other sources of income is known as the gross total income. However, the total income is the gross total income less the tax deductions under Section 80C to 80U.

What do you mean by ‘return of income’?

Also referred to as Income Tax Return (ITR), is a form that declares particulars of your income earned in a financial year and taxes paid to the IT department. The form also includes carry-forward of loss and claim refund. There are different forms for filing returns for different sources of income. You can download the same from the IT department’s official website.

What are the different ways I can file the return of income?

Below are the methods you can file ITR:

1. In paper form.

2. Electronically with a digital signature.

3. Transmitting the data electronically through electronic verification code.

4. Transmitting the data electronically, with the subsequent submission of the verification of the ITR in Return Form ITR-V.

What is the contact number of the IT department for queries related to e-filing?

You can contact 1800 180 1961 for any queries related to e-filing.

Also, Check: Official List of Income Tax Department Toll-Free Contact Numbers and Email IDs

What are the advantages of filing my return of income?

Apart from contributing to the development of the nation and your duty to the country, filing your return of income validates your creditworthiness for financial institutions to offer benefits such as bank credits, etc.

Should I file my return even if I have sustained loss during the financial year?

As per law, it is mandatory for you to file your returns from income, you can file the loss incurred during the assessment year and submit it by the due date. The loss sustained during the assessment year will be adjusted the subsequent year(s) against positive income.

What is the fine or penalty if I do not furnish my return of income by the due date?

Under Section 139 of the Income Tax Act, a person has to file income tax returns within the due date, failing which you need to pay interest on the tax due. As per the assessment year 2018-19, the fee to be paid if you fail to furnish your income tax returns is as follows (Fee for late filing shall not be more than Rs.1,000 of the total income is not more than Rs.5 lakh):1. If the return is furnished on or before 31 December of the assessment year, the fee is Rs.5,000.2. In other cases, it is Rs.10,000.

Why is it mandatory to file my income returns even after I have paid my taxes and interests, and no refund is due to me?

Only upon completion of self-assessment of your income, does your advance payment of tax or interests in the form of TDS or TCS will take the character of the tax due. The IT department is intimated of filing of the return of income through the self-assessment which lets the government assume rights over the taxes paid by you. Failure to file the return of income will attract a penalty.

How do I get a refund of the excess taxes paid by me?

You claim the excess tax through a refund by filing your income tax returns. The refund will be credited to your bank account through the ECS.

I have made a mistake in my original ITR, can I file a revised ITR to correct the mistake?

You can revise the ITR anytime during the assessment year. If your original ITR was filed manually or through a paper format, then you cannot change it electronically or through the online mode.

If my income is taxable and I don’t file my returns, am I liable for any criminal prosecution?

Not paying taxes attract penalty, interests, and prosecution. It can lead to rigorous imprisonment from 3 months to 2 years. If tax sought is more than Rs.25 lakh, the penalty could be from 6 months to 7 years.

What are the benefits of e-filing my Income Tax Returns (ITR)?

By filing your income tax return through the e-filing method you can comfortably file it from any place or time. E-filing is generally processed much quicker compared to returns filed manually.

What are the disadvantages of filing my income tax returns?

There are no disadvantages of filing your income tax returns. In fact, if you do not file your returns, you will attract penalty and prosecution as per the Income Tax Act.

News Related to Tax:

Finance Ministry Announced New Slabs Under GST Regime

– August 14, 2020

The Goods and Service Tax (GST) can into force from July 01, 2017. It was helpful in subsuming up to seventeen local taxes into one. Ever since GST was introduced by the Modi Government, the taxpayer base has increased to 1.24 crore. It has become a plus point in terms of compliance as well. The Revenue Neutral Rate was earlier 15.3 per cent and at present is 11.6 per cent. According to the recent announcement, businesses that have an annual turnover of rupees forty lakhs or less do not have to pay GST. Earlier this limit was up to twenty lakh rupees. For businesses that have a turnover of Rs. 1.5 crore or less can choose to opt for the Composition Scheme, under which they only have to pay a tax of 1 per cent. Many changes are made to the GST structure, for example, the housing sector now comes under 5% slab.

Tax Amnesty Scheme Extended in Kerala Until End of September

– August 11, 2020

With the coronavirus pandemic in the country on the rise and the challenges faced by the public due to the lockdown measures, the Kerala government has announced the extension of the last date to apply for its tax amnesty scheme. The last date has been extended to 30 September 2020. Through this scheme, taxes such as State VAT, Luxury Tax, Central Sales Tax, Kerala General Tax, Surcharge and Agricultural Income Tax are applicable for arrears. Merchants are required to register through the state’s income tax department web portal and can view their assessed tax arrears. Taxpayers can alter or edit the tax arrears and submit the application. The Assessment Officer will review the arrears and then merchants can pay the taxes online. Those who receive Demand Notice should submit their options in 30 days from the date of receiving the notification. Arrears should be paid by 31st March 2021.

New Government Notifications Regarding NPS Tier II Account

– August 5, 2020

The government has issued new notifications regarding the National Pension Scheme. This notification is concerning the Tier II account and investments made there as per the National Pension System. As per the latest notification, money invested in the above-mentioned account will be eligible for tax benefit. Such tax deductions will fall under Section 80C of The Income Tax Act. However, it is to be noted that this benefit is extended only for Central Government Subscriber. For such benefits, investments made by the central government employees in the Tier II NPS account will be locked. The lock-in period for such investments is three years. The requirement for opening a Tier II NPS account is a functional Tier I account. The Tier II accounts can be activated via online as well as the offline mode. Contributions made by employees from the private sector to the Tier II NPS account will not be eligible for tax deductions and will be free from the lock-in period.

Taxpayers Get One Time Relief to Verify ITR for Last Five Years

– July 16, 2020

Taxpayers have got a one-time relief to certify their Income Tax Returns (ITR) for the last 5 years. The Income Tax Department in a circular has announced that taxpayers who filed their ITR for the assessment year 2015-16 to 2019-20 but did not verify the ITR for the said assessment year, have the option to do so by the end of September 2020. An electronically filed ITR without a digital signature can be verified through their Aadhaar one-time password. Taxpayers also have the option to send the physical copy of ITR-V or the verification form to the IT department within 4 months. However, failure to do so will be considered missing or “nonest” and be declared invalid. The circular also said that this relief is not extended to cases where the IT Department has already taken other steps to declare them invalid.

IT Department Introduces Tool for Post Offices and Banks to Ensure TDS on Cash Withdrawals

– July 15, 2020

A new tool has been launched by the IT Department for post offices and banks to ensure TDS is captured for cash withdrawals. Through this tool, banks and post offices can determine the rates under the TDS for cash withdrawals of more than Rs.20 lakh in case the persons do not file ITR and more than Rs.1 crore in case of persons who file income tax returns. The Central Board of Direct Taxes (CBDT) notified that more than 53,000 verification requests have been completed through this tool. Post offices and banks need the Permanent Account Number (PAN) of the person and it will determine if the person is filing ITR or not. If the person files his income tax returns, then 2% TDS will be levied for cash withdrawal above Rs.1 crore. For persons who do not file ITR, the TDS is 2% for cash withdrawals of more than Rs. 20 lakh and 5% if the amount is more than Rs. 1 crore.

Taxpayers To Verify Returns For AY 2015-16 To 2019-20 Till September

– July 14, 2020

A large number of taxpayers have not verified their tax returns since the last few years. Not verifying the filed return can be considered as no returns filed in the court of law. The issue of not verifying the tax return arose when taxpayers filed online returns. Usually, the government allows 120 days to verify the filed returns. However, an opportunity has been given to those who have not verified their tax returns anytime between the assessment years 2015-16 to 2019-20. It is very important to verify the tax returns because the process remains incomplete if the filed return is not verified. In such cases, the tax department cannot process tax returns unless the return is verified. Verification helps in finalizing the filed returns and the taxpayer declares that all the details are correct. Since many taxpayers were not able to verify the returns due to genuine reasons, they can now breath a sigh of relief with this provision.

Sovereign Wealth Funds Exempted From Tax To “Incentivise The Investment”

– July 8, 2020

Finance Minister Nirmala Sitharaman had proposed a 100% tax exemption on capital gains incomes, interest, and dividends on sovereign wealth funds in order to incentivise the investment of foreign governments. This proposal was made in the Budget 2020. The exemption is applicable to investments made before March 31, 2024, in infrastructure and other sectors. The fund should have a minimum lock-in period of 3 years. The directive will be effective from April 1, 2021, for the assessment year 2021-22 and onwards. The Central Board of Direct Taxes (CBDT) has announced details about the tax exemption on sovereign wealth funds. The notice said that a wider scope of infrastructure was available via Finance Act 2020, under section 10 (23FE) of the Income Tax Act. 34 different infrastructure sectors have been allowed for investment through the funds. The sovereign wealth funds are funds that have global investments which invest in financial and real assets like bonds, real estate, stocks, gold, or investments in a hedge or private equity funds.

North Delhi Municipal Corporation Extended Deadline to Pay Property Tax

– July 2, 2020

The North Delhi Municipal Corporation has given some relief to property taxpayers and has extended the deadline for the rebate (15%) until the end of July this year. The move comes amid the ongoing coronavirus pandemic in the country. In an order issued by the Municipal Corporation, it said that the date of paying the property tax for 2020-21 has been extended until 30 July 2020. This is the lump sum amount along with the 15% rebate that can be paid by the end of July. The Municipal Corporation takes property tax on vacant land and buildings under its jurisdiction. The tax is calculated based on capital value, annual rental value and unit area system. The primary source of revenue for the corporation is the property tax in order to maintain and provide basic civil services.

COVID-19: Government Extends Deadline for Various Tax Compliance

– June 29, 2020

The Centre has extended deadlines for several tax compliance instruments which were supposed to end by the end of this month. Extensions have been provided for filing income tax returns, making investments in savings instruments under income tax, issuance of Form 16, filing audit reports, etc. Also, the deadline for linking the PAN with Aadhaar has been extended to 31 December. The extension comes amid the ongoing pandemic in the country, which has made it difficult for taxpayers to adhere to deadlines. The Central Board of Direct Taxes (CBDT), in a notification, said that extensions have been announced in an effort to reduce the burden on taxpayers for making several compliances. Through these extensions, it will offer more flexibility to taxpayers to comply with the deadlines and also provide some time for tax officers to assess the documents during the COVID-19 pandemic. Income Tax Returns (ITR), both original and revised, for the financial year 2018-19 can be filed by 31 July 2020. Income tax returns, which had to be filed by 31 July and 31 October, can now be filed by 30 November 2020. Hence, the deadline for furnishing tax audit reports can be done by 31 October 2020.

Finance Minister: Government May Extend Deadline For Availing Corporate Tax Rate Benefit

– June 8, 2020

In the wake of the COVID-19 pandemic in the country, the Finance Minister said that the government may consider extending the deadline to avail the benefit of the corporate tax rate at 15% on new investments. In September 2019, the government had drastically reduced the tax rate by up to 10 percentage points. This was done to prop up the economy as well as to attract private investments in the country. For existing companies, the government reduced the base corporate tax from 30% to 22%, while new manufacturing establishments were reduced from 25% to 15% effective 1 October 2019 and commencing operations prior to 31 March 2023. The FM also said that for new investments, the government will consider an extension of the deadline for availing the corporate tax of 15%.

Income Tax Return (ITR-1) Now Available in IT Department Website

– June 3, 2020

The Income Tax Department has notified that income tax return ITR-1 Form for the Financial Year 2019-20 is now available on their website. The form is available in Java and Excel formats. The new ITR-1 form now allows taxpayers to claim deductions on tax-saving instruments made between 1 April 2020 to 30 June 2020. This was announced by the government as part of its measure to contain the spread of the deadly COVID-19 in the country and extended the deadline to 30 June from the previous deadline of 31 March.

Disclosure of Cash Deposits Over Rs.1 Crore is Mandatory in New ITR Forms

– June 2, 2020

The Income Tax Department has announced the new Income Tax Returns Form for the Financial Year 2019-20. Under the new form, taxpayers are required to declare details of cash deposits over Rs.1 crore or if they have spent over Rs.2 lakh on foreign travel or if their electricity bill is over Rs.1 lakh for the said financial year. In a tweet, the IT department notified new ITR Forms 1 to 7 for FY 2019-20 (AY 2020-21). Due to the COVID-19 pandemic, the Centre has extended the deadline for taxpayers to file their ITR to 30 November from the current 31 July. This was notified by the Finance Minister Nirmala Sitharaman while announcing the first tranche of Rs.20 lakh crore economic stimulus package on 13 May 2020.

IT Department Issues New Income Tax Returns Forms

– June 1, 2020

For the financial year 2019-20, the Income Tax Department has issued new Income Tax Returns (ITR) forms. The Finance Ministry has issued new ITR 1, 2, 3, 4, 5, 6, 7 and V forms for the FY 2019-20 (Assessment Year 2020-21). The department had earlier withdrawn ITR Forms 1 and 4 to make some changes in IT rules amid the COVID-19 pandemic. The revised form seeks information on all payments and investments made between April and June 2020 by the taxpayer to claim tax deductions. The last date to file ITR has been extended to 30 November 2020 for the FY 2019-20 because of the Lockdown. Previously, taxpayers had to file their ITR by 30 July, which has been relaxed for this fiscal year.

Union Finance Ministry Releases Karnataka’s Instalment of Central Taxes for May

– May 22, 2020

The Union Finance Ministry has released Karnataka’s instalment of Central taxes of Rs.1600 crore for the month of May. The state received a similar amount in the month of April as well. In a tweet, the ministry said that the sanctioned amount is based on tax receipts proposed in the 2020-21 Budget and not as per the actuals. However, officials in Karnataka pointed out that the devolution is low compared to what was originally budgeted. The state’s budgeted share of central taxes for the said month was more than Rs.2,000 crore.

COVID-19: Property Tax Payment Deadline Extended by Punjab Government

– May 21, 2020

The municipal corporations of the state of Punjab have announced that the deadline to pay property taxes has been extended to 30 June 2020. The decision came amid the pandemic, which has led to lockdowns and citizens are finding it difficult to pay the property tax on time. Also, the deadline to pay One-Time Settlement (OTS) for arrears of sewerage and water charges in local municipalities has been extended up to 30 June 2020. Citizens can avail the rebate of 10% on payment of property tax until 30 June; however, non-payment by the extended date will invite a 10% penalty on the principal amount within 3 months. Those who still fail to pay the property taxes will have to pay a penalty of 20% of the principal amount along with interest of 18% from the due date till the date of realisation.

Chandigarh MC: Pay Property Tax with Rebate Until End of July

– May 20, 2020

All assessees, both commercial and residential, can pay property taxes with rebate until the end of July 2020, announced the Chandigarh Municipal Corporation. While commercial properties can avail a rebate of 10%, residential properties can avail a 20% rebate on the property tax. However, if the property tax is paid after 31 July 2020, there will be a 25% penalty to be levied along with interest on the principal. Citizens can pay their property taxes at e-Sampark centres or online (http://sampark.chd.nic.in). Defence personnel, veterans, economically weaker sections and widows are exempted.

Centre Cuts TDS by 25% on Rent and Insurance Premium

– May 18, 2020

In continuation of several measures undertaken by the Central Government, the Finance Ministry announced that the income tax department has decided to reduce TDS on payment of rent, insurance premium, dividend, acquisition of immovable property and professional fee by 25% for the remainder of the financial year. The new rates are applicable until 31 March 2021 as the directive was issued by the Central Board of Direct Taxes (CBDT). It said that TCS on sale of motor vehicles worth more than Rs.10 lakh has been reduced to 0.75%, TDS has been reduced to 23 such items. TDS on insurance premiums has been cut from 5% to 3.75% and TDS on rent, interest and dividend have been reduced from 10% to 7.5%. The rate for acquisition of immovable property has been decreased to 0.75%. Also, TDS on e-commerce has been cut from 1% to 0.75%. Likewise, TDS on professional tax has been cut from 2% to 1.5%, while TDS on payments towards deposits under NSS have been cut from 10% to 7.5%.

Finance Minister Announces Several Measures on EPF and Income Tax

– May 15, 2020

The Finance Minister has announced several measures on personal finance to increase demand in the country, which is sagging due to the lockdown to contain the spread of coronavirus in the country. The Finance Minister said that the due date to file ITR has been extended to 30 November 2020. A cut of 25% on TDS/TCS rate for non-salaried payments up till 31 March 2021. Also, to increase the take-home salary of employees, EPF contribution of both the employee and the employer will be cut to 10% from the current 12%. However, PSUs and CPSEs will continue to contribute 12%. Also, the Central Government will pay 24% of the monthly income into EPF accounts below Rs.15,000 per month. This will be applicable to employees working in establishments with up to 100 employees and 90% or more employees earning less than Rs.15,000 per month.

Select Tax Regime on Time To Avoid Higher TDS Deductions

– May 13, 2020

Employees must choose the type of tax regime at the beginning of the financial year and this will continue until the end of FY. However, employees can change their choice only at the time of filing their ITR. Hence, if you do not choose the lower tax bracket regime, you may end up paying higher TDS deductions based on the old tax regime in case the tax outgo is higher under it and no option of changing the tax regime would be provided during the year.

State Tax on Paper Lotteries Act 2005 Declared Unconstitutional by Kerala HC

– May 12, 2020

The Kerala Paper Lotteries Act 2005 has been declared unconstitutional by the Kerala High Court. The judgement by the Kerala HC states that Act which levies licence fee under Section 5BA of Kerala General Sales Tax Act, which charged indirect tax on the sale of lottery tickets within the state was declared unconstitutional. The Kerala High Court said that as per the Lotteries (Regulation) Act, 1998 it does not provide any tax in paper lotteries and it’s covered under the Union list and does not come under the purview of the State.

Donations Towards Shree Ram Janmabhoomi Theerth Kshetra Will Get Tax Exemptions

– May 11, 2020

The Government of India, through a notification, said that donations to Shree Ram Janmabhoomi Teerth Kshetra will be exempted from attracting income tax under Section 80G of the IT Act. The government said the tax exemption for the donations comes under the Section 80G since the place is of public worship and a place of historic importance for the financial year 2020-21, relevant to the AY 2021-22.

IT Return Forms To Be Revised For 2020-21: CBDT

– April 24, 2020

The Income Tax Return (ITR) Forms for 2020-21 will be revised to enable taxpayers to make donations and investments until the end of June 2020. The tax benefit can be claimed on the taxable income for the AY 2019-20. By the end of April 2020, the revised ITR forms will be notified by the Central Board of Direct Taxes (CBDT). The board said that with the government offering several relaxations or due dates for several compliance requirements, the ITR forms require revision to include other tax benefits after the extension of deadlines. Through an Ordinance, the government has extended the timeline to June 2020 to make investments and other donations to be included in the current assessment year.

Tax Regime Needs to be Chosen for TDS From Salary

– April 15, 2020

In a circular issued by the Central Board of Direct Taxes (CBDT), employers need to deduct TDS from salary for FY2020-21 on the basis of either the new or the old tax regime whichever the employee chooses from. Also, once the employee chooses such an option, they cannot change it during the financial year however, they can change it at the time of filing IT Returns. This means that if the employee chooses to opt for the new tax regime and the TDS is deducted from their salary, it cannot be revised to the old tax regime during the financial year however, they can while filing for the income tax returns. The Finance Ministry while presenting this year’s budget offered a new tax regime while continuing the old tax regime as well. Taxpayers can either opt the new or the old taxation system.

Donations By Employees Towards PM CARES Will Get 100% Tax Relief

– April 14, 2020

Donations by employees towards PM CARES can claim 100% tax relief. Employees can claim it through their Form-16. The Central Board of Direct Taxes (CBDT) said that since the tax department cannot issue tax deduction certificates, tax relief will be provided under Section 80G. The circular also said that donations made by an employee through the employer, separate certificates will not be issued since its a consolidated payment. The centre had notified earlier that contributions made to PM-CARES fund are eligible for 100% tax relief under Section 80G compared to the earlier 50% tax relief.

IT Refunds of up to Rs.5 Lakh To Be Processed Immediately: Govt.

– April 13, 2020

The IT Department, through a Tweet, has said that all pending IT refunds of up to Rs.5 lakh will be issued immediately to businesses entities and individuals. The statement comes amid the ongoing Coronavirus lockdown in the country. About 14 lakh taxpayers will be benefited from this decision by the IT department. Also, the statement said that GST custom refunds will also be issued immediately. With the decision to refund, it will enable people to get the money during these trying times. The Government of India has decided to process the IT refunds immediately to offer relief to individuals and businesses so that they have money during the lockdown. Taxpayers can get any excess tax paid as a refund when they file their IT Returns.

Deadline to Submit Form 15G and 15H for FY21 Extended to Avoid TDS

– April 6, 2020

The Central Board of Direct Taxes (CBDT) has extended the deadline for the submission of Form 15G and 15H for FY21, valid till 30 June 2020. This means that investors who need to submit Form 15G and 15H for nil or lower deduction of tax can do so by the first week of July this year. The CBDT in an order released through its Twitter account said that if taxpayers have submitted these forms to banks or other institutions for FY20, the forms will also be valid till 30 June 2020 for FY21. In case the taxpayers are yet to submit these forms, then they should do so by the 30th of June 2020 by providing the details of such credits or payments in the TDS statement by 30 June 2020. In the wake of the nationwide 21-day lockdown to stop the spread of the deadly Coronavirus infection across the country, taxpayers have been offered relief to submit their tax assessments.

COVID-19: Lower Withholding Tax Orders Validity Extended By 3 Months

– April 1, 2020

As per the directive of the finance ministry of India, the validity of lower or nil withholding tax orders validity has been extended by three months till 30 June 2020 in a directive by the Finance Ministry of India. The advisory came in the wake of the lockdown announced by the centre due to the rising Coronavirus infections across the country. Applications of taxpayers for nil or lower deduction of TCS/TDS is pending for disposal and hence the validity of such cases where such certificates were issued for the financial year 2019-20 will be extended to 30 June 2020. In scenarios where the taxpayer has not applied for such certificates for FY 2020-21 which were issued for 2019-20 certificates, will be valid until 30 June 2020.

Equalisation Tax of 2% May Be Applicable on Overseas Ecommerce Companies

– March 30, 2020

Cost of Netflix subscription or Airbnb bills may increase after the government included all overseas e-commerce transactions which originate from the country under the equalisation levy. An equalisation levy of 2% will be applicable on sales done through e-commerce companies in India as per the amended Finance Bill. This type of levy was introduced back in 2016 and was applicable to advertising and related services. Now, digital e-commerce transactions originating from India will be included in the equalisation levy.

COVID-19: Govt. Extends Tax Saving Investment for FY 2019-20 to End of June 2020

– March 27, 2020

The Indian government has extended the due date to file tax investment for the financial year 2019-20. The previous deadline was 31 March 2020. The extension was announced by the Finance Minister stating that due dates have been extended for the issue of notice, approval order, intimation, notification, sanction order, furnishing of returns, filing of an appeal, applications reports, statements and the due date for completion of proceedings to 30 June 2020. In the wake of the rising Coronavirus infection in India, the government has announced lockdown and to ease the burden on taxpayers, the extension was announced by the Finance ministry.

GST on Mobile Phones Hiked by 4%

– March 17, 2020

The Goods and Services Tax (GST) on mobile handsets and certain components has been hiked by 4% by the federal indirect tax body, the GST Council. The new GST rate for mobile handsets will come into effect from 1 April 2020. Union Finance Minister Nirmala Sitharaman also announced that the tax rate on aircraft maintenance services has been lowered from 18% to 5%. As for the other items such as footwear and fertilizers, the union minister said that if there is a need to calibrate the GST to remove the duty inversion, they will examine it at a future meeting. The GST on machine-made and handmade matchsticks to 12% from 18% and 5%  respectively.

Donation Details to be Pre-Filled While Filing ITR

– February 19, 2020

To ease the process of claiming deductions under Section 80G of the Income Tax Act, it has been proposed under the 2020 Budget that donee’s information will be pre-filled in the taxpayer’s returns. As per the announcement, information such as donations from charitable institutions will be given to the Central Board of Direct Taxes (CBDT), which will be automatically pre-filled in the ITR forms. Charitable institutions need to register with the income tax department to ensure taxpayers get the right tax exemptions. A unique number will be provided to the charitable institution and would be valid for 3 years initially.

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