The number of income taxpayers in Madhya Pradesh and Chhattisgarh has crossed 20 lakh so far this fiscal year. The number of new taxpayers rose by 6.82 lakh in these two states since demonetization and GST. The government has targeted to collect Rs 27,431 crore direct tax collections from these two states this fiscal. So far the collection has been Rs 17,928 crore.
ITAT Mumbai in the case of ITO vs. Shanti Realtors held that the assessee had satisfied all the requirements u/s 68 of the Income Tax Act and hence the loans received could not be added as unexplained credits. The assessee established the identity, creditworthiness, and genuineness of transactions and produced respective account confirmations, ITR acknowledgment, audited accounts and bank statements of the lenders. Loans given by the lenders were reflected in their audited accounts and ITR. These parties had utilized their own funds for advancing the loans. Loans taken by the assessee were subsequently repaid through banking channels.
In September 2018, the Supreme Court confirmed that Aadhaar is compulsory for filing of income tax returns. The apex court maintained the validity of section 139AA of the Income Tax Act. This section was made effective from July 1, 2017. Section 139AA says that Aadhaar must be quoted in all PAN applications. It also says that every person who is eligible to obtain Aadhaar as per the Aadhaar Act, 2016, must mention Aadhaar while filing tax returns. PAN numbers without Aadhaar will be invalid. Therefore, every PAN holder who has an Aadhaar must link it on the income tax website.
The Income Tax department on Tuesday carried out raids at the properties linked to BSP chief Mayawati's former secretary Netram. The searches were conducted on 12 locations in Delhi and Lucknow. The retired IAS officer is suspected of evading tax amounting to Rs 100 crores. Netram, a 1979 batch IAS officer, was believed to be close to Mayawati during her tenure as the Uttar Pradesh CM from 2007 and 2012 and also held key positions during the said time period.
The GST Council is likely to limit the use of tax credits collected by builders and allow a concessional rate for up to 10% of commercial property such as shops in residential areas. The government is keen to ensure that builders do not raise prices. The GST Council in its previous meeting had agreed to reduce the levy on under-construction residential projects to 5% without any input tax credit from the current 12% with credit for taxes paid on inputs such as paints, steel, cement, and sanitary ware. The GST Council meeting is scheduled to take place on March 19.
The Income tax department is the country’s largest tax litigant. As on March 31, 2017, over 90,000 cases are pending with the Income Tax Appellate Tribunal (ITAT). The corresponding disputed tax demand raised in these cases aggregate to Rs 2.01 lakh crore. 85% of these appeal cases have been filed by the Income Tax department with success rate of 30%. The ITAT is the second level appellate authority after the Commissioner (Appeals). The CBDT had raised the tax effect to Rs 20 lakh from Rs 10 lakh in July 2018 for I-T department to file an appeal with ITAT.
A whopping 11 of the 13 cases registered by the Mumbai zone of CGST in the last one year for availing fraudulent input tax credit (ITC) are linked to firms dealing in the iron and steel industry. Tax officials discovered various modus operandi through which ITC was fraudulently claimed. This includes availing ITC based on fake invoices without actual receipts of input goods. Such fraudulent credit is then subsequently utilised for payment of GST liability which hampers government’s cash collection drive. These bogus transactions were also resorted to inflate the turnover and avail bank loans which subsequently turn into NPAs.
GST officials have started sending notices to business firms seeking multiple details where a significant part of their GST liability has been paid using the GST input tax credit or huge variation in turnover figures between GSTR-3B and GSTR-1 have been reported. Notices have also been sent where a wide divergence has been identified in input tax credit between GSTR 2A and GSTR3B. Businesses have also been asked to furnish tax payment challans. The move has irked the business entities and the Institute of Chartered Accountants of India (ICAI), WIRC, has written to tax authorities questioning the practice.
A Surti salesman, Lalit Tholiya, received an unexpected tax demand notice of Rs 48 lakh from the income tax department after undisclosed transactions amounting to a whopping Rs 10.58 crore came to the notice of tax officials. Tholiya immediately filed a case of forgery and cheating against unidentified persons. He claimed complete ignorance about the transactions and the bank accounts through which they were routed. He alleged that the bank accounts were opened in his name using his documents without his knowledge. The department deducted Rs 2.35 lakh from his bank account for not paying up the tax demand.
Purchase of high value cars and jewellery is likely to become cheaper after the Central Board of Indirect Taxes and Customs (CBIC) said that tax collected at source (TCS) by the seller would not form part of the taxable value for computing GST liability. Under the Income Tax Act, TCS is levied at 1% on purchase of motor vehicles above Rs 10 lakh, jewellery exceeding Rs 5 lakh and bullion over Rs 2 lakh.
FADA, the apex body of automobile retail industry, has experessed concerns over the recent GST amendment relating to input utilisation. Newly inserted section 49A, effective from February 1, allows utilisation of CGST and SGST input against tax liability only after fully utilising the IGST credit. Auto dealers mostly purchase cars on IGST basis from OEMs and sell them intra-state levying CGST/SGST. The amendment will create a monthly additional working capital requirement to the tune of Rs 1 crore for 4-wheelers and Rs 50 lakhs for 2 -wheelers for the 25,000 auto dealerships across the country.
In a relief for the automobile sector, the government has clarified that no GST shall be applicable on the tax collected at source (TCS) levied under the Income Tax Act. Dealers are required to collect TCS from customers at a rate of 1% on automobiles priced above Rs 10 lakh. An earlier directive from the CBIC had mandated collection of GST by dealers on the invoice value plus TCS.
Maharashtra state government has launched an amnesty scheme for settlement of pre-GST state tax disputes under various state levies, including VAT, CST, entry tax, professional tax, luxury tax, and purchase tax on sugarcane. The move is aimed to ensure that the government recovers outstanding taxes and also clears the backlog of long pending assessments till the introduction of GST on July 1, 2017. The relief under the scheme is available only to taxpayers who have filed their relevant tax returns on or before July 15, 2019. Karnataka and West Bengal had already announced such schemes earlier.
The CBIC has clarified that promotional schemes offered by FMCG companies such as Buy One Get One (BOGO) and additional quantity for the same price will be eligible for input tax credit. Companies will neither be required to reverse the input credit on such supplies nor pay GST separately on the additional product unless it is a totally different one facing higher rate of tax. However, in respect of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples, ITC shall not be available to the supplier on inputs, input services and capital goods.
Direct tax collections for the full fiscal FY19 is expected to fall short by Rs 60,000-70,000 crore even after factoring the robust collection in the next three weeks to March 31. The government has set a revised target of Rs 12 lakh crore whereas only Rs 8.40 lakh crore have been collected so far. Direct tax revenues have grown at a slower pace of 12.2% as against the projected 19.8%. Any shortfall in collection will breach the government’s fiscal deficit target of 3.4%. Another source added that the direct tax shortfall is going to be over Rs 1 lakh crore.