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From Scrapping Retro Tax Law To Record GST Mop-Up, A Year Of Many Firsts For Revenue Dept

Scrapping Retro Tax Law To Record GST Mop-Up: 2021- A Year Of Many Firsts

Companies reminiscent of Cairn & Vodafone, have been entangled in a dispute with the federal government over retro tax regulation

New Delhi:

A report GST tax assortment, an overhaul of the revenue tax return submitting portal and the landmark transfer to scrap retrospective taxation have set the stage for the subsequent degree of reforms in tax administration that embody bringing a framework for cryptocurrencies and rationalising the GST price construction.

With tax reforms reminiscent of faceless evaluation taking roots, 2021 will go down because the yr that pivoted the tax administration in a rustic aspiring to turn into the world’s favorite funding vacation spot.

The process forward goes to be a tricky one because the tax division would grapple with taxing cryptocurrencies, rationalising Goods and Services Tax (GST) charges to shore up revenues and publish June 2022, the situation of how the GST income performs out for states with out the Centre’s assist of compensation.

In a historic resolution, the federal government in August scrapped the retrospective modification on oblique transfers for transactions previous to May 28, 2012.

To deliver tax certainty, the brand new rule supplies that no retrospective tax demand shall be raised sooner or later, and demand raised already shall be nullified on fulfilment of sure situations. The quantity already paid/collected shall be refunded, with none curiosity on fulfilment of the mentioned situations.

Almost the entire 17 firms, together with Cairn and Vodafone, which have been entangled in a dispute with the federal government over the retro tax regulation have approached the income division to withdraw and settle the circumstances.

In its endeavour to simplify processes for taxpayers, the income division unveiled a brand new revenue tax e-filing portal in June. However, the portal suffered technical snags and stakeholders complained in regards to the non-availability of many functionalities.

The income division needed to prolong the I-T return submitting date for particular person taxpayers until December 31 from July 31, and likewise relaxed many different compliance deadlines.

Over a time frame, these glitches have come all the way down to some extent and as of December 15, 2021, 3.59 crore Income Tax Returns (ITRs) have been filed via the brand new e-filing portal.

On the oblique taxes entrance, GST assortment recorded stellar efficiency this yr with 5 straight months of over Rs 1 lakh crore mop-up until November. In April, the mop-up was the best because the rollout of the brand new tax regime in July 2017 at Rs 1,39,708 crore.

As the five-year mechanism for compensating states for the shortfall in GST revenues involves an finish in June 2022, the Centre and the states have began deliberating on rationalising tax charges and merging tax slabs to take away some gadgets from the exempt checklist and shore up revenues.

Currently, GST is a four-tier slab construction of 5, 12, 18 and 28 per cent. Essential gadgets are both exempt or taxed on the lowest slab, whereas luxurious and demerit gadgets appeal to the best price.

On the highest of the best slab, a cess is levied on luxurious and demerit items. The quantity collected from levying this cess is used to compensate states for income loss on account of GST implementation.

On the direct taxes entrance, all eyes at the moment are on the proposed cryptocurrency regulation and the amendments that could possibly be launched in Budget 2022 clarifying taxation of such digital currencies. Besides, clarification on the applicability of GST on crypto buying and selling too is awaited.

In 2018, the Reserve Bank of India (RBI) had banned banks and different monetary establishments from facilitating cryptocurrency transactions. However, that doesn’t spare anybody from paying tax on cryptocurrency trades.

Tax and consulting agency AKM Global’s Director – Tax and Regulatory, Sandeep Sehgal mentioned in India, there are not any particular pointers on the taxation of cryptocurrency within the Income-Tax Act, 1961. But taxpayers must report transactions if they’ve invested in cryptocurrencies and gained from these investments.

BDO India, Partner and Leader – Tax and Regulatory, Pranay Bhatia mentioned cryptocurrencies have taken fancy of the Indian traders and the federal government is more likely to introduce a regulation on regulating the operation of cryptocurrencies in India.

“However, independent of the said regulation, clarity around taxing cryptocurrency transactions is the need of the hour to avoid unwarranted tax litigations and put investor anxiety to rest,” Bhatia added.

AMRG & Associates Senior Partner Rajat Mohan mentioned the yr 2021 was a curler coaster experience that witnessed quite a few modifications on taxation, together with modification of legal guidelines, strengthening of procedural regulation, closure of legacy points, and clarification on pending tax disputes.

Some important modifications made within the GST regulation embody that curiosity could be charged on money part solely, extension of e-invoice to all of the registered individuals with a turnover of Rs 50 crore and elimination of necessary GST audit.

Direct taxes additionally noticed a justifiable share of modifications in 2021. These embody a better price of TDS/TCS when the payee is a non-filer of ITR, introduction of TDS on buy of products, discount within the time restrict for submitting unique ITR, enhance within the threshold for tax audit to Rs 10 crore, availability of pre-filled ITR varieties and implementation of annual info system.

Nangia & Co LLP Partner Shailesh Kumar mentioned throughout 2021, the federal government targeted majorly on widening the tax base, enhancing the trade of economic info between taxpayers and tax authorities, and bettering tax collections.

This was the very first yr when the faceless scheme for evaluation procedures was utterly adopted.

The yr additionally noticed the introduction of the Annual Information Statement (AIS) by the federal government that goals at offering a complete database to the tax authorities of all monetary transactions undertaken by a taxpayer at a single place.

This doc is rather more complete than erstwhile Form 26AS and leaves no room for an escape to the taxpayer, as even that info whereby TDS has not been deducted, is reported primarily based on stories made by varied businesses/ authorities. PTI JD ANZ RAM ANZ ABM ABM

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