Vipin Sanger

The reduction in TDS/TCS is expected to boost cash flows by ~50,000 crore, the finance minister said on Wednesday while announcing the move as part of an economic package. The government’s move to reduce the rates of tax deduction at source (TDS) and tax collection at source (TCS) by 25% will benefit investors and professionals by putting more cash in their hands. While this doesn’t bring down the tax liability of taxpayers, it leaves more money with them during the course of the financial year. Individuals will still have to pay their tax liability -- every quarter, or annually. The reduction in TDS/TCS is expected to boost cash flows by ~50,000 crore, the finance minister said on 13th May, 2020 while announcing the move as part of an economic package aimed at reviving an economy roiled by the Covid-19 pandemic and the lockdown enforced to combat it. Usually, the payee deducts TDS or TCS on behalf of the receiver and deposits it with the government. TDS and TCS are met...

Investors in dividend plans of equity mutual funds will benefit from the 25% cut in the rates for tax deducted at source (TDS) announced by finance minister Nirmala Sitharaman on 13th May 2020. Tax experts said mutual funds are currently required to deduct a 10% TDS on dividends paid to unit holders. For the remainder of FY 2021 this will come down to 7.5%. The lower rates will come into effect from May 14 and include deductions on dividend, interest, professional fees and brokerage. Investors who route money through alternative investment funds (AIFs), real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), too would get the benefit of the lower TDS rate, say experts. REITs and InvITs are taxed in the same manner as debt instruments. The government had made dividends taxable in the hands of investors in the budget for FY 2021. “The unit holders will get the benefit of reduction of TDS on the dividend declared by mutual funds. This benef...

In order to enhance liquidity in the hands of taxpayers, FM announced a reduction in the rate of tax deducted at source (TDS) for non-salaried specified payments made to residents by 25%. The coronavirus crisis has impacted lives severely. Several employees have been fired and many have witnessed salary reduction. In order to offer some relief to taxpayers amid such situation, Finance Minister Nirmala Sitharaman recently announced a slew of direct tax measures. FM said in her press conference, "We think this measure will release liquidity of Rs 50,000 crore who otherwise would have paid the tax." 5 Income Tax relaxations that you need to know: 1. TDS rate cut: In order to enhance liquidity in the hands of taxpayers, FM announced a reduction in the rate of tax deducted at source (TDS) for non-salaried specified payments made to residents by 25%.  2. TCS rate cut: In order to provide more funds at the disposal of the taxpayers, the rates of Tax Collection at ...

As per the Central Board of Direct Taxes (CBDT), the benefit of lower TDS and TCS rate can only be availed by resident individuals and is not available to non-resident Indian (NRI) taxpayers. Finance Minister Sithdraman in her press conference on Wednesday announced several measures for MSMEs, NBFCs and taxpayers. She unveiled details of the Rs 20 lakh crore economic package. In order to enhance liquidity in the hands of taxpayers, FM announced a reduction in the rate of tax deducted at source (TDS) and tax collection at source (TCS) by 25%.  However, there are some categories of taxpayers who will not be avail to avail the benefit of this cut: As per the existing rules, TDS rates differ based on whether or not the taxpayer has furnished the Permanent Account Number (PAN) or Aadhaar to the deductor.  Taxpayers who fail to furnish their PAN or Aadhaar, 20% or higher TDS can be charged. CBDT Press Release: Reduction in rate of Tax Deduction at Source (TDS) & ...

On 13th May 2020, the government has announced, "Due date for all income tax return for individuals for the Financial Year (FY) 2019-20 (Assessment Year 2020-21) will be extended from July 31 2020 and 31 October 31, 2020 to November 30, 2020 and tax audit from Sept ember 30, 2020 to 31st October 2020." The government has announced that the income tax return (ITR) filing deadline for Financial Year (FY) 2019-20 (Assessment Year 2020-21) has been extended to November 30, 2020 from July 31, 2020. "Due date for all income-tax return for individual taxpayers for the Financial Year (FY) 2019-20 (Assessment Year 2020-21) will be extended from July 31 2020 and 31 October 31, 2020 to November 30, 2020 and tax audit from September 30, 2020 to 31st October 2020". This was a part of the Rs 20 lakh crore relief package due COVID-19 lockdown. Along with the extension of the ITR filing deadline, there were other direct tax-related relief measures announced. The e...

Many components of tax optimized pay structure might not be suitable or justifiable, because of which people have to move to the liner and simple structures, which will obviously impact the tax liability. Lots of people are facing salary cuts, salary delays, retrenchment, layoffs, leave without pay, and partial deferred payout, etc. amidst the COVID-19 crisis.  Companies that are most affected belong to the MSME sector or those companies with heavy bank loans with no incoming funds. Hence, these salary cuts are to be expected.  Additionally, there are people who have the reimbursements component in their salary structure but, since people are not going out, they can’t claim entertainment or transport allowances. During this lockdown, most organizations have been non-functional or are working from remote places. Experts believe post lockdown, organizations will have to operate with the limited on-premises workforce and the rest will continue working from home ...

The ministry of finance issued a release, saying that the income tax (I-T) department would be issuing refunds of up to 5 lakh immediately, a move that will benefit 14 lakh taxpayers. It was done to provide relief to businesses and individuals during the lockdown. Cybercriminals took this as an opportunity to target gullible taxpayers. Many individuals started receiving fake messages, which stated that the I-T department is providing relief to all taxpayers due to covid-19 outbreak. The message contained a link that the individual needs to click to claim tax refund. Following this, the I-T department and the State Bank of India sent out messages on Twitter warning taxpayers about such cyber frauds. These are the things you should keep in mind to avoid falling into these traps. THE SIMPLE TRICK If you receive a message from the I-T department about a refund, don't rush immediately to claim it. There are chances that it could be from hackers, who want to trick you into...

This notice is sent to you on your registered email ID with income tax department to inform you whether income tax calculation in the ITR filed by you matches that of the income tax department Once the income tax department has processed your income tax return (ITR), it sends you an intimation notice u/s 143(1) of the Income Tax Act-1961. This notice u/s 143(1) is sent to you on your registered email address as registered in your e-filing account to inform you whether the income tax calculation in the income tax return (ITR) filed by you matches that of the tax department as per the records/other sources of information they have. As per ITR-filing website, "The income tax return (ITR) filed by the taxpayer is processed by the Income Tax Department and under this process the department checks for any arithmetical errors, internal inconsistencies, tax and interest calculation and verification of tax payment etc of your income tax return (ITR). After processing the ITR, the I...

Section 139(5) of the Income Tax Act states that after filing their return, if someone discovers any omission or incorrect statement, taxpayer can furnish a revised return. At the time of filing our income tax return (ITR) we take the utmost care not to make any kind of mistakes. However, at times it may happen that we make any mistake while filing our ITR at the last minute. These could include mentioning the wrong bank account number or IFSC, forgetting to declare interest income, or claiming the wrong deduction. However, don't worry if you have made a mistake as the current income tax laws allow you to correct it. "If you have discovered any mistake or error after filing your income tax return (ITR), then you can rectify your mistake or error as allowed under the current income tax laws. Section 139(5) of the Income-Tax Act allows taxpayers to rectify their mistake or error by filing a revised income tax return (ITR)". This section states that if someone af...

For the first time ever, the Union budget 2020 presented by the Finance Minister came up with two tax slabs and rates and gave an option to the taxpayers to choose between the two from the financial year 2020-21. While retaining the existing three slab tax rates, it introduced a new six-slab tax rate. On the budget day, as news started trickling in on the tax front, the initial euphoria evaporated and gave rise to confusion and disappointment. The confusion was reinforced when I got a call from one of my colleagues recently, asking me which regime was beneficial as it was the time for the annual investment declaration in the organisation. Old or New? Taxes, deductions, exemptions and compliances are by themselves something of a rocket science for the average taxpayer. The new rules have only increase the confusion for the income tax taxpayers. So let us try to figure out which tax regime is better. The table (for taxpayers who are less than 60 years of age) compares th...

To fight the Covid-19-instigated economic devastation, GoI and RBI have stepped in with incentives, cash doles and monetary policy support. Industry in India, like its counterparts elsewhere, are cutting their losses and biding their time for the crises to come to an end. There is also a misguided demand from some sectors seeking exemption in goods and services tax (GST) rates in general, and specifically on items that are needed in the fight against the pandemic: ventilators, personal protection equipment (PPE), Covid-19 test-kits, sanitizers, etc. Exemption of GST on the final product is never a good idea. It distorts the value chain. It does not necessary lead to reduction in prices. In fact, it adversely impacts domestic industry. Basic customs duty (BCD) and health cess have, incidentally, been exempted on ventilators, PPE and test kits till September 30. This was done primarily to meet the immediate need, domestic manufacture of these products being woefully inadequ...

For apportioning the deduction under Section 80C of the Income-tax Act, 1961, for principal repayment and under Section 24 for interest on home loan, the financial ownership and not just the legal ownership of the property is considered. The deduction under Sections 80C and 24 should be apportioned between the financial owners in the ratio of the funding done towards the property by each. In your case, the deduction would be accordingly computed in both your and your wife’s hands, in the ratio of your respective funding. However, in the event of you or your wife opting for the new taxation regime introduced by The Finance Act, 2020, with effect from 1 April 2020, the deduction under Sections 80C and 24 for interest on loan taken for self-occupied property will not be available. Suppose; All my Provident Fund (PF) accounts are under one universal account number (UAN) since FY13. I changed my job in November 2014, but transferred PF in July 2019. As per the 2016 notificati...