Revision as of 07:19, 30 November 2020

This is a collection of articles archived for the excellence of their content.

1 Basic tenets
- 1.1 Section 80C
- 1.2 Section 80 D
2 Rates of income tax in India
- 2.1 1995-2015
- 2.2 1949-2017: peak rate of Income Tax
- 2.3 1949, and since 1995: The number of tax slabs
3 Appeals
- 3.1 2015: Appeals only for Rs 10 lakh +
- 3.2 2017: ‘Higher appeals limit applies to pending cases,’ SC
4 Artists
- 4.1 Fashion designers
5 Capital gains
6 Corporates’ promotional activities
- 6.1 Pharmaceutical companies’ junkets for doctors
7 Donations to NGOs’ projects
- 7.1 Halved in 2017
8 Educational institutions
- 8.1 Profits not taxable: SC
9 Exemptions
- 9.1 1950: residential palace of erstwhile ruler exempted from IT
- 9.2 Scheduled tribes, Sikkimese, agriculture, institutions, hospitals, trusts
- 9.3 Yoga
  - 9.3.1 `Medical relief,' `imparting education' are charitable purposes
10 Expatriates
- 10.1 Salary paid in India won’t face tax, if Non-resident
11 Family trusts
- 11.1 No `gift' tax on property received from individual
12 Film actors
- 12.1 Promotion of film: actor not expected to incur expenditure
13 Foreign tax credit (FTC)
14 Gifts
- 14.1 Need not be camouflaged remuneration
15 Gratuity
- 15.1 Payment of Gratuity(Amendment) Bill 2017
16 House rent allowance
- 16.1 Proof needed of rent paid to kin
17 Income Tax returns
- 17.1 Who has to file income tax returns
- 17.2 Not filing I-T returns?Imprisonment,fine
- 17.3 2018: Changed format
- 17.4 'Returns can be filed after I-T notice is issued'
- 17.5 Wrong information in I-T returns
18 Joint I-T liability
- 18.1 Co-ownership of property
19 Notice pay deducted by employer
- 19.1 Cannot be taxed
20 Overseas income
- 20.1 Residential status determined by no. of days stayed
21 Permanent account number (PAN)
- 21.1 2016: PAN mandatory for…
- 21.2 2016: Required for transactions above Rs 2 lakh
22 Perquisites
- 22.1 Interest-free loan from employer is taxable
23 Pharmaceutical companies
- 23.1 Freebies for doctors deductible
24 Property (house): income from
- 24.1 2018: losses from house property for TDS capped at ₹2 lakh
- 24.2 2018: owner to decide which property is self-occupied
25 Property (immovable): owned abroad
- 25.1 Notional rent to be included in income tax return
26 Property (NRI): purchase of
- 26.1 Miscalculation risks
- 26.2 TDS risks: 1
- 26.3 TDS risks: 2
27 Property, purchase of
- 27.1 Buyers won't lose I-T exemptions by adding kin name
28 Property, immoveable, sale of
- 28.1 Tax benefits for investment in new house
29 Raids
- 29.1 In Tamil Nadu
30 Reliefs on tax
- 30.1 Education loans to study abroad
31 Rental income
- 31.1 No tax on rent if none received from 2nd home
32 ‘Salary’
- 32.1 2018: Non-compete fees, some compensations are taxable
33 Sexual harassment damages
- 33.1 Not taxable
34 Shares
- 34.1 Premium on shares not taxable: HC
35 Small businesses, professionals
- 35.1 Presumptive tax scheme
36 TDS (tax deducted at source)
- 36.1 Head of religious congregation to certify names
- 36.2 Online rectification in ITR simplified, 2015
- 36.3 Penal interest can be waived in some cases
37 YEAR-WISE CHANGES
- 37.1 2019: nine issues in interim budget
38 See also

Basic tenets

Adapted from EconomicTimes March 2014

1) The interest earned on a bank fixed deposit is...Interest on FDs is fully taxable as income at the rate applicable to the taxpayer.

2) Travel insurance policies are not tax deductible for salaried individuals.

3) An individual won't get tax deduction for... employer's contribution to PF.

4) Gifts worth over Rs 50,000 in a year are taxed as income of recipient.

5) Any income of a minor child will be clubbed with that of the parent. HRA is not tax-exempt if you pay rent to... Your minor child.

6) A disabled dependant gets you a deduction under Section 80DD. This is an additional tax benefit

7) f you have a second house lying vacant, you have to...

a. Pay tax on rent not received. b. Include in wealth tax. c. Pay property tax on it. All the three conditions apply on a second house lying vacant.

8) If one earns rent on property, how much of it is taxable? Rental income is eligible for 30% standard deduction.

9) Only those with income below the basic exemption are exempt from filing tax returns.

10) The RGESS deduction is available only to first-time investors in equities.

Section 80C

December 12, 2017: The Times of India

To boost the habit of savings and investments, the government has allowed every individual taxpayer to invest and buy certain financial products which will allow them to avail of tax deductions. Under section 80C of Income Tax Act 1961, a taxpayer could invest a total of Rs 1.5 lakh per annum in ELSS of mutual fund houses, EPF, PPF, tax-saving FDs, NPS, life insurance products and some other approved financial products, which will reduce the person’s total tax liability. Payment of home loan principal and tuition fee of children also come under this section for tax deductions.

Section 80 D

January 23, 2018: The Times of India

WHAT ARE SECTION 80D TAX BENEFITS?

Section 80D under the Income Tax Act provides for tax deductions for buying health insurance policies, popularly called mediclaim plans. In an era of increasing healthcare costs, the government, to encourage people to take mediclaim policies, allows taxpayers some sops for these policies. A taxpayer can get claim deductions of up to Rs 25,000 per year for payment towards premium for health insurance plans for the taxpayer, spouse and dependent children. The limit is enhanced up to Rs 30,000 even if either the taxpayer or the spouse is a senior citizen. Within these limits one can also claim deductions of up to Rs 5,000 per year as a cost for preventive health check up. The government also allows mediclaim premium of up to Rs 30,000 for policies taken for parents.

Rates of income tax in India

1995-2015

See the chart on this page

See graphic:

Income tax rates in India: 1995-2015

Income tax rates in India: 1995-2015 Source: The Times of India

1949-2017: peak rate of Income Tax

January 15, 2018: The Times of India

1949-2017: peak rate of Income Tax
From: January 15, 2018: The Times of India

See graphic:

1949-2017: peak rate of Income Tax

Highlights

We know you absolutely hate a part of your annual income going into to the government's kitty in the form of taxes. After all, you worked hard the whole year and wish the exemption limit would be set higher. Whether that would be done or not will be known till Budget 2018 is presented, but you should take heart from the fact that you pay much less tax than what your grandfather did during his time.

While exemption limit today stands at Rs 2.5 lakh annually, it was Rs 1,500 way back in 1949-50. Though this may seem a meagre amount to you, a back of the envelope calculation shows this works out to be Rs 80,000 in today's terms. So your grandfather started paying tax at annual income of Rs 80,000, while you enjoy tax-free income that is nearly three times more than it.

Tax rates are another reason for you to cheer about. The peak tax rate today stands at 30.9%. But during 1970-71 it was a staggering 93.5%, a massive increase from the 25% Indians paid in 1949-50.

You may find three tax slabs cumbersome for tax calculation, but thank your stars, your parents or grandparents had to deal with as many as 11 tax slabs.

1949, and since 1995: The number of tax slabs

The number of tax slabs in 1949, and since 1995
From January 15, 2018: The Times of India

See graphic:

The number of tax slabs in 1949, and since 1995

Appeals

2015: Appeals only for Rs 10 lakh +

Sources:

1. The Times of India, Dec 13 2015

2. The Times of India, Dec 13 2015, Rubna Kably

I-T appeals only for Rs 10L and above

In a bid to reduce litigation and spare taxpayers harassment, the Central Board of Direct Taxes has increased from Rs 4 lakh to Rs 10 lakh the threshold for filing an appeal before the Income Tax Appellate Tribunal, reports Rubna Kably.

The threshold limit for an appeal by the I-T department before the high courts has been doubled to Rs 20 lakh. The threshold for I-T department appeals before SC remains at Rs 25 lakh.

To rein in frivolous appeals, CBDT ties I-T hands by raising `tax effect' limit

The Central Board of Direct Taxes (CBDT) continues with its plan to reduce litigation and be more taxpayer-friendly. By significantly increasing the threshold limits for filing of appeals, at various judicial levels, by the Income-tax (I-T) department, the CBDT hopes to mitigate taxpayer harassment and create efficacy in the functioning of the I-T department. At times, the I-T department files appeals with higher courts, with an eye on revenue, when the decision in the lower court is in favour of the taxpayer. Such frivolous litigation adds to the costs for both parties and results in taxpayer harassment.

The threshold limit for filing an appeal before the Income-Tax Appellate Tribunal (ITAT) by the I-T department has now been raised from Rs 4 lakh to Rs 10 lakh. Similarly , the limit for an appeal before the high courts has been doubled to Rs 20 lakh. While such revisions are an annual affair, the recently announced upward revisions are significant.

However, no change has been made in the threshold for appeals filed before the Supreme Court, which remains at Rs 25 lakh. Appeals before the ITAT and courts can now be filed by the I-T department only if the `tax effect' exceeds the threshold limits (see table). This move will help not only corporates, but also high net-worth individuals who find themselves embroiled in I-T litigation.

The CBDT has also clarified, in its circular dated December 10, that the revised limits will apply retrospectively and pending appeals below the specified threshold limits should be withdrawn or not pressed.

The `tax effect', as defined in CBDT's circular, means the difference between the tax on the total income assessed by the I-T department and the tax that would have been charged if the total income of the taxpayer was reduced by the income relating to disputed issues.

The CBDT has also instructed that merit must be the guiding factor while filing an appeal with higher judicial bodies -both the ITATs and courts. “It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits (ie: threshold limits for appeals) prescribed,“ states the circular.

Tax experts view that the increase in threshold limits and withdrawal of pending appeals falling below the revised thresholds will ease litigation. The impact will be more favourable at the ITAT level, which is the first level of appeal. It is learnt that pan-India, 1.06 lakh cases were pending across various ITAT benches as of June 1. The maximum pendency was in Mumbai and Delhi, with 25,039 and 20,499 pending cases. Howev er, the exact number of pend ng cases, which will now fall below the revised threshold imits and be withdrawn, was not available.

However, to safeguard the nterests of the I-T department, certain caveats have been built into the instruc ions. For instance, just because on a particular disputed ssue, the I-T department has not appealed as the tax effect is ow, it does not preclude it from iling an appeal on the same issue for another taxpayer where the tax effect is beyond he prescribed threshold).

Further, the instructions on not filing an appeal if the ax effect is below the prescribed monetary limit will not apply in certain instances. These instances include: where the constitutional val dity of a tax provision is challenged; where the CBDT's circular has been held illegal or even when the audit objection has been accepted by the I-T department.

2017: ‘Higher appeals limit applies to pending cases,’ SC

Higher I-T appeals limit also applies to pending cases, says SC, November 28, 2017: The Times of India

The honorable Supreme Court orders regarding CBDT's instruction revising monetary limits
From: Higher I-T appeals limit also applies to pending cases, says SC, November 28, 2017: The Times of India

The Supreme Court has held that the higher monetary threshold limits prescribed for filing of appeals by the income-tax authorities would apply both to appeals filed after the date of the instruction revising the limits and also to all pending matters. This brings respite to taxpayers who feared matters pending on the date of the instruction would be revived and lead to a tiring bout of litigation.

On November 23, the SC upheld the retrospective nature of the Central Board of Direct Taxes (CBDT) instruction setting down the thresholds for I-T appeals.

This order departs from an October order of the apex court which had taken a contrary view. After this decision, individual taxpayers and businessmen facing low denomination disputes had feared that I-T officials would rake up old matters discarded after upward revision of the threshold.

From time to time, CBDT, responsible for tax administration, enhances the monetary limits for filing of I-T appeals. Officials are not permitted to file appeals where the “tax effect” is low (as defined by the monetary limit), except for the few exceptions carved out. It helps cut down litigation, including pending litigation, and saves costs. “Tax effect” denotes the difference between the tax on income determined by I-T officials and the I-T chargeable on the income of the taxpayer after excluding the disputed income.

CBDT’s instruction, the subject matter of litigation before the SC, was dated February 9, 2011. It had provided that appeals cannot to be filed by I-T officials before high courts is the “tax effect” was less than Rs 10 lakh (the earlier circular on March 27, 2000, had pegged it at Rs 4 lakh). It did not change the monetary threshold for appeals before I-T tribunals and the SC, which remained at Rs 3 lakh and Rs 25 lakh, respectively.

Since then, another set of instructions have been issued, which provides that if the tax effect is Rs 10 lakh or less, an appeal cannot be filed even with the tax tribunals. For high courts, the limit is set at Rs 20 lakh and for the SC, it is Rs 25 lakh. Before the SC, the I-T department contended that the CBDT instruction had a prospective effect only. Thus cases pending in high courts on February 9, 2011, could not be dismissed merely based on the instruction. But the SC decided in favour of the taxpayer, SRMB Dairy Farming, a private limited company, by holding that CBDT’s instructions will also apply to all pending matters.

“The SC has rightly pointed out that the interpretation of CBDT’s instruction had to be done in the context of the purpose for which it was issued, which is to reduce litigation that had choked the legal system. Thus the apex court held that the instructions applied to pending matters also, as such an interpretation would facilitate achievement of the objectives of the National Litigation Policy aimed at bringing down the pendency of litigation cases,” said Gautam Nayak, tax partner, CNK & Associates, a firm of chartered accountants.

Interestingly, the latest instruction issued by the CBDT on December 11, 2015, not only significantly hiked the monetary threshold limits but categorically mentioned that: “This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in courts and tribunals. Pending appeals below the specified tax limits may be withdrawn.”

Nayak said: “This showcases the intent of the instructions and the SC has rightly acted on it.”

Artists

Fashion designers

Times of India

‘Fashion designers are artists, eligible for I-T exemption’ Shibu Thomas

Mumbai: A fashion designer is an artist, the Bombay High Court has said and ruled that they are eligible for incometax exemptions available under the category. Ten years after the income-tax department first objected to tax benefits claimed by one of India’s leading fashion designers, Tarun Tahiliani, a division bench of Justice Dhananjay Chandrachud and Justice J P Devadhar on Monday said the designer should get tax privileges extended to the artists.

Tahiliani opened the country’s first fashion boutique, Ensemble, and is credited with being one of the designers who have brought high couture to India. Tahiliani’s IT woes began in October 2000 when he sought tax exemption for his income of Rs 83.90 lakh. Under Section 80 RR of the Income-Tax Act, a resident of India, who is an an author, playwright, artist, musician, actor or sports person can claim exemption of 75% of his income earned from foreign assignments. Tahiliani said that applying the exemptions, his taxable income for that year would be Rs 53.24 lakh.

The tax department, however, refused to accept that the fashion designer was an artist. It also contested deductions sought by sought by Tahiliani on his taxable income for 1999-2000 and 2001-2002. The income-tax appellate tribunal ruled in Tahiliani’s favour, upholding his claim that he was a creative artist. The IT department challenged the order before the high court.

The department’s lawyer contended that a fashion designer didn’t belong to the creative profession as the vocation was classified under applied arts and not fine arts. The IT department said that the benefit of exemption was granted to aid the artists, who represent Indian culture abroad.

The HC dismissed the IT department’s petition and held that fashion designers were entitled to tax exemptions meant for artists.

Capital gains

See Capital gains: India

Corporates’ promotional activities

Pharmaceutical companies’ junkets for doctors

Lubna Kably, I-T trips pharma cos on doc junkets, Sep 20 2016 : The Times of India

Tribunal Disallows Expenses

The Mumbai bench of the Income-Tax Apellate Tribunal (ITAT) has nipped the `unholy' doctor-pharma nexus whereby medical practitioners are offered various incentives, like overseas trips, to encourage them to prescribe specific medicines or lines of treatment.

It has done so by upholding a disallowance of Rs 76.55 lakh, made by an I-T officer at the assessment stage. The expenditure was incurred by Liva Healthcare (a pharma company specialising in skincare formulations) to wards overseas trips for doctors and their spouses.

The immediate impact of the order is a higher I-T liability for the pharma company for financial year 2008-09, to which this case pertains, as the disallowed expenditure will be added back to the taxable component of income. In addition, the order will act as a reminder to pharma compa nies to adopt practices that are above board. The maximum rate of income tax on companies currently is 30% plus applicable surcharge and cess.

The ITAT's September 12 order observes, “The payment of overseas trips of doctors and their spouses for entertainment, by the pharma company , in lieu of expectation of getting patient re ferrals from doctors for its products so as to generate more business and profits, by any stretch of imagination cannot be accepted as legal.Undoubtedly it is not a fair practice and has to be termed as against the public policy.“

Section 37 of the I-T Act, which is a residual section, permits a business entity to claim as a deduction revenue expenditure incurred by it, `wholly and exclusively for the purpose of the business'.However, an explanation to this section provides that expenses incurred for any purpose which is an offence or is prohibited by law shall not be deemed to have incurred for the purpose of the business.Consequently , such expenditure cannot be allowed as a deduction from taxable income.

The code of conduct prescribed by the MCI debars doctors from receiving favours in return for referring, recommending or procuring of patients for medical, surgical or any other treatment.

Donations to NGOs’ projects

Halved in 2017

Share of donations to projects under Sec 35AC halved in FY16, March 4, 2017: The Times of India

Sec 35AC Sunset Clause Will Expire On March 31

Donations made to hundreds of projects carried out by NGOs across the country will no longer be eligible for a 100% income tax (I-T) deduction in the hands of the donor from April 1. While tax savings are not the main purpose, if donations are made in March towards eligible projects, then donors comprising salaried employees could reap an I-T benefit.

At present, donations made for specific projects run by NGOs that have been certified under section 35AC entitle the donor to a 100% I-T deduction under section 80GGA in respect of the donated amount.

However, section 35AC has a sunset clause which expires this March. Section 80GGA is not as widely known as section 80G, which permits a 100% I-T deduction in respect of certain donations (such as PM's National Relief Fund) and a 50% I-T deduction in most other cases (see table).

“Taxpayers who do not earn income under the head `profits and gains of business and profession', such as salaried employees, can claim the benefit of section 80GGA. While the employer cannot consider the donations made, while computing tax to be deducted at source against salary income, the employee can claim the benefit of the same in his I-T return and claim an I-T refund, if applicable,“ says Pradeep Mahtani, director, HelpYourNGO Foundation. A chartered accountant says, “In fact, if there has been a short deduction of tax at source and advance tax has not been paid by the salaried employee, by making donations eligible for I-T deduction up to March 31, the salaried taxpayer could mitigate his I-T penalty . Donors should ensure that they get the appropriate receipt.“

Notifications are issued by the finance ministry from time to time, certifying the projects that are eligible under section 35AC, the period of eligibility and also the total cost of the eligible project. For instance, as regards NGOs registered in Ma harashtra, these include projects by Magic Bus (skill development and livelihood programme), Association of Palliative Care (for a palliative care centre), Foundation of Promotion for Sports and Games (Olympic Gold Quest project) and Mesco (educational scholarships).

HelpYourNGO, an online donation platform, has on its portal 45 NGOs that run 90 projects eligible under section 35AC, These include some well known names such as Akshaya Patra's midday meals, projects by Childline and People for Animals.

In view of the sunset clause, a government-appointed national committee -which approves projects that would be eligible under section 35AC -had ceased to accept requests after December last year. “Donation stems from fundamental reasons, which are deep-rooted among each donor whether that's joy , guilt, remembrance or duty . However, everyone does think of saving I-T after having donated. Just like the insurance and the investment industry , which makes people aware of I-T savings available to them, for donations it is incumbent upon NGOs to make people aware of taxes they can save as a result of the donation they have made,“ says Dhaval Udani, founder of Danamojo, a payments platform for NGOs.

Perhaps awareness of a 100% I-T deduction for donations made to section 35AC-eligible projects has been low. HelpYourNGO did a dipstick sample survey of 12 NGOs, for which data was readily available. It showed that the percenta ge of donations towards 35ACeligible projects as compared to total donations received by NGOs has declined from 14.7% in fiscal 2014-15 to 7.9% in the next fiscal.

Deval Sanghavi, partner and co-founder at Dasra, a strategic philanthropy foundation, points out, “Our experience has shown that donors see the I-T deduction more as a government certification, which in essence states the organisation is compliant with laws and adheres to missiondriven principles vis-à-vis a giver donating more because of the I-T deduction.“

The number of individuals who donate money to charity has shown a rise in India.As many as 203 million Indians donated money during 2015, opposed to just 183 million in 2014, according to the World Giving Index 2016.

Educational institutions

Profits not taxable: SC

The Times of India

Mar 19 2015

Amit Choudhary

The Supreme Court has ruled that surplus income earned by educational institutions cannot be taxed, and imparting education not termed a for-profit activity simply because it yielded high returns. Dismissing the revenue department's submission that an educational institution ceased to be a solely scholastic endevaour if it generated high profits, the court noted that their income was exempt from tax under the Income Tax Act.

“Where an educational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit,“ a bench of Justice T S Thakur and Justice Rohinton F Nariman said.

“A distinction must be drawn between the making of a surplus and an institution being carried on `for profit'. If, after meeting expenditure, a surplus arises incidentally... it will not cease to be one existing solely for educational purposes,“ the bench added.

The court, however, said the government must examine activities of such institutions to ensure that the purpose of education is not taken over by a profit-making motive. “If they are not genuine, or are not being carried out in accordance with all or any of the conditions subject to which approval has been given, such exemption must be withdrawn,“ it said.

The court passed the order on a bunch of petitions filed by Queen Educational Society challenging an Uttarakhand High Court order allowing I-T authorities to tax its surplus income of around Rs 7 lakh for the assessment year 2000-01.

Exemptions

1950: residential palace of erstwhile ruler exempted from IT

AmitAnand Choudhary, Can't tax income from palace rent: SC, Dec 6, 2016: The Times of India

Court Raps I-T Dept For Pursuing Case Against Erstwhile Ruler Of Kota

The Supreme Court held that the income earned by erstwhile rulers of a princely state or their heirs by renting out a portion of the residential palace was not taxable and rapped the Income Tax department for pursuing a case despite their income being exempted under IT law.

A bench of Justices Ranjan Gogoi and Abhay Manohar Sapre allowed a plea of the ruler of the former princely state of Kota, now a part of Rajasthan, challenging the high court order for bringing his income from rent in the Income Tax net. The ruler owns extensive properties, including two residential pa laces known as Umed Bhawan Palace and the City Palace. The ruler is using Umed Bhawan Palace for his residence and a portion of it was rented out to the ministry of defence way back in 1976.

Although the Centre had in 1950 declared residential palace of an erstwhile ruler, situated within the state, as his inalienable ancestral property to be exempted from payment of income-tax, the I-T department had in 1984 initiated proceedings for assessment of income earned from renting out a portion of the palace. The Centre had incorporated Section 10(19A) in the IT Act to give exemption to former rulers.

The department contended that IT exemption was given for personal use and income earned from the rent was taxable. Commissioner of Income Tax and Income Tax Appellate Tribunal, however, turned down the plea of the IT department which had moved the Rajasthan HC.

The HC had ruled that as so long as the ruler continued to remain in occupation of his official palace for his own use, he would be entitled to claim exemption but if he let out any part of his palace, he became disentitled to claim benefit of exemption available under Section 10(19A) for the entire palace.

“In such circumstances, he is required to pay income-tax on the income derived by him from the portion let out in accordance with the provisions of the I T Act and the benefit of exemption remains available only to the extent of portion which is in his occupation as residence,“ the HC had said.

Quashing the HC order, the Supreme Court held that Section 10(19A) has used the term “palace“ for considering the grant of exemption to the ruler and income earned from renting out a portion of the palace was also exempted.

“We cannot ignore this distinction while interpreting Section 10(19A) which, in our view, is significant. In our considered opinion, if the Legislature intended to spilt the Palace in part(s), alike houses for taxing the subject, it would have said so by employing appropriate language in Section 10(19A) of the IT Act.We, however, do not find such language employed in the section,“ the bench said.. “Once the assessee is able to fulfil the conditions specified in section for claiming exemption under the Act then provisions dealing with grant of exemption should be construed liberally because the exemptions are for the benefit of the assessee,“ it said.

Scheduled tribes, Sikkimese, agriculture, institutions, hospitals, trusts

Here's why scrapped notes are flying off to the northeast, TNN | Updated: Nov 24, 2016, The Times of India

HIGHLIGHTS

I-T laws allow exemptions for various categories of incomes or individuals

Among those are members of ST communities in Nagaland, Manipur, Tripura, Arunachal and Mizoram

A similar exemption is available to all those defined as "Sikkimese"

Among those exempt from paying income tax are members of scheduled tribe communities in Nagaland, Manipur, Tripura, Arunachal Pradesh and Mizoram. Scheduled tribes in North Cachar Hills and Mikir Hills in Assam, the Khasi Hills, Garo Hills and Jaintia Hills in Meghalaya and Ladakh in Jammu & Kashmir also don't have to pay income tax. The exemption applies to income arising from any source in these areas or from dividends or interest on securities from anywhere.

A similar exemption is available to all those defined as "Sikkimese" in the I-T Act. This again is for any income generated from Sikkim itself and for income from dividend or interest on securities generated anywhere. The intent behind these exemptions is to provide fiscal concessions to backward areas and communities. In times like now, it becomes a useful route for people looking to turn undisclosed incomes legitimate.

Apart from these geographically restricted exemptions, there is of course the exemption for agricultural income. That includes any rent or revenue derived from agricultural land.

There are several institutions that are tax exempt under the IT Act. Again, it is not difficult to see why the lawmakers would have decided not to tax them. For instance, income of a public charitable trust or not for profit society established for development of khadi and village industries is exempt from tax. Educational institutions including universities existing solely for educational purposes and not for profit are exempt from paying tax on their incomes under various sub-sections of the IT Act.

Similarly, not for profit hospitals too are exempt, different kinds being covered by different sub-sections.

Income of a charitable institution or fund approved by the prescribed authority is not required to pay taxes on its income either. Nor are public religious or public charitable trusts approved by the prescribed authority. Political parties and electoral trusts are also exempt from tax on their incomes. It is another matter that a major chunk of the money flowing to parties never enters any books anyway.

Yoga

`Medical relief,' `imparting education' are charitable purposes

Lubna Kably, Ramdev trust wins I-T war on tax-exempt tag for yoga, Feb 18, 2017: The Times of India

Baba Ramdev's Patanjali Yogpeeth (a public charitable trust) has succeeded in its appeal before the Income-tax Appellate Tribunal (ITAT), which has accepted its tax exempt status.

The ITAT (Delhi bench) held that Yoga entails providing medical relief and camps also provide education, and that both `medical relief ' and `imparting education' fall within the meaning of charitable purpose, entitling the trust to claim I-T exempt status under sections 11 and 12 of the Income Tax Act.

“The finding of I-T authorities that propagation of yoga by Patanjali Yogpeeth does not qualify as medical relief or imparting of education is not justified,“ stated the ITAT in its order dated Feburary 9.Even as the litigation settled by the ITAT, relates to the 200809, the ITAT has also referred to subsequent amendment in the I-T Act, which came into effect from April 1, 2016. This amendment specifically inserted `yoga' within the definition of `charitable purpose'. If the exempt status not been upheld by the ITAT, Patanjali Yogpeeth would have been liable to pay income tax. The total income of this trust is not brought out in the ITAT order.

The ITAT also held that corpus donations aggregating to Rs 43.98 crore received by Patanjali Yogpeeth, predominantly for construction of cottages under its Vanprasth Ashram Scheme (which provides accommodation to those attending residential yoga courses), were capital receipts not liable to I-T. Such donations included land donated, whose market value was pegged by I-T authorities at Rs 65 lakh. In its order, the ITAT pointed out that “Corpus donations are not taxable, even in circumstances where the trust is not eligible for I-T exemption“.

Various additions to the trust's income made by the I-T authorities, including a Rs 96 lakh addition made for services made by the trust to Vedic Broadcasting in which Acharya Balkrishnan, a trustee and close aide of Baba Ramdev holds substantial interest were deleted by the ITAT, on the ground that the I-T authorities had not understood the facts.

The ITAT also agreed with the submissions made by the trust and observed that certain inferences by the I-T authorities such as provision of benefits to certain persons or receipt of anonymous donations were made without fully appreciating the facts.

Expatriates

Salary paid in India won’t face tax, if Non-resident

Lubna Kably, Non-resident expats’ salary paid in India won’t face tax, February 15, 2018: The Times of India

How tax residency in India is determined
From: Lubna Kably, Non-resident expats’ salary paid in India won’t face tax, February 15, 2018: The Times of India

The Authority of Advance Rulings (AAR) has held that the salary income of a nonresident individual for services rendered overseas cannot be taxed in India, even when such salary is paid into a bank account in India.

The ruling stands out because apart from providing relief from double taxation under the Indo-US tax treaty, the AAR additionally held that the sums received in India would not be taxable here under the domestic tax laws.

Unlike a tribunal or court order, a ruling by AAR, a quasi-judicial body, does not set a precedent. But it does have persuasive value and is well-considered. Thus, the ruling may benefit expat workers, in particular the over one lakh Indian workers who work in the US, largely on H1B visas.

Typically, when white-collared workers are ‘seconded’ on an overseas assignment by an Indian company, a split salary arrangement is worked out. Under ‘secondment’, the employee is transferred on the payroll of the overseas parent or group company, which pays the basic salary and certain allowances, in the overseas country. However, the Indian company deposits a part of the salary in the employee’s bank account in India. This enables the employee to meet certain obligations in India—such as repayment of housing loan or household expenses (as the family could be in India).

While an Indian residing abroad is popularly referred to as a non-resident Indian (NRI), the nomenclature is different under tax laws. It is not the country of origin, but the number of days’ stay in India, which determine whether a person will be a resident or non-resident for tax purposes.

Resident individuals are taxable in India on their global income, irrespective of where it was earned. In the case of non-residents, only income that accrues or arises in India (say, bank interest from a savings account in India or rental income from a house in Mumbai) is treated as taxable in India (see table). There is a third category, that is, resident but not ordinarily resident (RNOR), for whom the tax incidence is the same as for non-residents.

“Thus, salary received by non-residents in a bank account overseas for services performed outside India is not subject to tax in India. However, salary received in India is considered as taxable under the Indian domestic tax laws (along with being taxed in the country where they are working as most countries adopt the source method of taxation). Typically, a split salary mechanism results in litigation, as income-tax (I-T) authorities seek to bring to tax the income received in India. In such cases, employees claim relief under a tax treaty, which ensures that the same income is not taxed twice,” says Maulik Doshi, tax partner, SKP Group, a consultancy firm.

In this case, the employee, T N Santhosh Kumar, was seconded by Texas Instruments to Texas Inc, a US company, for a period of two years. As is typically the case, a split salary mechanism was adopted. Kumar was paid monthly a part of the salary and certain bonuses in India by Texas India.

A communique by EY India states: “Based on the India-US tax treaty, the AAR held that the place where the employee performs their duties is what is considered and not where the income is received or where the company providing the remuneration is based. As the salary is paid for work performed in the US, the income would be taxable in the US alone and no tax would be required to be withheld in India.”

“It is interesting to note that the AAR also held that such salary payments received in India by the non-resident would not be taxable in India even under its domestic tax laws,” says Doshi and adds, “in cases where there is no tax treaty (such as with Hong Kong) or in peculiar situations where the taxpayer is unable to access a tax treaty owing to lack of certain documents, this ruling will be very helpful.” In simple terms, the word accrue in India refers to something that is due in India.

Kumar was deputed for a two-year term. In the second year, in which he returned to India (that is, 2012-13) he was a resident of India and liable to tax on his global income. The US would also tax his US source salary income. Here, the AAR held he would be entitled to a tax credit in India for US taxes.

Family trusts

No `gift' tax on property received from individual

No levy on transfer of assets to family trust, March 24, 2017: The Times of India

`Gift' tax provisions will not apply to property received from an individual by a family trust, according to an amendment made in the Finance Bill passed by the Lok Sabha.

High net worth individuals (HNWI) commonly use family trusts as a tool for succession planning, as it provides an upfront solution to any possible future disputes that may arise, including any challenges to a will by relatives at a later date. Family trusts also ring fence assets from any future liabilities.Shares, immovable property et al are settled (transferred) to the trust for the benefit of spouse, children and other relatives. The trust dis tributes income to the beneficiaries.

The Finance Bill had introduced clause (x) in section 56(2). It provided that receipt of money or property by `any person' (which includes individuals and other entities such as private trusts and companies) without consideration or for inadequate consideration in excess of Rs 50,000 shall be subject to Income-tax (I-T) in the hands of the recipient, under the head `Income from other sources'.“The budget proposals had created uncertainty around family trusts receiving such gifts. The enacted change will bring relief to families intending to create trusts for legitimate succession planning,“ says Pranav Sayta, family business services leader at EY India.

Film actors

Promotion of film: actor not expected to incur expenditure

Money spent by Hrithik to promote film `taxable', Nov 30, 2016: The Times of India

It is not an actor's responsibility or obligation to incur expenditure on promotion of his film, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) ruled recently . It disallowed an expenditure of Rs 5.6 lakh, incurred for promotion of `Gujarish', which was claimed by the lead actor, Hrithik Roshan, as deduction from his income in 2010-11.

While verifying Hrithik's income-tax (I-T) returns, the officer noticed that Hrithik had shown an expenditure of Rs 7 lakh for promotion of his film.The actor said it was paid to seven contestants of `Saregama', a TV show, for promotion his brand image, as he was the lead actor in the film. `Guzaarish' was a 2010 release, composed and directed by Sanjay Leela Bhansali, which also had Aishwarya Rai in the lead role. The officer held that expenditure relating to the film's making, its promotion et all was the producer's responsibility . He disallowed the expenditure claimed by the actor in his I-T computation as a business deduction.

Foreign tax credit (FTC)

The Times of India, Jul 01, 2016

Lubna Kably

In a bid to reduce litigation, the Central Board of Direct Taxes (CBDT) has made it easier for Indian-resident taxpayers, including large Indian companies having overseas operations, to claim credit for the taxes borne by them abroad. Credit of foreign taxes (referred to as foreign tax credit, or FTC) were allowed under tax treaties with other countries and the Income Tax Act, but the absence of specific rules often led to litigation.Denial of FTC by tax authorities also resulted in double taxation on the same income in the hands of Indian-resident taxpayers.

FTC rules issued by the CBDT provide that credit for foreign taxes can be claimed against taxes paid in India, like income tax (be it personal or corporate), cess and surcharge. Further, Indian companies can also claim FTC against Minimum Alternate Tax (MAT). Taxpayers have to submit proof of the tax paid or deducted at source in the foreign country to claim FTC.

The earlier draft rules, issued in April, had excluded disputed foreign taxes from the ambit of FTC. Now credit can be claimed in respect of disputed foreign taxes, subject to meeting compliance requirements.

Indian-resident taxpayers pay taxes on their global income in India, including on foreign source income which has already been subject to tax overseas (see graphic). FTC eliminates double taxation on the same income. To illustrate: A parent company headquartered in India earns interest on debt given to its Sri Lankan (SL) subsidiary and is subject to a 10% withholding tax. The Indian company will pay tax in India on its global income (including the foreign source interest income). The new rules will make it easier for it to claim an FTC for the 10% tax with held in Sri Lanka.

According to RBI data, India Inc's overseas investments by way of debt and equity amounted to $750 million in May . FTC rules will help Indian companies with global operations get benefit of credits for foreign taxes. The rules will also help high net worth individuals who make overseas investments and bear foreign taxes on their dividend or interest income. “Clarity on grant of FTC against the MAT liability is a big positive as is the move to provide credit for `disputed foreign taxes' upon final settlement of dispute. However, the modus operandi for allowing such credit -especially when the assessments are time-barred -needs to be prescribed,“ says Girish Vanvari, tax leader at KPMG India.

Some hiccups remain.Gautam Nayak, tax partner, CNK & Associates, says, “The rules provide clarity about the extent of FTC available and documents to be submitted for that. However, difficulties faced by certain taxpayers have not been addressed.FTC would not be available for taxes not covered by the relevant tax treaty , such as state taxes paid in the US or branch profits' taxes paid overseas.Besides, the tax credit would be restricted to the rate of tax payable under the tax treaty , even if the actual tax paid as well as the Indian tax payable is higher. So, if excess taxes have been withheld by the foreign payer out of abundant precaution, or on account of their local laws, tax credit would be available only for tax payable under the treaty terms. For example, the US levies a higher rate of withholding of 30% if a foreign entity (say an Indian company) does not have a tax identification number. In such cases, credit in India would be available only to the extent of applicable rate prescribed under the tax treaty.“

Gifts

Need not be camouflaged remuneration

Lubna Kably, `SRK's RS15cr Dubai villa can't be taxed', August 24, 2017: The Times of India

The income-tax appellate tribunal (ITAT) has rejected the tax department's view that a villa in Dubai gifted to Bollywood actor Shah Rukh Khan a decade ago was a camouflage to evade income tax. The tribunal has held that the value of the villa cannot be treated as the actor's taxable income.

The villa had been gifted to Khan under a formal gift deed in 2007, after he obtained the RBI's approval.

I-T authorities were of the view that the donor, Nakheel PJSC, a Dubai-based company known for the famous Palm Projects, had gifted the villa as it was keen on using the actor's image and brand.The actor is a globally known figure and has endorsed various foreign brands for remuneration running into a few crores. Thus, the gift was seen as remuneration to Khan for utilising his brand image and in lieu of his stage performance at the company's annual day event. In light of this, the I-T authorities sought to tax the value of the villa as income in SRK's hands.

During the assessment for the financial year 200708, I-T officials added the value of the villa -Rs 17.85 crore -to the income of Rs 126.3 crore declared by Khan in his I-T return. The actor would have had to pay I-T on this additional sum. At the first stage of appeal, the commissioner (appeals), agreed with the I-T authorities. Based on a valuation report, though, he reduced the addition to Rs 14.7 crore.

Appealing before ITAT, Khan, through his counsel, said the chairman of the company, Sultan Ahmed Bin Sulayem, was his friend and thus wished to make the gift. He admitted to attending the annual day event, but said he merely addressed the employees and did not perform on stage, which would have amounted to brand endorsement. On taxation of a gift in kind, ITAT pointed out that for the relevant financial year, gifts of immovable property made without any consideration were out of the tax ambit.

Gratuity

Payment of Gratuity(Amendment) Bill 2017

March 22, 2018: The Times of India

HIGHLIGHTS

Parliament has passed Payment of Gratuity(Amendment) Bill 2017 paving the way for doubling the limit of tax free gratuity to Rs 20 lakh

The Bill also notifies period of maternity leave as part of continuous service

Parliament passed Payment of Gratuity(Amendment) Bill 2017 paving the way for doubling the limit of tax free gratuity to Rs 20 lakh and empowering the government to fix the ceiling of the retirement benefit through an executive order.

The Rajya Sabha passed the bill, which was approved by the Lok Sabha on March 15. Besides enabling the central government to fix the ceiling of tax free gratuity, the bill will also empower it to fix the period of maternity leave through executive order.

It also notifies the period of maternity leave as part of continuous service and proposes to empower the central government to notify the gratuity ceiling from time to time without amending the law.

Rajya Sabha Chairman M Venkaiah Naidu said in the Upper House that he had met leaders of various parties in the morning and it was decided that the House would take up the crucial Payment of Gratuity (Amendment) Bill as it was of importance to the employees.

Labour Minister Santosh Kumar Gangwar then moved the bill for consideration and passage. It was passed by a voice vote without a debate.

The labour ministry later said in a statement that the Bill also envisages amending the provisions relating to calculation of continuous service for the purpose of gratuity in case of female employees who are on maternity leave from "twelve weeks" to such period as may be notified by the central government from time to time.

Prime Minister Narendra Modi tweeted: "A significant pro-people measure passed in Parliament. Will benefit lakhs of Indians."

After implementation of the 7th Central Pay Commission, the ceiling of tax free gratuity amount for central government employees was increased from Rs 10 lakh to Rs 20 lakh. The unions have been demanding for inclusion of the change in the Act.

At present, formal sector workers with five or more years of service are eligible for Rs 10 lakh tax-free gratuity after leaving job or at time of superannuation. A senior government official had earlier said that the government wants to provide tax-free gratuity of Rs 20 lakh to organised sector workers at par with the central government.

The Payment of Gratuity Act, 1972, was enacted to provide for gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments. The law is applicable to employees, who have completed at least five years of continuous service in an establishment that has 10 or more persons.

The amendment will also allow the central government to notify the maternity leave period for "female employees as deemed to be in continuous service in place of existing twelve weeks". The proposal comes against the backdrop of the Maternity Benefit (Amendment) Act, 2017 enhancing the maximum maternity leave period to 26 weeks.

House rent allowance

Proof needed of rent paid to kin

Lubna Kably, For tax relief, you need proof of rent paid to kin, April 11, 2017: The Times of India

The Mumbai income tax appellate tribunal (ITAT) denied a claim on house rent allowance (HRA) by a taxpayer.

She had paid rent in cash to her mother, but was unable to substantiate it. On the other hand, the Ahmedabad ITAT allowed the HRA exemption claimed by a taxpayer who had paid rent to his spouse.

Given that the avenues available to save tax are limited for the salaried class, some employees try and take the `fullest' advantage of the income tax exemption available for HRA by paying rent to a family member with whom they are residing. It is another matter if the rent is actually paid to the relative, or if the rent receipts are genuine.

Where do these seemingly contrary ITAT decisions leave the taxpayer? The bottom line is it isn't illegal to pay rent to a close relative, but it carries a risk of a deeper probe by I-T officials and if genuineness cannot be proved, the claim would be denied, with attendant consequences.

The bottom line is precautions are necessary when paying rent to a relative. For instance, it is better to enter into a leave and licence agreement and make payments via banking channels. Under section 10 (13A) of the I-T Act, a salaried taxpayer can claim exemption on HRA for an accommodation occupied by him, if the property is not owned by him and he has actually incurred rent expenditure on it.

Amarpal S Chadha, partner, people advisory services at EY-India, says: “Payment of rent to a parent or spouse will not impact the eligibility to claim HRA exemption as long as the above mentioned conditions are met and the transaction is genuine.“ “The transaction should not be a mechanism to avoid tax,“ he stresses.

So decisions by the Mumbai and Ahmedabad ITATs -one accepting the tax exemption claim on payment of rent to a relative and the other denying it -may seem contrary , but the orders were based on specific facts in each case.

Rent paid to spouse, HRA claim allowed: In 2013, the Ahmedabad ITAT bench in Bajrang Prasad Ramdharani's case, allowed an HRA exemption claim by the taxpayer, even though rent was paid by him to his spouse. He was living with his wife but paid her rent via bank transfers. The ITAT held that the taxpayer had fulfilled the twin requirement of occupying a house not owned by him and payment of rent.

Rent paid to mother, HRA claim disallowed: But more recently , the Mumbai bench disallowed the HRA claim by Meena Vaswani who had contended that she lived with her aging mother to take care of her and paid rent to her mother in cash. While rent receipts were obtained by her, as the transaction was with her mother, she had not entered into any formal contract. Vaswani was not able to produce proof of cash withdrawals from her bank to substantiate the rental payments. Moreover, the authorities were able to prove that she was not residing with her mother, but in another apart ment nearby with her husband and daughter. The ITAT agreed with I-T authorities that the transaction was a sham to obtain a tax benefit.

The fine print: “There is nothing in the I-T Act to prevent a salaried person from claiming exemption under section 10(13A) on the basis of rent paid to a close relative. However, section 143(2) empowers the I-T officer to examine the genuineness of such expense,“ says Ameet Patel, tax partner at Manohar Chowdhry & Associates, a CA firm. “In the normal course, a taxpayer would not pay rent to his spouse or parent. I personally would never advise any client to enter into such a transaction. It is but natural for the I-T officer to look upon such arrangements with suspicion,“ adds Patel.

The Mumbai ITAT placed reliance on the Indian Evidence Act, 1872, and took the position that the onus of proving that the rental transaction was real lay with the taxpayer.

Income Tax returns

Who has to file income tax returns

Declaring investments through Form 12BB, 2016 onwards; Graphic courtesy: The Times of India, May 8, 2016

Salaried persons earning up to Rs 5 lakh annually

Salaried persons earning up to Rs 5 lakh annually will have to file income tax returns: Central Board of Direct Taxes

PTI | Jul 22, 2013

The Times of India

The CBDT had exempted salaried employees having a total income of up to Rs 5 lakh including income from other sources up to Rs 10,000 from the requirement of filing income tax return for assessment year 2011-12 and 2012-13, respectively.

However, for the assessment year 2013-14 and thereafter, salaried persons earning up to Rs 5 lakh annually will have to file income tax returns, Central Board of Direct Taxes (CBDT) said on Monday.

Earlier in May 2013, the CBDT had made E-filing of income tax return compulsory for the assessment year 2013-14 for persons having total assessable income exceeding Rs 5 lakh.

The CBDT said that the exemption has been not been extended as the facility for online filing of returns has been made "user-friendly with the advantage of pre-filled return forms".

These e-filed forms also get electronically processed at the central processing centre in a speedy manner, it said.

For filing returns, an assessee can transmit the data in the return electronically by downloading ITRs, or by online filing.

Thereafter the assessee had to submit the verification of the return from ITR-V for acknowledgement after signature to Central Processing Centre.

Not filing I-T returns?Imprisonment,fine

Not filed I-T returns? You face jail & fine

TNN | Aug 17, 2013-

The Times of India

MUMBAI: Those defaulting in filing income tax returns are liable to prosecution, the I-T department has said.

If the tax evaded exceeds Rs 25 lakh, the defaulter can be sentenced to a minimum imprisonment of six months and maximum of seven years, besides being asked to pay a fine. If the tax evasion amount is less than Rs 25 lakh, the imprisonment could range between three months to two years in addition to fine.

Recently, the additional chief metropolitan magistrate, New Delhi, sentenced a taxpayer to six months' imprisonment in one assessment year and one year imprisonment in subsequent assessment year for repeating the offence of not filing income tax returns.

2018: Changed format

Changes you need to know for I-T returns, April 7, 2018: The Times of India

What’s different in the I-T return forms notified for the assessment year 2018-19
From: Changes you need to know for I-T returns, April 7, 2018: The Times of India

When you file your income tax (I-T) returns in July, you will have to fill details such as allowances that are not exempt, value of perks, and profits in lieu of salary in the new I-T return forms notified for the assessment year 2018-19.

A one-page simplified ITR Form-1 (Sahaj) can be filed by an individual who is a resident having income up to Rs 50 lakh and who is receiving income from salary, one house property and other income (interest, etc), the I-T department said. The detailed break-up of salary was not part of ITR forms last year but has been added this year.

Similar details have to provided for income from house property. Gender mention requirement has been removed from ITR-1. Non-resident individuals cannot use ITR-1 to file returns and will have to use ITR-2 or -3, depending on their nature of income in India. Tax experts said this could raise their compliance costs.

The ITR-1form is similar to the one for the previous assessment year, which had been used by 3 crore taxpayers who filed their returns using this form. You will also have to provide details of all bank accounts held in the country at any time during the previous year, except dormant accounts.

The requirement of furnishing details of cash deposit made during a specified period as provided in the ITR form for the assessment year 2017-18 has been done away. This provision was added in the aftermath of the demonetisation drive.

ITR Form-2 has also been rationalised by providing that Individuals and HUFs (Hindu Undivided Families), having income under any head other than business or profession, shall be eligible to file returns under this form. The Individuals and HUFs, having income under the head business or profession, shall file either ITR Form-3 or ITR Form-4, the department said.

“There are more than 25 key changes in current year ITR forms in comparison to last year. Some of these changes suggest that the focus of new ITR forms is to get more information from unlisted companies, trusts and taxpayers, who have opted for presumptive taxation scheme,” said Naveen Wadhwa, deputy general manager at Taxman.

“Further, the ITR forms also require the business entities to report the GST transaction, which would help the department to independently reconcile the transactions reported by them in income-tax returns and GST returns,” he said.

In case of non-residents, the requirement of furnishing details of any one foreign bank account has been provided for credit of refund. “There is no change in the manner of filing of ITR forms as compared to last year. All these ITR forms are to be filed electronically,” the department said.

Any individual who is 80-year-old or more has the option to file paper returns as well as an Individual or HUF whose income does not exceed Rs 5 lakh and who has not claimed any refund in the return of income.

Tax experts said additional fields for penalty due to delayed filing have been added in ITR-1 and ITR-2.

“The new Form ITR-1 (Sahaj) for assessment year 2018-19 does not request for the residential status of the individual and it is neither applicable to individuals qualifying as Not Ordinarily resident (NOR) nor to non-residents (NR). So Indian employees who have left India for overseas employment in the first half of the year and qualifying as non-resident would be required to file their India tax returns in ITR-2, even though they have annual taxable income up to Rs 50 lakh,” said Alok Agarwal, senior director at Deloitte.

'Returns can be filed after I-T notice is issued'

Lubna Kably, ITAT: Can file revised return after notice issued by I-T, June 22, 2018: The Times of India

ITAT- Can file revised return after notice issued by I-T; The details of the case
From: Lubna Kably, ITAT: Can file revised return after notice issued by I-T, June 22, 2018: The Times of India

HIGHLIGHTS

Tax benefit claimed by taxpayers in revised income-tax returns cannot be denied byI-T officers because the revised return has been filed after issue of notice

Currently, the time limit for filing a revised return is before the expiry of twelve months from the last day of the financial year or before the completion of I-T assessment, whichever is earlier

A tax benefit claimed by a taxpayer in his revised income-tax return cannot be denied outright by an income-tax (I-T) officer merely because the revised return has been filed after issue of notice, income-tax appellate tribunal (ITAT) has said.

However, the revised return needs to be filed within the time limits set out in the I-T Act. This order of the Mumbai bench of the ITAT, passed on June 20, will provide relief to several taxpayers. When a mistake is made in the original I-T return, such as not disclosing an income correctly or not claiming a tax deduction, section 139 (5) the I-T Act permits a revised return to be filed to correct the errors.

Currently, the time limit for filing a revised return is before the expiry of twelve months from the last day of the financial year or before the completion of I-T assessment, whichever is earlier.

In this case before the ITAT, Mahesh Hinduja had declared a total income of Rs 4.91 lakh in his original return for the financial year 2010-11. He later filed a revised return declaring a total income of Rs 6.24 lakh. In this revised return he also disclosed long-term capital gains (LTCG) of nearly Rs 50 lakh. However, as he had invested 1.15 crore in a new residential house, he claimed a deduction under Section 54 of the I-T Act. Thus, capital gains were not offered for tax.

Under the Act, if an investment is made in another house in India, within the stipulated period of time, then the 'cost of the new house' is deducted and only the balance component of the LTCG is taxable. Thus, if the amount of capital gains is equal to or less than the cost of the new house, the entire sum of LTCG is not taxable.

To ensure that the taxpayer has not underreported his income or paid less tax, the I-T Act empowers I-T officials to issue a notice asking for further evidence. As the revised return was filed by Hinduja after he had received a notice under section 143(2), the I-T official rejected his claim for deduction. The litigation finally reached the level of the ITAT.

The ITAT noted that the I-T official had rejected the revised return of income as invalid but at the same time had accepted the higher income offered in the revised return, including the LTCGs. Only the claim of deduction under Section 54 had been rejected. "The I-T official has adopted a very selective approach in respect of the revised return of income filed by the taxpayer," remarked the ITAT.

The ITAT held that the I-T Act does not bar a taxpayer from filing a revised I-T return after issue of notice under Section 143 (2). Hinduja's case was sent back to the I-T official for examining and allowing the deduction, subject to the fulfilment of conditions prescribed for such claim.

Wrong information in I-T returns

April 19, 2018: The Times of India

HIGHLIGHTS

I-T department has said those who file wrong ITR will be prosecuted and their employers will be intimated to take action

The advsiory comes in the backdrop of the investigation wing of the department, in January, unearthing a racket of extracting fraudulent tax refunds by employees

The Central Processing Centre (CPC) of the department in Bengaluru, that receives and processes the Income Tax Returns (ITRs), has issued an advisory specifying such taxpayers should not "fall prey" to unscrupulous tax advisors or planners who help them in preparing wrong claims to get tax benefits.

Calling it a "cautionary advisory" on reports of tax evasion by under-reporting of income or inflating deductions or exemptions by salaried taxpayers, the department said such attempts "aided and abetted by unscrupulous intermediaries have been noted with concern".

"Such offences are punishable under various penal and prosecution provisions of the Income Tax Act," it said.

The advsiory comes in the backdrop of the investigation wing of the department, in January, unearthing a racket of extracting fraudulent tax refunds by employees of bellwether information technology companies based in Bengaluru, in alleged connivance with a tax advisor.

The CBI recently registered a criminal case to probe this nexus.

The tax filing season for salaried class taxpayers has just begun with the Central Board of Direct Taxes (CBDT), that frames policy for the department, recently notifying the new ITRs.

The one-page advisory added that if the department notices any fraudulent claims in their ITRs, such claims "may be punishable under provisions of the IT Act and this may also delay issuance of their refunds."

"Taxpayers, are, therefore strictly advised not to fall prey to false promises or mis-advice by unscrupulous intermediaries and submit wrong claims in their ITRs, which would be treated as cases of tax evasion.

"In the cases of such wrong claims by the government/PSU employees, reference would be made to the concerned vigilance division for action under conduct rules," it added.

The advisory added that the department possesses an "extensive risk analysis system" that is aimed at identifying persons who are non-compliant and aim to subvert the trust based-system "envisioned" while processing of ITRs at the CPC, which it said is automated and devoid of any human interface.

"In all such cases of high risk , the department may examine and verify the details submitted by taxpayers in their ITR subsequent to the processing of returns," it said.

It also asked tax planners and advisors to "confine their advice to taxpayers within the four corners of the IT Act" and warned that the violators will be prosecuted and such instances will also be referred to enforcement agencies like the CBI and the Enforcement Directorate (ED) for criminal prosecution.

Joint I-T liability

Co-ownership of property

The Times of India, Aug 13 2016

Lubna Kably

If the spouse has not invested in a property and is merely a co-holder, then on sale of such property , she cannot be liable for tax on capital gains, the Mumbai IncomeTax Appellate Tribunal (ITAT) has recently ruled. The ITAT order will help many taxpayers as married couples are increasingly opting for property registration in joint names, even if only one of them is the investor.

Anil Harish, an advocate specializing in real estate, said: “Co-holding of property is popular. Often the name of a spouse (say wife) is added to provide a sense of comfort, to ensure ease of succession on death of the partner or other reasons such as facilitating voting in a general body meeting of the housing society .“

The ITAT gave the order on Wednesday while hearing a case of a medical professio nal, Vandana Bhulchandani.

An I-T officer, based on information in his possession, noted that Bhulchandani had not disclosed the capital gains arising from the Rs 2.12-crore sale of a property in Parel that she jointly held with her husband in her I-T return for the financial year 2008-09.

She informed the I-T officer that her husband had made the entire investment and the property was reflected in his books of accounts--from the date of purchase till the date of sale. The officer also observed that Bhulchandani's husband did not incur any I-T liability on the capital gains arising from the sale--the husband had set off the short-term capital gains arising from the Parel property sale against the short-term capital losses incurred by him on the sale of shares. Under the I-T Act, short-term capital losses can be set off against capital gains arising in the same financial year and only the surplus, if any , is taxable.

But the I-T officer claimed that the entire arrangement was done to avoid tax payment and held Bhulchandani liable for 50% of the total short-term capital gains arising from the property sale and added Rs 45.38 lakh to her taxable income. Short-term capital gains are taxed at the applicable I-T slab rates, which depending on an individual's income varies between 10% and 30% in addition to applicable surcharge and cess.

Bhulchandani approached the commissioner of income-tax (appeals) who directed deletion of the addition.The I-T officer then filed an appeal before the ITAT. But the tribunal took into cognizance that the husband had bought the property , which was duly reflected in his books of accounts, and had also disclosed the details of the sale in his I-T return and thus, dismissed the appeal.

“The ITAT order is clear and correct. It will provide clarity in cases of co-holding of property , where the spouse has not made any monetary investment,“ said Harish.

Notice pay deducted by employer

Cannot be taxed

Lubna Kably, `Notice pay deducted by employer cannot be taxed', April 21, 2017: The Times of India

The Income-tax Appellate Tribunal (ITAT), which adjudicates Incometax (I-T) disputes, has held that an amount deducted by an employer for not serving out a notice period cannot be brought to tax.

In this case, two companies while settling dues had deducted salary for the notice period which the person had not served, but this deduction was not taken into account during tax assessment.However, ITAT (Ahmedabad bench) in its order dated April 18, said only salary received would be taxable, and not portions which were deducted by a company for not serving out a notice period.

Under the I-T Act, salary income is taxable on a due basis, regardless of whether it has been actually paid to an employee or not. And typically, when an employee resigns but does not serve out the notice period (provided for in the employment agreement), the employer deducts salary attributed to this period. However, I-T authorities do not consider such deductions and seek to tax entire salary due (that is, salary before allowing for such deduction). Hence, the order acquires significance.

“The ITAT has recognised the concept of real income, which is well accepted under I-T laws. It held that the salary against which notice pay was adjusted had not become due, as the net amount was paid by the employer. The employee had no right to receive the portion of the salary that had been deducted, under the terms of employment. Thus, the deducted amount could not be held as taxable salary income,“ said Gautam Nayak, tax partner, CNK & Associates.

In this case, which pertains to financial year 2009-10, N Rebello, had resigned from two companies, viz: Reliance Communication and Sistema Shyam Teleservices. Both companies had deducted a notice pay of Rs 1.10 lakh and Rs 1.66 lakh respectively and handed balance salary dues to Rebello. Accordingly in his I-T return, Rebello claimed as a deduction Rs 2.76 lakh from gross salary income, as this amount was not received. I-T authorities, in the course of assessment, denied such deduction. Commissioner (Appeals), which is the first level of appeal for a taxpayer, also upheld the action of the I-T.

The Commissioner (Appeals) pointed out that under section 15 of the I-T Act, tax is triggered when the salary becomes due, irrespective of whether it is paid or not. Secondly , section 16 of the I-T Act does not provide for any deduction made by the employer for the notice period. Thus, the deduction of Rs 2.76 lakh claimed by Rebello was not upheld. This led to Rebello filing an appeal before the ITAT, which decided in his favour.

Overseas income

Residential status determined by no. of days stayed

See graphic. Earning abroad? Know the tax rules, August 1, 2017: The Times of India

Tax incidence in India; Earning abroad? Know the tax rules, August 1, 2017: The Times of India

Tax Residential Status In India Is Determined By No. Of Days Stayed Here

Indians who are on deputa tion overseas or have sett led overseas -whether by way of acquiring a permanent residency such as a green card in the US, or acquiring citizenship of a foreign country -need to be aware of their tax obligations in India.

A recent move seeking details from non-residents of foreign bank accounts in income tax (I-T) returns caused anxiety about whether India was taking steps to tax global income. The Central Board of Direct Taxes (CBDT) subsequently clarified that providing such details was optional and it was to facilitate refunds in those cases where individuals did not have a bank account in India.

Here is a primer explaining the tax incidence for Indians overseas:

1) What determines tax residential status and why is it important?

An Indian residing abroad is popularly referred to as a non-resident Indian (NRI).Under India's tax laws, the reference is to the term `tax resident' or `non-resident'. The country of origin does not determine the taxability . For instance, a UK citizen who is working in Mumbai in the subsidiary of a UK parent company could be a tax resident of India. An Indian who has migrated to Australia on March 20 may in common parlance be an NRI, but for tax purposes for the financial year 2016-17, he is likely to be tax resident of India.

The number of days stay in India, as provided for in the Income Tax (I-T) Act, determines the tax residential status of an individual in India.This status, in turn, determines which income can be taxed in India and what cannot be taxed. Thus, it is important to know which category you fall into.

An individual is considered to be a tax resident of India (also referred to as Indian tax resident) for a financial year (say FY 2016-17) if (i) he has been in India for 182 days or more during that FY, or (ii) he has been in India for 60 days or more during that particular FY and has lived in India for at least 365 days or more during the four years immediately preceding.

Indian citizens taking up employment abroad or crew members of an Indian ship who have left India during a FY or persons of Indian origin (PIOs) visiting India need to note that the period of 60 days mentioned in the above clause is replaced by 182 days. (In the non-tax realm, the PIO scheme has been merged with Overseas Citizen of India scheme and it provides for visa-related relaxations.) Thus, if an Indian citizen has left for overseas deputation during FY 2016-17, he will be considered as a tax resident of India for the year ended March 31, 2017, if he has been in India for 182 days or more during 2016-17. Only , tax residents of India (ROR) are subject to tax on their global income, which would include interest income on overseas bank accounts.

2) Apart from resident and non-resident, is there any other definition in the I-T Act which determines tax in India?

Yes, the I-T Act also defines a `Resident but not ordinarily resident' (RNOR). An RNOR qualifies as a tax resident of India during a particular FY, but satisfies the following criteria: (i) He has been a non-resident of India in nine out of 10 immediately preceding fi nancial years; or (ii) has during the last seven years immediately preceding that particular FY been in India for a period of 729 days or less.

To illustrate: A PIO visits India during 2016-17 and stays for more than 182 days.This would make him a tax resident of India. However, during the last seven years immediately preceding FY201617, he has been in India for 729 days or less, he will be regarded as an RNOR.

3) What is the tax incidence in India of a tax resident (ROR), RNOR and nonresident?

As mentioned earlier, an ROR is subject to tax on his global income in India. RNOR and non-residents are generally subject to tax in India only in respect of India source income (that is, income received, accruing or arising in India or deemed to be received, accrued or arisen in India).

Salary received in India or for services provided in India, ren tal income from a house property in India, capital gains on sale of assets in India -be it shares or house property , income from fixed deposits or savings bank account in India are instances of income which would be taxed in the hands of not just tax residents of India, but also RNORs and non-residents.

NRIs should also note an additional point. They are allowed to hold NRE and FCNR accounts (where foreign earnings are deposited) with banks in India. However, under the I-T Act, interest against such deposits is tax-free.However, interest earned on an NRO account (where Indian source income is deposited) will be taxable in India.

4) What is the role of tax treaties?

If an individual is a tax resident of one country but has a source of income from another country , complexities can arise. Tax treaties ensure that the same income is not taxed twice. Broadly , tax treaties provide that the country from which the income is generated has the right to tax it.

Double taxation is avoided in two ways -either the country of non-tax residence exempts the income earned in the foreign country , or the country of tax residence grants a foreign tax credit for the taxes paid in the other country . India has entered into tax treaties with a hundred-odd countries, including US, UK, Canada, Australia and Germany , which are popular destinations for the Indian diaspora.

For instance, if an expat is a US tax resident, he will pay tax on his global income in the US (this would include tax on India source income). However, for taxes paid in India -say tax withheld at source against fixed deposits in a bank in India -he will get a foreign tax credit (a tax credit for the taxes paid or withheld in India against the US taxes payable by him). This will lower the US tax outgo.

Permanent account number (PAN)

2016: PAN mandatory for…

The Times of India Jan 04 2016

Mandatory PAN requirements

1 With effect from January 1, 2016, it has become mandatory to quote the permanent account number (PAN) for all transactions above `2 lakh for all modes of payment.

2 Only bank accounts opened under the Pradhan Mantri Jan Dhan Yojana have been exempted. But all other bank accounts and all kinds of deposits will have to quote PAN.

3 PAN will be mandatory for purchase of prepaid cards worth `50,000 or more in a year. Pur chase of gold jewellery worth above `2 lakh (`5 lakh current limit) would also need PAN.

4 The limit for quoting PAN for sale or purchase of real estate property has been raised to `10 lakh from `5 lakh.

5 PAN needs to be quoted only for a cash payment for a hotel or restaurant bill and foreign travel or purchase of forex of `50,000 (current limit `25,000).

2016: Required for transactions above Rs 2 lakh

The Times of India, Jun 22 2016

John Sarkar

New PAN rule hurts sale of luxury goods

Mails are flying thick and fast at most luxury stores across the country as harried sales staff face a tough time trying to coax people to part with their permanent account number (PAN) details. By the looks of it, they are not accomplishing much, resulting in poor sales of luxury goods. Furnishing of PAN details has been made mandatory by the government for any transaction above Rs 2 lakh in a bid to weed out black money .

However, the move has deterred many wealthy shoppers from spending lakhs of rupees on luxury products such as handbags, watches and writing instruments. “Our bags start at Rs 2 lakh.Sales at our store have been hit badly because our regular customers have stopped coming,“ said a senior executive of a French luxury brand. Earlier, most of them would pay in cash. But now, instead of giving their PAN details, they are opting to shop abroad.“

Most people in the luxury industry TOI spoke to complained about similar issues.For instance, at a store selling high fashion French leather goods in the capital, executives are tearing their well-groomed hair out to convince customers to reveal their PAN card number.

“We have taken a hit of several lakhs of rupees over the last few days but have not been able to figure out a way around the problem,“ said an executive at the store.“The other day , a lady who had come to buy a bag said she wouldn't risk getting her husband into trouble by furnishing his PAN card details.Eventually , she walked out without buying anything.“

Nikhil Mehra, CEO of Genesis Group that has marketing and distribution arrangements for several luxury brands such as Jimmy Choo, Giorgio Armani, Em porio Armani and Tumi among others and is the JV partner for Canali, Burberry and Villeroy and Boch in India, said consumer sentiment here has been affected by this ruling. “However, for most of our brands it is not a challenge because prices are within the Rs 2 lakh limit,“ he said.

The Indian luxury market has been pegged at Rs 16,300 crore in 2015 by market research firm Euromonitor and is expected to touch Rs 39,000 crore by 2020, with an annual growth rate of 19%.

Perquisites

Interest-free loan from employer is taxable

Lubna Kably, Interest-free loan from employer taxable: ITAT, June 12, 2018: The Times of India

Interest-free loans extended by an employer are taxable in the hands of an employee as a perquisite, the Income Tax Appellate Tribunal (ITAT) has said. However, the valuation of the taxable benefit or perquisite, which forms part of the salary income of the employee, cannot be done in an ad-hoc manner and has to be computed as per the prescribed formula under the Income Tax Act, the tribunal said.

In this case, Neha Saraf had obtained an interest-free loan from her employer, Teej Impex, a private company. During the assessment for the financial year 2010-11, her argument that no employeremployee relationship existed fell through because the company had deducted tax at source, or TDS, on the salary of Rs 24 lakh paid to her.

Thus, the I-T officer assessing her case estimated 15% interest on the loan and added Rs 43.8 lakh to her income as a perquisite value of the interest-free loan.

In the next stage of appeal, the commissioner of I-T (appeals) held that the I-T officer had rightly treated the value of interest-free loan as a taxable perquisite in the hands of the employee. However, he noted that the valuation cannot be done in an ad-hoc manner.

According to I-T Act rules, a perquisite value is based on the rate charged by SBI on April 1 of the financial year in which the employee received the loan.

The commissioner (appeals) reworked the valuation and arrived at a lower perquisite value of Rs 20.65 lakh.

The commissioner (appeals) also rejected Saraf ’s contention that as interest on the loan given to her had already been disallowed in the hands of the company, it cannot be treated as a perquisite in her hands. Unhappy with the outcome, Saraf filed an appeal with the ITAT. However, in its order dated May 16, the ITAT upheld the order of the commissioner (appeals).

In the context of interestfree loans from employers, Puneet Gupta, director of people advisory services at Ernst and Young, says, “The employer is liable to treat an interest-free loan as a taxable perquisite and TDS is to be deducted from salary. An exemption is available if the loan is provided for medical treatment of specified diseases or where the loan amount is petty and does not exceed Rs 20,000.”

“Employees must ensure that the employer deducts TDS on the total salary income, which includes the perquisite value of interest-free loans. If TDS is not deducted, the employee faces several consequences. Not only does he or she have to pay income tax on the perquisite value of the loan, but interest will also be payable for late deposit of advance tax. Further, if such taxable perquisite value is not reported in the I-T returns, the I-T department may levy penalty ranging from 50% to 200% of the tax payable on the under-reported income,” Gupta adds.

Pharmaceutical companies

Freebies for doctors deductible

Pharma co’s expenses towards freebies for docs can be claimed as deductions: ITAT, August 3, 2020: The Times of India

Tax issues surrounding the ‘nexus’, between pharma companies and doctors, where the latter are sponsored for conferences, at times replete with sightseeing and gala dinners, or expensive gifts, refuse to die down. Judicial precedents, in several cases, have been in favour of pharma companies with the costs relating to such freebies being allowed as business deductions.

The Mumbai bench of the Income-tax Appellate Tribunal (ITAT) recently passed an order in favour of Medley Pharmaceuticals, an Andheri based company.

The crux of the tax issue dealt with re-opening of the assessment for the FY 2011-12, owing to a change of opinion by the succeeding I-T officer. Based on technicalities such as no fresh ground material available on record, the re-opening was quashed by the ITAT.

However, the ITAT also went on to analyse the allowability of sales promotion expenses aggregating to Rs 6.2 crore for the pharma company. A break-up showed that Rs 2.4 crore was towards product reminders; conference expenses and travel costs ran into Rs 2.7 crore and additional doctors’ expenses were of Rs 1.1 crore.

The ITAT made some pertinent observations regarding the code of conduct issued by the Medical Council of India (MCI) and a circular issued by the Central Board of Direct Taxes (CBDT).

It said that the MCI code of conduct, which debars freebies, is meant to be followed by the medical fraternity alone and does not apply to pharma companies. Amended on December 10, 2009, the code prohibits medical practitioners and their professional associations from taking any gift, travel facility, hospitality, cash or monetary grant from the pharmaceutical and allied health sector industries.

The CBDT circular dated August 1, 2012 says that any expense in providing freebies in violation of the Medical Council’s code shall not be allowed as a business deduction.

The ITAT said that the MCI code of conduct, which debars freebies, is meant to be followed by the medical fraternity alone and does not apply to pharma companies

Property (house): income from

2018: losses from house property for TDS capped at ₹2 lakh

CBDT caps losses from house property for TDS at ₹2 lakh, January 8, 2018: The Times of India

An employer can set off loss declared by an employee under the head ‘income from house property’ only up to Rs 2 lakh against such employee’s salary to arrive at the amount of tax to be deducted at source (TDS).

The amendment to section 71 of the Income-Tax (IT) Act applies for the first time from 2017-18. If an employee has declared a loss higher than Rs 2 lakh, the excess is to be ignored for calculating the amount of TDS, which is deducted monthly from salary income, the Central Board of Direct Taxes (CBDT) has said.

In a circular issued last month, the CBDT has pointed out key amendments to the I-T Act, which employers who are responsible for TDS against salary income should consider. Issue of such a circular is an annual feature.

An employee is permitted to provide details of other income (say, bank interest) that he or she has earned during a year, together with the tax that has already been deducted (say, TDS deducted by the bank). Similarly, losses can also be declared by the employee. However, only loss from house property can be considered by the employer, as this is allowed to be set off against salary income. The employer has to take into consideration the details of income and loss from house property declared by the employee for the purpose of computing TDS.

Making such a declaration is not mandatory. However, if an employee does so, he or she may not have to separately compute and pay advance taxes, as the employer will be deducting tax at source on the employee’s taxable income based on the details given (and not just salary income).

If an employee had let out his or her house (which typically was the case when a second house was owned), the corresponding interest on home loan is fully allowed as a deduction. This, in many cases, led to a significant loss under the head ‘income from house property’ (which is mainly the difference between the rental income and the interest on the home loan)

2018: owner to decide which property is self-occupied

Lubna Kably, Owners of more than one house get tax leeway, June 8, 2018: The Times of India

The Mumbai bench of the Income-tax Appellate Tribunal (ITAT) upheld the right of a taxpayer to change the selection of a house property that would be treated as self-occupied and having a ‘nil’ annual value. Consequently, the notional rent from such a house will not be taxable.

In other words, if the taxpayer has in his Income-tax return declared a particular house property to be self-occupied, he can at a later stage during actual tax assessment of his case substitute this with another house property owned by him, which perhaps is in a more posh location. By doing so, it may be possible for him to reduce the notional rent that has to be offered for tax and lower his I-T outgo.

Under the I-T Act, where an individual owns more than one house, he can only treat any one of his properties as ‘self-occupied and having a nil annual value’. Annual value, in general terms, is the notional rent that the property would ordinarily fetch.

The other house properties, even if they are not given out on rent, are assumed to have been let out and I-T is payable on the notional rent. Certain deductions such as municipal taxes are permitted. Further, a standard deduction of 30% is allowed and I-T is payable on the balance component.

To mitigate I-T liability, taxpayers opt to choose that house property as ‘self-occupied and having a nil annual value,’ which would otherwise have had the highest adjusted annual value and would entail a higher I-T outgo.

“Sometimes, in cases where a dispute arises with I-T authorities on the annual value of a property, the taxpayer, since he has the choice, may change his selection during assessment proceedings, if it is advantageous to do so,” says Gautam Nayak, tax partner at CNK & Associates.

“It’s high time the government reconsiders this taxation. With housing finance being so readily available now, it is not only the rich people who have more than one house,” adds Nayak.

In an ITAT case , Venkatavarthan N Iyengar had three properties at Juhu, Santacruz East and Vasai. In his I-T return, he had declared his Vasai property as ‘self-occupied and having a nil annual value’. Later during course of tax assessment, he opted to substitute the Vasai with Juhu.

The I-T officer held that making a change during tax assessment is not permissible and the dispute reached the ITAT. Iyengar submitted that the I-T Act gives an option to the taxpayer to determine which of his properties he should treat as self-occupied.

The ITAT, in its order of May 23, observed, “The I-T Act nowhere states that the option of selecting a self-occupied property, once exercised, cannot be changed.”

Property (immovable): owned abroad

Notional rent to be included in income tax return

Lubna Kably, SRK must pay tax on notional rent from Dubai villa, rules ITAT, Order Set To Affect People Who Own Second Homes Abroad, March 23, 2017: The Times of India

Actor Shah Rukh Khan has to include notional rent from his Dubai villa in his income tax return filed in India, the Income Tax Appellate Tribunal (ITAT) has ruled.

Khan had submitted to the ITAT that under the IndiaUAE tax treaty , income from immovable property in Dubai would be liable to tax in the UAE and, therefore, he had not offered it to be taxed in India.

The ITAT rejected his contention. However, the two member ITAT (Mumbai) bench of Amit Shukla and G S Pannu added: “Credit for taxes paid in the UAE, if any , would be allowed as per the law.“

The ITAT directed the I-T officer to rework the final liability, which would arise in the hands of the actor, under the head “income from house property“. This decision will have wide ramifications for taxpayers having a second home overseas, especially those who fall under the jurisdiction of the Mumbai bench of the ITAT.

“In many instances, I-T authorities have been holding that rental income from overseas residential property (or deemed rental income, if the house is not let out) would be taxable in India. This ITAT decision will strengthen their argument,“ said Shuddhasattwa Ghosh, partner, people advisory services, at EY India.

Under the I-T Act, if a person has two residential properties, only one can be treated as “self-occupied“ and exempt from I-T. The other is taxed under the head “income from house property“ based on the annual value (in general terms deemed rental value or notional rent). Certain deductions are allowed to arrive at the taxable income from the house property , such as a 30% standard deduction and also municipal taxes paid on such property .

The Bollywood actor had been gifted a villa in Dubai and he obtained possession of it on June 18, 2008. For the financial year 2008-09, the I-T officer estimated the deemed rental value to be Rs 96 lakh. After allowing for a 30% standard deduction, he sought to tax Rs 67.2 lakh in the hands of Khan.

According to Ghosh, tax treaties entered into with UK, US and Canada contain similar wordings as the India-UAE tax treaty . “So they should be doubly careful and must include the rental income in the I-T return they file in India. They can claim a credit for taxes paid in such other country , as per the provisions of the relevant tax treaty,“ Ghosh added.

Property (NRI): purchase of

Miscalculation risks

Lubna Kably, Buying non-resident’s flat involves TDS risks, August 8, 2018: The Times of India

Miscalculations May Land Purchaser In Jail

As income tax sleuths intend to keep a close eye on property purchases from non-residents to ensure buyers have correctly deducted tax at source, extra vigilance is required. If there’s no tax deducted at source (TDS), or wrongly deducted, the I-T department takes action against the buyer and not the nonresident seller. In addition to interest and penalties, the I-T Act prescribes imprisonment of 3 months to 7 years.

An issue that arises is whether the TDS is to be computed against the sale value or the income that is taxable in India in the non-resident’s hands. The latter is technically correct, but has its own challenges. This issue and solutions are analysed below.

TDS risks: 1

Lubna Kably, Buying non-resident’s flat involves TDS risks, August 8, 2018: The Times of India

How to deduct TDS?

Indore-based chartered accountant Shweta Ajmera says, “According to section 195, which relates to TDS in case of non-residents, tax is deductible on ‘any sum chargeable to tax’. Thus, in case of sale of immovable property by a nonresident, tax is to be deducted on the capital gain amount.”

Chartered accountant Pankaj Bhuta adds, “In the case of GE India Technology Centre, the Supreme Court held that the TDS obligation is limited to the appropriate proportion of income chargeable under the I-T Act, which forms part of the gross sum of money payable to the non-resident. This means that the tax deductible at source is not on the entire sale value but merely on the net income arising from the sale. However, for computing the capital gains against which TDS is to apply, the buyer will have to depend on details provided by the seller — say, the period of holding of the property — and this adds to the risk. Second, if the seller wishes to invest in specified assets, be it a residential property in India or bonds, and save tax on capital gains, it is difficult for the buyer to ascertain that the investment will be made and conditions specified met.”

Gains arising from sale of property held for more than two years (the period of holding was three years prior to the Finance Act 2017) are longterm capital gains subject to tax at the rate of 20% plus applicable surcharge and cess. Typically, non-residents sell their property after this holding period is completed.

But a reader got a notice for short deduction even as he had deducted TDS at 20% plus applicable surcharge and cess. The penalties cost him nearly Rs 2 lakh. The reason: The buyer has to deduct TDS at the slab rate where the property is sold by the non-resident within two years of its purchase. The slab rate of 30% applies for taxable income above Rs 10 lakh.

To do: The buyer or seller can approach the I-T department to obtain a withholding tax order (referred to as a certificate), which gives a finality on the TDS amount. KPMG India tax partner Parizad Sirwalla says, “But this is time-consuming and requires prior planning.” Bhuta adds, “If the application for a withholding order is submitted after payment of advance deposit, such application is rejected (according to CBDT’s circular 774 dated March 17, 1999). Thus, parties should be careful.”

In the absence of such a certificate, it is safer for the buyer to deduct TDS at 20% on the sale value and not the capital gains of the non-resident seller. Generally, this results in the non-resident seller having to seek a refund from the I-T department.

This is the concluding part of our series on purchasing property from non-residents

TDS risks: 2

Lubna Kably, August 8, 2018: The Times of India

Who is a non-resident Indian?
From: Lubna Kably, August 8, 2018: The Times of India

Individuals who have purchased property from non-residents find themselves grappling with several income tax-related challenges. To begin with, it’s difficult to determine the seller’s tax status (whether he is a resident or non-resident in India according to the I-T Act). This is crucial, as tax is required to be deducted at 20% (in come cases even higher) for property purchased from a non-resident, as opposed to 1% where the seller is a tax resident. In case of wrong deduction, penalties apply, and the buyer can face prosecution.

When property is purchased from a resident, according to section 194-IA, TDS obligations kick in only if the sale consideration is above Rs 50 lakh. In case the purchase is from a non-resident, according to section 195, TDS obligations apply in all cases irrespective of the quantum.

In its July 24 edition, TOI reported that the Central Board of Direct Taxes (CBDT) — in its action plan — asked I-T cadre to closely = : watch : property : purchases from non-residents.

Lay buyers get confused between residency as per tax laws, nationality

Following this, TOI received many emails from readers. The issues faced by them and action points are analysed in a twopart series.

How to identify if the seller is a non-resident?

Lay buyers often get confused between residency according to tax laws, and nationality. Pune-based advocate Harshal Jadhav says, “Typically, the non-resident seller does not reside in Pune, where the property is situated. Communication with the prospective buyers are largely via email or telephone. In some cases, the seller sends the property documents along with a PAN card or Aadhaar card and agrees to meet on a pre-fixed date to complete the sale. These cards mislead the buyer who is a layman. Even otherwise, unless clearly disclosed by the property seller, it becomes difficult to determine his residential status.”

To do: Anil Harish, an advocate specialising in real estate, says, “The first step is to directly ask the seller if he is a non-resident. One can also probe further and ask for his I-T returns or passport details to determine the number of days stayed in India during the relevant period. As sellers may be reluctant to share these documents, the prospective buyer could ask the seller to get a certificate from his chartered accountant of his being a tax resident in India. An undertaking in writing must also be obtained from the seller of his being a resident (this can be part of the sale deed or a separate document). But such declarations will not offer absolute protection.”

Typically, if the seller has given a power of attorney to someone else, it’s likely he is a non-resident, caution experts. KPMG India tax partner Parizad Sirwalla says, “Tax residency in India is determined based on the number of days the individual has spent in India in the relevant financial year as well as a look-back period of four financial years (see box). Stay details in India of the seller, such as copies of passport covering this period, should be obtained.

However, if the transaction is carried out in the earlier part of the financial year, it is slightly difficult to determine residential status conclusively — here, a more conservative approach may be adopted by the buyer.”

Jadhav adds, “Buyers should get the agreement or sale deed verified by an advocate to safeguard their interests from disputes arising out of arrears of income tax liabilities, if any.”

Property, purchase of

Buyers won't lose I-T exemptions by adding kin name

Lubna Kably, Flat buyers won't lose I-T sop by adding kin name, May 1, 2017: The Times of India

Purchaser Should Get Full Tax Benefits: Tribunal

The Income Tax Appellate Tribunal (Mumbai bench) has, in a recent order, held that if the entire investment for purchase of a new residential house, along with stamp duty and registration charges, has been made by an individual, he should get the full benefit of the relevant income tax (I-T) exemptions.

Merely because the name of a close relative has been added to the newly purchased property (or in other words the new property is jointly held), it should not result in dilution of the I-T exemption in the hands of the individual who has paid for it.

The I-T Act, under various sections, offers tax benefits where sale proceeds (such as sale of residential house) are reinvested in certain assets (such as another residential house or eligible investments).

For instance, under section 54, if on sale of a residential house, the sale proceeds are reinvested in another house in India, within the stipulated period of time, to the extent of such reinvestment an exemption is available in computing capital gains. The taxable component of capital gains is reduced to the extent of the reinvestment, which results in a lower capital gains tax outgo.

If you look up the name plates in your housing society, you may find that several flats are jointly held.

The flat may be in the joint name of a couple, or owned with a parent or a sibling. The co-owner may or may not have contributed towards this purchase and the name of such a relative may have been added for the sake of convenience, such as to prevent family disputes arising in the future.

“The ITAT has upheld the well-established criteria that ownership for I-T purposes is determinant upon who has made the payment and to what extent. Very often, the name of a non-earning spouse, or parent or even sibling is added when a new property is purchased to offer a security net to them.

In those cases, where they have not contributed towards the purchase, the I-T benefit, such as on re-invest ment should flow entirely to the buyer who had made the purchase. This aspect has been reiterated by the ITAT,“ explains Gautam Nayak, tax partner, CNK & Associates.

In this case, decided by the ITAT on April 27, the taxpayer, Jitendra V Faria, had on sale of a residential house incurred capital gains of Rs.43.01 lakh. He reinvested Rs 42.66 lakh in a new residential house and claimed this amount as exempt under section 54 of the I-T Act. On the deficit balance, of Rs 35,000 odd, he paid capital gains tax amounting to Rs 7,376.

However, in the course of assessment, the I-T official noted that the new house that had been purchased was held in the name of two persons -Jitendra Faria with his brother Kunal Faria.Thus, the I-T official held that the exemption claimed by Jitendra Faria should be restricted to Rs 21.33 lakh (which is 50% of the amount claimed as exempt by him under section 54).

When the matter reached the ITAT, the tribunal noted that the name of brother was included only for the sake of convenience. It observed that even the I-T official had confirmed that the entire cost of the new house was borne only by Jitendra Faria. Thus, the ITAT set aside the decision of the I-T authorities and decided in favour of the taxpayer.

Property, immoveable, sale of

Tax benefits for investment in new house

November 24, 2020: The Times of India

Sold 2 houses to invest in new one? You can get tax benefits

Mumbai:

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT), in its recent order, has clarified that when a taxpayer sells two residential properties and re-invests in one residential house, he or she is entitled to tax benefit under section 54. This ruling will be very helpful to several individuals. With work from home here to stay for longer than initially anticipated, several families are in search of larger flats. Investment professionals explain that several salaried employees had invested in a second house. Many are now selling the flat in which they currently reside and their second house, to finance a larger apartment.

In this case heard by ITAT, Sabir Mazhar Ali had sold two flats in Mumbai’s Bandra area (one of which was jointly owned with his wife) and purchased another residential flat in Bandra. During the financial year 2010-11, he had claimed deduction under section 54 of the Income Tax (I-T) Act, as he had purchased a new house, within the time period specified.

Under this section, if the longterm capital gains arising on sale of a house are reinvested in another house in India, within the stipulated period of time, then to the extent of such investment, the taxable component of capital gains is reduced. This results in a lower tax outgo. Thus, if the entire amount of long-term capital gains is reinvested, there is no tax payable. This section requires that within a period of one year before or two years after the date of transfer of the old house, the taxpayer should acquire another residential house. Or the taxpayer should construct a residential house within a period of three years from the date of transfer of the old house. However, as Ali had sold two residential properties and reinvested in one residential house, the Income Tax officer had concluded that he was not eligible for claiming the benefit under section 54. In the course of litigation, as the Commissioner (Appeals) ruled in favour of the taxpayer, the I-T department filed an appeal with the ITAT.

In its order, the ITAT states that the provisions of section 54 do not prohibit the taxpayer from selling more than one residential house and reinvesting in a residential property. Thus, it set aside the grounds of appeal raised by the tax department and ruled in favour of the taxpayer.

Raids

In Tamil Nadu

A Subramani, Why I-T raids are dubbed as tools of political vendetta, Nov 13, 2017: The Times of India

Income Tax, search- facts and definitions
From: A Subramani, Why I-T raids are dubbed as tools of political vendetta, Nov 13, 2017: The Times of India

HIGHLIGHTS

Income tax is a central agency reporting to the present government.

After search and seizure, comes inquiry when I-T dept's investigation wing sends an appraisal report to an assessing officer who sends a notice to the assesse asking him to file returns for the past six years.

Uniformity in post-search formalities, apolitical body to give directions, say experts.

It needed some grit for beleaguered AIADMK leader TTV Dhinakaran to cry 'tax politics'+ while he was still in the eye of an income tax storm. He did it nevertheless, repeating terms such as 'vendetta' and 'witch-hunting' by the Centre.

But, when DMK's working boss M K Stalin sought to know the fate of earlier high-voltage income tax searches in Tamil Nadu, one sat up and took note, because each such case had travelled a distinctly different path, showing inconsistency in approach.

On April 22, 2016, Karur-based contractor C P Anbunathan's houses and godowns were searched by income tax officials, and among the seized materials were about Rs5 crore in cash and currency-counting machines.

Three trucks found carrying Rs570 crore were intercepted by election commission officials near Tirupur in poll-bound Tamil Nadu in mid-May 2016. The trucks remained parked in an open ground for days before being taken to RBI vaults, but income tax officials did not show even an academic interest in the drama.

In July-August 2016, I-T officials searched gutka godowns and fished out a diary containing names of officials and politicians on the payrolls of gutka wholesalers. A chief commissioner of income tax personally met the then TN chief secretary and handed over details. Though nothing came of it, the fact remains that the I-T department took pains to ensure action against suspects.

In December 2016, the office of the then TN chief secretary was searched by I-T officials, with armed men from central police organisation standing guard outside. The prime target was sand mining baron Sekhar Reddy. Sensational searches at a minister's house and recovery of 'proof' of distribution of Rs89 crore as bribe to voters of R K Nagar constituency took place on April 7, 2017. On the basis of IT report, the election commission cancelled the bypoll.

R K Nagar election-time search was huge, till more than 1,500 taxmen swooped on about 180 premises related to V K Sasikala+ , the jailed aide of former chief minister Jayalalithaa.

The inconsistent nature of the raids raises the question — can I-T searches and allegations of political vendetta be separated at all? No, if the target is a politician from an opposition camp. "Income tax is a central agency reporting to the present government. So, whenever it touches an opposition party member, the bogey of political vendetta is raised," says Rabu Manohar, central government standing counsel and counsel for GST and customs.

As for timing of raids, he says untaxed money surfaces mostly on two occasions — during political instability and during price swings of essential commodities, when they could be hoarded. "TN's political scene now is unstable and the agency has chosen the right time to strike," he adds.

But, senior advocate P Wilson, a DMK office-bearer and former additional solicitor-general of India says, "I-T searches have to be taken to a logical conclusion. But, unfortunately, in all recent cases, the proceedings had been abandoned midway. In Anbunathan's case, though the agency had proof of doubtful investments, the information were not forwarded to other agencies for follow up. In gutka case, they took extraordinary interest to ensure action against some officials. In R K Nagar bypoll case they merely sent a report to the election commission, which sent it to city police as complaint."

So, what really happens after 'searches'? After search and seizure, comes inquiry when the investigation wing of I-T department sends an appraisal report to an assessing officer who sends a notice to the assesse asking him to file returns for the past six years. "It is an opportunity for the assesse to amend their earlier returns, and declare undeclared assets," says a senior tax official. "They can also approach the settlement commission to escape penalty and prosecution. An opportunity to compound the offence is then offered after both sides are heard," he adds.

All the post-search processes are strictly between the assesse and income tax official, and so nothing is heard about it, says Manohar. "If Stalin wants to know the fate of such searches, he can utilise judicial forums seeking specific directions or even invoke RTI Act."

Referring to allegations of political vendetta behind raids, advocate V Lakshminarayanan says that to eliminate subjectivity, decisions to search premises must be routed through an apolitical body. Searches could be cleared by an entity to which members are nominated on the lines of chief vigilance commissioner and DGPs, he says. "I-T department should first offer a final self-declaration option, ushering in a measure of transparency besides offering the target a last chance to come clean," he adds.

Reliefs on tax

Education loans to study abroad

The Times of India, Dec 02 2015

Lubna Kably

Tax relief valid on edu loans to study abroad

In good news for parents whose children study overseas or plan to do so, the Pune income-tax appellate tribunal has held that higher education abroad is no bar for claiming tax relief on educational loans. A deduction for interest paid on such loans will be allowed from the taxable income of a parent, who has taken the loan and is paying interest, even if the child is studying overseas.

However, such a loan must be taken from either financial institutions, banks or from government-approved charitable institutions. Though Section 80E of the I-T Act states a parent is eligible for claiming tax relief on such loans, it has often been a ground for dispute during tax assessment. The term `higher education' has been defined in Section 80E of the I-T Act as: “Any course of study pursued after passing the senior secondary examination (SSE) or its equivalent from any school, board or university recognised by the central government, state government, local authority or any recognised authority .“

“This section does not specify that higher education must be undertaken by the student in India or that the overseas course must be approved by authorities in India. The only requirement is that such higher education should be undertaken by the student after passing SSE or its equivalent from a recognised institution in India,“ says Parizad Sirwalla, tax partner, KPMG.

Even in this case of Nitin Shantilal Muthiyan, which came for hearing before the Pune tribunal, the tax officer had held that deduction under Section 80E is allowable only in cases of higher education pursued in India. He, thus, disallowed the claim of interest of Rs 73,125 made by the taxpayer whose son, who had completed his BE in Electronics from Pune University, was pursuing a course at George Washington University , US. At the first stage of appeal, the commissioner of I-T (appeals) also upheld the action of the tax officer.

The taxpayer then filed an appeal with the income-tax appellate tribunal (ITAT) and obtained a favourable order. The ITAT in its order observed: “Provisions of Section 80E do not contain any stipulation that the higher education should be pursued only in India. If the intent of the legislation was that education should be pursued in India, in order to avail of the interest deduction, it would have stated so. Further, the taxpayer's son had completed SSE or its equivalent, as is required by this section, before pursuing studies overseas.“ Thus, the ITAT allowed the interest deduction claim made by the father during financial year 2008-09.

“The ITAT's decision is welcome, particularly in light of the spiralling cost of overseas education, and more and more Indian students opting for higher studies overseas. In terms of applicability of the decision, an ITAT's decision is binding within its jurisdiction, but carries precedent value in similar disputes for other jurisdictions, which are outside its purview,“ adds Sirwalla.

Rental income

No tax on rent if none received from 2nd home

February 2, 2019: The Times of India

National rent explained
From: February 2, 2019: The Times of India

India’s second-home market has been quite hot for some time, with some buyers seeking to get away from the crowded city and the stresses of work with a vacation home while others view it as a good real estate investment. However, the negative was that even if the property was empty, one had to fork out tax on notional rent.

No longer. The interim Budget has given relief to second home-owners by exempting the second property from tax on notional rent. Currently, if a taxpayer owns more than one house property, one property at the taxpayer’s choice is treated as selfoccupied and the other is considered as ‘deemed to be let out’. This is taxed at market rental value even if the taxpayer does not earn any income from it.

“Considering the difficulty of the middle class having to maintain families at two locations on account of their job, children’s education, care of parents, etc., I am proposing to exempt levy of income tax on notional rent on a second self-occupied house,” interim Finance Minister Piyush Goyal announced on Friday.

Industry trackers believe the move of exempting tax on notional rent on the second house property will help increase demand for affordable and mid-income housing segment as taxpayers will be encouraged to invest in a second home.

“With improved liquidity, demand across the affordable and mid-income housing segment will rise,” Ramesh Nair, CEO and Country Head, JLL India, said. However, the maximum deduction for interest on housing loans shall continue to remain capped, in the aggregate, at Rs 2 lakh.

While the FM in his speech alluded to the difficulties faced by those who are forced to maintain families at two locations, given the specific provisions of the I-T Act, it appears that no tax on notional rent will be payable if the second house is overseas.

There is one downside. “Taxpayers who had housing loans on their second property were earlier able to claim deduction for full interest on housing loan, against the notional rental income, which could result in a loss. This loss could be set off against rental income from other properties without any limit or could be carried forward for eight years. Now such setoff is limited to Rs 2 lakh,” says Puneet Gupta, director, People Advisory Services at EY India.

‘Salary’

2018: Non-compete fees, some compensations are taxable

Lubna Kably, Employment-related payments get taxable, February 5, 2018: The Times of India

Staff May Have To Pay Tax On Non-Compete Fees

The Income-tax Act is intricate — sometimes income received by an individual even if it relates to employment, does not fit within the technical definitions of ‘salary’ or ‘profits received in lieu of salary’. Thus, very often, such income could not be taxed.

Budget 2018-19 proposes to change this scenario. A wide range of income received — say non-compete payments (which sometimes did not fit the above definitions of salary or profits in lieu of salary); or compensation when a job offer went awry will now be taxable.

“The proposal perhaps also intends to bring within ambit of tax, payments received in connection with employment but not from the employer. In other words, it covers cases where an employer-employee relationship does not exist between the payer and the receiver. For example, in case of termination of employment with an Indian subsidiary company, any severance pay received from a foreign holding company may be covered under this amendment. It may also cover situations of merger and acquisition where payments are received by employees from the acquiring company or from the investors,” said Puneet Gupta, director, people advisory services at EY India, a business consultancy firm.

The explanatory memorandum to the Finance Bill says: “A large segment of compensation receipts in connection with employment are out of the purview of taxation leading to base erosion and revenue loss”. It therefore

proposes to amend section 56 of the I-T Act. “Any compensation or other payment due or received in connection with the termination of employment or the modification of the terms and conditions relating thereto”, will now be treated as ‘Income from other sources’. Such sums received by individuals will be taxed in their hands at the applicable slab rate. As per the budget proposals, the highest tax rate for an individual (who has a taxable income of more than Rs one crore) is nearly 36%.

This amendment does not cover money received from an employer when handed a pink slip or in cases of VRS, which will continue to be treated as salary income under existing I-T provisions and taxed accordingly.

Gautam Nayak, tax partner at CNK Associates, a firm of chartered accountants, explains: “In various decisions, courts and tax tribunals have held certain receipts to be not taxable, even as they related to employment. This is because such receipts did not fall under the definition of salaries or profits in lieu of salary or because the employer-employee relationship was not in existence. Money received in such instances is now proposed to be taxed.”

In simple terms, receipts are classified into revenue receipts (which are items of recurring nature, such as salary, business profits, interest to name a few) and capital receipts (which are of an isolated nature). “A capital receipt is not income and hence I-T is not levied on it,” states Nayak.

“There are instances, where compensation related to employment, has fallen within the cracks and escaped I-T. Each such case, typically involves compensation of at least Rs. one crore. . Hence, budget amendment is critical,” said a senior I-T officer.

Sexual harassment damages

Not taxable

Sushmita’s #MeToo payout not taxable, rules tribunal |18 11 2018| The Times of India

The city bench of the income-tax appellate tribunal (ITAT), which adjudicates income-tax disputes, has recently passed an order in favour of actress and model Sushmita Sen. A settlement compensation, in lieu of a sexual harassment complaint made by her, which runs into several lakh, has been held as non-taxable.

She had got Rs 95 lakh during financial year 2003-04 as a settlement compensation from Coca-Cola India, following her complaint of being subjected to sexual harassment by an employee of the company.

The ITAT, in its order dated November 14, held this sum was not ‘income’ that could be taxed but was in the nature of a ‘capital receipt’. Further, the penalty of Rs 35 lakh which was imposed on her for concealment of income (as she had not offered Rs 95 lakh to I-T) was ordered to be set aside.

Sushmita’s contract ended prematurely

Sushmita Sen had entered into a commercial contract aggregating to Rs 1.5 crore with Coca-Cola India to endorse its products; however, this contract was terminated prematurely by the company. The actress had disputed this termination as being mala fide and dishonest. She asserted that the termination of the commercial contract was meant to punish her as she had rightly resisted sexual harassment by an employee of the company. She had held Coca-Cola India, and its US-based parent, liable for all consequences flowing from such sexual harassment and for failing to discharge its statutory duty of providing her with a safe workplace environment. Subsequently, a settlement was reached between her and the company.

As per the terms of the commercial contract, in case of termination only a sum of Rs 50 lakh was due to her from Coca-Cola India. As against this, under the terms of the settlement, she received Rs 1.45 crore, of which she had offered Rs 50 lakh to income-tax. She had held that the balance of Rs 95 lakh was in the nature of compensation, which was not taxable.

Shares

Premium on shares not taxable: HC

In a relief to global energy and petrochemical giant Shell, the Bombay high court on Tuesday ruled that the firm is not liable to pay tax in a transfer pricing case of 2009-10. The potential tax demand on Shell by the I-T authorities was $240 million. The ruling comes after Vodafone’s recent win in the HC in a similar case. The I-T authorities in Mumbai had alleged that there was underpricing of shares which the company had issued to an overseas group entity Shell Gas BV in March 2009.

The company said it had issued 87 crore shares at Rs 10 per share, but the I-T department assessed the value at Rs 180 per share and said there was thus a Rs 15,000-crore under pricing in the transaction, an amount on which tax could be levied. The Bombay HC has now held that these share premiums are not taxable. In case of Vodafone, the HC had then held that issuance of shares in a capital financial transaction did not amount to taxable income. The cellular service major had challenged an order of Income Tax authority in a transfer pricing case.

Several global giants are involved in transfer pricing litigation with the government, whose stand has been criticized.

Investors have been critical of the way the tax department went about slapping notices over the past few years.

“We welcome the High Court decision. Shell has always maintained that equity infusion by a foreign parent company into an Indian subsidiary cannot be taxed as income,’’ said a Shell spokesperson after the verdict was pronounced. “ This is a positive outcome which should provide a further boost to the Indian government’s initiatives to improve the country’s investment climate”.

Small businesses, professionals

Presumptive tax scheme

The Times of India, Mar 02 2016

Surya Bhatia

For small biz & professionals, a way to save money, and a tax headache

The Budget presented for 2016-17 has come under fire for the move to tax EPF but there's one proposal that is sure to bring cheer to small businesses and professionals, and that's the presumptive tax scheme. This scheme covers small businesses with gross turnover up to Rs 2 crore -up from the existing ceiling of Rs 1 crore. It has also been extended to professionals with gross income up to Rs 50 lakh.

So what exactly is presumptive taxation?

As per Section 44AA of the Income-tax Act, 1961, a person engaged in business is required to maintain regular books of account. However, a person adopting the presumptive taxation scheme can declare income at a prescribed rate of 8% and, in turn, is relieved from the tedious job of maintaining books of account.

However, in case income earned is at a rate higher than 8%, then the higher rate can be declared.

And with the inclusion of professionals, a new Section 44ADA is proposed to be inserted in the Act to provide for estimating the income of an assessed who is engaged in any profession referred to in sub-section (1) of Section 44AA such as legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration or any other profession as is notified by the board in the official gazette and whose total gross receipts does not exceed Rs 50 lakh in the previous year. For the purpose, 50% of the total receipts of the professional during the financial year will be considered as profit and get taxed under the income-tax head “profits and gains of business or profession“.

If you look at the table, it's clear that the assessee not only saves on record-keeping headaches, he also saves a considerable amount in taxes. Yes, there can be a few counters to this -mainly that the taxable income could be much below the presumptive taxation rate of 8% and 50% of receipts respectively . And if that is the case then the individual has no option but to maintain the books of accounts.

To further keep the compliance burden minimum, those using presumptive taxation scheme are also allowed to pay advance tax by March 15 of the financial year, as against the normal practice of paying the advance tax in four installments.

However, the taxpayer needs to be careful when opting for this as he or she has to remain in that scheme for 5 years to avail the benefits.

TDS (tax deducted at source)

Head of religious congregation to certify names

No TDS for nuns, priests, monks, rules Madras HC, Dec 24, 2016: The Times of India

In an important ruling, the Madras HC has said no tax could be deducted at source from the salaries and other monetary benefits of persons who are members of religious congregation such as nuns, monks and priests.

Justice T S Sivagnanam, passing orders on a batch of 74 writ petitions, further said it would be sufficient if the head of the institution concerned certifies the names of staff members.

The order has offered immediate relief to nunsfatherspriests working in various teaching institutions, established and administered by religious congregation such as Institute of the Fransican Missionaries of Mary , which was one of the 74 petitioners.

They had moved the court after the I-T department passed an order on October 7, 2015 saying catholic nuns among teaching and non-teaching staff in these institutions were liable for TDS.

Online rectification in ITR simplified, 2015

The Times of India, Dec 10, 2015

I-T Dept simplifies online rectification of TDS in ITR

The finance ministry said a new facility has been provided for pre-filling of TDS schedule

Aimed at making life easier for tax payers, the I-T department today said it has simplified the process of online rectification of incorrect details of tax deducted at source (TDS) filed in the income tax return (ITR). Earlier, taxpayers were required to fill in complete details of the entire TDS schedule while applying for rectification on the e-filing portal of the I-T Department.

To avoid this, the finance ministry said a new facility has been provided for pre-filling of TDS schedule while submitting online rectification request on the e-filing portal to facilitate easy correction or updating of TDS details. "This is expected to considerably ease the burden of compliance on the taxpayers seeking rectification due to TDS mismatch," an official statement said. Errors due to incomplete TDS details in rectification applications were leading to delays in processing of such applications, thereby causing hardships to taxpayers, it added.

Penal interest can be waived in some cases

Taxmen can waive TDS-related penal interest in some cases, March 27, 2017: The Times of India

The Central Board of Direct Taxes (CBDT) in its circular issued on March 24 has empowered tax authorities to reduce or waive penal interest for non-deduction of tax at source (TDS) in certain circumstances, including owing to a retrospective amendment in law.

Interest can also be reduced or waived where tax could not be deducted as the books of a taxpayer were seized in a search operation.

CBDT's circular will also apply where tax was not deducted or deducted at a lower rate on payments made to non residents, and the matter was settled under the mutual agreement procedure between the authorities of the two countries, under the relevant tax treaty . To avail of this benefit, the taxpayer would be required to pay the principal tax sum demanded or make arrangements to pay the same. However, restrictive conditions in this order are unlikely to benefit taxpayers in indirect transfer cases, say experts. Vodafone International Holdings, for instance, faces a demand of Rs 14,200 crore, which, according to the income-tax department, is due to the $ 11-billion acquisition of Hutchison's India telecom business. Tax authorities had held that Vodafone ought to have deducted tax in India, even if the sale carried outside India was of shares of a non-resident company , as it related to an asset in India (telecom business in India).

To avail of the benefit of a waiver on interest (either partial or full), the condition imposed by CBDT is that the taxpayer did not deduct tax at source owing to a favourable high court order. Subsequently owing to an SC order on a retrospective amendment, it became liable to deduct tax at source. “The circular will have very limited applicability and usefulness in an indirect transfer tax kind of situ ation (where retrospective amendment was made in the I-T Act) as no positive jurisdictional high court decision on the subject as such is available on which reliance could have been placed by taxpayers,“ says Punit Shah, partner, Dhruva Advisors.

The reasoning is simple.Vodafone won a favourable decision from the Supreme Court on January 20, 2012. A month later, the Finance Bill, 2012, through a retrospective amendment made indirect transfers taxable in India. Thus, there is only a window of approximately one month available to taxpayers to have relied on a favourable decision of the Supreme Court and not deducted tax at source.This limits applicability of the CBDT circular, says a corporate counsel.

YEAR-WISE CHANGES

2019: nine issues in interim budget

NINE THINGS YOU NEED TO KNOW ABOUT PERSONAL TAX, February 2, 2019: The Times of India

Interim Budget Decoded

• Standard deduction for salaried taxpayers raised from Rs 40,000 to Rs 50,000. This will result in a maximum tax saving of Rs 3,588, if you apply the maximum marginal tax rate of 35.88%.

• If you are a resident taxpayer earning taxable income (after all applicable deductions) up to Rs 5 lakh, you will get full tax rebate. Earlier, the tax liability was of up to Rs 13,000, inclusive of health and education cess. If your gross income is up to Rs 6.5 lakh, you may not be required to pay any tax if you make investments in Provident Fund, specified savings, insurance, etc, which are eligible for deduction under Section 80C.

• No notional rental income will be added to the taxable income for a second house property owned that is not let out. This will allow you to own up to two houses without notional rent on the second property being added to the taxable income.

• Tax exemption on long-term capital gain on sale of a residential house will be available for investment in up to two residential house properties located in India against one earlier. The option is available only once in a lifetime for individuals or HUFs where capital gains on sale of house property is up to Rs 2 crore. This will allow individuals or HUFs to sell one house property and make investment in two without paying any capital gains tax.

• Threshold for TDS on interest income from deposits with banks and post offices increased from Rs 10,000 to Rs 40,000. The limit for a senior citizen payee continues to be Rs 50,000. In some cases, individuals earning interest income from fixed deposit exceeding Rs 10,000 were filing income-tax return to claim tax refund for TDS even when their net taxable income was lower than the exemption limit (Rs 2.5 lakh). Now, such individuals will not be required to file return if interest income from such deposits does not exceed Rs 40,000.

• Threshold for TDS on rent paid by any person (other than individual or HUF not subject to tax audit) to a resident increased from Rs 1.8 lakh per year to Rs 2.4 lakh per year. This will provide administrative relief to small taxpayers (landlords), if they have let out their flats to companies. However, if a tenant is a small individual taxpayer, then the TDS will apply only if the rent payout is more than Rs 50,000 per month.

• The I-T department plans to be more taxpayer-friendly by processing income-tax returns within 24 hours and issuing refunds simultaneously.

• It plans to conduct all verification and scrutiny assessment of returns electronically. This will be done by an anonymous back office, manned by tax experts and officials, eliminating personal interface between taxpayers and officials.

Googly To Watch Out For

• On December 10, 2018, the finance ministry announced a proposal to increase the tax exemption limit for lump-sum withdrawal from the National Pension System to 60% of the total amount. With this, the entire lump sum withdrawal from NPS, which is limited to 60% of the accumulated corpus, would have been exempt from tax. However, this proposal has not been notified in the Finance Bill, 2019, and, hence, the current tax exemption limit of 40% of the total amount remains unchanged.

(Note: The full-fledged Budget could revise the tax rates and provisions)

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+) The interest earned on a bank fixed deposit is...Interest on FDs is fully taxable as income at the rate applicable to the taxpayer.
-[http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=CAP/2013/08/10&PageLabel=29&EntityId=Ar02900&ViewMode=HTML The Times of India] 2013/08/10
-====PRAKASH PADUKONE====
+) Travel insurance policies are not tax deductible for salaried individuals.
-All England title 1980; Winner World Cup 1981; Commonwealth Games singles gold 1978; Bronze at World Championships 1983
-====SYED MODI====
-Commonwealth Games singles gold 1982; Bronze at Delhi Asian Games
-====PULLELA GOPICHAND====
-All England title 2001
-====APARNA POPAT====
-Runner-up World Junior Championship 1996; French Open 1998; Silver at Commonwealth Games 1998
-====SAINA NEHWAL====
-Bronze at London Olympics 2012; Gold at Commonwealth Games 2010; 17 major international titles
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=SAINA-AND-SINDHU-STUDY-IN-CONTRAST-20082016026026 ''The Times of India''], Aug 20 2016
+) An individual won't get tax deduction for...
+employer's contribution to PF.
-Manne Ratnakar
+) Gifts worth over Rs 50,000 in a year are taxed as income of recipient.
-Saina's trademark clam on court helps her deal with pesky opponents who try to rattle her with body smashes and stares. Sindhu, on her part, doesn't like body smashes and would get easily rattled and concede points. It's because of this that she tended to lose many matches from winning positions.
+) Any income of a minor child will be clubbed with that of the parent. HRA is not tax-exempt if you pay rent to... Your minor child.
-Saina, a proven champion, interestingly does not believe she is a natural stroke maker. She has herself admitted on a number of occasions that she lacked natural talent compared to some other players. Saina relies more on hard work and training and needs at least six to eight weeks to peak before a tournament.
+) A disabled dependant gets you a deduction under Section 80DD. This is an additional tax benefit
-====PARUPALLI KASHYAP====
+) f you have a second house lying vacant, you have to...
-Bronze at Commonwealth Games 2010
-==== PV Sindhu====
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-Bronze at World Badminton Championships, China, 2013
+a. Pay tax on rent not received. b. Include in wealth tax. c. Pay property tax on it. All the three conditions apply on a second house lying vacant.
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=SAINA-AND-SINDHU-STUDY-IN-CONTRAST-20082016026026 ''The Times of India''], Aug 20 2016
+) If one earns rent on property, how much of it is taxable?
+Rental income is eligible for 30% standard deduction.
-Manne Ratnakar
+) Only those with income below the basic exemption are exempt from filing tax returns.
-PV Sindhu has seized the opportunity to unleash her electric prowess as a shuttler on the greatest stage of all, eventually becoming the first female sportsperson to win a silver for India.
+) The RGESS deduction is available only to first-time investors in equities.
-Sindhu has numerous chinks in her defence but in 2016, she has worked hard on reducing the chinks. She looks solid in defence now and has sur prised many with her retrieving ability . Saina likes faster court conditions -when the shuttle is moving fast between the courts it will be advantage Saina. Sindhu prefers the opposite, she likes if the shuttle is slow. That is why in Asian conditions, where they use air conditioners, the shuttle moves well and Saina performs better. In Brazil, however, the shuttle moved slower and Sindhu was on a roll.
+== Section 80C==
+[http://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2017%2F12%2F12&entity=Ar01506&sk=A2A88911&mode=text  December 12, 2017: ''The Times of India'']
-At the Olympics 2016, Sindhu has been a revelation. She was cool like a cucumber even in the gold medal match and hardly ever seemed annoyed throughout her memorable campaign.
+To boost the habit of savings and investments, the government has allowed every individual taxpayer to invest and buy certain financial products which will allow them to avail of tax deductions. Under section 80C of Income Tax Act 1961, a taxpayer could invest a total of Rs 1.5 lakh per annum in ELSS of mutual fund houses, EPF, PPF, tax-saving FDs, NPS, life insurance products and some other approved financial products, which will reduce the person’s total tax liability. Payment of home loan principal and tuition fee of children also come under this section for tax deductions.
-Standing tall at 5'11“, Sindhu likes to pack her shots with a lot of power. Saina, however, is a rally player who wears down the opponent and pounces on the mistakes of others.
+==Section 80 D==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F01%2F23&entity=Ar01911&sk=D6250823&mode=text January 23, 2018: ''The Times of India'']
-=International titles, victories=
-== Asian Junior Championship==
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F07%2F23&entity=Ar03521&sk=710D3FFB&mode=text  July 23, 2018: ''The Times of India'']
+''WHAT ARE SECTION 80D TAX BENEFITS?''
-''' Gold '''
+Section 80D under the Income Tax Act provides for tax deductions for buying health insurance policies, popularly called mediclaim plans. In an era of increasing healthcare costs, the government, to encourage people to take mediclaim policies, allows taxpayers some sops for these policies. A taxpayer can get claim deductions of up to Rs 25,000 per year for payment towards premium for health insurance plans for the taxpayer, spouse and dependent children. The limit is enhanced up to Rs 30,000 even if either the taxpayer or the spouse is a senior citizen. Within these limits one can also claim deductions of up to Rs 5,000 per year as a cost for preventive health check up. The government also allows mediclaim premium of up to Rs 30,000 for policies taken for parents.
-: Gautam Thakkar won the boys singles gold
+=Rates of income tax in India=
+==1995-2015==
+'''See the chart on this page'''
-: [[PV Sindhu]] was the first girl to achieve this honour.
+'''See graphic''':
-: Lakshya Sen toppled top seed and reigning world junior champion Kunlavut Vitidsaran to become the first Indian boy after 53 years to win the Asian Junior Championship, in Jakarta. The 16-year-old needed just 46 minutes to beat Kunlavut 21-19, 21-18 in the final.
+''Income tax rates in India: 1995-2015''
-''' ''Other medals '' '''
+[[File: Income tax rates 1995-2015.jpg|Income tax rates in India: 1995-2015 Source: [http://epaperbeta.timesofindia.com//Gallery.aspx?id=11_07_2014_003_028_002&type=P&artUrl=YOUR-TAX-BURDEN-OVER-THE-YEARS-11072014003028&eid=31808 The Times of India ]|frame|500px]]
-'''2009''': Mixed doubles pair of Pranaav Chopra/Prajakta Sawant claimed bronze.
+==1949-2017: peak rate of Income Tax==
+[https://timesofindia.indiatimes.com/business/india-business/toi-budget-special-how-you-pay-less-tax-than-your-grandpa/articleshow/62458093.cms  January 15, 2018: ''The Times of India'']
-'''2011''': Sameer Verma won silver
+[[File: 1949-2017- peak rate of Income Tax.jpg|1949-2017: peak rate of Income Tax <br/> From: [https://timesofindia.indiatimes.com/business/india-business/toi-budget-special-how-you-pay-less-tax-than-your-grandpa/articleshow/62458093.cms  January 15, 2018: ''The Times of India'']|frame|500px]]
-'''2011''': Sindhu clinched bronze.
+'''See graphic''':
-'''2012''': Sameer Verma won bronze.
+''1949-2017: peak rate of Income Tax''
-=Premier Badminton League=
-==2018: Saina, Sindhu, Srikanth, Marin get the highest prices==
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F09&entity=Ar02611&sk=461A32F9&mode=text  October 9, 2018: ''The Times of India'']
+'''Highlights'''
-PV Sindhu, Saina Nehwal and world champion Carolina Marin were the expected top buys at the Premier Badminton League season four auction, fetching the maximum price of Rs 80 lakh each here on Monday. India’s top male shuttler Kidambi Srikanth too was picked for Rs 80 lakh at the auction.
+We know you absolutely hate a part of your annual income going into to the government's kitty in the form of taxes. After all, you worked hard the whole year and wish the exemption limit would be set higher. Whether that would be done or not will be known till Budget 2018 is presented, but you should take heart from the fact that you pay much less tax than what your grandfather did during his time.
-The unexpected one was rising doubles star Satwiksairaj Rankireddy who was the highest paid non-Icon Indian player with Rs 52 lakh. With all players returning to the auction pool for the first time since 2015 and no Right to Match (RTM) card at teams’ disposal, the exercise gained more significance with franchisees looking to get the combination right besides their ideal Icon player.
+While exemption limit today stands at Rs 2.5 lakh annually, it was Rs 1,500 way back in 1949-50. Though this may seem a meagre amount to you, a back of the envelope calculation shows this works out to be Rs 80,000 in today's terms. So your grandfather started paying tax at annual income of Rs 80,000, while you enjoy tax-free income that is nearly three times more than it.
-Indonesia’s Tommy Sugiarto was the highest paid non-Icon Player with Delhi Dashers splurging Rs 70 lakh for his services. The Delhi outfit won a tense battle with two other teams to acquire the World No 11, paying Rs 40 lakh above his base price.
+Tax rates are another reason for you to cheer about. The peak tax rate today stands at 30.9%. But during 1970-71 it was a staggering 93.5%, a massive increase from the 25% Indians paid in 1949-50.
-Icon players Marin and Sindhu were the obvious choice for most teams. At least four teams raised the prize purse to Rs 80 lakh, the maximum limit a team can bid for a player, before the players got assigned to the teams by a draw of lots.
+You may find three tax slabs cumbersome for tax calculation, but thank your stars, your parents or grandparents had to deal with as many as 11 tax slabs.
-Among the non-Icon Indians, Rankireddy was the top draw as Ahmedabad Smash Masters outbid the Hyderabad Hunters to secure the youngster for Rs 52 lakh, a massive jump from his base price of Rs 15 lakh.
+==1949, and since 1995: The number of tax slabs==
+[[File: The number of tax slabs in 1949, and since 1995.jpg| The number of tax slabs in 1949, and since 1995 <br/> From [https://timesofindia.indiatimes.com/business/india-business/toi-budget-special-how-you-pay-less-tax-than-your-grandpa/articleshow/62458093.cms  January 15, 2018: ''The Times of India ''] |frame|500px]]
-The fourth season of the PBL will begin in Mumbai on December 22 while the final will be held in Bengaluru on January 13, 2019. A ninth team, Pune7 Aces, has been added this year and Marin will be playing for them.
+'''See graphic''':
-=Statistics, year-wise=
+''The number of tax slabs  in 1949, and since 1995''
-=2014:Watershed year=
+=Appeals=
+==2015: Appeals only for Rs 10 lakh +==
+'''Sources:'''
-[http://epaperbeta.timesofindia.com//Article.aspx?eid=31808&articlexml=UNPRECEDENTED-LEAP-IN-BADMINTON-27122014015005 ''The Times of India'']
+. [http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=I-T-appeals-only-for-Rs-10L-and-13122015001059 ''The Times of India''], Dec 13 2015
-Dec 27 2014
+. [http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=To-rein-in-frivolous-appeals-CBDT-ties-I-13122015012026 ''The Times of India''], Dec 13 2015, Rubna Kably
-''' UNPRECEDENTED LEAP IN BADMINTON '''
-Amit Kumar Das
+'''I-T appeals only for Rs 10L and above'''
-It turned out to be a watershed year for Indian badminton as the home shuttlers clinched no less than eight individual titles and also broke new grounds in team championships, making India a dominant force at the international stage
-Saina Nehwal and K. Srikanth clinching titles at China Super Series Premier and P.V. Sindhu bagging five bronze, including a World Championship medal, besides the historic bronze medals at Uber Cup and Asian Games, were the highlights of the year in which Indian badminton achieved unprecedented success at the global platform.
-If Saina led the resurgence of Indian badminton in the last few years, the year also saw the emergence of younger stars, who made it a terrific season with the help of their stupen dous performance.
-While Saina scooped three titles, Srikanth, Parupalli Kashyap, Aravind Bhat, Sindhu and H.S. Prannoy -all laid their hands on the crown at least once in the year gone by.In fact, Saurabh Verma and P.C. Thulasi also won titles in the International challenge category.
+In a bid to reduce litigation and spare taxpayers harassment, the Central Board of Direct Taxes has increased from Rs 4 lakh to Rs 10 lakh the threshold for filing an appeal before the Income Tax Appellate Tribunal, reports Rubna Kably.
-It was yet again Saina who set things in motion with a victory at the India Grand Prix Gold, which finally broke her long title drought. The Indian ace added two more titles to her kitty, clinching the Australia Super Series at Sydney in June and China Super Series Premier at Fuzhou in November.
+The threshold limit for an appeal by the I-T department before the high courts has been doubled to Rs 20 lakh. The threshold for I-T department appeals before SC remains at Rs 25 lakh.
-While Saina blew hot and cold, teen sensation Sindhu continued to make big strides in world badminton with her performance, which saw her reach the finals of India Grand Prix Gold first in Lucknow and then winning the bronze at the Asian Badminton Championship in Gimcheon.
-In fact, Indian women's doubles pair of Jwala Gutta and Ashwini Poppanna also made their presence felt by clinching the bronze in the same tournament in April.
+'''To rein in frivolous appeals, CBDT ties I-T hands by raising `tax effect' limit'''
-Next month, India hosted the prestigious Thomas and Uber Cup Finals for the first time and Saina and Sindhu ensured that it turned out to be a memorable one as they shepherded the women's team to a historic bronze.
-Sindhu had a golden chance of winning the Commonwealth Games women's singles title in July but the Indian had to settle for a bronze when she lost to Michelle Li of Canada.
+The Central Board of Direct Taxes (CBDT) continues with its plan to reduce litigation and be more taxpayer-friendly. By significantly increasing the threshold limits for filing of appeals, at various judicial levels, by the Income-tax (I-T) department, the CBDT hopes to mitigate taxpayer harassment and create efficacy in the functioning of the I-T department.
+At times, the I-T department files appeals with higher courts, with an eye on revenue, when the decision in the lower court is in favour of the taxpayer. Such frivolous litigation adds to the costs for both parties and results in taxpayer harassment.
-=2014: Shuttlers: Kidambi Srikanth, Saina Nehwal, PV Sindhu =
+The threshold limit for filing an appeal before the Income-Tax Appellate Tribunal (ITAT) by the I-T department has now been raised from Rs 4 lakh to Rs 10 lakh. Similarly , the limit for an appeal before the high courts has been doubled to Rs 20 lakh. While such revisions are an annual affair, the recently announced upward revisions are significant.
-[http://epaperbeta.timesofindia.com//Article.aspx?eid=31808&articlexml=SCALING-NEW-FRONTIERS-31122014030010 ''The Times of India''], Dec 31 2014
-The fabulous feats of Indian shuttlers made 2014 the breakout year for Indian badminton. But no one could match the achievement of Kidambi Srikanth. Defying all predictions, the 21-year-old won the China Open Super Series, beating multiple World and Olympic champion Lin Dan in the final. He finished the year ranked No. 4 in the world. After a barren 2013, Saina Nehwal made an impressive comeback this year. She thrashed World Champion Carolina Marin of Spain to clinch the Australian Super Series and then grabbed the China Open, beating the Chinese on way to the final. PV Sindhu bagged bronze in Glasgow and helped the Indian team claim its first-ever Asiad and Uber Cup bronze.
+However, no change has been made in the threshold for appeals filed before the Supreme Court, which remains at Rs 25 lakh. Appeals before the ITAT and courts can now be filed by the I-T department only if the `tax effect' exceeds the threshold limits (see table). This move will help not only corporates, but also high net-worth individuals who find themselves embroiled in I-T litigation.
-=2015=
+The CBDT has also clarified, in its circular dated December 10, that the revised limits will apply retrospectively and pending appeals below the specified threshold limits should be withdrawn or not pressed.
-==Garaga, Rankireddy win Badminton Asia Championships boys doubles==
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Jayaram-retains-Dutch-Open-title-12102015025070 ''The Times of India''], October 12, 2015
-The budding doubles duo of Krishna Prasad Garaga and Satwiksairaj Rankireddy clinched boys doubles gold in the Badminton Asia Championships in Kudus, Indonesia Jayaram outclassed Raul Must of Indonesia in straight games 21-12, 21-18.
+The `tax effect', as defined in CBDT's circular, means the difference between the tax on the total income assessed by the I-T department and the tax that would have been charged if the total income of the taxpayer was reduced by the income relating to disputed issues.
-Under-17 boys Krishna and Satwik, who train at the Pullela Gopichand Badminton Academy , trounced Jun Hau Leong and Fong Hau Sim of Malaysia 21-16, 21-15 in straight games. Such was the domina tion of these Hyderabadi shuttlers that they did not even lose a single game in the entire tournament. Not only that, they were not even forced to save a game point. In 2014, KrishnaSatwik claimed bronze at this Continental meet.
-==October 2015: Srikanth climbs to fifth in rankings; Saina is second==
+The CBDT has also instructed that merit must be the guiding factor while filing an appeal with higher judicial bodies -both the ITATs and courts. “It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits (ie: threshold limits for appeals) prescribed,“ states the circular.
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=INDIA-FILE-Srikanth-climbs-to-fifth-in-rankings-30102015034050 ''The Times of India''], Oct 30 2015
-'''Srikanth climbs to fifth in rankings; Saina is second'''
+Tax experts view that the increase in threshold limits and withdrawal of pending appeals falling below the revised thresholds will ease litigation. The impact will be more favourable at the ITAT level, which is the first level of appeal. It is learnt that pan-India, 1.06 lakh cases were pending across various ITAT benches as of June 1. The maximum pendency was in Mumbai and Delhi, with 25,039 and 20,499 pending cases. Howev er, the exact number of pend ng cases, which will now fall below the revised threshold imits and be withdrawn, was not available.
-Top Indian male shutler Kidambi Srikanth climbed up place to fifth, while Saina Nehwal remained static on No. 2 in the atest Badminton World Federa ion (BWF) rankings released on Thursday . Srikanth gained a spot n the men's singles ranking.
+However, to safeguard the nterests of the I-T department, certain caveats have been built into the instruc ions. For instance, just because on a particular disputed ssue, the I-T department has not appealed as the tax effect is ow, it does not preclude it from iling an appeal on the same issue for another taxpayer where the tax effect is beyond he prescribed threshold).
-==Manu-Sumeeth bag GP title in Mexico==
+Further, the instructions on not filing an appeal if the ax effect is below the prescribed monetary limit will not apply in certain instances. These instances include: where the constitutional val dity of a tax provision is challenged; where the CBDT's circular has been held illegal or even when the audit objection has been accepted by the I-T department.
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Manu-Sumeeth-pair-bags-maiden-GP-title-in-22122015026035 ''The Times of India''] Dec 22 2015
+==2017: ‘Higher appeals limit applies to pending cases,’ SC==
+[http://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2017%2F11%2F28&entity=Ar01514&sk=7C5C11DB&mode=text  Higher I-T appeals limit also applies to pending cases, says SC, November 28, 2017: ''The Times of India'']
-Manne Ratnakar
+[[File: The honorable Supreme Court orders regarding CBDT's instruction revising monetary limits.jpg|The honorable Supreme Court orders regarding CBDT's instruction revising monetary limits <br/> From: [http://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2017%2F11%2F28&entity=Ar01514&sk=7C5C11DB&mode=text  Higher I-T appeals limit also applies to pending cases, says SC, November 28, 2017: ''The Times of India'']|frame|500px]]
-Hyderabad
+The Supreme Court has held that the higher monetary threshold limits prescribed for filing of appeals by the income-tax authorities would apply both to appeals filed after the date of the instruction revising the limits and also to all pending matters. This brings respite to taxpayers who feared matters pending on the date of the instruction would be revived and lead to a tiring bout of litigation.
-Ending a five-year drought, the fast rising doubles combination of Manu Attri and Sumeeth Reddy claimed their maiden Grand Prix crown with a 22-20, 21-18 victory over BodinIssara and NipitphonPuangpuapech of Thailand in the Mexico Open final on Sunday .
+On November 23, the SC upheld the retrospective nature of the Central Board of Direct Taxes (CBDT) instruction setting down the thresholds for I-T appeals.
-The duo, who trains at the Pullela Gopichand Academy here, faced a stiff resistance in the first game as the Thais saved four game points from 1620 before the Indians claimed it. In the second, the Indians got off to a brisk start and maintained a healthy lead over their rivals right throughout.
-After Olympians Rupesh Kumar and Sanave Thomas won the Bitburger Open in 2010, this is the best ever performance by an Indian men's doubles team. “This is a great win for both of us.We've worked really hard and this is the result of our hard work. We would like to thank our coach Pullela Gopichand, doubles coach Kim Tan Her and BAI officials for supporting us. Many thanks to our parents, it's because of their prayers and blessings we are here,“ Manu told TOI from Mexico City on Monday .
-The players, who have been consistent this year, were close to clinching their first GP title twice before. They missed out winning the titles in US Grand Prix in June and Dutch Open in October despite dishing out some inspired performances in the initial rounds. “It turned out to be a good year for us. And finishing off with a title is amazing. We started confidently . It was a bit tricky in the final, it was all about speed and tactics,“Sumeeth said.
-=2016=
+This order departs from an October order of the apex court which had taken a contrary view. After this decision, individual taxpayers and businessmen facing low denomination disputes had feared that I-T officials would rake up old matters discarded after upward revision of the threshold.
-==2016: Asia Championship==
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Shuttlers-lose-in-Asia-Cship-semis-21022016028036 ''The Times of India''], Feb 21 2016
-Manne Ratnakar
+From time to time, CBDT, responsible for tax administration, enhances the monetary limits for filing of I-T appeals. Officials are not permitted to file appeals where the “tax effect” is low (as defined by the monetary limit), except for the few exceptions carved out. It helps cut down litigation, including pending litigation, and saves costs. “Tax effect” denotes the difference between the tax on income determined by I-T officials and the I-T chargeable on the income of the taxpayer after excluding the disputed income.
-'''Shuttlers lose in Asia C'ship semis'''
+CBDT’s instruction, the subject matter of litigation before the SC, was dated February 9, 2011. It had provided that appeals cannot to be filed by I-T officials before high courts is the “tax effect” was less than Rs 10 lakh (the earlier circular on March 27, 2000, had pegged it at Rs 4 lakh). It did not change the monetary threshold for appeals before I-T tribunals and the SC, which remained at Rs 3 lakh and Rs 25 lakh, respectively.
-HS Prannoy , saviour of the hosts for the last two days, could not repeat the magic as his team bowed out of the tie much before his arrival, losing 1-3 to Indonesia in the semifinals of the Badminton Asia Team Championships at the Gachibowli Indoor Stadium.
+Since then, another set of instructions have been issued, which provides that if the tax effect is Rs 10 lakh or less, an appeal cannot be filed even with the tax tribunals. For high courts, the limit is set at Rs 20 lakh and for the SC, it is Rs 25 lakh. Before the SC, the I-T department contended that the CBDT instruction had a prospective effect only. Thus cases pending in high courts on February 9, 2011, could not be dismissed merely based on the instruction. But the SC decided in favour of the taxpayer, SRMB Dairy Farming, a private limited company, by holding that CBDT’s instructions will also apply to all pending matters.
-With this loss Indian men bagged the bronze medal, their first in last three decades.
-Though Kidambi Srikanth gave a solid start to his team, the hosts lost the next three ties and crashed out of the tournament. After winning the first game without much difficulty against in form Tommy Sugiarto, Srikanth was unlucky to lose the closely-fought second game. However, the top ranked Indian shifted gears in the decider and played an attacking game to oust Tommy 21-14, 23-25, 21-9.
+“The SC has rightly pointed out that the interpretation of CBDT’s instruction had to be done in the context of the purpose for which it was issued, which is to reduce litigation that had choked the legal system. Thus the apex court held that the instructions applied to pending matters also, as such an interpretation would facilitate achievement of the objectives of the National Litigation Policy aimed at bringing down the pendency of litigation cases,” said Gautam Nayak, tax partner, CNK & Associates, a firm of chartered accountants.
-Doubles pair of Manu Attri and Sumeeth Reddy proved no match for Mohammad Ahsan and Hendra Setiawan 21-11, 2110. In the second singles, world No.25 Ajay Jayaram tried hard before going down to Anthony Ginting 15-21, 20-22.
+Interestingly, the latest instruction issued by the CBDT on December 11, 2015, not only significantly hiked the monetary threshold limits but categorically mentioned that: “This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in courts and tribunals. Pending appeals below the specified tax limits may be withdrawn.”
-==2016: Uber Cup==
+Nayak said: “This showcases the intent of the instructions and the SC has rightly acted on it.”
-===Women===
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Ruthvika-steals-the-show-as-Indian-women-enter-20052016034034 ''The Times of India''], May 20, 2016
-'''Quarterfinals ''' When the top gun, misfired youngster RuthvikaShivani came to the rescue with a stupendous display to assure her team of a bronze with a 3-1 victory against Thailand in the Uber Cup quarterfinals on Thursday.
+=Artists=
+==Fashion designers==
+[http://epaper.timesofindia.com/Default/Client.asp?Daily=CAP&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW&AW=1393708348876  Times of  India]
-This will be only the second medal for India at this prestigious team event. Indian women had won bronze at the last edition.
+‘Fashion designers are artists, eligible for I-T exemption’
+Shibu Thomas
-For a long time, Saina Nehwal had carried Indian hopes. But the off-colour Hyderabadi faltered on the day to give India a poor start. PV Sindhu, however, stepped up and put the campaign back on rails with a dominant 21-18, 21-7 victory against Busanan Ongbumrungphan.
+Mumbai: A fashion designer is an artist, the Bombay High Court has said and ruled that they are eligible for incometax exemptions available under the category. Ten years after the income-tax department first objected to tax benefits claimed by one of India’s leading fashion designers, Tarun Tahiliani, a division bench of Justice Dhananjay Chandrachud and Justice J P Devadhar on Monday said the designer should get tax privileges extended to the artists.
-JwalaGutta and Ashwini Ponnappa made it 2-1for with a 21-19, 21-12 win against PuttitaSupajirakul and SapsireeTaerattanachai.
+Tahiliani opened the country’s first fashion boutique, Ensemble, and is credited with being one of the designers who have brought high couture to India. Tahiliani’s IT woes began in October 2000 when he sought tax exemption for his income of Rs 83.90 lakh. Under Section 80 RR of the Income-Tax Act, a resident of India, who is an an author, playwright, artist, musician, actor or sports person can claim exemption of 75% of his income earned from foreign assignments. Tahiliani said that applying the exemptions, his taxable income for that year would be Rs 53.24 lakh.
-Ruthvika then proved her mettle. No one expected her to get past a tough opponent like NitchaonJindapol, the world No.25 who has been giving top shuttlers a tough time. She had even defeated PV Sindhu in January this year.Ruthvika came up with a stunning show and registered a 21-18, 21-16 victory . Leading 20-10, Ruthvika conceded eight points before winning the first game at 21-18.
+The tax department, however, refused to accept that the fashion designer was an artist. It also contested deductions sought by sought by Tahiliani on his taxable income for 1999-2000 and 2001-2002. The income-tax appellate tribunal ruled in Tahiliani’s favour, upholding his claim that he was a creative artist. The IT department challenged the order before the high court.
+The department’s lawyer contended that a fashion designer didn’t belong to the creative profession as the vocation was classified under applied arts and not fine arts. The IT department said that the benefit of exemption was granted to aid the artists, who represent Indian culture abroad.
+The HC dismissed the IT department’s petition and held that fashion designers were entitled to tax exemptions meant for artists.
-=2017=
+= Capital gains=
-[[File: Badminton Jan to June 2017a.jpg|Badminton Jan to June 2017 |frame|500px]]
+See [[Capital gains: India]]
-==The best players==
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F01%2F25&entity=Ar03915&sk=350FF6B5&mode=text  TOISA 2018 NOMINEES: BADMINTON, January 25, 2018: ''The Times of India'']
+=Corporates’ promotional activities=
+== Pharmaceutical companies’ junkets for doctors==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=I-T-trips-pharma-cos-on-doc-junkets-20092016010015  Lubna Kably, I-T trips pharma cos on doc junkets, Sep 20 2016 : The Times of India]
-''KIDAMBI SRIKANTH (World No. 3 )''
+Tribunal Disallows Expenses
-Building on the promise shown during his run to the quarterfinals of the men’s singles at the 2016 Rio Olympics, Srikanth made it large last year. He won four Superseries titles in 2017, the most ever by an Indian, and moved to No. 2 in the BWF men’s singles rankings. Srikanth’s first title was the Indonesia Open, where he beat Japan’s
+The Mumbai bench of the Income-Tax Apellate Tribunal (ITAT) has nipped the `unholy' doctor-pharma nexus whereby medical practitioners are offered various incentives, like overseas trips, to encourage them to prescribe specific medicines or lines of treatment.
+It has done so by upholding a disallowance of Rs 76.55 lakh, made by an I-T officer at the assessment stage. The expenditure was incurred by Liva Healthcare (a pharma company specialising in skincare formulations) to wards overseas trips for doctors and their spouses.
-''PV SINDHU (World No. 3)''
+The immediate impact of the order is a higher I-T liability for the pharma company for financial year 2008-09, to which this case pertains, as the disallowed expenditure will be added back to the taxable component of income. In addition, the order will act as a reminder to pharma compa nies to adopt practices that are above board. The maximum rate of income tax on companies currently is 30% plus applicable surcharge and cess.
-After claiming a breakthrough silver medal at the 2016 Rio Olympics, Sindhu lived up to her billing as the queen of Indian badminton this year by winning two Superseries titles, a silver medal at the Badminton World Championships and another at the BWF World Superseries Finals. Her first Superseries win came in April, when she beat Olympic champion Carolina Marin 21-19, 21-16 to win the India Open for the first time. Days later, she rose to a careerhigh No 2 in the BWF women’s singles rankings. After claiming a silver medal at the Badminton World Championships, only India’s second ever, Sindhu went on to win her second Superseries in October Kazumasa Sakai 21-11, 21-19, and a week later he vanquished the world and Olympic champion Chen Long in straight games 22-20, 21-16 to claim the Australia Open. Later, Srikanth became the second Indian after Prakash Padukone to win the Denmark Open and then created history by claiming the French Open. In addition, Srikanth also reached the final of the Singapore Open.
+The ITAT's September 12 order observes, “The payment of overseas trips of doctors and their spouses for entertainment, by the pharma company , in lieu of expectation of getting patient re ferrals from doctors for its products so as to generate more business and profits, by any stretch of imagination cannot be accepted as legal.Undoubtedly it is not a fair practice and has to be termed as against the public policy.“
-when she became the first Indian to win the Korea Open. Her other title was the Syed Modi International Grand Prix Gold. Other close finishes came in the final of the National Badminton Championship and the Hong Kong Superseries, where she was runner-up both times.
+Section 37 of the I-T Act, which is a residual section, permits a business entity to claim as a deduction revenue expenditure incurred by it, `wholly and exclusively for the purpose of the business'.However, an explanation to this section provides that expenses incurred for any purpose which is an offence or is prohibited by law shall not be deemed to have incurred for the purpose of the business.Consequently , such expenditure cannot be allowed as a deduction from taxable income.
+The code of conduct prescribed by the MCI debars doctors from receiving favours in return for referring, recommending or procuring of patients for medical, surgical or any other treatment.
-''SAINA NEHWAL (World No. 10)''
+= Donations to NGOs’ projects=
+==Halved in 2017==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Share-of-donations-to-projects-under-Sec-35AC-04032017026075  Share of donations to projects under Sec 35AC halved in FY16, March 4, 2017: The Times of India]
-A successful, injuryfree year for the 2012 London Olympics medalist. Saina won a Grand Prix Gold, a bronze at the World Championships and her third national title. Won the Malaysia Masters Grand Prix - her 23rd title overall. Won a bronze medal at the Badminton World Championships having reached her recordbreaking seventh consecutive quarterfinal. Beat Olympic gold medal winner and two-time world champion Carolina Marin 22-20, 21-18 in round one of the Denmark Open.
+'''Sec 35AC Sunset Clause Will Expire On March 31'''
-''HS PRANNOY (World No. 10)''
+Donations made to hundreds of projects carried out by NGOs across the country will no longer be eligible for a 100% income tax (I-T) deduction in the hands of the donor from April 1. While tax savings are not the main purpose, if donations are made in March towards eligible projects, then donors comprising salaried employees could reap an I-T benefit.
-His most successful year ever, Prannoy won a Grand Prix Gold, reached the semifinals of two Super Series and won the national title for the first time. Claimed his third Grand Prix Gold title by beating compatriot Parupalli Kashyap 21-15, 20-22, 21-12 in the final of the US Open.
+At present, donations made for specific projects run by NGOs that have been certified under section 35AC entitle the donor to a 100% I-T deduction under section 80GGA in respect of the donated amount.
-Reached the semi-finals of the Indonesia Open Super Series and the French Open. Became the first Indian to beat the big four of world badminton: Taufik Hidayat (2013), Lin Dan (2015), Chong Wei (twice in 2017) and Chen Long (2017). Achieved a career-best position of No. 10.
+However, section 35AC has a sunset clause which expires this March. Section 80GGA is not as widely known as section 80G, which permits a 100% I-T deduction in respect of certain donations (such as PM's National Relief Fund) and a 50% I-T deduction in most other cases (see table).
+“Taxpayers who do not earn income under the head `profits and gains of business and profession', such as salaried employees, can claim the benefit of section 80GGA. While the employer cannot consider the donations made, while computing tax to be deducted at source against salary income, the employee can claim the benefit of the same in his I-T return and claim an I-T refund, if applicable,“ says Pradeep Mahtani, director, HelpYourNGO Foundation. A chartered accountant says, “In fact, if there has been a short deduction of tax at source and advance tax has not been paid by the salaried employee, by making donations eligible for I-T deduction up to March 31, the salaried taxpayer could mitigate his I-T penalty . Donors should ensure that they get the appropriate receipt.“
-''B SAI PRANEETH (World No. 16)''
+Notifications are issued by the finance ministry from time to time, certifying the projects that are eligible under section 35AC, the period of eligibility and also the total cost of the eligible project. For instance, as regards NGOs registered in Ma harashtra, these include projects by Magic Bus (skill development and livelihood programme), Association of Palliative Care (for a palliative care centre), Foundation of Promotion for Sports and Games (Olympic Gold Quest project) and Mesco (educational scholarships).
-Having never made it past the quarters of a Super Series of a Grand Prix Gold tournament, Sai beat Kidambi Srikanth in the final of the Singapore Open. In this tournament, he also beat Denmark’s Emil Holst, world No. 23 Qiao Bin, eighth seed Tanongsak Saensomboonsuk and Korea’s Lee Dong Keun to meet Srikanth in the first all-Indian Super Series final. Won his second title of the year in June, beating Indonesia’s Christie Jonatan 17-21, 21-18, 21-19 to clinch the $120,000 Thailand Open. Runnerup at the Syed Modi Grand Prix.
+HelpYourNGO, an online donation platform, has on its portal 45 NGOs that run 90 projects eligible under section 35AC, These include some well known names such as Akshaya Patra's midday meals, projects by Childline and People for Animals.
-==A watershed year==
+In view of the sunset clause, a government-appointed national committee -which approves projects that would be eligible under section 35AC -had ceased to accept requests after December last year. “Donation stems from fundamental reasons, which are deep-rooted among each donor whether that's joy , guilt, remembrance or duty . However, everyone does think of saving I-T after having donated. Just like the insurance and the investment industry , which makes people aware of I-T savings available to them, for donations it is incumbent upon NGOs to make people aware of taxes they can save as a result of the donation they have made,“ says Dhaval Udani, founder of Danamojo, a payments platform for NGOs.
-[http://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/PrintArticle.aspx?doc=TOIDEL%2F2017%2F12%2F28&entity=ar02400&ts=20171228005013&uq=20171213034334&mode=text  Action Replay 2017: BADMINTON, December 28, 2017: ''The Times of India'']
+Perhaps awareness of a 100% I-T deduction for donations made to section 35AC-eligible projects has been low. HelpYourNGO did a dipstick sample survey of 12 NGOs, for which data was readily available. It showed that the percenta ge of donations towards 35ACeligible projects as compared to total donations received by NGOs has declined from 14.7% in fiscal 2014-15 to 7.9% in the next fiscal.
-''2017 Was A Watershed Year For Indian Badminton As Players Broke New Ground, Writes'' '''M Ratnakar'''
+Deval Sanghavi, partner and co-founder at Dasra, a strategic philanthropy foundation, points out, “Our experience has shown that donors see the I-T deduction more as a government certification, which in essence states the organisation is compliant with laws and adheres to missiondriven principles vis-à-vis a giver donating more because of the I-T deduction.“
-If Saina Nehwal’s hat-trick of titles in 2010 was the catalyst which propelled Indian badminton to a different plane, 2017 has proved to be a watershed year for the sport as Kidambi Srikanth led the boys’ victory parade with four Super Series titles in a calendar year. Since 2010, the sport has witnessed a spiralling success rate every year. The Olympic medal came in 2012 with Saina’s bronze and a podium finish at the World Championships became a regular feature thereafter.
+The number of individuals who donate money to charity has shown a rise in India.As many as 203 million Indians donated money during 2015, opposed to just 183 million in 2014, according to the World Giving Index 2016.
-Sindhu’s Olympic silver at the 2016 Olympic Games catapulted the game to new heights of popularity.
+=Educational institutions=
+==Profits not taxable: SC==
-However, 2017 has seen greater performances from the Indian shuttlers as 13 major titles have been won by seven different players, apart from PV Sindhu’s silver and Saina’s bronze at the World Championships. Sindhu’s one hour 50-minute marathon against Nozomi Okuhara of Japan in the Worlds final will go down in history as an epic encounter.
+[http://epaperbeta.timesofindia.com//Article.aspx?eid=31808&articlexml=Educational-institutions-profits-not-taxable-SC-19032015015012 ''The Times of India'']
-Never in the past had so many Indian players figured among the winners’ circle. Until 2017, the success stories have been confined to Saina, Sindhu and Srikanth but this year ‘so-called fringe players’ like SAI Praneeth, Sameer Verma, HS Prannoy and even doubles pair of Pranaav Chopra and Sikki Reddy have ensured that the Indian flag flutters with pride at various international events. For a change the boys have leapt past the girls and cornered more glory in 2017. Sindhu won two Super Series titles —India Open and Korea Open — and capped the year with a silver at the year-end Finals in Dubai.
+Mar 19 2015
-But the year belonged to Srikanth and Co, who have virtually dominated the men’s singles with élan. The Indian boys were everywhere in 2017, winning titles, stunning champions and dominating the men’s singles category. Sameer Verma started it by trumping SAI Praneeth at the Syed Modi Grand Prix Gold final in January. Thereafter, SAI Praneeth took charge by pocketing his first Super Series at the Singapore Open in April. Interestingly, here too, Praneeth’s opponent was none other than Srikanth.
+Amit Choudhary
-Praneeth also clinched the Thailand Open Grand Prix Gold in June. A fortnight later Srikanth triumphed in the Indonesia Open, the richest Premier event of the year. The 24-year-old went on to clinch back-toback titles, a first in his career, by emerging victorious at the Australian Open Super Series the very next week.
+The Supreme Court has ruled that surplus income earned by educational institutions cannot be taxed, and imparting education not termed a for-profit activity simply because it yielded high returns.
+Dismissing the revenue department's submission that an educational institution ceased to be a solely scholastic endevaour if it generated high profits, the court noted that their income was exempt from tax under the Income Tax Act.
-While Indian fans were busy celebrating the unexpected success of their boys, experts have observed a fascinating trend behind these stupendous performances. The Hyderabad boys have been assisting each other in the victories as if they have learnt the art of ‘hunting in packs’.
+“Where an educational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit,“ a bench of Justice T S Thakur and Justice Rohinton F Nariman said.
-At the Indonesian Open, HS Prannoy had stunned Malaysian legend Lee Chong Wei and Olympic champion Chen Long to clear the path for his training partner Srikanth. Later, Prannoy said that he took tips from seasoned campaigner Parupalli Kashyap on how to beat the Chinese superstar. Prannoy lost to Kazumasa Sakai in the semifinals but passed on some key information to Srikanth, who defeated the Japanese shuttler in the final.
+“A distinction must be drawn between the making of a surplus and an institution being carried on `for profit'. If, after meeting expenditure, a surplus arises incidentally... it will not cease to be one existing solely for educational purposes,“ the bench added.
-Even at the Denmark Open in October, Prannoy helped Srikanth by ousting Lee Chong Wei in the second round itself. With easier opponents to negotiate at the latter stages, Srikanth claimed his third Super Series title by defeating Korean veteran Lee Hyun Il in the final. The next week at the French Open, Prannoy ousted Lee Hyun in the first round before going down to Srikanth in a keenly-contested semifinal. By claiming top honours in Paris, Srikanth became the fifth shuttler in badminton history to win four Super Series titles in a calendar year. Incidentally, these were also Srikanth’s second back-to-back titles.
+The court, however, said the government must examine activities of such institutions to ensure that the purpose of education is not taken over by a profit-making motive. “If they are not genuine, or are not being carried out in accordance with all or any of the conditions subject to which approval has been given, such exemption must be withdrawn,“ it said.
-It is no secret that the dexterous efforts of Pullela Gopichand is behind their success and the newfound vigour. All these players hail from his academy and have been with him since their childhood.
+The court passed the order on a bunch of petitions filed by Queen Educational Society challenging an Uttarakhand High Court order allowing I-T authorities to tax its surplus income of around Rs 7 lakh for the assessment year 2000-01.
-About five years back, when Saina and Sindhu were making all the headlines, Gopichand had predicted that the boys too will replicate the girls’ success stories soon. But very few took him seriously at that time. However, once Srikanth burst on the scene with a sensational mauling of Lin Dan in the China Open finals in 2014, people began to notice that the boys were coming to the party.
+=Exemptions=
+==1950: residential palace of erstwhile ruler exempted from IT==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Cant-tax-income-from-palace-rent-SC-06122016019026  AmitAnand Choudhary, Can't tax income from palace rent: SC, Dec 6, 2016: The Times of India]
-The coach, who is building Indian badminton brick-by-brick, has immense faith in the abilities of his players and is always confident about breaching the difficult barriers. “In my playing days many used to tell us that we can never reach the level of the Chinese. But I always believed that if we have the facilities in place we can achieve a lot. I am only putting a system in place and I am not surprised with these results,” Gopichand said.
+'''Court Raps I-T Dept For Pursuing Case Against Erstwhile Ruler Of Kota'''
-Gopichand changed the landscape of badminton but the Dronacharya awardee is yearning for more. He has a few budding shuttlers who are aspiring to follow the footsteps of their illustrious seniors.
-But despite these fabulous feats, the bigger trophies like Olympic gold, World Championships crown and All England are missing from the cupboard.The only way the forthcoming years can beat the success of 2017 is if the shuttlers bring these elusive trophies home.
+The Supreme Court held that the income earned by erstwhile rulers of a princely state or their heirs by renting out a portion of the residential palace was not taxable and rapped the Income Tax department for pursuing a case despite their income being exempted under IT law.
-===The main stars===
+A bench of Justices Ranjan Gogoi and Abhay Manohar Sapre allowed a plea of the ruler of the former princely state of Kota, now a part of Rajasthan, challenging the high court order for bringing his income from rent in the Income Tax net. The ruler owns extensive properties, including two residential pa laces known as Umed Bhawan Palace and the City Palace. The ruler is using Umed Bhawan Palace for his residence and a portion of it was rented out to the ministry of defence way back in 1976.
-[http://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/PrintArticle.aspx?doc=TOIDEL%2F2017%2F12%2F28&entity=ar02404&ts=20171228005013&uq=20171213034334&mode=text  M Ratnakar, Smashing success: India ruled the courts, December 28, 2017: ''The Times of India'']
+Although the Centre had in 1950 declared residential palace of an erstwhile ruler, situated within the state, as his inalienable ancestral property to be exempted from payment of income-tax, the I-T department had in 1984 initiated proceedings for assessment of income earned from renting out a portion of the palace. The Centre had incorporated Section 10(19A) in the IT Act to give exemption to former rulers.
-It wasn’t just all about Srikanth and Sindhu. Prannoy and Praneeth made heads turn too
+The department contended that IT exemption was given for personal use and income earned from the rent was taxable. Commissioner of Income Tax and Income Tax Appellate Tribunal, however, turned down the plea of the IT department which had moved the Rajasthan HC.
-—M Ratnakar
+The HC had ruled that as so long as the ruler continued to remain in occupation of his official palace for his own use, he would be entitled to claim exemption but if he let out any part of his palace, he became disentitled to claim benefit of exemption available under Section 10(19A) for the entire palace.
-'''KIDAMBI SRIKANTH'''
+“In such circumstances, he is required to pay income-tax on the income derived by him from the portion let out in accordance with the provisions of the I T Act and the benefit of exemption remains available only to the extent of portion which is in his occupation as residence,“ the HC had said.
-Popularising the whiplash smash and reinventing the aggressive style of badminton, Kidambi Srikanth made 2017 the best ever for Indian men. Of the seven Super Series titles India won, Srikanth bagged four. In the first quarter of the year, Srikanth did not do much as was he was recovering from his injuries. But in April he struck form. He lost to Sai Praneeth in the Singapore Super Series final and went on to win back-to-back Super Series titles in Indonesia and Australia. Though he had a disappointing World Championships, he was on a roll in October, once again claiming back-to-back titles in Denmark and France. With these amazing triumphs, Srikanth became only the fifth shuttler in the world to wear four Super Series crowns in a calendar year.
+Quashing the HC order, the Supreme Court held that Section 10(19A) has used the term “palace“ for considering the grant of exemption to the ruler and income earned from renting out a portion of the palace was also exempted.
-'''SAINA NEHWAL'''
+“We cannot ignore this distinction while interpreting Section 10(19A) which, in our view, is significant. In our considered opinion, if the Legislature intended to spilt the Palace in part(s), alike houses for taxing the subject, it would have said so by employing appropriate language in Section 10(19A) of the IT Act.We, however, do not find such language employed in the section,“ the bench said.. “Once the assessee is able to fulfil the conditions specified in section for claiming exemption under the Act then provisions dealing with grant of exemption should be construed liberally because the exemptions are for the benefit of the assessee,“ it said.
-Even though she did not win many titles, Saina Nehwal still made her presence felt in 2017. The seasoned campaigner won only one title — the Malaysia Masters — in the last 12 months apart from the bronze at the Worlds, her second successive medal at BWF’s biggest event. However, her crowning glory was the straight-game victory over PV Sindhu in the National Championship final. The ace shuttler, who returned to the Gopichand camp in August after a three-year hiatus, will be keen to win a few more titles with the help of the Dronacharya awardee.
+== Scheduled tribes, Sikkimese, agriculture, institutions, hospitals, trusts==
+[http://timesofindia.indiatimes.com/india/Heres-why-scrapped-notes-are-flying-off-to-the-northeast/articleshow/55590761.cms    Here's why scrapped notes are flying off to the northeast, TNN | Updated: Nov 24, 2016, The Times of India]
-'''SAI PRANEETH'''
+HIGHLIGHTS
-The supremely talented shuttler lived up to the expectations with two major titles. He started the year by reaching the final of the Syed Modi Grand Prix Gold tournament. But the biggest victory of his career came in April when he beat title favourite Srikanth in the final to win the Singapore Open Super Series. He also won the Thailand Grand Prix Gold title in June.
+I-T laws allow exemptions for various categories of incomes or individuals
-'''HS PRANNOY'''
+Among those are members of ST communities in Nagaland, Manipur, Tripura, Arunachal and Mizoram
-If there was one shuttler who lady luck did not oblige this year, it has to be HS Prannoy. The Kerala shuttler, who is regarded as one of the most deadliest attackers on the circuit, could have won at least two Super Series titles this year. He beat the best in the world, but fortune deserted him at crucial moments. Though he stunned Olympic champ Chen Long and Malaysian great World No.1 Lee Chong Wei, he failed to convert such major victories into titles. However, he helped his friend Srikanth by mowing down these tough nuts. He ended the year with a dominant victory against Srikanth in the National badminton final.
+A similar exemption is available to all those defined as "Sikkimese"
-==June: The rise of Srikanth, Praneeth, Prannoy==
+Among those exempt from paying income tax are members of scheduled tribe communities in Nagaland, Manipur, Tripura, Arunachal Pradesh and Mizoram. Scheduled tribes in North Cachar Hills and Mikir Hills in Assam, the Khasi Hills, Garo Hills and Jaintia Hills in Meghalaya and Ladakh in Jammu & Kashmir also don't have to pay income tax. The exemption applies to income arising from any source in these areas or from dividends or interest on securities from anywhere.
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=RISE-OF-THE-SHUTTLE-MEN-27062017024015  Manne Ratnakar, June 27, 2017: The Times of India]
+A similar exemption is available to all those defined as "Sikkimese" in the I-T Act. This again is for any income generated from Sikkim itself and for income from dividend or interest on securities generated anywhere. The intent behind these exemptions is to provide fiscal concessions to backward areas and communities. In times like now, it becomes a useful route for people looking to turn undisclosed incomes legitimate.
-Having played second fiddle to Saina Nehwal and PV Sindhu for long, India's male shuttlers, led by K Srikanth, have suddenly created big buzz with several stunning international triumphs recently. TOI looks at the phenomenon...
+Apart from these geographically restricted exemptions, there is of course the exemption for agricultural income. That includes any rent or revenue derived from agricultural land.
-`Hunting in packs' is the new mantra in Indian men's badminton. The exploits of Kidambi Srikanth, Sai Praneeth and HS Prannoy have catapulted Indian badminton to a new high as a group of Indian men have begun dominating men's singles as never before.
+There are several ''' institutions ''' that are tax exempt under the IT Act. Again, it is not difficult to see why the lawmakers would have decided not to tax them. For instance, income of a public charitable trust or not for profit society established for development of khadi and village industries is exempt from tax. Educational institutions including universities existing solely for educational purposes and not for profit are exempt from paying tax on their incomes under various sub-sections of the IT Act.
-Led by Srikanth, they have achieved a rare Super Series hat-trick besides notching up title wins in four of the last five big international tournaments.While Srikanth won the Indonesia and Australia Open Super Series titles, Sai bagged the Singapore Super Series and Thailand Grand Prix Gold crowns.
-The support cast too has played a key role in the number of titles won by the Indians. Prannoy and Parupalli Kashyap may not have won titles but they had helped their friends by clear ing their path. In Jakarta, Prannoy knocked out the legendary Lee Chong Wei and Olympic champion Chen Long, thereby letting Srikanth negotiate an easier opponent in the final.
+Similarly, not for profit hospitals too are exempt, different kinds being covered by different sub-sections.
-In Australia, Kashyap shut out Indonesia Open finalist Kazumasa Sakai at the qualifying stage itself.
+Income of a charitable institution or fund approved by the prescribed authority is not required to pay taxes on its income either. Nor are public religious or public charitable trusts approved by the prescribed authority. Political parties and electoral trusts are also exempt from tax on their incomes. It is another matter that a major chunk of the money flowing to parties never enters any books anyway.
-The sterling performance of the Indian boys in the last two months have made them one of the most feared gang of shuttlers in the world arena. Interestingly, most of them are in the 22-24 years age group, making them bright prospects for marquee international events which are coming up -like the Olympic and World Championships.
+==Yoga ==
+===`Medical relief,' `imparting education' are charitable purposes===
+[http://epaperbeta.timesofindia.com//Article.aspx?eid=31808&articlexml=Ramdev-trust-wins-I-T-war-on-tax-18022017013006  Lubna Kably, Ramdev trust wins I-T war on tax-exempt tag for yoga, Feb 18, 2017: The Times of India]
-What makes the scenario even more heartening is that besides these four, there are other talented shuttlers like Ajay Jayaram, Sameer Verma and Sourabh Verma who have been keeping the Indian flag flying.
-Undoubtedly, this is the best phase ever in men's singles for India. Earlier, success in this sphere was limited to Prakash Padukone (All England title in 1980) and Pullela Gopichand (All England title in 2001).
+Baba Ramdev's Patanjali Yogpeeth (a public charitable trust) has succeeded in its appeal before the Income-tax Appellate Tribunal (ITAT), which has accepted its tax exempt status.
-After the two major titles _ which were separated by more than two decades _ the best feats were Kashyap win ning the Commonwealth Games Gold and Srikanth clinching the China Open Super Series Premier in 2014. Srikanth added the Indian Open Super Series crown in 2015 while the likes of Jayaram and Sai Praneeth claimed Grand Prix Gold titles. But the major push came in last two months.
+The ITAT (Delhi bench) held that Yoga entails providing medical relief and camps also provide education, and that both `medical relief ' and `imparting education' fall within the meaning of charitable purpose, entitling the trust to claim I-T exempt status under sections 11 and 12 of the Income Tax Act.
-Gone are the days when Indians struggled to clear the qualifying stage and breaking into the top-50 was celebrated as a major feat. Our men are in the elite league now. It has taken years of hard work, sweat, sacrifice and a lot of planning to bring about this transformation. A lot of credit for this turn around has to go to National coach Gopichand.
+“The finding of I-T authorities that propagation of yoga by Patanjali Yogpeeth does not qualify as medical relief or imparting of education is not justified,“ stated the ITAT in its order dated Feburary 9.Even as the litigation settled by the ITAT, relates to the 200809, the ITAT has also referred to subsequent amendment in the I-T Act, which came into effect from April 1, 2016. This amendment specifically inserted `yoga' within the definition of `charitable purpose'. If the exempt status not been upheld by the ITAT, Patanjali Yogpeeth would have been liable to pay income tax. The total income of this trust is not brought out in the ITAT order.
-As a player, he faced a series of difficulties, got injured often, found no proper system but still achieved success.Once his career ended, he was determined to build a system. “There was never a dearth of talent in our country .Even during my time we had extremely talented players like Chetan Anand, Anup Sridhar, Arvind Bhatt, Nikhil Kanetkar. But what I realised was that all were crafty but lacked fitness, strength, speed and endurance. To get these things we needed to create a group of people around a player. In our days we never had a proper coaching system, no concept of having a physio, nothing like that. These are the basic necessities and thankfully we have created them now,“ Gopichand said.
+The ITAT also held that corpus donations aggregating to Rs 43.98 crore received by Patanjali Yogpeeth, predominantly for construction of cottages under its Vanprasth Ashram Scheme (which provides accommodation to those attending residential yoga courses), were capital receipts not liable to I-T. Such donations included land donated, whose market value was pegged by I-T authorities at Rs 65 lakh. In its order, the ITAT pointed out that “Corpus donations are not taxable, even in circumstances where the trust is not eligible for I-T exemption“.
-Gopichand also realised that the thought process of Indian shuttlers needed to change. “I always used to think different from others. In those days we were told to pick and play small tournaments, win some and improve the rankings. I thought it was wrong. So, I started making Saina (Nehwal) play in Super Series events. We need to believe in ourselves, think big and do what it requires to reach there,“ Gopi said.
+Various additions to the trust's income made by the I-T authorities, including a Rs 96 lakh addition made for services made by the trust to Vedic Broadcasting in which Acharya Balkrishnan, a trustee and close aide of Baba Ramdev holds substantial interest were deleted by the ITAT, on the ground that the I-T authorities had not understood the facts.
-Though Gopi achieved success with the girls _ Saina and PV Sindhu _ it took a while for him to replicate it in men's singles. “Success in women was achieved fast because I got two strong girls in Saina and Sindhu. But it took time for me to build that strength and fitness in men. Another area I succeeded in was converting the success at the junior level to senior stage. I also got an excellent support staff,“ Gopi said.
+The ITAT also agreed with the submissions made by the trust and observed that certain inferences by the I-T authorities such as provision of benefits to certain persons or receipt of anonymous donations were made without fully appreciating the facts.
-India have as many as six men in the top-35 of world rankings at present. It's a promising position and if the players keep improving, India can become a global power.
+=Expatriates=
+== Salary paid in India won’t face tax, if Non-resident==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F02%2F15&entity=Ar02416&sk=1A619CBE&mode=text  Lubna Kably, Non-resident expats’ salary paid in India won’t face tax, February 15, 2018: ''The Times of India'']
-With the longevity of shuttlers increasing due to modern training methods, Srikanth & Co will be around for at least another five years during which time they can take Indian badminton to a higher plane. With talented youngsters like Lakshya Sen and Siril Verma waiting in the wings, the future seems to hold exciting prospects for India.
+[[File: How tax residency in India is determined.jpg|How tax residency in India is determined <br/> From: [https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F02%2F15&entity=Ar02416&sk=1A619CBE&mode=text  Lubna Kably, Non-resident expats’ salary paid in India won’t face tax, February 15, 2018: ''The Times of India'']|frame|500px]]
-==June: The male stars==
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=THE-SHINING-BRIGADE-27062017024026  Jun 27 2017: The Times of India]
+The Authority of Advance Rulings (AAR) has held that the salary income of a nonresident individual for services rendered overseas cannot be taxed in India, even when such salary is paid into a bank account in India.
-'''KIDAMBI SRIKANTH (24, ranking 11)'''
-The form man of world badminton right now, Srikanth has risen fast to become the poster boy of men's badminton in India. He is expected to be ranked around 5 in the world when the fresh list is announced on Thursday.
+The ruling stands out because apart from providing relief from double taxation under the Indo-US tax treaty, the AAR additionally held that the sums received in India would not be taxable here under the domestic tax laws.
-'''PARUPALLI KASHYAP (30, ranking 116)'''
+Unlike a tribunal or court order, a ruling by AAR, a quasi-judicial body, does not set a precedent. But it does have persuasive value and is well-considered. Thus, the ruling may benefit expat workers, in particular the over one lakh Indian workers who work in the US, largely on H1B visas.
-He has been the guiding light to all the men's singles shuttlers. His victories at the international level, particularly the 2014 Commonwealth Games gold, gave confidence to others like Srikanth, Prannoy and Sai Praneeth. He was also the first Indian man to reach the Olympic quarterfinals. Kashyap has been fighting injuries in the last two years but is now back on court.
+Typically, when white-collared workers are ‘seconded’ on an overseas assignment by an Indian company, a split salary arrangement is worked out. Under ‘secondment’, the employee is transferred on the payroll of the overseas parent or group company, which pays the basic salary and certain allowances, in the overseas country. However, the Indian company deposits a part of the salary in the employee’s bank account in India. This enables the employee to meet certain obligations in India—such as repayment of housing loan or household expenses (as the family could be in India).
-'''HS PRANNOY (24, ranking 21)'''
+While an Indian residing abroad is popularly referred to as a non-resident Indian (NRI), the nomenclature is different under tax laws. It is not the country of origin, but the number of days’ stay in India, which determine whether a person will be a resident or non-resident for tax purposes.
-HS Prannoy, who trains at the Gopichand Academy in Hyderabad, has always been regarded as a very talented shuttler. His big break was the Swiss Open Grand Prix Gold title last year.He also created a splash by stunning Olympic gold medallist Cheng Long and silver medallist Lee Chong Wei at the recently Indonesia Open.
+Resident individuals are taxable in India on their global income, irrespective of where it was earned. In the case of non-residents, only income that accrues or arises in India (say, bank interest from a savings account in India or rental income from a house in Mumbai) is treated as taxable in India (see table). There is a third category, that is, resident but not ordinarily resident (RNOR), for whom the tax incidence is the same as for non-residents.
-'''AJAY JAYARAM (29, ranking 15)'''
+“Thus, salary received by non-residents in a bank account overseas for services performed outside India is not subject to tax in India. However, salary received in India is considered as taxable under the Indian domestic tax laws (along with being taxed in the country where they are working as most countries adopt the source method of taxation). Typically, a split salary mechanism results in litigation, as income-tax (I-T) authorities seek to bring to tax the income received in India. In such cases, employees claim relief under a tax treaty, which ensures that the same income is not taxed twice,” says Maulik Doshi, tax partner, SKP Group, a consultancy firm.
-Till recently, Ajay Jayaram was the top-ranked Indian men's singles shuttler. Unlucky to miss the London Olympics berth by a whisker, Jayaram won the Dutch Open Grand Prix Gold twice -2014 and 2015. He missed a Dutch hat-trick when he lost in the final last year. Jayaram, who trains under Tom John, also reached the finals of the Korea Open Super Series in 2015.
+In this case, the employee, T N Santhosh Kumar, was seconded by Texas Instruments to Texas Inc, a US company, for a period of two years. As is typically the case, a split salary mechanism was adopted. Kumar was paid monthly a part of the salary and certain bonuses in India by Texas India.
-'''SAI PRANEETH (24, ranking 16)'''
+A communique by EY India states: “Based on the India-US tax treaty, the AAR held that the place where the employee performs their duties is what is considered and not where the income is received or where the company providing the remuneration is based. As the salary is paid for work performed in the US, the income would be taxable in the US alone and no tax would be required to be withheld in India.”
-His Singapore Open triumph made him only the second Indian after Srikanth to clinch a Super Series title. He made it two titles in a row by claiming the Thailand Open Grand Prix Gold as well. The crafty player is expected to pose a major threat to the top shuttlers in the world.
+“It is interesting to note that the AAR also held that such salary payments received in India by the non-resident would not be taxable in India even under its domestic tax laws,” says Doshi and adds, “in cases where there is no tax treaty (such as with Hong Kong) or in peculiar situations where the taxpayer is unable to access a tax treaty owing to lack of certain documents, this ruling will be very helpful.” In simple terms, the word accrue in India refers to something that is due in India.
-'''SAMEER VERMA (22, ranking 32)'''
+Kumar was deputed for a two-year term. In the second year, in which he returned to India (that is, 2012-13) he was a resident of India and liable to tax on his global income. The US would also tax his US source salary income. Here, the AAR held he would be entitled to a tax credit in India for US taxes.
-The younger of the Verma brothers, Sameer's best show so far was reaching the final of the Hong Kong Open Super Series in November 2016. The 22-year-old is a hard-working shuttler who defeated Sai Praneeth to win the Syed Modi Grand Prix Gold title in January this year. His elder brother, Sourabh Verma, who is 24, is ranked 35th in the world and is yet another player to watch out for.
+=Family trusts=
+==No `gift' tax on property received from individual==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=No-levy-on-transfer-of-assets-to-family-24032017026045  No levy on transfer of assets to family trust, March 24, 2017: ''The Times of India'']
-==August: World Championship, Glasgow==
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=SINDHU-GOES-DOWN-FIGHTING-IN-THRILLING-WORLD-FINAL-28082017001052  Aug 28 2017: The Times of India]
-In a first, two Indians finished on the podium. Sindhu -who had earlier won bronze medals at the 2013 and 2014 World Championships -won the silver and Saina a bronze.
+`Gift' tax provisions will not apply to property received from an individual by a family trust, according to an amendment made in the Finance Bill passed by the Lok Sabha.
-==September: Five Indian men in top-20==
+High net worth individuals (HNWI) commonly use family trusts as a tool for succession planning, as it provides an upfront solution to any possible future disputes that may arise, including any challenges to a will by relatives at a later date. Family trusts also ring fence assets from any future liabilities.Shares, immovable property et al are settled (transferred) to the trust for the benefit of spouse, children and other relatives. The trust dis tributes income to the beneficiaries.
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=INDIAFILES-Five-Indian-men-shuttlers-in-top-20-29092017027032   Five Indian men shuttlers in top-20, Sep 29 2017:: The Times of India]
+The Finance Bill had introduced clause (x) in section 56(2). It provided that receipt of money or property by `any person' (which includes individuals and other entities such as private trusts and companies) without consideration or for inadequate consideration in excess of Rs 50,000 shall be subject to Income-tax (I-T) in the hands of the recipient, under the head `Income from other sources'.“The budget proposals had created uncertainty around family trusts receiving such gifts. The enacted change will bring relief to families intending to create trusts for legitimate succession planning,“ says Pranav Sayta, family business services leader at EY India.
-Five Indians find themselves in the top-20 of the BWF men's singles rankings with H S Prannoy being the biggest gainer after his quarterfinal showing at the Japan Open. Prannoy has jumped four places to be world no 15 while Kidambi Srikanth, who too lost in the quarterfinals in Japan, remains the highest-ranked Indian male player at eighth. Ajay Jayaram remains at the 20th spot while B Sai Praneeth too has not moved from his position of 17th. Sameer Verma has gained a couple of places to the 19th.
+=Film actors=
+==Promotion of film: actor not expected to incur expenditure==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Money-spent-by-Hrithik-to-promote-film-taxable-30112016021038  Money spent by Hrithik to promote film `taxable', Nov 30, 2016: The Times of India]
-==November: Sindhu, Srikanth both world’s No. 2==
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Double-joy-Sindhu-and-Srikanth-ranked-No-2-07112017023030  Manne Ratnakar, Double joy: Sindhu and Srikanth ranked No. 2, November 7, 2017: The Times of India]
+It is not an actor's responsibility or obligation to incur expenditure on promotion of his film, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) ruled recently . It disallowed an expenditure of Rs 5.6 lakh, incurred for promotion of `Gujarish', which was claimed by the lead actor, Hrithik Roshan, as deduction from his income in 2010-11.
-''The rise and rise of the Indian shuttlers has been awe inspiring.''
+While verifying Hrithik's income-tax (I-T) returns, the officer noticed that Hrithik had shown an expenditure of Rs 7 lakh for promotion of his film.The actor said it was paid to seven contestants of `Saregama', a TV show, for promotion his brand image, as he was the lead actor in the film. `Guzaarish' was a 2010 release, composed and directed by Sanjay Leela Bhansali, which also had Aishwarya Rai in the lead role. The officer held that expenditure relating to the film's making, its promotion et all was the producer's responsibility . He disallowed the expenditure claimed by the actor in his I-T computation as a business deduction.
-Four Super Series title triumphs catapulted Kidambi Srikanth to world No.2. It's a new high for Indian badminton as two shuttlers are currently ranked No.2 in the world, a feat accomplished for the first time.While PV Sindhu reached there a few weeks back, Srikanth joined her.
+=Foreign tax credit (FTC)=
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Claiming-credit-in-India-for-taxes-paid-overseas-01072016025026 The Times of India], Jul 01, 2016
-Until 2016, the script involved the success stories of Saina Nehwal and Sindhu. Saina's title-winning spree made it look difficult for others to emulate her till Sindhu started winning medals on a bigger stage. Inspired by the girls, the boys took charge in 2017 and collected more than half a dozen titles.
+Lubna Kably
-Srikanth may even become No.1 very soon.
+In a bid to reduce litigation, the Central Board of Direct Taxes (CBDT) has made it easier for Indian-resident taxpayers, including large Indian companies having overseas operations, to claim credit for the taxes borne by them abroad.
+Credit of foreign taxes (referred to as foreign tax credit, or FTC) were allowed under tax treaties with other countries and the Income Tax Act, but the absence of specific rules often led to litigation.Denial of FTC by tax authorities also resulted in double taxation on the same income in the hands of Indian-resident taxpayers.
-The efforts of coach Pullela Gopichand are responsible for the badminton revolution in the country . But the Dronacharya insisted that the success story is a culmination of a lot of things. “It is a culmination of a lot of things. Each and everybody's contribution is very important. Be it the Sports Authority of India (SAI), government, sponsors, coaches and also senior players like Saina and Kashyap,“ Gopichand said.
+FTC rules issued by the CBDT provide that credit for foreign taxes can be claimed against taxes paid in India, like income tax (be it personal or corporate), cess and surcharge. Further, Indian companies can also claim FTC against Minimum Alternate Tax (MAT). Taxpayers have to submit proof of the tax paid or deducted at source in the foreign country to claim FTC.
-Saina and Kashyap made others believe that success at highest level could be achieved.
+The earlier draft rules, issued in April, had excluded disputed foreign taxes from the ambit of FTC. Now credit can be claimed in respect of disputed foreign taxes, subject to meeting compliance requirements.
-==November: Prannoy, Saina win national titles==
+Indian-resident taxpayers pay taxes on their global income in India, including on foreign source income which has already been subject to tax overseas (see graphic). FTC eliminates double taxation on the same income. To illustrate: A parent company headquartered in India earns interest on debt given to its Sri Lankan (SL) subsidiary and is subject to a 10% withholding tax. The Indian company will pay tax in India on its global income (including the foreign source interest income). The new rules will make it easier for it to claim an FTC for the 10% tax with held in Sri Lanka.
-[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Sizzling-Saina-surprises-Sindhu-09112017027001 Suhas Nayse, Sizzling Saina surprises Sindhu, November 9, 2017: The Times of India]
-[[File: Achievements, Men's singles, Women's singles, Men's doubles, Women's doubles, Mixed doubles, 2017.jpg|Achievements, Men's singles, Women's singles, Men's doubles, Women's doubles, Mixed doubles, 2017 <br/> From: [http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Sizzling-Saina-surprises-Sindhu-09112017027001 Suhas Nayse, Sizzling Saina surprises Sindhu, November 9, 2017: The Times of India]|frame|500px]]
+According to RBI data, India Inc's overseas investments by way of debt and equity amounted to $750 million in May . FTC rules will help Indian companies with global operations get benefit of credits for foreign taxes. The rules will also help high net worth individuals who make overseas investments and bear foreign taxes on their dividend or interest income. “Clarity on grant of FTC against the MAT liability is a big positive as is the move to provide credit for `disputed foreign taxes' upon final settlement of dispute. However, the modus operandi for allowing such credit -especially when the assessments are time-barred -needs to be prescribed,“ says Girish Vanvari, tax leader at KPMG India.
-[[File: Women's singles final and Men's singles final, some facts, 2017.jpg|Women's singles final and Men's singles final, some facts, 2017 <br/> From: [http://epaperbeta.timesofindia.com/Gallery.aspx?id=09_11_2017_035_014_001&type=P&artUrl=SAINA-BEATS-P-V-SINDHU-PRANNOY-STUNS-SRIKANTH-09112017035014&eid=31808  November 9, 2017: The Times of India]|frame|500px]]
+Some hiccups remain.Gautam Nayak, tax partner, CNK & Associates, says, “The rules provide clarity about the extent of FTC available and documents to be submitted for that. However, difficulties faced by certain taxpayers have not been addressed.FTC would not be available for taxes not covered by the relevant tax treaty , such as state taxes paid in the US or branch profits' taxes paid overseas.Besides, the tax credit would be restricted to the rate of tax payable under the tax treaty , even if the actual tax paid as well as the Indian tax payable is higher. So, if excess taxes have been withheld by the foreign payer out of abundant precaution, or on account of their local laws, tax credit would be available only for tax payable under the treaty terms. For example, the US levies a higher rate of withholding of 30% if a foreign entity (say an Indian company) does not have a tax identification number. In such cases, credit in India would be available only to the extent of applicable rate prescribed under the tax treaty.“
-'''See also:'''
+=Gifts=
+==Need not be camouflaged remuneration==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=SRKs-RS15cr-Dubai-villa-cant-be-taxed-24082017009040  Lubna Kably, `SRK's RS15cr Dubai villa can't be taxed', August 24, 2017: The Times of India]
-''Achievements, Men's singles, Women's singles, Men's doubles, Women's doubles, Mixed doubles, 2017''
-''Women's singles final and Men's singles final, some facts, 2017''
+The income-tax appellate tribunal (ITAT) has rejected the tax department's view that a villa in Dubai gifted to Bollywood actor Shah Rukh Khan a decade ago was a camouflage to evade income tax. The tribunal has held that the value of the villa cannot be treated as the actor's taxable income.
+The villa had been gifted to Khan under a formal gift deed in 2007, after he obtained the RBI's approval.
-'''Back With Coach Gopi, Nehwal Claims Third National Title; Prannoy Shocks Srikanth For Maiden Crown'''
+I-T authorities were of the view that the donor, Nakheel PJSC, a Dubai-based company known for the famous Palm Projects, had gifted the villa as it was keen on using the actor's image and brand.The actor is a globally known figure and has endorsed various foreign brands for remuneration running into a few crores. Thus, the gift was seen as remuneration to Khan for utilising his brand image and in lieu of his stage performance at the company's annual day event. In light of this, the I-T authorities sought to tax the value of the villa as income in SRK's hands.
-Form and rankings went for a toss as Saina Nehwal and HS Prannoy stunned hot favourites PV Sindhu and Kidambi Srikanth to emerge champions in the 82nd Senior National Badminton Championship.
+During the assessment for the financial year 200708, I-T officials added the value of the villa -Rs 17.85 crore -to the income of Rs 126.3 crore declared by Khan in his I-T return. The actor would have had to pay I-T on this additional sum. At the first stage of appeal, the commissioner (appeals), agreed with the I-T authorities. Based on a valuation report, though, he reduced the addition to Rs 14.7 crore.
-The packed stadium with around ten thousand spectators at the Divisional Sports Complex witnessed some spectacular badminton from the country's premier shuttlers which kept them on the edge of their seats till the last point of the week-long tournament.
+Appealing before ITAT, Khan, through his counsel, said the chairman of the company, Sultan Ahmed Bin Sulayem, was his friend and thus wished to make the gift. He admitted to attending the annual day event, but said he merely addressed the employees and did not perform on stage, which would have amounted to brand endorsement. On taxation of a gift in kind, ITAT pointed out that for the relevant financial year, gifts of immovable property made without any consideration were out of the tax ambit.
-The dream summit clash between Saina and Sindhu lived up to expectations with both the players slugging it out for each point resulting in long and pulsating rallies.
+=Gratuity=
+==Payment of Gratuity(Amendment) Bill 2017==
+[https://timesofindia.indiatimes.com/business/india-business/tax-free-gratuity-limit-doubled-parliament-passes-bill/articleshow/63411961.cms  March 22, 2018: ''The Times of India'']
-Saina, seeded second, proved a point or two to her detractors by upsetting top seed Sindhu 21-17, 27-25 in 54 minutes to clinch her third title. The 27-year-old thus maintained her perfect record in the Nationals with three titles in as many appearances.
-Incidentally , she marked her comeback to the Nationals after a gap of almost ten years with the crown. As a teenager, she had triumphed at Goa in 2008 where she had defended the title she had won for the first time at Patna in 2007.
+'''HIGHLIGHTS'''
-Saina was fully fired up while taking on Sindhu as she made swift movements to jump to a comfortable lead in the first game. Besides excellent court coverage, the world No. 11 executed several bodyline smashes which Sindhu found too hot to handle. Sindhu reduced the deficit in the end but could not stop Saina pocketing the first game at 21-17.
+Parliament has passed Payment of Gratuity(Amendment) Bill 2017 paving the way for doubling the limit of tax free gratuity to Rs 20 lakh
-Stunned by the reversal, Sindhu bounced back gallantly in the second game. Although the scores were al most equal at the start, Sindhu surged ahead by three points and looked set to restore the parity.
+The Bill also notifies period of maternity leave as part of continuous service
-However, Saina was in no mood to let it go. She fought back like a true fighter and saved a couple of game points to stop Sindhu. Sindhu too was equally determined to take the match into the decider. After six deuces, Saina finally managed to convert her sixth match point.
+Parliament passed Payment of Gratuity(Amendment) Bill 2017 paving the way for doubling the limit of tax free gratuity to Rs 20 lakh and empowering the government to fix the ceiling of the retirement benefit through an executive order.
-At 26-25, both the players were engaged in another long rally , keeping the entire crowd breathless. After around twenty strokes, Sindhu fai led to return one of Saina's sharp half-shashes and hit the shuttle in the net as Saina punched the air in jubilation.
+The Rajya Sabha passed the bill, which was approved by the Lok Sabha on March 15. Besides enabling the central government to fix the ceiling of tax free gratuity, the bill will also empower it to fix the period of maternity leave through executive order.
-Saina thanked her support staff and coach Pullela Gopichand for the turnaround in her fortunes. “I am surprised with the way I played today .I moved well and picked Sindhu's difficult shots. It was a great match and I am glad that I could finish it off in two games. I would like to thank all the support staff and Gopi Sir for working hard on me in the last couple of months,“ an elated Saina told TOI af ter the final.
+It also notifies the period of maternity leave as part of continuous service and proposes to empower the central government to notify the gratuity ceiling from time to time without amending the law.
-Earlier, the men's singles final bet ween Srikanth and Prannoy also saw a big upset. Second seeded Prannoy edged out top seed and world No. 2 Sri e kanth 21-15, 16-21, 21-7 in a battle which lasted 50 minutes. It was a special mo . ment for Prannoy as he had never won any National title in any age group.I Prannoy celebrated his first entry o into the final in style by overcoming e the stiff challenge from his regular practice partner. The Kerala youngs ter also avenged his defeat to Srikanth in the semifinal of the French Open Super Series a few days back.
+Rajya Sabha Chairman M Venkaiah Naidu said in the Upper House that he had met leaders of various parties in the morning and it was decided that the House would take up the crucial Payment of Gratuity (Amendment) Bill as it was of importance to the employees.
-Ashwini Ponnappa bagged a double crown by claiming women's doubles and mixed doubles titles. Top seeds Ashwini and N Sikki Reddy stopped the giant-killing run of unseeded Maharashtra pair of Sanyogita Ghorpade and Prajakta Sawant in the women's doubles final.
+Labour Minister Santosh Kumar Gangwar then moved the bill for consideration and passage. It was passed by a voice vote without a debate.
-In the mixed doubles final, Ashwini teamed up with teenager Satiwik Sai Raj to annex the mixed doubles final. The new combination shocked top seeds Pranaav Jerry Chopra-N Sikki Reddy 21-9, 20-22, 21-17.
+The labour ministry later said in a statement that the Bill also envisages amending the provisions relating to calculation of continuous service for the purpose of gratuity in case of female employees who are on maternity leave from "twelve weeks" to such period as may be notified by the central government from time to time.
-==November: China Open: loses singles quarterfinal==
+Prime Minister Narendra Modi tweeted: "A significant pro-people measure passed in Parliament. Will benefit lakhs of Indians."
-[http://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIM%2F2017%2F11%2F18&entity=Ar03014&sk=69090E06&mode=text  Suhas Nayse, Defending champ Sindhu stunned, November 18, 2017: ''The Times of India'']
+After implementation of the 7th Central Pay Commission, the ceiling of tax free gratuity amount for central government employees was increased from Rs 10 lakh to Rs 20 lakh. The unions have been demanding for inclusion of the change in the Act.
-Defending champion PV Sindhu found Chinese teenager Fangjie Gao too hot to handle and bowed out of the China Open Super Series Premier badminton in Fuzhou on Friday.
+At present, formal sector workers with five or more years of service are eligible for Rs 10 lakh tax-free gratuity after leaving job or at time of superannuation.
+A senior government official had earlier said that the government wants to provide tax-free gratuity of Rs 20 lakh to organised sector workers at par with the central government.
-Nineteen-year-old Gao shattered the hopes of Sindhu with a clinical 21-11, 21-10 win in a one-sided women’s singles quarterfinal. Throughout the 38-minute encounter, Sindhu never looked in control and was completely surprised by the qualifier ranked 89th in the world.
+The Payment of Gratuity Act, 1972, was enacted to provide for gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments.
+The law is applicable to employees, who have completed at least five years of continuous service in an establishment that has 10 or more persons.
-Aiming to defend the title, Sindhu’s bid was foiled by an inspired local girl, regarded as one of the most promising shuttlers in China after the era of three Wangs and Olympic champion Li Xuerui.
+The amendment will also allow the central government to notify the maternity leave period for "female employees as deemed to be in continuous service in place of existing twelve weeks".
+The proposal comes against the backdrop of the Maternity Benefit (Amendment) Act, 2017 enhancing the maximum maternity leave period to 26 weeks.
-==November: Lost in Hong kong Super Series==
-[https://timesofindia.indiatimes.com/sports/badminton/pv-sindhu-loses-in-hong-kong-open-super-series-final/articleshow/61805193.cms  November 26, 2017: ''The Times of India'']
+=House rent allowance=
+== Proof needed of rent paid to kin==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=For-tax-relief-you-need-proof-of-rent-11042017001063  Lubna Kably, For tax relief, you need proof of rent paid to kin, April 11, 2017: The Times of India]
-PV Sindhu's gallant fight ended in agony as she suffered a second successive loss to world no. 1 Tai Tzu Ying of Chinese Taipei at the summit clash of the $400,000 Hong Kong Super Series.
-Playing her fifth straight tournament, Sindhu, who had a 3-7 head-to-head record against Tai before the match, never lacked in fitness and fought throughout the match before going down 18-21 18-21 to the defending champion in a 44-minute women's singles final.
+The Mumbai income tax appellate tribunal (ITAT) denied a claim on house rent allowance (HRA) by a taxpayer.
-This is Sindhu's second loss in the four finals that she reached this season. She had lost to Japan's Nozomi Okuhara at the World Championship final, while clinched two titles at India and Korea this year.
+She had paid rent in cash to her mother, but was unable to substantiate it. On the other hand, the Ahmedabad ITAT allowed the HRA exemption claimed by a taxpayer who had paid rent to his spouse.
-In the opening game which lasted 21 minutes, Tai moved to a 3-0 lead early on before Sindhu made a good judgement at the baseline to log the first points. However, Tai unleashed her wide repertoire of strokes and varied the pace well to lead 7 -2.
-Sindhu then started to dominate the rallies by using her deep clears and drew the Taiwanese close to the net. She used her reach to catch the shuttle early and placed it in difficult positions to narrow the deficit to 6-7.
+Given that the avenues available to save tax are limited for the salaried class, some employees try and take the `fullest' advantage of the income tax exemption available for HRA by paying rent to a family member with whom they are residing. It is another matter if the rent is actually paid to the relative, or if the rent receipts are genuine.
-A deceptive net return gave Tai a point. The Taiwanese then produced a smash on the deep backhand corner of Sindhu and moved to 10-7. Sindhu unleashed a body smash to perfection before Tai's flat straight return bamboozled the Indian.
+Where do these seemingly contrary ITAT decisions leave the taxpayer? The bottom line is it isn't illegal to pay rent to a close relative, but it carries a risk of a deeper probe by I-T officials and if genuineness cannot be proved, the claim would be denied, with attendant consequences.
-At the break, the Taiwan had a three point advantage.
+The bottom line is precautions are necessary when paying rent to a relative. For instance, it is better to enter into a leave and licence agreement and make payments via banking channels. Under section 10 (13A) of the I-T Act, a salaried taxpayer can claim exemption on HRA for an accommodation occupied by him, if the property is not owned by him and he has actually incurred rent expenditure on it.
-After the breather ,Tai committed a couple of unforced errors at both the flanks, while Sindhu came up with a backhand return near the net to reduce the margin to 10-13 but Tai quickly recovered to extend her domination to 16-13.
+Amarpal S Chadha, partner, people advisory services at EY-India, says: “Payment of rent to a parent or spouse will not impact the eligibility to claim HRA exemption as long as the above mentioned conditions are met and the transaction is genuine.“ “The transaction should not be a mechanism to avoid tax,“ he stresses.
-Sindhu tried to anticipate her deceptive rival and put Tai in awkward positions a few times, but she hit long or at the net to allow the Taiwanese lead 18-14.
+So decisions by the Mumbai and Ahmedabad ITATs -one accepting the tax exemption claim on payment of rent to a relative and the other denying it -may seem contrary , but the orders were based on specific facts in each case.
-A gritty Sindhu, however, kept breathing down her neck and soon clawed back at 18-18.
-During the next rally, the string of the Sindhu's racquet broke and Tai unleashed a smash which left the Indian frustrated. Tai produced another smash on Sindhu backhand to move to game point. She then grabbed the opening game after winning a video referral when her shuttle landed on the line.
+Rent paid to spouse, HRA claim allowed: In 2013, the Ahmedabad ITAT bench in Bajrang Prasad Ramdharani's case, allowed an HRA exemption claim by the taxpayer, even though rent was paid by him to his spouse. He was living with his wife but paid her rent via bank transfers. The ITAT held that the taxpayer had fulfilled the twin requirement of occupying a house not owned by him and payment of rent.
-In the second game, Sindhu was left to deal with some indecision due to the sidewise drift which gave early advantage to Tai but the gritty Indian levelled the score at 4-4 with a superb return at her rival's forehand.
+Rent paid to mother, HRA claim disallowed: But more recently , the Mumbai bench disallowed the HRA claim by Meena Vaswani who had contended that she lived with her aging mother to take care of her and paid rent to her mother in cash. While rent receipts were obtained by her, as the transaction was with her mother, she had not entered into any formal contract. Vaswani was not able to produce proof of cash withdrawals from her bank to substantiate the rental payments. Moreover, the authorities were able to prove that she was not residing with her mother, but in another apart ment nearby with her husband and daughter. The ITAT agreed with I-T authorities that the transaction was a sham to obtain a tax benefit.
-The duo moved to 7-7 before Tai hit wide and lost a referral too.
+The fine print: “There is nothing in the I-T Act to prevent a salaried person from claiming exemption under section 10(13A) on the basis of rent paid to a close relative. However, section 143(2) empowers the I-T officer to examine the genuineness of such expense,“ says Ameet Patel, tax partner at Manohar Chowdhry & Associates, a CA firm. “In the normal course, a taxpayer would not pay rent to his spouse or parent. I personally would never advise any client to enter into such a transaction. It is but natural for the I-T officer to look upon such arrangements with suspicion,“ adds Patel.
-Sindhu produced a overhead backhand flick, a deceptive return at the forecourt and another smash to move to 10-7 before entering the lemon break with a two-point advantage when Tai found the net.
+The Mumbai ITAT placed reliance on the Indian Evidence Act, 1872, and took the position that the onus of proving that the rental transaction was real lay with the taxpayer.
-However, Tai dominated the proceedings after the interval, despite a fighting Sindhu trying to snap at her heels.
-The Indian lost a referral and then failed to retrieve a shot at the forecourt as Tai led 12-11.
+= Income Tax returns=
+==Who has to file income tax returns==
+[[File: Declaring investments through Form 12BB, 2016 onwards.jpg| Declaring investments through Form 12BB, 2016 onwards; Graphic courtesy: [http://epaperbeta.timesofindia.com/Gallery.aspx?id=08_05_2016_035_016_002&type=P&artUrl=3-CHANGES-IN-THE-WAY-YOU-DECLARE-INVESTMENTS-08052016035016&eid=31808 ''The Times of India''], May 8, 2016|frame|500px]]
-At 13-12, Sindhu was not allowed a video referral by the line judge and after that the match slipped away from the Indian even as Tai produced a stroke on Sindhu's forehand to perfection. With the Indian failing to finish the rallies, it allowed Tai to lead 17-12.
+''Salaried persons earning up to Rs 5 lakh annually''
-Another weak return by Sindhu and Tai was leading 18-12. The Indian produced a cross court smash to break the rhythm, but she again hit long. Tai faltered at the net and then miscued a lift from the front court. She then hit long as Sindhu conjured up hopes of a turn around, moving to 16-19.
+'''Salaried persons earning up to Rs 5 lakh annually will have to file income tax returns: Central Board of Direct Taxes'''
-However, a long rally ensued which ended with Sindhu's lift going long and Tai earned the match point at 20-16. Sindhu saved two match points before a perfect drop shot from Tai sealed the title for the Chinese Taipei shuttler.
+PTI | Jul 22, 2013
-==2017, Dec. rankings==
+[http://timesofindia.indiatimes.com/business/india-business/Salary-earners-up-to-Rs-5-lakh-need-to-file-I-T-return-CBDT/articleshow/21248270.cms The Times of India]
-[http://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2017%2F12%2F08&entity=Ar03116&sk=0E6FFC09&mode=text  Srikanth fourth in rankings, December 8, 2017: ''The Times of India'']
-Kidambi Srikanth improved a rung to be at the 4th position, while promising Indian shuttler Lakshya Sen entered the World top 100 after jumping 19 places to reach the 89th spot in the latest BWF ranking.HS Prannoy and B Sai Praneeth were static at the 10th place and 17th spots respectively. In women’s singles, PV Sindhu and Saina Nehwal retained their third and 10th places respectively.
+The CBDT had exempted salaried employees having a total income of up to Rs 5 lakh including income from other sources up to Rs 10,000 from the requirement of filing income tax return for assessment year 2011-12 and 2012-13, respectively.
-=2018=
+However, for the assessment year 2013-14 and thereafter, salaried persons earning up to Rs 5 lakh annually will have to file income tax returns, Central Board of Direct Taxes (CBDT) said on Monday.
-== BWF World Tour==
-=== Saina loses to Tzu Ying in QF===
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F27&entity=Ar03320&sk=A7C55700&mode=text  October 27, 2018: ''The Times of India'']
+Earlier in May 2013, the CBDT had made E-filing of income tax return compulsory for the assessment year 2013-14 for persons having total assessable income exceeding Rs 5 lakh.
-Olympic medallist Indian shuttler Saina Nehwal’s impressive run at the French Open ended with yet another loss to World No. 1 Tai Tzu Ying, this time at the quarterfinals of the BWF World Tour Super 750 tournament here on Friday.
+The CBDT said that the exemption has been not been extended as the facility for online filing of returns has been made "user-friendly with the advantage of pre-filled return forms".
-Saina looked in good touch initially but couldn’t match the pace of Tzu Ying later on to squander four game points and lose the opening game. She was no match to her rival in the second and eventually went down 20-22, 11-21 in the quarterfinals here.
+These e-filed forms also get electronically processed at the central processing centre in a speedy manner, it said.
-It was Saina’s 12th straight defeat to the Chinese Taipei shuttler, who showed incredible temperament and determination to seal the contest after being 9-16 and 16-20 down in the opening game. Tzu Ying now has an overwhelming 14-5 head-to-head record against Saina.
+For filing returns, an assessee can transmit the data in the return electronically by downloading ITRs, or by online filing.
-Earlier, PV Sindhu advanced to the quarterfinals with a straight-game win over Japan’s Sayaka Sato but B Sai Praneeth crashed out in men’s singles on Thursday night. Sindhu, seeded third, dished out a compact game to outwit Sayaka 21-17, 21-16 in a second round match on Thursday to set up a clash with seventh seeded Chinese He Bingjiao.
+Thereafter the assessee had to submit the verification of the return from ITR-V for acknowledgement after signature to Central Processing Centre.
-However, Praneeth was no match for Asian Games champion Jonatan Christie of Indonesia, going down 16-21, 14-21 in a men’s singles match.
+==Not filing I-T returns?Imprisonment,fine==
+''' Not filed I-T returns? You face jail & fine '''
-The men’s doubles pairs of Satwiksairaj Rankireddy and Chirag Shetty and Manu Attri and B Sumeeth Reddy too put up a good show, progressing to the quarterfinals with straight game wins.
+TNN | Aug 17, 2013-
-==China Open World Tour==
+[http://timesofindia.indiatimes.com/city/mumbai/Not-filed-I-T-returns-You-face-jail-fine/articleshow/21871680.cms The Times of India]
-=== Srikanth advances; Prannoy bows out===
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F09%2F20&entity=Ar02720&sk=850D6959&mode=text  Suhas Nayse, Satwiksairaj-Ashwini Pair Moves Up, September 21, 2018: ''The Times of India'']
+MUMBAI: Those defaulting in filing income tax returns are liable to prosecution, the I-T department has said.
-A day after Manu Attri and Sumeeth Reddy knocked out world No. 13 Chinese Taipei pair, Satwiksairaj Rankireddy and Ashwini Ponnappa stunned world No. 12 pair of Marcus Ellis and Lauren Smith of England in the China Open World Tour Super 1000 tournament in Changzhou.
+If the tax evaded exceeds Rs 25 lakh, the defaulter can be sentenced to a minimum imprisonment of six months and maximum of seven years, besides being asked to pay a fine. If the tax evasion amount is less than Rs 25 lakh, the imprisonment could range between three months to two years in addition to fine.
-Reigning national mixed doubles champions Satwiksairaj and Ashwini overcame a mid-match slump to edge out Commonwealth Games silver medallists Ellis and Smith 21-13, 20-22, 21-17.
+Recently, the additional chief metropolitan magistrate, New Delhi, sentenced a taxpayer to six months' imprisonment in one assessment year and one year imprisonment in subsequent assessment year for repeating the offence of not filing income tax returns.
-Kidambi Srikanth overcame a late fightback from Rasmus Gemke to post a 21-9, 21-19 win in the men’s singles first round. In a first match between the two players, seventh seed Srikanth ousted Denmark’s Gemke, ranked 23 in the world, with brilliant display.
+==2018: Changed format==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F04%2F07&entity=Ar02812&sk=8B686481&mode=text  Changes you need to know for I-T returns, April 7, 2018: ''The Times of India'']
-The 2014 champion will now lock horns with Suppanyu Avihingsanon of Thailand for a spot in the quarters. The Thai player is world No. 28 and Srikanth has a perfect 2-0 record against him. But they havent’s faced each other since 2013 Malaysia GP Gold.
+[[File: What’s different in the I-T return forms notified for the assessment year 2018-19.jpg|What’s different in the I-T return forms notified for the assessment year 2018-19 <br/> From: [https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F04%2F07&entity=Ar02812&sk=8B686481&mode=text  Changes you need to know for I-T returns, April 7, 2018: ''The Times of India'']|frame|500px]]
-Srikanth’s practice partner HS Prannoy failed to clear the first round hurdle. The national champion lost to eighth seed Ng Ka Long Angus of Hong Kong 16-21, 12-21.
+When you file your income tax (I-T) returns in July, you will have to fill details such as allowances that are not exempt, value of perks, and profits in lieu of salary in the new I-T return forms notified for the assessment year 2018-19.
-In a big upset, Gao Fangjie of China upset world No. 1 and top seed Tai Tzu Ying of Chinese Taipei 21-17, 21-16 in 37 minutes.
+A one-page simplified ITR Form-1 (Sahaj) can be filed by an individual who is a resident having income up to Rs 50 lakh and who is receiving income from salary, one house property and other income (interest, etc), the I-T department said. The detailed break-up of salary was not part of ITR forms last year but has been added this year.
-INDIAN RESULTS (Round 1) Men’s singles: 7-Kidambi Srikanth bt Rasmus Gemke (Denmark) 21-9, 21-19; HS Prannoy lost to 8-Ng Ka Long Angus (Hong Kong) 16-21, 12-21; Men’s doubles: Satwiksairaj Rankireddy-Chirag Shetty lost to Goh V Shem-Tan Wee Kiong (Malaysia) 19-21, 20-22; Women’s doubles: Ashwini Ponnappa-N Sikki Reddy lost to Kim So Yeong-Kong Hee Yong (Korea) 10-21, 18-21; Mixed doubles: Satwiksairaj Rankireddy-Ashwini Ponnappa bt Marcus Ellis-Lauren Smith (England) 21-13, 20-22, 21-17.
+Similar details have to provided for income from house property. Gender mention requirement has been removed from ITR-1. Non-resident individuals cannot use ITR-1 to file returns and will have to use ITR-2 or -3, depending on their nature of income in India. Tax experts said this could raise their compliance costs.
-===Sindhu, Srikanth reach quarters===
+The ITR-1form is similar to the one for the previous assessment year, which had been used by 3 crore taxpayers who filed their returns using this form. You will also have to provide details of all bank accounts held in the country at any time during the previous year, except dormant accounts.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F09%2F21&entity=Ar02509&sk=BF30956D&mode=text  Suhas Nayse, September 21, 2018: ''The Times of India'']
+The requirement of furnishing details of cash deposit made during a specified period as provided in the ITR form for the assessment year 2017-18 has been done away. This provision was added in the aftermath of the demonetisation drive.
-PV Sindhu and Kidambi Srikanth survived scares against their respective opponents — both from Thailand — to reach the quarterfinals of the China Open in Changzhou on Thursday.
+ITR Form-2 has also been rationalised by providing that Individuals and HUFs (Hindu Undivided Families), having income under any head other than business or profession, shall be eligible to file returns under this form. The Individuals and HUFs, having income under the head business or profession, shall file either ITR Form-3 or ITR Form-4, the department said.
-Third seed Sindhu rallied against Busanan Ongbamrungphan 21-23, 21-13, 21-18 in a marathon match which lasted for an hour and nine minutes. Sindhu went in as the favourite, with a 8-0 head-tohead record against the 22-year-old. However, Busanan came up with a much-improved display to test the Indian.
+“There are more than 25 key changes in current year ITR forms in comparison to last year. Some of these changes suggest that the focus of new ITR forms is to get more information from unlisted companies, trusts and taxpayers, who have opted for presumptive taxation scheme,” said Naveen Wadhwa, deputy general manager at Taxman.
-In the men’s singles second round, Srikanth came from a match-point down to pip Suppanyu Avihingsanon 21-12, 15-21, 24-22 in 63 minutes.
+“Further, the ITR forms also require the business entities to report the GST transaction, which would help the department to independently reconcile the transactions reported by them in income-tax returns and GST returns,” he said.
-After promising a lot in the last couple of days, India’s doubles campaign came to an end in the pre-quarters.
+In case of non-residents, the requirement of furnishing details of any one foreign bank account has been provided for credit of refund. “There is no change in the manner of filing of ITR forms as compared to last year. All these ITR forms are to be filed electronically,” the department said.
-Satwiksairaj Rankireddy and Ashwini Ponnappa lost 14-21, 11-21against top seeds Siwei Zheng and Huang Yaqiong of China. Pranav Jerry Chopra and Sikki Reddy also could not get the better of sixth seeds Christinna Pedersen and Mathias Christiansen of Denmark and lost in straight games. In the men’s doubles, Mannu Attri and B Sumeeth Reddy were overwhelmed by Chen Hung Ling and Wang Chi-Lin 9-21, 10-21.
+Any individual who is 80-year-old or more has the option to file paper returns as well as an Individual or HUF whose income does not exceed Rs 5 lakh and who has not claimed any refund in the return of income.
-===Sindhu, Srikanth lose in quarters===
+Tax experts said additional fields for penalty due to delayed filing have been added in ITR-1 and ITR-2.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F09%2F22&entity=Ar03012&sk=C28E9324&mode=text  Suhas Nayse, September 22, 2018: ''The Times of India'']
+“The new Form ITR-1 (Sahaj) for assessment year 2018-19 does not request for the residential status of the individual and it is neither applicable to individuals qualifying as Not Ordinarily resident (NOR) nor to non-residents (NR). So Indian employees who have left India for overseas employment in the first half of the year and qualifying as non-resident would be required to file their India tax returns in ITR-2, even though they have annual taxable income up to Rs 50 lakh,” said Alok Agarwal, senior director at Deloitte.
-Indian challenge in China Open Badminton tournament came to an end with the defeats of PV Sindhu and Kidambi Srikanth at Changzhou on Friday. Third seed Sindhu went down fighting against Chen Yufei of China 11-21, 21-11, 15-21 in 52 minutes. The fifth seed Chinese shattered the hopes of the Indian with a commanding performance.
+=='Returns can be filed after I-T notice is issued'==
+[https://timesofindia.indiatimes.com/business/india-business/itat-can-file-revised-return-after-notice-issued-by-i-t/articleshow/64689438.cms  Lubna Kably, ITAT: Can file revised return after notice issued by I-T, June 22, 2018: ''The Times of India'']
-The 2016 champion Sindhu had a psychological advantage going into the match against the local girl as she was leading 4-2 in terms of head-to-head record. Sindhu had also won the last two encounters against the Chinese but on Friday she failed to extend her dominance and crashed out.
+[[File: ITAT- Can file revised return after notice issued by I-T; The details of the case.jpg|ITAT- Can file revised return after notice issued by I-T; The details of the case <br/> From: [https://timesofindia.indiatimes.com/business/india-business/itat-can-file-revised-return-after-notice-issued-by-i-t/articleshow/64689438.cms Lubna Kably, ITAT: Can file revised return after notice issued by I-T, June 22, 2018: ''The Times of India'']|frame|500px]]
-In the deciding third game, Yufei established an early lead and maintained it till the end. The only survivor in the men’s singles Srikanth also bowed out. The seventh seed found third seed Kento Momota too hot to handle and lost 9-21, 11-21 in 28 minutes.
-The in-form Japanese made the light work of former world No. 1 and stormed into the semifinals in style. The last week champion at the Japan Open look set to pocket yet another title in the dream season. With this crushing win, Momota now improved his career record against Srikanth to 8-3. It was second quarterfinal defeat for Srikanth in as many weeks.
+'''HIGHLIGHTS'''
-Indian coach Amrish Shinde was disappointed with the result but admitted that Sindhu fought gallantly.
+Tax benefit claimed by taxpayers in revised income-tax returns cannot be denied byI-T officers because the revised return has been filed after issue of notice
-===Sindhu, Srikanth ousted in QF===
+Currently, the time limit for filing a revised return is before the expiry of twelve months from the last day of the financial year or before the completion of I-T assessment, whichever is earlier
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F11%2F10&entity=Ar02105&sk=16D0D5EF&mode=text  November 10, 2018: ''The Times of India'']
-Olympic silver medallist P V Sindhu and Kidambi Srikanth were ousted from the China Open World Tour Super 750 on Friday after losing their singles quarterfinals matches here. While Sindhu yet again struggled to go past China's He Bingjiao in women's singles, Srikanth fell in straight-games to world number 3 Chou Tien Chen in the men's singles event. Third seeded Sindhu lost 17-21 21-17 15-21 to the eighth-seeded Chinese. It was Indian shuttler’s third loss to Bingjiao, who had defeated her at the Indonesia Open and French Open in July and October this year.
+A tax benefit claimed by a taxpayer in his revised income-tax return cannot be denied outright by an income-tax (I-T) officer merely because the revised return has been filed after issue of notice, income-tax appellate tribunal (ITAT) has said.
-Later Srikanth paid the price for being too erratic as he lost 14-21, 14-21 in 35 minutes to Chen, who has been in good form this season with three titles from five final appearances.
+However, the revised return needs to be filed within the time limits set out in the I-T Act. This order of the Mumbai bench of the ITAT, passed on June 20, will provide relief to several taxpayers. When a mistake is made in the original I-T return, such as not disclosing an income correctly or not claiming a tax deduction, section 139 (5) the I-T Act permits a revised return to be filed to correct the errors.
-Earlier, the left-handed Bingjiao controlled the rallies by executing her strokes perfectly and used her deft touch to outwit Sindhu. The Indian frittered away a 8-3 advantage early on to lose the opening game but made a roaring comeback in the second before losing the decider after a late charge.
+Currently, the time limit for filing a revised return is before the expiry of twelve months from the last day of the financial year or before the completion of I-T assessment, whichever is earlier.
-Sindhu had started well to take a 4-1 lead early on before moving to 8-3 but Bingjiao managed to claw back at 9-9. Sindhu made it to 17-18 before Bingjiao pocketed the opening game. In the second game, Sindhu turned the tables as she moved to 6-5 and then grabbed a 11-7 lead. In the decider, Bingjiao was more sure-footed than Sindhu as she executed her plan well to take a 11-6 advantage at the interval. The Chinese managed to eke out a 15-8 lead before Sindhu produced a late charge to claw back to 15-16. But Bingjiao didn’t give any chance to the Indian after that as she reeled off the remaining points to cement her place in the semifinals.
+In this case before the ITAT, Mahesh Hinduja had declared a total income of Rs 4.91 lakh in his original return for the financial year 2010-11. He later filed a revised return declaring a total income of Rs 6.24 lakh. In this revised return he also disclosed long-term capital gains (LTCG) of nearly Rs 50 lakh. However, as he had invested 1.15 crore in a new residential house, he claimed a deduction under Section 54 of the I-T Act. Thus, capital gains were not offered for tax.
-== Commonwealth Games==
+Under the Act, if an investment is made in another house in India, within the stipulated period of time, then the 'cost of the new house' is deducted and only the balance component of the LTCG is taxable. Thus, if the amount of capital gains is equal to or less than the cost of the new house, the entire sum of LTCG is not taxable.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F04%2F16&entity=Ar02101&sk=1E251F31&mode=text  Biju BabuCyriac, Displaying Her Trademark Grit, A Resurgent Nehwal Downs Sindhu For A Famous Triumph, April 16, 2018: ''The Times of India'']
-[[File: Saina Nehwal beats PV Sindhu 21-18, 23-21, at the  Commonwealth Games, 2018.jpg|Saina Nehwal beats PV Sindhu 21-18, 23-21, at the  Commonwealth Games, 2018 <br/> From: [https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F04%2F16&entity=Ar02101&sk=1E251F31&mode=text  Biju BabuCyriac, Displaying Her Trademark Grit, A Resurgent Nehwal Downs Sindhu For A Famous Triumph, April 16, 2018: ''The Times of India'']|frame|500px]]
+To ensure that the taxpayer has not underreported his income or paid less tax, the I-T Act empowers I-T officials to issue a notice asking for further evidence. As the revised return was filed by Hinduja after he had received a notice under section 143(2), the I-T official rejected his claim for deduction. The litigation finally reached the level of the ITAT.
-One is the pathbreaker in the sport in India. The other, the opponent, is the new sensation. And when the two clashed in the final of women’s badminton at the Commonwealth Games here, spectators the world over got nearly an hour of exhilarating edge-ofthe-seat action. Former World No. 1 Saina Nehwal gave a master-class of attacking badminton to win India’s 26th gold, beating teammate and Olympic silver medallist PV Sindhu on the final day at the Games here on Sunday.
+The ITAT noted that the I-T official had rejected the revised return of income as invalid but at the same time had accepted the higher income offered in the revised return, including the LTCGs. Only the claim of deduction under Section 54 had been rejected. "The I-T official has adopted a very selective approach in respect of the revised return of income filed by the taxpayer," remarked the ITAT.
-It was one of India’s bestever showing in a Games abroad — 26 gold, 20 silver and 20 bronze, across nine disciplines. And fittingly, India’s final gold came from the pioneering shuttler Saina, who beat Sindhu in 21-18, 23-21 in the final. The 56-minute blockbuster got the fans on the edge of their seats at the Carrara Sports Arena as the two of the world’s best players traded rallies — the best being a 64-stroke heart-stopper in the second game — and fought tooth and nail for each point.
+The ITAT held that the I-T Act does not bar a taxpayer from filing a revised I-T return after issue of notice under Section 143 (2). Hinduja's case was sent back to the I-T official for examining and allowing the deduction, subject to the fulfilment of conditions prescribed for such claim.
-It was a clash of contrasting styles. Saina, who opened the proceedings, took a 6-4 lead in the first game forcing the point with a superb crosscourt drop after dictating terms in a long rally. Soon she was stretching her lead to 12-6 but an agitated Sindhu pulled the next three points back to narrow the gap to 9-12.
+==Wrong information in I-T returns==
+[https://timesofindia.indiatimes.com/business/india-business/filing-wrong-itrs-by-salaried-class-will-lead-to-complaint-to-employers/articleshow/63816022.cms  April 19, 2018: ''The Times of India'']
-Saina, appearing more agile now after having shed some weight during her preparations for Gold Coast, then forced an error from Sindhu at the net but the lanky Hyderabadi returned the compliment to stay in the hunt at 11-16. Even as Sindhu tried to wriggle out of the corner, Saina moved ahead to 20-14 and set up six game points. Sindhu now found a different gear to race up with her experienced teammate saving four game points, but Saina was only waiting for her chance and pulled the trigger smashing the winner to an open court to take the first game at 21-18.
-The start of the second game saw Saina drifting a bit and Sindhu did the needful to stretch her lead to 9-6 following a 39-stroke rally which Saina netted. A mix of Sindhu’s class and Saina’s errors helped her pull away to 15-10, but the latter was in no mood to let the momentum shift. She came up with series of powerful smashes that Sindhu couldn’t return.
+'''HIGHLIGHTS'''
-At 14-15, Saina appeared to have the match under control, but Sindhu, who recovered from a minor injury, was in no mood to go down without a fight as she ran up to an 18-14 lead and then took it to 19-16. But Saina was not to let her attacking ways go and won a draining 64-shot rally, it lasted all of 68 seconds, before going level at 19-19.
+I-T department has said those who file wrong ITR will be prosecuted and their employers will be intimated to take action
-Sindhu then served on game point but it was soon 20-20. Next it was Sindhu’s turn to save a match point but it was all over soon with Saina smashing away to victory getting past of the best of retrievals from Sindhu. It was an epic clash and in the end, her experience and a seemingly newfound ability from Saina came to fore announcing that a change of guard at the top will still take some time.
+The advsiory comes in the backdrop of the investigation wing of the department, in January, unearthing a racket of extracting fraudulent tax refunds by employees
-'''Srikanth ends second best'''
-World No. 1 Kidambi Srikanth was forced to settle for silver after losing a riveting match in the men’s singles final to Malaysian Lee Chong Wei 21-19, 14-21, 14-21.
+The Central Processing Centre (CPC) of the department in Bengaluru, that receives and processes the Income Tax Returns (ITRs), has issued an advisory specifying such taxpayers should not "fall prey" to unscrupulous tax advisors or planners who help them in preparing wrong claims to get tax benefits.
-Chong Wei raced to a 5-0 lead in the opener but Srikanth, who beat the Malaysian in the team event here, caught up with the 36-year-old three-time Olympic silver medalist at 7-7. The next seven points saw an array of superb strokes from both the players. The two were again level at 15-15, 17-17 and 19-19 but Srikanth kept his nose in front finding vacant spots on the court. In the end, it was Srikanth who took the game at 21-19.
+Calling it a "cautionary advisory" on reports of tax evasion by under-reporting of income or inflating deductions or exemptions by salaried taxpayers, the department said such attempts "aided and abetted by unscrupulous intermediaries have been noted with concern".
-The second game, which saw a 42-stroke rally, began in the same fashion with both the players going for the deceptive angles and net flicks in addition to the power hitting. It was all even till the break at 11 but Chong Wei soon opened up a lead. The Malaysian opened up a big lead again in the third as Srikanth got buried under his errors. Chong Wei was up 7-1 in no time and from then on Srikanth had a hard time catching up.
+"Such offences are punishable under various penal and prosecution provisions of the Income Tax Act," it said.
-==Denmark Open BWF Tour Super 750==
+The advsiory comes in the backdrop of the investigation wing of the department, in January, unearthing a racket of extracting fraudulent tax refunds by employees of bellwether information technology companies based in Bengaluru, in alleged connivance with a tax advisor.
-===Saina beats Tunjung, enters final; Srikanth loses to Momota===
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F21&entity=Ar02518&sk=BE64F40C&mode=text  Manne Ratnakar, October 21, 2018: ''The Times of India'']
+The CBI recently registered a criminal case to probe this nexus.
-Saina Nehwal was one step away from winning her first major title in two years at the Denmark Open in Odense. However, Kidambi Srikanth was dethroned in the semifinal by world champion Kento Momota of Japan 16-21, 12-21. Momota was at his retrieving best in the semifinal. Saina steamrolled reigning junior world champion Gregoria Mariska Tunjung of Indonesia 21-11, 21-12 in just 30 minutes to book a final berth against Tai Tzu Ying of Chinese Taipei.
+The tax filing season for salaried class taxpayers has just begun with the Central Board of Direct Taxes (CBDT), that frames policy for the department, recently notifying the new ITRs.
-Saina told Badminton Europe that she is happy to be in a final after a long gap. "I feel great to be playing finals. After the surgery I have not been getting my rhythm. But after the Asian Games, I started playing well and moving well. Even at the Korea Open I lost a very close match against Okuhara. She went on to win that tournament. I had to be patient and here I am playing the finals. Belief makes a lot of difference," Saina said, adding that semifinal is not as easy as the scoreline suggests.
+The one-page advisory added that if the department notices any fraudulent claims in their ITRs, such claims "may be punishable under provisions of the IT Act and this may also delay issuance of their refunds."
-"It's not easy to play someone who plays so many tricky shots. It was tough but I was able to pick those shots. I moved well and my shots were much more sharper."
+"Taxpayers, are, therefore strictly advised not to fall prey to false promises or mis-advice by unscrupulous intermediaries and submit wrong claims in their ITRs, which would be treated as cases of tax evasion.
-Incidentally, this was Saina's first Super Series final in two years after she won the Australian Open. The 28-yearold, who was in full flow against Japanese shuttlers Akane Yamaguchi in second round and Nozomi Okuhara in the quarters, was at her best against Mariska on Saturday.
+"In the cases of such wrong claims by the government/PSU employees, reference would be made to the concerned vigilance division for action under conduct rules," it added.
-The world No.19 Indonesian, who has never beaten a top ranked player so far, proved no match for the Indian. Saina toyed with Mariska.
+The advisory added that the department possesses an "extensive risk analysis system" that is aimed at identifying persons who are non-compliant and aim to subvert the trust based-system "envisioned" while processing of ITRs at the CPC, which it said is automated and devoid of any human interface.
-Women's doubles pair of Ashwini Ponnappa and Sikki Reddy went down to top seeds Yuki Fukushima and Sayaka Hirota of Japan 14-21, 12-21.
+"In all such cases of high risk , the department may examine and verify the details submitted by taxpayers in their ITR subsequent to the processing of returns," it said.
-===Saina beats Yamaguchi for first time in 4 years ===
+It also asked tax planners and advisors to "confine their advice to taxpayers within the four corners of the IT Act" and warned that the violators will be prosecuted and such instances will also be referred to enforcement agencies like the CBI and the Enforcement Directorate (ED) for criminal prosecution.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F19&entity=Ar02613&sk=94D968AC&mode=text  Manne Ratnakar, Saina ends the jinx, October 19, 2018: ''The Times of India'']
+=Joint I-T liability=
+==Co-ownership of property==
+[http://epaperbeta.timesofindia.com//Article.aspx?eid=31808&articlexml=Co-ownership-of-property-doesnt-mean-joint-I-13082016021026 ''The Times of India''], Aug 13 2016
-''Beats Yamaguchi For First Time In 4 Years To Enter QF''
+Lubna Kably
-Saina Nehwal was at her fluent best as she outclassed world No. 2 Akane Yamaguchi of Japan 21-15, 21-17 to move into the quarterfinals of the Denmark Open BWF World Tour Super 750 tournament in Odense on Thursday.
+If the spouse has not invested in a property and is merely a co-holder, then on sale of such property , she cannot be liable for tax on capital gains, the Mumbai IncomeTax Appellate Tribunal (ITAT) has recently ruled.
+The ITAT order will help many taxpayers as married couples are increasingly opting for property registration in joint names, even if only one of them is the investor.
-This was Saina’s first victory over the Japanese in four years. The last time Saina triumphed against Yamaguchi was in the China Open back in 2014.
+Anil Harish, an advocate specializing in real estate, said: “Co-holding of property is popular. Often the name of a spouse (say wife) is added to provide a sense of comfort, to ensure ease of succession on death of the partner or other reasons such as facilitating voting in a general body meeting of the housing society .“
-Sameer Verma also continued his good run and joined Saina in the quarterfinals along with the women’s doubles pair of Ashwini Ponnappa and Sikki Reddy. Extending his giant-killing run, Verma, who ousted world No.2 in the first round, accounted for Asian Games champion Jonatan Christie in the second. Verma registered a hard fought 23-21, 6-21, 22-20 victory against the Indonesian in the one hour-10 minute encounter. Verma will now square up against the winner of the match between Kidambi Srikanth and Lin Dan of China.
+The ITAT gave the order on Wednesday while hearing a case of a medical professio nal, Vandana Bhulchandani.
-Unseeded pair of Ashwini and Sikki knocked out seventh seeded south Koreans Lee So Hee and Shing Seung Chan in three games 18-21, 22-20, 21-18.
+An I-T officer, based on information in his possession, noted that Bhulchandani had not disclosed the capital gains arising from the Rs 2.12-crore sale of a property in Parel that she jointly held with her husband in her I-T return for the financial year 2008-09.
-Earlier, Saina eased past Yamaguchi in just 36 minutes. This is Saina’s first victory against Yamaguchi since November 2014. The Indian ace lost to the Japanese shuttler six consecutive times before the Denmark meeting. A relieved Saina, who was struggling in major BWF events, told Badminton Europe that she was happy to break the jinx against Yamaguchi.
+She informed the I-T officer that her husband had made the entire investment and the property was reflected in his books of accounts--from the date of purchase till the date of sale. The officer also observed that Bhulchandani's husband did not incur any I-T liability on the capital gains arising from the sale--the husband had set off the short-term capital gains arising from the Parel property sale against the short-term capital losses incurred by him on the sale of shares. Under the I-T Act, short-term capital losses can be set off against capital gains arising in the same financial year and only the surplus, if any , is taxable.
-===Saina loses to Tai in the final===
+But the I-T officer claimed that the entire arrangement was done to avoid tax payment and held Bhulchandani liable for 50% of the total short-term capital gains arising from the property sale and added Rs 45.38 lakh to her taxable income. Short-term capital gains are taxed at the applicable I-T slab rates, which depending on an individual's income varies between 10% and 30% in addition to applicable surcharge and cess.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F22&entity=Ar02405&sk=D387627F&mode=text  Manne Ratnakar, Saina fails to solve Tai puzzle yet again, October 22, 2018: ''The Times of India'']
+Bhulchandani approached the commissioner of income-tax (appeals) who directed deletion of the addition.The I-T officer then filed an appeal before the ITAT. But the tribunal took into cognizance that the husband had bought the property , which was duly reflected in his books of accounts, and had also disclosed the details of the sale in his I-T return and thus, dismissed the appeal.
-Saina Nehwal did her best, came back strongly but couldn’t find a way to get past Tai Tzu Ying in the final of the Denmark Open BWF Tour Super 750 tournament in Odense on Sunday.
+“The ITAT order is clear and correct. It will provide clarity in cases of co-holding of property , where the spouse has not made any monetary investment,“ said Harish.
-Once again, the world No.1 from Chinese Taipei arguably proved the most difficult opponent of Saina’s career. Though Saina won a game, raising hopes of a fine come-from-behind victory, Tai still reigned supreme at 21-13, 13-21, 21-6.
+=Notice pay deducted by employer =
+==Cannot be taxed==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Notice-pay-deducted-by-employer-cannot-be-taxed-21042017013042  Lubna Kably, `Notice pay deducted by employer cannot be taxed', April 21, 2017: The Times of India]
-Tai became the first shuttler from Taipei to clinch the Denmark Open title. Though she has won almost all the Super Series titles, Denmark always proved a roadblock for her. On Sunday, despite a little bother provided by Saina, that record was set right.
-In her element right from the first point, Tai repeatedly changed her tactics to quell a determined Saina, who fought ferociously for most part of the final.
+The Income-tax Appellate Tribunal (ITAT), which adjudicates Incometax (I-T) disputes, has held that an amount deducted by an employer for not serving out a notice period cannot be brought to tax.
-Her crafty net game, loaded with a lot of disguise and accurate on-the-line smashes earned her easy points as it came coupled with her effortless retrieving ability. Tai was already leading 11-5 at the break.
+In this case, two companies while settling dues had deducted salary for the notice period which the person had not served, but this deduction was not taken into account during tax assessment.However, ITAT (Ahmedabad bench) in its order dated April 18, said only salary received would be taxable, and not portions which were deducted by a company for not serving out a notice period.
-Saina upped the ante and played some brilliant smashes but Tai did well to protect the big lead she had gained.
+Under the I-T Act, salary income is taxable on a due basis, regardless of whether it has been actually paid to an employee or not. And typically, when an employee resigns but does not serve out the notice period (provided for in the employment agreement), the employer deducts salary attributed to this period. However, I-T authorities do not consider such deductions and seek to tax entire salary due (that is, salary before allowing for such deduction). Hence, the order acquires significance.
-In the second game, Saina pushed the shuttle back and hardly allowed Tai to come near the net. The ploy worked as Tai's returns looked weak giving the Indian an upperhand. Saina took an 8-3 lead and maintained that control throughout the game. Despite losing the second game, Tai realised where she was going wrong. Towards the end, she had begun returning sharply packing the bird with a lot of pace. This is her 11th straight loss against Tai since 2013. But the silver lining for the Indian was that she had managed to extend the tie to three games for the first time in three years. The last time Saina won a game against Tai was in December 2015.
+“The ITAT has recognised the concept of real income, which is well accepted under I-T laws. It held that the salary against which notice pay was adjusted had not become due, as the net amount was paid by the employer. The employee had no right to receive the portion of the salary that had been deducted, under the terms of employment. Thus, the deducted amount could not be held as taxable salary income,“ said Gautam Nayak, tax partner, CNK & Associates.
-'''Momota triumphs'''
+In this case, which pertains to financial year 2009-10, N Rebello, had resigned from two companies, viz: Reliance Communication and Sistema Shyam Teleservices. Both companies had deducted a notice pay of Rs 1.10 lakh and Rs 1.66 lakh respectively and handed balance salary dues to Rebello. Accordingly in his I-T return, Rebello claimed as a deduction Rs 2.76 lakh from gross salary income, as this amount was not received. I-T authorities, in the course of assessment, denied such deduction. Commissioner (Appeals), which is the first level of appeal for a taxpayer, also upheld the action of the I-T.
-Japan’s Kento Momota won the men’s singles title with a 22-20, 16-21, 21-15 victory against Chou Tien Chen of Chinese Taipei in the final.
+The Commissioner (Appeals) pointed out that under section 15 of the I-T Act, tax is triggered when the salary becomes due, irrespective of whether it is paid or not. Secondly , section 16 of the I-T Act does not provide for any deduction made by the employer for the notice period. Thus, the deduction of Rs 2.76 lakh claimed by Rebello was not upheld. This led to Rebello filing an appeal before the ITAT, which decided in his favour.
-=== Sameer stuns Shi in major upset===
+=Overseas income=
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F18&entity=Ar03014&sk=B236CCD0&mode=text  Manne Ratnakar, Sameer stuns Shi in major upset; Marin crashes out, October 18, 2018: ''The Times of India'']
+==Residential status determined by no. of days stayed ==
+'''See graphic.'''
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=LEARNING-WITH-THE-TIMES-Earning-abroad-Know-the-01082017020021  Earning abroad? Know the tax rules, August 1, 2017: The Times of India]
+[[File: Tax incidence in India.jpg|Tax incidence in India; [http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=LEARNING-WITH-THE-TIMES-Earning-abroad-Know-the-01082017020021  Earning abroad? Know the tax rules, August 1, 2017: The Times of India]|frame|500px]]
-Sameer Verma caused one of the major upsets of the tournament when he knocked out world No.2 Shi Yuqi of China 21-17, 21-18 in the first round of the Denmark Open BWF Tour Super 750 in Odense, late on Tuesday.
+''Tax Residential Status In India Is Determined By No. Of Days Stayed Here''
-The world No.23 Indian took just 44 minutes to oust Yuqi. Verma will now take on world No.13 Jonatan Christie of Indonesia, who defeated Wong Wing Ki Vincent of Hong Kong 17-21, 21-18, 21-13. Verma enjoys a 1-0 win-loss record against Christie.
+Indians who are on deputa tion overseas or have sett led overseas -whether by way of acquiring a permanent residency such as a green card in the US, or acquiring citizenship of a foreign country -need to be aware of their tax obligations in India.
-Seventh seed Kidambi Srikanth eased into the second round with a 21-16, 21-10 victory against Hans-Kristian Solberg Vittinghus of Denmark. Srikanth will face multiple world and Olympic champion Lin Dan of China in the second round. Though Lin Dan has a 3-1 career record against Srikanth, the former world No.1 has been struggling in the last few months.
+A recent move seeking details from non-residents of foreign bank accounts in income tax (I-T) returns caused anxiety about whether India was taking steps to tax global income. The Central Board of Direct Taxes (CBDT) subsequently clarified that providing such details was optional and it was to facilitate refunds in those cases where individuals did not have a bank account in India.
-The other Indian in men’s singles, Sai Praneeth will take the court late on Wednesday. Women’s singles also witnessed another major upset as reigning world and Olympic champion Carolina Marin of Spain suffered a 19-21, 21-14, 19-21 shock defeat to local girl and world No. 20 Mia Blichfeldt. Ashwini Ponnappa and Sikki Reddy was the only Indian doubles team to clear the first round.
+''' ''Here is a primer explaining the tax incidence for Indians overseas:'' '''
-===Srikanth beats Lin Dan===
+'''1) What determines tax residential status and why is it important?'''
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F20&entity=Ar02204&sk=DF11AD1C&mode=text  October 20, 2018: ''The Times of India'']
+An Indian residing abroad is popularly referred to as a non-resident Indian (NRI).Under India's tax laws, the reference is to the term `tax resident' or `non-resident'. The country of origin does not determine the taxability . For instance, a UK citizen who is working in Mumbai in the subsidiary of a UK parent company could be a tax resident of India. An Indian who has migrated to Australia on March 20 may in common parlance be an NRI, but for tax purposes for the financial year 2016-17, he is likely to be tax resident of India.
-Kidambi Srikanth defeated the legendary Lin Dan for the second time in his career to set up an all-Indian quarterfinal against Sameer Verma at the Denmark Open here. World number six Srikanth bounced back to beat the world number 14 from China 18-21, 21-17, 21-16 in the second round clash played.
+The number of days stay in India, as provided for in the Income Tax (I-T) Act, determines the tax residential status of an individual in India.This status, in turn, determines which income can be taxed in India and what cannot be taxed. Thus, it is important to know which category you fall into.
-Dan, a two-time Olympic gold medallist and five-time world champion, is not the player he used to be but is still a force to reckon with. It was a fifth meeting between Srikanth and Dan and the Chinese great won the last time they played, in the quarterfinals of the 2016 Rio Olympics. Srikanth had famously scored his maiden win over Dan to win the 2014 China Open.
+An individual is considered to be a tax resident of India (also referred to as Indian tax resident) for a financial year (say FY 2016-17) if (i) he has been in India for 182 days or more during that FY, or (ii) he has been in India for 60 days or more during that particular FY and has lived in India for at least 365 days or more during the four years immediately preceding.
-After a tough match against the Chinese, Srikanth will have to play fellow Indian Verma in the quarterfinals to be held later on Friday. World number 23 Verma had beaten 2018 Asian Games gold medallist, Jonathan Christie of Indonesia, in his second round match.
+Indian citizens taking up employment abroad or crew members of an Indian ship who have left India during a FY or persons of Indian origin (PIOs) visiting India need to note that the period of 60 days mentioned in the above clause is replaced by 182 days. (In the non-tax realm, the PIO scheme has been merged with Overseas Citizen of India scheme and it provides for visa-related relaxations.) Thus, if an Indian citizen has left for overseas deputation during FY 2016-17, he will be considered as a tax resident of India for the year ended March 31, 2017, if he has been in India for 182 days or more during 2016-17. Only , tax residents of India (ROR) are subject to tax on their global income, which would include interest income on overseas bank accounts.
-==French Open BWF==
+'''2) Apart from resident and non-resident, is there any other definition in the I-T Act which determines tax in India?'''
-===Sindhu, Srikanth exit ===
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F28&entity=Ar02807&sk=F85B0CCE&mode=text  Sindhu, Srikanth exit French Open, October 28, 2018: ''The Times of India'']
+Yes, the I-T Act also defines a `Resident but not ordinarily resident' (RNOR). An RNOR qualifies as a tax resident of India during a particular FY, but satisfies the following criteria: (i) He has been a non-resident of India in nine out of 10 immediately preceding fi nancial years; or (ii) has during the last seven years immediately preceding that particular FY been in India for a period of 729 days or less.
-PV Sindhu and Kidambi Srikanth crashed out in the quarterfinals of the French Open after suffering straight-game defeats in their respective matches as India’s campaign ended in the singles events at the BWF World Tour Super 750 tournament. Third seed Sindhu looked a pale shadow of herself as she lost 13-21, 16-21 in 40 minutes against seventh seed He Bingjiao of China.
+To illustrate: A PIO visits India during 2016-17 and stays for more than 182 days.This would make him a tax resident of India. However, during the last seven years immediately preceding FY201617, he has been in India for 729 days or less, he will be regarded as an RNOR.
-It was Sindhu’s second consecutive loss at the hands of the Chinese shuttler this year after her straight-game defeat in Indonesia Open in July. By virtue of this win, Bingjiao extended her head-to-head record to 7-5 against the Indian.
+'''3) What is the tax incidence in India of a tax resident (ROR), RNOR and nonresident?'''
-To make matters worse for India, fifth seed Srikanth gave a good account of himself but eventually lost steam against top seed Kento Momota of Japan. Satwiksairaj Rankireddy and Chirag Sen suffered a straight-game loss to world no 1 pair of Marcus Fernaldi Gideon and Kevin Sanjaya Sukamuljo in the semifinals.
+As mentioned earlier, an ROR is subject to tax on his global income in India. RNOR and non-residents are generally subject to tax in India only in respect of India source income (that is, income received, accruing or arising in India or deemed to be received, accrued or arisen in India).
+Salary received in India or for services provided in India, ren tal income from a house property in India, capital gains on sale of assets in India -be it shares or house property , income from fixed deposits or savings bank account in India are instances of income which would be taxed in the hands of not just tax residents of India, but also RNORs and non-residents.
-'''Ayhika wins silver, Anthony-Sanil clinches bronze in Belgium Open TT'''
+NRIs should also note an additional point. They are allowed to hold NRE and FCNR accounts (where foreign earnings are deposited) with banks in India. However, under the I-T Act, interest against such deposits is tax-free.However, interest earned on an NRO account (where Indian source income is deposited) will be taxable in India.
-New Delhi: Ayhika Mukherjee settled for a silver medal after going down 1-3 to Korea’s Youjin Kim in the final of the ITTF Challenge Belgium Open in the under-21 women’s singles category. Anthony Amalraj and Sanil Shetty too fought their way into the medals’ bracket, bagging a bronze in the men’s doubles. Ayhika put up a brave fight in the summit clash but Kim proved to be a tough nut to crack in the end. In the semifinals, Ayhika had defeated Hong Kong’s Chengzhu Zhu 3-1 to enter the finals.
+'''4) What is the role of tax treaties?'''
-In men’s doubles, Amalraj-Shetty started slowly, losing a tight opening game 10-12 to the Belgian pair of Olav Kosolosky and Laurens Devos. They had a tough second game too which they eventually managed to win 15-13. There was no stopping them thereafter.
+If an individual is a tax resident of one country but has a source of income from another country , complexities can arise. Tax treaties ensure that the same income is not taxed twice. Broadly , tax treaties provide that the country from which the income is generated has the right to tax it.
+Double taxation is avoided in two ways -either the country of non-tax residence exempts the income earned in the foreign country , or the country of tax residence grants a foreign tax credit for the taxes paid in the other country . India has entered into tax treaties with a hundred-odd countries, including US, UK, Canada, Australia and Germany , which are popular destinations for the Indian diaspora.
-'''Sethuraman holds Anand'''
+For instance, if an expat is a US tax resident, he will pay tax on his global income in the US (this would include tax on India source income). However, for taxes paid in India -say tax withheld at source against fixed deposits in a bank in India -he will get a foreign tax credit (a tax credit for the taxes paid or withheld in India against the US taxes payable by him). This will lower the US tax outgo.
-Isle of Man: Grandmaster S P Sethuraman played out an easy draw as white against five-time world champion Viswanathan Anand in the seventh round of Isle of Man International Chess tournament here on Saturday. Both Anand and Sethuraman inched themselves up to five points out of a possible seven and shared the joint eighth spot. Michael Adams of England took advantage of this draw-melee to join the six overnight leaders on 5.5 points defeating erstwhile joint leader Abhijeet Gupta.
+=Permanent account number (PAN)=
+==2016: PAN mandatory for…==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=SMART-THINGS-TO-KNOW-04012016022029 ''The Times of India''] Jan 04 2016
+''' Mandatory PAN requirements '''
-'''Greco Roman wrestlers out of Worlds'''
+With effect from January 1, 2016, it has become mandatory to quote the permanent account number (PAN) for all transactions above `2 lakh for all modes of payment.
-Budapest: India’s campaign at the World Championship ended with Greco Roman wrestlers on the final day of the competitions, here on Saturday. Of three grapplers in action, only Hardeep managed to win a bout when he downed Morocco’s Choucri Atafi 8-4 in the 1/16 in the 97kg category. Later he lost his 1/8 bout 1-4 to Laokratis Kesidis from Greece.
+Only bank accounts opened under the Pradhan Mantri Jan Dhan Yojana have been exempted. But all other bank accounts and all kinds of deposits will have to quote PAN.
-===Srikanth, Saina in QF===
+PAN will be mandatory for purchase of prepaid cards worth `50,000 or more in a year. Pur chase of gold jewellery worth above `2 lakh (`5 lakh current limit) would also need PAN.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F26&entity=Ar03312&sk=412B622C&mode=text  Srikanth & Saina in French QF, October 26, 2018: ''The Times of India'']
+The limit for quoting PAN for sale or purchase of real estate property has been raised to `10 lakh from `5 lakh.
-Defending champion Kidambi Srikanth and India ace Saina Nehwal made their way to the quarterfinals of the USD 750,000 French Open BWF World Tour Super 750 here Thursday. Srikanth showed great determination to outwit Korea’s world no 25 Lee Dong Keun 12-21, 21-16, 21-18 in a secondround clash that clocked an hour and 13 minutes. The Indian had lost twice to the 27-year-old Korean in the past two meetings.
+PAN needs to be quoted only for a cash payment for a hotel or restaurant bill and foreign travel or purchase of forex of `50,000 (current limit `25,000).
-Saina, who had reached the finals at Denmark Open last week, continued her good run by outwitting former World champion Nozomi Okuhara of Japan 10-21, 21-14, 21-17 in another exciting contest.
+==2016: Required for transactions above Rs 2 lakh==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=New-PAN-rule-hurts-sale-of-luxury-goods-22062016001073 ''The Times of India''], Jun 22 2016
-==Hong Kong Open==
+John Sarkar
-===Srikanth, Sameer enter quarter-finals===
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F11%2F16&entity=Ar02805&sk=BFA3A426&mode=text  November 16, 2018: ''The Times of India'']
+'''New PAN rule hurts sale of luxury goods'''
-Former world No.1 Kidambi Srikanth and Sameer Verma sailed into the quarterfinals of the Hong Kong Open while PV Sindhu was shown the door in Kowloon.
+Mails are flying thick and fast at most luxury stores across the country as harried sales staff face a tough time trying to coax people to part with their permanent account number (PAN) details. By the looks of it, they are not accomplishing much, resulting in poor sales of luxury goods.
+Furnishing of PAN details has been made mandatory by the government for any transaction above Rs 2 lakh in a bid to weed out black money .
-In a see-saw battle which went down to the wire, Srikanth defeated compatriot HS Prannoy 18-21, 30-29, 21-18 while Sameer got a walkover against Chen Long of China. After winning a exhausting second game in which the lead changed hands a number of times, Srikanth secured a seven-point lead (11-4) in the third game. But Prannoy clawed back and caught up with Srikanth at 16-16. Thereafter, Srikanth won the big points to clinch the contest.
+However, the move has deterred many wealthy shoppers from spending lakhs of rupees on luxury products such as handbags, watches and writing instruments. “Our bags start at Rs 2 lakh.Sales at our store have been hit badly because our regular customers have stopped coming,“ said a senior executive of a French luxury brand. Earlier, most of them would pay in cash. But now, instead of giving their PAN details, they are opting to shop abroad.“
-In the quarters, Srikanth will square up against the winner of the tie between Kenta Nishimoto of Japan and Kantaphon Wangcharoen of Thailand. Sameer will face qualifier Lee Cheuk Yiu of Hong Kong. Sindhu lost to former world No.2 Ji Hyun Sung of Korea 24-26, 20-22 in a close match.
+Most people in the luxury industry TOI spoke to complained about similar issues.For instance, at a store selling high fashion French leather goods in the capital, executives are tearing their well-groomed hair out to convince customers to reveal their PAN card number.
+“We have taken a hit of several lakhs of rupees over the last few days but have not been able to figure out a way around the problem,“ said an executive at the store.“The other day , a lady who had come to buy a bag said she wouldn't risk getting her husband into trouble by furnishing his PAN card details.Eventually , she walked out without buying anything.“
-'''Lakshya in pre-quarters'''
+Nikhil Mehra, CEO of Genesis Group that has marketing and distribution arrangements for several luxury brands such as Jimmy Choo, Giorgio Armani, Em porio Armani and Tumi among others and is the JV partner for Canali, Burberry and Villeroy and Boch in India, said consumer sentiment here has been affected by this ruling. “However, for most of our brands it is not a challenge because prices are within the Rs 2 lakh limit,“ he said.
-Lakshya Sen and two Indian doubles pairs made it to the pre-quarterfinals of the BWF World Junior Championship in Markham, Canada, on Wednesday.
+The Indian luxury market has been pegged at Rs 16,300 crore in 2015 by market research firm Euromonitor and is expected to touch Rs 39,000 crore by 2020, with an annual growth rate of 19%.
-Fourth seed Lakshya made short work of Giovanni Toti of Italy 21-7, 21-13. He will face ninth seed Chen Shiau Cheng of Chinese Taipei on Thursday.
+=Perquisites=
+==Interest-free loan from employer is taxable==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F06%2F12&entity=Ar01311&sk=78264D41&mode=text  Lubna Kably, Interest-free loan from employer taxable: ITAT, June 12, 2018: ''The Times of India'']
-Men’s doubles duo of Srikrishna Sai Kumar Podile and Vishnu Vardhan Goud defeated Joel Hansson and Melker Z-Bexell of Sweden to move into the pre-quarterfinals.
-In women’s doubles pair of Aditi Bhatt and Tanisha Crasto downed Dilmi Das and Anurangi Masakorala of Sri Lanka in straight games 22-20, 21-10.
+Interest-free loans extended by an employer are taxable in the hands of an employee as a perquisite, the Income Tax Appellate Tribunal (ITAT) has said. However, the valuation of the taxable benefit or perquisite, which forms part of the salary income of the employee, cannot be done in an ad-hoc manner and has to be computed as per the prescribed formula under the Income Tax Act, the tribunal said.
-===Kidami Srikanth, Sameer Verma lose===
+In this case, Neha Saraf had obtained an interest-free loan from her employer, Teej Impex, a private company. During the assessment for the financial year 2010-11, her argument that no employeremployee relationship existed fell through because the company had deducted tax at source, or TDS, on the salary of Rs 24 lakh paid to her.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F11%2F17&entity=Ar02611&sk=83B62C78&mode=text  Indian challenge ends in HK, November 17, 2018: ''The Times of India'']
+Thus, the I-T officer assessing her case estimated 15% interest on the loan and added Rs 43.8 lakh to her income as a perquisite value of the interest-free loan.
-India’s challenge ended with Kidami Srikanth and Sameer Verma being knocked out of the Hong Kong Open BWF Super 500 event in Kowloon.
+In the next stage of appeal, the commissioner of I-T (appeals) held that the I-T officer had rightly treated the value of interest-free loan as a taxable perquisite in the hands of the employee. However, he noted that the valuation cannot be done in an ad-hoc manner.
-Fourth seed Srikanth went down to eighth seed Kenta Nishimoto of Japan 17-21, 13-21. This was Srikanth’s first loss against Nishimoto in four meetings. Later, Sameer Verma faltered against qualifier Lee Cheuk Yiu of Hong Kong 15-21, 21-19, 11-21. The only consolation for the shuttlers this year was Sindhu reaching the finals of three major events.
+According to I-T Act rules, a perquisite value is based on the rate charged by SBI on April 1 of the financial year in which the employee received the loan.
-However, Sindhu qualified for the yearend event in China. But with only two more qualifying tournaments left — Syed Modi International and Scottish Open — Srikanth and Sameer are unlikely to make the cut. Only eight players qualify in each category and Srikanth is placed 14th spot and Sameer 12th. Sindhu is fifth in the qualifiers list.
+The commissioner (appeals) reworked the valuation and arrived at a lower perquisite value of Rs 20.65 lakh.
+The commissioner (appeals) also rejected Saraf ’s contention that as interest on the loan given to her had already been disallowed in the hands of the company, it cannot be treated as a perquisite in her hands. Unhappy with the outcome, Saraf filed an appeal with the ITAT. However, in its order dated May 16, the ITAT upheld the order of the commissioner (appeals).
-'''Lakshya, doubles pair in quarters'''
+In the context of interestfree loans from employers, Puneet Gupta, director of people advisory services at Ernst and Young, says, “The employer is liable to treat an interest-free loan as a taxable perquisite and TDS is to be deducted from salary. An exemption is available if the loan is provided for medical treatment of specified diseases or where the loan amount is petty and does not exceed Rs 20,000.”
-Meanwhile, Lakshya Sen and the men’s doubles pair of Srikrishna Sai Kumar Podile and Vishnu Vardhan Goud entered the quarterfinals of the BWF World Junior Championship in Canada.
+“Employees must ensure that the employer deducts TDS on the total salary income, which includes the perquisite value of interest-free loans. If TDS is not deducted, the employee faces several consequences. Not only does he or she have to pay income tax on the perquisite value of the loan, but interest will also be payable for late deposit of advance tax. Further, if such taxable perquisite value is not reported in the I-T returns, the I-T department may levy penalty ranging from 50% to 200% of the tax payable on the under-reported income,” Gupta adds.
-Lakshya beat Chen Shiau Cheng of Chinese Taipei 15-21, 21-17, 21-14. Lakshya will face Malaysia’s Aidil Sholeh Ali Sadikin next. Srikrishna and Vishnu eased past Dwiki Rafian Restu and Bernadus Bagas Kusuma of Indonesia 21-11, 21-17. They will face tenth-seeded Koreans Tae Yang Shin and Chan Wang.
+=Pharmaceutical companies=
+== Freebies for doctors deductible==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2020%2F08%2F03&entity=Ar00807&sk=1485E10E&mode=text  Pharma co’s expenses towards freebies for docs can be claimed as deductions: ITAT, August 3, 2020: ''The Times of India'']
-==India Open: PV Sindhu, sixth loss in a final since Olympics==
+Tax issues surrounding the ‘nexus’, between pharma companies and doctors, where the latter are sponsored for conferences, at times replete with sightseeing and gala dinners, or expensive gifts, refuse to die down. Judicial precedents, in several cases, have been in favour of pharma companies with the costs relating to such freebies being allowed as business deductions.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F02%2F05&entity=Ar01913&sk=328EA05F&mode=text  Saumyajit Basu, Sindhu slips in the final, February 5, 2018: ''The Times of India'']
+The Mumbai bench of the Income-tax Appellate Tribunal (ITAT) recently passed an order in favour of Medley Pharmaceuticals, an Andheri based company.
-''Zhang Is The New Champion; Shi Yuqi Claims Men’s Crown''
+The crux of the tax issue dealt with re-opening of the assessment for the FY 2011-12, owing to a change of opinion by the succeeding I-T officer. Based on technicalities such as no fresh ground material available on record, the re-opening was quashed by the ITAT.
-In the end, a Chinese and an American of Chinese descent swept the honours on the final day.
+However, the ITAT also went on to analyse the allowability of sales promotion expenses aggregating to Rs 6.2 crore for the pharma company. A break-up showed that Rs 2.4 crore was towards product reminders; conference expenses and travel costs ran into Rs 2.7 crore and additional doctors’ expenses were of Rs 1.1 crore.
-After Shi Yuqi won the men’s singles title to become the first Chinese to do so in the India Open, Beiwan Zhang taught PV Sindhu such a bitter lesson that she refused to attend the customary aftermatch press meet on Sunday evening. For Sindhu, it was her sixth loss in a final since her Olympic silver, to go with two title wins.
+The ITAT made some pertinent observations regarding the code of conduct issued by the Medical Council of India (MCI) and a circular issued by the Central Board of Direct Taxes (CBDT).
-Sindhu kept hopes alive till the very end but Zhang looked destined to write a beautiful story of her own. Having already scalped Saina Nehwal on Friday, she upstaged Sindhu 21-18, 11-21, 22-20 to win her first Tour title to fulfil a longcherished dream.
+It said that the MCI code of conduct, which debars freebies, is meant to be followed by the medical fraternity alone and does not apply to pharma companies. Amended on December 10, 2009, the code prohibits medical practitioners and their professional associations from taking any gift, travel facility, hospitality, cash or monetary grant from the pharmaceutical and allied health sector industries.
-“I wanted to win a tour title this year,” the world No. 11 had said after her quarterfinal victory over Saina. That she could tilt the tightly-fought final game on Sunday her way, is something she would savour for long. “It is the best moment of my career,” the 27-old Zhang said after matching the world No. 4 point for point.
+The CBDT circular dated August 1, 2012 says that any expense in providing freebies in violation of the Medical Council’s code shall not be allowed as a business deduction.
-“I used the smash more than usual to quell Sindhu, who seemed to be under a lot of pressure. She was playing in front of the home crowd. I had nothing to lose,” said a beaming Zhang, before rushing off to catch the earliest flight out.
+The ITAT said that the MCI code of conduct, which debars freebies, is meant to be followed by the medical fraternity alone and does not apply to pharma companies
-While the fifth seeded Zhang pocketed $26,250 and 9200 ranking points for her effort, Sindhu had to be content with $13,300 and 7800 ranking points.
+[[Category:Economy-Industry-Resources|I
+INCOME TAX INDIA: LAWS]]
+[[Category:India|I
+INCOME TAX INDIA: LAWS]]
+[[Category:Law,Constitution,Judiciary|I
+INCOME TAX INDIA: LAWS]]
-Unlike Zhang, Shi Yuqi used the smash with rare precision to undo Chou Tien’s challenge. What Lin Dan couldn’t achieve in his few attempts, Yuqi did it in his first. “I am not a big fan of Super Dan,” said the champion moments after he calmly decimated Chou Tien Chen 21-18, 21-14. Even trailing till 17 in the first game, the 21-year old Chinese never looked ill at ease. Armed with an intelligent all-court game programmed by anticipation, Yuqi even returned Chou Tien’s supposed winners, much to the frustration of the Chinese Taipei player. He clocked four points on the bounce to reach game point and logged home the first with a lot of confidence.
+= Property (house): income from=
+==2018: losses from house property for TDS capped at ₹2 lakh==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F01%2F08&entity=Ar01917&sk=334D3C1E&mode=text  CBDT caps losses from house property for TDS at ₹2 lakh, January 8, 2018: ''The Times of India'']
-In the second, however, Yuki didn’t let Chou Tien nose ahead. Consummately in control and using the smash only when absolutely sure of it being a winner, Yuki showed that his second singles title, after the French Open in 2016, was just a dawn of a shining day ahead. “He is sure to make the China’s Thomas Cup team,” said an official accompanying the China team.
-RESULTS (ALL FINALS) — Men's singles 4-Shi Yuqi bt 3-Chou Tien Chen 21-18, 21-14 ; Women's singles 5-Beiwen Zhang bt 1-PV Sindhu 21-18, 11-21, 22-20; Men's doubles: 1-Marcus Gideon/ Kevin Sanjaya bt 4-Kim Astrup/Anders Skaarup Rasmussen 21-14, 21-16; Women's doubles: 3-Greysia Polii/ Apriyani Rahayu bt 2-Jongkolphan Kititharakul/Rawinda Prajongjai 21-18, 21-15; Mixed doubles: 5-Mathias Christiansen/ Christinna Pedersen bt Praveen Jordan/ Melati Daeva Oktavianti 21-14, 21-15.
+An employer can set off loss declared by an employee under the head ‘income from house property’ only up to Rs 2 lakh against such employee’s salary to arrive at the amount of tax to be deducted at source (TDS).
-==Indonesia Open BWF==
+The amendment to section 71 of the Income-Tax (IT) Act applies for the first time from 2017-18. If an employee has declared a loss higher than Rs 2 lakh, the excess is to be ignored for calculating the amount of TDS, which is deducted monthly from salary income, the Central Board of Direct Taxes (CBDT) has said.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F07%2F07&entity=Ar03016&sk=F720CBF1&mode=text  Manne Ratnakar, Sindhu, Prannoy bow out as Indian challenge ends, July 7, 2018: ''The Times of India'']
+In a circular issued last month, the CBDT has pointed out key amendments to the I-T Act, which employers who are responsible for TDS against salary income should consider. Issue of such a circular is an annual feature.
-PV Sindhu and HS Prannoy bowed out in the quarterfinals of the Indonesia Open BWF World Tour Super 1000 tournament in Jakarta. With the exit of these two shuttlers, the Indian challenge ended in the $1.25 million tournament. Sindhu lost to China’s He Bingjiao 21-14, 21-15 and Shi Yuqi defeated Prannoy 21-17, 21-18.
+An employee is permitted to provide details of other income (say, bank interest) that he or she has earned during a year, together with the tax that has already been deducted (say, TDS deducted by the bank). Similarly, losses can also be declared by the employee. However, only loss from house property can be considered by the employer, as this is allowed to be set off against salary income. The employer has to take into consideration the details of income and loss from house property declared by the employee for the purpose of computing TDS.
-Prannoy failed to win the big points towards the end of both games. At 18-18 in the second he committed unforced errors and surrendered the advantage to his Chinese rival. Sindhu failed to find her range even as Bingjiao controlled the game. The Indian kept pace with her rival till 10-10, thereafter it was Binjiao all the way. From 13-11, the Chinese girl raced ahead giving the Indian no chance to come back.
+Making such a declaration is not mandatory. However, if an employee does so, he or she may not have to separately compute and pay advance taxes, as the employer will be deducting tax at source on the employee’s taxable income based on the details given (and not just salary income).
-Not giving much lift to the bird, Binjiao restricted Sindhu from executing her trademark smashes or overhead drives. It was no different in the second game as Binjiao broke free from the 7th point to emerge victorious.
+If an employee had let out his or her house (which typically was the case when a second house was owned), the corresponding interest on home loan is fully allowed as a deduction. This, in many cases, led to a significant loss under the head ‘income from house property’ (which is mainly the difference between the rental income and the interest on the home loan)
-== Japan Open BWF Tour Super 750==
+==2018: owner to decide which property is self-occupied==
-=== Manu-Sumeeth beat Olympics silver medallists===
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F06%2F08&entity=Ar01511&sk=5EB565B9&mode=text  Lubna Kably, Owners of more than one house get tax leeway, June 8, 2018: ''The Times of India'']
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F09%2F13&entity=Ar02714&sk=ED264DB3&mode=text  Manne Ratnakar, Stunning win for Manu-Sumeeth duo, September 13, 2018: ''The Times of India'']
-Manu Attri and Sumeeth Reddy stunned Rio Olympics silver medallists Goh V Shem and Tan Wee Kiong 15-21, 23-21, 21-19 to make it to the pre-quarterfinals of the Japan Open BWF Tour Super 750 tournament in Tokyo.
+The Mumbai bench of the Income-tax Appellate Tribunal (ITAT) upheld the right of a taxpayer to change the selection of a house property that would be treated as self-occupied and having a ‘nil’ annual value. Consequently, the notional rent from such a house will not be taxable.
-The Indians saved a match point to beat the Malaysian in 54 minutes. Staring down the barrel at 19-20 in the second game, Manu-Sumeeth won two crucial points to force the decider. In the keenly-contested third game, the Indians trailed 17-19 but did well to seal the issue.
+In other words, if the taxpayer has in his Income-tax return declared a particular house property to be self-occupied, he can at a later stage during actual tax assessment of his case substitute this with another house property owned by him, which perhaps is in a more posh location. By doing so, it may be possible for him to reduce the notional rent that has to be offered for tax and lower his I-T outgo.
-It was this killer instinct that was missing from this pair. At the Asian Games in Jakarta, the duo could have won a medal. Leading 20-18 in the third game, they lost to Chinese pair of Li Junhui and Liu Yuchen in the pre-quarterfinals.
+Under the I-T Act, where an individual owns more than one house, he can only treat any one of his properties as ‘self-occupied and having a nil annual value’. Annual value, in general terms, is the notional rent that the property would ordinarily fetch.
-“We are playing well now. We kept our nerves and supported each other. This victory will give us a lot of confidence for future,” Attri said. The world No. 28 Indians will face world No.18 Chinese pair of Qiang Tan and He Jiting in the second round. This would be the first meeting between the two teams.
+The other house properties, even if they are not given out on rent, are assumed to have been let out and I-T is payable on the notional rent. Certain deductions such as municipal taxes are permitted. Further, a standard deduction of 30% is allowed and I-T is payable on the balance component.
-The junior men’s doubles team of Satwiksairaj Rankireddy and Chirag Shetty and the women's outfit of Ashwini Ponnappa and Sikki Reddy lost their first round matches. While Satwik/Chirag lost to third-seeded Japanese Takeshi Kamura and Keigo Sonoda 12-21, 17-21, Ashwini-Sikki went down to South Korea’s Chang Ye Na and Jung Kyung Eun 17-21, 13-21.
+To mitigate I-T liability, taxpayers opt to choose that house property as ‘self-occupied and having a nil annual value,’ which would otherwise have had the highest adjusted annual value and would entail a higher I-T outgo.
-PV Sindhu, Kidambi Srikanth, HS Prannoy and the mixed doubles duo of Pranaav Jerry Chopra and Sikki Reddy will play their second round matches. Sindhu faces Chin’s Gao Fangjie.
+“Sometimes, in cases where a dispute arises with I-T authorities on the annual value of a property, the taxpayer, since he has the choice, may change his selection during assessment proceedings, if it is advantageous to do so,” says Gautam Nayak, tax partner at CNK & Associates.
-=== Sameer wins Swiss, Kashyap Austrian Open===
+“It’s high time the government reconsiders this taxation. With housing finance being so readily available now, it is not only the rich people who have more than one house,” adds Nayak.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F02%2F26&entity=Ar02521&sk=B13E1DBD&mode=text  February 26, 2018: ''The Times of India'']
+In an ITAT case , Venkatavarthan N Iyengar had three properties at Juhu, Santacruz East and Vasai. In his I-T return, he had declared his Vasai property as ‘self-occupied and having a nil annual value’. Later during course of tax assessment, he opted to substitute the Vasai with Juhu.
-Sameer Verma won the first biggest title for India in 2018 by emerging triumphant in the Swiss Open Super 300 badminton tournament in Basel on Sunday.
+The I-T officer held that making a change during tax assessment is not permissible and the dispute reached the ITAT. Iyengar submitted that the I-T Act gives an option to the taxpayer to determine which of his properties he should treat as self-occupied.
-Though they reached the finals, neither Saina Nehwal (Indonesia Masters) nor PV Sindhu (India Open) could clinch the titles this season. But Sameer faced no such final blues as he notched up a fluent victory against former Jan O Jorgensen of Denmark 21-15, 21-13.
+The ITAT, in its order of May 23, observed, “The I-T Act nowhere states that the option of selecting a self-occupied property, once exercised, cannot be changed.”
-The Pullela Gopichand Academy trainee needed just 36 minutes to ease past the former world No.2. Jorgensen, who won the World Championships bronze in 2015, was out of sorts as Sameer looked in full low. Sameer started with a 3-0 lead in the first game and the closest Jorgensen came was at 10-12. Sameer then produced a five-point burst to took the issue beyond the Dane.
+= Property (immovable): owned abroad=
+== Notional rent to be included in income tax return==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=SRK-must-pay-tax-on-notional-rent-from-23032017011046  Lubna Kably, SRK must pay tax on notional rent from Dubai villa, rules ITAT, Order Set To Affect People Who Own Second Homes Abroad, March 23, 2017: The Times of India]
-Sameer was even more dominant in the second game as he took off from 11-9 to 17-9 in one serve.
-A few hours earlier about 720 kilomtres away from Basil, Sameer’s senior pro Parupalli Kashyap clinched the Austrian Open.
+Actor Shah Rukh Khan has to include notional rent from his Dubai villa in his income tax return filed in India, the Income Tax Appellate Tribunal (ITAT) has ruled.
-Ending a long title drought, Kashyap annexed the Austrian Open International Challenge title with a convincing victory against June Wei Cheam of Malaysia 23-21, 21-14. The 31-year-old, who was struggling to comeback after recurring injuries, was in complete control despite a tough first game.
+Khan had submitted to the ITAT that under the IndiaUAE tax treaty , income from immovable property in Dubai would be liable to tax in the UAE and, therefore, he had not offered it to be taxed in India.
-Having enduring tough time ever since he won the Commonwealth Games men's singles gold at Glasgow in 2014, Kashyap is pleased with the victory.
+The ITAT rejected his contention. However, the two member ITAT (Mumbai) bench of Amit Shukla and G S Pannu added: “Credit for taxes paid in the UAE, if any , would be allowed as per the law.“
-“For any player it is important to win titles, I’ve to get into a habit of winning titles,” Kashyap told ToI from Vienna. The seasoned campaigner is always hailed as the shuttler who make rapid strides before the younger lot led by Kidambi Srikanth began dominating men's singles.
+The ITAT directed the I-T officer to rework the final liability, which would arise in the hands of the actor, under the head “income from house property“. This decision will have wide ramifications for taxpayers having a second home overseas, especially those who fall under the jurisdiction of the Mumbai bench of the ITAT.
-Kashyap always believes that he has several good years of badminton left in him. Even last year he reached the finals of US Open.
+“In many instances, I-T authorities have been holding that rental income from overseas residential property (or deemed rental income, if the house is not let out) would be taxable in India. This ITAT decision will strengthen their argument,“ said Shuddhasattwa Ghosh, partner, people advisory services, at EY India.
-The shuttler now wants to focus on getting some ranking points which would help him improve his ranking. “With this win I will get some points which will help to improve my ranking. I am playing some tournaments in Europe next month. So I hope to continue this winning form there as well. I’ve to keep improving myself,” he said.
+Under the I-T Act, if a person has two residential properties, only one can be treated as “self-occupied“ and exempt from I-T. The other is taxed under the head “income from house property“ based on the annual value (in general terms deemed rental value or notional rent). Certain deductions are allowed to arrive at the taxable income from the house property , such as a 30% standard deduction and also municipal taxes paid on such property .
-==Sindhu, Prannoy bow out; Srikanth enters quarterfinals==
+The Bollywood actor had been gifted a villa in Dubai and he obtained possession of it on June 18, 2008. For the financial year 2008-09, the I-T officer estimated the deemed rental value to be Rs 96 lakh. After allowing for a 30% standard deduction, he sought to tax Rs 67.2 lakh in the hands of Khan.
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F09%2F14&entity=Ar02602&sk=3BA73818&mode=text  September 14, 2018:  ''The Times of India'']
+According to Ghosh, tax treaties entered into with UK, US and Canada contain similar wordings as the India-UAE tax treaty . “So they should be doubly careful and must include the rental income in the I-T return they file in India. They can claim a credit for taxes paid in such other country , as per the provisions of the relevant tax treaty,“ Ghosh added.
+= Property (NRI): purchase of=
+==Miscalculation risks==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F08%2F08&entity=Ar03014&sk=D6AFA64F&mode=text  Lubna Kably, Buying non-resident’s flat involves TDS risks, August 8, 2018: ''The Times of India'']
-Fatigue caught up with India’s premier shuttler PV Sindhu as she was upstaged in straight games but Kidambi Srikanth entered quarterfinals of the $700,000 Japan Open here Thursday. Sindhu was beaten by China’s Gao Fangjie in the women’s singles second round, her first preliminary exit in almost a year. The Indian went down fighting 18-2119-21in 55 minutes to the world no 14 Chinese. She had lost in the opening round at the Denmark Open in October 2017.
-Former world no.1 Srikanth, however, didn’t break a sweat as he avenged his Asian Games loss to Hong Kong’s Wong Wing Ki Vincent with a clinical 21-15, 21-14 victory to enter the men’s singles quarterfinals. The seventhseeded Indian, who won a silver at the Commonwealth Games, will face Korea’s Lee Dong Keun next.
+''Miscalculations May Land Purchaser In Jail''
-However, it was curtains for the other Indian in the men’s draw, HS Prannoy, as he went down to giant-killer Anthony Sinisuka Ginting. The world no.10 Indonesian defeated formidable Japanese Kento Momota and Olympic champion Chen Long at the Asian Games.
+As income tax sleuths intend to keep a close eye on property purchases from non-residents to ensure buyers have correctly deducted tax at source, extra vigilance is required. If there’s no tax deducted at source (TDS), or wrongly deducted, the I-T department takes action against the buyer and not the nonresident seller. In addition to interest and penalties, the I-T Act prescribes imprisonment of 3 months to 7 years.
-Sindhu, who has endured a hectic BWF season reaching five finals including three majors at CWG, World Championship and Asian Games, seemed mentally drained as errors crept into her game. The Indian put up a decent fight as she recovered from 2-8 down in the opening game but squandered a 17-14 lead.
+An issue that arises is whether the TDS is to be computed against the sale value or the income that is taxable in India in the non-resident’s hands. The latter is technically correct, but has its own challenges. This issue and solutions are analysed below.
-==Verma wins Dutch BWFTour Super 100 title==
+== TDS risks: 1==
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F10%2F15&entity=Ar02018&sk=6B20F541&mode=text  Sourabh wins Dutch Open title, October 15, 2018: ''The Times of India'']
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F08%2F08&entity=Ar03014&sk=D6AFA64F&mode=text  Lubna Kably, Buying non-resident’s flat involves TDS risks, August 8, 2018: ''The Times of India'']
-Sourabh Verma won the Dutch Open BWFTour Super 100 badminton tournament in Almere, Netherlands.
+'''How to deduct TDS?'''
-Verma defeated June Wei Cheam of Malaysia 21-19, 21-13 in the final. The unseeded Indian ousted top seed Mark Caljouw of the Netherlands in the semifinals on Saturday.
+Indore-based chartered accountant Shweta Ajmera says, “According to section 195, which relates to TDS in case of non-residents, tax is deductible on ‘any sum chargeable to tax’. Thus, in case of sale of immovable property by a nonresident, tax is to be deducted on the capital gain amount.”
-The 25-year-old shuttler, who trains at the Pullela Gopichand Badminton Academy, had won the Russia Open earlier this year. Dutch Open is Verma's third international title. In 2016 Verma won the Chinese Taipei Masters.
+Chartered accountant Pankaj Bhuta adds, “In the case of GE India Technology Centre, the Supreme Court held that the TDS obligation is limited to the appropriate proportion of income chargeable under the I-T Act, which forms part of the gross sum of money payable to the non-resident. This means that the tax deductible at source is not on the entire sale value but merely on the net income arising from the sale. However, for computing the capital gains against which TDS is to apply, the buyer will have to depend on details provided by the seller — say, the period of holding of the property — and this adds to the risk. Second, if the seller wishes to invest in specified assets, be it a residential property in India or bonds, and save tax on capital gains, it is difficult for the buyer to ascertain that the investment will be made and conditions specified met.”
-==World junior badminton championship==
+Gains arising from sale of property held for more than two years (the period of holding was three years prior to the Finance Act 2017) are longterm capital gains subject to tax at the rate of 20% plus applicable surcharge and cess. Typically, non-residents sell their property after this holding period is completed.
-===India loses mixed event===
-[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F11%2F10&entity=Ar02105&sk=16D0D5EF&mode=text  November 10, 2018: ''The Times of India'']
+But a reader got a notice for short deduction even as he had deducted TDS at 20% plus applicable surcharge and cess. The penalties cost him nearly Rs 2 lakh. The reason: The buyer has to deduct TDS at the slab rate where the property is sold by the non-resident within two years of its purchase. The slab rate of 30% applies for taxable income above Rs 10 lakh.
-'''Jr World Cup: India bow out in mixed event'''
+To do: The buyer or seller can approach the I-T department to obtain a withholding tax order (referred to as a certificate), which gives a finality on the TDS amount. KPMG India tax partner Parizad Sirwalla says, “But this is time-consuming and requires prior planning.” Bhuta adds, “If the application for a withholding order is submitted after payment of advance deposit, such application is rejected (according to CBDT’s circular 774 dated March 17, 1999). Thus, parties should be careful.”
-Markham (Canada): India went down fighting 1-3 to South Korea in the mixed team quarterfinals of the world junior badminton championships, despite Lakshya Sen's superb efforts here. Asian Junior champion, Lakshya lived up to expectations but the two losses in the doubles category virtually sealed India's fate and it was all over after the women singles defeat.
+In the absence of such a certificate, it is safer for the buyer to deduct TDS at 20% on the sale value and not the capital gains of the non-resident seller. Generally, this results in the non-resident seller having to seek a refund from the I-T department.
+This is the concluding part of our series on purchasing property from non-residents
+== TDS risks: 2==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F08%2F07&entity=Ar02904&sk=58B3493A&mode=text  Lubna Kably, August 8, 2018: ''The Times of India'']
+[[File: Who is a non-resident Indian?.jpg|Who is a non-resident Indian? <br/> From: [https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F08%2F07&entity=Ar02904&sk=58B3493A&mode=text  Lubna Kably, August 8, 2018: ''The Times of India'']|frame|500px]]
+Individuals who have purchased property from non-residents find themselves grappling with several income tax-related challenges. To begin with, it’s difficult to determine the seller’s tax status (whether he is a resident or non-resident in India according to the I-T Act). This is crucial, as tax is required to be deducted at 20% (in come cases even higher) for property purchased from a non-resident, as opposed to 1% where the seller is a tax resident. In case of wrong deduction, penalties apply, and the buyer can face prosecution.
+When property is purchased from a resident, according to section 194-IA, TDS obligations kick in only if the sale consideration is above Rs 50 lakh. In case the purchase is from a non-resident, according to section 195, TDS obligations apply in all cases irrespective of the quantum.
+In its July 24 edition, TOI reported that the Central Board of Direct Taxes (CBDT) — in its action plan — asked I-T cadre to closely = : watch : property : purchases from non-residents.
+'''Lay buyers get confused between residency as per tax laws, nationality'''
+Following this, TOI received many emails from readers. The issues faced by them and action points are analysed in a twopart series.
+How to identify if the seller is a non-resident?
+Lay buyers often get confused between residency according to tax laws, and nationality. Pune-based advocate Harshal Jadhav says, “Typically, the non-resident seller does not reside in Pune, where the property is situated. Communication with the prospective buyers are largely via email or telephone. In some cases, the seller sends the property documents along with a PAN card or Aadhaar card and agrees to meet on a pre-fixed date to complete the sale. These cards mislead the buyer who is a layman. Even otherwise, unless clearly disclosed by the property seller, it becomes difficult to determine his residential status.”
+To do: Anil Harish, an advocate specialising in real estate, says, “The first step is to directly ask the seller if he is a non-resident. One can also probe further and ask for his I-T returns or passport details to determine the number of days stayed in India during the relevant period. As sellers may be reluctant to share these documents, the prospective buyer could ask the seller to get a certificate from his chartered accountant of his being a tax resident in India. An undertaking in writing must also be obtained from the seller of his being a resident (this can be part of the sale deed or a separate document). But such declarations will not offer absolute protection.”
+Typically, if the seller has given a power of attorney to someone else, it’s likely he is a non-resident, caution experts. KPMG India tax partner Parizad Sirwalla says, “Tax residency in India is determined based on the number of days the individual has spent in India in the relevant financial year as well as a look-back period of four financial years (see box). Stay details in India of the seller, such as copies of passport covering this period, should be obtained.
+However, if the transaction is carried out in the earlier part of the financial year, it is slightly difficult to determine residential status conclusively — here, a more conservative approach may be adopted by the buyer.”
+Jadhav adds, “Buyers should get the agreement or sale deed verified by an advocate to safeguard their interests from disputes arising out of arrears of income tax liabilities, if any.”
+= Property, purchase of =
+==Buyers won't lose I-T exemptions by adding kin name==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Flat-buyers-wont-lose-I-T-sop-by-01052017013019  Lubna Kably, Flat buyers won't lose I-T sop by adding kin name, May 1, 2017: The Times of India]
+'''Purchaser Should Get Full Tax Benefits: Tribunal'''
+The Income Tax Appellate Tribunal (Mumbai bench) has, in a recent order, held that if the entire investment for purchase of a new residential house, along with stamp duty and registration charges, has been made by an individual, he should get the full benefit of the relevant income tax (I-T) exemptions.
+Merely because the name of a close relative has been added to the newly purchased property (or in other words the new property is jointly held), it should not result in dilution of the I-T exemption in the hands of the individual who has paid for it.
+The I-T Act, under various sections, offers tax benefits where sale proceeds (such as sale of residential house) are reinvested in certain assets (such as another residential house or eligible investments).
+For instance, under section 54, if on sale of a residential house, the sale proceeds are reinvested in another house in India, within the stipulated period of time, to the extent of such reinvestment an exemption is available in computing capital gains. The taxable component of capital gains is reduced to the extent of the reinvestment, which results in a lower capital gains tax outgo.
+If you look up the name plates in your housing society, you may find that several flats are jointly held.
+The flat may be in the joint name of a couple, or owned with a parent or a sibling. The co-owner may or may not have contributed towards this purchase and the name of such a relative may have been added for the sake of convenience, such as to prevent family disputes arising in the future.
+“The ITAT has upheld the well-established criteria that ownership for I-T purposes is determinant upon who has made the payment and to what extent. Very often, the name of a non-earning spouse, or parent or even sibling is added when a new property is purchased to offer a security net to them.
+In those cases, where they have not contributed towards the purchase, the I-T benefit, such as on re-invest ment should flow entirely to the buyer who had made the purchase. This aspect has been reiterated by the ITAT,“ explains Gautam Nayak, tax partner, CNK & Associates.
+In this case, decided by the ITAT on April 27, the taxpayer, Jitendra V Faria, had on sale of a residential house incurred capital gains of Rs.43.01 lakh. He reinvested Rs 42.66 lakh in a new residential house and claimed this amount as exempt under section 54 of the I-T Act. On the deficit balance, of Rs 35,000 odd, he paid capital gains tax amounting to Rs 7,376.
+However, in the course of assessment, the I-T official noted that the new house that had been purchased was held in the name of two persons -Jitendra Faria with his brother Kunal Faria.Thus, the I-T official held that the exemption claimed by Jitendra Faria should be restricted to Rs 21.33 lakh (which is 50% of the amount claimed as exempt by him under section 54).
+When the matter reached the ITAT, the tribunal noted that the name of brother was included only for the sake of convenience. It observed that even the I-T official had confirmed that the entire cost of the new house was borne only by Jitendra Faria. Thus, the ITAT set aside the decision of the I-T authorities and decided in favour of the taxpayer.
+=Property, immoveable, sale of=
+== Tax benefits for investment in new house==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2020%2F11%2F24&entity=Ar01020&sk=42DA49D5&mode=text  November 24, 2020: ''The Times of India'']
+Sold 2 houses to invest in new one? You can get tax benefits
+Mumbai:
+The Mumbai bench of the Income Tax Appellate Tribunal (ITAT), in its recent order, has clarified that when a taxpayer sells two residential properties and re-invests in one residential house, he or she is entitled to tax benefit under section 54.
+This ruling will be very helpful to several individuals. With work from home here to stay for longer than initially anticipated, several families are in search of larger flats. Investment professionals explain that several salaried employees had invested in a second house. Many are now selling the flat in which they currently reside and their second house, to finance a larger apartment.
+In this case heard by ITAT, Sabir Mazhar Ali had sold two flats in Mumbai’s Bandra area (one of which was jointly owned with his wife) and purchased another residential flat in Bandra. During the financial year 2010-11, he had claimed deduction under section 54 of the Income Tax (I-T) Act, as he had purchased a new house, within the time period specified.
+Under this section, if the longterm capital gains arising on sale of a house are reinvested in another house in India, within the stipulated period of time, then to the extent of such investment, the taxable component of capital gains is reduced. This results in a lower tax outgo. Thus, if the entire amount of long-term capital gains is reinvested, there is no tax payable. This section requires that within a period of one year before or two years after the date of transfer of the old house, the taxpayer should acquire another residential house. Or the taxpayer should construct a residential house within a period of three years from the date of transfer of the old house.
+However, as Ali had sold two residential properties and reinvested in one residential house, the Income Tax officer had concluded that he was not eligible for claiming the benefit under section
+. In the course of litigation, as the Commissioner (Appeals) ruled in favour of the taxpayer, the I-T department filed an appeal with the ITAT.
+In its order, the ITAT states that the provisions of section 54 do not prohibit the taxpayer from selling more than one residential house and reinvesting in a residential property. Thus, it set aside the grounds of appeal raised by the tax department and ruled in favour of the taxpayer.
+[[Category:Economy-Industry-Resources|IINCOME TAX INDIA: LAWS
+INCOME TAX INDIA: LAWS]]
+[[Category:India|IINCOME TAX INDIA: LAWS
+INCOME TAX INDIA: LAWS]]
+[[Category:Law,Constitution,Judiciary|IINCOME TAX INDIA: LAWS
+INCOME TAX INDIA: LAWS]]
+=Raids=
+==In Tamil Nadu==
+[https://timesofindia.indiatimes.com/city/chennai/why-i-t-raids-are-dubbed-as-tools-of-political-vendetta/articleshow/61620536.cms  A Subramani, Why I-T raids are dubbed as tools of political vendetta, Nov 13, 2017: ''The Times of India'']
+[[File: Income Tax, search- facts and definitions.jpg|Income Tax, search- facts and definitions <br/> From: [https://timesofindia.indiatimes.com/city/chennai/why-i-t-raids-are-dubbed-as-tools-of-political-vendetta/articleshow/61620536.cms  A Subramani, Why I-T raids are dubbed as tools of political vendetta, Nov 13, 2017: ''The Times of India'']|frame|500px]]
+'''HIGHLIGHTS'''
+Income tax is a central agency reporting to the present government.
+After search and seizure, comes inquiry when I-T dept's investigation wing sends an appraisal report to an assessing officer who sends a notice to the assesse asking him to file returns for the past six years.
+Uniformity in post-search formalities, apolitical body to give directions, say experts.
+It needed some grit for beleaguered AIADMK leader TTV Dhinakaran to cry 'tax politics'+ while he was still in the eye of an income tax storm. He did it nevertheless, repeating terms such as 'vendetta' and 'witch-hunting' by the Centre.
+But, when DMK's working boss M K Stalin sought to know the fate of earlier high-voltage income tax searches in Tamil Nadu, one sat up and took note, because each such case had travelled a distinctly different path, showing inconsistency in approach.
+On April 22, 2016, Karur-based contractor C P Anbunathan's houses and godowns were searched by income tax officials, and among the seized materials were about Rs5 crore in cash and currency-counting machines.
+Three trucks found carrying Rs570 crore were intercepted by election commission officials near Tirupur in poll-bound Tamil Nadu in mid-May 2016. The trucks remained parked in an open ground for days before being taken to RBI vaults, but income tax officials did not show even an academic interest in the drama.
+In July-August 2016, I-T officials searched gutka godowns and fished out a diary containing names of officials and politicians on the payrolls of gutka wholesalers. A chief commissioner of income tax personally met the then TN chief secretary and handed over details. Though nothing came of it, the fact remains that the I-T department took pains to ensure action against suspects.
+In December 2016, the office of the then TN chief secretary was searched by I-T officials, with armed men from central police organisation standing guard outside. The prime target was sand mining baron Sekhar Reddy. Sensational searches at a minister's house and recovery of 'proof' of distribution of Rs89 crore as bribe to voters of R K Nagar constituency took place on April 7, 2017. On the basis of IT report, the election commission cancelled the bypoll.
+R K Nagar election-time search was huge, till more than 1,500 taxmen swooped on about 180 premises related to V K Sasikala+ , the jailed aide of former chief minister Jayalalithaa.
+The inconsistent nature of the raids raises the question — can I-T searches and allegations of political vendetta be separated at all? No, if the target is a politician from an opposition camp. "Income tax is a central agency reporting to the present government. So, whenever it touches an opposition party member, the bogey of political vendetta is raised," says Rabu Manohar, central government standing counsel and counsel for GST and customs.
+As for timing of raids, he says untaxed money surfaces mostly on two occasions — during political instability and during price swings of essential commodities, when they could be hoarded. "TN's political scene now is unstable and the agency has chosen the right time to strike," he adds.
+But, senior advocate P Wilson, a DMK office-bearer and former additional solicitor-general of India says, "I-T searches have to be taken to a logical conclusion. But, unfortunately, in all recent cases, the proceedings had been abandoned midway. In Anbunathan's case, though the agency had proof of doubtful investments, the information were not forwarded to other agencies for follow up. In gutka case, they took extraordinary interest to ensure action against some officials. In R K Nagar bypoll case they merely sent a report to the election commission, which sent it to city police as complaint."
+So, what really happens after 'searches'? After search and seizure, comes inquiry when the investigation wing of I-T department sends an appraisal report to an assessing officer who sends a notice to the assesse asking him to file returns for the past six years. "It is an opportunity for the assesse to amend their earlier returns, and declare undeclared assets," says a senior tax official. "They can also approach the settlement commission to escape penalty and prosecution. An opportunity to compound the offence is then offered after both sides are heard," he adds.
+All the post-search processes are strictly between the assesse and income tax official, and so nothing is heard about it, says Manohar. "If Stalin wants to know the fate of such searches, he can utilise judicial forums seeking specific directions or even invoke RTI Act."
+Referring to allegations of political vendetta behind raids, advocate V Lakshminarayanan says that to eliminate subjectivity, decisions to search premises must be routed through an apolitical body. Searches could be cleared by an entity to which members are nominated on the lines of chief vigilance commissioner and DGPs, he says. "I-T department should first offer a final self-declaration option, ushering in a measure of transparency besides offering the target a last chance to come clean," he adds.
+=Reliefs on tax=
+==Education loans to study abroad==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Tax-relief-valid-on-edu-loans-to-study-02122015001062 ''The Times of India''], Dec 02 2015
+Lubna Kably
+'''Tax relief valid on edu loans to study abroad'''
+In good news for parents whose children study overseas or plan to do so, the Pune income-tax appellate tribunal has held that higher education abroad is no bar for claiming tax relief on educational loans.
+A deduction for interest paid on such loans will be allowed from the taxable income of a parent, who has taken the loan and is paying interest, even if the child is studying overseas.
+However, such a loan must be taken from either financial institutions, banks or from government-approved charitable institutions. Though Section 80E of the I-T Act states a parent is eligible for claiming tax relief on such loans, it has often been a ground for dispute during tax assessment. The term `higher education' has been defined in Section 80E of the I-T Act as: “Any course of study pursued after passing the senior secondary examination (SSE) or its equivalent from any school, board or university recognised by the central government, state government, local authority or any recognised authority .“
+“This section does not specify that higher education must be undertaken by the student in India or that the overseas course must be approved by authorities in India. The only requirement is that such higher education should be undertaken by the student after passing SSE or its equivalent from a recognised institution in India,“ says Parizad Sirwalla, tax partner, KPMG.
+Even in this case of Nitin Shantilal Muthiyan, which came for hearing before the Pune tribunal, the tax officer had held that deduction under Section 80E is allowable only in cases of higher education pursued in India. He, thus, disallowed the claim of interest of Rs 73,125 made by the taxpayer whose son, who had completed his BE in Electronics from Pune University, was pursuing a course at George Washington University , US. At the first stage of appeal, the commissioner of I-T (appeals) also upheld the action of the tax officer.
+The taxpayer then filed an appeal with the income-tax appellate tribunal (ITAT) and obtained a favourable order. The ITAT in its order observed: “Provisions of Section 80E do not contain any stipulation that the higher education should be pursued only in India. If the intent of the legislation was that education should be pursued in India, in order to avail of the interest deduction, it would have stated so. Further, the taxpayer's son had completed SSE or its equivalent, as is required by this section, before pursuing studies overseas.“ Thus, the ITAT allowed the interest deduction claim made by the father during financial year 2008-09.
+“The ITAT's decision is welcome, particularly in light of the spiralling cost of overseas education, and more and more Indian students opting for higher studies overseas. In terms of applicability of the decision, an ITAT's decision is binding within its jurisdiction, but carries precedent value in similar disputes for other jurisdictions, which are outside its purview,“ adds Sirwalla.
+=Rental income=
+==No tax on rent if none received from 2nd home==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2019%2F02%2F02&entity=Ar00606&sk=899BC15F&mode=text  February 2, 2019: ''The Times of India'']
+[[File: National rent explained.jpg|National rent explained <br/> From: [https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2019%2F02%2F02&entity=Ar00606&sk=899BC15F&mode=text  February 2, 2019: ''The Times of India'']|frame|500px]]
+India’s second-home market has been quite hot for some time, with some buyers seeking to get away from the crowded city and the stresses of work with a vacation home while others view it as a good real estate investment. However, the negative was that even if the property was empty, one had to fork out tax on notional rent.
+No longer. The interim Budget has given relief to second home-owners by exempting the second property from tax on notional rent. Currently, if a taxpayer owns more than one house property, one property at the taxpayer’s choice is treated as selfoccupied and the other is considered as ‘deemed to be let out’. This is taxed at market rental value even if the taxpayer does not earn any income from it.
+“Considering the difficulty of the middle class having to maintain families at two locations on account of their job, children’s education, care of parents, etc., I am proposing to exempt levy of income tax on notional rent on a second self-occupied house,” interim Finance Minister Piyush Goyal announced on Friday.
+Industry trackers believe the move of exempting tax on notional rent on the second house property will help increase demand for affordable and mid-income housing segment as taxpayers will be encouraged to invest in a second home.
+“With improved liquidity, demand across the affordable and mid-income housing segment will rise,” Ramesh Nair, CEO and Country Head, JLL India, said. However, the maximum deduction for interest on housing loans shall continue to remain capped, in the aggregate, at Rs 2 lakh.
+While the FM in his speech alluded to the difficulties faced by those who are forced to maintain families at two locations, given the specific provisions of the I-T Act, it appears that no tax on notional rent will be payable if the second house is overseas.
+There is one downside. “Taxpayers who had housing loans on their second property were earlier able to claim deduction for full interest on housing loan, against the notional rental income, which could result in a loss. This loss could be set off against rental income from other properties without any limit or could be carried forward for eight years. Now such setoff is limited to Rs 2 lakh,” says Puneet Gupta, director, People Advisory Services at EY India.
+=‘Salary’=
+==2018: Non-compete fees, some compensations are taxable==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F02%2F05&entity=Ar00905&sk=4D3A4971&mode=text  Lubna Kably, Employment-related payments get taxable, February 5, 2018: ''The Times of India'']
+''Staff May Have To Pay Tax On Non-Compete Fees''
+The Income-tax Act is intricate — sometimes income received by an individual even if it relates to employment, does not fit within the technical definitions of ‘salary’ or ‘profits received in lieu of salary’. Thus, very often, such income could not be taxed.
+Budget 2018-19 proposes to change this scenario. A wide range of income received — say non-compete payments (which sometimes did not fit the above definitions of salary or profits in lieu of salary); or compensation when a job offer went awry will now be taxable.
+“The proposal perhaps also intends to bring within ambit of tax, payments received in connection with employment but not from the employer. In other words, it covers cases where an employer-employee relationship does not exist between the payer and the receiver. For example, in case of termination of employment with an Indian subsidiary company, any severance pay received from a foreign holding company may be covered under this amendment. It may also cover situations of merger and acquisition where payments are received by employees from the acquiring company or from the investors,” said Puneet Gupta, director, people advisory services at EY India, a business consultancy firm.
+The explanatory memorandum to the Finance Bill says: “A large segment of compensation receipts in connection with employment are out of the purview of taxation leading to base erosion and revenue loss”. It therefore
+proposes to amend section 56 of the I-T Act. “Any compensation or other payment due or received in connection with the termination of employment or the modification of the terms and conditions relating thereto”, will now be treated as ‘Income from other sources’. Such sums received by individuals will be taxed in their hands at the applicable slab rate. As per the budget proposals, the highest tax rate for an individual (who has a taxable income of more than Rs one crore) is nearly 36%.
+This amendment does not cover money received from an employer when handed a pink slip or in cases of VRS, which will continue to be treated as salary income under existing I-T provisions and taxed accordingly.
+Gautam Nayak, tax partner at CNK Associates, a firm of chartered accountants, explains: “In various decisions, courts and tax tribunals have held certain receipts to be not taxable, even as they related to employment. This is because such receipts did not fall under the definition of salaries or profits in lieu of salary or because the employer-employee relationship was not in existence. Money received in such instances is now proposed to be taxed.”
+In simple terms, receipts are classified into revenue receipts (which are items of recurring nature, such as salary, business profits, interest to name a few) and capital receipts (which are of an isolated nature). “A capital receipt is not income and hence I-T is not levied on it,” states Nayak.
+“There are instances, where compensation related to employment, has fallen within the cracks and escaped I-T. Each such case, typically involves compensation of at least Rs. one crore. . Hence, budget amendment is critical,” said a senior I-T officer.
+=Sexual harassment damages=
+==Not taxable==
+See also [[Sexual harassment in India's media, entertainment, advertising industries; academics ]]
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F11%2F19&entity=Ar00516&sk=3BA14BC1&mode=text    Sushmita’s #MeToo payout not taxable, rules tribunal    |18 11 2018| ''The Times of India'']
+The city bench of the income-tax appellate tribunal (ITAT), which adjudicates income-tax disputes, has recently passed an order in favour of actress and model Sushmita Sen. A settlement compensation, in lieu of a sexual harassment complaint made by her, which runs into several lakh, has been held as non-taxable.
+She had got Rs 95 lakh during financial year 2003-04 as a settlement compensation from Coca-Cola India, following her complaint of being subjected to sexual harassment by an employee of the company.
+The ITAT, in its order dated November 14, held this sum was not ‘income’ that could be taxed but was in the nature of a ‘capital receipt’. Further, the penalty of Rs 35 lakh which was imposed on her for concealment of income (as she had not offered Rs 95 lakh to I-T) was ordered to be set aside.
+Sushmita’s contract ended prematurely
+Sushmita Sen had entered into a commercial contract aggregating to Rs 1.5 crore with Coca-Cola India to endorse its products; however, this contract was terminated prematurely by the company. The actress had disputed this termination as being mala fide and dishonest. She asserted that the termination of the commercial contract was meant to punish her as she had rightly resisted sexual harassment by an employee of the company. She had held Coca-Cola India, and its US-based parent, liable for all consequences flowing from such sexual harassment and for failing to discharge its statutory duty of providing her with a safe workplace environment. Subsequently, a settlement was reached between her and the company.
+As per the terms of the commercial contract, in case of termination only a sum of Rs 50 lakh was due to her from Coca-Cola India. As against this, under the terms of the settlement, she received Rs 1.45 crore, of which she had offered Rs 50 lakh to income-tax. She had held that the balance of Rs 95 lakh was in the nature of compensation, which was not taxable.
+= Shares=
+==Premium on shares not taxable: HC==
+In a relief to global energy and petrochemical giant Shell, the Bombay high court on Tuesday ruled that the firm is not liable to pay tax in a transfer pricing case of 2009-10. The potential tax demand on Shell by the I-T authorities was $240 million. The ruling comes after Vodafone’s recent win in the HC in a similar case. The I-T authorities in Mumbai had alleged that there was underpricing of shares which the company had issued to an overseas group entity Shell Gas BV in March 2009.
+The company said it had issued 87 crore shares at Rs 10 per share, but the I-T department assessed the value at Rs 180 per share and said there was thus a Rs 15,000-crore under pricing in the transaction, an amount on which tax could be levied. The Bombay HC has now held that these share premiums are not taxable. In case of Vodafone, the HC had then held that issuance of shares in a capital financial transaction did not amount to taxable income. The cellular service major had challenged an order of Income Tax authority in a transfer pricing case.
+Several global giants are involved in transfer pricing litigation with the government, whose stand has been criticized.
+Investors have been critical of the way the tax department went about slapping notices over the past few years.
+“We welcome the High Court decision. Shell has always maintained that equity infusion by a foreign parent company into an Indian subsidiary cannot be taxed as income,’’ said a Shell spokesperson after the verdict was pronounced. “ This is a positive outcome which should provide a further boost to the Indian government’s initiatives to improve the country’s investment climate”.
+=Small businesses, professionals=
+==Presumptive tax scheme==
+[http://epaperbeta.timesofindia.com//Article.aspx?eid=31808&articlexml=For-small-biz-professionals-a-way-to-save-02032016017025 ''The Times of India''], Mar 02 2016
+Surya Bhatia
+''' For small biz & professionals, a way to save money, and a tax headache '''
+The Budget presented for 2016-17 has come under fire for the move to tax EPF but there's one proposal that is sure to bring cheer to small businesses and professionals, and that's the presumptive tax scheme.
+This scheme covers small businesses with gross turnover up to Rs 2 crore -up from the existing ceiling of Rs 1 crore. It has also been extended to professionals with gross income up to Rs 50 lakh.
+''' So what exactly is presumptive taxation? '''
+As per Section 44AA of the Income-tax Act, 1961, a person engaged in business is required to maintain regular books of account. However, a person adopting the presumptive taxation scheme can declare income at a prescribed rate of 8% and, in turn, is relieved from the tedious job of maintaining books of account.
+However, in case income earned is at a rate higher than 8%, then the higher rate can be declared.
+And with the inclusion of professionals, a new Section 44ADA is proposed to be inserted in the Act to provide for estimating the income of an assessed who is engaged in any profession referred to in sub-section (1) of Section 44AA such as legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration or any other profession as is notified by the board in the official gazette and whose total gross receipts does not exceed Rs 50 lakh in the previous year. For the purpose, 50% of the total receipts of the professional during the financial year will be considered as profit and get taxed under the income-tax head “profits and gains of business or profession“.
+If you look at the table, it's clear that the assessee not only saves on record-keeping headaches, he also saves a considerable amount in taxes. Yes, there can be a few counters to this -mainly that the taxable income could be much below the presumptive taxation rate of 8% and 50% of receipts respectively . And if that is the case then the individual has no option but to maintain the books of accounts.
+To further keep the compliance burden minimum, those using presumptive taxation scheme are also allowed to pay advance tax by March 15 of the financial year, as against the normal practice of paying the advance tax in four installments.
+However, the taxpayer needs to be careful when opting for this as he or she has to remain in that scheme for 5 years to avail the benefits.
+=TDS (tax deducted at source)=
+==Head of religious congregation to certify names==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=No-TDS-for-nuns-priests-monks-rules-Madras-24122016015032  No TDS for nuns, priests, monks, rules Madras HC, Dec 24, 2016: ''The Times of India'']
+In an important ruling, the Madras HC has said no tax could be deducted at source from the salaries and other monetary benefits of persons who are members of religious congregation  such as nuns, monks and priests.
+Justice T S Sivagnanam, passing orders on a batch of 74 writ petitions, further said it would be sufficient if the head of the institution concerned certifies the names of staff members.
+The order has offered immediate relief to nunsfatherspriests working in various teaching institutions, established and administered by religious congregation such as Institute of the Fransican Missionaries of Mary , which was one of the 74 petitioners.
+They had moved the court after the I-T department passed an order on October 7, 2015 saying catholic nuns among teaching and non-teaching staff in these institutions were liable for TDS.
+==Online rectification in ITR simplified, 2015==
+[http://timesofindia.indiatimes.com/tech/tech-news/I-T-Dept-simplifies-online-rectification-of-TDS-in-ITR/articleshow/50123897.cms ''The Times of India''], Dec 10, 2015
+'''I-T Dept simplifies online rectification of TDS in ITR'''
+''The finance ministry said a new facility has been provided for pre-filling of TDS schedule''
+Aimed at making life easier for tax payers, the I-T department today said it has simplified the process of online rectification of incorrect details of tax deducted at source (TDS) filed in the income tax return (ITR).
+Earlier, taxpayers were required to fill in complete details of the entire TDS schedule while applying for rectification on the e-filing portal of the I-T Department.
+To avoid this, the finance ministry said a new facility has been provided for pre-filling of TDS schedule while submitting online rectification request on the e-filing portal to facilitate easy correction or updating of TDS details.
+"This is expected to considerably ease the burden of compliance on the taxpayers seeking rectification due to TDS mismatch," an official statement said.
+Errors due to incomplete TDS details in rectification applications were leading to delays in processing of such applications, thereby causing hardships to taxpayers, it added.
+==Penal interest can be waived in some cases==
+[http://epaperbeta.timesofindia.com/Article.aspx?eid=31808&articlexml=Taxmen-can-waive-TDS-related-penal-interest-in-27032017017010  Taxmen can waive TDS-related penal interest in some cases, March 27, 2017: The Times of India]
+The Central Board of Direct Taxes (CBDT) in its circular issued on March 24 has empowered tax authorities to reduce or waive penal interest for non-deduction of tax at source (TDS) in certain circumstances, including owing to a retrospective amendment in law.
+Interest can also be reduced or waived where tax could not be deducted as the books of a taxpayer were seized in a search operation.
+CBDT's circular will also apply where tax was not deducted or deducted at a lower rate on payments made to non residents, and the matter was settled under the mutual agreement procedure between the authorities of the two countries, under the relevant tax treaty . To avail of this benefit, the taxpayer would be required to pay the principal tax sum demanded or make arrangements to pay the same. However, restrictive conditions in this order are unlikely to benefit taxpayers in indirect transfer cases, say experts.
+Vodafone International Holdings, for instance, faces a demand of Rs 14,200 crore, which, according to the income-tax department, is due to the $ 11-billion acquisition of Hutchison's India telecom business. Tax authorities had held that Vodafone ought to have deducted tax in India, even if the sale carried outside India was of shares of a non-resident company , as it related to an asset in India (telecom business in India).
+To avail of the benefit of a waiver on interest (either partial or full), the condition imposed by CBDT is that the taxpayer did not deduct tax at source owing to a favourable high court order. Subsequently owing to an SC order on a retrospective amendment, it became liable to deduct tax at source. “The circular will have very limited applicability and usefulness in an indirect transfer tax kind of situ ation (where retrospective amendment was made in the I-T Act) as no positive jurisdictional high court decision on the subject as such is available on which reliance could have been placed by taxpayers,“ says Punit Shah, partner, Dhruva Advisors.
+The reasoning is simple.Vodafone won a favourable decision from the Supreme Court on January 20, 2012. A month later, the Finance Bill, 2012, through a retrospective amendment made indirect transfers taxable in India.
+Thus, there is only a window of approximately one month available to taxpayers to have relied on a favourable decision of the Supreme Court and not deducted tax at source.This limits applicability of the CBDT circular, says a corporate counsel.
+= YEAR-WISE CHANGES=
+==2019: nine issues in interim budget==
+[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2019%2F02%2F02&entity=Ar00600&sk=89D73EDC&mode=text  NINE THINGS YOU NEED TO KNOW ABOUT PERSONAL TAX, February 2, 2019: ''The Times of India'']
+'''Interim Budget Decoded'''
+• Standard deduction for salaried taxpayers raised from Rs 40,000 to Rs 50,000. This will result in a maximum tax saving of Rs 3,588, if you apply the maximum marginal tax rate of 35.88%.
+• If you are a resident taxpayer earning taxable income (after all applicable deductions) up to Rs 5 lakh, you will get full tax rebate. Earlier, the tax liability was of up to Rs 13,000, inclusive of health and education cess. If your gross income is up to Rs 6.5 lakh, you may not be required to pay any tax if you make investments in Provident Fund, specified savings, insurance, etc, which are eligible for deduction under Section 80C.
+• No notional rental income will be added to the taxable income for a second house property owned that is not let out. This will allow you to own up to two houses without notional rent on the second property being added to the taxable income.
+• Tax exemption on long-term capital gain on sale of a residential house will be available for investment in up to two residential house properties located in India against one earlier. The option is available only once in a lifetime for individuals or HUFs where capital gains on sale of house property is up to Rs 2 crore. This will allow individuals or HUFs to sell one house property and make investment in two without paying any capital gains tax.
+• Threshold for TDS on interest income from deposits with banks and post offices increased from Rs 10,000 to Rs 40,000. The limit for a senior citizen payee continues to be Rs 50,000. In some cases, individuals earning interest income from fixed deposit exceeding Rs 10,000 were filing income-tax return to claim tax refund for TDS even when their net taxable income was lower than the exemption limit (Rs 2.5 lakh). Now, such individuals will not be required to file return if interest income from such deposits does not exceed Rs 40,000.
+• Threshold for TDS on rent paid by any person (other than individual or HUF not subject to tax audit) to a resident increased from Rs 1.8 lakh per year to Rs 2.4 lakh per year. This will provide administrative relief to small taxpayers (landlords), if they have let out their flats to companies. However, if a tenant is a small individual taxpayer, then the TDS will apply only if the rent payout is more than Rs 50,000 per month.
+• The I-T department plans to be more taxpayer-friendly by processing income-tax returns within 24 hours and issuing refunds simultaneously.
+• It plans to conduct all verification and scrutiny assessment of returns electronically. This will be done by an anonymous back office, manned by tax experts and officials, eliminating personal interface between taxpayers and officials.
+'''Googly To Watch Out For'''
+• On December 10, 2018, the finance ministry announced a proposal to increase the tax exemption limit for lump-sum withdrawal from the National Pension System to 60% of the total amount. With this, the entire lump sum withdrawal from NPS, which is limited to 60% of the accumulated corpus, would have been exempt from tax. However, this proposal has not been notified in the Finance Bill, 2019, and, hence, the current tax exemption limit of 40% of the total amount remains unchanged.
+(Note: The full-fledged Budget could revise the tax rates and provisions)
 =See also=
-Pages on individual stars like
+[[Direct taxes: India]]
+[[Income Tax India: Expert advice ]]
+[[Income Tax India: Laws ]]
-[[Kidambi Srikanth]],
+[[Income Tax India: NRIs ]]
-[[Pullela Gopichand]],
+[[Income Tax India: Statistics]]: this page includes historical details of income tax '''rates''' and '''tax exemption limits''' over the years; how many Indians pay I Tax; how the income of women has risen over the years; the extent of tax arrears...
-[[PV Sindhu]],
+[[Wealth tax: India ]]
-[[Saina Nehwal]].
+[[Yog(a): history; legal and administrative issues]]

Badminton: India, Income Tax India: Laws

Revision as of 07:19, 30 November 2020

Contents

Basic tenets

Section 80C

Section 80 D

Rates of income tax in India

1995-2015

1949-2017: peak rate of Income Tax

1949, and since 1995: The number of tax slabs

Appeals

2015: Appeals only for Rs 10 lakh +

2017: ‘Higher appeals limit applies to pending cases,’ SC

Artists

Fashion designers

Capital gains

Corporates’ promotional activities

Pharmaceutical companies’ junkets for doctors

Donations to NGOs’ projects

Halved in 2017

Educational institutions

Profits not taxable: SC

Exemptions

1950: residential palace of erstwhile ruler exempted from IT

Scheduled tribes, Sikkimese, agriculture, institutions, hospitals, trusts

Yoga

`Medical relief,' `imparting education' are charitable purposes

Expatriates

Salary paid in India won’t face tax, if Non-resident

Family trusts

No `gift' tax on property received from individual

Film actors

Promotion of film: actor not expected to incur expenditure

Foreign tax credit (FTC)

Gifts

Need not be camouflaged remuneration

Gratuity

Payment of Gratuity(Amendment) Bill 2017

House rent allowance

Proof needed of rent paid to kin

Income Tax returns

Who has to file income tax returns

Not filing I-T returns?Imprisonment,fine

2018: Changed format

'Returns can be filed after I-T notice is issued'

Wrong information in I-T returns

Joint I-T liability

Co-ownership of property

Notice pay deducted by employer

Cannot be taxed

Overseas income

Residential status determined by no. of days stayed

Permanent account number (PAN)

2016: PAN mandatory for…

2016: Required for transactions above Rs 2 lakh

Perquisites

Interest-free loan from employer is taxable

Pharmaceutical companies

Freebies for doctors deductible

Property (house): income from

2018: losses from house property for TDS capped at ₹2 lakh

2018: owner to decide which property is self-occupied

Property (immovable): owned abroad

Notional rent to be included in income tax return

Property (NRI): purchase of

Miscalculation risks

TDS risks: 1

TDS risks: 2

Property, purchase of

Buyers won't lose I-T exemptions by adding kin name

Property, immoveable, sale of

Tax benefits for investment in new house

Raids

In Tamil Nadu

Reliefs on tax

Education loans to study abroad

Rental income

No tax on rent if none received from 2nd home

‘Salary’

2018: Non-compete fees, some compensations are taxable