Direct tax – Important due dates for June 2022, Income Tax updates – March 2022 to May 2022

1. Due Date for Income tax Compliance (June2022)

Since tax deductors/ collectors are required to use higher tax rate for deducting/ collecting tax from the vendors/ buyers on the basis of certain criteria such as non-filer of ITRs, etc, ITD had introduced an online functionality for making the said tas easier for tax deductors/ collectors.

Through this circular, ITD has communicated that the functionality is been updated as per the new provisions brought in by Finance Act 2022 and also made certain clear guidelines for making the lives easier for tax deductors/ collectors by stating that deductors/ collectors may check the PAN of vendors/ buyers at the beginning of FY only and not before making every payment, etc

However, if the payment is made to a NR, declaration is still required to be obtained from that NR for not having a PE in India, as the functionality is not capable to track the same.

(Circular 10/2022)

2. Charitable Trust/ Institutions – Extension of time line for electronic filing of Form No.10AB for seeking registration

The Central Board of Direct Taxes (CBDT) extended the due date for electronic filing of Form10AB as under:

The application for registration or approval under Section 10(23C), 12A or 8OG of the Act, for which the last date for filing falls on or before 29th September, 2022, may be filed on or before 30th September, 2022.

(Circular 08/2022)

3. Penalty provision for Aadhar PAN link notified

After extending the due date for the Aadhar PAN link several times, the Ministry of Finance has notified penalty provisions and it did not extend the due date of 31st March 2022.

1. Penalty of INR 500 will be applicable if Aadhar-PAN is linked within 3 months;

2. Penalty of INR 1000 will be applicable in any other case.

Consequence of non-linking –The PAN will become inoperative till the time PAN-Aadhar is duly linked.

CBDT clarified that “…..till 31st March, 2023 the PAN of the assessees who have not intimated their Aadhaar, will continue to be functional for the procedures under the Act, like furnishing of return of income, processing of refunds etc.”

(Circular 07/2022 and Notification 17/2022)

4. Domestic Companies opting for lower tax regime – Condonation of delay in filing Form 10-IC for Assessment Year 2020-21

CBDT has condoned the default in filing Form 10-IC to avail lower tax rate of 22% under section 115BAA for AY 2020-21.

Form 10-IC can now be filed till 30 June 2022, if Income Tax return was originally filed within due date and the option to avail lower rate was opted in ITR 6.

(Circular 06/2022)

5. Clarification regarding the Most-Favored-Nation (MFN) clause in the Protocol to India’s DTAAs with certain countries

CBDT clarified that the applicability of the MFN clause and benefit of the lower rate or restricted scope of source taxation rights in relation to certain items of income (such as dividends, interest income, royalties, Fees for Technical Services, etc.) provided in India’s DTAAs with the third States will be available to the first (OECD) State only when all the following conditions are met:

(i) The second treaty (with the third State) is entered into after the signature/ Entry into Force (depending upon the language of the MFN clause) of the treaty between India and the first State;

(ii) The second treaty is entered into between India and a State which is a member of the OECD at the time of signing the treaty with it;

(iii) India limits its taxing rights in the second treaty in relation to rate or scope of taxation in respect of the relevant items of income; and

(iv)A separate notification has been issued by India, importing the benefits of the second treaty into the treaty with the first State, as required by the provisions of sub-section (1) of Section 90 of the Income Tax Act, 1961.

This clarification is regarding cases where after first DTAA with a country, a second DTAA is signed with a third country.

(Circular 03/2022)

Now, persons entering into following criteria whall have to compulsorily obtain PAN:

• Cash deposit aggregating to INR 20 lakhs or more in a financial year, in one or more account of a person with a bank/ Post Office;

• Cash withdrawal aggregating to INR 20 lakhs or more in a financial year, in one or more account of a person with a bank/ Post Office;

• Opens of a current account or cash credit account with a Bank/ Post Office

(Notification 53/2022)

2. Notified Form & Manner of filing Updated Income Tax Return – Section 139(8A) – ITR U

Finance Act 2022 had introduced new provisions for filing Updated Return of Income – giving taxpayers having voluminous & complicated transactions to file correct information in the ITRs and also to facilitate ease of compliance to the taxpayers in a litigation free manner. This facility is accompanied with payment of additional tax equivalent to 25% – 50% of the tax and interest, as applicable.

The said return can be filed within 24 months from end of the relevant assessment year. There are certain cases where updated ITR cannot be filed such as cases where there is a reduction in the total tax liability, adjustment of losses against the income, refund or increase in the refund amount, etc.

To this effect, Income Tax Department has notified Form ITR U for filing the said updated Return of Income on 29 April 2022.

(Notification 48/2022)

3. More taxpayers brought under the obligation to file Income Tax Return

CBDT has expanded the scope of persons who are under obligation to file ITRs even earning income below basic exemption limit of INR 2,50,000. As per new notified rules, if a person other than a company/ firm falls under below category, ITR filing becomes mandatory:

• Deposited INR 50 lakhs or more in one or more Savings Bank Account during a FY;
• Business owners – if Turnover exceeds INR 60 lakhs during a FY;
• Professionals – if Gross Receipts exceeds INR 10 lakhs during a FY;
• If your TDS is deducted/ TCS is collected exceeds INR 25,000 during a FY [or INR 50,000 in case of senior citizen (60 years & above)].

Previously, the above list was limited to following categories:
• Amount deposited in one or more Current Bank Account exceeds INR 1 crore during a FY;
• Amount incurred on foreign travelling exceeds INR 2 lakhs during a FY;
• Amount incurred towards electricity consumption exceeds INR 1 lakhs during a FY.

New provisions are applicable from immediate effect.

(Notification 37/2022)

4. Taxability of income from retirement benefit account maintained in notified countries

CBDT notified Canada, United Kingdom of Great Britain and Northern Ireland, USA to be the countries income from retirement benefit account maintained these jurisdictions shall be as per Section 89A r.w Rule 21AAA

(Notification 25/2022)

5. Non-application of TCS provisions u/s 206C(1G) of the Act

Section 206C(1G) states that TCS should be collected by the seller of overseas tour package and AD Bankers in cases of selling overseas tour packages and remitting money outside India under LRS scheme, respectively.

On 30 March 2022, CBDT clarified that the person who is not an Indian Resident u/s 6(1) OR 6(1A) of the Act, TCS provisions u/s 206C(1G) shall not apply on them.

(Notification 20/2022)

6. Faceless Inquiry or Valuation Scheme, 2022

CBDT notified Faceless Inquiry or Valuation scheme for the purpose issuing scrutiny notice section 142(1)/ making inquiry before assessment section 142(2) of the Act/ directing the assessee to get his accounts audited under section 142(2A) of the Act/ Estimating the value of any asset, property or investment by a Valuation Officer
under section142A of the Act.

(Notification 19/2022)

7. e-Assessment of Income Escaping Assessment Scheme, 2022.

29 March 2022 – CBDT notified e-assessment scheme for making income escaping assessment u/s 147 of the Act.

(Notification 18/2022)

8. e-advance rulings Scheme, 2022

18 January 2022 – CBDT notified e-assessment scheme for making income escaping assessment u/s 147 of the Act.

(Notification 07/2022)

Tax Evasion Informer –

CBDT has launched a service for filing tax evasion petition. A person, after doing a login to the e-filing website, will be able to file a complaint regarding tax evasion, foreign undisclosed income, benami properties, etc.

GST Purchase/ Sale, transaction of sale of goods covered under TDS provision and Income of specified senior citizens will now be available at income tax portal

From last year, taxpayers started getting information regarding transactions already reported to Income Tax against his PAN. Tax payer is able to download Annual Information Statement (AIS) from his income tax e-filing account to get details of such transactions.

Now, AIS will also show details of GST turnover, GST purchases, TDS-194Q (under Business receipts of certain sums by buyers against sale of goods), and the income of specified senior citizens.

Supreme Court put end to controversy involved in notice issued u/s 148 after 31-Mar-2021.

Income tax department had issued appx 90000 notices u/s 148 (old provisions) for several assessment years (A.Y. 2013-14 onwards) after 31st March 2021. Many writ petitions have been filed across the country challenging the notices as new provision were introduced u/s 148A and made applicable from 1st April 2021.

In response to writ petitions, several HCs quashed reassessment notices issued under the old reassessment regime after 31st March.

In further appeal by revenue, Supreme Court opines that the notices ought to have been issued under the substituted provisions of Sections 147 to 151 and remarks that there appears to be genuine non-application of the amendments as the Revenue may have been under a bonafde belief that the amendments may not yet be enforced.

Further, Supreme Court holds that the impugned notices be treated as show-cause notices in terms of Section 148A(b) and directs that the Revenue shall within thirty days provide the assessees with all the material and information relied upon, so as to enable the assessees to file their reply to the notices within two weeks.

(Union of India Vs Ashish Agarwal)

Implementation of SC Judgement for 148A matters – Instructions issued by CBDT

Vide Instruction No.1/2022 dated 11.05.2022, implementation of SC Judgement (Union of India Vs Ashish Agarwal) for extended reassessment notices issued between 1st April 2021 and 30th June 2021 (hereinafter referred as these cases) are dealt. Some of the important points of the said instructions are as under:

(i) ​For AY 2013-14, AY 2014-15 and AY 2015-16​,​ ​f​resh notice u​/s​ 148 can be issued ​for ​​these cases with the approval of the specified authority​.​
(ii) ​For AY 16-17. AY 17-18​, fresh notice under section 148 can be issued in these cases with the approval of the specified authority, since they are within the period of ​3 years.
(iii) Hon’ble Supreme Court has directed that information and material is required to be provided in all cases within 30 days. However, material will not be provided in a case for AY 2013-14, AY 2014-15 and AY 2015-16, if the income escaping assessment is less than 50 lakhs.
(iv)The assessee has two weeks to reply as to why a notice under section 148 of the Act should not be issued, on the basis of information.
(v) If assessee makes a request by making an application that more time be given to him to file reply to the show cause notice, then such a request shall be considered by the Assessing Officer on merit and time may be extended by the Assessing Officer.

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