<ul><li>The <keyword id="6354977" type="General" weightage="20" keywordseo="Supreme-Court" source="Orion">Supreme Court</keyword> has allowed the government to appeal against the ₹923 crore GST refund to <keyword id="15491" type="General" weightage="20" keywordseo="Airtel" source="Orion">Airtel</keyword>.</li><li>The Delhi High Court in May 2020 had ordered the government to verify and refund excess taxes paid to the telco.</li><li>Airtel had claimed that it paid an excess amount of GST as the GSTR-2A return form was not operational.</li></ul>In a major setback to Indian telecom operator Airtel, the Supreme Court (SC) has allowed the Indian government’s appeal against the Delhi High Court’s order granting ₹923 crore in tax refunds to the company. In May 2020, the Delhi High Court had ordered the government to verify and refund the ₹923 crore of excess goods and services tax (GST) paid by Airtel between July and September 2017. Soon after the verdict, the government moved the Supreme Court challenging the Delhi High Court order. The Sunil Mittal-led telco had claimed that it had paid an excess amount of GST as the GSTR-2A return form was not operational during the period. GSTR-2A is a system-generated return that includes all the outward supplies. Authorities had claimed that the telco had under-reported input tax credit during the period. Bharti Airtel was trading at ₹694.60 at 12:40 p. m., down by over 1% on October 28. <cmsannotation type="cmsannotation" annotationid="Airtel applies for AGR dues moratorium" comment="subhead" text="Airtel applies for AGR dues moratorium">Airtel applies for AGR dues moratorium</cmsannotation> Earlier this month, Airtel <a href="https://www.businessinsider.in/business/telecom/news/airtel-opts-for-agr-dues-moratorium-becomes-the-second-telco-to-do-so/articleshow/87254202.cms">opted</a> for the adjusted gross revenue (AGR) dues moratorium offered as part of the <a href="https://www.businessinsider.in/business/telecom/news/airtel-vodafone-idea-and-jio-welcome-telecom-relief-package-but-analysts-are-divided-on-whether-it-is-enough/articleshow/86252002.cms">telecom relief package</a> by the government. The telco is expected to free up its cash-flow by up to ₹40,000 crore due to the moratorium. In addition to Airtel, Vodafone Idea has also opted for the moratorium and is expected to free up its cash-flow by up to ₹60,000 crore for four years. SEE ALSO: <a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-cements-its-lead-over-airtel-in-both-total-as-well-as-active-subscribers/articleshow/87156675.cms">Reliance Jio cements its lead over Airtel in both total as well as active subscribers</a> <a href="https://www.businessinsider.in/business/telecom/news/airtel-vodafone-idea-shares-jump-after-government-proposes-to-withdraw-13000-crore-demand-for-spectrum-usage-charges/articleshow/86775903.cms">Airtel, Vodafone Idea shares jump after government proposes to withdraw ₹13,000 crore demand for spectrum usage charges</a> <a href="https://www.businessinsider.in/policy/legal/news/cloud-kitchens-are-restaurants-ice-cream-is-not-food-and-other-important-clarifications-that-will-affect-gst-rates/articleshow/86841614.cms">Cloud kitchens are restaurants, ice cream is not food and other important clarifications that will affect GST rates</a>

Airtel GST refund – Supreme Court allows government appeal against ₹923 crore relief

By Deepa Bakhru and Smriti Gangwal The pace of <keyword id="168300" type="General" weightage="20" keywordseo="digitalisation" source="Orion">digitalisation</keyword> in business activities in India has been a testimony to the tremendous potential of digital transformation. Moreover, with the outbreak of <keyword id="8763838" type="General" weightage="20" keywordseo="COVID-19" source="Orion">COVID-19</keyword>, most business operations moved online, accelerating a digital transformation that has been underway for decades. Today, technology is commonly interwoven into every business function. Companies globally, including in India, are increasing investments on data management and standardisation, <keyword id="107950" type="General" weightage="20" keywordseo="artificial-intelligence" source="Orion">artificial intelligence</keyword> and shifting of applications and infrastructure to the cloud. Moreover, the Indian government is also increasingly putting digital strategies at the centre of its policy <a href="https://www.gartner.com/en/newsroom/press-releases/2021-08-19-gartner-india-govt-it-spending-forecast-2022">agendas</a>. There has been a paradigm shift in the mechanism of <keyword id="936384" type="General" weightage="20" keywordseo="filing-tax-returns" source="Orion">filing tax returns</keyword> from manual to e-filing, introduction of GST, faceless assessment and appeal, etc. Also, the Income-tax department has revamped the income tax portal to provide several new features for ease of compliance. The tech industry is eyeing the forthcoming Budget in order to get clarifications on digital taxation to resolve ambiguities in various laws around it. Some of the key expectations of the tech industry from the upcoming <keyword id="10547300" type="General" weightage="20" keywordseo="Budget-2022" source="Orion">Budget 2022</keyword>, are enumerated as under: <ul><li>Presently, there is an ambiguity in relation to the scope of equalisation levy (EQL)provisions, for instance, digital/electronic facilities could be held to cover any communication by way of emails or calls or any other means using the internet. Further, Indian tax treaties do not support the claim of credit of EQL in case of non-residents, in its home country. Therefore, the government needs to provide clarity in terms of scope of EQL and introduce a mechanism for claiming credit of EQL paid by non-residents in the home country. Additionally, a mechanism needs to be introduced for claiming refund/adjustment of excess EQL deposited by the e-commerce operator.</li></ul><ul><li><keyword id="6704918" type="General" weightage="20" keywordseo="Significant-Economic-Presence" source="Orion">Significant Economic Presence</keyword> (SEP) has significantly widened the scope of the term ‘business connection’ with the thresholdsbeing prescribed. Though SEP was introduced to tax digital transactions, based on the wordings of the provisions, it may include physical transactions in its ambit. Further, considering the broad coverage of SEP and EQL, there is an overlap of the transactions covered under both regimes. There could also be tax deducted at source (TDS) impact in case the same is being considered as royalty or fees for technical services (FTS), in case of non-resident taxpayers. The government needs to clarify on the coverage of SEP along with the interplay between SEP, EQL and TDS provisions. Further, clear profit attribution rules also need to be introduced.</li></ul><ul><li>Likewise, clarity is also required on the applicability of EQL/TDS provisions on cloud-based transactions which is currently uncertain due to the contrary positions adopted by taxpayers and tax authorities.</li></ul><ul><li>Relevant amendments are required to be made in the Act to provide clarity on final <a href="https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-october-2021.pdf">Pillar </a>provisions including the consequent abolishment of SEP and EQL.</li></ul><ul><li>Recently, there has been an increase in data centre activities being undertaken by captive units in India and with the introduction of data localisation regulations, there has been a surge in the number of data centres being set up in India. Tax authorities have been considering such operations as activities constituting PE for non-residents. Clarifications need to be provided to put an end to the prolonged litigation.</li></ul><ul><li>The tech industry incurs heavy advertising, marketing and promotion (AMP) expenditure for promoting their products which are being considered as capital in nature, leading to additions including transfer pricing adjustments. Clarifications in the tax treatment of AMP expenses is required around the said issue. </li></ul>Additionally, taxpayers also seek the following policy interventions: <ul><li>Refund of input tax credit on capital goods should be permitted; </li><li>Mix of panel members (including independent members) in dispute resolution panel (DRP)should be introduced for better evaluation of merits of each case; and </li><li>Time limits for conclusion of appeals by Commissioner of Income (Appeals) [CIT(A)] and Income Tax Appellate Tribunal (ITAT) should be prescribed.</li></ul><cmsannotation type="cmsannotation" annotationid="Conclusion" comment="subhead" text="Conclusion">Conclusion</cmsannotation> India’s tax regime is being geared up to cover newer tech business models. However, the overlapping of certain provisions and lack of clarity leads to interpretational, administrative and operational challenges to taxpayers. Accordingly, taxpayers are looking forward to clarifications to resolve such ambiguities. Deepa Bakhru is Senior Manager and Smriti Gangwal is Manager with Deloitte Haskins and Sells LLP SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/opinion-tax-consolidation-schemes-need-of-the-hour-for-indias-renewable-energy-sector/articleshow/89118730.cms">OPINION: Tax consolidation schemes is the need of the hour for India’s renewable energy sector</a>

OPINION: These tech issues need clarity and amendments

<keyword id="6358777" type="LOCATION" weightage="20" keywordseo="New-Delhi">New Delhi</keyword>, The <keyword id="128625" type="COMPANY" weightage="20" keywordseo="Internet-and-Mobile-Association-of-India">Internet and Mobile Association of India</keyword> (IAMAI) on Thursday said that its has appealed to the government to reduce TDS on e-commerce platforms to 0.25 per cent from 1 per cent to give a much-needed relief to small sellers in the <keyword id="8445197" type="COMPANY" weightage="20" keywordseo="union-budget-2020-21">Union Budget 2020-21</keyword>. The uniform TDS on e-commerce transactions is creating major challenges for the small sellers who are conducting <keyword id="6355515" type="UNKNOWN" weightage="20" keywordseo="business">business</keyword> via e-commerce platforms. "Reducing TDS will help achieve the tax trail without creating the unintended cash-flow concerns," the IAMAI said in a statement. "While it understands that it was an important move on part of the government for better monitoring and realisation of taxation, it has led to unforeseen consequences hurting SME sellers". IAMAI had earlier shared with the authorities an illustration that suggested for merchants who have a turnover of up to Rs 1.25 crore, 1 per cent TDS under the new provisions would exceed their total tax liability, resulting in an unnecessary refund position. "Or, in other words, create cash flow and working capital concerns for small businesses," said the IAMAI which has now appealed to the authorities in its pre-budget memorandums to reduce the rate of TDS. Given the Covid-related economic slowdown, e-commerce platforms have proven to be a crucial lifeline for small scale and MSME sellers, who do not have the marketing or logistics bandwidth for wider outreach and are now using ecommerce platforms to sell across the country. "Unfortunately, the TDS, over and above the pre-existing TCS under GST, now means that such sellers conducting business over e-commerce platforms have a considerable amount of their total revenues locked up under <keyword id="516033" type="PERSON" weightage="20" keywordseo="tax-claims">tax claims</keyword>," the association argued. Forcing small businesses into prolonged tax refund claims for release of critical revenues is perhaps unwarranted under the present circumstances, it added. --IANS na/

Budget 2021: Industry body seeks tax relief for small sellers on e-commerce platforms

New Delhi, Feb 1 () Direct tax body CBDT will adopt a "taxpayer charter" which will ensure trust between a taxpayer and the administration and reduce harassment, Finance Minister Nirmala Sitharaman said on Saturday.
 "Wealth creators will be respected in this country," Sitharaman said in her 2020-21 Budget speech.
 She said an important aspect of both ease of living and ease of doing business is fairness and efficiency of tax administration. 
 "We wish to enshrine in the statutes a 'taxpayer charter' through this budget. Our government would like to reassure taxpayers that we remain committed to taking measures so that our citizens are free from harassment of any kind," she said.
 She further said that any tax system requires trust between taxpayers and the administration, which will be possible only when taxpayer's rights are clearly enumerated. 
 "With the objective of enhancing the efficiency of the delivery system of the Income Tax Department, I propose to amend the provisions of the Income Tax Act to mandate the Central Board of Direct Taxes (CBDT) to adopt a Taxpayers' Charter," Sitharaman said.
 The Economic Survey 2019-20 tabled in Parliament on Friday had said that ethical wealth creation is the key to India becoming a USD 5 trillion economy by 2025.
 Taking forward faceless assessment process, the Budget also proposed to bring about "faceless appeal".
Currently, most of the functions of the Income Tax Department starting from the filing of return, processing of returns, issuance of refunds and assessment are performed in the electronic mode without any human interface. 
 "In order to take the reforms initiated by the Department to the next level and to eliminate human interface, I propose to amend the Income Tax Act so as to enable Faceless appeal on the lines of Faceless assessment," Sitharaman said in her Budget speech.
 The Budget also proposed a new dispute resolution scheme-- 'Vivad Se Vishwas' -- for time bound resolution of 4.83 lakh direct tax cases pending in various appellate forums -- Commissioner (Appeals), ITAT, High Court and Supreme Court.
 Under the proposed scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by March 31, 2020. Those who avail this scheme after March 31, 2020 will have to pay some additional amount. The scheme will remain open till June 30, 2020.
 In the receipts side, the Budget has pegged gross tax revenues for 2020-21 at Rs 24.23 lakh crore, up 12 per cent from Rs 21.63 lakh crore in current fiscal.
Around Rs 6.38 lakh crore is expected to be mopped up from personal income tax in 2020-21, a 14.13 per cent increase over Rs 5.59 lakh crore earned in 2019-20.
Besides, Corporate tax revenue is budgeted to increase 11.63 per cent to Rs 6.81 lakh crore in 2020-21, from Rs 6.10 lakh crore in current fiscal.
The revenues from Goods and Services Tax (GST) is estimated at Rs 6.90 lakh crore in 2020-21 as against Rs 6.12 lakh crore in current fiscal.
 In the current fiscal the government has missed the gross tax revenue collection target by Rs 2.97 lakh crore. The budget estimates for gross tax revenue in 2019-20 was Rs 24.61 lakh crore, while in revised estimates it is pegged at Rs 21.63 lakh crore.
Revenues from corporate tax was cut substantially from Rs 7.66 lakh crore budgeted for 2019-20, to Rs 6.10 lakh crore in revised estimates.
Revenue from income tax also missed budget projections of Rs 5.69 lakh crore. In revised estimates it stands at Rs 5.59 lakh crore for 2019-20. JD MR
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Airtel GST refund – Supreme Court allows government appeal against ₹923 crore relief

Rounak Jain

OPINION: These tech issues need clarity and amendments

BI India Bureau

Budget 2021: Industry body seeks tax relief for small sellers on e-commerce platforms

IANS

'Taxpayer charter' on cards to build trust, reduce harassment; wealth creators will be respected: FM

PTI