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<ul><li>For education and medical treatment there is no change to the earlier tax of 5% on remittances in excess of ₹7 lakh</li></ul><ul><li>Overseas tour packages will get more expensive as <keyword id="6357150" type="General" weightage="100" keywordseo="tcs" source="Orion">TCS</keyword> has been increased from 5% to 20%</li></ul><ul><li>TCS paid can be settled against tax dues and refund claimed if applicable</li></ul>The Union Budget 2023 has proposed a tax collection at source (TCS) of 20% for foreign outward remittance under liberalized remittance scheme (LRS) (other than for education and medical purposes). This will be applicable from July 1, 2023. Before this, TCS of 5% was applicable to foreign outward remittance in excess of ₹7 lakh. Now, apart from education and medical treatment, there will be no threshold limit for other instances of remittances. “ There is a proposal to increase the TCS to 20% from 5% for exchange remittances under LRS as prescribed by RBI. The TCS can be claimed as a credit in the tax return. This impacts the remittances being made under LRS, such as investing in foreign stocks, property overseas travel, maintenance of relatives abroad,” says <keyword id="8998975" type="General" weightage="50" keywordseo="rohinton-sidhwa" source="Orion">Rohinton Sidhwa</keyword>, partner, Deloitte India. Let us take a closer look at how this will affect overseas remittance under LRS. Overseas education and medical treatment: For both overseas education and medical treatment, the 5% TCS is charged on the total amount of remittance in excess of ₹7 lakh. The budget proposes no change in that. Plus, when someone takes a loan to study abroad the TCS is charged only at 0.5% of the total amount in excess of ₹7 lakh. It is to be noted that education includes tuition fees and hostel expenses. “In case a student goes abroad and lives in a school/college hostel and remittance for foreign exchange is made for the same, then it can be considered as remittance for educational purposes. However, in case the student spends for food/lodging and where there is no link of such spending with the school/college, then it may be sought to be classified as other than education purposes and the field officers may seek to demand a levy of TCS at 20%. In case this happens, then education abroad would become quite cash intensive,” says <keyword id="1256264" type="General" weightage="50" keywordseo="vivek-jalan" source="Orion">Vivek Jalan</keyword>, Partner, Tax Connect Advisory. Overseas tour packages: Overseas tour packages will get costlier and attract a TCS of 20% without any threshold limit. If an Europe tour package costs ₹10 lakh, one now has to pay ₹12 lakh for the same package going ahead. “However, this is applicable only to your packages and will not apply if someone is making bookings of hotels etc on their own,” says Rachit Sharma, Company Secretary, Taxmann Group. “While various boosters have been provided for integrated domestic travel in this budget, yet this increase in the rate of TCS would act as a dampener for foreign travel. Hence the policy of The Government seems clear,” says Jalan. Overseas investments: When investing abroad, one has to pay 20% TCS without any threshold limit going forward. Over the last few years more and more Indians have been investing overseas, especially in the US. Since every dollar one invests will now have a 20% tax imposed on it, this will affect their returns (earlier one did not have to pay any TCS on up to ₹7 lakh invested). Buying property abroad: “Similarly, if the person wants to buy an immovable property outside India, in addition to the money he has to pay for the purchase of the property, he will be required to pay 20% of the the purchase price by the way of TCS to the bank from where remittance is made,” says <keyword id="47558" type="General" weightage="50" keywordseo="ved-jain" source="Orion">Ved Jain</keyword>, founder, Ved Jain Associates. Hence, if you are buying a property in Dubai worth Rs 3 crore, an additional ₹60 lakh needs to be paid. However, one can get a tax credit on the same as explained later. <div type="image" title="budget-table" msid="97555446" hostid="261" sizebytes="76684" caption="&amp;lt;p&amp;gt;&amp;lt;em&amp;gt;Source: Taxmann Group, Only for remittance under LRS&amp;lt;/em&amp;gt;&amp;lt;/p&amp;gt;"></div> TCS can be settled against tax dues: TCS on remittances essentially means that a person making a remittance will have to pay an additional 20% at the time of making the remittance, i.e. there will be an additional 20% cash flow paid towards TCS. However, it can be settled against tax dues. “This amount then will appear in their Form 26AS since TCS is linked to their PAN and can be settled against their tax dues. This is tax already collected from them. In the event the taxpayer has a refund situation, the excess tax collected via TCS shall be refunded to the taxpayer,” says Archit Gupta, founder and CEO, Clear. “However for everyone this implies more funds locked in which are only adjustable while paying taxes, or refunded after the FY once income tax return is processed,” says <keyword id="3707077" type="General" weightage="50" keywordseo="sidhwa" source="Orion">Sidhwa</keyword>. One may infer that this move is aimed at discouraging people from sending money abroad. When sending money abroad, one thus needs to plan accordingly.

Budget 2023 proposes 20% TCS on foreign expenses under LRS

<ul><li>When you join a <keyword id="167744" type="General" weightage="20" keywordseo="new-job" source="Orion">new job</keyword>, inform your new employer about your previous <keyword id="10876" type="General" weightage="20" keywordseo="salary" source="Orion">salary</keyword> details. </li><li>In your <keyword id="6354751" type="General" weightage="20" keywordseo="income-tax" source="Orion">income tax</keyword> return you have to disclose incomes from both employers. </li><li>If your new employer has not deducted TDS, you should advise the employer to do so. </li></ul>If you have changed your job recently, any time before 31 March 2023, you need to be more careful when filing your taxes. This is because you had a salary from the previous employer, and then, almost immediately or with a gap, you have also drawn a salary from your new employer. <cmsannotation type="cmsannotation" annotationid="Disclose your previous salary details" comment="subhead" text="Disclose your previous salary details">Disclose your previous salary details</cmsannotation> When someone switches jobs, the new organisation assumes that it is their first employment during the year, and thus they may not consider the older employer salary, and tax deduction, while doing their income and tax computation. “Therefore they give the employer benefits of standard deduction, basic exemption limit, <keyword id="13075797" type="General" weightage="20" keywordseo="80c-deduction" source="Orion">80C deduction</keyword> etc all over again, even though it has been considered by the previous employer,” says Archit Gupta, CEO, Clear, a Fintech company. This leads to incorrect computation of income, as well as taxes. ““In his income <keyword id="102735" type="General" weightage="20" keywordseo="tax-return" source="Orion">tax return</keyword> an employee has to disclose incomes from both employers, aggregate the amount, and get deductions under one category only," says Ved Jain, founder, Ved Jain Associates, a tax consultancy firm. Similarly, when you are claiming HRA etc, you need to take the salary aggregate into consideration, so that your calculator of tax is appropriate. Jain says that when you join a new job you are supposed to inform your employer about your previous employer, and share details of the salary that you have received during the year from the previous employer. Then the tax will be deducted at an appropriate rate. <cmsannotation type="cmsannotation" annotationid="Check if your employer is deducting TDS" comment="subhead" text="Check if your employer is deducting TDS">Check if your employer is deducting TDS</cmsannotation> If his income is taxable, he employee should be careful and check if his employer has deducted TDS from his salary slip. “If the employer has not deducted tax at source which he was supposed to deduct, he should advise the employer to deduct tax at source and in case that is not done he should pay advance taxes,” says Jain. Otherwise, he may have to pay a huge amount of taxes at one go, and also pay interest under section 234B and 234C. <cmsannotation type="cmsannotation" annotationid="What to do if an employer is deducting TDS but not submitting to the Government?" comment="subhead" text="What to do if an employer is deducting TDS but not submitting to the Government?">What to do if an employer is deducting TDS but not submitting to the Government?</cmsannotation> In rare cases if the employer deducts TDS and does not pay to the Government, then the employee is losing that entire money for which he has already paid taxes. What is the remedy? “The employee can find out from his salary slip that the TDS has been deducted, but it will not reflect in his form 26AS. The employee can then raise a complaint on the income tax portal to his jurisdiction officer that such and such entity had deducted his taxes, but not paid it to the Government. His jurisdiction officer is duty bound to raise this to the employer’s jurisdiction officer, and recover the money from the employer, or take prosecutory action against the employer,” says Vivek Jalan, partner, Tax Connect Advisory. Hence, disclosing your income from both employers, and computing taxes accordingly is important, if you have changed jobs in the last financial year.

Changed your job in the last financial year? Here’s how to get your tax filing in place

<ul><li><keyword id="103549" type="General" weightage="20" keywordseo="elss" source="Orion">ELSS</keyword> is an open-ended equity mutual fund that invests primarily in equities and equity-related products. </li><li>ELSS funds have a lock-in period of three years, meaning that investors are not allowed to withdraw their investment before the completion of this term. </li><li>Under Section 80C, investors can claim a deduction of up to ₹1.5 lakh by investing in ELSS funds. </li></ul>If an investor decides to opt for the old tax regime, he/she can still take advantage of the various deductions available to minimise tax outgo. Section 80C, with its plethora of tax-saving investment options, remains a favourite with investors. One of the options to save tax under section 80C is ELSS (equity-linked saving scheme), which is a type of mutual fund that focuses mainly on equities and provides tax benefits to investors, making it a popular investment choice. ELSS funds have a lock-in period of three years, meaning that investors are not allowed to withdraw their investment before the completion of the term. This lock-in period is shorter than that of other tax-saving investments such as the public provident fund (PPF), national savings certificate (NSC), and fixed deposits (FDs). Under Section 80C of the Income Tax Act, investors can claim a deduction of up to ₹1.5 lakh from their taxable income by investing in ELSS funds. This deduction is one of several deductions available under Section 80C. Despite being considered high-risk investments due to their primary focus on equities, ELSS funds have the potential to provide higher returns than other tax-saving investments over the long term. Professional fund managers manage ELSS funds and base their investment decisions on market trends and analysis. “Investment in ELSS is a good option as it gives both tax benefits, as well as good return. A taxpayer saves tax on the amount of investment made. Further the return on such equity investment is better than any investment in debt like FD, bonds etc,” says Ved Jain, founder, Ved Jain Associates, a chartered accountancy firm. Though past performance is not an indication of future returns, ELSS funds as a category have given 9.64% returns over the last 5 years, and 14.58% returns over the last 10 years. Investors have two options for investing in ELSS funds: lump sum or systematic investment plan (SIP). In a lump sum investment, the entire investment amount is made at once, while in an SIP investment, a fixed amount is invested at regular intervals. SIP investments are an excellent choice for investors who want to invest in ELSS funds but do not have a large sum of money available at once. “Investors should look at ELSS as an opportunity to participate in an equity scheme. It should be looked at as an option for creating wealth in a 15-year time frame. Tax saving should be taken as incidental benefit,” says AK Narayan, CEO and founder of AK Narayan Associates, a financial planning firm. Investors can select from various ELSS funds offered by different mutual fund companies. Before investing, it is essential to conduct research and compare the different funds to ensure that they are aligned with one's investment goals and risk appetite.

ELSS Mutual Fund: A way to claim tax deduction while enjoying market-linked returns

<ul><li>Indians buy <keyword id="18712" type="General" weightage="20" keywordseo="gold" source="Orion">gold</keyword> on <keyword id="126295" type="General" weightage="20" keywordseo="akshaya-tritiya" source="Orion">Akshaya Tritiya</keyword> as it is believed that the day symbolises good luck, success and fortune.</li><li>This year Akshaya Tritiya falls on April 22 and companies are offering multiple ways consumers can buy gold.</li><li>Gold has risen 15% since the last Akshaya Tritiya on May 3, 2022.</li><li><keyword id="46002" type="General" weightage="20" keywordseo="gold-prices" source="Orion">Gold prices</keyword> scaled a record high of ₹61,660 per 10 gm on April 19, 2023 in Mumbai.</li></ul>Akshaya Tritiya also known as Akha Teej is a Hindu festival considered to be a highly auspicious and sacred day – and a good day to buy gold and properties. As per mythology, a number of events took place on Akshaya Tritiya, making it an auspicious day. For instance Maharishi Ved Vyasa, the author of Mahabharata, is believed to have started narrating the epic to Lord Ganesh on this day. This year Akshaya Tritiya falls on April 22, Saturday. And gold has risen 15% since the last Akshaya Tritiya on May 3, 2022, according to Quantum AMC. Gold prices hit a record high at ₹61,660 per 10 gm on April 19, 2023 in Mumbai. “This Akshaya Tritiya seems like an opportune time to load up your purchase as the macroeconomic backdrop and risk-reward dynamics seem to favour gold and the downside looks limited,” said Ghazal Jain, fund manager- alternate investments, Quantum AMC. The yellow metal is considered as a hedge against inflation and a safe haven compared to assets like equities, bonds and currencies. A mild recession and weaker earnings have historically been gold-positive. A further weakening of the dollar as inflation recedes could provide support for gold. The current uncertain macro environment triggered by the war between Russia and Ukraine, high inflation across the globe, rising interest rates and now the banking crisis in the US and Europe – all make a case for buying gold. “Domestic gold prices are derived from international gold prices. International gold prices are priced in US dollars and hence the dynamics of the US economy are big drivers of gold prices. Expectations of a monetary policy pivot by the Federal Reserve are gathering steam after a regional banking crisis in the United States made the economic impact of higher interest rates apparent,” said Jain. “Further deterioration in economic conditions could drive risk aversion, hurt risk assets and lead gold prices up,” she said. Soaring gold prices have led Titan’s jewellery arm Tanishq to reinstate its advanced booking option, allowing buyers to lock in the price of the yellow metal ahead of Akshaya Tritiya. It has also amplified its gold-exchange programme and introduced an affordable range of jewellery to woo consumers. From gold jewellery and coins to gold ETFs or exchange-traded funds, there are multiple ways in which one can invest in gold. Here are some ways to invest in gold: <keyword id="36023" type="General" weightage="20" keywordseo="Gold-coins" source="Orion">Gold coins</keyword> You can buy gold coins from MMTC-PAMP – a joint venture between Switzerland-based bullion brand PAMP SA and MMTC, a Government of India Undertaking. You can also buy them from non-government sources such as jewellers and bullion traders. <keyword id="2754241" type="General" weightage="20" keywordseo="Sovereign-gold-bonds" source="Orion">Sovereign gold bonds</keyword> Sovereign gold bonds (SGB), a substitute to physical gold, is a paper issued by the government that is denominated in terms of grams of gold. Basically, SGBs give investors an exposure to gold, but not in a physical form like gold bars or jewellery. The Indian government had initiated the investment options in 2015 as an alternative to owning physical gold. These bonds have a term of eight years with a lock-in period of five years. However, that does not necessarily mean that the investment needs to be compulsorily held till maturity. Investors can opt for premature redemptions. Additionally, gold bond investors have the option of selling the bonds anytime on the stock exchanges. Gold exchange-traded funds (ETFs) Gold ETFs are passive investment instruments that invest in gold bullion, and aim to track the domestic physical gold price. In other words, Gold ETFs are units representing physical gold which may be in paper or dematerialised form. ETFs reflect the current gold prices unlike physical gold prices, which vary across India depending on local taxes in each state, transportation cost and other related costs. Since ETFs are listed on an exchange, they offer high liquidity. You can buy or sell your holdings at any time during the day at the real-time price of gold. <keyword id="1024100" type="General" weightage="20" keywordseo="Gold-mutual-funds" source="Orion">Gold mutual funds</keyword> Gold mutual funds are a type of mutual fund that invest their corpus in various gold forms including physical gold and gold mining companies. The performance of gold funds is dependent on the movement of stock prices of these companies. Since gold mutual funds are actively managed by a fund manager, it has the potential to offer higher returns as compared to gold ETFs that mimic a market index. <keyword id="4465249" type="General" weightage="20" keywordseo="Digital-gold" source="Orion">Digital gold</keyword> It allows you to purchase the precious metal online, but eliminates the need to physically store it. Digital gold can be bought online through fintech platforms like Groww, Kuvera etc., and through brokers as well. The gold purchased as digital commodity will be stored in insured vaults by the seller on behalf of the customer. All you need is internet/mobile banking and you can invest in gold digitally anytime, anywhere. Moreover, you can invest an amount as low as ₹10. Here is how to invest in digital gold via fintech platforms: <ul><li>Signup on the fintech platform to start the investment</li><li>Enter an amount in rupees or grams</li><li>Complete the know-your-customer (KYC) process</li><li>Pay for the investment</li><li>Store your gold in a secured locker</li><li>Later, when you sell you can choose to sell your gold digitally on the platform or take physical delivery of the gold. You can request for a doorstep delivery of your gold in the form of coins or bullion. </li></ul> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/rils-q4-to-be-driven-by-sustained-momentum-in-retail-business-o2c-to-see-modest-growth/articleshow/99629278.cms">RIL’s Q4 to be driven by sustained momentum in retail business, O2C to see modest growth</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/condom-maker-mankind-pharmas-4326-crore-ipo-to-open-next-week-on-april-25/articleshow/99614288.cms">Condom maker Mankind Pharma’s ₹4,326 crore IPO to open next week on April 25</a>

Here are the many ways you can invest in gold this Akshaya Tritiya

<ul><li>Finance minister Nirmala Sitharama introduced the <keyword id="8703284" type="UNKNOWN" weightage="20" keywordseo="Finance-Bill-2020">Finance Bill 2020</keyword> during this year’s budget announcements. </li><li>It proposes <keyword id="1000000" type="PERSON" weightage="20" keywordseo="tax-collection-at-source">tax collection at source</keyword> (TCS) at the rate of 0.1%. The lack of an Aadhaar card or PAN card would mean paying 1% TCS — a ten-fold increase. </li><li>Ved Jain, former ICAI President, feels that this will have an adverse impact on the ease of doing business in India by increasing the tax compliance burden for big corporates, public sector undertakings and exporters. </li></ul>Finance minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> introduced a new tax collection law in this year’s Union Budget to widen the scope of tax collection at source (TCS). However, not having an Aadhaar Card or a PAN Card could result in a 10-fold increase in the tax rate. The Finance Bill 2020 proposes a new tax subsection (1H), under 206 C requires TCS at the rate of 0.1% if the turnover of a business exceeds ₹10 crore per annum — or if buyer’s sales consideration exceeds ₹50 lakh. "The rate will be ten times, that is 1% if the buyer doesn’t have PAN/Aadhar. This will have far-reaching implications in all big corporates, public sector undertakings and exporters," said Ved Jain, former ICAI President. The new provision widens the scope but increases the burden of TCS compliance and covers a large group of assessees. The effect on companies — big and small For big companies, even a rate of 0.1% can have far-ranging implications. "Just imagine the magnitude of deduction on Indian Oil which has a turnover of more than ₹5 lakh crore," said Jain. Micro, small, and medium enterprises (MSMEs) don’t have turnovers that match up to Indian Oil. However, the new tax provision will increase working capital requirement and compliance. "Just imagine the number of invoices and obligation to collect the extra amount of 0.1%," Jain explained. "This will further block the working capital of the buyer, which includes MSMEs as well since the obligation is to collect on sales of over ₹50 lakhs in a year. It also increases the compliance burden tremendously," he added. Exports get more expensive Overseas buyers generally don’t have PAN cards and Aadhaar cards. They are also under no obligation to pay tax in India. However, the proposed tax law states that tax will have to collect from them as well, that too at the higher rate of 1%. "This will be extra cost to the exporter as an overseas buyer will not pay this amount since he is not required to pay tax in India," said Jain. According to Jain, the new tax law is only wearing a "garb of widening and deepening the tax base," when in actuality, it’s deteriorating the ease of doing business with Indian firms. See also: <a href="https://www.businessinsider.in/personal-finance/news/what-is-dividend-distribution-tax-and-what-has-changed-with-ddt-in-budget-2020/articleshow/73898224.cms">What is dividend distribution tax and what has changed with DDT in budget 2020</a> <a href="https://www.businessinsider.in/business/startups/news/there-are-serious-flaws-in-budget-2020s-esop-gift-for-startups/articleshow/73951581.cms">There are serious flaws in Budget 2020's ESOP gift for startups</a> <a href="https://www.businessinsider.in/personal-finance/news/vivad-se-vishwas-union-budgets-new-scheme-seeks-to-reduce-tax-litigations/articleshow/73977190.cms">'Vivad Se Vishwas' - Union Budget’s new scheme seeks to reduce tax litigations</a>

Finance Bill's new tax collection norms may make exports expensive, says an expert

<ul><li>ICAI announced a special committee comprising of former presidents and educationists to oversee the examination process and governance. </li><li>The committee members include the acting secretary of ICAI Rakesh Sehgal, P C Jain, government nominee of ICAI Council, Justice Anil R Dave, Ved Jain, Amarjit Chopra, and Girish Ahuja. </li><li>The students have been protesting against wrong evaluation system of the institute, alleging that their answers were evaluated wrongly and marks were deducted from correct answers as well.</li></ul>Amid ongoing student protests, the Institute of Chartered Accountants of India (ICAI) announced a special committee to oversee the examination process and its governance. The committee will comprise of former presidents and educationists. The members include the acting secretary of ICAI Rakesh Sehgal, PC Jain, government nominee of ICAI Council; Justice Anil R Dave; Ved Jain, Amarjit Chopra, and Girish Ahuja, The Print <a href="https://theprint.in/india/ca-students-want-better-system-of-re-evaluation-icai-names-panel-to-fix-exam-process/297359/">reported</a>. This move came after over 1.2 million aspiring chartered accountants protested errors in evaluation of CA qualifying exam held in May. They are seeking a re-valuation of their papers and these protests have gathered steam in the social media as well. It decided to constitute a high-level independent committee to look into the regulations governing CA examinations including Regulation 39(4) of the Chartered Accountants Regulations, 1988 and suggest changes wherever required in the ICAI examination system,” <a href="https://www.financialexpress.com/education-2/icai-forms-committee-to-look-into-exam-process-after-student-protest/1718689/">said</a> ICAI president Prafulla Chhajed. The students have been protesting against wrong evaluation system of the institute, alleging that their answers were evaluated wrongly and marks were deducted from correct answers as well. The institute tried to assure the students saying that the examination process of ICAI has multiple layers for quality evaluation. “Even people who check the papers undergo tests. This is a temporary post, and what benefit am I to get by indulging in any of what the students are claiming,” Chhajed argued. According to the Regulation 39(4) of the <keyword id="6816621" type="UNKNOWN" weightage="20" keywordseo="Chartered-Accountants-Act-1949">Chartered Accountants Act, 1949</keyword>, students cannot seek re-valuation. They can only appeal for re-totalling of marks. The institute introduced changes in the evaluation process for the examinations scheduled for November 2019 and May 2020. The examination papers will now undergo digital evaluation for transparency. See also: <a href="https://www.businessinsider.in/ca-aspirants-want-icai-to-amend-regulation-that-allows-re-valuation/articleshow/71308772.cms">CA aspirants want ICAI to amend regulation that allows re-valuation</a> <a href="https://www.businessinsider.in/hundreds-of-indias-aspiring-chartered-accountants-are-furious-and-protesting-on-the-streets/articleshow/71286881.cms">Hundreds of India's aspiring chartered accountants are furious and protesting on the streets</a> <a href="https://www.businessinsider.in/rahul-gandhi-gets-a-rare-thumbs-up-from-twitter-for-supporting-ca-student-protest/articleshow/71304174.cms">Rahul Gandhi gets a rare thumbs up from Twitter for supporting CA student protest</a>

ICAI bows down to student protests and forms a high-level committee

<ul><li>If you did not file your tax returns in 2018-19, you may be stuck in pickle this season and have to pay double the applicable rate or 5%, whichever is higher.</li><li>This rule shall come into force starting 1 July 2021.</li><li>Deductors will now have to ask for proof of ITR submission for the last two years, increasing the burden of compliance, according to Archit Gupta, the founder and CEO of ClearTax.</li></ul>“Suppose you are making payment to a contractor. And, when you’re getting the work executed, you’re supposed to deduct TDS at 2% — that’s the normal rate. If I made a payment of ₹ 1 crore, I deducted TDS of ₹2 lakh and deposited it in his account.,” explained Ved Jain, former President of The Institute of Chartered Accountants of India (ICAI) told Business Insider. “Starting from December 2021-22, I will ask him if he has filed returns for the last two years or not. For years 2018-19 and 2019-20. If he has filed for any of these, I will continue to deduct 2%. But, if he has not filed returns of the last two years, then I need to deduct at 5%,” he said. This provision has been brought in by Finance Minister Nirmala Sitharaman in the latest budget to tighten the leash on those who haven’t filed their <keyword id="6355828" type="UNKNOWN" weightage="20" keywordseo="income-tax-returns">income tax returns</keyword>. This new provision comes into effect from 1 July 2021. However, it may be the case that some of the stick may hit those making the payment to the lax taxpayer, and therefore collecting the tax at source. The burden of compliance is on the the person⁠— who may be a prompt filer of returns⁠— deducting the tax. Some will have no choice but to pay double the tax The new proposal means that those who haven’t filed their tax returns in 2018-19 and 2019-20 may be in trouble. Some corporates already take a declaration, before processing payments, from their usual vendors that they have filed their returns. For transactions involving individuals, like contractors, artists and freelancers, and businesses in the unorganised sector, the situation is a little more complicated. How do you know if the person you are transacting with has filed returns? Deductors can check whether or not returns have been filed on the Income Tax Department’s official website. There is a utility available where the PAN number can be given, and deductors can check the last returns filed by an individual. “That utility is in the public domain,” said Jain. <div type="image" title="Form 26AS" msid="80765867" hostid="261" caption="&amp;lt;p&amp;gt;Sample of Form 26AS&amp;lt;/p&amp;gt;"></div> Wherever TDS or TCS applies, it should automatically come in Form 26AS and return filing could be ascertained through it. But it is still easier said than done for most people. "This is an additional burden of compliance for deductors. No additional remedy has been provided for cases where ITR filing was not applicable in the two previous years. Taxpayers who foresee facing this issue should prepare to file ITR for FY 2020-21 in due course," Archit Gupta, founder and CEO, ClearTax told Business Insider. Unanswered questions about the new TDS rule* The primary challenge that emerges from the proposed amendment is the ability of the deductor to determine whether the deductee or collectee has filed their income tax returns for the previous two years, according to <a href="https://www.taxmann.com/budget-2021-22/budget-story/154/are-you-a-non-filer%3F-tds%2Ftcs-on-non-filers-at-higher-rates">Taxmann</a>. The onus will also be on the deductor to determine whether the aggregate TDS and TCS over the last two years was more or less than ₹50,000. Another uncertainty is whether the deductee was mandatorily required to furnish their income tax return. For instance, individuals who don’t fall under any taxable bracket or if they are an NRI earning only dividend, interest, royalty or fees for technical services — as specified in section 115A of the Act — will they also be penalised for not submitting their TDS or TCS over the last two years. Taxmann points out that in cases where the due date of filing of return has not expired, should a deductor obtain a declaration from the deductee that the income-tax return will be filed within the prescribed due date and will such declaration be admissible? “It is also possible that the deductee or collectee may refrain from furnishing particulars of their income tax return with the deductors/clients. As a result, the onus of gathering information from the deductee or collectee shall trammel the deductors from ease of functioning and may impose additional compliances in terms of revision of e-TDS returns in case the information is retrieved belatedly from the deductee,” says Taxmann. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/meet-the-lawyer-turned-fitness-entrepreneur-who-is-training-alia-bhatt-ranbir-kapoor-kiara-advani-among-others/articleshow/80761071.cms">Meet the lawyer-turned-fitness entrepreneur who is training Alia Bhatt, Ranbir Kapoor, Kiara Advani among others</a> <a href="https://www.businessinsider.in/international/news/joe-biden-and-narendra-modi-spoke-over-the-phone-last-night-heres-what-they-discussed/articleshow/80759960.cms">Joe Biden and Narendra Modi spoke over the phone last night⁠— here’s what they discussed</a> <a href="https://www.businessinsider.in/thelife/personalities/news/meet-the-it-veteran-making-a-comeback-as-tech-mahindras-cfo/articleshow/80708957.cms">Meet the 63-year old making a comeback as Tech Mahindra's CFO</a>

With the new TDS rule, every time you make a payment, you must ask if the receiver has filed tax returns in last two years

<ul><li>The central government has launched a new scheme ‘<keyword id="8697064" type="UNKNOWN" weightage="20" keywordseo="vivad-se-vishwas">Vivad Se Vishwas</keyword>’ to reduce the number of tax litigations pending with different courts. </li><li>The scheme permits the taxpayers to settle the dispute by paying only the disputed tax amount with the penalties. </li><li>Any interest will be waived off if the payment is made before March 31, 2020.</li></ul>Finance minister Nirmala Sitharaman announced a new scheme called Vivad Se Vishwas (no dispute but trust) for resolving direct tax disputes pending with different tribunals during her <keyword id="7836802" type="UNKNOWN" weightage="20" keywordseo="Budget-2020">Budget 2020</keyword> speech. “Taxpayers in whose cases appeals are pending at any level can benefit from this scheme. I hope that taxpayers will make use of this opportunity to get relief from vexatious litigation process,” she said. It is evident that those who wish to avail of the scheme after 31 March 31 2020 will have to pay extra amount towards interest and penalty. “In cases, where litigation is over interest and penalty, the matter could be settled by paying 25% of the amount by March 31 and 30% after the cut-off date. The offer will remain open till 30 June 2020,” she explained. Nature of the scheme As per Sitharaman’s statement, the bill has been introduced with the objective of resolving disputed taxes and its connected issues by focusing on trust-building. The finance minister also said the bill introduced now will be open-ended but can only be availed for a limited time. The scheme seeks to offer a formula-based solution and will take effect once it receives the assent of the President of India. Statistics show a huge amount is locked in In their research paper titled “Tax Dispute Resolution in India: Trends and Insights”, Dhruva Advisors reveal that the amount that is found locked-in at the Income Tax Commissioner (Appeals) level was ₹ 6.38 crore as of 31 March 2018. In addition, around ₹ 4.96 lakhs crore is struck in disputes that are pending with other bodies like the Income Tax Appellate Tribunal, High Courts and Supreme Court. Expert views on the scheme “It covers all appeals except where assessments have been made under section 153A or 153C. Thus Search cases have been kept outside the purview of this scheme. Further only those cases where appeals are pending have been covered,” explained Ved Jain, former ICAI President. However, disputes pending with the AO have not been covered. “Exclusion of such cases and not giving an option to settle disputes which are before AO, doesn't appear to be a good idea. Ideally, when Settlement of dispute is the objective, the scheme should have been extended to cover all disputes and also where disputes are likely to occur,” he said. According to Jain, the inclusion of AO cases would have encouraged people to come out clean not only where disputes have come up and appeals are pending. However, G. Murlidhar, managing director of Kotak Mahindra Life Insurance Company, feels that it’s still a step in the right direction. "Incorporation of a taxpayer charter in the laws is a positive step and message, that rights of taxpayers are respected and honest taxpayers need not worry about procedures or tax harassment," he said.

'Vivad Se Vishwas' - Union Budget’s new scheme seeks to reduce tax litigations

<ul><li>The Organisation for Economic Cooperation and Development (OECD) has pitched its proposal for a new tax that will tax multinational companies according to where they have the most users. </li><li>This means that MNCs, including digital companies, will now have to pay tax in countries where they are earning profits regardless of having a physical presence. </li><li>In India, companies will have the choice to operate as a foreign entity or set up a subsidiary locally to come under the lesser domestic tax bracket. </li></ul>India is a vast market for tech giants like Google, Facebook and Apple. They provide numerous goods and services in the country. But since they are able to provide services without physical presence, they do not fall under the tax net. Indian government has long since been trying to fix it by making <keyword id="992014" type="PERSON" weightage="20" keywordseo="New-tax-rules">new tax rules</keyword> to catch them. Now, it might find a friend in Organisation for Economic Cooperation and Development (<a href="http://www.oecd.org/tax/oecd-leading-multilateral-efforts-to-address-tax-challenges-from-digitalisation-of-the-economy.htm">OECD</a>). The organization has pitched its own proposal to expand the rights of governments to tax multinationals (MNCs), including digital companies. "This plan brings together common elements of existing competing proposals, involving over 130 countries, with input from governments, business, civil society, academia and the general public. It brings us closer to our ultimate goal: ensuring all MNEs pay their fair share," said OECD Secretary General Angel Gurría in a statement. India is not a member of the OECD but has a working relationship with the organisation. The cooperation between the two dates back to 1995. As per the existing laws, a foreign company which is not registered in a country, cannot be taxed. As per the OECD's proposal,irrespective of whether a company is registered or not, if it’s ‘earning’ in India, it can be taxed by the Indian government. The choice between two taxes If such a tax is implemented, digital companies will no longer be able to get a ‘free pass’. The tax rate has not been decided yet but the existing tax structure gives MNCs the choice between paying 42% to 22% tax on income. "There are two rates, one is for domestic companies and the other is for foreign companies," ICAI President Ved Jain told Business Insider. Foreign companies — that are not incorporated in India and only have a branch office in the country — will be taxed at 42%. It means the tax department will take local employees, sales, consumers and all other factors associated with a non-digital company into account, for digital companies. Domestic companies, on the other hand, are taxed at 22%. If foreign companies want to pay the same tax rate at domestic companies, they have to setup local subsidiaries. "So, the moment you have a company in India, you become a domestic company — a subsidiary normally," said Jain. The new tax rules will mean that tax payments won’t only be applicable where a company chooses to establish its headquarters. It will now be distributed according to areas where a company has more users. This could mean a lot more revenue for the Indian government where a large chunk of Google, Facebook and Amazon’s users reside. See also: <a href="https://www.businessinsider.in/everything-ravi-shankar-prasad-wants-google-to-do-in-india/articleshow/71203999.cms">India wants Google's help with its $1 trillion digital economy, the weather and its villages</a> <a href="https://www.businessinsider.in/india-against-wto-digital-tax-e-commerce-rules/articleshow/68148424.cms">India decides to opt-out of WTO e-commerce talks over digital tax concerns: Report</a>

Apple, Google, and Facebook can escape higher taxes in India by setting up local firms

<ul><li>The government has announced in what it believes are easier processes for startups to claim exemption from <keyword id="6406536" type="UNKNOWN" weightage="20" keywordseo="Angel-Tax">Angel Tax</keyword>. </li><li>Startups incorporated before April 2016 can also apply for exemption. </li><li>However, startups need to be recognised by <keyword id="6391107" type="UNKNOWN" weightage="20" keywordseo="DIPP">DIPP</keyword> for the same.</li></ul>Indian startups have long been fighting the demon that came into their lives with the ‘angel <keyword id="45031" type="PERSON" weightage="20" keywordseo="Tax">tax</keyword>,’ which requires them to pay up for money they received from early investors. Now, the government has introduced changes to tax laws under the Section 56(2) (vii b) of the Income Tax Act that will exempt ‘genuine’ investors in recognised startups – but not without another red tape. They have to be registered with the government’s Department of Industrial Policy and Promotion (DIPP) in order to get the exemption. The angel tax, which was introduced in 2012, mandated that angel investments should be treated as “income from other sources” if the <keyword id="138263" type="PERSON" weightage="20" keywordseo="startup">startup</keyword> issues shares at a price that exceeds the fair market value of the shares. The Indian government believes it is now providing a simpler mechanism to claim exemption from the tax. While earlier, exemption from this tax was available only for startups incorporated after 2016 under the government’s ‘Startup India program’ – a much-touted initiative of the Modi government to boost entrepreneurship. “All previous and future investments are covered, startups incorporated before April 2016 also covered,” DIPP secretary Ramesh Abhishek told <a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/angel-tax-wont-haunt-startups-any-longer/articleshow/67566526.cms">Economic Times.</a> Since the launch of the Startup India program, 15,113 companies have been recognised under DIPP; India is home to a total of over 40,000 startups until June 2018 according to a <a href="https://yourstory.com/2018/06/presenting-india-startup-report-yourstory-overview-startup-ecosystem/">YourStory report</a>. With the new rule in place, DIPP-recognised startups applying for the exemption to the Central Board of Direct Taxation will be able to get an approval in 45 days. All in all, the rule becomes another added layer of bureaucratic hoops that startups now have to jump through, even though culturally speaking, a startup’s way of functioning is very different than that of a typical ‘registered company’. Experts believe that investments in a startup by an individual is a commercial decision that needs to be treated like one. “The government’s intent is to check if anyone is misusing the methodology for money laundering. If the source of the money is not tainted then why should there be an angel tax,” said Ved Jain, a tax expert and past president of The Institute of Chartered Accountants of India. The question that most experts are weighing in on is – why do we really need an angel tax? By implementation of the rule to register under DIPP, the government gets a say on how and when you startup – and that might not exactly be the ‘ease’ of doing business that the government is promoting. “Why are we moving with a presumption that whichever company is receiving the share capital with a difference in the fair market value, there is something wrong with the deal. There has to be a difference between a commercial and government decision. However if there is an allegation that it has been misused, only then additional rules should be implemented,” said Jain. See Also: <a href="https://www.businessinsider.in/the-indian-government-may-roll-back-a-tax-on-angel-investments-that-is-said-to-be-hurting-the-countrys-startup-ecosystem/articleshow/67177981.cms">The Indian government may roll back a tax on angel investments that is said to be hurting the country’s startup ecosystem</a> <a href="https://www.businessinsider.in/the-indian-government-has-reportedly-invested-just-19-of-its-fund-dedicated-to-boosting-startups/articleshow/67323307.cms">The Indian government has reportedly invested just 19% of its fund dedicated to boosting startups</a> <a href="https://www.businessinsider.in/taxed-for-being-an-angel-several-start-ups-wont-benefit-even-as-angel-tax-is-revoked-say-experts/articleshow/52831043.cms">Taxed for being an ‘angel’? Several start-ups won’t benefit even as angel tax is revoked, say experts</a>

Indian government just added a lot more red tape for startups while trying to fix the devilish ‘angel tax’

<ul><li>The <keyword id="6354751" type="UNKNOWN" weightage="20" keywordseo="income-tax">Income Tax</keyword> Appellate Tribunal in Mumbai has ruled that Fox International can only be taxed for the commissions it earns and license fees it charges in India as opposed to its entire income. </li><li>Since Fox doesn’t have a <keyword id="1759264" type="ORGANIZATION" weightage="20" keywordseo="Permanent-Establishment">permanent establishment</keyword> (PE) - legal speak for physical presence - in India, it will be levied taxes on the income it earns from business dealings with Indian entities. </li><li>Earlier, <keyword id="145769" type="ORGANIZATION" weightage="20" keywordseo="foreign-companies">foreign companies</keyword> with ‘substantial economic presence’ were liable to pay tax in India. This had left room for interpretation, causing some confusion. </li></ul>In a move that adds some much-needed clarity to the taxation process for multinational corporations with operations in India, the Income Tax Appellate Tribunal in Mumbai has <a href="https://www.itat.gov.in/files/uploads/categoryImage/1549518581-5557%20-%20SD%20+%20RKo%20-%20FOX%20NETWORKS%20GROUP%20ASIA%20PECIFIC%20-%20MEM%20-%20COPIED%20-%20OK.pdf">ruled </a>that Fox International, a cable and satellite channels company, can only be taxed for the commissions it earns and license fees it charges in India as opposed to its entire income. Since Fox doesn’t have a permanent establishment (PE) - legal speak for physical presence - in India, it will be levied taxes on the income it earns from business dealings with Indian entities. Earlier, foreign companies with ‘substantial economic presence’ were liable to pay tax in India. This had left room for interpretation, causing some confusion. The latest order has brought some clarity by adding ‘territorial nexus’ to the equation. Now, “a foreign company’s income that can be traced to India, based on the frequency of transactions with Indian entities and the company’s customer base in the country will be taxable,” according to Ved Jain, the former president of Institute of Chartered Accountants of India.. Fox mainly earns income through its Indian subsidiary - Star TV. However, it is primarily a service provider and distributes content and sells ad space for its subsidiary channels - Star Movies, Star World, Star Plus, Channel V, Star Gold - at the global level. Hence, it will be levied taxes on the agency fees it charges to its subsidiaries as a distributor and seller of ad space. As a result of the ruling, only the “attributable profits” of a foreign company can be taxed by domestic authorities. In the future, MNCs will be subject to taxes based on deal volumes and the number of consumers. SEE ALSO: <a href="https://www.businessinsider.in/indian-corporates-demand-lower-tax-rates-ahead-of-budget-2019/articleshow/67520197.cms">Indian corporates demand lower tax rates ahead of Budget 2019</a> <a href="https://www.businessinsider.in/indian-government-just-added-a-lot-more-red-tape-for-startups-while-trying-to-fix-the-devilish-angel-tax/articleshow/67572452.cms">Indian government just added a lot more red tape for startups while trying to fix the devilish ‘angel tax’</a>

A new ruling clarifies taxable income for foreign companies in India

The Narendra Modi goverment has gone all out to woo voters across social segments — not just the ones in rural India. The Indian middle class had been watching this budget with a lot of hope for relief and stand-in finance minister, Piyush Goyal, did not disappoint. He stated, "Reducing the middle-class tax burden has been a priority of the government." However, these are proposals have to be approved by the Parliament, and given that this is an interim budget, the opposition may try to stall it. Here are the big takeaways for the Indian middle class: 1. No tax on income up to ₹500,000. The benefit will be available through rebates. The current limit for zero tax is ₹250,000. "The benefit will be to only those taxpayers whose total income doesn’t exceed ₹500,000. The moment it exceeds ₹500,000, tax will start from ₹250,0000 at 5% up to ₹500,000 and 20% from ₹500,000 to ₹1 million," according to Ved Jain, former president of the Institute of Chartered Accountants of India. You won’t have to pay any tax if you have ₹7.5 million tucked away in fixed deposits and no other income because you'll only be earnings ₹450,000 a year assuming an interest rate of 6%. Piyush Goyal, the interim finance minister who presented the budget, also clarified that even people will gross income of up to ₹650,000 may not be required pay any income tax if they make investments in provident funds, specified savings and insurance etc. 2. No tax deduction at source (TDS) on interest received from banks and post office deposits for up to ₹40,000, increased from ₹10,000. That means interest accrued from fixed deposits of up to ₹670,000, assuming an interest of 6%, will not be taxed. 3. No TDS on house rent up to ₹240,000 a year, raised from ₹180,000 earlier. This move gives tax-related relief to individuals who are dependent on rental income. 4. Standard deduction from income increased to ₹50,000 from ₹40,000 a year. Standard deduction is a fixed amount of deduction, which can be reduced by salaried taxpayers, from their gross salary. The feature was introduced during last year's budget after the Finance Act 2005 was scrapped. 5. If you own two self-occupied properties, there will be no 'notional rent' on both properties. Currently, there notional rent was applicable on all properties but one, even if they were occupied by the same family. This will benefit families that live apart due to work or other reasons. 6. Exemption from Capital Gain on sale of residential house under Section 54 has been extended to purchase of 2 residential house subject to maximum capital gain of ₹20 million. This option can be claimed once in a lifetime. It's not that government left the poor section of the economy out of the conversation. When keeping the reservations that are already in place intact, the governmetn has ensured an additional 10% of reservation for the poor in government jobs and education. An additional 600 billion has been allocated towards the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) as well.

Here is how the Budget 2019 benefits the Indian middle class

<ul><li>The Indian government just proposed modifying the tax slabs, allowing for full tax rebate on incomes up to ₹500,000. </li><li>It’s a populist move in the interim-budget, also termed the ‘election budget’. </li><li>The announcement could potentially prove to be controversial once the Direct Tax Code Report comes out on February 28.</li></ul>The middle-class in India has been hit hard by several indirect taxes, rising prices, and income hasn’t nearly caught up. Since today’s budget was an interim budget, tax breaks and policy changes weren’t expected, but realignment of the tax slabs was on many wish-lists. The Indian government has announced relief for individual middle-class taxpayers extending the non-taxable slab upwards to ₹500,000. "The benefit will be to only those taxpayers whose total income doesn’t exceed ₹500,000. The moment it exceeds ₹500,000, tax will start from ₹250,0000 at 5% up to ₹500,000 and 20% from ₹500,000 to ₹1 million," according to Ved Jain, former president of the Institute of Chartered Accountants of India. Piyush Goyal, the interim finance minister who presented the budget, also clarified that even people will gross income of upto ₹650,000 may not be required pay any income tax if they make investments in provident funds, specified savings and insurance etc. Goyal added that this move will allegedly provide tax benefit of ₹185 billion to an estimated 30 million Indian middle-class taxpayers. Essentially, you won’t have to pay any tax if you have ₹7.5 million tucked away in fixed deposits and no other income because you'll only be earnings ₹450,000 a year assuming an interest rate of 6%. It’s an apt populist move by the Modi government considering that they fell short on their promises of increasing employment from 2014 and demonetisation disrupted the economy. Not the first time In 2014 budget, the minimum tax exemption limit was raised from ₹200,000 to ₹250,000. Along with that, the limit under 80C was hiked by ₹50,000 to ₹150,000. - so essentially, individuals can reduce up to ₹150,000 from their total taxable income. The new tax slabs In its pre-budget memorandum, the Confederation of Indian Industry (CII) had suggested that the tax rate should be zero from income up to ₹500,000, while 10% tax should be levied on income upto ₹1 million and 20% on income up to ₹2 million and 25% on income beyond ₹2 million. Cuts in income-tax rates have invariably resulted in higher revenues in the past, and there is no reason why they should not generate a similar response in the future. India has generally been a non-compliant society, where avoiding and evading tax plague the economy. A tax cut is a temporary incentive for both since it drives down the incentive to avoid compliance. Introducing new tax slabs also puts more money in hands of the taxpayers increasing consumption demand. The requirement for borrowing goes down which, ideally, results in interest rates going down. The new tax slabs may have appeased the country but the Direct Tax Code Report is coming up on February 28 that could quickly turn the tables on the government.

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