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MCA issues new rules on voluntary exit of companies-FourV Update

New Delhi: Companies keen to exit their business for various economic reasons can now hope for quick regulatory clearance with the government operationalising the newly set up Centre for Processing Accelerated Corporate Exit (CPACE).

 

The Ministry of Corporate Affairs on Monday notified the rules authorising CPACE to handle this work, taking over the task from RoCs across the country. CPACE is set up at the Indian Institute of Corporate Affairs, an institution attached to the ministry.

 

The amended rules for removal of companies from the official register will be effective 1 May, the ministry said while also bringing out the forms for voluntary closure.

The move of shifting voluntary closure of companies to a centralised agency is part of a revamp of the approval process for various corporate filings aimed at uniform and quick decision-making process.

 

The ministry also replaced three forms that are related to the process of striking off the names of companies while giving the all-India jurisdiction to CPACE for voluntary closure of companies.

The forms entail some changes, including provision for disclosing pending litigation, explained Virender Bhasin, Executive Director, Entity Setup and Management at Nexdigm, a consultancy.

 

“The changes are welcome and it will accelerate the pace of strike applications pending with respective ROCs at a faster pace after introduction of centralized processing centre for exit. Also, some modifications in the form will provide better transparency resulting in good governance,” said Bhasin.

 

Companies chose to go for voluntary closure for various economic reasons including unviability of the business or changed circumstances. For closure, the companies should not have any unmet liability. Voluntary closure is different from government’s action of removing a company from the register for defaulting on filing statutory documents for two consecutive years, although most such defaulting companies may also be defunct. 

 

Income tax department has sent notices to about 8,000 taxpayers-FourV Technologies Pvt Ltd

India’s income tax department has sent notices to about 8,000 taxpayers who have made large donations to charitable trusts, suspecting them to be attempts at tax evasion. Data analytics suggested these taxpayers were making donations disproportionate to their income and expenditure, officials told ET.

 

Those served notices include salaried and self-employed individuals, apart from companies.

 

The IT department is also looking into independent tax professionals who facilitated these transactions.

 

“In all 8,000 odd cases, the donation was exactly the amount required to lower the tax slab or get a full exemption and was paid by cash,” a tax official said. “Also, an exceptionally high amount was paid to tax professionals, even by a straight salaried person.”

 

The notices were sent over three weeks from mid-March to early April and were for the assessment years 2017-18 to 2020-21. More notices are likely in the coming weeks.

 

In the case of businesses, mostly small ones, the amount paid to charitable trusts was out of sync with income, the officials said.

 

In these transactions, cash contributions are returned to the taxpayer along with a donation receipt after deducting a commission, helping the assessee evade tax, they said.

 

The department is also tracking charitable trusts that are offering fake bills to taxpayers. While no action has been initiated against them so far, they may lose their tax exemption status if there is wrongdoing.

 

Data analytics being used

 

Contributions to certain funds and charitable institutions are allowed as deductions from income under Section 80G of the Income Tax Act. Depending on the nature of the institution, 50-100% of the contribution may be allowed as deduction. Such donations are also subject to limits linked to income.

 

Data analytics is being used to track misuse of some deductions under the old income tax regime, especially Section 80G, along with 80 GGC and 80GGB, which entitle taxpayers to deductions in income tax for donations to charitable trusts and political parties, said the official cited above.

 

The income tax department is separately investigating donations to dormant political parties and has already sent several notices.

 

Budget data shows ₹1,430 crore tax foregone in FY22 on Section 80G contributions by companies.

 

In the case of individuals and Hindu Undivided Families (HUFs), the revenue foregone on Section 80G donations was 1,729 in FY22, up from 1,541 in the preceding year.

 

Tax experts said that while such evasion was possible in the past, strict compliance and synchronised data collection by the tax department will make it difficult with measures such as disallowing donations above 2,000 in cash.

Updated Advisory: Time limit for Reporting Invoices on the IRP Portal | DigiHunter |

Dear Taxpayers,

 

1. It is to inform you that it has been decided by the Government to impose a time limit on reporting old invoices on the e-invoice IRP portals for taxpayers with AATO greater than or equal to 100 crores.

 

2. To ensure timely compliance, taxpayers in this category will not be allowed to report invoices older than 7 days on the date of reporting.

 

3. Please note that this restriction will apply to the all document types for which IRN is to be generated. Thus, once issued, the credit / Debit note will also have to be reported within 7 days of issue.

 

4. For example, if an invoice has a date of April 1, 2023, it cannot be reported after April 8, 2023. The validation system built into the invoice registration portal will disallow the user from reporting the invoice after the 7-day window. Hence, it is essential for taxpayers to ensure that they report the invoice within the 7-day window provided by the new time limit.

 

5. It is further to clarify that there will be no such reporting restriction on taxpayers with AATO less than 100 crores, as of now.

 

6. In order to provide sufficient time for taxpayers to comply with this requirement, which may require changes to your systems, we propose to implement it from 01.05.2023 onwards.

No Penalty under 271C of Income Tax for delayed payment of TDS or non-payment of deducted TDS : Supreme Court

SUPREME COURT OF INDIA
US Technologies International (P.) Ltd.
v.
Commissioner of Income-tax
M.R. SHAH AND C.T. RAVIKUMAR, JJ.
CIVIL APPEAL NO. 7934 OF 2011 AND 1258-1260 OF 2019
APRIL  10, 2023
 
M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment(s) and order(s) passed by the High Court of Kerala at Ernakulam in confirming the levy of interest/penalty under  Section 271C of the Income Tax Act, 1961 (hereinafter referred to as the Act) on failure of the respective assessees to deposit the tax deducted at source (TDS) (or belated remittance of the TDS), the respective assessees have preferred the present appeals.
CIVIL APPEAL NO.
7934/2011
2. The facts leading the present appeal in a nutshell are as under: ­

2.1 From 01.04.2002 to February, 2003, the appellant – assessee, engaged in a software development business at Techno Park, Trivandrum which employed about 700 employees, deducted tax at source (TDS) in respect of salaries, contract payments, etc., totalling Rs. 1,10,41,898/­ for the  assessment year (AY) 2003­04. In March, the assessee remitted part of the TDS being Rs. 38,94,687/­ and balance of Rs. 71,47,211/­ was remitted later. Thus, the period of delay ranged from 05 days to 10 months. On 10.03.2003, a survey was conducted by the Revenue at assessee’s premises and it was noted that TDS was not deposited within the prescribed dates under Income Tax Rules (IT Rules). On 02.06.2003, Income Tax Officer (ITO) vide order under Section 201(1A) of the Act, 1961 levied penal interest of Rs. 4,97,920/­ for the period of delay in remittance of TDS. On 09.10.2003, the Additional Commissioner of Income Tax issued a show cause notice proposing to levy penalty under Section 271C of the amount equal to TDS. That the assessee replied to the
said show cause notice vide reply dated 28.10.2003. That on 06.11.2003, another order under Section 201(1A) was passed
levying the penal interest of Rs. 22,015/­. On 10.11.2003, the Additional Commissioner of Income Tax (ACIT) vide order under Section 271C levied a penalty of Rs. 1,10,41,898/­ equivalent to the amount of TDS deducted for AY 2003­-04. That order of Additional CIT levying the penalty under Section 271C came to be confirmed by the High Court by the
impugned judgment and order. The High Court vide impugned judgment and order has dismissed the appeal preferred by the assessee by holding that failure to deduct/remit the TDS would attract penalty under Section 271C of the Act, 1961.
2.2 Feeling aggrieved and dissatisfied with the levy of interest/penalty under Section 271C of the Income Tax Act, 1961 on late remittance of TDS is the subject matter of preferred appeal(s).
CIVIL APPEAL NOS. 1258­1260/2019
 
3. The facts leading to the present appeals in a nutshell are under: ­
3.1 By order(s) dated 26.09.2013, the ACIT by way of orders under Section 271C levied penalty equivalent to the amount of TDS deducted for AYs 2010-­11, 2011­-12 and 2012­-13 on the ground that there was no good and sufficient reason for not levying penalty
3.2 The CIT (Appeals) dismissed the assessees’ appeals. By common order dated 01.06.2016 the Income Tax Appellate Tribunal (ITAT) allowed the assessees’ appeals by holding that imposition of penalty under Section 271C was unjustified and reasonable causes were established by the assessee for remitting the TDS belatedly. By the impugned common
judgment and order the High Court has allowed the Revenue’s appeals relying upon its earlier judgment (which is the subject matter of Civil Appeal No. 7934/2011 as above). The impugned judgment and order passed by the High Court is the subject matter of present appeals being Civil Appeals Nos. 1258­1260/2019.
4. Shri Arijit Prasad and Shri C.N. Sreekumar, learned Senior Advocates have appeared on behalf of the respective assessees and Shri Balbir Singh, learned ASG assisted by Ms. Monica Benjamin, learned counsel has appeared on behalf of the Revenue.

5. Shri Arijit Prasad, learned Senior Advocate appearing on behalf of the assessee in Civil Appeal No. 7934/2011 has vehemently submitted that in the facts and circumstances of the case, the levy of penalty under Section 271C of the Act, 1961 is not justifiable at all. It is submitted that in the facts and circumstances of the case there shall not be any penalty leviable under Section 271C of the Act, 1961.
5.1 It is further submitted by Shri Arijit Prasad, learned Senior Advocate appearing on behalf of the assessee that here is the case of lateremittance of the TDS and not a case of nondeduction of TDS at all. It is submitted that therefore, at the most, the assessee shall be liable to pay the penal interest leviable under Section 201(1A) of the Act, 1961. It is submitted that however, there shall not be any levy of penalty under Section 271C of the Act, 1961 on mere late remittance of the TDS though deducted.
5.2 It is further submitted by Shri Arijit Prasad, learned Senior Advocate appearing on behalf of the assessee that Section 271C would be applicable only in case of non­deduction of whole or any part of the tax [Section 271C(1) (a)]. It is submitted that Section 271C(1)(a) shall be applicable in case of non­deduction of whole or any part of the tax as required by or under the provisions of Chapter XVIIB. It is submitted that in the present case Section 271C(1)(b) shall not be applicable. It is submitted that therefore taking into consideration the words employed in Section 271C(1)(a), there shall be levy of penalty of a sum equal to the amount of tax in case of failure on the part of the concerned person who fails to deduct the whole or any part of the tax as required by or under the provisions of Chapter XVIIB. It is submitted that in case of belated remittance of the TDS, there shall not be any levy of interest under Section271C of the Act, 1961.
5.3 It is submitted that as per the cardinal principle of law, a penal provision is required to be construed strictly and literally and nothing is to be added in the Section and the penalty provisions are required to be read as they are.
5.4 It is submitted that so far as the belated remittance of the TDS is concerned, the Statute provides for penal interest under Section 201(1A) of the Act, 1961. It is submitted that the penal interest levied under Section 201(1A) is compensatory in nature. It is submitted that therefore, when the Parliament thought it fit to levy the penal
interest on late remittance of the TDS for the belated period, there shall not be any levy of the penalty under Section 271C for belatedremittance of the TDS.
5.5 It is submitted that if the stand taken by the Revenue and the views taken by the High Court that even on belated remittance of the TDS there shall be penalty levied under Section 271C of the Act, is accepted, in that case it would tantamount to adding something more than which is not provided in the Section. It is submitted that words used in Section 271C are “fails to deduct the whole or any part of the tax.” It is submitted that it does not speak “fails to deduct and remitted belatedly.” 
5.6 Shri Arijit Prasad, learned Senior Advocate appearing on behalf of the assessee has drawn our attention to Section 276B of the Act, 1961. It is submitted that as per Section 276B of the Act “if a person fails to pay to the credit of the Central Government the tax deducted at source by him as required by or under the provisions of Chapter XVIIB, he shall be liable to be prosecuted and shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.” It is submitted that therefore, Section 276B talks about “fails to pay,” the words which are missing in Section 271C of the Act. It is submitted that therefore, wherever, the Parliament wanted to provide for the consequences on non­payment of the TDS, the same is provided like Section 276B of the Act. It is submitted that therefore, thus the
words in Section 271C and Section 276B are different and distinct.
5.7 It is further submitted by Shri Arijit Prasad, learned Senior Advocate appearing on behalf of the assessee that even otherwise, the impugned judgment and order passed by the High Court has been subsequently overruled by the Full Bench of the Kerala High Court in the case of Lakshadweep Development Corporation Ltd. Vs. Additional Commissioner of Income Tax (TDS) and Anr. (2019) 411 ITR 213 (FB).
5.8 It is further submitted by learned counsel appearing on behalf of the respective assessees in respective appeals that even otherwise in exercise of powers under Section 273B, no penalty shall be imposed on the person or the assessee, for any failure, if he proves that there was a reasonable cause for the said failure. Reliance is placed on the decision of this Court in the case of CIT Vs. Bank of Nova Scotia (2016) 15 SCC 81.
5.9 It is submitted that in the case of Civil Appeals Nos. 1258­60/2019, the ITAT found in favour of the assessee that there was a reasonable cause for the assessee for the failure to remit the TDS belatedly. It is submitted that once the ITAT found the case falling under Section 273B, the same was not required to be interfered with by the High Court as the same cannot be said to a substantial question of law.
5.10 Making the above submissions, it is prayed to allow the present appeals and to hold that for late remittance of the TDS, there shall not be any penalty leviable under Section 271C of the Act, 1961.
6. All these appeals are vehemently opposed by Shri Balbir Singh, learned ASG assisted by Ms. Monica Benjamin, learned counsel,appearing on behalf of the Revenue.
6.1 Shri Balbir Singh, learned ASG appearing on behalf of the Revenue has vehemently submitted that Section 271C of the Act has been inserted in the year 1987. It is submitted that the object and purpose of inserting Section 271C is to levy the penalty for failure to deduct tax at source. It is submitted that under the old provision of Chapter XXI of the Income Tax Act, no penalty was provided for failure to deduct tax at source though, this default, however, attracted prosecution under the provisions of Section 276B, which prescribed punishment for failure to deduct tax at source or after deducting failure to remit the same to the Government and therefore, Section 271C came to be inserted to provide for levy of penalty for failure to deduct tax at source. It is submitted that therefore, in a case where though the assessee has deducted the tax
(TDS), but does not remit the same to the Government and/or belatedly remits the TDS after deducting, such an assessee is liable to pay the penalty under Section 271C of the Act.
6.2 It is submitted that any other view will frustrate the object and purpose of insertion of Section 271C of the Act. Then, Shri Balbir Singh, learned ASG has taken us to the CBDT Circular No. 551 dated 23.01.1998, explaining the amendment and insertion of Section 271C. It is submitted that the object and purpose of insertion of Section 271C seems to be that over and above the prosecution, the person who has deducted tax at source but not remitted the same to the Government shall also be liable to pay penalty and that is why Section 271C has been inserted.
6.3 Making the above submissions, it is prayed to dismiss the present appeals.
7. Heard learned counsel appearing on behalf of the respective parties at length.
7.1 The short question which is posed for the consideration of this Court is in case of belated remittance of the TDS after deducting the TDS whether such an assessee is liable to pay penalty under Section 271C of the Act, 1961?
7.2 The question which is also posed for the consideration of this Court is what is the meaning and scope of the words “fails to deduct” occurring in Section 271C(1)(a) and whether an assessee who caused delay in remittance of TDS deducted by him, can be said a person who “fails to deduct TDS”?
7.3 In order to appreciate the rival contentions and to answer the aforesaid questions, it is necessary to have analysis of Statutory provisions.
7.4 The relevant provisions are as under: ­
“Section 201(1A) of the Act Without prejudice to the provisions of sub­section (1), if any such person, principal officer or company as is referred to in that sub­section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,
—
(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
(ii) at one and one­half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of subsection (3) of Section 200:]
 
Section 271C of the Act
 
271­C. Penalty for failure to deduct tax at source. (1) If any person fails to—
(a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII­B; or
(b) pay the whole or any part of the tax as required by or under,—
(i) sub­section (2) of Section 115­O; or
(ii) the second proviso to Section 194­B;
then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid.]
(2) Any penalty imposable under subsection (1) shall be imposed by the Joint Commissioner.
 
Section 273B of the Act
273­B. Penalty not to be imposed in certain cases.—Notwithstanding anything contained in the provisions of clause (b) of sub­section (1) of Section 271, Section 271­A 4203[Section 271­ AA], Section 271­B 4204[Section 271­ BA], 4205[Section 271­
BB, 4206[Section 271­C, Section 271­ CA], Section 271­D, Section 271­E, 4207[Section 271­F,] 4208[Section 271­FA 4209[, 4210[Section 271­FAB, Section 271­FB, Section 271­G, Section 271­GA, 4211[Section 271­ GB,]]] 4212[Section 271­ H,] 4213[Section 271­I,] 4214[Section 271­J,] clause (c) or clause (d) of subsection (1) or sub­section (2) of Section 272­A, sub­section (1) of Section 272­ AA] or 4215[Section 272­B or] 4216[sub­section (1) or sub­section (1­A) of Section 272­BB] or sub­section (1) of Section 272­BBB or] clause (b) of sub­section (1) or clause (b) or clause (c) of sub­section (2) of Section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.
 
Section 276B of the Act
276­B. Failure to pay tax to the credit of Central Government under Chapter XII­D or XVII­B.—If a person fails to
pay to the credit of the Central Government,—
(a) the tax deducted at source by him as required by or under the provisions of Chapter XVII­B; or
(b) the tax payable by him, as required by or under,—
(i) sub­section (2) of Section 115­O; or
(ii) the second proviso to Section 194­B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.”
7.5 At the outset, it is required to be noted that all these cases are with respect to the belated remittance of the TDS though deducted by the assessee and therefore, Section 271C(1)(a) shall be applicable. At the cost of repetition, it
is observed that it is a case of belated remittance of the TDS though deducted by the assessee and not a case of non­deduction of TDS at all.
7.6 As per Section 271C(1)(a), if any person fails to deduct the whole or any part of the tax as required by or under the provisions of Chapter XVIIB then such a person shall be liable to pay by way of penalty a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid. So far as failure to pay the whole or any part of the tax is concerned, the same would be with respect to Section 271C(1)(b) which is not the case here. Therefore, Section 271C(1)(a) shall be applicable in case of a failure on the part of the concerned person/assessee to “deduct” the whole of any part of the tax as required by or under the provisions of Chapter XVIIB. The words used in Section 271C(1)(a) are very clear and the relevant words used are “fails to deduct.” It does not speak about belated remittance of the TDS. As per settled position of law, the penal provisions are required to be construed strictly and literally. As per the
cardinal principle of interpretation of statute and more particularly, the penal provision, the penal provisions are required to be read as they are. Nothing is to be added or nothing is to be taken out of the penal provision.
Therefore, on plain reading of Section 271C of the Act, 1961, there shall not be penalty leviable on belated remittance of the TDS after the same is deducted by the assessee. Section 271C of the Income Tax Act is quite categoric. Its scope and extent of application is discernible from the provision itself, in unambiguous terms. When the nondeduction of the whole or any part of the tax, as required by or under the various instances/provisions of Chapter XVIIB would invite penalty under Clause 271C(1)(a); only a limited text, involving sub­section (2) of Section 115O or covered by the second proviso to Section 194B alone would constitute an instance where penalty can be imposed in terms of Section 271C(1)(b) of the Act, namely, on non­payment. It is not for the Court to read something more into it,
contrary to the intent and legislative wisdom.
7.7 At this stage, it is required to be noted that wherever the Parliament wanted to have the consequences of non­payment and/or belated remittance/payment of the TDS, the Parliament/Legislature has provided the same like in Section 201(1A) and Section 276B of the Act.
7.8 Section 201(1A) provides that in case a tax has been deducted at source but the same is subsequently remitted may be belatedly or after some days, such a person is liable to pay the interest as provided under Section 201(1A) of the Act. The levy of interest under Section 201(1A) thus can be said to be compensatory in nature on belated remittance of the TDS after deducting the same. Therefore, consequences of nonpayment/belated remittance/payment of the TDS are specifically provided under Section 201(1A).
7.9 Similarly, Section 276B talks about the prosecution on failure to pay the TDS after deducting the same. At this stage, it is required to be noted that Section 271C has been amended subsequently in the year 1997 providing Sections 271C(1)(a) and 271C(1)(b). As observed hereinabove, fails to pay the whole or any part of the tax would be falling under Section 271C(1)(b) and the word used between 271C(1)(a) and 271C(1)(b) is “or”. At this stage, it is required to be noted that Section 276B provides for prosecution in case  of failure to “pay” tax to the credit of Central Government. The word “pay” is missing in Section 271C(1)(a).
8. Now so far as the reliance placed upon the CBDT’s Circular No. 551 dated 23.01.1998 by learned ASG is concerned, at the outset, it is required to be noted that the said circular as such favours the assessee. Circular No. 551 deals with the circumstances under which Section 271C was introduced in the Statute, for levy of penalty. Paragraph 16.5 of the above Circular reads as follows:
“16.5″: Insertion of a new section 271C to provide for levy of penalty  for failure to deduct tax at sourceunder the old provisions of Chapter XXI of the Income Tax Act no penalty was provided for failure to deduct tax at source. This default,
however, attracted prosecution under the provisions of Section 276B, which prescribed punishment for failure to deduct tax at source or after deducting failure to pay the same to the Government. It was decided that the first part of the default, i.e., failure to deduct tax at source should be made liable to levy of penalty, while the second part of the default, i.e., failure to pay the tax deducted at source to the Government which is a more serious offence, should continue to attract
prosecution. The Amending Act, 1987 has accordingly inserted a new Section 271C to provide for imposition of penalty on any person who fails to deduct tax at source as required under the provisions of Chapter XVIIB of the Act. The penalty is of a sum equal to the amount of tax which should have been deducted at source.
 
On fair reading of said CBDT’s circular, it talks about the levy of penalty on failure to deduct tax at source. It also takes note of the fact that if there is any delay in remitting the tax, it will attract payment of interest under Section 201(1A) of the Act and because of the gravity of the mischief involved, it may involve prosecution proceedings as well, under  Section 276B of the Act. If there is any omission to deduct the tax at source, it may lead to loss of Revenue and hence remedial measures have been provided by incorporating the provision to ensure that tax liability to the said extent would stand shifted to the shoulders of the party who failed to effect deduction, in the form of penalty. On deduction of tax, if there is delay in remitting the amount to Revenue, it has to be satisfied with interest as payable under Section 201(1A) of the Act, besides the liability to face the prosecution proceedings, if launched in appropriate cases, in terms of Section 276B of the Act.
Even the CBDT has taken note of the fact that no penalty is envisaged under Section 271C of the Income Tax Act for non deduction TDS and no penalty is envisaged under Section 271C for belated remittance/payment/deposit of the TDS.
8.1 Even otherwise, the words “fails to deduct” occurring in Section 271C(1)(a) cannot be read into “failure to deposit/pay the tax deducted.”
8.2 Therefore, on true interpretation of Section 271C, there shall not be any penalty leviable under Section 271C on mere delay in remittance of the TDS after deducting the same by the concerned assessee. As observed hereinabove, the consequences on nonpayment/belated remittance of the TDS would be under Section 201(1A) and Section 276B of the Act, 1961.
9. In view of the above in all these cases as the respective assessees remitted the TDS though belatedly and it is not case of non­deduction of the TDS at all they are no liable to pay the penalty under Section 271C of the Income Tax Act. Therefore, any question on applicability of Section 273B of the Act is not required to be considered any further.
10. In view of the above and for the reasons stated above, all these appeals succeed.
Impugned judgment(s) and order(s) passed by the High Court are hereby quashed and set aside and the question of law on interpretation of Section 271C of the Income Tax Act is answered in favour of the assessee(s) and against the Revenue and it is specifically observed and held that on mere belated remitting the TDS after deducting the same by the concerned person/assessee, no penalty shall be leviable under Section 271C of the Income Tax Act. Present appeals are accordingly allowed. No costs.
…………………………………..
[M.R. SHAH]
…………………………………..
[C.T. RAVIKUMAR]
NEW DELHI;
APRIL 10, 2023

CRN full form in Income Tax

The CRN full form is  Challan Reference Number.

 

Why does taxpayer need to create a Challan (CRN)?

 

Resolution:

In e-Pay Tax service at e-Filing portal, it is mandatory to generate the Challan for the payment of direct taxes. Every such generated Challan will have a unique Challan Reference Number (CRN) associated with it.

 

Who can generate a Challan (CRN)?

 

Resolution:

Any taxpayer (including tax deductors & collectors) required to make direct tax payment and willing to use e-Pay Tax service at the e-Filing Portal can generate Challan (CRN). Challan (CRN) can also be generated via Post-Login/PreLogin option available in the service.

What are the various modes available for making payment after generation of Challan (CRN)?

 

Resolution:

After generation of Challan (CRN), following modes are available for making tax payment:

  • Net Banking (of selected Authorised Banks)
  • Debit Card (of selected Authorised Banks)
  • Pay at Bank Counter (Over the Counter Payment at the Branches of selected Authorised Banks)
  • RTGS / NEFT (through any bank having such facility)
  • Payment Gateway (using sub-payment modes as Net Banking, Debit Card, Credit Card, and UPI)

* RTGS/NEFT and Payment Gateway are newly added payment methods as an upgradation in the e-Pay Tax service on the e-Filing portal.

 

What will happen if no payment is initiated after creation of Challan (CRN)?

 

Resolution:

A partially created Challan remains in the “Saved Drafts” tab unless it is finally generated along with the Challan Reference Number (CRN). After generation of CRN, it moves to “Generated Challan” tab and is valid for 15 days after the date of generation of CRN. Taxpayer may initiate payment against the CRN within this validity period.  If no payment is initiated in the said period, CRN will expire, and taxpayer will have to generate a fresh CRN for making the payment.   

In case, Challan (CRN) is generated on or after 16th March for the payment of ‘Advance Tax’, then the valid till date is by default set as 31st March of that Financial Year.

What is meant by “Valid Till” date printed on the Challan Form (CRN)? 

 

Resolution:

The “Valid Till” date is the date till which Challan Form (CRN) remains valid for making payment.  After the expiry of “Valid Till” date, the status of an unused Challan Form (CRN) is changed to  Expired. Example, if a CRN is generated on 1st April, then it will remain valid till 16th April and on  17th April the status of CRN will be changed to Expired, if payment is not initiated against that  CRN.

 

If a taxpayer presents the Payment Instrument to the Authorised Bank on or before the “Valid Till”  date while using the ‘Cheque’ as the Pay at Bank mode, the Challan “Valid Till” date will be  extended by an additional 90 days.

 

In case, Challan form (CRN) is generated on or after 16th March for the payment of ‘Advance Tax’,  then the valid till date is by default set as 31st March of that Financial Year.

Where can taxpayer view generated Challan (CRN)? Will taxpayer be able to view expired  Challans (CRN)?

 

Resolution:

Taxpayer can view generated Challans (CRN) on the e-Pay Tax page under the “Generated Challans” tab on e-Filing portal post-login. Expired Challan (CRN) will also be available on the e-Pay Tax page under the Generated Challans tab for 30 days from the “Valid Till” date.

 

Can taxpayer make modifications in the already generated Challan (CRN)?

 

Resolution:

No. Once a Challan (CRN) is generated, it cannot be modified. However, it can be used to  generate a new Challan  (CRN) by copying the information from an earlier Challan (CRN).

 

Does a taxpayer need to select the mode of payment during generation of challan (CRN)?

 

Resolution:

Yes, the taxpayer has to mandatorily select mode of payment at the generation of challan (CRN).

Can a taxpayer change the mode of tax payment after generating Challan (CRN)?

 

Resolution:

Once a Challan (CRN) is generated, the taxpayer cannot change the Mode of Payment.

If the taxpayer wants to make tax payment through some other mode, a new Challan (CRN) needs  to be generated and the old challan will expire after 15 days.

Create Challan FAQ

In order to make any Income Tax payment for an assessment year through the e-Filing portal, you will have to create a challan for the same.

Registered or unregistered users (Corporate / Non-Corporate users, ERIs and Representative Assessee) on the e-Filing portal can create a challan.

You can pay the following under Corporate tax options:

  • Advance Tax
  • Self-Assessment Tax
  • Tax on Regular Assessment
  • Tax on Distributed Profit of Companies
  • Tax on Distributed Income to Unit Holders
  • Surtax
  • Secondary Adjustment Tax under Section 92CE of Income Tax Act, 1961
  • Accretion Tax under Section 115TD of Income Tax Act, 1961

You can pay the following under Corporate tax options:

  • Advance Tax
  • Self-Assessment Tax
  • Tax on Regular Assessment
  • Secondary Adjustment Tax under Section 92CE of Income Tax Act, 1961
  • Accretion Tax under Section 115TD of Income Tax Act, 1961.

You can pay the following under Fee / Other Payments:

  • Wealth Tax
  • Fringe Benefit Tax
  • Banking Cash Transaction Tax
  • Interest Tax
  • Hotel Receipts Tax
  • Gift Tax
  • Estate Duty
  • Expenditure / Other Tax
  • Appeal Fee
  • Any Other Fee

GST Number to Professionals doing Work From Home

No Restriction on issuing GST Number to Professionals doing Work From Home.

 

The Minister of State, Shri Pankaj Chaudhary in the Ministry of Finance in a written reply to a raised in Rajaya Sabha stated, “GST Number provided to Professional Working from Home.”

The question that was raised by Shri Naranbhai J. Rathwa and Shri Rajmani Patel in the Rajaya Sabha:

MINISTRY OF FINANCE
DEPARTMENT OF REVENUE

RAJYA SABHA UNSTARRED

QUESTION No. 1488

ANSWERED ON 14/03/2023

Question: GST Number to Professionals working from home?

 

1488. Shri Naranbhai  J. Rathwa:

 

Shri Rajmani Patel:

 

Will the Minister of FINANCE be pleased to state:-

 

(a) whether it is a fact that Management consultants, Architects and other professionals operating from their homes are not allowed to get GST numbers for working from the residential premises;

(b) if so, the details thereof;

(c) whether it is a fact that post COVID-19 pandemic, most of senior professionals and consultants have started their professional activities under the Work from Home (WFH) concept; and

(d) if so, the steps Government is contemplating to allow all Professionals and Management Consultants to work from home and allot GST numbers?

 

Replay;

THE MINISTER OF STATE FOR FINANCE

 

(SHRI PANKAJ CHAUDHARY)

 

(a) to (c) The Central Goods & Services Tax Act, 2017 does not restrict GST registration of Management consultants, Architects and other professionals operating from residential premises, due to covid-19 pandemic or otherwise.

(d) Does not arise in view of above.

5 Strategies to Turn Your Vacation into a Tax Deduction…

One of the benefits of being a business owner is the ability to take tax deductions for business-related expenses. As you plan for your next vacation, make sure you take advantage of all the tax write-offs that you are legally entitled to, and that includes the wonderful opportunity to save on taxes by turning your vacation into a tax deduction.

So how exactly do you turn your vacation into a legitimate tax deduction? The easiest way to demonstrate this is to go over a specific example of just how this can be done.

As an example, let’s take Tim, who owns his own business. Tim decided he wanted to take a two-week trip around the United States. So he did—and was able to legally deduct every dime that he spent on his “vacation.” Here’s how he did it.

How to make your next vacation a tax write-off

1. Make all your business appointments before you leave for your trip

Most people believe that they can go on vacation and simply hand out their business cards in order to make the trip deductible.

Wrong.

You must have at least one business appointment before you leave in order to establish the “prior set business purpose” required by the IRS. Keeping this in mind, before Tim left for his trip he set up appointments with business colleagues in the various cities that he planned to visit.

Let’s say Tim is a manufacturer of green office products looking to expand his business and distribute more products. One possible way to establish business contacts—if he doesn’t already have them—is to place advertisements looking for distributors in newspapers in each location he plans to visit. He could then interview those who respond when he gets to the business destination.

Example: Tim wants to vacation in Hawaii. If he places several advertisements for distributors, or contacts some of his downline distributors to perform a presentation, then the IRS would accept his trip for business.

Tip: It would be vital for Tim to document this business purpose by keeping a copy of the advertisement and all correspondence, along with noting in his diary what appointments he will have.

2. Make sure your trip is all “business travel”

In order to deduct all of your on-the-road business expenses, you must be traveling on business. The IRS states that travel expenses are 100% deductible as long as your trip is business related, you are traveling away from your regular place of business longer than an ordinary day’s work, and you need to sleep or rest to meet the demands of your work while away from home.

Example: Tim wanted to go to a regional meeting in Boston, which is only a one-hour drive from his home. If he were to sleep in the hotel where the meeting will be held (in order to avoid possible automobile and traffic problems), his overnight stay qualifies as business travel in the eyes of the IRS.

Tip: Remember: You don’t need to live far away to be on business travel. If you have a good reason for sleeping at your destination, you could live a couple of miles away and still be on travel status.

3. Deduct all on-the-road expenses for each day you’re away

For every day you are on business travel, you can deduct 100% of lodging, tips, car rentals, and 50% of your food. Tim spends three days meeting with potential distributors. If he spends Rs.4093 a day for food, he can deduct 50% of this amount, or Rs.2,046 a day.

Example: If Tim pays Rs.491 for drinks on the plane, Rs.569 for breakfast, Rs.982 for lunch, and Rs.4093 for dinner, he does not need receipts for anything since each item was under Rs.6140.

Tip: The IRS doesn’t require receipts for travel expense under Rs. 6140 per expense—except for lodging.

Why a Domain Name Is Important for Your Business…..!

A domain name adds credibility to your business

Having your own domain name makes your company look professional. If you publish your site through an ISP or a free web-hosting site, you’ll end up with a URL such as www.yourisp.com/-yourbusiness. This generic address does not inspire confidence in a customer like a www.yourcompany.com domain name does.

 

As there are some less than reputable sites on the web, you want to do what you can to prove that your small business is one that customers can trust and that deserves their money. If you’re not willing to pay the money to register an appropriate domain name, why would consumers think you’d put any effort into creating valuable products or services?

A domain name builds your brand.

More than anything else, a domain name can increase awareness of your brand. If your domain name matches your company name, it reinforces your brand, making it easier for customers to remember and return. It will also be easier to win business via word of mouth because customers will remember your name and pass it along to friends.

The right domain name can attract walk-in business.

 

If you decide to register a domain name that matches the concept of your business (instead of your exact business name), you might draw web surfers in search of that topic. For instance, a hardware store that registered Hammers.com might get visitors looking for hammers on the internet. Also, although search engine results are hard to predict, Hammers.com could show up more frequently in search results when someone searches for information about hammers.

The bottom line is that a good domain name can go a long way toward generating traffic to your website and building your reputation. That, in turn, will result in more customers and better sales.

Click here to see a sample Domain Name Purchase Agreement.

Section 194BA Income Tax , TDS on Winnings from online games.

Insertion of new section 194BA.

 

After section 194B of the Income-tax Act, the following section shall be inserted, namely:—

Winnings from online games.

‘194BA.

 

(1) Notwithstanding anything contained in any other provisions of  this Act, any person responsible for paying to any person any income by way of winnings from any online game during the financial year shall deduct income-tax on
the net winnings in his user account, computed in the manner as may be prescribed, at the end of the financial year at the rates in force:

Provided that in a case where there is a withdrawal from user account during the  financial year, the income-tax shall be deducted at the time of such withdrawal on the net winnings comprised in such withdrawal, as well as on the remaining amount of net winnings in the user account, computed in the manner as may be prescribed, at the end of the financial year.


(2) In a case where the net winnings are wholly in kind or partly in cash, and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the net winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the net winnings.


(3) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purposes of removing the difficulty.


(4) Every guideline issued by the Board under sub-section (3) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the person liable to deduct income-tax.

 

Explanation.—For the purposes of this section—


(a) “computer resource”, “internet” and “online game” shall have the meanings respectively assigned to them in section 115BBJ;
(b) “online gaming intermediary” means an intermediary that offers one  or more online games;
(c) “user” means any person who accesses or avails any computer resource of an online gaming intermediary;
(d) “user account” means account of a user registered with an online gaming intermediary.’.

Is It Possible To Get a Loan Against Property Without ITR?

A loan against property (LAP) is a secured loan that is offered by Banks and other financial institutions. The loan is provided against collateral/security, which could be a residential or commercial property owned by the borrower. The loan amount is based on the market value of the property and the borrower’s repayment capacity.

 

The Income Tax Return (ITR) is an important document that reflects the borrower’s income and tax liabilities. Lenders use the ITR as proof of income to determine the borrower’s repayment capacity.

However, some borrowers may not have an ITR or may have filed a nil ITR due to their low income or tax exemptions. In such cases, they may wonder whether they can get a loan against property without ITR. In this blog, we will explore whether it is possible to get a loan against property without ITR.

Is getting a loan against property possible without ITR?

The short answer is yes, you can get a loan against property without ITR. Some lenders may offer LAPs to borrowers without ITR. However, such loans may come with higher interest rates, lower loan-to-value (LTV) ratios, and stricter eligibility criteria. Lenders may require the borrower to provide alternative income proof such as Bank statements, rent receipts, or business receipts. The lender may also assess the borrower’s credit score, repayment capacity, and other financial factors before approving the loan.

What are the alternatives to ITR for LAP?

If you do not have an ITR, there are some alternative income proofs that you can provide to the lender to increase your chances of getting a LAP. Check out the below common alternatives:

Bank statements: You can provide your Bank statements for the past 6-12 months as proof of income. The lender will assess your income based on the average monthly balance in your account and the transactions made during that period. The Bank statements can also show your savings and expenses, which can help the lender determine your repayment capacity.

Property documents: Since LAP is a secured loan, lenders may focus more on the value of the property being used as collateral. Therefore, they may require property-related documents such as sale deeds, property tax receipts, and possession certificates, instead of ITRs.

Business receipts: If you own a business, you can provide business receipts as proof of income. The lender may ask for the business registration documents and the financial statements of the business. The business receipts can show your business income, which can be considered a source of income for the loan.

Fixed deposits: If you have fixed deposits (FDs) with a Bank, you can provide the FD receipts as proof of income. The lender may ask for the FD certificate and the Bank statement showing the interest earned on the FD.

Co-applicant income: If you are unable to provide ITRs or any other income proof, some lenders may allow you to add a co-applicant with a regular income to increase your chances of getting the loan approved.

Liquid Income Program: Your creditworthiness can still be evaluated through the Liquid Income Program by examining the actual cash flow of your business if you do not have an Income Tax Return (ITR). Only self-employed professionals and self-employed non-professionals are eligible for this program. To determine eligibility for LIP, a comprehensive analysis of your financials will be conducted, which includes preparing a Profit & Loss account and a balance sheet. This report will be utilized to determine your eligible income.

In conclusion, it is possible to get a loan against property without ITR, but the availability of such loans and the loan amount may depend on the lender’s policies and the borrower’s profile.