Income tax department asks 10 PSU firms to pay more tax

The income tax (I-T) department has asked top 10 public sector undertakings (PSUs), including State Bank of India and Oil and Natural Gas Corporation, to cough up more tax on demands of earlier years, some of which may be disputed.
According to sources, this is a pre-emptive measure to ensure its target for collection is met. The final date is Thursday for payment of advance tax by companies. “As advance tax accounts for a major percentage of total direct tax collection, we are anticipating growth of 18 per cent in this quarter,” said an official.
However, if advance tax revenue fails to meet the expected growth, these PSUs could be asked to pay taxes on past demands raised against them. A tax official says the rules provide for raising of reasonable assessment orders for the financial year, in a time-bound manner. A payer wishing to appeal against past tax demands will have to deposit a fifth of the total sought to get a stay, pending disposal of the case with the commissioner of I-T (appeals).
The latter is the first stage for a redressal. A further appeal may be had at the appellate tribunal and then the high court. The authorities may also ask for a deposit more than 20 per cent in certain circumstances, in case the tribunal or court has favoured the I-T demand.
Income tax department asks 10 PSU firms to pay more tax “If the judgment goes in favour of the payer, the amount paid will be adjusted or refunded by the department,” said Rahul Garg, partner at consultancy PwC.
Sources said inconsistency in the advance tax outgo by companies had prompted the department to take the present initiative.

Companies often defer paying advance tax till payment accrues and this could be pushed to the next financial year. Beside, sales in some sectors have been adversely affected by implementation of the goods and services tax. Banks, pharmaceuticals and software are going through a rough patch.
Between April and December 2017, Rs 3.8 trillion of advance tax was collected, a rise of 12.7 per cent over the previous year. Total direct tax collection in the first 11 months of 2017-18 was 19.5 per cent higher, at Rs 7.4 trillion. The Central Board of Direct Taxes had revised the target for direct tax collection to Rs 10.05 trn (personal income tax and corporate tax), up from the budgeted Rs 9.8 trn.
Advance tax is a system of staggered payment across the year, in four quarterly instalments. According to the Income Tax Act, companies are required to pay 15 per cent of their total advance tax by June 15, followed by 30 per cent each in September and December, and the remaining 25 per cent in March. Payment is considered a barometer of a company’s performance.


Income tax department asks 10 PSU firms to pay more tax

I-T dept has compiled a list of 8,000-odd non-filers: Report

In a bid to meet stiff revenue targets amid sluggish growth, the income tax (I-T) department has reportedly initiated prosecution proceedings against a large number of individuals and business entities for not filing tax returns and for delaying remittance of tax deducted at source (TDS).

This is probably the first time that prosecution proceedings, which was primarily used against wilful tax evaders, have been initiated for such charges.
“A list of 8,000-odd non-filers (of tax return) with a past record of earnings has been compiled (by the tax department). Many in that list have been issued prosecution notices,” a senior tax official in Mumbai, told The Economic Times.

“Notices have also gone to companies which even after deducting TDS (from salaries, rent, or other heads) have failed to submit it to the government,” the official said.

According to the business daily, some small and mid-sized companies who had cleared the tax in phases along with interest after admitting their inability to pay on time, have also received prosecution notices.

The ones who have received such a notice will now have to explain reasons for delay in paying taxes. The assessee might also have to present himself before the magistrate’s court if the tax assessing officer is not satisfied with the explanation.

The assessee can also move the high court seeking to quash the notice.

Tax practitioners and business heads said the move will result in unnecessary hardship to assessees.

I-T dept has compiled a list of 8,000-odd non-filers: Report

Last day to file ITR: Don’t forget to pay tax on rent from foreign property

Many high net worth individuals who own houses abroad have in recent times been questioned by income tax officials for not having paid tax on the “deemed rental income” from those properties. It, therefore, becomes important for owners of foreign properties to understand the concept of deemed rental income and their tax liability on it.

For tax purposes, one house (in India or abroad) is treated as self-occupied. The owner has to pay tax on rental income on the other house (or houses). If the other house is not rented out, he has to arrive at a deemed or notional rental income and pay tax on it. “A person resident in India is liable to pay tax in India on his global income. Hence, rental income from house property — let out or on deemed basis — situated abroad is taxable in India. The income tax law does not make any distinction between house properties situated in India or abroad for computing income from house property,” says Suresh Surana, founder, RSM Astute Consulting Group.

In case of the taxpayers owning more than one house (all used for own purpose) and where one or more of them is situated outside India, they will have to do some calculation and arrive at the taxable value of each property by considering it first as self-occupied and then as let out. “The taxpayer can then choose a combination which results in the lowest taxable income from house property,” says Chetan Chandak, head of tax research, H&R Block India.

To calculate the deemed rental, the person needs to use the standard rent or let-able value of the property. “Obtain quotes from property brokers in the area or browse on websites that provide rental rates for that overseas location. Estate tax bills can also provide some indication in this regard,” says Nidhi Seksaria, partner and leader–real estate and construction, BDO India.

The rent you receive or the deemed rent is the gross annual value, from which you can reduce the municipal taxes paid during the year to arrive at the net asset value (NAV). From this, you can avail of two deductions under Section 24 of the I-T Act. One is the standard deduction under Section 24(A), wherein you can deduct 30 per cent of the NAV. Next, under Section 24 (B) you can deduct the interest paid on home loan. You will then arrive at the income from house property, which is added to your other sources of income and taxed according to the slab rate applicable to you. “You also need to check your eligibility for availing foreign tax credit related to taxes paid abroad on a house situated abroad under the relevant tax treaty provisions. If available, this will reduce your net tax outgo in India,” says Seksaria.

In countries such as the US, the property is usually managed by a real estate management agency, which charges a commission and a property management charge. This is over and above the property tax, mortgage amount, etc. paid by it on behalf of the client. The property management fee is assumed to be included in the standard deduction (30 per cent of NAV) which one gets under Indian tax laws. But there are differing views regarding the deductibility of the commission charged as percentage of rent collected from the tenant. “Some consider it as deductible from the amount of gross rent as it is in the nature of diversion of income. Others opine that this should be part of the 30 per cent standard deduction and no separate deduction is admissible for it. This needs to be evaluated in the light of the facts of each case based on the terms of agreement with the agency,” says Chandak.

Last day to file ITR: Don’t forget to pay tax on rent from foreign property

Income tax raids on Uttar Pradesh bureaucrats on charges of tax evasion

The Income Tax department today carried out searches at the premises of four Uttar Pradesh- based bureaucrats, including two IAS officers, in connection with its probe against them on charges of tax evasion.

Several I-T teams have covered at least 15 premises of the officers in Lucknow, Noida, Greater Noida, Meerut, Baghpat, Mainpuri and Delhi since early morning, I-T officials say.
The officers against whom the action was being taken were IAS officer and Director (Health) Hriday Shankar Tewari, IAS officer and Additional CEO of Greater Noida Authority V K Sharma and his wife and Regional Transport Officer (RTO) Mamta Sharma, and special secretary (prisons) S K Singh.

The I-T officials said the department had been investigating charges of tax evasion against them.

The department had carried out similar raids against some other UP bureaucrats last month.

Income tax raids on Uttar Pradesh bureaucrats on charges of tax evasion