Direct Tax

The IT Department may utilize GST data to inhibit tax evasion

The income tax department may be planning to utilize the data generated through Goods and Services Tax (GST) to keep tabs on tax evasion. According to finance ministry officials, the IT department is pondering on using the GST data of the taxpayers, who have taken high input tax credit (ITC), but their ITC claims do not match with their personal income tax return that is submitted to the department. The department is also considering using the GST information to determine cases of suppression of personal income or tax evasion by displaying lower GST turnover or taking refunds from GST fraudulently. The department has instructed its officials to take additional efforts to identify and book tax evaders by implementing data analytics, information sharing and share the findings with GST authorities to initiate strict actions against wilful tax evaders or those using fake invoices and inflated or fake e-way bills.

Central Board of Direct Taxes (CBDT) prescribes electronic payment modes for newly inserted Sec. 269SU purposes

Under Section 269SU, shops, business firms or companies with an annual turnover of INR 5 billion or more are required to provide digital payment facilities to customers as part of the government's stride towards a cash-less economy. CBDT has notified three electronic modes, namely:

  1. Debit Card powered by RuPay
  2. Unified Payments Interface [UPI] - BHIM-UPI
  3. UPI QR Code; and
  4. Other electronic modes of payment, if any, being provided by such person

If the specified person fails to do so, he shall be liable to pay a penalty of INR 5000 per day effective 1 February 2020 under section 271DB of the Act for such failure as per a circular dated 30 December 2019.

Government notifies ITR 1 and ITR 4 for AY 2020-21

In a first, the CBDT has notified that the income tax return (ITR) forms for the financial year (FY) well in advance before the end of it. At present, the CBDT has issued two forms— ITR-1 and ITR-4— the balance forms are expected to be notified soon.

ITR-1 which is also known as “Sahaj" can be used by an individual whose income primarily includes salary income and whose total income does not exceed INR 5 million during the FY. ITR-4 can be used to file returns by resident individuals, Hindu Undivided Family (HUFs) and firms (other than LLP) having a total income of up to INR 5 million from business and profession and filing return under presumptive taxation scheme. However, presently only the forms have been notified without the return filing utility. Returns cannot be filed until the filing utility is activated on the website.

Transfer Pricing

The Central Board of Direct Tax (“CBDT”) vide Notification No. 03/2020/F. No. 370142/19/2019-TPL amends Rule 10DA (Requirements in relation to Master File) and Rule 10DB (Procedure and details relating to CbCR), which is applicable w.e.f. 1 April 2020.

The notification sets out the following key amendments:

No. Rule Rule 10DA/DB prior to CBDT amendment Rule 10DA/DB post CBDT amendment
1 10DA (2) requires a master file to be furnished to the
Director General of Income-tax (Risk Assessment)
requires a master file to be furnished to the
Joint Commissioner of Income-tax
2 10DB(1) Income tax authority for section 286
shall be the DGIT (Risk Assessment)
Income tax authority for section 286 shall be the
Joint Commissioner as may be designated by DGIT (Risk Assessment)

Indirect Tax

Verification of certain exports of goods

In view of the detection of various export-related ITC frauds, the Central Board of Indirect Taxes and Customs (CBIC) has applied stringent risk parameters-based checks driven by rigorous data analytics and artificial intelligence. Basis these checks, a small fraction of exporters of goods were taken up for further verification. The refund scrolls for such exporters have been kept in abeyance till the verification report in respect of such cases was received from the field formations. The Board has now prescribed a detailed procedure for undertaking such verification in a time-bound manner by the jurisdictional CGST officers.

[Circular No. 131/1/2020 dated 23 January 2020]

Due date to claim transitional credit extended

A taxpayer who could not submit the declaration of availing transitional credit by the specified due date as a consequence of technical challenges on the common portal and whose cases have been recommended by the GST Council have been given an extension in due dates as under:

Form Old due date Revised due date
GST TRAN-1 31 December 2019 31 March 2020
GST TRAN-2 31 January 2020 31 April 2020

[Notification No. 2/2020-Central Tax dated 1 January 2020]