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Direct Tax

Government stands defiant, rules out rollback of digital tax

[Excerpts from Money Control, 26 October 2020]

India introduced a digital tax called equalization levy in 2016 at the rate of 6%, which was payable by Indian residents on online advertisement services purchased from non-resident companies. From 1 April 2020, the scope of equalization levy has been expanded to include a 2% levy on all online sales of goods or services into India by non-resident e-commerce operators. As a response, the US initiated an investigation under section 301 of the Trade Act, 1974 into the digital services taxes that had been adopted, mentioning that the countries are unfairly targeting American tech companies by a levy of such taxes. Also, the Indian Government has received multiple requests for a rollback on digital tax by the industry, however, it has confirmed that it will not be reconsidering any variations in the current provisions.

Recognized PFs can invest in ‘A’ or higher rated securities: CBDT

[Excerpts from Money Control, 25 October 2020]

In order to be treated as recognized employee provident funds, such funds are required to invest 45-55% of its funds in Government securities, 35-45% in debt (bonds and term deposits), 0-5% in short term debt (money market, liquid funds), 5-15% in equity, asset-backed securities (units of REITS, InVITs) 0-5%. The CBDT has recently diluted norms for investment purposes to bonds with a minimum ‘A’ rating, as against the earlier requirement of ‘AA’ rating. This gives such funds the flexibility to hold their current investments in bonds, even where such papers have been downgraded.

People opting for lower tax regime not eligible for LTC stimulus: Government

[Excerpts from Business Standard, 30 October 2020]

Recently, the government extended the Leave Travel Concession (LTC) Cash Voucher Scheme to private sector employees, the public sector units, and state governments as well with the motive of providing tax benefits to the employee and boost his spending power. The Finance Ministry has clarified that people who are opting for the lower tax regime provided in the Budget for 2020-21 are not eligible for the new incentive package through leave travel concession. For the private sector employees who are not opting in for a lower tax regime would be eligible to get tax exemption under the Scheme (similar to benefits for central government employees subject to a few modifications).

Government makes it mandatory for foreign companies operating e-commerce platforms in India to have PAN

[Excerpts from Economic Times, 28 October 2020]

It would be mandatory for foreign entities operating e-commerce platforms in India or having access to the Indian market to have permanent account numbers (PAN) for paying up equalization levy. The CBDT has amended existing forms for such levy to create separate sections for reporting of the payments of a levy by e-commerce operators. The changes also include the option of keying in Aadhaar in place of PAN while filing the details. Such changes have been made to align the annual statement and forms with the new e-commerce equalization levy introduced. The annual statement and appeal documents mandate quoting the PAN / Aadhar of non-residents, thereby supporting the view that non-resident e-commerce entities may need to obtain PAN in India.

ITAT disposes of 7,251 cases during the COVID-19 pandemic via virtual hearings

[Excerpts from Financial Express, 10 November 2020]

During the COVID-19 pandemic, the ITAT has set up virtual benches across the country, which are extensively for case hearings used during the Pandemic period. The ITAT President Justice P P Bhatt announced that the tribunal has disposed off 7,251 cases against the 3,378 new cases filed during the pandemic period. The total pendency of ITAT as on 1 November 2020 is 83,546. Further, physical requirements are now replaced by a portal that facilitates e-filing of appeals, documents, and other documents by the litigants.

Indirect Tax

Waiver of penalty on non-compliance of QR code provisions

[Notification No. 89/2020–Central Tax dated 29 November 2020]

The government has waived off the penalty applicable on non-compliance of Quick Response (QR) code provisions between 1 December 2020 to 31 March 2021, applicable to businesses with a turnover of more than INR 500 crores, provided that such businesses comply with the said provisions from 1 April 2021.

E-invoicing provisions to be made applicable to more businesses from 1 January 2021

[Notification No. 88/2020–Central Tax dated 10 November 2020]

E-invoicing provisions under Rule 48(4) of the CGST Rules will be made applicable to businesses with turnover exceeding INR 100 crores in any preceding financial year from 2017-18 onwards, with effect from 1 January 2021.