⚫PM expressed confidence that the Budget for 2021-22 would be seen as part of the packages announced by FM over the past 10 months to offset the impact of Covid induced lockdowns.
⚫PM told leaders of various political parties that his Govt has been continuously trying to resolve the issues raised by protesting farmers through talks.
⚫Uttar Pradesh has received over Rs 1,88,000 crore investment in the last three and a half years. The kind of work done by the CM ever since he came to power in shaping up investment friendly policies is the reason why nationally and internationally reputed co's are now willing to set up their units in the state.
⚫The Govt has suspended Internet connectivity for two days in Singhu & Tikri border, & Ghazipur border for two days at the request of Delhi Police.
⚫With 571,974 more vaccinations across India on Thursday, the total count of those inoculated reached 3,500,027. The count of recovered coronavirus cases across India, reached 96.98% of total caseload.
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NICAI Updates:
1. CBDT has made it mandatory to update UDIN on all IT Forms related to Tax Audit or any other Income Tax Reports else these forms will become null and void. avail this one-time opportunity to generate UDIN (if missed) and update on the e-filing Portal at the earliest but not later than 15th Feb., 2021 to avoid invalidation.
2. Income Tax Section 12AA registration cannot be denied without recording dissatisfaction about objects of trust. Case Name : Balika Vidyalaya Educational & Cultural Trust Vs CIT (Exemptions) (ITAT Cuttack)
3. 31.1.21 (Sunday) is last date to apply for Quarterly Return Monthly Payment Scheme for Jan-Mar quarter by taxpayers having turnover upto 5 cr in 19-20 & 20-21.
4. GST: Uploading Show Cause Notice and Order on GST Portal is Mandatory. SCN and order sent via email only is invalid: High Court of MP In the matter of M/S. SHRI SHYAM BABA EDIBLE OILS vs THE CHIEF COMMISSIONER AND ANOTHER (W. P. No. 16117/2020 dated 19th November, 2020).
5. Taxation on incomes from the mutual funds are similar to incomes from non-mutual funds under the head long term/ short terms capital gains and dividends for the corporate/ non-corporates and NRIs. Read more: http://femainindia.com/Image/01.%20Taxation%20on%20Incomes%20from%20the%20Mutual%20Funds%20in%20India.pdf
6. ROC EXTENSION AOC 4 for AGM 2020 can be filed till 15 FEB 2021 without additional Fee vide MCA circular today.
7. RBI asked banks to step up disclosures on customer complaints and cost of redressal, cautioning lenders that fail to improve their redress mechanism quickly will be charged.At the end of March 2020, the total number of complaints across various offices of RBI stood at 3,08,630. This is a steep rise from 1,95,901 complaints outstanding at the ombudsman offices, as per data from the Trends and Progress Report of the RBI.
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Sayar Devi Baid v. ITO
Decision: In assessee's favour.
Income from undisclosed sources--Addition under section 69A--Alleged unexplained cash deposit--Assessee successfully explained source of cash deposit
Facts:
AO came to know that assessee deposited cash in her saving bank account and accordingly, the assessee was asked to explain the source of cash deposit. Assessee stated that she had been doing business of procuring Papad and snacks from manufacturer and selling the same in retail trading. It was explained that the source of cash deposit was her trading business in Papad and snacks. However, the explanation of the assessee did not find any favour with the AO, who was of the firm belief that the assessee failed to discharge the onus of explaining the source of cash deposit. Accordingly, the AO made addition of the same under section 69A.
Held:
AO accepted the return of the assessee thereby accepting the turnover from the sales of Papad and snacks. Since the business of the assessee had been accepted by the AO by accepting her return of income, there should not be any doubt in accepting the source of cash deposit, which was assessee's trading business. Further, the assessee successfully explained that the source of cash deposit was her trading business, therefore, the addition made under section 69A on account of unexplained cash deposit would not be sustainable and hence, the same was deleted.
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✅ CA Final Nov 2020 Exam Result likely to be declared on 1st Feb (evening) or 2nd Feb 2021:ICAI
✅ One-time Condonation Scheme to regularize UDINs was ending on TODAY 31st January.
🔮 Note : UDIN is required on MCA forms, Internal and Concurrent Audit, Prospective and Provisional Financial Statements as per SAE 3400 and SRS 4410 respectively, separate for Form 29 B and Form 10 CCB of IT Act, 1961 etc., so in case, you have missed generation of any UDIN for the said period, you are requested to make use of this scheme which is available till 31st January, 2021 only.
Extension
However, This has reference to the Condonation Scheme to regularize UDINs announced by the ICAI vide its announcement dated 28th December 2020. As per the scheme, the documents signed between 1st Feb.2019 till 31st Dec. 2020 the UDINs can be generated during 1st Jan. 2021 to 31st Jan. 2021. The requests have been received from Practicing Chartered Accountants from different parts of the country for extension of the time limit for compliance with the UDIN requirement under Condonation Scheme as they could not take advantage of the scheme due to various statutory compliances. Further many members were in the impression that the UDINs can be generated till 31st Jan. 2021 for the documents issued from 1st Jan. 2021 till 16th Jan. 2021 also. In view of above, it is being informed to the members that all the missed UDINs between the period 1st Feb. 2019 to 31st Jan. 2021 can now be generated upto 28th Feb. 2021 and this be taken as extension of the Condonation Scheme announced previously. However, it may be noted that for all the documents signed from 1st Feb. 2021 onwards, the original guidance for generation of UDIN i.e on the same day or within 15 days will have to be followed.
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👉 Release of Educational Material on Ind AS 23, Borrowing Costs - (27-01-2021)
https://www.icai.org/category/announcements
👉 Declaration of Results of Assessment for Certificate Course in CSR held on 10.01.2021. - (27-01-2021)
https://resource.cdn.icai.org/62865csr50857.pdf
👉 RBI Working Paper No.03/2021: Monetary Policy Transparency and Anchoring of Inflation Expectations in India
https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51023
👉 RBI releases framework for strengthening the grievance redress mechanism in banks
https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51029
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⚫India's economy is likely to grow by 11% in the fiscal year beginning April 1 as a vaccine drive and rebound in consumer demand help it emerge from the carnage inflicted by a strict coronavirus lockdown. The rebound will follow an estimated 7.7% contraction in the GDP in the current financial year ending March 31.
⚫The output of eight core infrastructure sectors contracted for the third month in a row by 1.3% in December, dragged down by poor show by crude oil, natural gas, refinery products, fertiliser, steel and cement sectors.
⚫Power generation in the country would continue to grow in fourth quarter of this fiscal year on the back of revival of electricity demand and adequate coal stocks at power plants.
⚫Govt's fiscal deficit soared to Rs 11.58 trillion or 145.5 per cent of the Budget Estimate at the end of December, as revenue realisation was hit by disruptions in normal business activities. According to the Controller General of Accounts, the fiscal deficit at the end of December in the previous fiscal year was 132.4% of the BE of 2019-20.
⚫In the quarter ending December, corporate profits have doubled for a sample of 379 Co's analysed. Without banks, the growth in profit after tax still stands at a robust 34%. Employee costs, which were growing faster when profits were falling, are growing slow now, but way ahead of the economic growth curve. These developments may bring in strong direct tax revenue in the second half of FY21.
⚫With 572,060 more vaccinations across India on Thursday, the total count of those inoculated reached 2,928,053. The count of recovered coronavirus cases across India, meanwhile, reached 10,394,352 – or 96.96% of total caseload – with 20,746 new cured cases being reported on Friday.
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To benefit small and micro units, MCA panel suggests creation of small LLPs
▶️Suggests LLPs be allowed to issue NCDs to entities regulated by SEBI and RBI
▶️ If this reform of allowing LLPs to issue NCDs gets Parliamentary assent, then AIFs, including private equity funds, will be able to pump funds into several Special Purpose Vehicles that operate under the LLP structure in the infrastructure and real estate sector, say economy watchers.
▶️creation of a new category of ‘small LLP’ is expected to enable ease of living for corporates and its stakeholders and also be beneficial for small and micro enterprises as it will reduce the cost of compliance, and subject such classof LLP to lesser penalties in the event of default as has been done in the case of companies under Companies Act 2013.
▶️The panel, headed by MCA Secretary Rajesh Verma, has recommended that LLPs with capital contribution of up to ₹25 lakhand turnover not exceeding ₹40 lakh in a financial year be allowed to opt for small LLP structures.
https://www.google.com/amp/s/www.thehindubusinessline.com/economy/to-benefit-small-and-micro-units-mcapanel-suggests-creation-of-small-llps/article33610368.ece/amp/
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Highlights of the economic survey 2020-21:
1. The survey expects the Indian Economy to grow by 11 per cent during 2021-22 which is close to the growth forecast of 11.5 per cent made by the IMF.
2. The gross tax revenue earned by the government during the period April to November 2020 fell by 12.6% to ₹10.26 lakh crore which can be attributed to the contraction of the economy.
3. Disinvestment which was targeted at ₹2.1 lakh crore has only been ₹15,220 crore (7.2%).
4. The fiscal deficit has also gone up and as of January 8, the union government borrowed a total of ₹10.72 lakh crore, 65% more than same period in the last year.
5. In the 2nd half of the fiscal year, government consumption is expected to grow by 17%, while private consumption is expected to contract by 0.6%.
6. In this year, agriculture sector is expected to grow by 3.4%.
7. GST collections have also increased in the 2nd half of the year.
8. Bank credit growth as of January 1 stood at 6.7%. Since September 2019, bank credit growth has been in the single digits. Credit growth to the services sector accelerated to 9.5% in October 2020 from 6.5% in October 2019. Adequate capitalisation of banks is called for.
9. Inflation between April and December 2020 stood at 6.6% on account of high food inflation of 9.1%.
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⚫India's economy is likely to grow by 11% in the fiscal year beginning April 1 as a vaccine drive and rebound in consumer demand help it emerge from the carnage inflicted by a strict coronavirus lockdown. The rebound will follow an estimated 7.7% contraction in the GDP in the current financial year ending March 31.
⚫The output of eight core infrastructure sectors contracted for the third month in a row by 1.3% in December, dragged down by poor show by crude oil, natural gas, refinery products, fertiliser, steel and cement sectors.
⚫Power generation in the country would continue to grow in fourth quarter of this fiscal year on the back of revival of electricity demand and adequate coal stocks at power plants.
⚫Govt's fiscal deficit soared to Rs 11.58 trillion or 145.5 per cent of the Budget Estimate at the end of December, as revenue realisation was hit by disruptions in normal business activities. According to the Controller General of Accounts, the fiscal deficit at the end of December in the previous fiscal year was 132.4% of the BE of 2019-20.
⚫In the quarter ending December, corporate profits have doubled for a sample of 379 Co's analysed. Without banks, the growth in profit after tax still stands at a robust 34%. Employee costs, which were growing faster when profits were falling, are growing slow now, but way ahead of the economic growth curve. These developments may bring in strong direct tax revenue in the second half of FY21.
⚫With 572,060 more vaccinations across India on Thursday, the total count of those inoculated reached 2,928,053. The count of recovered coronavirus cases across India, meanwhile, reached 10,394,352 – or 96.96% of total caseload – with 20,746 new cured cases being reported on Friday.
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👉🏻Govt to introduce bill to ban cryptocurrency in Budget Session
(Govt is to introduce a bill to ban, with exceptions, the trading in cryptocurrencies in India and also put in place the framework for an official digital currency)
👇🏻 👇🏻 👇🏻
http://bit.ly/3r8CgKT
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Reducing Impact of Surcharge: New manufacturing companies are eligible for income tax @ 15%. Even the Corporate Tax in general has been reduced to 22% without any capping (effectively tax rate – 25.18% with surcharge and Cess). However, the rate of personal Income Tax is still at 30% for all income above Rs 10 Lakh or Rs. 15 Lakh (as per the optional schemes offered to the individual taxpayers). In addition to 30% of tax rate & 4% of Cess, there is a surcharge (better known as the Super Rich Tax) if income exceeds Rs. 50 Lakh. The surcharge ranges from 10% to 37%. The effective tax rate for High Net worth Individual (HNI) goes up to 42.75%. High rates of tax acts as a discouragement for taxpayers and results in tax evasions/ avoidance. The tax rates including all Cess & surcharges need to be capped in the range of 30% to 35% for better sentiments & tax compliances.
Rationalizing the Tax Rates of Firm/LLP:
Due to administrative cost & convenience, the number of firms/LLP’s are much higher as compared to the Companies registered in India. The lower tax rates for companies as compared to Firm & LLP looks little unfair & discriminatory. Lowering the tax rates for such entities will be the real sentiment booster for the economy. Hope, the income tax rates will be aligned in line with the corporate tax rates.
Lower rate of TDS:
The liquidity crunch in the business is likely to continue in the FY 2021-22. The reduction of TDS rate by 25% was announced for FY 2020-21 due to prevailing pandemics Covid -19. It may be continued in the FY 2021-22 as well. This will ensure better cash flow amongst the taxpayers.
Disallowance for Cash Payment Exceeding Rs. 10,000/-:
Any payment exceeding Rs. 10,000/- is disallowable u/s 40A(3) of the Income Tax Act – 1961. Though the aim is to promote digitized mode of payment, still there are situations where transactions in cash is the only option. The disallowance in such cases may be restricted to 20% as against 100% at present.
Tax under Sec. 115 BBE
Section 115BBE provides for levy of tax on certain income @ 60% which is further subject to surcharge @ 25% & Cess @ 4%, resulting in aggregate tax rate of 78%. If the addition is done by the Assessing Officer then penalty @ 10% of tax is also attracted U/s 271AAC resulting in total liability of 84%. The rate was enhanced from 30% to take care of the unexplained deposit of cash during demonetization. This huge tax rate is only adding to the tax litigations and disputes, resulting in piling of appeal cases. It needs to be restored to the original tax rate of 30%.
Upward revision of Personal Income Tax Slab:
Lower tax rate results in better tax compliances and discourages tax evasions & avoidance. The personal income tax exemption limit has not yet been changed since long though the alternate tax regime for personal *taxation U/s 115BAC was offered in the last Budget – 2019*. Basic exemption limit, tax rate & tax slab may be revisited in following way:
a) Basic exemption limit should be enhanced to Rs. 5 Lakh for all categories of the taxpayers.
b) Income in the range of Rs. 5 Lakh to 10 Lakh should be made taxable @ 10%.
c) Income in the range of Rs. 10 Lakh to Rs. 25 Lakh should be subject to tax @ 20%.
d) Income exceeding Rs.25 Lakh should be subject to tax @ 25%.
Needless to say, reduction in the maximum rate of taxation @ 25% would help in developing a better tax compliant society.
Enhance the threshold limit under Section 80C of the Act:
In a country where there is no system of social security, investment habits need to be promoted by offering tax sops. Further, the overall maximum deduction limit of Rs. 1.50 Lakh u/s 80C towards LIC/PPF/Tuition fees, etc was fixed long back & has not been revisited since then. It needs to be enhanced to at least Rs 2.50,000/-.
Taxation u/s 50C, 43CA & 56(2)(x) vs, Removal of taxation on Notional Basis
Section 50C, 43CA & 56(2)(x) provides for taxation of immovable property transactions on notional basis wherein if the property is sold / purchased below its stamp duty valuation, the difference between actual sale consideration & stamp duty valuation is liable for income tax in the hands of seller as well as buyer. There are various situations like distressed sale, sale of encroached property, sale of disputed property, sale of mortgaged assets by banks & various other factors which make it impossible to sell the property at FMV. Exclusions for such situations need to be provided in all above sections.
Further, reference to DVO option is presently available only to the Assessing officer which can happen only after the transaction is completed i.e., the sale deed is executed. It is suggested that the option be given to the assessee to approach the AO for getting a DVO report even before the transaction is executed. It could be subject to payment of prescribed fee to the DVO. This option is going to remove the contingency involved in the property transactions.
Why Not remove Notional Scheme of Taxation
Levying tax on real income is the right of the Government & is also considered by the taxpayers as their duty. However, levying tax hypothetical income makes the tax environment complicated & burdensome for the taxpayers, more so when the department is flooded with information and well equipped with the system of checking/cross checking the transactions. It calls for revisiting all the notional tax provisions which were introduced as an anti-abuse measure. It’s only the actual income received by an assessee which should be chargeable to tax.
Increase in the limit of Standard Deduction for Salaried Taxpayers
With lowest cost of collection & lesser possibility of tax evasion, salaried taxpayers are left with little choice to save tax. They need to be respected by increasing the amount of standard deduction limit from Rs. 50,000/- to Rs. 1 Lakh at least for taxpayers with income exceeding Rs. 10 Lakh.
Taxpaying population is very less as compared to the size of the country. There is no recognition & incentives to the taxpayers. With the advent of Information Technology, special incentives & privileges can be offered to taxpayers by offering priority on various fronts like railway reservation, court cases, healthcare services, etc. Hope 2021 Budget lays down the roadmap of recognizing the taxpayers of the country.
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