CBDT extends deadline for filing ITRs with audit reports to Oct 15, 2018

 

The government has extended last date for filing of income tax returns (ITRs) for those taxpayers who are required to file their returns along with audit reports from Sept 30 to Oct 15, 2018.

 

The text of the notification by CBDT is as below:

CBDT has extended the due date for filing Income Tax Returns and audit reports from 30th September 2018 to 15th October 2018. However, there shall be no extension of the due date for purpose of Explanation 1 to section 234A (Interest for defaults in furnishing return) of the Act and the assessee shall remain liable for payment of interest as per provisions of section 234A of the Act.

                                  In its tweet, the income tax department has posted – “CBDT extends due date for filing of Income Tax Returns & audit reports from 30th Sept,2018 to 15th Oct, 2018 for all assessees liable to file ITRs for AY 2018-19 by 30.09.2018,after considering representations from stakeholders.”

 

However, it adds that “Liability to pay interest under section 234A of Income Tax Act will remain.” It is important to note that if one has any unpaid tax liability then penal interest on the same may be leviable.

Typically, tax practitioner bodies ask for an extension from the government, saying they needed more time to file returns for entities where tax audit report or transfer pricing report or other audit reports are required to be filed as per the law.

Even last year, on consideration of representations from various stakeholders and to facilitate ease of compliance by the taxpayers, CBDT had extended the ‘due-date’ for filing Income Tax Returns with audit reports as prescribed under the Income-tax Act,1961 from 31st October, 2017 to 7th November, 2017 for AY 2017-18.

Tax audit is a review of accounts of taxpayers with business or profession from an income tax point of view such as incomes, deduction, compliance with tax laws, etc. Taxpayers with turnover exceeding Rs 1 crore in business (not opted for presumptive taxation scheme) or whose gross professional income is over Rs 50 lakh need to get a tax audit done. Tax audit report needs to be filed on or before the 30 September of the subsequent financial year in case of taxpayers who have not entered into an international transaction.

Some chartered accountants have argued that they have been busy filing returns of individual tax payers like the salaried class till August 30. Consequently they have had little time to devote to preparing the audit reports for those tax payers whose accounts are required to be compulsorily subjected to tax audit. The number of clauses in the audit reports have also increased thereby increasing the time required, they have pointed out. For these reasons they had requested an extension of the deadline for filing tax returns with audit reports.

Highlights:

  • An audit is a review of accounts of taxpayers with business or profession from an income tax point of view such as incomes, deduction, compliance with tax laws, etc.
  • Those with turnover exceeding Rs 1 cr in business or whose gross professional income is over Rs 50 lakh need to get a tax audit done.
  • It is important to note that if one has any unpaid tax liability then penal interest on the same may be leviable.

CBDT Notification

CBDT signs first ever two Indian APAs with Netherlands in Nov-2017

CBDT signs first ever two Indian APAs with Netherlands in Nov-2017. The total number of APAs entered into by the CBDT has gone up to 186

CBDT signs first ever two Indian APAs with Netherlands in Nov-2017. The total number of APAs entered into by the CBDT has gone up to 186

 

 


 

Press Information Bureau
Government of India
Ministry of Finance
01-December-2017 11:53 IST
Central Board of Direct Taxes (CBDT) signs two Indian Advance Pricing Agreements (APAs) in November, 2017

The Central Board of Direct Taxes (CBDT) has entered into 2 Bilateral Advance Pricing Agreements (APAs) during the month of November, 2017. These Agreements are the first ever Bilateral APAs with The Netherlands. With the signing of these Agreements, the total number of APAs entered into by the CBDT has gone up to 186. This includes 171 Unilateral APAs and 15 Bilateral APAs.

These two APAs pertain to the Electronics and Technology sectors of the economy. The international transactions covered in these agreements include Distribution, Provision of Marketing Support Services, Provision of Business Support Services, etc.

The APA provisions were introduced in the Income-tax Act in 2012 and the “Rollback” provisions were introduced in 2014. The APA Scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance. Since its inception, the APA Scheme has been well-accepted by taxpayers.

The progress of the APA Scheme strengthens the Government’s resolve of fostering a non-adversarial tax regime. The Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.

*****
DSM/SBS/KA 

Source: http://abcaus.in/income-tax/cbdt-signs-first-ever-two-indian-apas-with-netherlands-in-nov-2017.html

CBDT signs 7 more unilateral APAs with taxpayers

The seven APAs signed over the last month pertain to sectors like FMCG, semi-conductor, information technology, travel and leisure, office furniture and engineering.

The Central Board of Direct Taxes (CBDT) has signed seven more advance pricing agreements (APAs) with Indian taxpayers as it looks to reduce litigation by providing certainty in transfer pricing.

The seven APAs signed over the last month pertain to sectors like FMCG, semi-conductor, information technology, travel and leisure, office furniture and engineering.

“The Central Board of Direct Taxes (CBDT) has entered into seven more Advance Pricing Agreements (APAs) during October 2017. All these agreements are unilateral,” the CBDT said in a statement.

With the signing of these agreements, the total number of APAs entered into by the CBDT has gone up to 184, which includes 171 unilateral and 13 bilateral APAs.

In 2017-18, a total of 32 APAs (2 bilateral and 30 unilateral) have been signed till date.

The APA scheme was introduced in the Income-Tax Act in 2012 and the ‘Rollback’ provision in 2014.

The scheme aims to provide certainty to taxpayers in the domain of transfer pricing by specifying methods of pricing and setting the prices of international transactions in advance.

According to the statement, the progress of the APA scheme strengthens the government’s resolve of fostering a non-adversarial tax regime. The Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.

 

ZeeNews

CBDT signs 4 more APAs with taxpayers in August

The Central Board of Direct Taxes (CBDT) signed four more advance pricing agreements (APAs) in August with Indian taxpayers as it looks to reduce litigation by providing certainty in transfer pricing.

The four APAs entered into during August, 2017 pertain to various sectors of the economy like telecom, banking, manufacturing and education, an official statement said today.

“Out of these four agreements, three are unilateral and one is a bilateral,” it said.

According to the statement, the bilateral APA is for international transactions between an Indian company and a UK-based company and this is the eighth bilateral APA with the United Kingdom and 13th overall (the other five being with Japan).

With the signing of these four agreements, the total number of APAs entered into by CBDT has reached 175, the statement said, adding, “this includes 162 unilateral APAs and 13 bilateral APAs.”

Besides, in the current financial year, a total of 23 APAs (2 bilateral and 21 unilateral) have been signed till date, the statement noted.

The APA provisions were introduced in the Income-tax Act in 2012 and the “rollback” provisions were introduced in 2014.

The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance.

The statement pointed out that since its inception, the APA scheme has been well-accepted by taxpayers and that has resulted in more than 800 applications (both unilateral and bilateral) being filed so far in five years.

Noting that the progress of the APA scheme strengthens the government’s resolve of fostering a non-adversarial tax regime, the statement said the Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.

 

Source: Times of India

Central Board of Direct Taxes cuts profit margin for safe harbour rules

Safe harbour rules are defined as circumstances under which the income-tax authorities accept the transfer pricing declared by the assessee.

Given the lukewarm response to the safe harbour mechanism for transfer pricing, Central Board of Direct Taxes (CBDT) on Thursday cut the operating profit margin for information technology-enabled services, knowledge process outsourcing services (KPOs) and research and development (R&D) related to software and generic pharmaceutical drugs companies.

The new rules will apply to transactions of up to Rs 200 crore. Safe harbour rules, a dispute-avoidance mechanism, are defined as circumstances under which the income-tax authorities accept the transfer pricing declared by the assessee. The rule provides the minimum operating profit margin in relation to operating expenses that a taxpayer is expected to earn for certain categories of international transactions. The same is acceptable to the income tax authorities as arm’s length price (ALP). The rules are applicable for transactions between group companies based in different countries so that a fair price or ALP is arrived at by the tax authorities. The rules have come into effect from April 1 this year and will continue to remain in force for two successive years up to assessment year 2019-2020, the board said in a statement

For software development services, safe harbour margins have been reduced to a peak rate of 18% from 22% in the previous regime. Similarly, for KPOs, a graded structure of three different rates of 24%, 21% and 18% has been provided, based on employee cost to operating cost ratio, replacing the single rate of 25% earlier. For the third category of R&D services, the margins have been reduced to 24% from 30% and 29%, respectively, earlier. “The lukewarm response to the earlier safe habour scheme was on account of the high rates. Thus, taxpayers opted for unilateral APA process instead. The revised scheme has been designed to attract small to medium business, especially in the IT/ITeS segment, so as to give them a viable alternative to APA regime, which is both time consuming and expensive. The rates for IT/ITeS segment are more or less in line with the APAs being settled and hence the safe harbour scheme, this time, should get a positive response,” Arun Chhabra, director, Grant Thornton Advisory, said.

Assessees eligible under the present safe harbour regime up to AY 2017-18 shall also have the right to choose the safe harbour option most beneficial to them, the board said. It added that a new category of transactions being “Receipt of Low Value-Adding Intra-Group Services” has been introduced. “The revised safe harbour rules are a welcome step towards making safe harbour a viable alternate dispute resolution mechanism. Key highlights are: Reduction of margins for service units, introduction of safe harbour rate for low-valued services (in line with BEPS recommendation) and well-thought scheme for knowledge process outsourcing companies. Overall, it’s a welcome step towards strengthening the safe harbour option for small and mid size companies,” Kunj Vaidya, leader transfer pricing, Price Waterhouse & Co, said.

Source: http://www.financialexpress.com/economy/central-board-of-direct-taxes-cuts-profit-margin-for-safe-harbour-rules/708984/

Finnish companies looking for new opportunities in India

Nina Vaskunlahti, Ambassador of Finland to India Paul Noronha

India is becoming one of the favorite destinations for investments in manufacturing, clean tech, infrastructure and hi-tech for Finnish companies.

Nina Vaskunlahti, Ambassador of Finland to India, in an interview with BusinessLine said, “There is increasing interest in economic cooperation, and Finnish companies are looking for new opportunities in India.”

Investment protection

According to Vaskunlahti, although India’s legislative framework can be a little complicated and the judicial system overworked and under-resourced leading to delays in solving disputes for foreign investors, overall the atmosphere is “welcoming and pretty open”.

However, according to the Ambassador, Finland is worried over India’s move to terminate investment protection agreement with 82 countries. “We are not quite sure what is the purpose of this,” Vaskunlahti said. While the treaty between India and Finland is still in force, according to Vaskunlahti, India and the European Union seem to be stuck over negotiating a new investment protection treaty after a year back India had sent request for renegotiation for the Bilateral Investment Treaty (BIT) to over 80 countries with whom it had earlier signed Bilateral Investment Promotion and Protection Agreements (BIPA).

“As a member of EU, we cannot negotiate on our own, because it’s the EU Commission that has a negotiating mandate,” Vaskunlahti said. “What we have now on the table is called a comprehensive negotiating mandate which covers both free trade agreement and the investment protection agreement. For the moment, nothing much is happening, but efforts and work are being done in background to push it forward.”

The new model of the BIT was cleared by the Union Cabinet in December 2015 and was seen to give more stability to foreign investors and prevent disputes with multinational companies by excluding matters such as government procurement, taxation, subsidies, compulsory licences and national security.

Arbitration mechanism

At the same time, the new model BIT brings in a provision obliging foreign investors to first exhaust the option of local judicial system at least for five years before going to international arbitration mechanism in case of disputes.

Some of the cases when foreign investors challenged India in international arbitrage, invoking clauses of earlier BIPAs include Devas Multimedia, Vodafone, Deutsche Telekom, Sistema and Cairn.

Source: http://www.thehindubusinessline.com/info-tech/finnish-companies-looking-for-new-opportunities-in-india/article9719905.ece

Fresh transfer pricing trouble for MNCs

A new provision for secondary adjustment in transfer pricing, announced in the Union Budget for 2017-18, is likely to affect the cash flow of multinational corporations (MNCs) and the dividend distribution tax paid by their Indian subsidiaries. The provision has also sparked worry on Minimum Alternate Tax (MAT) and service tax payable by the subsidiaries, as well as retrospective implementation from 2013-14.   Experts claim the provision is in line with the norms of the Organisation for Economic Co-operation and Development (OECD) —but its wording is giving rise to apprehension.

Transfer pricing is the value at which companies trade products, services or assets between units across borders, a regular part of doing business for a multinational.

A primary adjustment is made, by tax administration, to company´s taxable profits on transactions with an associated enterprise in a secondary jurisdiction.

At present, there is only primary adjustment on transfer pricing of an MNC´s subsidiary.

This means if the subsidiary concerned agrees to the tax adjustment provided by an assessment officer, or on its own makes such an adjustment, it will pay taxes on that amount.

For instance, a company claims it has earned Rs.400 crore, and the transfer pricing officer claims it has earned Rs.600 crore, using the arm´s length principle.

If the company agrees to the assessment and pays tax on this, it is called primary adjustment.

Under the existing law, the additional Rs.200 crore would not need to be shown in the books of the company.

A secondary adjustment arises when simultaneous changes are made in the books of accounts of the company as well. This is what new provision aims at —the additional Rs.200 crore would also have to be shown in the books of the Indian subsidiary of MNC concerned.

“The parent company might not want to part with this Rs.200 crore, as the subsidiary in India might not be significant for its strategy,” said Eric Mehta, partner, transfer pricing, PwC India.

“An MNC might have a global presence, with India only a small part of its affairs.” Sending the money to India would also face hurdles because of lack of a contractual arrangement, said Amit Maheshwari, partner, Ashok Maheshwary and Associates.

He added it would have an adverse effect on the cash flow and business operations of MNCs.

If the Indian subsidiary concerned does not get the required amount, say Rs.200 crore, within a stipulated period, it would be considered a loan to the parent or associate, attracting interest.

(The time period has not been specified in the Budget documents.) “In case, the total amount is brought to the books of the Indian company, it will give rise to higher dividend, which in turn, will give rise to higher dividend distribution tax,” said Mehta.

Also, if the payment is towards services rendered by Indian subsidiaries, the higher receipt in books will give rise to higher service tax liability, added Mehta.

Maheshwari said higher receipt and hence profit in the books would also give rise to MAT as profit on the additional income, in this case  Rs.200 crore, was not shown earlier in the books earlier.

It should be noted that MAT is applicable to book profits.

All this will, however, only apply if the primary adjustment of the Indian entity exceeds Rs.1 crore the previous year —along with other conditions.

The provision has also given rise to fear of retrospective application, as the condition of primary adjustment exceeding Rs.1 crore is effective from April 1, 2016 or previous years.

Currently, the assessment of 2013-14 is underway for transfer pricing purposes, said Mehta, pointing to the possibility of secondary adjustments made from that year.

He agreed the purpose of the provision might not be to have retrospective effect, but the wording does not prevent it.