The Income Tax department, beginning this financial year, has decided to ‘name and shame’ all category of taxpayers who have a default of Rs one crore and above.
Financial technology startup Defmacro Software , which owns and operates online tax returns filing platform ClearTax , has raised $2 million (Rs 13.3 crore) from FF Angel , the angel investing arm of Peter Thiel-led Founders Fund , and Sequoia Capital .
The five year-old company will use the proceeds from the round to launch a slew of consumer-focused tax-saving products, including mutual funds and other equity-linked saving schemes. It will also be adding to its leadership team, said Archit Gupta , chief executive of ClearTax.
“We have taken the long route, and now we are extremely excited to have some of the biggest thought leaders and investors on board as our partners,” Gupta said. “We are an instrument-agnostic platform that will allow consumers to choose their rate of return and select what to have in their tax savings basket.”
The transaction, which closed last week, marks FF Angel’s first investment in India, and comes a month after Bengaluru-based ClearTax secured $1.3 million in a seed funding round from a group of Silicon Valley investors including PayPal cofounder Max Levchin and Scott Banister, an early investor in Facebook and Uber.
The Income Tax department has launched a special electronic grievance redressal system called ‘e-nivaran’ in order to fast track taxpayer grievances and ensure early resolution of their complaints.
A separate and dedicated window for grievance redressal has been launched recently in the Income Tax Business Application (ITBA), the new smart electronic platform for the regular operations of the department.
The facility is called ‘e-nivaran’ (electronic solution) and acts to integrate all online and physical complaints gathered by the department at this platform which will be monitored by the Assessing Officer of the case upto the supervisory officers in a paperless environment.
The facility is called ‘e-nivaran’ (electronic solution) and acts to integrate all online and physical complaints gathered by the department at this platform which will be monitored by the Assessing Officer of the case up to the supervisory officers in a paperless environment.
“The new system is called unified grievance management system and is acronymed ‘e-nivaran’. The system not only records the origin of the grievance on the electronic platform it works on, but it also keeps tracking it till it reaches its logical conclusion for final resolution,” a senior IT official said.
The e-portal will also ensure that grievances related to any section or domain of the tax department are transferred quickly to the department concerned like that of refunds issue or any other IT matter concerning an assessee.
The decision to launch ‘e-nivaran’, the official said, was taken in view of Prime Minister Narendra Modi few months back asking the IT department to pull up its socks and ensure that taxpayers grievances are resolved in the shortest possible time.
Modi had also asked all such departments which have a public interface to reduce this time to one month from the existing two months time.
The Central Board of Direct Taxes (CBDT), the policy-making body of the department, has recently also created a new structure in the department to deal with these issues called the Taxpayer Services unit.
Allotting high priority to this issue, the CBDT had also brought a new mechanism where top officers of the department have been allotted a specific quota of complaints to monitor and track, from their origin to successful resolution.
Several taxpayers diligently file their tax returns but forget to e-verify them.
They believe their return filing process is complete once return has been duly submitted to the income tax department.
Your income tax (I-T) return submission is not complete unless you’ve ticked off the e-verification with the following steps :
Step 1: You have e-filed your tax return
Step 2: You have e-verified the return
Step 3: Final return processing by the tax department i.e. refund is processed or intimation under Section 143(1) is received.
Taxpayers who do not verify end up with incomplete filings. A refund, if any, is not processed in such cases.
Returns can be verified either electronically or by sending the physical ITR-V to CPC, Bengaluru. ITR-V is a one-page document, emailed by the I-T department to you; it can also be downloaded from the department’s website. ITR-V must be signed in blue ink and sent via ordinary or speed post to CPC, Bengaluru. You cannot courier the ITR-V. Sending the physical ITR-V involved a lot of problems. With the introduction of electronic verification, your return can now be verified easily and quickly.
There are several ways to verify your tax returns. To begin, log in to your e-filing account with your PAN and date of birth. Click on ‘e-File’ from the blue top bar. There is an option under it, ‘e-Verify Return’; select it. Select one of the options listed to e-verify.
EVC sent to registered email ID and mobile number
This option is available to taxpayers who have a total income of less than R5 lakh and there is no refund. A 10-digit alphanumeric code is sent to their email id and mobile number, registered on the tax department website, which is valid for 72 hours.
EVC via Aadhaar OTP
If you don’t have a refund, you can also e-verify via an Aadhaar OTP. Your Aadhaar card must be linked to your PAN on the e-filing website. The OTP is sent to your mobile number registered with Aadhaar and is valid for 10 minutes.
EVC through net banking
Those with an income of over R5 lakh, or with a refund, have to use net banking to e-verify returns. If your bank is authorised, you’ll be able to log in to e-filing through net banking. First, log in to your bank account and look for the e-filing option. When you confirm to e-verify, an EVC will be automatically generated and applied to the return; your e-verification will be complete. Don’t assume the refund will be credited to the net banking account you have used to e-verify. It is credited to the account selected for refund in your tax return, which may be different from the account you used to e-verify.
EVC through bank account number
You can also verify your tax return through your bank account number by logging in to the income tax department website. Your bank account number must be pre-validated. To validate, you have to select your bank name, enter the bank account number, IFSC and mobile number, and validate it on the income tax department website.
The department has issued a circular giving a final chance to taxpayers to put their past tax returns in order. If you had submitted your tax return for the past six years from AY 2009-10 to AY 2014-15, but the return could not be processed for want of ITR-V, you can e-verify it by August 31, 2016. The department shall process such returns by November 30. This will help put your past records in order.
E-filing of tax returns witnessed a jump of 68.5% in the first month of the current fiscal year with over 8.32 lakh assessees filing ITRs electronically.
The number of e-filed returns recorded in April 2015-16 stood at 4.94 lakh. In all, 4.33 crore returns were electronically filed last fiscal.
As per the data of Central Board of Direct Taxes (CBDT), a total of 8,32,499 assessees have filed returns in April 2016.
Unlike previous year, the CBDT had operationalised all the nine types of Income Tax Returns (ITRs) filed by different types of assesses from this fiscal.
Over the years, the e-filing process has been simplified and assessees can file returns even from the comfort of their homes.
As per the CBDT, there were over 5.25 crore registered users (on April 30, 2016) and about 49.54% of the returns were received outside office hours. Also, 35.27% of assesses used the utility provided by the department.
An online ‘tax calculator’ for filers is meant to help taxpayers assess tax liability.
Divya Baweja, Partner, Deloitte Haskins and Sells LLP said during the initial years, e-filing was considered to be an onerous task, but now the process has become a “simple affair”.
“In recent years, tax department has made a conscious effort to ease the e-filing procedure by simplifying the tax return forms and introducing tax utilities which automatically picks data from previous year’s tax return/tax credit statement, thereby making it much easier for a common individual to file his or her tax return,” she said.
The CBDT had notified the new forms on March 30, and ITRs can be filed till the stipulated deadline of July 31.
The data further said during April, the maximum returns were filed from Maharashtra followed by Gujarat, Tamil Nadu and Uttar Pradesh.
People with an income of more than Rs 50 lakh per annum and who own luxury items like yacht, aircraft or valuable jewellery will have to disclose these expensive assets with the IT department in the new ITRs.
Last year, the e-filing commenced on July 1 following the controversy over a 14-page form requiring assessees to disclose bank account and foreign travel details.
India will levy capital gains tax on investments routed through Mauritius from April 1 next year, bringing down the curtains on a contentious three decade-old rule that allowed companies to bring in billions of dollars by paying negligible taxes.
The taxes on capital gains will apply to investments made from April 1, 2017 and will be imposed at 50% or half of the domestic rate until March 31, 2019, and at the full rate thereafter.
How do people use tax havens to avoid paying taxes?
Through “round tripping” or “treaty shopping”.
How does round tripping work?
Round tripping refers to routing of investments by a resident of one country through another country back to his own country.
You get money out of India and transmit it to a tax haven with whom India has a bilateral tax avoidance treaty such as the double-taxation avoidance agreement (DTAA). In the tax haven, this money is treated as capital of a registered corporate entity. You now invest this money back in an Indian company as foreign direct investment (FDI) by buying stakes or invest it in Indian equity markets.
How does this help in avoiding taxes?
The entire purpose of this exercise is to window-dress as foreign capital your original money that you had taken out from India.
In the entire process, you end up paying zero or negligible taxes. In India, you can claim tax exemption citing the DTAA arguing that you have paid taxes in the source country. In the source country, taxes are negligible since it is a tax haven.
What is DTAA?
These are bilateral treaties signed between governments to prevent companies from being taxed twice over.
So, what was the problem with Mauritius?
Mauritius, and other tax havens, has almost negligible taxes. This was encouraging companies to route their investments in India through “shell” companies (those that exist only on paper) in Mauritius and avoid paying taxes.
How big was the problem?
At $94 billion, Mauritius has been the largest FDI source for India, accounting for 34% of total FDI in India between 2000 and 2015.
What are the changes that will plug this gap?
The changed DTAA will make it mandatory to pay capital gains tax on sale of shares in India by companies registered in Mauritius
When will the new rules kick-in?
Share sales in Indian companies by Mauritius-registered firms will be taxed at half of the applicable rate between April 1, 2017 and March 31, 2019.
If the capital gains tax in India is 10% currently, Mauritius-registered companies will be taxed at 5% during the first two years beginning April 2017. Full capital gains tax will apply from April 1, 2019.
What about previous investments?
The new rules will not apply only to investments made before April 1, 2017, meaning share sale of investments made before this date will be exempt from capital gains tax.
Which companies will benefit from the reduced tax rates during the first two years?
The benefit of 50% reduction in tax rate during the transition period from April 1, 2017 to March 31, 2019 shall be subject to a limitation of benefit (LOB) Article.
A Mauritius-registered company (including a shell or conduit company) will not be entitled to lower tax rate, if it doesn’t spend at least Rs 27 lakh in Mauritius in the previous 12 months. This is called ‘purpose and bonafide business test’.
How will impact investors?
Many foreign investors will have to redraw their strategies. The incentive to route investments through Mauritius will cease to exist once the new rule kicks-in. This could raise their tax outgo.
What about markets?
It could hurt short-term foreign investor inflows into India, particularly from companies whose investment strategies are guided by minimising taxes. This could pull down markets initially.
Are these rules related to the general anti-avoidance rules (GAAR)?
GAAR are aimed at curbing tax avoidance and aim to give tax authorities the right to scrutinise transactions that they feel have been done to avoid taxes.
Under GAAR corporations may be forced to restructure salaries of employees if taxmen conclude that these were structured only to avoid taxes. Similarly, if a foreign investment transaction from Mauritius has taken place with an intent to exploit DTAA, it will come under GAAR.
Implementation of GAAR will take place from April, 2017.
Public sector corruption siphons $1.5 trillion to $2 trillion annually from the global economy in bribes and costs far more in stunted economic growth, lost tax revenues and sustained poverty, the International Monetary Fund said on Wednesday.
In a new research paper, the IMF said that tackling corruption is critical for the achievement of macroeconomic stability, one of the institution´s core mandates.
The Fund argues that strategies to fight corruption require transparency, a clear legal framework, a credible threat of prosecution and a strong drive to deregulate economies.
“While the direct economic costs of corruption are well known, the indirect costs may be even more substantial and debilitating,” IMF Managing Director Christine Lagarde wrote in an essay accompanying the paper. “Corruption also has a broader corrosive impact on society.
It undermines trust in government and erodes the ethical standards of private citizens,” Lagarde added.
The paper, titled “Corruption: Costs and Mitigating Strategies,” follows Lagarde´s warning to Ukraine in February that the IMF would halt its $17.5-billion bailout for the strife-torn eastern European country unless it takes stronger action to fight corruption, including new governance reforms.
Lagarde is due to participate in a British government-sponsored anti-corruption summit in London on Thursday that will include U.S. Secretary of State John Kerry and other senior officials including the presidents of Nigeria and Afghanistan.
Extrapolating from 2005 World Bank research, the paper estimated that around 2 percent of global gross domestic product is now paid in bribes annually.
But it said corruption´s indirect costs are substantially higher, reducing government revenues by encouraging tax evasion and reducing incentives to pay taxes, leaving less money available for public investments in infrastructure, health care and education.
Source: http://www.thenews.com.pk/latest/119186-IMF-Global-corruption-costs-trillions-in-bribes-lost-growth
The department has begun publishing the names of tax defaulters in leading national dailies since last year and has named 67 such defaulters from across the country till now with their vital details like addresses, contacts, PAN card number and shareholders in case of companies.
The earlier exercise was restricted to people with huge defaults to the tune of about Rs 20-30 crore but the new measure will bring to the fore those names who have defaulted a tax of Rs 1 crore or more. “It has been decided to ‘name and shame’ all category of taxpayers including personal and corporate taxpayers who have a default of Rs 1 crore and above by March, 31 which is the end of 2016-17 financial year.
Source: http://indianexpress.com/article/business/economy/it-dept-to-name-and-shame-crorepati-defaulters-this-fiscal-2817347/#sthash.jCduzRT8.dpuf