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ITR Utilities for AY 2021-22: Things to watch out for

Tax filing season is just around the corner. ITD is gearing up for the same and it recently released utilities for ITR1, ITR2 and ITR4 for AY21-22. The utility is a software introduced by ITD which helps Taxpayers file their ITR. The ITD releases ITR utility every tax filing season with updated rules and schemas.

However, with the new Income Tax Portal being launched, it seems that there are some issues Taxpayers need to watch out for when it comes to utilities. The ITD will be resolving these small issues shortly.
Here’s what you need to keep an eye out for:

Pre-filled JSON

Currently, pre-filled JSON downloaded from the IT portal only includes basic information like taxpayer’s name, PAN no, Aadhar no, residential address, contact information and bank accounts. However, more comprehensive data such as heads of income (i.e Salary, Capital Gains, other sources) and tax credits (i.e TDS, Self-assessment Tax, Advance Tax) are yet to be updated.

Issues while filing ITR 4

When opting for the new Tax regime, you need to file form 10-IE before filing the ITR. Details such as the date of filing form 10-IE and its acknowledgement number need to be disclosed when filing the ITR under the new tax regime. Currently, taxpayers are unable to enter these details in the ITR 4 utility.

Error in calculating Advance Tax interest u/s 234C

In case, you missed paying Advance Tax in the FY you are liable to pay interest under 234C. In the Income Tax utility, there are some issues that are being noticed when calculating quarterly instalments, incorrect rate of interest and calculation for Dividend and Capital Gain income.

Issues in Foreign Asset Reporting

When reporting foreign asset, if the taxpayer selects “No”, the ITR preview reflects the option “Yes”.

Incidents of Miscalculation

In certain cases, the utility allows rebate u/s 87A for instances where the taxpayer’s net taxable income exceeds INR 5 lac. When the net taxable Income exceeds INR 5 lacs, taxpayers are not eligible to claim rebate u/s 87A.

These errors might cause a little inconvenience to taxpayers for a short while. However, it seems that these are just some initial hiccups. The stakeholders are working on these glitches and very soon taxpayers are going to have a user-friendly Income Tax E-filing portal.


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Finance Minister's Meeting with Infosys: Why & What can we Expect?

The new IT portal has been constantly in the news for the past couple of weeks both for the right and wrong reasons. It has created enough buzz and expectations. The premise of this excitement was the promise of a seamless user experience. However, ever since its launch on 7th June, it started coming under criticism. Taxpayers voiced their inconvenience regarding the technical glitches in the new portal. Many users also expressed their preference for the old portal itself.

FM and Infosys to discuss the new IT Portal on 22nd June

Why the Meeting?

Social Media was quite abuzz with the conversation around the new portal. This was noticed by the Finance Minister, who took to Twitter to share her opinion on the same. She encouraged Infosys and Nandan Nilekani, the force behind the new portal to rise to the occasion and address the issues of the Taxpayers.

Nandan Nilekani acknowledged the issue and promised to get it resolved by the first week of the launch of the new portal.

However, Taxpayers continue to face issues while working on the new IT portal. The technical hiccups in the new IT portal are making it difficult for Tax Payers to use the portal easily.
To address these issues, the Finance Minister has convened a meeting on 22nd June 2021.

Who will be the Participants of the Meeting?

The meeting will be an interactive one involving a lot of stakeholders. It will include auditors, consultants, members from the ICAI, and taxpayers as well. And of course, representatives from the Infosys Team will also be present to address the queries and concerns that will be raised.
The Government has also invited written representation from the stakeholders with regards to the issues they are facing on the New IT Portal.

What will be the possible outcome of the meeting?

The meeting is expected to serve as a forum to raise issues and get them clarified. The Infosys team will be addressing and providing clarification regarding the grievances that were raised. It is also expected that they will provide a solution roadmap wherein the team will talk about the current health of the portal, reasons for the glitches and the steps that are being taken to solve these glitches.

What do YOU think will be the outcome of this upcoming meeting? Share your thoughts with us.

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When will new Income Tax E-Filing Portal be up & running?

As Maroon 5 famously said, “Just wait, can we work this out?“. The new Income Tax portal is also asking us to wait a little as all good things take time.

The new portal, www. incometax.gov.in has sparked a lot of interest and enthusiasm with its promise of a seamless user experience. However, the team is still working to make all the features of the new IT Portal fully functional.

Nirmala Sitharaman, the Finance Minister took to Twitter to share her thoughts regarding the new IT portal. She has also encouraged Infosys and Nandan Nilekani, the forces behind the new IT Portal to prioritise user experience when it comes to the new portal.
Infosys assured that they will do their best to live up to the expectations of the users.
Meanwhile, a lot of people resorted to Twitter to express their opinions, excitement and concerns regarding the new portal. This led to quite a Twitter storm.⚔️

What is Working on the new IT Portal?

Though most of the new features of the new IT portal, www.incometax.gov.in are being worked on, there are a couple of things that the user can try out.

  1. Logging in 💻: The users can login to their profile on www.incometax.gov.in using various secure login options like Aadhaar, PAN and others
  2. Access their profile and update details: Users can update their profile with their income details. This can include details regarding their salary, business income and others. This information will, later on, be used to prefill their ITRs on the new portal.
  3. Download Prefilled JSON: Taxpayers can download prefilled JSON of their ITR form which is a required document for your Income Tax return filing from this AY onwards. However, as of now the prefilled JSON only includes the basic information like Name, PAN, Address, Bank Account details etc. Post 30th June 2021, once the TDS and SFT returns are filed, prefilled JSONs are expected to have SalaryCapital Gain details & much more.

When will e-filing start on the new IT portal for FY 2020-21 (AY 2021-22)?🤔

There’s no doubt that the new IT portal has created a lot of buzz. But the main question, which seems to be the show stopper is, “When will e-filing start on the new portal?” Well, let’s go ahead and answer this million-dollar question.

  1. E-filing of ITR: You might have got all your forms ready to start filing your returns on the new portal.🧾 However, on behalf of the new portal we would like to say “Tu thodi derr aur thair jaa.” The e-filing of ITR for FY 2020-21 (AY 2021-22) is expected to start in the latter part of June or 1st week of July 2021.
  2. Utilities: ITR Utility Software by the IT department performs the calculation once you input your income and deduction details. The utility for ITR 3 is yet to be released. However, the offline version of the utility for ITR 1, ITR 2 and ITR 4 is out.
  3. Payment Getaways: Don’t get ready with your UPI pins already since the feature of multiple payment getaways like UPI, NEFT/RTGS and others for paying Income Tax will be available after 18th June 2021.

Meanwhile, this is what Twitter had to say 😆

Well, what can we say? Twitter never fails to amaze us. However, all perfect things were imperfect at one point in time. So just sit back and relax and let the new IT portal roll. 😎

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GST Waiver on Covid related items: How helpful is it?

On 28th May 2021, the 43rd GST Council meeting chaired by Finance Minister Nirmala Sitharaman met almost after a period of 7 months. The main agenda of the meeting was to discuss GST waiver that can be extended to covid relief items like vaccines, drugs and others.

Further, the Finance Ministry has formed a Group of Ministers (GoM) to examine more GST waiver on essential COVID related items, including vaccines. Still confused? Well, let’s dive in.

Takeaways from the 43rd GST Council Meeting

After enough deliberations and discussions, the council decided on providing GST waiver on several covid related items. However, this GST waiver will only apply to items that are being imported. And it will include both freely procured items and the ones that are paid for.

Also, the council announced a GST Amnesty scheme for people who delayed GSTR-3B filing. This came as a relief for small taxpayers.

So, what’s the Controversy around the GST Waiver?

So, the government has provided GST waiver for covid related items, right? Then why are people critiquing this? Well, this is definitely a step in the right direction. However, many find this to be inadequate.

The first catch is that the GST waiver will only apply to organisations and NGOs that have been recognised by the government. This will definitely encourage NGOs to continue with their noble endeavours. However, this also leaves out individuals and organisations that aren’t recognised by the government from availing of the GST waiver.

The main contention is around the question of GST waiver for domestic covid relief items, especially vaccines. In India, the major two vaccines in circulation are Covishield and Covaxin, both of which are manufactured in India itself. Currently, both the vaccines attract a GST of 5% while most other domestic covid related items like testing kits, oxygen-related equipment attract GST in the range of 12%-18%.

So, Domestic Covid Relief Items are not GST exempt?

Well, it seems that domestic covid related items will also come within the gambit of GST waiver. The finance ministry has constituted an eight-member group of ministers (GOM) who will look into the question of providing GST waiver to domestic covid related items especially vaccines. The body will have to submit its report to the GST council by 8th June after which further decision will be taken.

However, some stalwarts have raised their eyebrows regarding the waiting period till 8th June to get a verdict of further GST waiver. EY India tax partner Abhishek Jain found this further wait “disappointing”. A similar concern was raised by Sanjay Bhutani, director of the Medical Technology Association of India.

The Road Ahead

The additional wait period might be a tad bit frustrating. However, it seems that the government is serious about extending GST waiver to domestic covid related items. And hopefully, we will soon be able to see a dip in the price of these items.

So what do you think? Will domestic vaccines be exempted from GST in the near future?

Still confused about the implications of the GST waiver on covid items? Well, fret not. We are here to clarify all our doubts. Shoot your questions  TaxQ&A and we promise to answer them all in the simplest way!

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Digital Tax on Goods and Services in India

Digitisation  has  changed the pace of our lives and has undoubtedly made it better. It is evident that the wave of consumerism specific to the digital world has been increasing manifold. 

In the current era driven by technological advancement we have all become digital producers and consumers. We all have posted photos on Instagram, thereby becoming digital producers and similarly, we have consumed hours of content over our favorite streaming platforms.

By being consumers and producers of digital goods, one can say we have become traders of digital goods. You must have not realised but taxation follows closely behind every trade, including that of digital goods!

Are you aware about the taxes that you pay when you consume your favourite TV show over the internet? Yes, you read it right. We often pay a tax called Digital Tax on these platforms. Let’s dive in a little deeper to understand what this Digital Tax is all about.

What is Digital Tax?

Digital tax is nothing but simply the tax to be paid on the trade of digital goods and services. India has its own digital tax called the equalisation levy which was introduced in April 2020. 

It is important to note that the tax was introduced for foreign e-commerce enterprises who conduct business in India. It was therefore introduced to  level the playing field for local businesses to compete against their foreign counterparts. 

How Much is the Digital Tax?

For the digital tax to apply, there are two criterias to be met. First, the goods or services must be provided by a non-resident. Second, such goods or services must be sold on a foreign ecommerce platform . 

If those two criterias are met, a  digital tax or equalisation levy will be charged at the rate of 2% on the transacted amount. 

Who pays the Digital Tax?

Essentially, the seller of goods and services will be charged with the tax and will have to pay for it. Provided that the two criterias mentioned above are met. Therefore, if an Indian resident or Indian permanent establishment sells goods and services on the foreign ecommerce platform, the digital tax of two percent is not levied. 

The latest news that has been creating buzz is that from April 2022, overseas entities that do not have any physical presence in India will also be charged Digital Tax. However, they will be charged this tax only  if they derive significant financial benefit from Indian customers. 

This will largely affect technology giants like Facebook Inc., Google, Amazon.com Inc., Alibaba Group Holding Ltd. etc. 

Again, it is important to note that no tax will be levied on any goods and services sold by a resident. This is inline with intent of the legislation of protecting the economic interests of Indian sellers and e-commerce websites . 

Threshold limit for Digital Tax

Now, the tax will not be levied on all overseas entities. Additionally, the digital tax will be levied basis in the following manner: 

Revenue/ Transaction Threshold: 

Non-resident seller whose revenue exceeds INR 2 crore for transactions in respect of goods, services or property with any person in India will be liable to pay the digital tax Transaction on data or software will also be considered under the definition of transaction for taxation purposes. 

User Threshold: 

Another threshold is on the e-commerce entity. For any entity that systematically and continuously does business with more than 3 lakh users in India will come under the scope of the Digital Taxation.

Will the consumer pay for Digital Tax?

The regulations do not tax the consumers directly, as is in the case of most of such tax rules. However, with an increase in taxation on transactions it is expected that the suppliers  of such goods and services hike their price in order to cover for the added tax they would have to pay on it.

So as a consumer even though you are not directly taxed you end up paying the tax indirectly at the time of purchase . 

Got a question? Shoot’em on TaxQ&A and we promise to answer them all in the simplest way!

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