Taxation Times

October 2024

UJA | Taxation Times - Upcoming Tax Changes for 2025
1Introduction
2Article : Upcoming Tax Changes for 2025
3Case Laws 
4Circulars and Notifications: October 2024
5Tax Compliance October 2024
6Tax News from around the World
Picture of by Anjali Darak
by Anjali Darak

Manager - Direct Tax

The Union Budget 2024-25 introduces several pivotal changes aimed at enhancing the financial landscape of India. Among the key highlights are the revised tax slabs, increased deductions and exemptions for salaried employees and pensioners, and the abolition of the angel tax, each designed to foster economic growth, simplify the tax system, and support innovation.

Coming to this month’s Taxation Times, here’s what we have :

  1. An article to Navigating International Taxation for Global Businesses.
  2. Case Laws from various courts & jurisdictions;
  3. Tax Compliance Calendar – October 2024;
  4. Circulars & Notifications – October 2024;
  5. Tax News from around the world

We hope that you find this month’s edition of the Taxation Times useful. In case you have any feedback or need us to include any information to make this issue more informative, please feel free to write to us at info@uja.in

Happy Reading!
Best Regards,
UJA Tax Team 

Upcoming Tax Changes for 2025

Introduction

As we approach 2025, various proposed tax changes are on the horizon that could significantly impact individual taxpayers and businesses. While some of these changes are still in the discussion phase, understanding them now can help you plan effectively for the upcoming tax year. 

Understanding the Basics of International Taxation: -

i. Standard Deduction Adjustments
  • One of the anticipated changes is an increase in the standard deduction amounts. While specific figures have yet to be finalized, adjustments are likely based on inflation. This could provide taxpayers with greater relief and simplify the filing process for those who do not itemize. 
ii. Changes to Tax Brackets
  • The IRS typically adjusts tax brackets annually to account for inflation. Taxpayers should be aware of potential changes in income thresholds for various tax rates, which could impact how much tax you owe based on your income level.
iii. Corporate Tax Rates
  • There is ongoing discussion about revisiting corporate tax rates. Depending on legislative outcomes, changes could affect how corporations are taxed, potentially impacting their financial strategies and overall economic activity.
iv. Capital Gains Tax Revisions
  • Proposals have surfaced regarding adjustments to capital gains taxes, particularly for high-income earners. Changes could involve increasing the tax rate on long-term capital gains or altering the thresholds for when these rates apply.
    The Union Budget 2024-25 brings significant changes to the taxation of capital gains, aimed at simplifying the tax structure and providing relief to taxpayers. The budget introduces new tax rates for both short-term and long-term capital gains, impacting a wide range of financial and non-financial assets. These revisions reflect the government’s commitment to making the tax system more equitable and less burdensome for taxpayers, particularly benefiting the lower and middle-income classes.
  • Short Term Capital Gains
    Short-term capital gains on specified financial assets shall be taxed at a rate of 20% instead of the previous rate of 15%. All other financial assets and non-financial assets will continue to be taxed at their applicable tax rates, maintaining consistency in the broader tax framework.
  • Long-Term Capital Gains
    Long-term gains on all financial and non-financial assets will attract a tax rate of 12.5%. To benefit the lower and middle-income classes, increasing the limit of exemption of capital gains on certain financial assets from ₹1 lakh to ₹1.25 lakh per year has been proposed. This increased exemption limit will apply for FY 2024-25 and subsequent years.
    The rate for other long-term capital gains on all assets has been rationalized to 12.5% without indexation (Section 112). Previously, this rate was 20% with indexation. This change aims to simplify the taxation of capital gains and facilitate their easy computation.
v. Retirement Account Contributions
  • Changes to retirement account contribution limits may be on the table. Increased limits for 401(k)s and IRAs would provide taxpayers with more opportunities to save for retirement while enjoying tax benefits. Keeping up with these changes is essential for effective financial planning.
vi. Deductions and Credits
  • Several deductions and credits are under review, including those related to child tax credits, education expenses, and energy-efficient home improvements. Changes could enhance or limit the benefits available to taxpayers, so staying informed is critical.
vii. Changes to Tax Compliance and Reporting
  • Anticipate potential updates in tax compliance requirements, particularly for digital assets and cryptocurrency. As regulations evolve, new reporting obligations may be introduced to enhance transparency and accountability.
viii. Litigation and Appeals
  • The government has reiterated its commitment to minimizing litigation and appeals. To this end, the Budget introduces the Vivad se Vishwas Scheme, 2024, as a mechanism to resolve pending income tax disputes. Additionally, the monetary thresholds for filing appeals related to direct taxes, excise, and service tax have been increased to ₹60 lakh, ₹2 crore, and ₹5 crore respectively, for Tax Tribunals, High Courts, and the Supreme Court.
    To reduce litigation in international taxation and enhance certainty, the government proposes to expand the scope of safe harbour rules and streamline the transfer pricing assessment process.

Conclusion

As 2025 approaches, taxpayers should stay informed about potential tax changes that may impact their financial planning and filing strategies. While some proposals are still in discussion, proactive preparation can help you navigate any adjustments effectively. Consider consulting with a tax professional to ensure you’re ready for whatever changes may come your way. By planning ahead, you can optimize your tax situation and make informed decisions for the upcoming year

Case Laws

[2024] 167 taxmann.com 120 (Mumbai - Trib.) image IN THE ITAT MUMBAI BENCH 'H (SMC)' Arihant Engineers v. Income-tax Officer
Section 151, read with section 148, of the Income-tax Act, 1961

Facts:  The assessee was a firm. Since the assessee was a non-filer of the return for the year under consideration and in the assessee”s PAN, certain high-value transactions were captured by the system, proceedings under section 148A were initiated and show cause notice under section 148A(b) was issued to the assessee requiring the assessee to show cause as to why notice under section 148 should not be issued for the year under consideration.

  • In response, the assessee submitted its reply and the necessary explanations. The Jurisdictional Assessing Officer did not agree with the submissions of the assessee and vide order dated 22-4-2022 passed under section 148A(d) held that the purchase cost as per the copy of the order of MIDC dated 13-3-2008, vide which the plot of land was allotted to the assessee is seen at Rs. 19.84 lakhs, whereas the purchase cost adopted by the assessee in the statement of computation is at Rs. 21.19 lakhs. Thus, it was held that the assessee was not able to reconcile the purchase cost of the property.
  • Since the assessee could not furnish the copy of the sale agreement to substantiate that the property under consideration is the same property, which was allotted to it by MHADA, and the assessee also did not furnish any proof in respect of the claim of brokerage expenses of Rs. 65,000, the Jurisdictional Assessing Officer held that the income chargeable to tax amounting to Rs. 65 lakh had escaped assessment, and this was a fit case for issue of notice under Section 148 for the assessment year 2018-19.
  • Thereafter, on 22-4-2022, notice under Section 148 was issued by the Jurisdictional Assessing Officer. The assessment order was passed under Section 147, with Section 144B computing long-term capital gains at Rs. 22.92 lakhs and adding the same to the total income of the assessee.
  • On appeal to the Tribunal, the assessee submitted that the reopening of assessment under section 147, in the present case, was bad in law as the order dated 22-4-2022 was passed under section 148A(d), after the grant of approval by the Principal Commissioner. It was submitted that as per the provisions of Section 151(ii) if more than three years had elapsed from the end of the relevant assessment year, the Specified Authority for the purpose of Sections 148 and 148A was the Principal Chief Commissioner, Principal Director General, or Chief Commissioner or Director General.

Held:

As per the first proviso to section 148, it is evident that for issuing notice under the section, the Assessing Officer is required to obtain prior approval of the Specified Authority. The second proviso to section 148 further provides that no such approval shall be required where the Assessing Officer, with the prior approval of the Specified Authority, has passed the order under section 148A(d). Further, Explanation ( 3 )clarifies that the Specified Authority for the purpose of section 148 shall be the Specified Authority as referred to in section 151. [Para 8]

  • Further, section 151 deals with the Specified Authority for sections 148 and 148A. [Para 9]
  • Therefore, from the plain reading of section 151, it is evident that in the case where more than three years have elapsed from the end of the relevant assessment year, the Specified Authority for the purpose of granting prior approval, as required under section 148, is Pr. Chief Commissioner or Pr. Director General or Chief Commissioner or Director General. [Para 10]
  • It is found that while considering a similar issue, the Jurisdictional High Court in Siemens Financial Services (P.) Ltd. v. D y. CIT [2023] 457 ITR 647 (Bom.) held that where the Assessing Officer issued a reopening notice beyond the period of three years, approval was required to be taken as per provisions of amended section 151 from the Pr. Chief Commissioner or Pr. Director General or Chief Commissioner or Director General. [Para 11]
  • Therefore, respectfully following the aforesaid decision of the Jurisdictional High Court as, in the instant case, the period of three years has elapsed from the end of the relevant assessment year and the order dated 22-4-2022 was passed under section 148A(d) after obtaining the approval of the Pr. Commissioner, the revenue has not followed the mandatory provisions of the Act while initiating the reassessment proceedings and sanction of the Specified Authority is not in conformity with the law prevalent at the time of grant of sanction. [Para 12].
  • Thus, in the instant case, it is discernible that the notice under Section 148 was issued on 22-4-2022 in contravention of the provisions of Section 151 as the sanction of the concerned Specified Authority was not obtained.

 Accordingly, the notice issued under section 148 is void ab initio and bad in law and therefore is quashed. Consequently, the entire reopening proceedings and assessment order passed under section 147 read with section 144B is also quashed. [Para 13].

In Favor of: The Assessee

[2024] 167 taxmann.com 123 (Mumbai - Trib.) image IN THE ITAT MUMBAI BENCH 'SMC' Girdharlal Brothers v. Addl.CIT/JCIT/DCIT/ACIT/ITO National e-assessment Centre
Reference: Section 50Cof the Income-tax Act, 1961

FactsThe assessee was a tenant/occupant of a shop. As per the Articles of Agreement of October 2016, the assessee agreed to surrender his tenancy rights in lieu of the allotment of a permanent alternate accommodation. As per the agreement, the assessee was assured of certain areas on the second floor of the proposed building and certain areas on the first floor immediately over and above. Since no alternate accommodation was provided in the impugned year, no transaction was reported by the registering authority.

  • Subsequently, vide deed of transfer, the assessee was allotted only a certain area, and on such a deed of transfer, stamp duty was paid at Rs. 38.48 lakhs. The assessee electronically filed his return of income, declaring income of Rs. 36,400. The return was selected for scrutiny assessment, and accordingly, statutory notices were issued and served upon the assessee.
  • While scrutinizing the return of income, the assessing officer noticed that the assessee had received consideration for the transfer of immovable property. The assessee submitted the relevant and supporting documents, including the deed of transfer. It was explained that the assessee was in receipt of consideration in respect of the property, which was a tenancy property that was in a dilapidated and dangerous condition for its tenants/occupants. As the building was undertaken for redevelopment, the assessee in lieu of the tenancy property would be given a permanent alternate accommodation. It was further explained that the said property was still under construction. The reply of the assessee was considered by the assessing officer along with supporting documents but did not accept the contention of the assessee.
  • As per the deed of transfer, the assessee had transferred a property for Rs. 38.48 lakhs, but no capital gain was reflected/declared by the assessee, and since the deed of transfer was executed by the assessee, the assessee was consideredthe transferor of the capital asset, andthe transferor of the capital asset, and as the stamp valuation authority determined Rs. 38.48 lakhs as the value of the capital asset, the consideration amounting to Rs. 38.48 lakhs was considered a long-term capital gain in the hands of the assessee within the meaning of Section 45(1), and accordingly, Rs. 38.48 lakhs was added to the income of the assessee.
  • The assessee reiterated the matter before the Commissioner (Appeals), but without any success.

Held: The undisputed fact is that the assessee is a tenant/occupant of a shop. It is also not in dispute that, as per the Articles of agreement of October 2016, assessee agreed to surrender his tenancy rights in lieu of the allotment of a permanent alternate accommodation. As per the agreement, the assessee was assured 351.87 sq. ft. on the second floor of the proposed building and 105.81 sq. ft. on the first floor immediately over and above. Since no alternate accommodation was provided in the impugned year, no transaction was reported by the registering authority. [Para 9]

  • Subsequently, vide deed of transfer dated 21-7-2017, the assessee was allotted only 351.86 sq. ft. of carpet area, and on such deed of transfer, stamp duty was paid at Rs. 38.48 lakhs, which is the bone of contention. [Para 10]
  • Assuming that there was a transfer of tenancy right during the year under consideration even then, as per the decision of the High Court in the case of Abdul Aziz Abdul Kadar v. ITO [2014] 46 taxmann.com 154 (Bom.), provisions of Section 50C do not apply. [Para 12]
  • Considering the facts of the case in the light of the decision of the High Court in the case of Abdul Aziz Abdul Kadar (supra), it is viewed that provisions of Section 50C do not apply on the facts of the case in hand. The Assessing Officer is accordingly directed to delete the impugned additions. [Para 13]
  • Moreover, since the transaction has not completed during the year under consideration and as per the assessee it may conclude in subsequent years, the Assessing Officer is free to take action as per the provisions of the law in the year of completion and allotment of the alternate accommodation. [Para 14]

In Favor of: The Assessee.

Circulars and Notifications October 2024

Circulars / Orders

  • In supersession of all earlier Instructions/Circulars/Guidelines issued by the Central Board of Direct Taxes (the Board) from time to time to deal with the applications for condonation of delay in filing returns claiming refund and returns claiming carry forward of loss and set off thereof under Section 119(2)(b) of the Income-tax Act. 1961 (the Act), the present Circular is being issued to deal with the applications for condonation of delay in filing returns claiming refund and returns claiming carry forward of loss and set off thereof containing comprehensive guidelines on the conditions for condonation and the procedures to be followed for deciding such matters.
  • (i) The Principal Commissioners of Income- Tax/Commissioners of Income- Tax (Pr. CsIT/CsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims is not more than Rs. 1 crore for any one assessment year.
    (ii) The Chief Commissioners of Income-tax (CCsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims exceeds Rs. 1 crore but is not more than Rs. 3 crore for any one assessment year.
    (iii) The Principal Chief Commissioners of Income-tax (Pr. CCsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims exceeds Rs. 3 crores for any one assessment year.
    2.1 Further, it is also provided that the Commissioner of Income-tax, Central Processing Centre (CPC), Bengaluru, shall be vested with the powers for acceptance/rejection of petitions under Section 119(2)(b) of the Act seeking condonation of delay in verifying the return of income by sending the ITR-V to the centralized processing cell (CPC), Bengaluru, within the prescribed time limit.
  • No condonation application for a claim of refund/loss shall be entertained beyond five years from the end of the assessment year for which such application/claim is made. The time limit for filing such an application within five years from the end of the assessment year will be applicable for applications filed on or after 1-10-2024. This limit of five years shall be applicable to all authorities having powers to condone the delay as per the above prescribed monetary limits. A condonation application should be disposed of, as far as possible, within six months from the end of the month in which the application is received by the competent authority.
  • In view of the amendment in Section 139(9A) of the Act vide Finance Act, 2024, the powers of acceptance/rejection of the application within the monetary limits delegated to the authorities in case of such claims will be subject to the following conditions:
    i. At the time of considering the case under Section 119(2)(b) of the Act, it shall be ensured that the assessee was prevented by reasonable cause from filing the return of income within the due date and that the case is of genuine hardship on merits.
    ii. The authorities dealing with the case shall be empowered to direct the jurisdictional assessing officer to make necessary inquiries in accordance with the provisions of the Act to ensure that the application is dealt with on merit in accordance with law.
  • In a case where refund claim has arisen consequent to a Court order, the period for which any such proceedings were pending before any Court of Law shall be ignored while calculating the said period of five years, provided such condonation application is filed within six months from the end of the month in which the Court order was issued or the end of financial year, whichever is later.
  • A belated application for supplementary claim of refund (claim of additional amount of refund after completion of assessment for the same year) can be admitted for condonation provided other conditions as referred above are fulfilled. The powers of acceptance/rejection within the monetary limits delegated to the Pr.CCsIT/CCsIT/Pr.CsIT/CslT in case of returns claiming refund and supplementary claim of refund would be subject to the following further conditions:
    i. The income of the assessee is not assessable in the hands of any other person under any of the provisions of the Act.
    ii. No interest will be admissible on belated claims of refunds.
    iii. The refund has arisen as a result of excess tax deducted/collected at source and/or excess advance tax payment and/or excess payment of self-assessment tax as per the provisions of the Act.
  • The delegation of powers, as per Paragraph 2 of this Circular, shall also cover all such applications/claims for condonation of delay under section 119(2)(b) of the Act which are pending as on the date of issue of the Circular, i.e. 1-10-2024.
  • The Board reserves the power to examine any grievance arising out of an order passed or not passed by the authorities mentioned in paragraph 2 above and issue suitable direction to them for proper implementation of this Circular.
    CIRCULAR NO. 11/2024 [F. NO. 312/63/2023-OT], DATED 1-10-2024

Press Release

More than 34 lakh Audit Reports filed till 7th October, 2024, on the e-filing portal of the Income Tax Department The Income-tax Department extends its appreciation to taxpayers and tax professionals for their timely compliance in filing Tax Audit Reports (TARs) in Form Nos. 10B, 10BB, 3CA-CD, 3CB-CD and other audit reports in Form Nos. 29B, 29C, 10CCB, etc. More than 34.84 lakh audit reports, including about 34.09 lakh Tax Audit Reports (TARs), have been filed for AY 2024-25 on the e-filing portal till the end of the due date. It is observed that there is an increase in the filing of Tax Audit Reports (TARs) for the AY 2024-25 by around 4.8% compared to the filings of TARs on the due date for AY 2023-24. To assist taxpayers, the department conducted extensive outreach programs through emails, SMSs, social media and information messages on the Income Tax portal to create and raise awareness among the tax payers about filing Tax Audit Reports and other audit forms by the due date. Various user awareness videos were uploaded on the Income Tax portal to provide guidance. These concerted efforts have been helpful to taxpayers and tax professionals in filing the audit reports within the due date. The e-filing Helpdesk team handled around 1.23 lakh queries from taxpayers during September and October 2024, proactively supporting them throughout the filing period. The team assisted taxpayers and tax professionals in resolving complexities and facilitated the smooth submission of audit forms. Helpdesk support was provided through inbound calls, outbound calls, live chats, WebEx, and co-browsing sessions. The team also supported the resolution of queries received on the Department’s X handle (formerly Twitter) through Online Response Management (ORM), by proactively reaching out to taxpayers and stakeholders and providing assistance to them on various issues in near real-time basis. Various webinars related to filing of audit forms were conducted to guide tax professionals. The Department expresses its gratitude to all tax professionals and taxpayers for their support in compliance efforts. 
PRESS RELEASE, DATED 09-10-2024

Notifications

S.O. 4400(E).—In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, ‘Real Estate Regulatory Authority, New Delhi (PAN AAALR1691Q)’ an Authority constituted under sub-section (1) of Section 20 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016), in respect of the following specified income arising to that Authority, namely:- (a)Amount received as Grant-in-aid or loan/advance from Government; (b)Fee/penalty received from builders/developers, agents or any other stakeholders as per the provisions of the Real Estate (Regulation and Development) Act, 2016; and (c)Interest earned on (a) & (b) above. 2. This notification shall be effective subject to the conditions that the ‘Real Estate Regulatory Authority, New Delhi –(a)shall not engage in any commercial activity; (b)activities and the nature of the specified income shall remain unchanged throughout the financial years; and (c)shall file return of income in accordance with the provision of clause (g) of sub-section (4C) of Section 139 of the Income-tax Act, 1961; 3. This notification shall be applicable for the financial years 2018-2019 to 2022-2023 relevant to assessment years 2019-2020 to 2023-2024 respectively.[Notification No. 109 /2024/F. No. 300196/57/2018-ITA-I] VIKAS SINGH, Director ITA-I Explanatory Memorandum It is certified that no person is being adversely affected by giving retrospective effect to this notification. Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054. SARVESH KUMAR SRIVASTAVADigitally signed by SARVESH KUMAR SRIVASTAVA Date: 2024.10.12 14:53:20 +05’30’www.taxmann.com.
Notification No. 109 /2024/F. No. 300196/57/2018-ITA-I

Tax Compliance: October 2024

07th October 2024

  • Due date for deposit of Tax deducted/collected for the month of September, 2024. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan

07th October 2024

  • Form 3CD, 3CA/3CB :- Filing of Tax Audit Report where due date of ITR is 31 October. Form 29B, 29C :- Filing of MAT/AMT Audit Report etc. where due date of ITR is 31 Oct. Form 10DA:- Filing of Audit Report u/s 80JJAA(2) for additional employment where due date of ITR is 31 Oct.

15th October 2024

  • Due date for issue of TDS Certificate for tax deducted under section 194-IA/194-IB/194M/194S in the month of May, 2024
  • Quarterly statement of TCS deposited for the quarter ending September 30, 2024

30th October 2024

  • Last date for furnishing Challan-cum-Statement in respect of TDS under Section 194-IA, 194-IB, and 194M for the month of September 2024

31st October 2024

  • Income Tax Return:
    Filing of Income Tax returns by Cos, Partnership firms etc. (Audit applicable but TP Audit not applicable)
  • Form 24Q, 26Q, 27Q, 27EQ:
    Due date for filing quarterly TDS/TCS returns (Q2 of FY 2024-25).
  • Form 3CA/3CB-3CD:
    Filing Tax Audit Report where due date of ITR is 30 Nov.
  • Form 29B, 29C :- Filing of MAT/AMT Audit Report etc. where due date of ITR is 31 Oct.
    Form 10DA:- Filing of Audit Report u/s 80JJAA(2) for additional employment where due date of ITR is 31 Oct.

Tax News from Around the World

Principles for the 2025 Tax Debate: End High-Income Tax Cuts, Raise Revenues to Finance Any Extensions or New Investments:

French Parliament Publishes Draft Finance Bill 2025 Including Temporary Taxes for High-Income Individuals and Large Companies — Orbitax Tax News & Alerts

Switzerland Reducing Interest Rates for Tax Arrears, Refunds, and Advance Tax Payments in 2025 — Orbitax Tax News & Alerts

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