Latest News

CBDT constitutes Start-up Cell for redressal of grievances related to Start-ups

Ministry of Finance

CBDT constitutes Start-up Cell for redressal of grievances related to Start-ups

Dated: 30 AUG 2019

One of the measures pertaining to taxation announced by the Hon’ble Finance Minister as part of the several measures to boost the economy, was the withdrawal of ‘Angel Tax’ provisions for Start-ups and their investors. As part of the measures for mitigating the genuine difficulties of Start-ups, it was decided that a dedicated cell would be set up under a Member of CBDT for addressing the specific problems of Start-ups.

In order to redress grievances and address various tax related issues in the cases of Start-ups, a Start-up Cell has been constituted by CBDT on 30.08.2019 with the following ex-officio members:

SN	Portfolio	Designation
1	Member (IT &C)	Chairman
2	JS-TPL-II	Member
3	CIT(ITA)	Member
4	Director (ITA-I)	Member Secretary
5	Under Secretary(ITA-I)	Member

The Cell will work towards redressal of grievances and mitigate tax-related issues in case of Start-up entities with respect to administration of the Income-tax Act, 1961.

Grievances relating to Start-ups may be filed with the O/o Under Secretary, ITA-I, Room No.245A, North Block, New Delhi – 110001 as well as online at startupcell.cbdt@gov.in. The Cell will also be accessible telephonically on 011-23095479 /23093070 (F).

Start-up entities can approach the Cell for speedy resolution of their grievances. This initiative is the latest amongst the recent initiatives taken by CBDT to further ease the compliance issues pertaining to Start-ups.

****

RM/HP/KMN

(Release ID: 1583692)

CBDT - Differential regime between domestic investors & FPIs not creation of Budget 2019 or FM announcements

Ministry of Finance

CBDT clarifies differential regime between domestic investors (including AIF category III) and FPIs existed even prior to General Budget 2019 and was not creation of the Finance (No. 2) Act, 2019

Dated: 28 AUG 2019

The Central Board of Direct Taxes (CBDT) said today that an incorrect perception is being created in a section of media as if announcements made by Smt. Nirmala Sitharaman, Union Minister of Finance & Corporate Affairs, in a press conference on 23^rdAugust 2019, which brought in a number of responsive structural measures to boost up the economy, have created a differential regime between FPIs and domestic investors including AIF category III.

Dispelling this false impression being created in certain sections of media including social media, CBDT said that differential regime between domestic investors (including AIF category III) and FPIs existed even prior to the General Budget 2019 and was therefore not the creation of the Finance (No. 2) Act, 2019 or the announcement made by the Finance Ministry on 23^rd August 2019.

In this regard, CBDT has further stated that in case of Foreign Institutional Investors (FPIs), Income Tax Act, 1961 (the Act) contains special provisions [section 115AD read with section 2(14) of the Act] for taxation of income from derivatives. Under this regime, income of FPIs arising from derivatives was treated as capital gains and liable for special rate of tax as per section 115AD of the Act. However, income arising from derivatives for the domestic investors including Alternative Investment Funds (AIFs) category-III as well as for foreign investors who are not FPIs, has always been treated as business income and not as capital gains, and taxed at applicable normal income tax rates. The differential regime therefore already existed for FPIs through Section 115 AD. Therefore, to say that General Budget 2019 or FM’s announcement on 23^rd August 2019 created a differential regime between FPI and domestic investor is incorrect.

****

RM/KMN
(Release ID: 1583205)

CBDT - Differential regime between domestic investors & FPIs not creation of Budget 2019 or FM announcements

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 28th August, 2019

PRESS RELEASE

CBDT issues clarification on perceived differential taxation of FPIs and domestic investors

It has come to the notice of the Central Board of Direct Taxes (CBDT) that an incorrect perception was being created in a section of the media inasmuch as if the announcements made by the Hon’ble Finance Minister on last Friday, which brought in a number of responsive structural measures to boost up the economy, had created a differential regime between FPIs and domestic investors including AIF category III.

Dispelling this false impression being created in certain sections of the media including social media, it is clarified that differential regime between domestic investors (including AIF category III) and FPIs existed even prior to the 2019 budget and was therefore not the creation of the Finance ( No 2) Act, 2019 or the announcement made by the Finance Minister on last Friday.

In this regard, it is further stated, that, in case of Foreign Institutional Investors (FPIs), Income Tax Act, 1961 (the ‘Act’) contains special provisions [section 115AD read with section 2(14) of the Act] for taxation of income from derivatives. Under this regime, income of FPIs arising from derivatives was treated as capital gains and liable for special rate of tax as per section 115AD of the Act. However income arising from derivatives for the domestic investors including Alternative Investment Funds (AIFs) category-III as well as for foreign investors who are not FPIs, has always been treated as business income and not as capital gains, and taxed at applicable normal income tax rates. The differential regime therefore already existed for FPIs through Section 115 AD. Therefore to say, that this year’s budget or FM‘s announcement of last Friday created a differential regime between FPIs and domestic investors is incorrect.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT.

Finance Minister Smt. Nirmala Sitharaman presentation on measures to boost Indian Economy

Reform & Simplification – an ongoing endeavour
Taxation – Ease of life for tax payers – Income tax, GST, Customs	• Prefilling of IT returns • Faceless scrutiny from Vijaya Dashmi 2019 • Reduction in GST returns and simplification of forms • Refund process of GST simplified. • Risk based approach in dealing with tax payers
Labour laws	•Fixed term employment for flexibility in hiring • Contribution of ESIC reduced from 6.5% to 4% • Web-based and jurisdiction-free Inspections • Inspection report to be uploaded within 48 hours • Compounding of offences • Self certification for start-ups - 6 labour laws
Environment clearances	• Single air and water clearance for MSMEs • Single consent to establish a factory by MSMEs
Corporate Affairs	• 1 day to incorporate a company - Central Registration Centre for name reservation & incorporation • Integrated Incorporation Form • Shifting of 16 offence sections to monetary penalty only • Faster & easier approvals for mergers and acquisitions • Modifications in provisions for Differential Voting Rights • Withdrawal of over 14,000 prosecutions under Companies Act • Robust IBC framework with amendments supporting MSMEs and home buyers
Measures to Boost Economy Facilitating wealth creators
1. CSR violations	Not to be treated as criminal offence and would instead be civil liability. Ministry of Corporate Affairs to review the sections under Companies Act. Government has provided companies through revised orders, time for completing ongoing projects towards fulfil their CSR obligations.
2. Issue of IT orders, notices, summons, letters etc through a centralized system	In order to address complaints of harassment on account of issue of notices, summons, orders etc. by certain income-tax authorities: • On or after 1st October, 2019 all notices, summons, orders etc. by the income-tax authorities shall be issued through a centralized computer system and will contain a computergenerated unique Document Identification Number. • Any communication issued without computer-generated unique Document Identification Number shall be non est in law. • All old notices to be decided by 1st October 2019 or uploaded again through the system • From 1st October, 2019 a ll notices to be disposed off within three months from the date of reply.
Measures to Boost Economy Taxation Measures
3.	Relief from enhanced surcharge on Longterm/ Short-term Capital Gains
4.	Withdrawal of Angel Tax provisions for Startups and their investors
Measures to Boost Economy Banks/NBFCs/MSMEs
5. Additional Credit expansion through PSBs	• Upfront release of Rs. 70,000 Cr., additional lending and liquidity to the tune of ~ Rs 5 Lakh crore by providing upfront Capital to PSBs • This will benefit Corporates, Retail borrowers, MSMEs, small traders, etc
6.Banks to effect timely rate cuts	• Banks have decided to pass on rate cuts through MCLR reduction to benefit all borrowers
7. Banks to launch Repo rate /external benchmark linked loan products	• Reduced EMI for housing loans, vehicle and other retail loans by directly linking Repo rate to interest rates. Working capital loans for industry will also become cheaper
8. Customer Ease	• To reduce harassment and bring in greater efficiency, PSBs to ensure mandated return of loan documents within 15 days of loan closure. • Benefit: Borrowers who have mortgaged assets
9.Customer Ease: Online tracking of loan applications	• On line tracking of loan applications by customers of Retail, MSME, Housing, Vehicle, working Capital, limit enhancements ,renewals etc. • Would increase transparency, reduce harassment, and improve turn around time for customers.
10.	• Banks to issue improved transparent OTS policy to benefit MSME and retail borrowers in settling their overdues. • Policy to be based on check box approach • Benefit: Increased transparency
11.Protecting honest decision making	• Tosupport decision making and to prevent harassment for genuine commercial decisions by bankers, CVC has issued directions that Internal Advisory Committee (IAC) in banks to classify cases as vigilance and non-vigilance. • Decision of the IAC and bank CVO/ DA to be treated as final.
12.Support to NBFCs/HFCs	More credit support for purchase of houses, vehicles, consumption goods, • Additional liquidity support to HFCs Rs. 20,000 Cr by NHB thereby increasing it to Rs. 30,000 Cr. • Partial Credit Guarantee scheme for purchase of pooled assets of NBFCs/ HFCs upto Rs 1 lakh Cr - to be monitored at highest level in each bank • Prepayment notices issued to NBFCs to be monitored by Banks
13. Use of Bank KYCs by NBFCs	• NBFCs to be permitted to use the Aadhaar authenticated bank KYC to avoid repeated processes. • Necessary changes shall be made in PMLA rules and Aadhaar Regulations • Easier, fast tracked onboarding of customers
14. Co-origination of loans by PSBs jointly with NBFCs	• To take advantage of liquidity with PSBs and last mile customer connect of NBFCs, PSBs to fast track collaboration for loans to MSMEs, small traders Self Help Groups, MFI clients borrowers in coorigination mode with NBFCs
15. GST Refund to MSME within 30 days	• All pending GST refund due to MSMEs shall be paid within 30 days. In future all GST refunds shall be paid within 60 days from the date of application
16. MSME Bill discounting	• TReDS to use GSTN system in medium term to enhance market for bill discounting for MSMEs
17. MSME Definition	• Amendment to MSME Act to move towards single definition to be considered
18. UK Sinha Committee recommendations	• Decisions on recommendations such as on ease of credit, marketing, technology, delayed payments etc. within 30 days
Measures to Boost Economy Increasing capital flows and energising financial markets
19. Deepening of bond markets in India		• In order to improve access to long term finance, it is proposed to establish an organisation to provide Credit Enhancement for infrastructure and housing projects. This would enhance debt flow towards such projects. •The government would soon take further action on development of Credit Default Swap markets soon, in consultation with RBI and SEBI. • In order to improve domestic m arket in bonds, Ministry of Finance will work with RBI to make it more conducive for investors and bond issuers, as well as facilitate increased trading for price discovery • Government has amended the Companies (Share capital and Debenture rules) 2014 to remove the requirement for creation of a Debenture Redemption Reserve (DRR) of outstanding debentures in respect of listed companies, NBFCs and for HFCs
20.Access of Indian Companies to the Global Markets		• The Depository Receipt Scheme 2014 is expected to be operationalised soon by SEBI. This will give Indian companies increased access to foreign funds through ADR/GDR.
21. Use of Aadhaar based KYCs for domestic retail investors		• In order to improve market access for the domestic retail investors, Aadhaar-based KYC to be permitted for opening of Demat account and making investment in mutual funds • Necessary notification for amendments in PMLA Rules to be issued
22. Simplified KYC for foreign and investors and FPIs		• Simplified KYC procedure to improve market access for foreign investors including FPIs
23. Offshore Rupee market		• To bring offshore Rupee market to domestic stock exchanges and permit trading of USD -INR derivatives in GIFT IFSC, Ministry of Finance is working with RBI to introduce this measure shortly.
Measures to Boost Economy Increasing capital flows and energising financial markets
24. Delayed Payments			• Delayed payments from Government/ CPSEs to be monitored by Department of Expenditure and performance reviewed by Cabinet Secretariat
25.Decision to pay 75% of the arbitration awards			• In contractual disputes by Government/ CPSEs to be implemented and monitored by Cabinet Secretariat
26. Rs 100 lakh crores for developing modern infrastructure over 5 years			• An inter-ministerial Task force is being formed by Department of Economic Affairs to finalise the pipeline of infrastructure projects. • The above initiative is expected to boost growth and creation of jobs. These projects would be monitored actively to accelerate capital expenditure and investments in the economy.
Measures to Boost Economy Automotive Sector
27. BS IV vehicles purchased till 31.3.20				• To remain operational for entire period 27 of registration
28.Revision of one time registration fees				• Being deferred till June 2020
29. Higher depreciation for all vehicles				• Additional 15% depreciation on all vehicles, to increase it to 30% acquired during the period from now till 31.03.20
30. Both EVs and ICVs will continue to be registered				• Government’s focus will be on setting up of infrastructure for development of ancillaries /components including batteries for export
31.To boost demand				• Government shall lift the ban on purchase of new vehicles for replacing all old vehicles by Departments •Government will consider various measures including scrappage policy
Measures to Boost Economy
32. Ministry of Finance to continue to engage				• With stakeholders for timely and suitable interventions for different sectors

Ministry of Finance : Government withdraws enhanced surcharge on tax payable on transfer of certain assets

Ministry of Finance

Dated: 24th August, 2019

PRESS RELEASE

Government withdraws enhanced surcharge on tax payable on transfer of certain assets

In order to encourage investment in the capital market, it has been decided to withdraw the enhanced surcharge levied by Finance (No. 2) Act, 2019 on tax payable at special rate on income arising from the transfer of equity share/unit referred to in section 111A and section 112A of the Income-tax Act,1961(the 'Act') from the current FY 2019-20. The following capital assets are mentioned in section 111A and section 112A of the Act:

i) Equity shares in a company;

ii) Unit of an equity oriented fund; and

iii) Unit of a Business Trust

The derivatives (Future & options) are not treated as capital asset and the income arising from the transfer of the derivatives is treated as business income and liable for normal rate of tax. However, in the case of Foreign Institutional Investors (FPI), the derivatives are treated as capital assets and the gains arising from the transfer of the same is treated as capital gains and subjected to a special rate of tax as per the provisions of section 115AD of the Act. Therefore, it is also decided that the tax payable on gains arising from the transfer of derivatives (Future & options) by FPI which are liable to special rate of tax under section 115AD of the Act shall also be exempted from the levy of the enhanced surcharge.

Therefore, the enhanced surcharge shall be withdrawn on tax payable at special rate by both domestic as well as foreign investors on long-term & short-term capital gains arising from the transfer of equity share in a company or unit of an equity oriented fund/business trust which are liable for securities transaction tax and also on tax payable at special rate under section 115AD by the FPI on the capital gains arising from the transfer of derivatives. However, the tax payable at normal rate on the business income arising from the transfer of derivatives to a person other than FPI shall be liable for the enhanced surcharge.

RM/KN

(Release ID: 1582824)

Top Columns

FAQs on PFA & Defective for ITR 1 to 6 for A Y 24-25 Union Budget 2024-2025 FINANCE (No. 2) ACT, 2024 MINISTRY OF LAW AND JUSTICE Tiger Global – A Case for Substance “in” Form Bharath Lakshminarayana Vishnu Bagri Income addition and revision order; Delay by 2000 days denied; Revision upheld, hybrid accounting accepted... and more! Taxsutra Database Bulletin Decoding the Meaning of Words “accrue” & “arise” in Section 5 Vishnu Moorthi H