Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

Dated: 22nd August, 2019

PRESS RELEASE

CBDT issues clarification on eligibility of small Start-ups to avail tax holiday

The Central Board of Direct Taxes (CBDT) has clarified today that small start-ups with turnover upto Rs. 25 crore will continue to get the promised tax holiday as specified in Section 80-IAC of the Income Tax Act, 1961(the ‘Act’), which provides deduction for 100 per cent of income of an eligible start-up for 3 years out of 7 years from the year of its incorporation. 

CBDT further clarified that all the start-ups recognised by DPIIT which fulfilled the conditions specified in the DPIIT notification did not automatically become eligible for deduction under Section 80-IAC of the Act. A start-up has to fulfil the conditions specified in Section 80-IAC for claiming this deduction. Therefore, the turnover limit for small start-ups claiming deduction is to be determined by the provisions of Section 80-IAC of the Act and not from the DPIIT notification.

CBDT dispelled the confusion created by some media report claiming discrepancy that the I-T law was yet to reflect DPIIT’s higher turnover threshold of Rs. 100 crore. CBDT said that there was no contradiction in DPIIT’s notification dated 19.02.2019 and Section 80-IAC of the I.T. Act, 1961 because in para 3 of the said notification, it has clearly been mentioned that a start-up shall be eligible to apply for the certificate from the Inter-Ministerial Board of Certification for claiming deduction under Section 80-IAC of the Act, only if the start-up fulfils the conditions specified in sub-clause (i) and sub-clause (ii) of the Explanation of Section 80-IAC. Therefore, the turnover limit for eligibility for deduction under section 80-IAC of the Act, as per the DPIIT’s notification is also Rs. 25 crore.

It is further stated that Section 80-IAC contains a detailed definition of the eligible start-up which, inter alia, provides that a start-up which is engaged in the eligible business shall be eligible for deduction, if (i) it is incorporated on or after 1st April 2016, (ii) its turnover does not exceed Rs. 25 crore in the year of deduction, and (iii) it holds a certificate from the Inter-Ministerial Board of Certification.

It was explained that this was the major reason as to why there was a wide difference between the number of start-ups recognised by the DPIIT and the start-ups eligible for deduction under section 80-IAC of the Act. It is pertinent to state that Section 80-IAC was inserted vide Finance Act, 2016 as an exception to the Government’s stated policy of phasing out profit-linked deduction for promoting small start-ups during their initial year of operation. Since the intention was to support the small start-ups, the turnover limit of Rs. 25 crore was considered reasonable for granting profit linking deduction.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT

 

Press Information Bureau 
Government of India
Ministry of Finance

Dated: 14 AUG 2019

CBDT takes further steps to ensure transparency in Tax Administration by bringing in concept of DIN

With a view to bringing greater transparency in the functioning of the tax-administration and improvement in service delivery, almost all notices and orders of Income Tax Department are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (CBDT) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as “communication”) were found to have been issued manually, without maintaining a proper audit trail of such communication.

In order to prevent such instances and to maintain proper audit trail of all communication, the CBDT has, vide Circular No.19/2019 dated 14.08.2019 laid down parameters specifying the manner in which any communication issued by any income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person will be dealt with. All such communication issued on or after the 1st of October, 2019 shall carry a computer-generated Document Identification Number (DIN) duly quoted in the body of such communication.

CBDT has also specified exceptional circumstances where the communication may be issued manually but only after recording reasons in writing and with the prior written approval of the Chief Commissioner / Director General of Income-Tax concerned. In cases where manual communication is required to be issued, the reason for issue of manual communication without DIN has to be specified alongwith the date of obtaining written approval of the Chief Commissioner / Director General of Income-Tax in a particular format. Any communication which is not in conformity with the prescribed guidelines shall be treated as invalid and shall be deemed to have never been issued. Further, CBDT has also laid down the timelines and procedure by which such communication issued manually will have to be regularised and intimated to the Principal Director General of Income-tax (Systems).

            In addition to the above, in all pending assessment proceedings, where notices were issued manually, prior to issuance of the above referred Circular, all such cases would be identified and the notices so sent would be uploaded on ITBA by 31st October, 2019.

This is another step taken by CBDT towards better delivery of taxpayer services while ensuring accountability in official dealings.

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RCJ/MS/HP

 

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 13th August, 2019

PRESS RELEASE

CBDT rebuts incorrect reports about Income Tax notices to Durga Puja Committees

There have been reports in the media about Income Tax notices being issued to Durga Puja Committees in Kolkata recently. The reports also mention that Income Tax notices were sent to the Durga Puja Committee Forum in the last few weeks. It is unequivocally stated that the said reports are factually incorrect and are strongly denied. It is a fact that no notice was issued to the Durga Puja Committee Forum by the Department during this year.

However, as the Department had been getting information that several contractors who were doing work for the Puja committees were not paying due taxes, therefore notices under section 133(6) of the Income Tax Act, 1961 were issued in December, 2018 to about 30 committees, calling for details of tax deducted at source on payments made to contractors and event managers etc. engaged by the committees for the Puja events, including the TDS statement. This was part of an exercise carried out by the TDS wing of the Department to ensure that the contractors and event managers pay their due taxes in time. Many of the committees complied and furnished evidence of tax deducted at source as well as deposit of the same into the Government account.

It is also pertinent to state that several committees requested the Department to organise educative sessions to explain the provisions of TDS to the committees.

Taking a cue from the same, one such outreach programme was organised on the 16th of July, 2019 for the Durga Puja Committees at their own request. Nearly eight (8) members of the Forum attended the outreach programme voluntarily and were educated about the provisions of TDS. Their doubts pertaining to TDS provisions were also clarified.

It is reiterated that the aforesaid exercise is in no manner whatsoever against the Puja Committees, but has been undertaken to ensure that the contractors and event managers pay their due taxes correctly within the stipulated time.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT.

 

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 10th August, 2019

PRESS RELEASE

Income Tax Searches in Tamil Nadu net more than Rs 700 crore

The Income Tax Department conducted a search and seizure operation on 06.08.2019 in the case of one of the major producers of beer and IMFL in Tamil Nadu. The search action was launched in the early hours of Tuesday at 55 premises in various places in Tamil Nadu including Chennai, Coimbatore, Thanjavur, etc and also in Kerala, Andhra Pradesh and Goa. The premises included residences of the promoters, key employees and some of the suppliers of materials.

The search action was based on intelligence gathered over several months that the business group was indulging in large scale tax evasion by inflating its expenditure on materials used in its production processes. During the search action, the search teams found telltale evidence of the modus operandi of the group. The modus operandi involved over-invoicing of purchase of raw materials and bottles which constituteda major portion of the cost of production. The suppliers received payment at the inflated value by cheque or RTGS, but paid back the excess value in cash to key confidante employees of the group. The search teams gathered evidence of such over-invoicing and return of cash by suppliers. Such inflation by over invoicing amounted to suppression of taxable income  of almost Rs 400 crore over a period of six years.

The search also resulted in unearthing of evidence of similar tax evasion by another leading business group in the same liquor industry. Consequently, the Department launched search operation in the case of the second group also on 09.08.2019. About seven premises of this group at Chennai and Karaikal were covered in the second phase of the search operation. The search is still in progress and the suppression of taxable income detected in this group has been estimated to be about Rs 300 crore.

Based on a tip off during the search action, the tax officers tracked down employees moving with unaccounted cash and intercepted them and recovered Rs 4.5 crore cash from the car in which they had concealed it. The search action has thus far resulted in detection of undisclosed income of Rs 700 crore which had not been disclosed for taxation.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT.

 

 

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

                                                                                New Delhi, 10th August, 2019

PRESS RELEASE

Income Tax Department detects Benami business of running of petrol outlets in Meghalaya

In a swift and coordinated action on Friday, 2nd August 2019, the Investigation Wing of Income Tax Department. NER carried out searches on certain businessmen in Meghalaya, found to be involved in running a web of petrol pumps managed and controlled as benami properties. These persons were depriving the State Government of legitimate revenue by suppressing sales and non-deposit of local taxes collected, while also indulging in massive evasion of income tax by misusing exemption under Section 10(26) of the Income Tax Act , 1961 meant for tribal persons.

In the enforcement operation that commenced in the early hours and went on till wee hours of the next day, more than Rs 2 crore of unaccounted cash alongwith incriminating documents have been seized by officials of the Department. The cash found was hidden in unexpected places like water tanks.

This search by the Department was a much needed action on a long existing racket run by some unscrupulous elements exploiting local citizens of Meghalaya and avoiding paying income tax using tribal persons who are exempted from income tax, as a front. The pre-search investigation involved extensive surveillance and covert enquiries which were continuing for over a year.

Following the searches exposing these benami petrol pumps, the Executive Committee (EC) member of Khasi Hills Autonomous District Council (KHADC) in-charge of trade, announced to the media on the 8th of August, 2019 that urgent steps will be taken to prevent benami transactions in the State. He noted that despite the law, benami transactions are thriving due to collusion between some local people and their non-tribal business partners. The KHADC is a statutory autonomous body which regulates various aspects of trade and commerce in Meghalaya.

The action taken by the Department has been widely appreciated by the public and also local authorities as a timely and positive step that will help to control the menace of benami commercial activities, as well as augment Government revenues.

 (Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT.