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Therefore, the enhanced surcharge shall be withdrawn on tax payable at special rate by both domestic as well as foreign investors on long-term & short-term capital gains arising from the transfer of equity share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)

 

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

 

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.