Mukesh Patel.in
practical tax & investment planning online
international tax expert / columnist / author / speaker

CALL FOR CRUSADE AGAINST GAAR!

Even as Parliamentary Panel frowns on the notorious DTC provisions, Budget gives it a mischievous back-door entry!

             While presenting his Budget 2012, the Union Finance Minister referred to the ‘Report on the Direct Taxes Code (DTC) Proposals’ received from the Parliament’s Standing Committee on Finance and observed that, “we will examine the Report expeditiously and take steps for the enactment of DTC at the earliest.”

             However, it has come as a huge shock that grossly ignoring the critical concerns of the Committee in regard to the ‘General Anti Avoidance Rules’ (GAAR) and its strong recommendations for thoroughly amending GAAR, the original GAAR proposals as packaged in the DTC Bill have been most mischievously given a back-door entry in the Income-tax Act through clause 40 of the Finance Bill, 2012. (more…)

COERCIVE RECOVERY NOT JUSTIFIED!

HC holds that ITO should not act as a mere tax gatherer but as a quasi judicial authority vested with public duty!

“Administrative directions for fulfilling recovery targets for the collection of revenue should not be at the expense of foreclosing remedies which are available to assessees for challenging the correctness of a demand. The sanctity of the rule of law must be preserved.” With these observations, the Bombay High Court has come down heavily hammer and tongs, sharply criticizing the attitude of the tax officials in making coercive recoveries from taxpayers through attachment of their bank accounts. (more…)

ILLUSIONS LARGER THAN CONCESSIONS!

Tax reliefs granted by the FM in Budget 2012 are not only inadequate but also deceptive!

                   While the Finance Minister has been predictable, in announcing the much expected Rs.2,00,000 personal income-tax exemption limit (from the current limit of Rs.1,80,000), he has disappointed the lady taxpayer and the senior citizen by not making any significant increase in their respective exemption limits of Rs.1,90,000 and Rs.2,50,000.

                    Thus, while  all income-tax payers upto the taxable income of Rs.8,00,000 will get a tax benefit of Rs.2,060, a lady taxpayer has been handed only Rs.1,030 and the senior citizen (including Super Seniors above 80) virtually nothing by way of tax relief!

                     Taxpayers in the income range of Rs.8,00,000 to Rs.10,00,000 and Rs.10,00,000 and above shall have a definite reason to cheer, with tax saving of 10.3% and Rs.22,660 respectively. (more…)

DTC PANEL MOOTS MAJOR REFORMS!

Seeks more rational exemptions, liberal tax rates, greater accountability in administration & taxpayer friendly regime!

                   “We want taxpayers to celebrate DTC. I can assure you that our committee will make sure that the Direct Tax Code (DTC) is made as taxpayer friendly, as judicious and as equitable as possible,” assured Yashwant Sinha, former FM and Chairman of the 31 member Parliamentary Standing Committee on Finance, while responding to the presentation made by your columnist on the occasion of the interactive session on the ‘Challenges of Direct Tax Code’ held at Ahmedabad in May, 2011. It is indeed heartening for the taxpayers at large that the spirit of this positive assurance stands reflected in ample measure in the 364 page Report of the Parliamentary Panel on DTC presented to the Speaker on March 9, 2012. (more…)

SIMPLE PRE-BUDGET PRESCRIPTION!

Via meaningful reforms in tax administration FM can earn immense tax-payer goodwill without losing any tax revenue!

              There was a time until the mid-1980s when our direct tax rates were so high, that Indian taxpayers used to pray to the FM, “Take away all our income, just return us our taxes!” However, the past 25 years have witnessed a considerable rationalization in the direct tax rate structure. And, after the peak income tax rate was brought down to 30% in 1997, India’s finance ministers have been justifiably boasting of the country having world class tax rates. (more…)

I.T. WEAVES WONDERS FOR I.T.!

E-processing of tax returns at CPC ushers faster refunds for tax payers & considerable saving in interest cost of IT Dept.

                   Information Technology (IT) has indeed weaved wonders for Income Tax (IT)! Your columnist had an occasion to get a feel of this unique feat of the Centralized Processing Centre (CPC) of the IT Department, while participating at the interactions of the strategic All India CPC Workshop, organized at the sprawling state of the art academic campus of Infosys at Mysore. (more…)

LATE NIGHT INTERROGATION IS HUMAN RIGHT VIOLATION!

Patna High Court holds tax officials guilty for sleep deprivation of taxpayer during Income-tax search!

                 One Rajendra Singh made a complaint before the Bihar State Human Rights Commission that during the Income-tax search and seizure operation, the raiding party committed various acts of omission and commission including violation of his human rights. He alleged that the officials of the Income Tax Department confined his family in the house for two days in course of the search and seizure operations at their business and residential premises almost uninterruptedly and did not allow cooking food, thereby compelling them to purchase the same from outside. He also alleged that the members of the search team misbehaved, abused and tortured the taxpayer and his family members and used methods of coercion for recording statements and obtaining signatures forcibly. (more…)

BANK ON TERM DEPOSITS FOR AVAILING TAX SAVING

Investing in the ‘Tax Saving Deposit Scheme’ can be a great choice for NRIs & HUFs who cannot invest in PPF!

              The Finance Act, 2006 enlarged the scope of investments and allocations eligible for deduction under Section 80C of the Income-tax Act through the inclusion of ‘a term deposit for a period of 5 years or more in accordance with a scheme framed by the Central Government.’  Pursuant to this, the ‘Bank Term Deposit Scheme, 2006’ was announced vide Notification No.203/2006 dated 28th July, 2006. (more…)

TAX FREE MEDICAL PERKS

 Salaried employees enjoy special tax shelter for various reimbursements of medical expenditure for self & family!

                    Section 17(2) of the Income-tax Act provides for taxability of perquisites in the hands of a salaried employee. In this context, a salaried employee must plan to take the benefit of a number of medical facilities provided by an employer to the employee, which are not treated as taxable perquisites as per the Proviso to Section 17(2), which carves out exceptions to the general rule of taxing perquisites. (more…)

ZOOZOO WINS THE TAX BATTLE!

Supreme Court’s verdict in Rs.11,000 crore Vodafone case

A big shot in the arm for global investment in India!

              One of the most sensational cases ever, in the history of Indian Income-tax, came to be decided by the Supreme Court on January, 20, 2012. The Vodafone ruling, involving a mammoth tax stake of around Rs.11,000 crores, which has been delivered in favour of the taxpayer and against the  revenue assumes great significance, since it has also reinforced the faith of the global investor community in the Indian judicial system.

THE BIG TAX CONTROVERSY

               The core controversy before the Apex Court was whether India could tax capital gains arising from sale of shares of overseas companies, merely because such companies had downstream subsidiaries in India. The tax authorities had contended that the sale of the share capital of a Cayman Islands company that ultimately held approximately 67 per cent in Hutchison Essar (now Vodafone Essar) gave rise to capital gains tax liability in India, and therefore, Vodafone was required to deduct tax on payments made to Hutchison for acquiring the shares. In response, Vodafone argued that the transaction was not taxable in India and that the Indian income-tax authorities did not have jurisdiction to proceed against them for any alleged failure to withhold tax. (more…)

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