CBDT sets March 31 deadline to complete Panama, Paradise Papers probe

CBDT is trying to complete this investigation early so that other investigative agencies can speed up their investigation. The Central Board of Direct Taxes (CBDT) is currently investigating on these cases in the Foreign Exchange Management Act, as soon as the tax department begins filing criminal cases CBDT will have the basis to convert these cases into the Money Laundering Act.

CBDT after completing the investigation may file prosecution charges against these entities,  to help other agencies to take action against those entities.

About 426 Indian companies with offshore accounts were under income tax department scrutiny in 2016. Over Rs, 1,000 crores of hidden income had been discovered by the department in Panama Papers alone, listing many famous personalities including KP Singh from DLF, Amitabh Bachhan, Aishwarya Rai, Sameer Gehlaut.

  • Around  714 companies and individuals had been identified in the case of Paradise Papers that came to light in 2017
  • Former state minister of Jharkhand Jayant Sinha is also named in this case who is a  member of the Hazaribagh parliament in Jharkhand state.

Appleby, A Bermuda-based legal services provider and Asiaciti based in Singapore, disclosed much of the data on   Paradise Papers which facilitated the establishment of low or zero tax rates on offshore firms.

Currently, CBDT is investigating these cases within the context of the Foreign Exchange Management Act. Once the tax department begins filing prosecution cases we have the basis to transform our case under the Money Laundering Prevention Act.

These cases are currently being investigated by the income tax department under the 2015 Black Money Act. Under this Act, if any person who is unable to justify the source of the funds in question will be required to pay a penalty of nearly 300 percent of the applicable tax liability on it.

These cases are not subject to domestic inquiry; the department is entirely dependent on foreign agencies for information. For the investigator as well as for the agency, therefore, setting a deadline for completing the investigation is not desirable.

Panama and the Paradise Papers mentioned only company names. Finding data from foreign agencies requires proper information that is not available to the department, thus slowing the investigation. Sometimes the department’s own machinery strikes down the request because the department has set unfulfilled SOPs.

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100% Tax Exemption on Investment in Sovereign Funds

100% Tax Exemption on Investment in Sovereign Funds National Infrastructure Pipeline (Section 80-IA)

Per Budget 2020, FM has announced a 100 percent tax exemption on the returns on Investment made in National Infrastructure Pipeline( Allocated Rs 103 Cr.) informs both equity & debt. It’s available to sovereign wealth funds, namely Abu Dhabi Investment Authority as well as any entity wholly owned and controlled, directly or indirectly, by a foreign government.

 Sovereign funds, willing to invest in India’s story in Infrastructure growth, can write to the Finance Ministry along with their project details as it enables choice for funds to invest through incorporated entities rather than investing directly. Every case based on merits of the details will be vetted by the Department of Revenue  and as per the scheme, Sovereign funds will be notified for exemption under Section 80-IA of the Income Tax Act.

Tax exemption for the Infra. Related Instruments will cover –

  • Dividend
  • Interest or
  • Long-term capital gains arising from a debt or equity

 The major condition is that Invested Funds should be used in a “company or enterprise carrying on the business of developing, or operating and maintaining, or developing, operating or maintaining any infrastructure facility” as specified by the law.

  • The infrastructure projects will include:
  • Road, a bridge or a rail
  • Highway project including housing or other activities being a part of the highway project.Water supply project, water treatment system, irrigation project, sanitation, and sewerage system or solid waste management system.
  • Port, airport, inland waterway, inland port or navigational channel in the sea.

The investment needs to have been made before March 31, 2024, and held for at least three years.

A hundred percent deduction for any profits and gains from an investment will be available for 10 consecutive years, according to the Finance Bill.

National Infrastructure Pipeline Project timelines broadly cover a time frame from 2019-20 to 2024-25. These projects have been identified in sectors such as energy, roads, railways, ports and airports, digital infrastructure projects, mobility projects, irrigation, rural, agriculture and food processing.

Projects worth about Rs 25 lakh crore have been identified in the energy sector followed by road projects worth Rs 20 lakh crore.

Some of the other funds that eye to invest in the Govt of India scheme are:-

  • Norway’s Government Pension Fund Global with $1.2 trillion in investments
  • Singapore’s Temasek—an investment fund with a $313-billion portfolio.
  • Public Investment Fund of Saudi Arabia
  • Mubadala Investment Company of UAE
  • GIC Pvt. Ltd., Kuwait Investment Authority,  & Temasek Holdings

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Direct tax revenue will soon slip in the financial year 2019-20

Direct tax revenue will soon slip in the financial year 2019-20

You must have read in the newspaper that direct tax revenue will soon slip in the financial year 2019-20. The Income Tax Department is conducting Survey U / s 133A of the Income Tax Act on assessee’s business premises in order to recover higher tax sums and to meet budgeted tax collection. The income tax department will even conduct a tax recovery survey and TDS test to recover higher taxes.

In view of the above situation, we request you to take necessary steps:

(1) keep books of account updated
(2) Unwanted chits/papers/ noting always create a problem. So you should not keep such papers in your drawer/computer/ laptop/personal diary. Please destroy it.
(3) keep advance tax working ready for the installment of March 2020
(4) pay advance tax on the basis of booking of flats/ shops made during the year
(5) ledger confirmations of all sundry Creditors should be always obtained.
(6) Name and address of loan depositor with PAN should be always readily available at your office.
(7) provisions of the Benami Property Act are very severe and therefore never enter into such transactions. “ Hawala Loan “ transactions are covered under the Benami Property Act
(8) Always pay tax as per Law
(9) Pay TDS, Advance tax, GST within the time limit allowed under Law.
(10) keep the Labour Contract agreement ready.
(11) partners should have complete knowledge in relation to transactions entered in books of accounts
(12) Please note that income declared under section 68 to 69D of income tax Act is liable to tax at 75% provision of section 115BBE of Income-tax Act.

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