Today’s Certicom Updates

Today’s Certicom Updates

1. Late payment of employee’s contribution to EPF & ESIC allowable if paid before filing I.T. return. Case Name: Indo States Exports Vs ACIT (ITAT Delhi) Appeal Number: ITA No. 1892/Del/2020 Date of Judgment/Order: 30/06/2021.

2. GST: Supply of drinking water to the public through mobile tankers or dispensers by a charitable organisation is taxable at 18 per cent under the GST, AAR has ruled. The Andhra Pradesh bench of the Authority for Advance Ruling (AAR) has ruled — in the case of the Vijayavahini Charitable Foundation.

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3. Payments to Facebook, AWS for Advertising, Marketing not Taxable as Royalty: the supreme court’s decision in engineering analysis of the centre of excellence Pvt LTD. (Date of judgement: 17.08.2021)

Tax Benefits Available For Startups

4. Excess amount, the late fee charged by the new Income Tax portal for filing ITR for FY 2020-21 will be refunded.

5. EBI has reduced the minimum lock-in period for promoters’ investment post an initial public offering (IPO) to 18 months from three years, under certain conditions.

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Tax Benefits Available For Startups

Tax Benefits Available For Startups

All tax benefits are available to the startups only if they come under the criteria of an ‘Eligible Startup’.

So let’s try to understand the conditions to be met to qualify as an ‘Eligible Startup’.

Eligibility Criteria for Startup Recognition:

  • The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership.
  • Turnover should be less than INR 100 Crores in any of the previous financial years since incorporation.
  • An entity shall be considered as a startup up to 10 years from the date of its incorporation.
  •  
  • The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth.
  • An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”

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Tax benefits allowed to Eligible Startups :

80 IAC Tax exemption

An Eligible startup (incorporated between 1 April 2016 to 31 March 2022) can avail a deduction of 100% of profits for a block of 3 years in the first 7 years of its incorporation. Such deduction would be available upon filing an application with DPIIT provided that that annual turnover does not exceed Rs.25 crores in any financial year.

Waiver from ‘Angel tax’ 

Domestic companies are required to issue their shares at fair market value (FMV) determined on a net assets value basis or discounted cash flow basis determined by the merchant banker. Any amount received by the company from residents in India in excess of FMV is liable to tax in the hands of the company (popularly known as ‘Angel tax’). Upon filing the requisite declaration with DPIIT and subject to certain conditions, Eligible startups are exempted from Angel tax.

Tax exemption to Individual/HUF on investment of long-term capital gain in equity shares of Eligible Startups u/s 54GB. 

The startups shall also use the amount invested to purchase assets and should not transfer assets purchased within 5 years from the date of its purchase.

1. Thus, if an individual or HUF sells a residential property and invests the capital gains to subscribe the 50% or more equity shares of the eligible startups, then tax on long term capital will be exempt provided that such shares are not sold or transferred within 5 years from the date of its acquisition.

2. The existing provisions u/s 54GB allows the exemption from tax on long-term capital gains on the sale of a residential property if such gains are invested in the small or medium enterprises as defined under the Micro, Small and Medium Enterprises Act, 2006. But now this section has been amended to include exemption on capital gains invested in eligible start-ups also.

What is e-RUPI and how it works?

Exemption from tax on Long-term capital gains

A new section 54 EE has been inserted in the Income Tax Act for the eligible startups to exempt their tax on a long-term capital gain if such a long-term capital gain or a part thereof is invested in a fund notified by the Central Government within a period of six months from the date of transfer of the asset.

The maximum amount that can be invested in the long-term specified asset is Rs 50 lakh. Such amount shall be remain invested in the specified fund for a period of 3 years. If withdrawn before 3 years, then the exemption will be revoked in the year in which money is withdrawn.

Other benefits available for Startups :

  • Simple process for registration of startup
  • Self-certification of compliance under Environment and Labour laws.
  • Easy access to funds through Alternate Investment Funds.
  • Easy winding up of Company within 90 days under Insolvency & Bankruptcy Code,2016.
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Fix issues with the Income Tax e-filing portal by September 15, 2021: FM to Infosys

Fix issues with the Income Tax e-filing portal by September 15, 2021: FM to Infosys

The Finance Ministry met with Infosys to discuss issues with the Income Tax Department’s e-filing portal.

Smt. Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs, met with Mr Salil Parekh, MD & CEO, Infosys, here today afternoon to express the Government’s and taxpayers’ deep disappointment and concerns about the ongoing glitches in the Income Tax Department’s e-filing portal, even two and a half months after its launch, which was also delayed. Smt. Sitharaman demanded an answer from Infosys for the taxpayers’ ongoing problems.

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The Ministry of Finance emphasised the necessity for Infosys to invest more resources and effort in order to assure the much-delayed delivery of agreed-upon services. Mr. Parekh was also made aware of the challenges faced by taxpayers, as well as the issues that have arisen as a result of the portal’s slow operation.

The Finance Minister demanded that the team overcome the challenges that taxpayers are having with the portal’s present features by September 15, 2021, so that taxpayers and professionals may work together effortlessly on the platform.

India’s exposure to US securities has increased by more than 10pc in the last 3 months 

Mr. Parekh stated that he and his staff are doing all possible to ensure the portal’s flawless operation. Mr. Parekh further stated that around 750 team members are working on this project, which is being directly overseen by Mr. Pravin Rao, Infosys’ COO. Mr. Parekh also stated that Infosys is working quickly to ensure that taxpayers have a smooth experience on the platform.

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