The revenue loss from gasoline tax cuts expected to be lower.

The revenue loss from gasoline tax cuts expected to be lower.

According to estimates by ratings firm ICRA NSE 0.24 percent, states will lose around Rs 44,000 crore in revenue as a result of the Centre’s reduction in value-added tax on gasoline and diesel, as well as a reduction in excise duty, but gains from the more-than-budgeted tax devolution will be relatively higher at Rs 60,000 crore.

It did, however, warn against the budgetary risk posed by an increase in state government guarantees to state-level enterprises, citing the minimal contributions made by numerous states to their guarantee redemption funds.

In an effort to provide respite to consumers from rising crude oil prices, the central government reduced the road and infrastructure cess (RIC) component of the Central excise duty levied on petrol and diesel by Rs 5 and Rs 10, respectively, effective November 4. Although the RIC component is not shared with states, because states impose VAT on an ad-valorem basis, ICRA estimates that the excise cut will reduce their VAT inflows by Rs 9,000 crore.

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“We predict a Rs 350 billion revenue loss to all states and UTs as a result of the VAT cuts on these fuels” (Rs 35,000 crore). As a result, their total income foregone for FY2022 is estimated to be Rs 440 billion (Rs 44,000 crore), in line with the predicted revenue loss of the GoI (Government of India),” said Aditi Nayar, chief economist at ICRA, during a webinar on Thursday.

The fiscal loss or money foregone, according to Nayar, is justified given the benefits in terms of lowering inflation and raising overall confidence levels among households and other economic players.

Benefits of Tax Devolution

Central tax devolution, on the other hand, is expected to exceed the government’s FY22 budget expectations of Rs 6.7 lakh crore by Rs 60,000 crore, and the FY21 provisional actuals by Rs 1.3 lakh crore, according to the ratings company.

Despite this, tax devolution to states remained practically unchanged in the first half of FY21 and FY22, at Rs 2.6 lakh crore. In the July-September quarter of this year, the devolution amount increased to Rs 47,500 crore each month, up from Rs 39,200 crore per month in the preceding three months.

“Based on the expected upward revision in tax devolution to Rs 7.3 trillion (Rs 7.3 lakh crore) in FY22, keeping the monthly amount of tax devolution at Rs 475 billion in October-February FY2022 will back-end the release of Rs 2.3 trillion to March 2022, which will be inefficient from the cash-flow perspective for the states,” Nayar said, arguing that the government should increase monthly devolution to states to avoid back-ended transfers.

“The income visibility will boost confidence and allow them to accelerate spending, particularly growth-friendly capital spending,” she added.

In FY22, ICRA estimates that most states would have a budget deficit of around 3.5 percent of GDP, which will be sustainable, and only a few states will need to borrow more than 10% of GDP. In addition to the carried over borrowings from last year, they will have access to the Centre’s back-to-back loans totaling over Rs 1.59 lakh crore for GST compensation, which will provide them with additional funding.

“Only a few states are likely to face financing constraints beyond the current year’s sources,” Nayar added.

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State development loans have been issued at a 15% lower rate than last year, she noted, with only five states borrowing more than they did in the same time of FY21.


Guarantees at the state level

States provide state-level bodies with guarantees that allow them to borrow money from a variety of sources. The guarantee ceiling is set by each state. States have the ability to set and amend their guarantee ceilings, unlike the yearly borrowing limit for debt, which is determined by the Government of India. This enables them to offer new guarantees in a short amount of time without the need for government approval or considerable scrutiny from the Reserve Bank of India.

Some governments had already provided significant guarantees before the epidemic began, according to ICRA, and the stock of guarantees in a few states is believed to have risen considerably since then.

“Without proper data, it’s unclear how much of the recent increase in guarantees is due to non-revenue-generating projects that would eventually be serviced by the respective governments, making them an actual obligation rather than a contingent liability.” This is a financial concern, especially given the small contributions made by numerous governments to their guarantee redemption accounts,” Nayar said.

The Annual Information Statement released by Dept. Of Income Tax

The Annual Information Statement released by Dept. Of Income Tax

The new Annual Information Statement (AIS) on the compliance portal, which provides a comprehensive view of information relating to a taxpayer’s interest, dividends, securities transactions, mutual fund transactions, and foreign remittance information, among other things, was launched on Monday by the income tax department.

The new AIS can be viewed by going to the services page on the new income tax e-filing portal and clicking on the link Annual Information Statement.

The Board said in a statement Monday that “the presentation of Form 26AS on the TRACES portal will likewise continue in parallel until the new AIS is validated and fully operational.”

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In addition to extra information relating to interest, dividends, securities transactions, mutual fund transactions, international remittance information, and so forth, the new AIS contains a facility to record online feedback.

Duplicate information has been removed from the information reported. The Board stated that taxpayers will be able to obtain AIS data in PDF, JSON, and CSV forms.

“A facility has been provided for the taxpayer to submit online comments if they believe the information is erroneous, relates to another person/year, or is duplicate.” The Board also stated that “feedback can be provided by submitting information in bulk.”

Taxpayers can also use an AIS utility to view AIS and upload feedback in an offline mode. In the AIS, the reported value and the value after feedback will be displayed separately. If the information is changed or denied, the source of the information may be contacted for confirmation.

For each taxpayer, a simplified Taxpayer Information Summary (TIS) has been prepared, which presents the taxpayer’s aggregated value for simplicity of return filing.

TIS displays the processed value, which is the value obtained following deduplication of data using pre-defined criteria, as well as the derived value, which is the value derived after taking into account taxpayer feedback and the processed value.

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The resulting information in TIS will be automatically updated in real time if the taxpayer offers comments on AIS, according to the Board.

“The resulting information in TIS will be used for Return pre-filling (pre-filling will be enabled in stages),” it continued.

Because the AIS will incorporate information now available with the income tax department, the Board advised taxpayers to double-check all related information and disclose complete and accurate information in their income tax returns.

The Board also stated that in the event of a discrepancy between the TDS or TCS information or the details of tax paid displayed in Form26AS on the TRACES portal and those on the AIS, the taxpayer may rely on the information displayed on the TRACES portal for ITR filing and other tax compliance purposes.

Income Tax Payment- Checks & Balances

Income Tax Payment- Checks & Balances

When paying self-assessment or advance tax, it’s critical to double-check that the assessment year and code for the tax category you’ve chosen are valid. If you choose the incorrect option, there may be a mismatch between the taxes you pay and the amounts shown on Form 26AS for a given fiscal year. As a result, you won’t be able to claim a tax credit for it when you file your income tax return (ITR).

Here’s how taxes are paid and how to fix any problems you could make when paying self-assessment tax.

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What are the most common mistakes made by taxpayers when it comes to paying taxes?

Paying advance or self-assessment tax can be done in two ways:

(1) Through the NSDL website

(2) Paying taxes with physical challans at a bank branch.

Taxpayers frequently make the error of picking the incorrect assessment year for which tax payment is due, according to chartered accountants. The assessment year follows the financial year for which the ITR must be lodged.

For example, the assessment year for FY 2020-21 is 2021-22. As a result, the tax you pay now for FY 2020-21 will be known as self-assessment tax. Furthermore, when making the payment, you must pick AY 2021-22. If you are submitting advance tax for the current fiscal year, you should choose AY 2022-23 because you will be depositing for FY 2021-22, which is the current fiscal year for which ITR will be submitted next year.

What is the best way to fix a mistake?

Ex-IRS officer and founder of Taxbuddy.com, an ITR filing service, Sujit Bangar says, “If a mistake was made when paying taxes, the easiest approach to fix it is to contact the jurisdictional assessing officer or send him an email asking correction. The inauguration of the ‘Challan Correction’ service is noted on the newly created income tax portal. This service, however, has yet to be made available to taxpayers. Once this service is activated, an individual can use his or her registered account to repair challan errors online.”

The information on the ‘Challan Correction’ service may be found in the ‘Help section’ of the new income tax portal.

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How can you find out who your assessing officer is?

As previously stated, the assessing officer can make changes to the tax challan details. To find out who your assessing officer is, follow the steps below on the new income tax portal:

Step 1: Go to https://www.incometax.gov.in/iec/foportal to access the new income tax portal.

Step 2: Select ‘Know your AO’ from the ‘Services’ tab on the webpage.

Step 3: On your screen, a new webpage will appear. Fill up your PAN and phone number. Continue by pressing the enter key.

Step 4: Your cellphone number will receive a one-time password (OTP). The OTP is only good for 15 minutes. Click ‘Validate’ after entering the OTP.

The page will display your assessing officer’s information, including his or her office address and email address. You have the option of sending an email for challan details rectification or physically visiting his/her office for correction.