India faces first fall in direct taxes

India’s corporate and income tax revenue is likely to fall for the first time in at least two decades, more than half a dozen senior tax officials told Reuters, amid rapid declines in economic growth and lower corporate taxes rate.

The government of Prime Minister Narendra Modi targeted for a direct tax collection of 13.5 trillion rupees ($189 billion) for the year ending March 31-a 17 percent rise over the previous fiscal year.

A sharp decline in demand, however, has forced companies to slash investment and jobs, dent tax collections, and prompted the government to forecast 5 percent growth for this fiscal year – the slowest in 11 years.

A senior tax officer said that the tax department was able to collect only 7.3 trillion rupees as at January 23, more than 5.5% below last year’s level.

In the final three months, authorities usually raise about 30 to 35% of annual Direct Taxes from businesses during advance for the first three quarters, according to estimates from the last three years.

Yet eight senior tax officials interviewed by Reuters said this fiscal year was likely to fall below the 11.5 trillion collected in 2018-19, despite their best efforts to steer tax collections.

“Forget about the target. That’s the first time we’re ever going to see the drop in direct tax collections,” a tax officer in New Delhi said.

He predicts that direct tax receipts will end up around 10 percent below fiscal 2019 for this year.

The government’s annual revenue projections usually account for around 80% of direct taxes, and the deficit will leave the government with the need to raise borrowing to meet its expenditure commitments.
Tax officials also say that another major reason behind the lenient tax collections is a surprise reduction in the top corporate income tax rate last year aimed at wooling the fabricators and raising investment in Asia’s third-largest economy.

“We will be very pleased if we can even breakeven with what we raised last year,” said another senior tax official in the financial capital Mumbai, the largest tax driver, which accounts for about a third of direct tax revenues.

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Social Media Rumours on changing ITR forms rules are rejected by CBDT

  • 29 Jul 2019
  • ITR
  • Comments Off on Social Media Rumours on changing ITR forms rules are rejected by CBDT

The Central Board of Direct Taxes (CBDT) on Tuesday disproved reports in social media about changes being executed in ITR form2 and 3. The income tax division expressed that only the utility software has been refreshed which won’t hamper the filing of returns. Meantime, there were reports in social media that the tax payers were confronting difficulties in efiling of income tax return in ITR-2 and ITR3 for the financial year 2018-19 because of wide-scale alterations in the ITR form for the AY 2019-20

“No progressions have been made in any of the Income-tax return(ITR) forms including ITR-2 and ITR-3 since the warning made on April 1 2019, which is on the first day of the Assessment Year 2019-20,” CBDT said.

The income tax expert has explained that the software utility for e-filing of all the ITR forms has been published long back on second May and on tenth May 2019 separately. However, the software utility update is a dynamic procedure and is persistently taken up according to the input received from the clients/filers to ease their experience in electronic filing of returns.

Other than this, it has additionally explained that the updating of utility does not hamper filing of return as the taxpayers are permitted to file ITR utilizing the utility which is accessible by that time. Despite the fact that the utility is being updated routinely to give ease to taxpayers, the returns filed by utilizing the past version of utility will continue being substantial. It is relevant to express that the updation in the utility of ITR forms depends on feedback and basically went for facilitating the compliance burden of the tax payers by encouraging simpler e-filing. For example, this year, the advantage of pre-filling of return forms has been given dependent on the information given in the TDS statement.

This facility has been refreshed in the utility therefore. This would generously diminish the efforts of taxpayers in filling of return forms. It is emphasized that there are no changes in the mentioned ITR forms; just the utility has been updated to encourage the taxpayers. Hence, the affirmation that various changes have been made in ITR-2 and ITR-3 on July 11, 2019, does not give a correct picture.

For  more details or in case any queries, contact Certicom Consulting.