Latest news with #ITAT
Mint
3 hours ago
- Business
- Mint
Centre asks tax dept to drop tax appeals below new thresholds in 3 months
New Delhi: Finance minister Nirmala Sitharaman on Monday asked the income tax department to withdraw within three months all appeals filed by it before tribunals and courts in which the tax claim falls below the new monetary threshold announced in last year's budget. The government had in budget 2024-25 raised the threshold for filing appeals in tax disputes from ₹50 lakh to ₹60 lakh before the Income Tax Appellate Tribunal (ITAT), from ₹1 crore to ₹2 crore in the case of high courts and from ₹2 crore to ₹5 crore in the case of Supreme Court, according to a finance ministry said. Since then, over 4,600 appeals have already been withdrawn and more than 3,100 cases were not pursued in view of the revised limits, the statement said after Sitharaman's meeting with tax officials. Also read: Indian economy faces crosswinds with mounting global shocks Out of the pending 5.77 lakh appeals, over 2.25 lakh appeals are targeted for completion in FY26, resolving over ₹10 trillion of disputed demand, it added. The minister instructed that all departmental appeals falling below the revised monetary thresholds be identified and withdrawn within three months. Sitharaman also asked all Principal Chief Commissioners of Income Tax to prioritize and speed up disposal of disputed tax demands that are currently pending before the faceless appellate authorities. 'This is aimed at reducing litigation backlog and ensuring timely resolution, thereby enhancing taxpayer trust in the system," the statement said. Mint reported on Monday that Sitharaman will review the performance of the tax administration at a meeting with senior officials in the national capital and discuss ways of cutting down the backlog of tax disputes and of making tax governance more efficient. Also read: Close investigations swiftly, speed up refunds: finance minister tells tax officials The minister also asked senior officials to ensure that tax compliance processes are made simpler, more transparent and taxpayer-friendly, the statement said. The efforts are part of reforming the department's management of litigation and overall governance. The government is laying emphasis on governance reforms and on further improving ease of doing business as it can help in unlocking the unrealized potential of the economy, which was the theme of Sitharaman's FY26 Union budget. The minister's discussions centred on tax dispute resolution, grievance redressal, refund issuance and regional performance in taxpayer service delivery. On the taxpayer services front, the Central Board of Direct Taxes reported progress in grievance handling and refunds. As of mid-June, more than 82% of 1.6 lakh grievances filed have been resolved. Also, refunds worth ₹33,872 crore have been issued, marking a 58% growth in refunds over the previous year. Sitharaman called for greater attention to regional disparities in taxpayer service delivery and urged the adoption of best practices from better-performing zones. She directed officials to monitor disposal of grievances on its online platforms, identify recurring issues and strengthen redressal mechanisms accordingly. Also read: What 16th Finance Commission's thinking on giving higher tax share to states The minister said the new Income Tax Bill successfully embodies prime minister Narendra Modi's vision of simplification and clarity in laws. She asked the department to conduct nationwide awareness and capacity-building programmes once the Bill is passed by Parliament. The finance ministry's effort is to make tax administration trust-based and compliance-voluntary, while reducing the burden of protracted litigation.
Mint
12 hours ago
- Business
- Mint
How to track your days in India—and why it matters more than ever for your tax status
Renowned entrepreneur M. Mahadevan, popularly known as 'Hot Breads Mahadevan' for his international bakery and restaurant chain, has run into tax trouble back home. A recent Income Tax Appellate Tribunal (ITAT) ruling declared Mahadevan a tax resident of India for financial years 2012-13, 2013-14, and 2018-19, thereby making his global income taxable in India—despite his claim of being a non-resident. Mahadevan, who operates restaurants and bakeries both in India and abroad, declared himself a non-resident in his income tax filings for the aforementioned years. He based this status on his interpretation of passport stamps, asserting that he had stayed less than 182 days in India in each relevant year. As a non-resident, he only paid tax on Indian-sourced income, leaving his overseas earnings out of the tax net. Also read: NRI taxation: How to claim special tax concessions However, a detailed review by the tax department—using passport records, visa copies, and data from the Foreigner Regional Registration Office (FRRO)—suggested otherwise. The officer concluded that Mahadevan exceeded the 182-day threshold in FY13 and FY14, and also met the 60-day-plus-365-days condition for FY19, thereby qualifying him as a tax resident under India's Income-tax Act, 1961 (ITA). Importantly, Mahadevan's travel was under 'social' or 'visitor' visa categories, not business or employment—further undermining his claim of leaving India for professional reasons. Mahadevan challenged the tax officer's ruling at the first appellate level, where he found relief. The appellate authority ruled in his favour, interpreting his overseas trips as business-related despite the visa types. It accepted his stay in India to be under the threshold and upheld his non-resident status, exempting his foreign income from taxation. On further appeal, the ITAT clubbed the cases and overturned the appellate ruling. It agreed with the tax department, affirming that Mahadevan was a resident for those years and his foreign income was liable to Indian tax. Still, the Tribunal offered some relief: if Mahadevan could furnish proof of foreign taxes paid, foreign tax credit would be allowed. Why the tribunal ruled against Mahadevan FRRO data as credible proof: The Tribunal trusted FRRO records as reliable government data for determining days of stay. Visa purpose matters: Frequent travel abroad did not equate to business if the visa stated otherwise. Since Mahadevan's visas were for social visits, he could not claim the 182-day exception allowed for business departures. UAE Tax Residency Certificate (TRC): Mahadevan produced a UAE TRC issued in 2021 for earlier years. The Tribunal held that under the India-UAE tax treaty, treaty benefits cannot apply if a person qualifies as a tax resident of India under domestic law. Also read: Decoding dual taxation: What NRIs need to know for better tax efficiency Key lessons for global Indians Residential status is pivotal in determining tax liability and must be backed by appropriate records. Count days with care An individual's residential status determines their tax liability in India and is primarily based on days spent in the country. While passport stamps are usually relied on, it's advisable to cross-check stay records with FRRO data to avoid mismatches that may affect tax residency. Involuntary stays (e.g., passport seizures) are excluded. For land entries from Nepal or Bhutan, where passports/visas aren't required, documents like hotel receipts can help establish duration of stay. Who is a resident? A person is considered a resident in India if they: The 60-day threshold is relaxed to 120 or 182 days for: Visa type matters Residency status can also depend on the visa category used for travel. A person leaving India for work should not use tourist or social visas, as these may not support claims of business-related travel abroad under tax laws. Dual residency & tie-breaker If you're classified as a resident in both India and another country, tax treaties apply a tie-breaker test. This considers: This helps decide which country can tax your global income. Also read: Golden tax window for NRIs: What RNOR means and how to use itAshish Karundia, founder, Ashish Karundia & Co., Chartered Accountants
Mint
01-06-2025
- Business
- Mint
Will money crowdfunded from relatives, friends to pay medical bills be taxed?
Any amount received without consideration from a relative would not be taxable and is specifically exempt under section 56(2)(x) of the Income Tax Act, 1961. In respect of your mother, amounts received from her brother would be considered as those received from a relative and would, therefore, not be taxable. In your case, the amount received from your maternal grandmother, as well as the wife of your mother's brother, would also be considered as received from relatives and would therefore not be taxable. In respect of the amounts received from your friends and your mother's friends, these could be considered as taxable in your hands as they are not received from relatives. While one could have taken a view that amount received with a clear condition for spending for a particular purpose should not constitute income in the hands of the receiver, a recent ITAT decision has held that such crowdfunded amount received is taxable in the hands of the recipient under section 56(2)(x). The ITAT decision was primarily based on the fact that there was a mixing of the funds raised from crowdfunding with personal funds, and that the funds were not fully utilised for the purpose for which they were raised. Accordingly, if you have received the funds in a separate bank account, which is then used to incur the hospital and rehabilitation expenditure, or if you can clearly substantiate the link between the funds received and the amounts incurred, you may be able to distinguish your case from the facts in this ITAT case. It may be possible to argue that the funds were received for spending for a specific purpose, were spent for that purpose, and that you were merely a channel for paying the funds on behalf of the contributors. Alternatively, one can also consider claiming a deduction for the hospital expenses incurred out of the amounts received, on the ground that incurring these expenses was the condition for receiving the crowdfunding amounts. However, the matter is highly debatable. Therefore, it would be necessary for you to maintain documents to substantiate that the amounts were received with the obligation to spend on hospitalisation and rehabilitation. Mahesh Nayak, chartered accountant, CNK & Associates.
Hindustan Times
01-06-2025
- Business
- Hindustan Times
Mumbai property tax rises by 15% on average; flats under 500 sq ft remain exempt
The Mumbai Civic body, also known as the Brihanmumbai Municipal Corporation (BMC), has restructured property tax in the Mumbai real estate market by an average of almost 16%, according to a statement issued by the corporation. According to BMC, there has been no amendment or increase in the structure or rate of property tax. However, due to ready reckoner rates in Mumbai increasing from FY26, the property tax automatically stands to be increased, owing to the base of capital value going upwards. To cite an example, if the annual property tax for a flat owner was ₹50,000, it would now be above ₹57,500. The Brihanmumbai Municipal Corporation (BMC) has increased property tax for the first time in nearly a decade. The last revision took place in 2015, but the scheduled hike in 2020 was deferred due to the COVID-19 pandemic. Under Section 154 (1C) of the Mumbai Municipal Corporation Act, 1888, the capital value of properties must be revised every five years, which typically leads to an increase in property tax. Also Read: Major relief for homeowners: ITAT rules redeveloped flats not taxable as 'other income' According to the BMC, flats smaller than 500 sq ft have been exempted from property tax since 2022, and the decision taken earlier remains as it is. Hence, the BMC clarified that there is zero levy on these flats. There are 4,00,000 housing societies in Mumbai. BMC individually issues property tax bills to flat owners. The Maharashtra government announced in 2022 that it would waive property tax for flats below 500 sq ft, a move that it said would help citizens save ₹460 crore annually. Also Read: Mumbai's unsold luxury housing inventory rises 36% in Q1 2025 after two-year decline: ANAROCK The BMC announced on May 29 in a statement that it has deferred its much-debated fee on solid waste management, or garbage tax, in view of the increase in property tax. According to the BMC, the user fee was meant to cover the daily collection of solid waste from individual homes as well as commercial and industrial establishments. The levy was proposed in April; the fee ranges from ₹100 to ₹7,500, depending on the size and nature of the establishment. Also Read: Housing sales in top 15 Tier 2 cities fall 8%, sales value up 6% in Q1 2025: Report However, in view of the increase in property tax, Maharashtra Chief Minister Devendra Fadnavis and Deputy Chief Minister Eknath Shinde decided to defer the levy of the garbage fee.
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Business Standard
19-05-2025
- Business
- Business Standard
Selling two homes? New tax ruling says you can still save on capital gains
A recent ruling by the Income Tax Appellate Tribunal (ITAT), Mumbai, has clarified that taxpayers selling two different residential properties can still claim long-term capital gains (LTCG) exemption under Section 54 of the Income Tax Act, if the sale proceeds are reinvested in a single residential property, provided all other conditions are met. Experts say this interpretation could ease tax pressures for middle-class families and joint property owners navigating complex real estate transactions. 'Judgment based on liberal interpretation' 'This judgement is based on a liberal interpretation of Section 54, thereby emphasising that denial of exemption merely on literal interpretation or pure technical grounds is not the intent of law,' said Riaz Thingna, partner, Grant Thornton Bharat. He added that the ITAT allowed the exemption even though two houses—owned separately by a husband and wife—were sold and proceeds were jointly reinvested in one new home. The ruling sets a precedent that as long as each co-owner claims LTCG exemption only on their respective share and avoids double benefit, the exemption under Section 54 cannot be denied. Multiple sales, one house still valid According to Dipesh Jain, partner, Economic Laws Practice, 'There is no restriction under Section 54 if long-term capital gains from multiple house properties are invested in one residential property, as long as the conditions of the section are fulfilled.' He further clarified that although Section 54 limits the investment to only one (or in some cases, two) residential houses, it does not restrict gains arising from the sale of multiple properties. While both experts agree that the ruling brings flexibility, they caution that risks at the initial assessment stage still exist. 'The decision offers greater clarity, but taxpayers must be cautious. If multiple properties are sold by the same person and the total gain is reinvested into a single house, exemption may be denied,' warned Thingna, citing the specific wording of the law that refers to 'a residential house'. Jain noted that litigation risks cannot be ruled out at the assessing officer level, even though higher appellate forums may offer relief. Precautions for claiming exemption Taxpayers planning to use this benefit should take the following precautions suggested by both of the experts: · Maintain clear documentation proving ownership and transaction details. · Ensure compliance with all conditions of Section 54, especially investment limits. · Avoid double claiming of exemption in case of joint ownership. · Keep judicial precedents handy to support claims if challenged by tax authorities. 'The taxpayer must show that joint owners are not taking double benefit and have claimed exemption only on their respective share,' emphasised Thingna. The ITAT's interpretation aligns with the intent of Section 54 to promote reinvestment in housing, but taxpayers must tread carefully and consult professionals to ensure compliance and avoid potential disputes.
