The Income Tax Assessee can file appeals before the higher authorities in case disputed assessment orders. The department is also empowered to file an appeal in case the assessee gets relief in the case. The appeal can be filed at various levels, including Joint Commissioner, Commissioner of Income Tax (Appeals), Income Tax Appellate Tribunal, High Courts, and Supreme Court. Pending litigations are rising due to more cases being appealed and fewer cases being disposed of. The successful 2020 Direct Tax Vivad se Viswas will be followed by the 2024 scheme to reduce litigations further. The scheme though announced yet to come in force on a date to be notified by the Central Govt. The starting and end date of the scheme shall be announced very soon.
Direct Tax Vivad se Vishwas Scheme Key points
Main Objective
The main objective of the scheme to resolve the pending income tax disputes by depositing a portion of the disputed tax, interest and penalties. The aim is to provide immediate relief to the taxpayers vide the speeding up the resolution process for pending disputes before various tax appellate forums
Eligibility
As of July 22, 2024, all pending disputes/appeals are before Supreme Court, High Court, ITAT, Commissioner (Appeals), or DRP. Except a few exclusions, the scheme covers disputes/appeals filed by any of the taxpayer and/or tax authorities.
Application
The eligible taxpayers may file a declaration in the prescribed form with the designated authority. The designated authority shall determine the tax arrears and issue a certificate stating the tax arrears payable within 15 days. The taxpayer is required to deposit the arrear payable within 15 days from the date of receipt of such certificate.
Arrear Payment
In the previous Direct tax VSV Scheme, taxpayers were required to pay a percentage of the disputed tax, but received full waivers on penalties and interest. The amount payable depends on the timing of the settlement and the type of dispute. If the scheme is opted on or before 31.12.2024, only 100% of the disputed tax will be in question. Persons will be charged a little more in disputed tax if they opt for the scheme after December 31, 2024 but before its closure.
In case the dispute is about Interest, Penalty or Fee i.e. non tax disputes, only 25% of such non tax arrear is payable if the scheme is opted on or before 313.12.2024 and 30% if after 31.03.2024.
Immunity and Settlement
Under this scheme, the taxpayer is granted immunity from further prosecution, penalties, and interest for resolving disputes. After filing the declaration and making the payment, the appellants before relevant forums (such as High Courts or ITAT) will withdraw their pending appeals.
Exclusions
As we have discussed earlier, some of the litigations are not eligible under VsV 2024 like cases involving search and seizure operations, where prosecution under any law has been initiated, undisclosed foreign income or assets and cases received in DTAA.
Conclusion
The Direct Tax Vivad se Vishwas Scheme 2024 improves upon the previous VSV Scheme by efficiently resolving tax disputes cost-effectively. It waives interest and penalties and avoid further litigation.
The government will soon announce closure dates for the scheme, along with notifications and clarifications, to maximize benefits for taxpayers.
Disclaimer:
This document is general information and is not intended to be advice or legal opinion on any matter. Readers should seek appropriate professional advice before acting on the basis of any information contained herein.
A Guide to Section 194T : TDS on Payments to Partners
Section 194T of the Income Tax Act 1961 covers TDS deduction on partner payments by firms. It is crucial for firms and partners to comprehend this segment to adhere to the tax laws of India.
What is Section 194T?
Section 194T covers income tax paid by firms or LLPs to partners as salary, commission, interest, or remuneration.. It requires firms to subtract TDS that is payable before making such payments to partners. This makes sure that the incomes of partners are taxed under income taxation of India.
The following are the main features of the section :
TDS Deduction: Firms must deduct 10% TDS on payments like salary or interest to partners per Section 194T. This is allowed only if the payment made is more than ₹20,000 in a particular financial year.
Threshold Limit: Any payment made to a single person which does not exceed ₹20,000 is not subjected to TDS deduction. Any sum over this limit shall be subjected to TDS under Section 194T of the Income Tax Act of 1961.
Different from Salary: This provision applies to partner payments, not employee salaries. This goes to show how the incomes of partners are treated differently under income taxation in India.
Why TDS Matters Under Section 194T
The tax referred to as TDS that is paid under Section 194T makes it possible for government to recover its taxes directly from the firms before reaching the partners. This reduces chances of tax evasion and ensures that the provisions of the income tax laws are followed.
For partners, this means they receive income after the tax has been deducted from the income received, thus making it convenient for the partners to handle the tax issue at the end of the financial year. It also reduces the burden of depositing large amounts of taxes at a go because TDS is made progressively.
Example of Section 194T in Action
If a firm pays ₹50,000 as commission to a partner, it has to deduct 10% TDS which is payable on ₹50,000 and it will be ₹5,000. The partner gets ₹45,000 and ₹5,000 is paid to the government as TDS amount. Here’s a table that illustrates this:
Payment to Partner
TDS Deducted (10%)
Net Payment to Partner
₹50,000
₹5,000
₹45,000
This will help to ensure that income taxation is in compliance with the laws of India as provided by the Income Tax Act of 1961.
Conclusion
Section 194T is a very important section in the context of income taxation in India especially for partnership concerns. The firms ensure compliance with the Income Tax Act 1961 by deducting TDS payment on partner income. This provision is very important for firms to be in touch with to avoid penalties and to make proper filings of taxes. The knowledge of the right income tax rates and TDS payable assists both the firms and the partners in the efficient management of their taxes.
Choosing Wisely: Old Tax Regime vs. New Tax Regime in 2024
Starting of a new financial year not only brings a new opportunity in India but also the time to pay income tax for the financial year. It can be a very emotional period that can often be tinged with sadness. We all look forward to the end of the year and the closing of account books but tax laws may not always be welcome. One of the biggest decisions many taxpayers face is which income tax regime to choose: the present one or the new one adopted recently. It is essential to understand the differences between both options because it can be quite confusing at first sight. But, at Book My Accountant we know that. This article aims to clarify the two available income tax systems to avoid confusion. This article will break down the primary differences between the old and new laws so that you can make a better choice for the following tax year, i.e. , AY 2024-25.
Understanding Income Tax Regimes
India offers two main tax regimes for individual taxpayers:
Old Tax Regime: This conventional type of tax system enables different deductions and exemptions that can drastically cut down the taxable income. Many of the normally allowed deductions are, for instance, investments in Public Provident Fund (PPF), Employee Provident Fund (EPF), National Pension System (NPS), health insurance premiums, and home loan interest payments.
New Tax Regime: Under Budget 2020, this new regime is a shorter one where the tax rates are lower than the old one. Nevertheless, it is accompanied by the downside, which is the removal of most deductions and exemptions.
Choosing the Right Regime: A Balancing Act is the act of keeping weight on both sides of a vessel in order to maintain its stability.
There is no single-answer solution for the tax system that applies to everyone. The optimal decision for you is determined by your own financial situation.
Income Tax Regimes
Income Tax Slab Comparison (FY 2023-24, AY 2024-25)
The income tax you pay depends on the tax slab you fall under.
Comparison of the income tax slabs for both regimes
Let Book My Accountant do the heavy lifting for you so you can choose the best option.
Selecting the better tax system can profoundly affect your tax burden. On top of that, our certified tax consultants can evaluate your income, deductions, and investments to put forward the most economical tax regime for you. We offer a range of tax services, including:
The keynote discussion will be on the comparison of tax return filing for the old and new regimes.
The planning and optimization of tax are the first steps in the process of organizing your money.
More assistance in claiming deductions and exemptions is the next step.
Provide assistance in tax computation and e-filing.
Don’t attempt to tackle the tax filing on your own. Contact Book My Accountant for a Consultation and let us be your tax saver!
