Tax Time for FY 2023-24: Key Updates and Reminders [Land Ahoy!]
As we set sail into the new fiscal year, navigating the tax waters can feel like a daunting task. But worry not, fellow taxpayer! This blog post serves as your trusty map, guiding you through the key updates and deadlines for FY 2023-24. Let’s ensure you’re compliant and avoid any unwanted encounters with the taxman.
Supreme Court Clarifies Overcharges vs. Illegal Charges
A recent Supreme Court ruling (UOI vs Indian Oil) sheds light on the distinction between “overcharges” and “illegal charges” in the context of taxation. This distinction is crucial as it determines your eligibility for claiming refunds.
Overcharges: These represent amounts charged in excess of what is legally permissible. If you can demonstrate an overcharge, you may be entitled to a refund.
Illegal Charges: These are charges that have no legal basis and should not have been levied in the first place. Claims for refunds on illegal charges would also be valid.
The Court additionally emphasized the importance of taxpayer vigilance in identifying and contesting overcharges within the stipulated timeframes.
Income Tax Department Scrutiny: Payments to Relatives
The Income Tax Department is known to scrutinize payments made to relatives under Section 40A(2) of the Income Tax Act. Disallowances can occur if the amount paid exceeds the fair market value of the goods or services provided.
Taxpayers making such payments should ensure they can demonstrate:
Fair Market Value: The payment should be commensurate with the prevailing market rate for similar goods or services rendered by unrelated parties.
Tax Neutrality: Payments to relatives shouldn’t be significantly lower than those charged to unrelated parties for the same service.
Supporting Documentation: Maintaining receipts, invoices, and any documentation that details the nature and value of the services rendered by the relative is crucial.
A recent judgment by the Ahmedabad ITAT highlights these considerations when disallowing related party payments.
Income Tax Notices: Important Deadlines to Remember
It is crucial not to miss the deadlines for income tax notices. Here are two important deadlines to keep in mind:
- March 31, 2024: Last date for notices under section 148Afor FY 2019-20 (tax escape ≤ Rs. 50 lakh)
- March 31, 2024: Last date for notices under section 148A for FY 2016-17 (tax escape ≥ Rs. 50 lakh)
Make sure to regularly check the income tax portal for any notices and respond promptly to avoid any penalties or legal consequences.
Tax Planning Tip: Tax-Loss Harvesting
As the financial year 2023-24 comes to a close, taxpayers should consider implementing tax-loss harvesting strategies to manage their securities income tax burden. This strategy involves selling a security with a loss to offset capital gains and reduce the overall tax liability. For example, offsetting Rs. 2 lakh in short-term capital gains with a Rs. 1 lakh unrealized loss can save Rs. 15,000 in taxes. Consult with a tax professional for guidance on implementing this strategy effectively.
CBIC Update: Preventing Suspicious Cash Flow and Illegal Activities During Elections
The Central Board of Indirect Taxes and Customs (CBIC) has issued a Standard Operating Procedure (SOP) to prevent suspicious cash flow, illegal activities, and the smuggling of goods during elections. This measure aims to maintain the integrity of the electoral process and ensure compliance with tax and customs regulations.
Income Tax Notification: New Form ITR-V Format for Assessment Year 2024-25
The Central Board of Direct Taxes (CBDT) has notified the new Form ITR-V format for the assessment year 2024-25, effective from April 1, 2024. Taxpayers should familiarize themselves with the updated format and ensure accurate filing to avoid any errors or penalties.
Income Tax Return Filing: Updated Utilities Available
Great news for taxpayers! The Excel utilities for filing ITR-1, ITR-2, and ITR-4 for the assessment year 2024-25 are now available. In addition to offline utilities, taxpayers can also opt for online filing with prefilled data for ITR-1, ITR-2, ITR-4, and ITR-6 for the assessment year 2024-25. Stay tuned for more updates on tax-related matters.
Remember, staying informed and meeting deadlines keeps you sailing smoothly through tax season!
