Circulars / Notifications / Press Release
Notification on Tax Collection at Source for IFSC Units
– Units of International Financial Services Centres (IFSCs) are not considered buyers under Section 206C(1H) for purchasing goods from a seller.
– The IFSC unit must submit a statement-cum-declaration in Form No. 1A to the seller, detailing deductions under section 80LA for ten consecutive assessment years.
– The seller must not collect tax on payments after receiving the declaration from the buyer.
– The seller must report non-taxable payments in the tax collection statement under Section 206C(3).
– The tax exemption applies only for the years declared in Form 1A, with the seller liable to collect tax on other payments.
– The notification is effective from January 1st, 2025.
Tax Deduction Exemption for Purchases from IFSC Units
– No tax deduction under Section 194Q will be made by a buyer for purchases from a Unit of International Financial Services Centre (IFSC), subject to conditions.
– The seller (IFSC unit) must submit a statement-cum-declaration in Form No. 1, detailing the previous years for which deductions under section 80LA are claimed
– The buyer must not deduct tax after receiving the statement from the seller and report non-deducted payments in the tax deduction statement.
– The relaxation applies only for the declared years under section 80LA; the buyer must deduct tax on other payments.
– The notification is effective from January 1st, 2025
Legal Ruling on Rebate Under Section 87A and its Denial by Revenue
– Revenue modified the online income tax return filing utility on July 5th 2023, disabling assessee from claiming rebate under section 87A.
– The petitioner challenged the modification, arguing that the rebate under section 87A should be allowed from tax computed under section 115BAC and other provisions of Chapter XII, unless expressly prohibited.
– Revenue contended that rebate under section 87A cannot be granted from taxes specified in other sections of Chapter XII, other than section 115BAC, and that the form was in accordance with the provisions of the Act.
– Section 139D, along with Rule 12, provides for electronic filing of returns and authorizes the Board to make rules for the class of persons required to file electronically. However, this does not empower authorities to design the form based on their interpretation of the law, which could unjustly debar an assessee from making a claim.
– The issue of claiming rebate under section 87A was found to be highly debatable and contentious.
– Revenue was not justified in assuming its interpretation was final and using it to prevent bona fide claims for the rebate under section 87A.
– Therefore, the assessee cannot be restrained from claiming the rebate under section 87A by modifying the utility, which forbids the claim at the threshold.
Bizfile Update: No Late Filing Penalties for Filers Until 15 March 2025
On 21st January 2025, the Accounting and Corporate Regulatory Authority (ACRA) issued a press release stating that ACRA is aware that some Bizfile users have encountered challenges with filing and that ACRA is working on resolving the issues.
ACRA highlights the following important information:
– Further to ACRA’s notice on 28th December 2024, ACRA will continue to waive late filing penalties until 15th March 2025. ACRA had earlier stated that it would waive late filing penalties for those who faced difficulties in their filing.
– Bizfile users filing all statutory filings (such as annual returns) and ad hoc filings which are due between 9th December 2024 and 28th February 2025, will have up to 15th March 2025 to file. No late lodgement penalties will be imposed.
– ACRA assures Bizfile users who need to file a general lodgement (e.g. shares related transactions) that the date of transaction to be reflected in the Bizfile records will be the same as the date of the general lodgement.
– Bizfile users who need more information on how to file key transactions on the new Bizfile portal may refer to ACRA’s video tutorial guides:
Notification relating to the Insurance Regulatory and Development Authority of India, 2025:
The Insurance Regulatory and Development Authority of India (“Authority”) under the powers granted to it by the Insurance Act, 1938 (“Act”) published the Insurance Regulatory and Development Authority of India (Maintenance of Information by the Regulated Entities and Sharing of Information by the Authority) Regulations, 2025 effective from 01 January 2025 (“Regulations”). The Regulations aim to enable insurers to maintain electronic data for operations in compliance with the applicable laws, ensuring security by adopting a recognized data governance framework.
a) The Regulations define certain key terms such as: (i) “Requesting Entity” which is an entity requesting information relating to a Requested Entity; (ii) “Requested Entity” is an entity (domestic or foreign) whose information is subject of disclosure under these Regulations; and (iii) “Minimum Information” means information which is required to be maintained by the insurers or intermediaries or insurance intermediaries as specified under these Regulations.
b) The Regulations outline that the information sought by the Requesting Entity from the Authority may either be publicly available or exclusively held by the Authority. Further, the Authority must notify and obtain prior consent from the Requested Entity before sharing confidential information with law enforcement or regulatory authorities. The Regulations further set out the categorization, purpose and manner of disclosure of such information.
c) The Regulations obligate every insurer to maintain accurate records of policies and claims made under the Act, with proper security and governance. These records, including those held in electronic mode, must be stored in data centres located in India and made accessible to Authority for inspections or investigations. The insurers engaged in reinsurance business must adhere to the same requirement. The insurers must have a Board-approved policy ensuring appropriate security mechanisms, latest technology, privacy standards, data confidentiality, and any other requirements set by the Authority.
d) The Regulations detail the Minimum Information every insurer must maintain for investigation and inspection which shall include all records, information, data, documents, books, or registers required to be maintained by them, at their principal place of business in India, or otherwise at branches/data centres, as required under the Act.
