Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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Tell HMRC about beneficial owners at a disproportionate risk of harm
HMRC guidance instructs trustees and others on how to report beneficial owners who face a disproportionate risk of harm if their details are disclosed on the Trust Registration Service (TRS). UK trust registration rules require beneficial ownership information to be held on HMRC's register, but provisions exist to protect individuals at genuine risk. This process allows trustees to apply for suppression of certain details. The guidance is relevant to UK trust tax compliance obligations, intersecting personal tax, anti-money laundering regulations, and trust reporting requirements under HMRC's expanded TRS framework introduced post-2020.
Bankman et al: Home Production and the Income Tax
Academic paper by Bankman et al. examines the treatment of home production under the income tax system. The study explores how unpaid household labor and self-produced goods or services—activities that generate economic value but fall outside traditional market transactions—interact with income tax principles. The paper questions whether current tax frameworks adequately capture or appropriately exempt home production, analyzing implications for tax equity and efficiency. The research contributes to ongoing scholarly debate about broadening or refining the income tax base to account for non-market economic activity.
Can Penalty for Concealment Survive If Income Declared in Return Filed Under Section 148 Is Accepted? ITAT Chennai Says No
The Income Tax Appellate Tribunal (ITAT) Chennai ruled that a penalty for concealment of income cannot survive when the income declared in a return filed under Section 148 (reassessment notice) is accepted by tax authorities. The case examines whether concealment penalties under Section 271(1)(c) of the Income Tax Act are valid if the assessee voluntarily discloses income in response to a reassessment notice and that disclosure is accepted without dispute. ITAT Chennai concluded that acceptance of the declared income negates the basis for imposing a concealment penalty, providing significant relief to taxpayers facing reassessment proceedings in India.
How to Use Online Challan Correction Facility on IT Portal
This article provides a step-by-step guide on using the online challan correction facility available on India's Income Tax Portal. It explains how taxpayers can rectify errors in tax payment challans, such as incorrect assessment years, tax amounts, or taxpayer details, without visiting a bank or tax office. The guide covers eligibility conditions, the correction request process, and timelines for approval, helping individuals and businesses ensure their tax payment records are accurate and properly reflected in their accounts.
Buyback Proceeds Now Taxable as Dividend: How to Report it in Your ITR
India has changed the tax treatment of share buyback proceeds, now taxing them as dividends in the hands of shareholders rather than at the company level. The article guides Indian taxpayers on how to correctly report such income in their Income Tax Return (ITR), covering the applicable tax rates, disclosure requirements, and relevant ITR schedules. This represents a significant shift in personal income tax treatment for investors receiving buyback proceeds, requiring careful compliance when filing returns for the relevant assessment year.
Capital Gains Manual
HMRC's Capital Gains Manual provides comprehensive guidance on the taxation of capital gains in the UK. It covers the rules and principles governing how gains and losses are calculated, what assets are chargeable, available reliefs and exemptions, and how capital gains tax applies to individuals, trusts, and companies. The manual serves as an authoritative reference for tax practitioners and taxpayers navigating UK capital gains tax obligations, including topics such as disposal proceeds, allowable costs, and specific asset classes including shares, property, and business assets.
International treaty: Sweden: tax treaties
This publication covers the tax treaty arrangements between the United Kingdom and Sweden. Double taxation agreements between the two countries set out rules for determining taxing rights over various categories of income and gains, including dividends, interest, royalties, employment income, and business profits. The treaties are designed to prevent double taxation and fiscal evasion, providing certainty for individuals and businesses operating across both jurisdictions. The guidance is relevant for cross-border taxpayers and advisers managing UK-Sweden tax exposures.
Undergraduate Student Receives Income Tax Summons Over Rs 20.98 Crore Transactions, Alleges PAN-Aadhaar Misuse by Shell Company
An undergraduate student in India received an income tax summons related to Rs 20.98 crore in financial transactions linked to their PAN and Aadhaar credentials. The student alleges identity misuse by a shell company that fraudulently used their details. The case highlights serious concerns around PAN-Aadhaar misuse for tax evasion purposes, with the Income Tax Department investigating the high-value transactions. It underscores risks of identity theft in tax compliance and the challenges individuals face when fraudulently implicated in others' financial activities.
Income Tax Act, 2025 Replaces “May” with “Shall”: Has the Assessing Officer Lost His Discretion?
India's Income Tax Act, 2025 has replaced the word 'may' with 'shall' in provisions governing Assessing Officers, raising significant questions about whether AOs have lost their discretionary powers. Previously, 'may' granted flexibility in assessment decisions, while 'shall' imposes a mandatory obligation. This linguistic shift could have far-reaching implications for tax administration, potentially constraining AOs from exercising judgment in borderline cases. The article examines whether this drafting change represents a deliberate policy intent to standardize assessments or an inadvertent alteration, and what consequences this may have for taxpayers facing scrutiny assessments under the revised statute.
Has the Income-tax Act, 2025 Changed the Law on Capital Gains Exemption for Depreciable Assets?
India's Income Tax Act, 2025 has prompted analysis of whether it alters the established legal position on capital gains exemption for depreciable assets. Under prior law, gains on depreciable assets were typically taxed as short-term capital gains regardless of holding period. The article examines whether the 2025 recodification has inadvertently or deliberately changed this treatment, reviewing relevant provisions and their interaction with depreciation rules. Any substantive change could significantly impact businesses and individuals holding depreciable assets, affecting tax planning strategies and the computation of capital gains liabilities under the new statutory framework.
HC Upholds MCX Circular Fixing Negative Due Date Rate for Crude Oil
A High Court has upheld a Multi Commodity Exchange (MCX) circular that fixed a negative due date rate for crude oil contracts. While primarily a commodity market regulatory matter, the case carries tax implications as the settlement price determination for futures contracts affects the calculation of commodity transaction tax and capital gains tax on derivative instruments. The ruling validates MCX's authority to set contract settlement rates under extraordinary market conditions, similar to the negative pricing event seen in April 2020, which has downstream consequences for how gains and losses on such contracts are assessed for tax purposes in India.
Appeal Is Not a Mere Formality: ITAT Mumbai Reminds Authorities to Determine the Correct Tax Liability
The Income Tax Appellate Tribunal (ITAT) Mumbai has issued a significant ruling emphasizing that tax appeals are not mere procedural formalities but substantive proceedings requiring authorities to determine the correct tax liability. The tribunal reminded appellate authorities of their independent duty to assess the actual tax due rather than mechanically upholding or rejecting lower-order decisions. This ruling reinforces taxpayer rights in the appellate process and underscores that appellate bodies must apply judicial mind to the merits of each case, ensuring fair and accurate tax assessments rather than rubber-stamping earlier determinations.
HC Holds Time-Barred Assessment Cannot Sustain Penalty Under Section 271(1)(c)
An Indian High Court has ruled that a time-barred tax assessment cannot serve as the basis for levying a penalty under Section 271(1)(c) of the Income Tax Act, which deals with concealment of income or furnishing inaccurate particulars. The court held that if the underlying assessment itself is invalid due to being time-barred, any consequential penalty proceedings also cannot be sustained. This ruling has significant implications for tax controversy cases, reinforcing procedural safeguards for taxpayers against penalties arising from legally defective assessments.
ITAT Upholds Pass-Through Taxation for Revocable Securitisation Trust Under Income Tax Act
India's Income Tax Appellate Tribunal (ITAT) has upheld pass-through taxation treatment for a revocable securitisation trust under the Income Tax Act. The ruling affirms that income generated by such trusts should be taxed in the hands of the beneficiaries rather than the trust itself, consistent with pass-through principles. This decision has significant implications for the securitisation industry in India, clarifying the tax treatment of revocable trusts and providing certainty for financial institutions and investors structuring securitisation vehicles under Indian tax law.
ITAT Remands Section 50C Addition After Finding Breach of Natural Justice
India's Income Tax Appellate Tribunal (ITAT) has remanded a Section 50C addition back for fresh adjudication after determining that the assessing officer violated principles of natural justice. Section 50C deals with deemed capital gains on property transfers where the sale consideration is below the stamp duty value. The tribunal found the taxpayer was not given an adequate opportunity to present their case before the addition was made, requiring the matter to be reconsidered with proper procedural fairness.
ITAT Directs CPC to Grant Section 87A Rebate on STCG Tax
India's Income Tax Appellate Tribunal (ITAT) has directed the Centralised Processing Centre (CPC) to grant the Section 87A tax rebate on Short-Term Capital Gains (STCG) tax to eligible taxpayers. The CPC had denied the rebate, creating disputes for individuals whose total income fell within eligible thresholds. This ruling clarifies that the Section 87A rebate, available to resident individuals with income up to specified limits, should be applied against STCG tax liabilities, providing relief to affected taxpayers.
FBR to receive data on bank transactions above Rs100m under new law
Pakistan's Federal Board of Revenue (FBR) is set to gain access to data on bank transactions exceeding Rs100 million under newly enacted legislation. This measure is designed to enhance tax compliance and broaden the tax base by enabling authorities to cross-check declared income against large financial movements. The initiative reflects the FBR's ongoing efforts to curb tax evasion and improve documentation of the economy. Automatic data sharing from financial institutions to the tax authority represents a significant enforcement tool in Pakistan's tax administration framework.
IRS offers gift tax safe harbor for contributions to Trump accounts
The IRS has issued a gift tax safe harbor for contributions made to Trump accounts, providing taxpayers with guidance on how such contributions will be treated for federal gift tax purposes. The safe harbor offers clarity on the tax implications of these contributions, helping donors avoid potential gift tax liability. This guidance is significant for taxpayers making contributions to these accounts, as it establishes a clear framework for compliance with gift tax rules under the Internal Revenue Code, reducing uncertainty and potential disputes with the IRS over the taxable nature of such transfers.
IRS offers gift tax safe harbor for contributions to Trump accounts
The IRS has issued guidance providing a gift tax safe harbor for contributions made to Trump accounts, a new savings vehicle. The safe harbor clarifies the tax treatment of contributions, offering taxpayers certainty that qualifying contributions will not trigger gift tax liability. This guidance is significant for individuals contributing to these accounts on behalf of others, addressing concerns about potential gift tax implications. The IRS ruling helps define the boundaries of taxable gifts in this context, providing practical relief for account contributors and aligning with broader personal tax planning considerations under current U.S. tax law.
Tax Court Reviews ‘Cohan Rule’ in New Business Expense Case
The U.S. Tax Court has revisited the Cohan Rule in a new business expense case, examining its application to taxpayers who lack adequate documentation for claimed deductions. The Cohan Rule allows courts to estimate deductible expenses when exact records are unavailable, provided sufficient evidence exists to support a reasonable approximation. This case highlights ongoing tension between taxpayer recordkeeping obligations under IRC Section 274 and judicial discretion to allow estimated deductions. The ruling has practical implications for tax practitioners advising clients on substantiating business expenses and managing audit risk when documentation is incomplete or lost.
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