Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
Tax Head
Region
ITAT Grants Fresh Hearing Despite Repeated Non-Compliance, Imposes Rs 15,000 Cost
India's ITAT granted a fresh hearing to an assessee who had repeatedly failed to comply with tribunal proceedings, while simultaneously imposing a cost of Rs 15,000 as a penalty for the non-compliance. The tribunal balanced the principle of natural justice — ensuring the taxpayer has an opportunity to be heard — against the need to discourage habitual non-appearance and procedural delays. The cost imposition signals the tribunal's intent to deter dilatory tactics while still preserving substantive hearing rights for taxpayers.
ITAT Quashes Section 270A Penalty as Assessee Was Not Informed of Actual Charge
India's ITAT quashed a penalty levied under Section 270A of the Income Tax Act, which deals with penalties for under-reporting or misreporting of income. The tribunal held that the penalty was invalid because the assessee was never properly informed of the specific charge being invoked against them during proceedings. This ruling underscores the principle of natural justice, requiring tax authorities to clearly communicate the nature of the charge so taxpayers can mount an adequate defense before penalties are imposed.
SHC declares FBR officers’ appointment to monitor private business null & void
The Sindh High Court (SHC) has declared null and void the Federal Board of Revenue's (FBR) appointment of officers tasked with monitoring private businesses. The court ruled the move legally untenable, raising questions about FBR's authority to deploy tax officials within private sector entities. The ruling has significant implications for Pakistan's tax enforcement strategy, limiting the FBR's ability to conduct real-time oversight of business operations through embedded officers. The decision is a notable tax controversy development, potentially affecting how Pakistan's federal tax authority approaches compliance monitoring going forward.
ITAT Delhi Clarifies: Once Form 10-IE Is Filed, New Tax Regime Option Continues Unless Withdrawn
The Income Tax Appellate Tribunal (ITAT) Delhi has ruled that once a taxpayer files Form 10-IE to opt into India's new tax regime, that election remains in force for subsequent assessment years unless formally withdrawn. The case clarifies the continuity of the new tax regime option for individuals and HUFs with business income, reducing uncertainty around whether taxpayers must re-file the form each year. This decision has significant implications for personal income tax planning, as it confirms the binding and ongoing nature of the Form 10-IE election under the Indian Income Tax Act.
Demonetisation Tax Shock Gets a Reality Check: Rajasthan HC Rules 60% Tax Under Section 115BBE Not Applicable for AY 2017-18
The Rajasthan High Court has ruled that the enhanced 60% tax rate under Section 115BBE of the Indian Income Tax Act is not applicable for Assessment Year 2017-18, providing relief to taxpayers who faced harsh tax treatment in the wake of India's 2016 demonetisation. The court's decision offers a reality check on retrospective application of punitive tax provisions introduced to target unexplained cash deposits during the demonetisation period. The ruling has broader implications for tax controversy cases stemming from demonetisation-era cash transactions and the scope of Section 115BBE applicability.
Rs6b tax & petroleum levy evasion uncovered
Pakistani authorities have uncovered a Rs6 billion tax and petroleum levy evasion scheme. The investigation reveals significant non-compliance involving both tax obligations and petroleum levies, which are key government revenue streams in Pakistan. The case highlights enforcement challenges in the energy and fuel sector, where evasion of both direct/indirect taxes and sector-specific levies represents substantial revenue loss. FBR and associated agencies are pursuing recovery and potential prosecution in what represents a major tax controversy case in Pakistan's energy sector.
Tax Court Doesn’t Horse Around in New Hobby Loss Case
A US Tax Court ruling addresses a hobby loss case, examining whether an activity—likely involving horses—qualifies as a for-profit business or a hobby under IRC Section 183. Hobby loss rules disallow deductions for activities not engaged in for profit, making the profit motive determination critical. The case highlights the IRS's scrutiny of horse-related ventures, which frequently attract audit attention due to their lifestyle appeal and recurring losses. Taxpayers must demonstrate a genuine profit intent through factors such as manner of operation, expertise, time devoted, and history of income or losses. The ruling offers guidance for practitioners advising clients in similar situations.
Not just vape shops – the small business tax gap
This article from Tax Watch UK examines the broader small business tax gap, using vape shops as a focal point but expanding the analysis to wider non-compliance patterns among small businesses. It explores how small businesses underreport income, overclaim expenses, and operate in the cash economy, contributing significantly to the UK's overall tax gap. The piece highlights HMRC's challenges in detecting and addressing non-compliance at scale across numerous small enterprises, questioning whether enforcement resources are adequately targeted and calling for greater scrutiny of the structural factors enabling small business tax avoidance and evasion.
EU Court Rules Transferred Loan Management Is Not VAT Exempt
The EU Court of Justice has ruled that transferred loan management services do not qualify for VAT exemption. The case examines whether outsourced or transferred loan management activities can benefit from the VAT exemption typically available for financial services. The court determined that such transferred management services fall outside the scope of the exemption, with significant implications for financial institutions and servicers that outsource or transfer loan portfolios along with associated management functions. This ruling clarifies the boundaries of VAT exemptions in the financial services sector across EU member states.
Foreign Assets, Reassessment & Non-Residents: ITAT Special Bench Clarifies the 16-Year Rule
India's Income Tax Appellate Tribunal (ITAT) Special Bench has issued a clarification on the 16-year reassessment window applicable to cases involving undisclosed foreign assets held by non-residents. The ruling addresses the scope of reassessment proceedings under the Income Tax Act, specifically whether tax authorities can invoke the extended 16-year limitation period against non-resident taxpayers with foreign assets. The judgment draws important boundaries on jurisdiction and procedural fairness, providing clarity for non-residents on their exposure to prolonged reassessment and the evidentiary standards required to trigger the extended window under Indian tax law.
Presumptive Taxation vs. Stamp Duty Valuation: ITAT Draws the Line Against Double Taxation
India's ITAT has ruled against the double taxation of property transactions by drawing a clear distinction between presumptive taxation under Section 44AD and stamp duty valuation under Section 50C/43CA. The tribunal held that once income from a property transaction is assessed under the presumptive taxation scheme, tax authorities cannot separately invoke stamp duty circle rates to impute additional income on the same transaction. The decision provides significant relief to small taxpayers and real estate participants who faced dual tax exposure, reinforcing that presumptive taxation constitutes a complete code that overrides separate deeming provisions.
Mumbai ITAT Restricts Addition on Alleged Bogus Diamond Purchases to 2% Following Earlier Orders in Assessee’s Own Case
The Mumbai Income Tax Appellate Tribunal (ITAT) restricted the tax addition on alleged bogus diamond purchases to 2% of the purchase value, following precedent set in earlier orders in the assessee's own case. The tribunal applied consistency principles, recognizing that the same issue had been adjudicated previously and limiting the addition accordingly. This decision is significant for the diamond trade industry in India, where bogus purchase additions are a recurring audit issue, and reinforces the principle that tax authorities must follow prior rulings in the assessee's own case when facts remain unchanged.
Mumbai ITAT Allows 60% Depreciation on Computer Software and Restricts Section 14A Disallowance to Assessee’s Suo Motu Computation
The Mumbai ITAT allowed 60% depreciation on computer software, affirming its classification as eligible for the higher depreciation rate applicable to computers and software under Indian tax law. Additionally, the tribunal restricted the Section 14A disallowance—which limits deductions for expenses related to exempt income—to the assessee's own suo motu computation, rejecting the tax officer's higher disallowance. Both rulings favor the taxpayer and reinforce limits on revenue authorities' discretion to override assessee computations without adequate basis.
Bangalore ITAT Deletes ₹10 Lakh Addition Caused by DRP’s Typographical Error- AO Cannot Sustain Addition Contrary to DRP’s Intent
The Bangalore ITAT deleted a ₹10 lakh tax addition that arose from a typographical error made by the Dispute Resolution Panel (DRP). The tribunal held that the Assessing Officer (AO) cannot sustain an addition that is contrary to the actual intent of the DRP's directions, even if the written order contained an error. The ruling reinforces that AOs are bound by the substance and intent of DRP directions rather than literal but erroneous text, protecting taxpayers from arbitrary additions stemming from administrative mistakes in quasi-judicial proceedings.
Taxpayer Advocate Service: Releases FY 2027 Objectives Report to Congress
The Taxpayer Advocate Service (TAS) has released its Fiscal Year 2027 Objectives Report to Congress, outlining the priorities and planned activities of the independent IRS watchdog for the upcoming year. The report typically identifies key taxpayer service issues, systemic problems within the IRS, and legislative or administrative recommendations aimed at improving taxpayer rights and IRS operations. As an official report to Congress, it serves as a critical accountability document highlighting ongoing challenges in tax administration and compliance assistance facing American taxpayers.
Canadian Influencer Tax Guide: CRA Audit Risks, GST/HST Rules, Cryptocurrency Income, Foreign Reporting, and Tax Planning Strategies
A comprehensive tax guide for Canadian social media influencers covering key obligations and risks under the Canada Revenue Agency framework. Topics include GST/HST registration requirements once income thresholds are met, treatment of cryptocurrency income as either business income or capital gains, foreign income reporting obligations for brand deals with international companies, and CRA audit triggers specific to influencers such as unreported barter transactions and gifted products. The guide also outlines tax planning strategies including incorporation considerations, deductible business expenses, and proper record-keeping practices to minimize audit exposure and optimize tax positions.
Six Compulsory Income Tax Scrutiny Categories Every Taxpayer Should Know
Indian tax authorities have identified six mandatory income tax scrutiny categories that automatically trigger detailed assessment for taxpayers. These categories outline specific circumstances under which returns are compulsorily selected for scrutiny rather than random selection, helping taxpayers understand compliance risks. The categories cover high-value transactions, discrepancies between reported income and third-party data, foreign asset disclosures, and other red-flag indicators. Awareness of these triggers is critical for individual and corporate taxpayers in India to ensure accurate filings, maintain proper documentation, and reduce exposure to prolonged tax assessments and potential penalties.
ITAT Quashes Reassessment of Section 80GGC Political Donation Claim Due to Limitation
India's Income Tax Appellate Tribunal (ITAT) has quashed a reassessment proceeding related to a Section 80GGC deduction claimed for a political donation, ruling it time-barred under limitation provisions. The taxpayer had claimed a deduction for contributions to a political party, which authorities sought to reopen. The ITAT found the reassessment notice was issued beyond the permissible limitation period, rendering it legally invalid. The ruling reinforces procedural safeguards against arbitrary reopening of assessments and highlights the importance of strict adherence to statutory time limits in Indian income tax reassessment proceedings.
SC Upholds GST on Gross Bet Value Instead of Gaming Revenue in Gameskraft
India's Supreme Court has upheld the levy of GST on the gross bet value in online gaming, ruling against Gameskraft's argument that tax should apply only to platform fees or net gaming revenue. The court affirmed that the entire bet amount placed by players constitutes the taxable value, significantly expanding the GST base for online gaming operators. This landmark ruling has major financial implications for the online gaming industry in India and clarifies the tax treatment of real-money gaming platforms, aligning with the government's earlier legislative amendments imposing 28% GST on gross gaming revenue.
AI Transforms SARS Compliance and Strengthens Tax Enforcement
The South African Revenue Service (SARS) is increasingly deploying artificial intelligence to enhance tax compliance and enforcement capabilities. AI tools are being used to detect non-compliance, identify high-risk taxpayers, analyse large datasets for audit targeting, and improve the accuracy of auto-assessments. This technological transformation is strengthening SARS's ability to close the tax gap and deter evasion. The integration of AI into revenue administration represents a significant shift in how SARS conducts enforcement activities, with implications for both individual and corporate taxpayers who may face more sophisticated and data-driven scrutiny from the authority.
Get the Friday Digest
Every Friday, a curated summary of the week's tax news delivered to your inbox. Choose what you want to hear about — no noise, no spam, unsubscribe anytime.
Tax heads you care about(select all that apply)
Regions you care about(select all that apply)
Your email is never shared or sold. You can unsubscribe at any time. Built in compliance with GDPR.