Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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ITAT Allows Broken Period Interest, Rules MAT Inapplicable to Foreign Banks
India's Income Tax Appellate Tribunal (ITAT) has ruled on two significant issues affecting foreign banks operating in India. First, the tribunal allowed the deduction of broken period interest — the interest accrued on bonds between the last coupon date and the purchase date — as a revenue expense rather than capitalizing it. Second, the ITAT ruled that Minimum Alternate Tax (MAT) is not applicable to foreign banks, providing relief from this alternative tax computation mechanism. These rulings have notable implications for foreign banking institutions regarding their tax liabilities and accounting treatment of debt instrument transactions in India.
Guidance: List of approved professional organisations and learned societies (List 3)
UK government guidance providing the official List 3 of approved professional organisations and learned societies whose membership fees qualify for income tax relief. Employees and self-employed individuals who pay subscriptions to bodies on this list can claim tax deductions against their earnings. The list is maintained by HMRC and updated periodically to reflect newly approved or removed organisations. Relevant to UK taxpayers seeking to reduce their personal income tax liability through legitimate deductions for professional membership costs.
Can the Income Tax Department Tax You for a Transaction That Never Happened? ITAT Says No
India's Income Tax Appellate Tribunal (ITAT) ruled that the Income Tax Department cannot levy tax on a transaction that never actually occurred. The case highlights a significant taxpayer protection principle: tax liability must be grounded in real, substantiated transactions rather than presumed or fictitious ones. The ITAT's decision reinforces that tax assessments cannot be based on assumptions or fabricated transactions, providing relief to taxpayers facing arbitrary additions to income. This ruling has important implications for how tax authorities conduct assessments and the evidentiary standards required before taxing alleged transactions.
Introducing the 2026 Latvia VAT Guide
A 2026 Latvia VAT guide has been introduced, providing updated compliance information for businesses operating in or trading with Latvia. The guide covers Latvia's VAT framework, rates, registration requirements, and filing obligations relevant for the upcoming year. It serves as a practical resource for companies navigating Latvian VAT rules, reflecting any regulatory changes or updates effective in 2026. Such country-specific VAT guides are essential tools for multinational businesses and tax professionals managing cross-border compliance obligations within the European Union, where Latvia applies both domestic VAT rules and EU VAT directives.
ITAT Quashes Section 263 Revision Where AO Conducted Detailed Enquiry
India's Income Tax Appellate Tribunal (ITAT) has quashed a Section 263 revision order issued by the Commissioner of Income Tax, ruling that the Assessing Officer (AO) had already conducted a detailed and thorough enquiry during the original assessment. The tribunal held that where the AO has applied mind and examined the relevant issues in depth, the revisionary authority cannot invoke Section 263 merely because a different view is possible. The decision reinforces the principle that Section 263 cannot be used to substitute the CIT's judgment for that of the AO when the original assessment is neither erroneous nor prejudicial to revenue interests.
ITAT Quashes Reassessment Based Solely on Pre-2021 Third-Party Search Material
India's ITAT has quashed a reassessment proceeding that was initiated solely on the basis of third-party search material predating the 2021 amendments to the Income Tax Act. The tribunal ruled that reassessment cannot be validly triggered using pre-2021 search material under the new reassessment framework introduced by the Finance Act 2021. The decision highlights critical procedural and temporal limitations on the tax department's power to reopen assessments, reinforcing taxpayer protections against reassessments that rely on stale or procedurally incompatible information gathered under the old statutory regime.
The New Capital Gain Formula: More Choice, More Confusion
India has introduced a revised capital gains tax formula offering taxpayers more choice in how gains are calculated, but the added flexibility is generating confusion among taxpayers and advisors. The new framework appears to provide multiple computation options, potentially allowing individuals to select the method most favorable to their tax position. However, the complexity of choosing between formulas, understanding eligibility conditions, and applying the correct approach is creating significant uncertainty. The article explores the practical challenges arising from this policy change and its implications for taxpayers managing investment portfolios and asset sales.
Orissa HC: No GST Demand After Pre-Proceeding Reversal of Wrongly Availed ITC
The Orissa High Court ruled that GST authorities cannot raise a demand for wrongly availed Input Tax Credit (ITC) if the taxpayer has already reversed the ITC before the initiation of proceedings. The court held that once the reversal is made voluntarily prior to any show cause notice or formal proceeding, the demand becomes unsustainable. This judgment provides significant relief to taxpayers who self-correct ITC errors proactively, reinforcing that penal action under GST law should not apply where the tax liability has already been rectified before the department initiates action.
Section 115BBE Controversy Nearing Closure: Rajasthan High Court Joins the Taxpayer Camp
The Rajasthan High Court has sided with taxpayers in a dispute over Section 115BBE of India's Income Tax Act, which imposes a higher tax rate on unexplained income. The court's ruling adds to a growing body of judicial opinion challenging the retrospective or broad application of this provision, particularly regarding the levy of surcharge and penalty alongside the elevated tax rate. With multiple High Courts now aligning with taxpayers, legal experts suggest the controversy surrounding Section 115BBE is approaching resolution in favor of taxpayers, potentially limiting aggressive tax department assessments under this provision.
United Kingdom Confirms Peppol as Core Interoperability Network for e-Invoicing
The United Kingdom has confirmed Peppol as the core interoperability network for its e-invoicing framework. This decision aligns the UK with international standards already adopted across Europe and beyond, enabling standardised electronic invoice exchange between businesses and government entities. The move signals a significant step in the UK's digital tax infrastructure development, facilitating smoother B2B and B2G transactions. Adopting Peppol supports HMRC's broader ambitions around Making Tax Digital and reducing administrative burdens through automated, structured invoice data. Businesses operating in the UK will need to align their invoicing systems with Peppol-compliant formats as the framework develops.
ITAT: Assessment Quashed as AO Exceeded Scope of Limited Scrutiny Without Mandatory Approval
India's ITAT has quashed an assessment order where the Assessing Officer exceeded the permissible scope of a limited scrutiny without obtaining mandatory prior approval from higher authorities. The tribunal held that limited scrutiny cases are restricted to the specific issues for which the case was selected, and any expansion of scope requires explicit approval under prescribed procedures. By acting beyond this boundary without authorization, the AO rendered the assessment invalid. The ruling underscores procedural safeguards that protect taxpayers from arbitrary or unauthorized expansion of tax scrutiny beyond its originally sanctioned parameters.
ITAT Quashes Reassessment Notice Issued After 31 March 2022 for AY 2015-16 as Time-Barred
India's ITAT has quashed a reassessment notice issued after 31 March 2022 for Assessment Year 2015-16, ruling it time-barred under the amended reassessment provisions of the Income Tax Act. The tribunal applied the Supreme Court's guidance on the transitional provisions introduced by the Finance Act 2021, finding that the extended timelines allowed under pandemic-related relaxations did not permit reassessment notices for AY 2015-16 to be issued beyond the stipulated cutoff date. The decision provides important clarity on the temporal limits of reassessment jurisdiction under the post-2021 statutory framework.
UPERC Allows Pass-Through of GST Rate Cut Benefits to Consumers Under PM-KUSUM Projects
The Uttar Pradesh Electricity Regulatory Commission (UPERC) has permitted the pass-through of GST rate cut benefits to consumers under the PM-KUSUM solar energy scheme. The ruling ensures that reductions in GST rates on solar equipment are reflected in the tariffs charged to end consumers rather than being absorbed by project developers or utilities. This decision has implications for renewable energy pricing and GST compliance in regulated sectors, aligning with the government's broader objective of making solar energy more affordable under the PM-KUSUM program.
MTD is the accelerant of a shift that was already underway
Making Tax Digital (MTD) is driving a broader transformation in UK accounting and tax compliance that was already in motion. The initiative is accelerating the shift toward digital record-keeping, real-time reporting, and cloud-based accounting systems. MTD is compelling businesses and accountants to adopt technology-driven workflows, moving away from manual processes. This digital mandate is reshaping the advisor-client relationship, pushing firms to offer more strategic, data-driven services rather than traditional compliance work. MTD acts as a catalyst, speeding up modernisation of tax administration and practice management that market forces were already encouraging across the accounting profession.
OECD: AI cuts VAT non-compliance detection time, official says
An OECD official has highlighted how artificial intelligence is significantly reducing the time required to detect VAT non-compliance, according to a recent report. AI-powered tools are enabling tax authorities to analyse large volumes of transactional data more efficiently, identifying anomalies and compliance gaps that would previously take considerably longer to uncover. The OECD's commentary underscores a growing trend among tax administrations globally to adopt advanced analytics and machine learning to improve VAT enforcement, close tax gaps, and enhance audit targeting. This development has implications for businesses as tax authority detection capabilities become increasingly sophisticated and data-driven.
ITAT Allows Deduction of Interest on Delayed Radio Migration Fees, Grants Depreciation on Acquired Workforce Intangibles
India's ITAT has allowed a taxpayer's deduction for interest paid on delayed radio migration fees, treating it as a revenue expenditure deductible under the Income Tax Act. Additionally, the tribunal granted depreciation on workforce intangibles acquired as part of a business acquisition, recognizing them as qualifying assets under the depreciation provisions. The rulings address nuanced questions around the deductibility of financing costs linked to regulatory fees and the tax treatment of intangible assets such as assembled workforces, providing useful precedent for businesses involved in telecom operations and corporate acquisitions in India.
Comments on T-184/25 (A) – Management of Securitised Mortgages is Taxable
A case comment on T-184/25 examines a court ruling that the management of securitised mortgages constitutes a taxable supply for VAT purposes. The decision challenges the common assumption that such financial management services might qualify for VAT exemption under financial services provisions. The ruling has significant implications for securitisation vehicles and their VAT treatment, potentially affecting how mortgage servicers and special purpose vehicles structure their arrangements and recover input tax. Businesses involved in securitisation transactions will need to reassess their VAT positions in light of this judgment.
ITAT Allows Foreign Tax Credit Despite Delay in Filing Form 67, Calls Requirement Procedural
India's Income Tax Appellate Tribunal (ITAT) ruled in favor of a taxpayer seeking foreign tax credit, holding that the late filing of Form 67 is merely a procedural requirement and should not result in denial of the credit. The tribunal emphasized that substantive rights to claim foreign tax credit under the Income Tax Act and applicable tax treaties cannot be defeated by procedural delays. This decision provides relief to taxpayers who miss filing deadlines for Form 67 while still being entitled to relief from double taxation on foreign income.
2026 CA Day: Upto 50% Off on Tax, Payroll, and ROC Software
SAG Infotech is offering discounts of up to 50% on its tax, payroll, and ROC software products in celebration of CA Day 2026. The promotional offer targets chartered accountants and tax professionals seeking compliance and filing tools. Products covered include tax return preparation, payroll processing, and company secretarial software. This is a commercial software promotion tied to the accounting profession's annual celebration, highlighting the role of tax technology tools in streamlining compliance workflows for Indian CA firms and tax practitioners.
Peppol model confirmed for 2029 mandatory e-invoicing in UK
The UK has confirmed a Peppol-based model for its mandatory e-invoicing rollout, set to take effect in 2029. Peppol, the widely adopted international framework for electronic document exchange, will underpin the UK's e-invoicing infrastructure, aligning it with standards already in use across Europe and beyond. This move signals a significant shift in UK business compliance requirements, with companies needing to adapt their invoicing systems ahead of the deadline. The confirmation provides businesses and software vendors clarity on the technical framework needed to prepare for the mandate, following earlier consultations on the UK's e-invoicing strategy post-Brexit.
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