NICAI Update
CA Raj Chawla
Respected Members,
Quotes of the day;
1. Mistake is a single page of life, But relation is a complete book, So don't close a full book for a single page.
2. Steal the beauty of thoughts from wherever you find, Because the beauty of the face changes with age But the beauty of thoughts always remains immortal in the hearts.
NICAI Update;
1. The Supreme Court again rejected the income tax department's review petitions against its March 2021 ruling that payments made to non-residents for software purchases cannot be taxed as royalty.
2. The tax department had argued that cross-border payments made to foreign software companies and distributors amounted to royalty because the software sold to end users involved licensing of the underlying programme. It maintained that Indian buyers were granted rights to exploit software copyright and that the payments therefore constituted royalty income for overseas sellers. A three-judge bench comprising justices Sanjay Kumar, KV Viswanathan and K Vinod Chandran noted that the court had already dismissed review petitions filed by the tax department against the same judgment in April 2024.
3. Income tax return (ITR) forms for FY 2025-26 (AY 2026-27) underscore this evolution, signalling a shift from basic disclosures to more rigorous requirements for accurate, consistent, and comprehensive reporting by taxpayers, which helps authorities navigate fast processing of tax return as cross verification of claims between individual ITR vis-à-visreporting from businesses become easier.
4. With another tax return filing season round the corner, it is pertinent for taxpayers to plan. The first question that arises is which ITR form to choose from the various forms notified by the tax department. The selection of the appropriate ITR form depends on an individual's specific circumstances, including residential status, nature of income, taxable income thresholds, etc.
5. The Income Tax Department has directed field officers to intensify the recovery of confirmed and undisputed tax demands, strengthen monitoring of large non-compliant taxpayers and improve demand management.
6. Under the project termed the Central Action Plan for 2026-27, the department has specifically asked officers to prioritise recovering Rs 2.57 lakh crore in demands upheld by the Commissioner of Income Tax (Appeals) in FY26. Special teams are being set up to pursue top arrear cases and analyse tax trends sectorally. The tax officers also have to ensure prompt refunds and better taxpayer outreach to improve compliance and minimise revenue leakages.
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With best regards
CA (Dr) Raj Chawla
B.Com (Hons), FCA, FCS, FCMA, LLB
MIMA, DISA, MICA, Phd, ASA (Aust), CMP (USA)
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