CA Vishal Mittal

01/02/2025

01/02/2025

Summary of Key Announcements from Budget 2025-

The Budget 2025 focuses on Gareeb (poor), Yuva (youth), and Nari (women). Here's a breakdown of the key announcements:

Agriculture & Rural Development:
* Addressing underemployment in agriculture, benefiting 1.7 crore farmers.
* Launching a National Mission on high-yielding seeds.
* 5-year program to increase cotton productivity.
* Kisan Credit Cards for 7.7 crore farmers, with loan limit enhanced to ₹5 lakh.
* Second Gene Bank to be set up for future food security.
Infrastructure & Connectivity:
* India Post to become a large public logistics organization.
* Modified UDAN scheme to be launched, connecting 120 new destinations.
* Greenfield airports to be facilitated in Bihar.
* Top 50 tourism destinations to be developed.
* National Geospatial Mission announced.
Healthcare & Education:
* 50,000 Atal Tinkering Labs to be set up in government schools over 5 years.
* 10,000 additional seats in medical institutes, creating 75,000 seats in 5 years.
MSME & Industry:
* Term loans up to ₹20 crore for MSMEs.
* SWAMIH Fund to complete another 40,000 housing units in 2025.
* 9 handicraft items added to duty-free inputs.
* Extending incorporation benefits for startups for five years.

Taxation & Finance:

* New income tax bill next week.
* Jan Vishwas Bill 2.0 to decriminalize 100 provisions.
* Revised fiscal deficit estimated at 4.8% of GDP.
* Capital expenditure at ₹10.18 lakh crore.
* Gross market borrowings at ₹14.82 lakh crore.
* Social welfare surcharge on 82 tariff lines waived.
* 36 life-saving drugs fully exempted from customs duty.
* Personal tax reforms focused on the middle class.
* TCS for remittance on education purposes removed.
* Reduced compliance burden for small charitable trusts.
* New scheme to determine Arms Length Price in international transactions.
* Digitalization being operationalized in tax frameworks.
* No income tax payable up to ₹12 lakh income.
* Capital gains limit extended to ₹12.7 lakh.
* Income tax slabs changed.
* ₹70,000 tax benefit for income of ₹18 lakh.
* Maximum tax rate of 30% kicks in at ₹24 lakh taxable income (compared to ₹15 lakh earlier).

Other:
* Compliance burden reduced for small charitable trusts.

20/01/2025

🚨 BREAKING: Supreme Court Calls Out GST Department! 🚨

The Supreme Court has slammed the GST department for issues with fake invoices, questioning how genuine buyers can be held liable for the faults of their suppliers.

The court emphasized, "Look at it from the point of view of the taxpayer, not just the department's perspective." It's high time for accountability and clarity in GST practices to protect honest businesses.

12/01/2025

💡 Understanding Prohibited Transactions in Cash under the Income Tax Act 💡

The Income Tax Act restricts cash transactions in India to enhance transparency and reduce tax evasion. Key provisions on prohibited cash transactions include:

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1️⃣ Section 40A(3): Disallowance of Cash Payments
Any expenditure or asset purchase in cash exceeding ₹10,000 per person per day leads to:
➡️Expense disallowed
➡️Depreciation disallowed

✅Expenditure exceeding Rs. 10,000 in a single day to a single person must be made by account payee cheque/draft or electronic clearing system.

✅For payments to transport operators, the limit is Rs. 35,000.

✅Rule 6DD provides exceptions to Section 40A(3):
➡️ Payments to RBI, banks, government
➡️ Payments in villages/towns with no banking facilities
➡️ Payments to cultivators/producers of agricultural/forest produce, fish, etc.
➡️ Payments on a day when banks were closed

2️⃣ Section 269SS: Acceptance of Loan, Deposit, and Specified Sums
Prohibition on accepting loans/deposits in cash above limits.
➡️Prohibits acceptance of ₹20,000 or more in cash or other non-accountable modes.
➡️Penalty: Equal to the amount of loan/deposit under Section 271D.

3️⃣ Section 269ST: Mode of Undertaking Transactions
Prohibition on repayment of loans/deposits in cash above limits
➡️ Restricts receipt of ₹2,00,000 or more in cash, except via account payee cheque, bank draft, or other prescribed methods.
➡️ Penalty: 100% of such receipts under Section 271DA.

4️⃣ Section 269T: Repayment of Certain Loans/Deposits
➡️Loans/deposits repayment of ₹20,000 or more must not be in cash.
➡️ Penalty: Equal to the repaid amount under Section 271E.

5️⃣ Section 269SU: Facility for Accepting Prescribed Electronic Modes
Businesses with a turnover of ₹50 crores or more in the preceding financial year must mandatorily offer:
➡️Unified Payment Interface (UPI) (e.g., BHIM-UPI)UPI QR Code
➡️ Penalty: ₹5,000 per day of non-compliance under Section 271DB.

✅ Rationale Behind Cash Transaction Limits:
➡️ To curb the generation and circulation of unaccounted money
➡️To create an audit trail of high-value transactions
➡️To promote banking channels and digital payments

Select Few Case Laws:
A) Direct deposit to seller's bank account not considered cash payment under Section 40A(3). Punjab & Haryana High Court in Smt. Shelly Passi [(2013) 213 Taxmann 213 :: (2013) 261 CTR 422 :: (2013) 350 ITR 227]

B) Payments to agriculturists through agents covered under Rule 6DD(i) exception. Madras High Court in Sri Shanmuga Ginning Factory [(2013) 218 Taxmann 76 :: (2013) 355 ITR 96]

C) The assessee withdrew funds via supervisors to pay laborers, with each payment not exceeding Rs. 20,000. As supervisors acted as agents, section 40A(3) didn't apply, leading to the deletion of the 20% disallowance. Calcutta High Court in S.K. Jaynal Abddin [(2024) 161 taxmann com 640]