UNIT V

Income Tax Authority

5.1 Income Tax Authority -Their Appointment, Jurisdiction ND Powers

Explanation to the tax Authority [section 133A (a)]:

"Income tax authority" means a commissioner, Co-commissioner, director, co-director, assistant director or deputy director or evaluator, or taxman , for the needs of subsection(1)section(I), subsection(3)and subsection(5)section(I). This includes the inspector of tax.

Various institutions

The tax Act of 1987 led to significant changes within the organizational structure. The implementation of this act is within the hands of those authorities. The change within the designation of certain authorities and therefore the creation of certain new posts within the structure are the most features of the amendment by the tax Act of 1987. The new functions of the authorities are properly drawn on the chart of the facing page. Two main wings for these authorities:

(I) administrative [income tax authorities] [Section 116]

1. The Central Committee on direct taxes was formed supported the Central Committee Revenue Act of 1963 (54 years in 1963).)
2. Director-Head of tax or chief commissioner of tax
3. Income tax director or tax commissioner or tax commissioner (appeal),
4. (CC) Additional Director of tax or additional chairman of tax or additional chairman of tax (appeal),

      (Cca) co-director of tax or co-commissioner of tax .

      Deputy director of tax or Deputy Commissioner of tax or Deputy Commissioner of tax (appeal),

e.     Assistant director of tax or Assistant Commissioner of tax ,

f.        Income tax officer,

g.     Tax inspector,

h.     Income tax inspectors.

(II) Evaluator [Sec.2 (7A)])]

"Evaluator “means a vice-chairperson or vice-chairperson or vice-chairperson or tax officer with relevant jurisdiction by an instruction or order issued under Paragraph 1 or 2 of this act under paragraph 120 or other provisions, and a co-chairperson or co-chairperson as directed under Paragraph(B)of Paragraph 4, which can be granted or assigned to an evaluator under this act. This suggests that you simply will exercise or perform all or any of the rights and functions provided by you.;

Importance of Officer Evaluation:

In the organizational setting of the tax Department, assessing officers plays a really important role. He’s the first authority that initiates his proceedings and is directly connected with the general public. Form the time of filing a return until the assessment is completed he plays a pivotal role. He can start such procedures as non-declaration, imposition of penalties. Orders also are possible. The department can amend his order only by the commissioner of tax, if it's proven that there's a negative impact on the income.

(III) Appointment of tax authorities [Sec.117]

1. Central government authority: the central government can appoint those that it considers deserve the tax Authority. It retained the authority to appoint powers over the rank of Assistant Commissioner of income tax [Sec.117 (1)]
2. Authority of the board and other higher authorities: in accordance with the principles and orders of the central government regulating the terms of service of persons publicly services and posts, the central government shall appoint the board, or the chief Director, Chief Commissioner or director or commissioner, the tax Authority below the rank of Deputy Commissioner or Deputy Commissioner. You’ll also use this feature to permit the user to make a replacement account. 117th (2)) ]
3. Authority to appoint officers and ministerial staff: in accordance with the principles and orders of the central government regulating the terms of service of persons publicly services and posts, the tax Authority, authorized in its place by the council, may appoint such officers or ministerial staff as necessary to help within the performance of its functions.

(IV) Control of tax authorities [Sec.118]

The board may, by notification of the Official Gazette, instruct the tax Authority or authority laid out in the notice to be subordinate to the opposite tax authority or authority laid out in such notice.

For the purposes of this law, there shall be the following income tax authorities:

(1) For the needs of this law, there shall be the subsequent tax authorities:—

(a) Central Revenue Committee,

[(A) i s inspection,]

(b) Tax commissioner,

(C) To look at the Assistant Commissioner of tax appeal or the Assistant Commissioner of tax could also be either the Assistant Commissioner of tax

(d) Tax officer,

(e) Tax inspectors

[(1A) the central government may appoint as many inspection directors because it deems appropriate, and therefore the inspection Directors shall be under the control of the Central Revenue Committee and shall perform such functions of other tax authorities assigned by the central government.]

[(2) the central government may appoint as many tax commissioners because it deems appropriate, as could also be dictated by the central Income Commission of such region or person of such person or class or case of such income or class or case of such case or class if such instructions are assigned to the commissioners of income or class income or class income or class income or class income or class tax within the same region or an equivalent person or class, they shall have concurrent jurisdiction in accordance with the orders that the central Income Commission may perform for the allocation and allocation of the work performed to be.

(3) the central government may appoint as many because it deems appropriate tax officers and appeals or inspectors of tax officers serving class I, and therefore the commissioners could also be authorized by the central government at any time as tax officers serving Class II and tax inspectors, in accordance with the principles and orders of the central government regulating the terms of service of persons publicly services and posts could also be appointed.

(3A) in accordance with the principles and orders of the central government regulating the terms of service of persons publicly services and posts, the tax Authority may appoint such executive or ministerial staff as could also be necessary to help within the performance of its functions.]

(4)income tax appeal the assistant commissioner shall be under the direct control of the central Income Commission and shall perform its functions with reference to such person or class of persons[or of such income or class of income]with reference to such area as could also be indicated by the central Income Commission[and such instructions shall be in two if one or more appeals are assigned to the Assistant Commissioner, an equivalent person or person class or an equivalent income or income class or an equivalent area]in accordance with any order that the central Income Commission may bring the allocation and allocation of labor to be performed.

(5) the inspection assistant of the tax and tax Officer shall perform its functions with reference to such person or class of persons[or of such income or class of persons]may instruct in respect of areas like the tax officer[and, if such instruction is assigned to 2 or more inspection assistants of the tax or tax officer, such person or class the tax Commissioner shall fulfil its function with reference to the category , class of an equivalent person or person or class of an equivalent income or class of income or an equivalent area]in accordance with any order that the tax Commissioner may bring the distribution and distribution of labor performed. The commissioner shall, by written General or special order, have the proper granted to the tax officer and therefore the appellate aide by or under this law, and any regard to the tax officer and therefore the refore the appellate aide during this law or the principles made herein shall be deemed to be a regard to the inspector aide and the commissioner, respectively. It is not.

[(5A) the tax inspector shall, within the execution of this act, perform the functions assigned by the tax officer or the tax Authority appointed thereunder, and shall not be liable for such acts.]

(6) the Central Revenue Committee May, through a notice within the Official Gazette, empower the tax Commissioner, appellate or inspection assistant and tax officer to perform such functions with reference to the income classification [or region] specified within the notice, in order that the required functions could also be assigned by other authorities appointed under (2)and (3) to the income classification[or region]identified.

[(7) For the needs of this law,—

(I) the inspection assistant commissioner shall be subordinate to the director of the inspection and therefore the tax Commissioner within its jurisdiction once they perform their functions.;

[(7A) the commissioner of tax may transfer any case from one tax officer to a different that's subordinate to him, and the Central Committee of revenue may transfer any case from one tax officer to a different. Such a transfer is often made at any stage of the proceedings and doesn't require the reissue of the notice already issued by the tax officer to whom the case was transferred.]

Key takeaways:

• "Income tax authority" means a commissioner, Co-commissioner, director, co-director, assistant director or deputy director or evaluator, or taxman.
• Two main wings for these authorities:

      administrative [income tax authorities] [Section 116]

      Evaluator [Sec.2 (7A)])]

• The board may, by notification of the Official Gazette, instruct the tax Authority or authority laid out in the notice to be subordinate to the opposite tax authority or authority laid out in such notice.
• In the organizational setting of the tax Department, assessing officers plays a really important role.
• For the purposes of this law, there shall be the following income tax authorities.

5.2 A Brief Introduction to Wealth Tax Act 1957

A wealth tax was a fee imposed on the entire or market price of private assets. Also referred to as the capital tax or equity tax, the wealth tax was imposed on the richer section.

Property taxes included certain stipulated assets like buildings or land (with certain exceptions), vehicles, jewellery, bullion, yachts, boats and aircraft (except those used for commercial purposes), city land, and cash available in more than a particular amount. Internet wealth tax deducted personal wealth, mainly debt from mortgages and other loans.

According to the 1957 wealth tax code, individuals, Hindu non-split families (HUF) and businesses are required to pay a wealth tax at a rate of 1 million rupees on net wealth exceeding 30 rupees on the Judgment Day of the fiscal year. This law was applied throughout India.

However, the appliance of the wealth law was discontinued on April1, 2016 thanks to low levels of awareness and yield, additionally to increased collection costs and administrative burdens.

The wealth tax was scrapped from 2016 to 2017 (£28m) in 2016 and replaced with a further levy on the super rich (those whose annual taxable income exceeds £ 2million). The wealth tax was primarily aimed toward super-rich people with large sums of assets received through inheritance or earned on their own.

The wealth tax wasn't a part of the tax Return (ITR), but was a sort of tax that needed to be paid separately at the top of every fiscal year.

The following weren't subject to the wealth tax:

      Cooperatives

      Companies registered under Article 25 of the businesses Act (1956)

      Social Club

      Political parties

      Federal Reserve Bank of India

      Mutual funds registered under Article 10 (23d) of the tax Act

      Trust

      Artificial judiciary

      Partner companies

      People's Association (AOPs)

The following assets were exempt from the wealth tax:

      Interest during a joint heirs property of a Hindu Undivided Family

      Possession of jewellery by a rich person (ruler) isn't as personal property

      Self-employed housing or a plot of land that doesn't exceed 500 square meters

In addition, residential or commercial buildings that form a part of the share transaction, or property within the nature of a residential or commercial property or complex that the taxpayer may occupy for business or professional purposes, were also excluded from the scope of the wealth tax.

For taxpayers with multiple residential lands additionally to at least one residential land, additional residential land is often used for wealth management if they were put out for a minimum of 300 days during the previous year.

Wealth taxes were usually imposed on unproductive assets. Thus, productive assets like mutual funds, time deposits, listed money funds and savings bank accounts were also not included within the wealth tax.

How net wealth is calculated?

A wealth tax is imposed on the net wealth owned by the taxpayer on the valuation date. The net wealth of every person (that is, taxable wealth) is calculated in the following ways:

Wealth-taxes and residence status

A person can own assets not only in India, but also abroad. The taxability of the asset is determined based on the residence status and the location of the asset. The status of residence is confirmed in the same way as it is determined under the income tax code. The following individuals need to pay a wealth tax with respect to their World assets (i.e., assets located in India, as well as assets located outside India):

(a) Resident and usually resident individuals who are citizens of India;

(b) Resident and usually resident HUF.

(c) Resident company.

The following persons are obliged to pay a wealth tax only with reference to assets located in India: In other words, the subsequent persons aren't liable for paying the wealth tax with respect to the assets they own and are located outside of India:

(a)Individuals who are not citizens of India (whether they are residents and usually residents);

(b) An individual who is a resident but not a normal resident and a Hindu Undivided Family that is a resident but not a normal resident.

(c) Non-residents (may be individuals or HUF or companies);

Asset valuation

A wealth tax is imposed on the value of assets owned by the taxpayer on the valuation date, that is, 31 months of the relevant year. The value of assets (other than cash) responsible for the wealth tax should be determined in the manner prescribed in the valuation rules (that is, the rules given to schedule III of the wealth tax code).

Some of the key provisions of the wealth tax law

• Everyone whose net wealth on the rating Day exceeds Rs. He/she must file his / her return of 30, 00,000 net wealth.
• The date for filing the return of net wealth is the same as the date set out for filing the return of income under Article 139 of the Income Tax Act, where, among other things, the taxpayer is obliged to undergo an audit under the Income Tax Act, the date is 30 days, and in other cases 31 days.
• Delayed or revised returns may be submitted within a period of one year from the end of the evaluation year or before the completion of the evaluation, either earlier.
• 1%@interest per month or part of the month is levied for the delay in filing the return of net wealth.
• If the taxpayer fails to pay taxes or interest or both in whole or in part, the taxpayer shall be considered a defaulter in respect of taxes or interest or both. If the amount is not paid within 30 days or within less than the time specified in the demand notice, the taxpayer must pay the amount from the expiration date of the date specified in the demand notice for payment.
• The penalty in case of concealment of wealth can be between 100% and 500% of the tax tried to avoid.
• Apart from the taxation of penalties for various defaults, the law also provides for prosecution for such defaults as deliberate attempts to evade taxes, failure to generate accounts, records, not filing returns of wealth, false statements in verification, etc.

Key takeaways:

• A wealth tax was a fee imposed on the entire or market price of private assets.
• The wealth tax wasn't a part of the tax Return (ITR), but was a sort of tax that needed to be paid separately at the top of every fiscal year.
• Certain assets exemptions from the wealth tax:

      Interest during a joint heirs property of a Hindu Undivided Family

      Possession of jewellery by a rich person (ruler) isn't as personal property

      Self-employed housing or a plot of land that doesn't exceed 500 square meters

• A wealth tax is imposed on the net wealth owned by the taxpayer on the valuation date.
• Key provisions of the wealth tax law.

5.3 Gift Tax Act-1958 and GST Act.

Indian gift tax

Indian culture has thousands of years of history, as well as various traditions connected with it. It is also the birthplace of many religions like Hinduism, Sikhism, Buddhism, etc. Also, India is a country with a diverse culture, which is why each occasion celebrates and shows love and affection to close family and friends. Gifts are exchanged for numerous occasions like Diwali, Raksha Bandhan, Christmas, and New Year and so on. In addition to the present, some people also consider gifting as a standing symbol. However, a little you know that these gifts are taxable after certain restrictions and one must pay income tax on the gifts they receive, therefore, the government of India introduced a gift tax in May 1958, which was regulated by the gifting Act, 1958 (GTA). It was introduced with the aim of imposing a tax on receiving or giving gifts under certain circumstances.

Definition of a gift

A property or any sum of amount which is given in cash/cheque, real estate such as land or building or movable property such as stocks, jewellery or drawings is known as Gift.

Gift tax law

In 1958, by enacting the gifting act, gifting was taxed on the hands of the recipient. However, it was later abolished in 1988. And six years later, it had been reintroduced under Section 56 (2) (V) of the tax Act 1961 to tax gifts within the hands of recipients. Thus, according to the law amended in 2017,"gifts received by someone are taxed in the hands of the recipient under the head of"income from other sources"at the normal tax rate."

The provisions of the gift tax law are as follows:

Stamp duty provisions

The stamp duty provision is very similar to the provision under Article 50 of the Income Tax Act. The following is the payment of gift tax:

Stamp duty calculation

Property gift tax to calculate stamp duty, you need to consider stamp duty. However, the stamp duty value can be higher for a variety of reasons, and one such reason may be the time difference between the date of registration and the contract for fixing the consideration. Therefore, with regard to gift tax, it is necessary to pay attention to the stamp duty amount on the date of the contract on which the consideration is finalized, if the following conditions are met:

      The contract date and Registration date are different

      Consideration may be paid in part or transferred to the account recipient, using the electronic transfer mode through a bank account or bank bill of exchange on or before the date of the transfer agreement.

      The tax officer must also evaluate all records in case the taxpayer questions or disputes the stamp duty value adopted by the valuation body in accordance with section 50C of the Income Tax Act.

Gift tax exemption

As a rules laid down by the government, there are certain gifts that do not attract taxes when received by any person in the form of gifts.

Note: The Meaning of Donee-the person who receives the gift is known as donee.

Disclaimer:

There are excessive tax plans in India using gifts that clearly fall under the scrutiny of the tax department, especially if it is a huge amount. Therefore, it is important to maintain documents to establish the authenticity of the received gift.

Key takeaways:

• Gifts are exchanged for numerous occasions like Diwali, Raksha Bandhan, Christmas, and New Year and so on.
• In 1958, by enacting the gifting act, gifting was taxed on the hands of the recipient. However, it was later abolished in 1988.
• The provisions of the gift tax law.
• The stamp duty provision is very similar to the provision under Article 50 of the Income Tax Act. The following is the payment of gift tax.
• Property gift tax to calculate stamp duty, you need to consider stamp duty.
• As a rules laid down by the government, there are certain gifts that do not attract taxes when received by any person in the form of gifts.