Income tax – Evedirect http://evedirect.net/ Tue, 30 Nov 2021 22:14:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://evedirect.net/wp-content/uploads/2021/11/icon-27-120x120.png Income tax – Evedirect http://evedirect.net/ 32 32 income tax connection: How to connect to the new income tax portal? https://evedirect.net/income-tax-connection-how-to-connect-to-the-new-income-tax-portal/ Tue, 30 Nov 2021 05:33:00 +0000 https://evedirect.net/income-tax-connection-how-to-connect-to-the-new-income-tax-portal/ To file your income tax return (ITR) online, you must use the Income Tax Department’s new e-filing portal at https: // www. Incometax.gov.in/. But before you can log in, you need to register on the e-filing portal. Click here for instructions on how to register for the government’s new ITR e-filing portal Now let’s see […]]]>
To file your income tax return (ITR) online, you must use the Income Tax Department’s new e-filing portal at https: // www. Incometax.gov.in/. But before you can log in, you need to register on the e-filing portal. Click here for instructions on how to register for the government’s new ITR e-filing portal

Now let’s see how to log into the e-filing portal.

How to log in to the electronic filing portal

There are different methods of logging into the portal; according to the tax office, there are 14 methods. A taxpayer can log in using various methods such as using Aadhaar OTP, Net Banking, static password and a few other methods.

Here is an overview of how to log into the electronic income tax filing portal using their cell phone number or email address.

How to log into the income tax portal using a cell phone / email number

Step 1: Go to https: // www. Incometax.gov.in/ and click on the “Login here” option on the home page to access the official portal of the income tax service.

Step 2: Enter your PAN in the Enter your user ID text box and click Continue.

Step 3: Confirm the secure access message you received. Click Continue after entering your password.

Step 4: Choose whether you want to receive the 6 digit OTP by voice call or SMS on your primary mobile number. Click on enter.

Step 5: Click Login after entering the 6-digit OTP sent to your registered mobile number or email address on the e-Filing portal.

The e-Filing dashboard appears after successful validation.

To note

  • The OTP will only be valid for 15 minutes.
  • You will have three chances to enter the correct OTP.
  • The OTP expiration countdown on the screen indicates when the OTP will expire.
  • A new OTP will be created when you click Resend OTP.

How to Log In to Income Tax Website Using Aadhaar OTP

Step 1: Click Login on the home page of the e-Filing portal.

Step 2: Enter your Aadhaar number in the Enter your ID text box and press the Continue button.

Step 3: After confirming your secure access message, select OTP on your Aadhaar registered mobile phone and click Continue.

Note: If you want to use Aadhaar OTP as the higher security option, sign in with your username and password, and then on the Higher Security Options page, click OTP on the mobile number registered by Aadhaar> To continue.

Step 4: If you already have an OTP, select I already have an OTP on my registered mobile number in Aadhaar and go to step 6. Click Generate OTP if a valid OTP is not available.

Step 5: On the Verify It’s You page, select I agree to validate my Aadhaar details> Generate Aadhaar OTP.

Step 6: Enter the 6 digit OTP sent to your Aadhaar registered cell phone number and click Connect.

You will be taken to the e-Filing dashboard after successful validation.

How to connect to the income tax site via Net banking

Step 1: Go to the home page of the e-Filing portal and click on Login. If you want to use Net Banking as a higher security option, enter your username and password, then click Via Net Banking on the Higher Security Options page and go to step 3.

Step 2: If you have not chosen the e-Filing Vault Higher Security option, go to the bottom of the page and select Net Banking in the Other ways to access your account section.

Step 3: Select your preferred bank and click Next.

Step 4: Read the disclaimer and make sure you understand it. Click on Continue.

Step 5: Enter your Net Banking username and password to access your account.

Step 6: After logging in, go to the bank’s website and click on the e-Filing portal link. The e-Filing dashboard is displayed.


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Income tax bill to reduce tax evasion: president of the NBR https://evedirect.net/income-tax-bill-to-reduce-tax-evasion-president-of-the-nbr/ Thu, 25 Nov 2021 16:25:00 +0000 https://evedirect.net/income-tax-bill-to-reduce-tax-evasion-president-of-the-nbr/ The current Income Tax Ordinance, for the most part, is a continuation of the Income Tax Act, 1922, which includes provisions almost 100 years old. TBS Report 25 November 2021, 22:25 Last modification: November 25, 2021, 11:54 PM Logo of the National Revenue Office (NBR) “> Logo of the National Revenue Office (NBR) A bill […]]]>

The current Income Tax Ordinance, for the most part, is a continuation of the Income Tax Act, 1922, which includes provisions almost 100 years old.

TBS Report

25 November 2021, 22:25

Last modification: November 25, 2021, 11:54 PM

Logo of the National Revenue Office (NBR)

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Logo of the National Revenue Office (NBR)

A bill to be presented to the government will reduce tax evasion, the chairman of the National Board of Revenue (NBR) said on Thursday.

The “Income Tax Bill-2022” which proposes to pay income tax refunds directly to taxpayers’ bank accounts through an automated system will also be easier to implement, Abu said. Hena Md Rahmatul Munim.

He made the remarks while chairing a seminar on law, organized by the NBR, at the auditorium of the BCS (tax) Academy in the capital.

The proposed law includes various measures such as abolishing the discretionary power of tax officers on the ground, which experts say will make it more business-friendly.

Many people are filing income tax evasion complaints under the pretext of difficult provisions and incomprehensible elements in “the old 1984 Income Tax Ordinance,” the NBR chairman said. The new bill will put an end to it, he hopes.

Meanwhile, speaking as the main guest of the seminar, Attorney General AM Amin Uddin recommended considering expert opinion before enacting the bill to make it more sophisticated.

“People are afraid and apprehended when they receive an income tax letter. The new law must be crafted in a way that eliminates this fear. So that people feel encouraged to pay taxes,” Amin said. .

The current Income Tax Ordinance, for the most part, is a continuation of the Income Tax Act, 1922, which includes provisions almost 100 years old, speakers at the seminar said. The socio-economic structure and trade of the country changed during this period.

Amin said the new law “is long overdue,” adding that there are opportunities to make many changes to the existing income tax law.

He also said that various attempts have been made to simplify the bill, which is being formulated in Bengali as part of a government initiative to formulate all laws in the country’s official language. Once enacted, international best practices will be incorporated into the 2022 tax law.

“The new law will remove the ambiguity. Tax collection will be easier.”

Speakers at the seminar said that the existing law does not include a specific line of action on the selection of audits and the conduct of audit activities.

The draft income tax law contains specific guidelines on these issues, which will ensure transparency in audits and create a favorable environment for businesses, they added.

In addition, the bill includes provisions relating to electronic tax management.

If one wishes to send money in the form of interest to a non-resident affiliated organization, they must follow specific rules.

In addition, provisions have been added to prevent internal transfer pricing and tax evasion. The rules for withholding and withholding at source have been clarified and more precise, which will remove any ambiguity in the withholding and withholding of residents and non-residents.

The rules for settling claims and collecting have been considerably simplified. Provisions relating to the approval of business expenditure have also been clarified.


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IDCOL received the 1st position of the highest taxpayer award by the NBR in the NBFI category https://evedirect.net/idcol-received-the-1st-position-of-the-highest-taxpayer-award-by-the-nbr-in-the-nbfi-category/ Thu, 25 Nov 2021 06:45:00 +0000 https://evedirect.net/idcol-received-the-1st-position-of-the-highest-taxpayer-award-by-the-nbr-in-the-nbfi-category/ NBR also presented the Tax Card 2021 in favor of Fatima Yasmin, President, IDCOL & Abdul Baki, Director and CEO (in charge), IDCOL TBS Report November 25, 2021, 12:45 p.m. Last modification: November 25, 2021, 12:57 PM IDCOL received the 1st position of the highest taxpayer award “> IDCOL received the 1st position of the […]]]>

NBR also presented the Tax Card 2021 in favor of Fatima Yasmin, President, IDCOL & Abdul Baki, Director and CEO (in charge), IDCOL

TBS Report

November 25, 2021, 12:45 p.m.

Last modification: November 25, 2021, 12:57 PM

IDCOL received the 1st position of the highest taxpayer award

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IDCOL received the 1st position of the highest taxpayer award

Infrastructure Development Company Ltd. (IDCOL) was awarded first place by the National Board of Revenue (NBR) in the Non-Bank Financial Institution category for the 2020-2021 assessment year, a press release said.

NBR also presented the Tax Card 2021 in favor of Fatima Yasmin, President, IDCOL and Abdul Baki, Director and CEO (in charge), IDCOL.

AHM Mustafa Kamal, FCA, MP, Honorable Minister, Ministry of Finance, Government of the People’s Republic of Bangladesh, was present as the main guest of the award ceremony organized by the NBR.

Abu Hena Md. Rahmatul Muneem, Principal Secretary, Internal Resources Division and President, NBR, Ministry of Finance, presented the award and tax cards to SM Monirul Islam, Deputy General Manager and Chief Financial Officer, IDCOL.


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Income Tax Act takes precedence over share distribution regulations: Federal Court of Appeal https://evedirect.net/income-tax-act-takes-precedence-over-share-distribution-regulations-federal-court-of-appeal/ Tue, 23 Nov 2021 14:23:00 +0000 https://evedirect.net/income-tax-act-takes-precedence-over-share-distribution-regulations-federal-court-of-appeal/ The Federal Court of Appeal sided with Ottawa in a dispute over how to impose a transfer of shares in an Ontario-based company on its employees, ruling that it should have been treated as a income and not under the rules governing prescribed trusts. The case in McNeeley v. Canada 2021 FCA 218 involved the […]]]>

The Federal Court of Appeal sided with Ottawa in a dispute over how to impose a transfer of shares in an Ontario-based company on its employees, ruling that it should have been treated as a income and not under the rules governing prescribed trusts.

The case in McNeeley v. Canada 2021 FCA 218 involved the distribution of shares of D2L Corporation, based in Kitchener, Ontario, from a trust to several employees of the company. These employees treated the distribution of shares as a capital gain, believing that the rules applicable to trusts prescribed under income tax regulations should apply, but the Canada Revenue Agency (CRA) reassessed them on the basis that the trust was a benefit plan and therefore should have been treated as income. In Canada, there is generally no special tax treatment for employment income, but capital gains are half the normal income tax rate.

And a unanimous Federal Court of Appeal ruled in favor of a lower court ruling that the trust was an employee benefit plan, so it could not also be a trust prescribed under income tax regulations (McNeeley v. Canada 2020 TCC 90). Judge Wyman W. Webb, who wrote the opinion for the court, held that the preponderance of Income Tax Act over regulations should prevail.

“Parliament could have foreseen that a prescribed trust is not an employee benefit plan. [The] definition of a benefit plan excludes[s] a number of arrangements and trusts defining an employee benefit plan, ”he wrote. “If Parliament had also intended to exclude prescribed trusts from the definition of an employee benefit plan, a reference to a prescribed trust could have been added.

The court also rejected the arguments of D2L executive John Baker that the distribution of shares to him should not be treated as distributions from a benefit plan on the grounds that he did not receive these. actions as an employee of D2L.

“No part of this arrangement is excluded from the definition of a benefit plan. Therefore, there is only one arrangement, ”Judge Webb wrote. “All amounts received by a taxpayer under or under an employee benefit plan are included in computing that taxpayer’s income from an office or employment. “

Pamela Cross, Borden Ladner Gervais LLP

Pamela Cross, tax lawyer at Borden Ladner Gervais LLP in Ottawa, said it is “very difficult” to enter into agreements that lead to the treatment of capital gains in the labor relations context because the Income Tax Act casts a fairly wide net on what employment income is.

“This case reaffirms the scope of labor rules and the fact that most income from your work will be taxed as employment income,” she said. “And if you are using trusts you will have to be very careful because if you try to do so you could be caught in the arrangement considered to be a benefit plan, which means the employees are no better off.” than them. would have been if they had just received direct employment income.

Cross noted that capital gains normally involve an investment in which a person has something at risk, which is one of the reasons they are given preferential tax treatment.

“There is this element that you have invested in an asset and if that asset appreciates, you should be somewhat compensated for that risk,” she said. “In this case, I don’t think the employees invested their own money – it seems to have been designed to provide them with compensation in the form of stocks in the hope that they would get capital gain treatment.”

CRA press agent Charles Drouin said in an email that the confidentiality provisions of the Income Tax Act prevent the agency from commenting on specific details of court cases, but she welcomed the ruling because it “promotes fairness and is consistent with the need for all taxpayers to pay their fair share of the benefits that all Canadians enjoy.”

“The courts provide Canadians with additional independent review of contentious issues, and publicly available information can be obtained from the Tax Court of Canada or the Federal Court of Appeal on any matter before the tribunal,” a- he declared.

Counsel for the appellants declined to comment on the case.

If you have any information, ideas for articles or tips for The Lawyer Daily please contact Ian Burns at Ian.Burns@lexisnexis.ca or dial 905-415-5906.


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Marcos’ failure to file tax returns not a crime involving moral turpitude https://evedirect.net/marcos-failure-to-file-tax-returns-not-a-crime-involving-moral-turpitude/ Mon, 22 Nov 2021 15:15:34 +0000 https://evedirect.net/marcos-failure-to-file-tax-returns-not-a-crime-involving-moral-turpitude/ I do not tolerate the failure of former senator and now presidential candidate Ferdinand Marcos Jr. to file his income tax returns (RTIs) for four consecutive years from 1982 to 1985. According to the law, he was convicted . As a voter, it must not be a crime of moral turpitude for me to challenge […]]]>

I do not tolerate the failure of former senator and now presidential candidate Ferdinand Marcos Jr. to file his income tax returns (RTIs) for four consecutive years from 1982 to 1985. According to the law, he was convicted . As a voter, it must not be a crime of moral turpitude for me to challenge this and count it against his candidacy.

After all, all of us who have fixed incomes know that even though our taxes are automatically withheld from our wages and as such we cannot be accused of evading paying taxes, we still need to produce our ITRs. . The ITRs are, in fact, already prepared for us, and all we have to do is affix our signatures and send them back to our respective finance offices for mass filing with the Bureau of Internal Revenue.

However, I do not agree that Marcos should not be allowed to run for president because he has committed and has been convicted of tax evasion, which is a crime that involves moral turpitude. It is incorrect to claim that he was convicted of tax evasion. The facts and the law do not support this claim.

In fact, it is not denied that the income taxes Marcos owed the government were already withheld. So the taxes were already paid. His only shortcoming was that he had not filed the necessary accompanying ITRs. While the lower court convicted him of tax evasion, that decision was overturned on appeal by the Court of Appeal, and he was only fined for not filing these ITRs.

In terms of law, even the Supreme Court ruled in GR 130371 and GR 130855, which are separate cases but also implicate Marcos, that his offense of not filing an RTI is not a crime of moral turpitude. The High Court was very clear in its decision when it said: “Therefore, given that respondent Ferdinand Marcos II has appealed against his conviction of four violations of section 45 of the NIRC, this does not should not serve as a basis for disqualifying him for appointment. as his father’s executor. More importantly, even assuming that his conviction is subsequently confirmed, it remains insufficient to disqualify him because “failure to report income tax” is not a crime involving moral turpitude. “

Retired Senior Associate Judge Antonio Carpio suggested, quoted in a Vera Files report, that the assertion that RTI’s failure to file is not a crime involving moral turpitude was an ancillary remark “since the Court in the same case admitted that Marcos Jr.’s conviction was then still on appeal. “However, Carpio’s insinuation that such a statement was only an obiter dictum, or something the court mentioned as a ancillary expression of opinion, not essential to the decision and not establishing a precedent, is denied by the court stating in GR 130371 and GR 130855 that even if the guilty verdict is confirmed, this will not change the fact that the failure to file an income tax return does not reach the level of a crime involving moral turpitude.

There are also arguments which allege that the Court of Appeal erred in overturning Marcos’ initial conviction for tax evasion by the regional court of first instance, and simply to impose the penalty of a fine, when the law states that a prison sentence should also have been imposed. This is important in the campaign to remove Marcos from the list of official presidential candidates for the 2022 elections, as one of the disqualifying circumstances for any candidate is when convicted of a crime involving a penalty. imprisonment for at least 18 months.

Grant without admitting that the Board made an error in its decision, but it was already final and the fine had already been paid. Marcos was found guilty of failing to file his RTI, which the Supreme Court has previously ruled to be an act that falls short of the level of a crime involving moral turpitude. He was not sentenced to a prison term.

There are also those who invoke section 286 of the National Internal Revenue Code (NIRC), or PD 1994 published in November 1985, which states that a person convicted of committing a tax offense who is also a public servant or a public employee, must suffer the maximum penalty provided for, which is dismissal from public office and a lifelong ban from holding any public office, voting and participating in any election. However, it is a fact that while the perpetual exclusion is an ancillary penalty for tax matters under PD 1994, any penalty must nonetheless be clearly stated in the dispositive part of any decision. The penalty, although available, was not imposed by the CA on Marcos in his tax record.

Marcos ‘motion to annul Marcos’ certificate of candidacy (COC) is not based on legal or constitutional grounds if its purpose is to call into question his failure to file an RTI. Court decisions, unless overturned on appeal or automatic review, are deemed to be legal and enforceable. Once the sentence has been served, they can no longer be tried again in another court as this would violate the rule of double criminality which is also provided for in the Constitution. The Election Commission does not have the authority or competence to overturn the decision of the Court of Appeal. In fact, even the Supreme Court would not have the right to overturn a decision whose sentence has already been served. When this request reaches the high court, it will only be decided if Marcos has made a false declaration in his CoC, or if he has disqualifying attributes as listed in the Omnibus electoral code. The court can no longer revise, or even cancel, the decision of the CA on his tax file, even if it may have been flawed.


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government can change tax laws to tax cryptocurrency gains in the budget https://evedirect.net/government-can-change-tax-laws-to-tax-cryptocurrency-gains-in-the-budget/ Mon, 22 Nov 2021 03:44:00 +0000 https://evedirect.net/government-can-change-tax-laws-to-tax-cryptocurrency-gains-in-the-budget/ The government plans to make changes to income tax laws to bring cryptocurrencies under the tax net in Budget 2022. In addition, he is likely to present a cryptocurrency bill in the winter session of Parliament. This comes amid a growing number of commercials, even featuring movie stars, promising easy and high returns on cryptocurrency […]]]>
  • The government plans to make changes to income tax laws to bring cryptocurrencies under the tax net in Budget 2022.
  • In addition, he is likely to present a cryptocurrency bill in the winter session of Parliament.
  • This comes amid a growing number of commercials, even featuring movie stars, promising easy and high returns on cryptocurrency investments.

The government is considering changes to income tax laws to bring cryptocurrencies under the tax net, with some changes that could be part of next year’s budget, a senior official said.

Revenue secretary Tarun Bajaj stated that in terms of income tax, some people already pay a capital gains tax on cryptocurrency income, and with respect to the goods and services tax (GST), the law is also “very clear” that the rate would apply like those in cases of other services.

“We’re going to take a call. I understand people are already paying taxes on it. Now that it’s really gone up a lot, we’ll see if we can actually make changes to the law’s position or not. But that would be a budget. We are already approaching the budget, we have to look at that time, ”Bajaj told PTI in an interview.

When asked if a TCS (tax collected at source) provision could be introduced for crypto trading, the secretary replied “if we make a new law we will see what to do”.

“But yes, if you make money you have to pay taxes … We already have taxes, some have treated it as an asset and paid capital gains tax on it”, did he declare.

When asked if people involved in cryptocurrency trading would be classified as a facilitator, brokerage and trading platform and how taxation would be carried out under the GST, Bajaj said that “of such things would already be available in other services as well. So whatever rate of GST they are taxed at will apply to them. ”

“They have to register. The GST law is very clear. If there is an activity, if there is a broker who helps people and charges brokerage fees, the GST will be charged,” a- he declared.

Separately, the government is likely to introduce a cryptocurrency bill during the winter session of parliament starting on November 29, when those currencies are said to be used to lure investors with misleading claims.

Notably, there have been a growing number of advertisements, even featuring movie stars, promising easy and high returns on cryptocurrency investments in recent times.

Currently, there is no regulation or ban on the use of cryptocurrencies in the country. Against this backdrop, Prime Minister Narendra Modi last week held a cryptocurrency meeting with senior officials and it looks like strong regulatory action could be taken to address the issue.

Earlier this week, the Standing Committee on Finance, chaired by BJP member Jayant Sinha, met with representatives from crypto exchanges, blockchain and the Crypto Assets Council (BACC), among others, and came to the conclusion that cryptocurrencies shouldn’t be banned, but it should be regulated.

The RBI has repeatedly reiterated its firm stance against cryptocurrencies, claiming that they pose serious threats to the country’s macroeconomic and financial stability and has also questioned the number of investors trading there as well as their market value. claimed.

Earlier this month, RBI Governor Shaktikanta Das also reiterated his views against allowing cryptocurrencies, saying they pose a serious threat to any financial system because they are not regulated by central banks.

The Supreme Court, in early March 2020, quashed the RBI circular banning cryptocurrencies. Following this on February 5, 2021, the central bank set up an internal panel to propose a model of the central bank’s digital currency.

The RBI had announced its intention to release an official digital currency, in the face of the proliferation of cryptocurrencies such as Bitcoin, of which the central bank has many concerns.

Private digital currencies / virtual currencies / crypto currencies have grown in popularity over the past decade or so. Here, regulators and governments have been skeptical of these currencies and fear the associated risks.

It can be noted that on March 4, 2021, the Court of Cassation canceled an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services in the field of virtual currencies.

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IT Department Detects Rs 200 Crore Black Income After Raids On Kolkata Group, Real Estate News, ET RealEstate https://evedirect.net/it-department-detects-rs-200-crore-black-income-after-raids-on-kolkata-group-real-estate-news-et-realestate/ Sat, 20 Nov 2021 09:30:00 +0000 https://evedirect.net/it-department-detects-rs-200-crore-black-income-after-raids-on-kolkata-group-real-estate-news-et-realestate/ NEW DELHI: The Income Tax Department has detected unrecorded income of around Rs 200 crore after it recently raided a Kolkata group engaged in cement manufacturing and real estate, the CBDT said in a statement . The searches were carried out in twenty-four premises in Kolkata, Assam, Meghalaya and Delhi on November 16, he said. […]]]>
NEW DELHI: The Income Tax Department has detected unrecorded income of around Rs 200 crore after it recently raided a Kolkata group engaged in cement manufacturing and real estate, the CBDT said in a statement . The searches were carried out in twenty-four premises in Kolkata, Assam, Meghalaya and Delhi on November 16, he said.

The department seized Rs 1.30 crore in cash and placed half a dozen bank lockers, unearthed in the raids, under duress, the Central Commission on Direct Taxes (CBDT) said.

“The search action, so far, has led to the detection of a total unrecorded income of around Rs 200 crore,” he said in a statement on Thursday.

The CBDT said the documents seized point to taxable income fraud by enacting various wrongdoings such as shutting down production, unaccounted for and under-invoicing sales, inflation of the cost of purchases using fake parts and expenses. not recognized incurred in cash.

“Evidence of receipt of cash during the sale of apartments, by a group company, has also been found. ”

“Analysis of the seized evidence reveals that many paper companies are managed by the group to provide housing for its flagship business,” said the governing body of the Department of Income Taxes.

Documents relating to unrecorded unsecured loans, bogus commissions paid and unjustified share capital and share premiums received through shell companies were seized, he said.

The press release indicates that some of the group’s companies are managed on behalf of people / employees with limited means.

“While these employees were earning meager salaries, payments amounting to millions of rupees were made to these companies. These companies operate from the premises of the group’s factory,” he said.


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Two new income tax increases included in the Build Back Better law https://evedirect.net/two-new-income-tax-increases-included-in-the-build-back-better-law/ Thu, 18 Nov 2021 16:30:16 +0000 https://evedirect.net/two-new-income-tax-increases-included-in-the-build-back-better-law/ On November 3, 2021, the House Rules Committee released a revised version of HR 5376, the Build Back Better Act, which would impose two new income tax “surcharges” on high-income taxpayers, effective January 3, 2021. January 1st. 2022. For individuals, a 5% surtax would apply on modified adjusted gross income (MAGI) over $ 10 million […]]]>

On November 3, 2021, the House Rules Committee released a revised version of HR 5376, the Build Back Better Act, which would impose two new income tax “surcharges” on high-income taxpayers, effective January 3, 2021. January 1st. 2022. For individuals, a 5% surtax would apply on modified adjusted gross income (MAGI) over $ 10 million and a 3% surcharge on MAGI over $ 25 million. For a married person filing separately, the MAGI thresholds would be $ 5 million and $ 12.5 million, respectively.

For trusts and estates, the Act would impose these surcharges at thresholds 98% less than those of individuals: 5% on MAGIs over $ 200,000 and an additional 3% on MAGIs over $ 500,000. At present, these surcharges are simply offered. They have not yet been voted on in the House, and even if they are passed, the Senate could remove them from the final bill.

Indeed, these increases would create an “intermediate” tax bracket of 31.8% on capital gains, roughly halfway between the current maximum tax rate on long-term capital gains of 23.8% and the ordinary maximum rate of income tax of 40.8%. Aside from a handful of highly paid business executives, athletes and artists, the proposed surcharges, if adopted, are likely to affect (and may surprise) two main categories of taxpayers: (1) entrepreneurs who sell a business; and (2) non-grantor trusts.

So what now? The most obvious strategy to avoid the proposed surcharges would be to recognize as much income as possible before the effective date of January 1, 2022. Other than accelerating earnings and other income, what other strategies are available?

Entrepreneurs

Entrepreneurs looking to avoid the impact of the proposed surtaxes may want to spread the gain from the sale of a business among multiple tax years or multiple taxpayers. For example, they can:

  • Structure the sale of the business to recognize the gain in stages, accepting a remittance note or retained equity instead of cash. This would allow the seller to recognize reduced amounts of gain over time when the buyer makes payments of instruments or upon a subsequent sale of retained equity.

Transfer business interests to other taxpayers prior to the sale and in pursuit of the seller’s broader planning goals. For example, the seller may wish to transfer business interests to family members, non-grantor trusts for their benefit, or charities. Each owner will then recognize their proportional share of the gain, thereby lessening the impact of the sale on a taxpayer’s MAGI for the purposes of surcharges. Taxpayers seeking to transfer business interests should do so as long as possible before finalizing the sale of the business in order to avoid the transfer being treated as an illegal disposal of income, which applies once the right of the taxpayer to collect the income is virtually certain. (See Treasury Regulations, article 1.671-1 (c); Chrem v. Commissioner, 116 TCM (CCH) 437 (2018)).

  • Transfer the business interest to a Charitable Remainder Trust (CRT), which, as a non-taxable entity, will avoid immediate recognition of gain on interest held in trust at the time of sale. (Note: this strategy will not work with shares of Company S, as a CRT is not an authorized shareholder of Company S.) Instead, the seller will recognize this deferred gain upon receipt of the annual distributions from the CRT generally for the lifetime of the seller or the joint life of the seller and the seller’s spouse.
  • If the business is a C corporation, use the Internal Revenue Code section 1202 small business share exception where possible, which may result in the exclusion of a gain that may be achieve $ 10 million of the seller’s MAGI in the year of the transaction.

Non-granting trusts

Unlike entrepreneurs, trustees of non-granting trusts will need long-term or year-over-year solutions to proposed surcharges, rather than focusing primarily on one significant fulfillment event. This is because taxpayers may reconsider or restructure non-grantor trusts, especially trusts that were created primarily to reduce state income taxes, as proposed federal surtaxes may outweigh state tax benefits. provided by these trusts. For existing non-grantor trusts, or in cases where a non-grantor trust remains appropriate for other reasons, the trustees may consider the following strategies:

  • “Activate” the grantor’s trust status for a year in which the trust’s MAGI would otherwise trigger a surcharge. IRC section 675 (3) provides that a trust shall be treated as a grantor’s trust for any year in which the grantor borrows from the trust without adequate collateral and has not repaid the loan prior to the end of the year. (Note: Taxpayers should be careful to avoid recognition of a gain when converting from transferor to non-transferor trust status.) Under this strategy, the settlor could potentially borrow trust assets shortly before the transfer. end of the year, repay those assets shortly thereafter and avoid the lower MAGI thresholds for non-grantor trusts that would otherwise apply.
  • Distribute the net distributable income (RNI) of the trust so that the responsibility for paying income tax is vested in the individual beneficiaries, rather than retained by the trust. Distributions may be made directly to the beneficiaries, to a flow-through entity owned by the beneficiaries, or to creditor-protected trusts that the beneficiaries are deemed to own for income tax purposes. Although the DNI generally excludes capital gains income, a trust can be amended to include this income in the DNI; liberal distributions to individual beneficiaries under this broad definition of income would further reduce the trust’s MAG. The trustee may be able to include capital gains in the DNI by virtue of its adjustment power under the Uniform Principal and Income Act, or as a “reasonable and impartial exercise of discretion” under by Treas. Reg. Section 1.643 (a) -3 (b).
  • Invest some or all of the trust’s cash reserves in private placement life insurance, which, if properly structured, should reduce the trust’s MAGI by excluding the growth in cash value from tax of the police.

It is difficult to reduce MAGI by generating deductible expenses. For example, deductible investment interest charges reduce MAGI, but charitable contributions typically do not. Essentially, MAGI is adjusted gross income. Income shifting is therefore more likely than extravagant spending to reduce the impact of the new surcharges.

There is no certainty that these surcharges will be enacted, let alone in their current form. We will continue to monitor the progress of the law and keep you informed of any new developments.


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How will the new income tax law 2022 impact taxpayers? https://evedirect.net/how-will-the-new-income-tax-law-2022-impact-taxpayers/ Wed, 17 Nov 2021 11:00:37 +0000 https://evedirect.net/how-will-the-new-income-tax-law-2022-impact-taxpayers/ There are no major changes in the Income Tax Bill 2022. Instead, the law has been shelved, which was previously scattered. Compiling the same elements in one chapter will help taxpayers, tax professionals, tax professionals and students find related issues in less time than before. Another good point is that the bill emphasizes the rules, […]]]>

There are no major changes in the Income Tax Bill 2022. Instead, the law has been shelved, which was previously scattered. Compiling the same elements in one chapter will help taxpayers, tax professionals, tax professionals and students find related issues in less time than before.

Another good point is that the bill emphasizes the rules, which will also help taxpayers easily understand complex and technical issues such as the implication of average tax when calculating partnership profit with total income, total rental value of home ownership, tax allowance for individual taxpayers. etc.

The main concern of taxpayers is how changes in tax law will impact their tax burden, which applies to both individual and corporate taxpayers, and also the ease with which taxpayers will be able to calculate their income. taxable and their tax payable.

For complex and technical reasons, taxpayers are afraid to complete their tax returns.

The employee is the majority of taxpayers compared to other employees. The identification of the subject employee is easy because the payment of wages is made by bank exceeding a certain ceiling.

But, the calculation of taxable income from salary income taking into account the eligible exemptions for the rent of the house, transport, medical allowance, etc.

The above calculations are more direct and precise in the bill than the existing law, which will give more comfort to the employee. According to the bill, he must first calculate the total wage income, then deduct the lower amount from two-thirds of the base salary or Tk 450,000. That’s all!

But a certain level of employee will have the option of increasing or decreasing the amount of the base salary to reduce taxable income to pay less taxes to benefit from the total exemption.

On the other hand, the highly paid employee will not have the chance because of the maximum cap of 450,000 Tk. Thus, the high wage earners will suffer in the new law.

Where the tax benefits for well-paid employees diminish, the business benefits.

If the payment of benefits to the employee exceeds a certain limit known as perquisites, then the company will be required to pay tax at the normal rate, i.e. 30 percent on that amount exceeded. .

Now, raising the existing limit from 5.5 lakh Tk to 10 lakh Tk will greatly reduce the amount of the tax, which will make businessmen happy.

The inclusion of new elements in the bill will also help business sectors, which were not included in the existing ordinance.

Due to the absence of these elements in the existing ordinance, companies suffer in a few cases, resulting in a tax burden as well as tax disputes between the tax administration and taxpayers.

The amortization of preliminary expenses and intangible assets and the exclusion of advertising of promotional expenses will relieve corporate taxpayers and also reduce tax disputes.

However, few new rules will force private sectors to follow more strictly, especially when paying in cash.

Like payment for renting a house, no cash payment is allowed to the employee as salary, which is Tk 20,000, according to applicable law. In all other cases, no payment will be made in cash exceeding Tk 50,000. Otherwise, the full amount will be refused, i.e. 30 percent tax.

Each month, two monthly statements of taxes levied or collected at source, a semi-annual withholding tax statement, annual statements relating to the payment of tax are filed with the tax circle by the business sector including the tax authorities .

But, during the annual corporate tax assessment, tax challans are required to submit again to the same tax office. Submitting the same documents requires a huge volume of photocopies.

Recently, the tax administration has implemented an electronic tax payment system, and the tax administration can integrate the system to check whether the tax has been filed against the amount shown in the financial statements audited by the firms. accounting.

And this digitization will reduce the hassle for taxpayers while saving the environment by skipping photocopying the same documents over and over again.

Due to technological advancements and cross-border transactions through online platforms, there is new hope of raising revenue for the government.

During the lockdown due to Covid-19, cross-border transactions have increased and several developed countries have already implemented a digital services tax on the income of technology companies operating around the world.

Thus, the tax administration can think of the new sector to impose taxes on their local income in Bangladesh through their agent.

However, the project is open to comments from stakeholders and yet the rules must be published through regulatory orders. So we have to wait until then to understand how the new income tax law 2022 will affect taxpayers.

The author is a fellow chartered accountant and tax advisor.


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Governor wants income tax eliminated, says towns and counties spending federal dollars on water and sewage needs to be ‘rewarded’ https://evedirect.net/governor-wants-income-tax-eliminated-says-towns-and-counties-spending-federal-dollars-on-water-and-sewage-needs-to-be-rewarded/ Mon, 15 Nov 2021 20:28:55 +0000 https://evedirect.net/governor-wants-income-tax-eliminated-says-towns-and-counties-spending-federal-dollars-on-water-and-sewage-needs-to-be-rewarded/ Gov. Tate Reeves said Monday he wanted to eliminate state income tax, give teachers a big pay rise and move national parks to a new agency. Reeves also said local governments that do not prioritize spending federal COVID-19 relief funds for critical water and sewer infrastructure needs will see “their pleas for help will likely […]]]>

Gov. Tate Reeves said Monday he wanted to eliminate state income tax, give teachers a big pay rise and move national parks to a new agency.

Reeves also said local governments that do not prioritize spending federal COVID-19 relief funds for critical water and sewer infrastructure needs will see “their pleas for help will likely stay. without answer”.

First-term Republican governor released annual budget proposal this represents his priorities for lawmakers, who will follow next month with a budget proposal of their own. Neither is binding and both are simply blueprints that lawmakers can use to develop the budget at the end of the upcoming session.

The new session begins on January 4 and fiscal 2023 will begin on July 1.

“In fiscal 2023, we will look to eliminate tax burdens and take bold steps to attract more and better jobs for our people,” said Reeves. “If we’re going to be competitive, we’ve got to be able to pull out a map of the United States and recognize that Texas is to our west, Florida is to our east, Tennessee is to our north.

“We compete with them every day for new jobs. Either way, we were at a disadvantage because they didn’t have income tax.

The biggest proposal is Reeves’ quest to eliminate state income tax, starting with the 4% bracket in fiscal year 2023 and part of the 5% bracket in fiscal year 2023. calendar year 2023. Its budget would use $ 1 billion of the $ 1.8 billion in excess revenue. to begin the phase-out of five years. He also wants lawmakers to implement budget caps of 1.5% growth in general fund spending each fiscal year.

He also opposes any proposed tax swap that would trade an increase in one tax for a decrease in another.

“I am opposed to lowering taxes here, but raising your taxes there,” Reeves said. For me, this is not a tax cut. It is a fiscal exchange.

The teachers’ salary increase would cost $ 71 million and give teachers an immediate salary increase of $ 1,300, with two further increases of $ 1,000 over the next two fiscal years for a total of $ 3,300. The governor said the salary increase would move the state from 37th nationwide to 21st best (fourth best in the Southeast region).

As for the $ 800 million in federal COVID-19 relief funds allocated statewide to municipalities and counties, the city of Jackson received $ 45 million and Hinds County received between 42 and 43 million dollars in federal funds.

Reeves said if cities and counties want to be rewarded with more state money for water and sewer infrastructure or even additional resources for law enforcement, they must spend these funds for essential infrastructure needs.

“I think it’s really important that if they really believe their priority is the water and sewer system, and I think it should be that they invest their local money,” Reeves said. “I think we, as a state, should be prepared to reward entities that spend their money in areas of critical importance. ”

Speaking of Jackson, Reeves continued his efforts to expand the role of the Capitol Police.

The governor also wants $ 5.5 million for the Department of Public Safety to double the size of the Capitol Police force to 150 officers. These officers were transferred during the last session of the Department of Finance and Administration to the DPS and are responsible for policing the Capitol Complex Improvement District in Jackson.

Reeves also wants state parks to be transferred from the Mississippi Department of Wildlife, Fisheries and Parks to the Mississippi Development Authority, which handles business recruiting and tourism. He also wants a trial program for two state parks to be managed by a third-party vendor.

The governor also has plans for American Rescue Plan Act funds, which the legislature has held a hearing to discuss. Reeves’ plans include:

  • $ 200 million for broadband expansion.
  • $ 130 million for workforce training through Accelerate Mississippi.
  • $ 100 million to repair water and sewage infrastructure across the state. The governor says that in the future he wants $ 1.2 billion over the next few years in matching funds for counties and municipalities.
  • $ 52 million for the promotion of tourism.
  • $ 50 million for downtown revitalization.


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