August 2020 / India

August 14 2020

India Launches Transparent Taxation Platform

With a clear agenda to build trust between the taxpayers and the administration, the Prime Minister has launched the "Transparent Taxation" platform to honour honest taxpayers amid the COVID-19 pandemic. The said platform focuses on major reforms such as faceless assessment, faceless appeal and the Taxpayers' Charter.

Faceless assessment and faceless appeal

The faceless assessment and faceless appeal schemes aim to simplify the assessment and appeal process, ensure anonymity of taxpayers and minimize direct contact between taxpayers and income tax officers. In this regard, the Central Board of Direct Taxes issued an order under section 119 of the Income Tax Act 1961 dated 13 August 2020 to support various e-governance initiatives, instructing that all assessment orders from now on be passed by the National e-Assessment Centre through the Faceless Assessment Scheme 2019, except for:
  • assessment orders in cases assigned to Central Charges; and
  • assessment orders in cases assigned to International Tax Charges.
The cases taken up for faceless assessment would include a mix of returns filed by individuals and businesses (micro, small and medium-sized enterprises, as well as large companies) and would be determined based on risk parameters and mismatches by a central computer. The National e-Assessment Centre would then allocate the cases to assessment units through an automated allocation system to ensure taxpayer anonymity. Assessees should then respond to notices electronically to the National e-Assessment Centre.

Taxpayers' Charter

Taxpayers are assured of fair, courteous and rational behaviour with the introduction of the Taxpayers' Charter 2020, which lists the Income Tax Department's commitments to taxpayers, including treating taxpayers with honesty, providing mechanisms for appeal and review, providing complete information, and reducing the cost of compliance, among other things, as well as the department's expectations from taxpayers. The faceless assessment and the Taxpayers' Charter are effective from 13 August 2020, while the faceless appeal will be available across the country from 25 September 2020 onwards.
August 24 2020

India Issues Administrative Rules on Claiming Preferential Custom Duty Rates under Treaty Agreements

The Ministry of Finance has issued administrative rules for importers of goods claiming preferential duty rates under treaty agreements. The procedures in the Customs (Administration of Rules of Origin under Trade Agreements) Rules of 2020 (the Rules) require that an importer or his agent claiming the preferential duty rate:
  • declare that the goods qualify as originating goods for preferential rate of duty under an agreement at the time of filing the bill of entry;
  • indicate the respective tariff notification against each item on which preferential duty rate is claimed;
  • produce the certificate of origin (CO) covering each item on which the preferential rate is claimed; and
  • enter certain details from the CO in the bill of entry as prescribed by the Rules.
Importers claiming preferential rate of duty are expected to:
  • possess information as indicated in Form I of the rules;
  • keep all supporting documents related to Form I for at least 5 years from the date of filing of the bill of entry and submit the same to the proper officer on request; and
  • exercise reasonable care to ensure the accuracy and truthfulness of the information and documents.
The claim of preferential duty rate may be denied without verification if the CO:
  • is incomplete and not in accordance with the format prescribed in the Rules of Origin;
  • has an alteration not authenticated by the issuing authority;
  • is produced after its validity period has expired; or
  • is issued for an ineligible item.
The claim may also be disallowed without further verification when:
  • the importer relinquishes the claim; or
  • the information or documents furnished by the importer and available on record are sufficient to prove that the goods do not meet the prescribed origin criteria.
An importer must provide information or documents requested for verification by an officer within 10 working days from the date of request. Where the importer fails to comply by the prescribed date or where the information and documents are found to be insufficient, the officer shall forward a verification proposal for the CO from the designated verification authority in the exporting country or country of origin. Where it is established that an importer has suppressed the facts, made wilful misstatement or colluded with the seller or any other person, with the intention to avail undue benefit of a trade agreement, his claim of preferential rate of duty will be disallowed and the importer will be penalised accordingly. The Rules will come into force on 21 September 2020. Details are available here.
August 10 2020

India Updates Scope of Mandatory Electronic Invoicing for Certain Taxpayers

The Central Board of Indirect Taxes and Customs has updated the scope of the mandatory electronic invoicing (e-invoicing) requirement which will be effective from 1 October 2020. The following changes were announced in Notification No. 61/2020 – Central Tax of 30 July 2020:
  • taxpayers whose aggregate turnover exceeds INR 5 billion (from the previous limit of INR 1 billion) in a financial year will be required to issue e-invoices; and
  • a special economic zone unit is exempt from the requirement.
The increase in the revenue threshold for mandatory e-invoicing aims to provide relief on compliance requirements for small companies. Insurance companies, banks, financial institutions, including non-banking financial institutions, goods transport agencies and passenger transportation services, which are covered by different invoicing rules, are exempt from the e-invoicing requirement.