Non-reopening of employee tax assessments where employer pays short-deducted tax and interest under the Board's compliance circular.
Assessments of employees will not be reopened or disturbed merely because employers disclosed excess salary payments or perquisites where employers have paid the short-deducted tax and interest pursuant to Board's Circular No. 685; this non-reopening treatment aims to encourage voluntary compliance by employers defaulting in tax deduction at source and is to be communicated to Assessing Officers.

Exchange of information under DTAA: routine half yearly proforma reporting plus suo motu briefs where tax evasion is suspected.
Routine exchange of information under the Exchange of Information article of DTAAs requires half yearly proforma reports to the Board concerning transactions involving treaty partner country recipients; the monetary threshold for routine reporting is raised and reports for periods ending 30 June and 30 December must reach the Board by the end of the following month. Additionally, authorities must send suo motu, self contained briefs to the Board where tax evasion in the treaty partner country is suspected.

Tax Deduction at Source compliance: voluntary payment of outstanding TDS plus interest avoids penalty and prosecution
Employers must deduct and remit tax at source on salaries, allowances and perquisites paid or provided abroad for services rendered in India; failure to do so makes the employer an assessee in default with interest and exposes them to penalties and prosecution. The Board offered a time limited concession exempting voluntary payers who remit the full outstanding TDS plus interest by the specified cutoff from initiation of penalty and prosecution proceedings, and directed wide publicity for the concession while warning of strict enforcement thereafter.

Tax rate restructuring: Finance Act revises income tax rates, expands TDS scope, and introduces estimation schemes and exemptions
The Finance Act, 1994 revises income tax rates and surcharge treatment, standardises uniform withholding rates for specified nonresident incomes, expands TDS to rent and contractor sub contracts, and alters advance tax instalments and interest for shortfall. It creates new senior income tax authorities, makes certain 143 intimations appealable, and prescribes earlier company return dates. Substantive changes include reduced holding periods for securities and mutual funds for long term capital gains, estimated income schemes for construction and truck businesses, targeted tax holidays and expanded exemptions and deductions for select sectors and beneficiaries.

Consent requirement under SICA: fiscal concessions to be decided case-by-case; central government to convey consent through DGIT Admn as nodal agency.
Circulars Nos. 523 and 576 are withdrawn because they did not address the statutory consent requirement under the Sick Industrial Companies Act; fiscal concessions or financial assistance for rehabilitation must now be considered on individual merits and consent or denial will be conveyed by the Central Government. Prior cases decided under the withdrawn circulars need not be reopened. The Director-General of Income-tax (Admn.) is designated as the nodal coordinating office for communication between the tax administration and industrial reconstruction authorities.

Assessment scrutiny selection: mandatory scrutiny for searches, reassessments and high-risk refunds; sample checks and exclusions specified.
Parameters require compulsory scrutiny for assessments arising from search, seizure and survey, reassessments and set-aside assessments, high-risk refund claims, and cases recommended by the Investigation Wing. Sample scrutiny applies by income bands with specified selection percentages and exclusions for certain resident individuals and modest year-on-year increases subject to provisos. Sampling uses rotational selection for higher bands and a random-start method for lower bands; samples are drawn from prior-year filings unless workload necessitates current returns. Non-filers must be issued notices and, if they file, are selected under the same criteria.

MODVAT credit disallowed where depreciation claimed on the duty component; notify excise to withdraw credit.
A MODVAT mechanism allows credit of duty on capital goods to offset excise on final products provided the manufacturer does not claim depreciation under Section 32 for the portion of cost representing that duty; a declaration to the Assistant Collector is required. The Board instructs that if depreciation is claimed on the duty component after credit was availed, Central Excise authorities must be notified to withdraw the credit.

Jewellery seizure limits under search provisions: specified personal thresholds and discretionary exclusions govern seizure during income-tax searches.
Guidelines require that during income-tax searches only gold jewellery exceeding the gross weight declared by a wealth-tax assessee be seized, while persons not assessed to wealth-tax are to have specified personal jewellery thresholds excluded from seizure; authorised officers must prepare a detailed inventory for assessment and may, considering family status and community customs, exclude larger quantities subject to reporting to the authorising Director/Commissioner.

Capital gains residency rule: Mauritius residents' gains from alienation of shares taxable only in Mauritius.
Paragraph 4 of Article 13 allocates exclusive taxing rights over capital gains from property not covered by earlier subparagraphs to the State of residence of the person deriving the gains; accordingly, capital gains realised by a Mauritius resident from the alienation of shares are taxable only in Mauritius under Mauritius law and not taxable in India. Paragraph 5 defines "alienation" to include sale, exchange, transfer, relinquishment, extinguishment of rights or compulsory acquisition.

Tax withholding on payments for any work expands to include services and transport, with prescribed withholding rates on pay-outs.
Section 194C mandates tax deduction at source from payments for carrying out any work, broadly including services, transport, advertising, broadcasting, telecasting, labour supply, materials incidental to work, and works contracts; applies to written and oral contracts, with withholding at 2% from contractors and 1% by contractors on payments to resident sub-contractors, calculated on payment amount and triggered on credit or payment. Exclusions include contracts in substance for sale of goods, hiring or renting of equipment, certain banking transactions, and amounts treated as salaries; a non-deduction certificate may be obtained where income is not taxable.

Deduction under section 115J follows the computation method of sections 80HHC and 80HHD, not their quantified amounts.
Clause (iii) requires that the net profit shown in the profit and loss account be adjusted as per the Explanation's specified additions and deductions and that the deduction from book profits be computed by applying the procedural proportionate methods used in the export-deduction rules; if the business is exclusively eligible the full adjusted amount is deductible, otherwise the relevant export-related turnover or receipts proportion is applied to the adjusted amount to determine the deduction.

Luxury tax exclusion from room charges clarifies Expenditure-tax scope, withdrawing prior guidance and adopting contrary interpretation.
The Board accepts the Income-tax Appellate Tribunal's view that luxury tax and similar State levies do not form part of room charges under section 2(10) of the Expenditure-tax Act, 1987, and withdraws earlier circulars that had required inclusion of such taxes in the room-charge base for Expenditure-tax applicability.

Tax deduction under section 80G: donations to CM earthquake relief fund eligible for full deduction; employers may deduct via payroll.
Drawing and Disbursing Officers may allow 100% deduction under section 80G for donations to the Chief Minister's Earthquake Relief Fund if satisfied as to amount and receipt; no upper ceiling applies though donations below a specified minimum are ineligible. Employers remitting payroll collections as lump sums must supply the Fund with a donor-identifying list counter-signed by the Fund and issue employee certificates detailing deductions and remittance particulars. A statutory amendment is pending and the instruction applies to donations made in the referenced financial year.

Ad hoc deduction extended to agents of notified mutual funds, subject to account maintenance and aggregate commission limits.
The Board grants a 50% ad hoc deduction of gross commission to agents of notified mutual funds who do not maintain detailed expense accounts and whose total gross commission from specified sources falls below the aggregate threshold; commissions from UTI, specified securities and LIC are included in this aggregate. Agents exceeding the threshold are not eligible for the ad hoc allowance and must have their expenditure admissibility determined by Assessing Officers under the Income tax Act.

Limit on freight tax ensures total tax does not exceed tax on payments to vessel owners for export carriage.
Taxation of shipping companies must be computed so the total tax collected on carriage from an Indian port to the port of ultimate destination does not exceed a fixed proportion of payments made by the Indian exporter to owners of the mother and daughter vessels, whether paid individually or collectively; field officers are to be informed and implement this computation rule.

Competent Authority discretion in Chapter XXA acquisition proceedings allows dropping proceedings after merits review, subject to chief commissioner's approval.
Guidelines under Chapter XXA required summary examination to identify cases suitable for discontinuance to reduce pendency, without affecting the statutory discretion of the Competent Authority. If the Competent Authority, after hearing objections and reviewing merits, finds property not fit for acquisition, proceedings may be dropped without Board approval; where a detailed merits examination has occurred, prior approval of the Chief Commissioner is required for administrative control. Authorities were directed to dispose of pending Chapter XXA cases within the administrative timeframe to reduce backlog.

Advance tax instalment deadline: payment on next working day avoids interest under Income-tax Act provisions when bank closed
If an advance tax instalment due date falls on a day the authorised receiving bank is closed, Section 10 of the General Clauses Act, 1897 deems payment made on the next immediately following working day as timely, and mandatory interest under sections 234B and 234C of the Income-tax Act, 1961 shall not be charged; Assessing Officers are to be notified for uniform application.

Fictitious depreciation claims tied to sham leasing arrangements should be investigated and disallowed as abusive tax claims.
Fictitious book entries and circular leasing arrangements were used to create deemed ownership of computers so third parties could claim depreciation and investment allowance; Assessing Officers were directed to investigate listed cases and disallow any depreciation/investment allowance claims found to be fictitious.

Deduction under section 80RR: scriptwriters and directors qualify as eligible artists; producers are excluded by category.
Clarification interprets section 80RR to allow an individual author, playwright, artiste, musician, actor or sportsman receiving income from a foreign government or nonresident to claim a deduction of fifty percent of such income or a greater proportion where amounts are brought into India under foreign exchange law, whichever is higher. Script writers qualify as playwrights and directors qualify as artistes for this deduction; producers do not fall within the enumerated categories and are therefore ineligible.