Page 17 - Banking Finance June 2023

ROUNDUP

that the ruling could open the door for trusts as their incomes and donations ter Nirmala Sitharaman chaired a review
litigation. did not add up. meeting with Central Board of Direct
Taxes (CBDT).
The case relates to Profisolutions Pvt
Ltd which provides solutions in various Coffee day lapses: NFRA Sitharaman emphasised that CBDT
industries and has its head office in should ensure timely action on all ap-
bars auditor for 10 years
Bengaluru and a branch office in plications filed by taxpayers and that
The National Financial Reporting Au-
Chennai. The branch office provides a reasonable time frame should be set
thority (NFRA) has barred the engage-
support services like engineering, de- for disposal of such applications.
ment partner of the firm that audited
sign, and accounting to the head of-
Mysore Amalgamated Coffee Estate
fice. The two offices have different
(MACEL) for the maximum permissible Services exports rise
GST registrations.
10 years for professional misconduct.
record 27% in FY23
In an order passed by the regulator for
I-T sends notices to 8000 India's services exports shot up by a
auditors and firms of large and listed record 26.6 per cent in 2022-23 (FY23)
taxpayers who donated companies, NFRA held chartered ac-
to $322 billion, according to data re-
to charitable trusts countant Lavitha Shetty, proprietor of leased by the Reserve Bank of India
Lavitha & Associates, guilty, citing
The Income-Tax Department has sent (RBI), thus closing the gap with mer-
multiple failures.
8,000 notices to various individuals chandise exports that grew only 6 per
who made large donations to chari- MACEL, which was linked to Cafe Cof- cent to $447 billion in the same period.
table trusts reported. The notices have fee Day founder V G Siddhartha, has Services imports, on the other hand,
been sent because the donations made been under regulatory lens. grew 22.2 per cent to $179.7 billion,
appear to be attempts to evade tax.
In its order, NFRA said that its investi- leading to a services trade surplus of
Government officials aware of the de- gations have revealed that MACEL's $142.5 billion. With a $267 billion mer-
velopment were quoted in the report auditor for the 2019-20 did not meet chandise trade deficit in the last finan-
as saying that the data shows that the relevant audit standards, and cial year, the country ended up with a
donations made by these taxpayers failed to exercise "professional judg- cumulative trade deficit (or net ex-
was not consistent with their declared ment and skepticism" during audit of ports) of $124.5 billion.
incomes and expenditures. fraudulent borrowings of Rs 4,438 India's services exports range from in-
crore from banks and related parties.
The people who have been served no- formation technology (IT) to services
Of this, Rs 4,177 crore was diverted to
tices include salaried employees, self- provided by doctors and nurses abroad.
the personal accounts of promoters,
employed individuals, and companies. While the RBI doesn't release monthly
their relatives, entities controlled by
disaggregated services exports data, its
The government official said, "In all
them and other related parties.
classification of services exports re-
8,000 odd cases, the donation was
leased quarterly with balance of pay-
exactly the amount required to lower
CBDT review meeting: FM ment data includes transport, travel,
the tax slab or get a full exemption
construction, insurance and pensions,
and was paid by cash." He added, discusses taxpayer base,
financial services, telecommunications,
"Also, an exceptionally high amount
new TDS codes computer and information services, and
was paid to tax professionals, even by
Introduction of new data sources in personal, cultural and recreational ser-
a straight salaried person."
Statement of Financial Transactions (SFT) vices, and other business services. While
The notices were sent during the last
like dividend, interest, securities, mutual software exports dominate India's ser-
one month and were for the assess-
funds and information from GSTN in re- vices exports, "other business services"
ment years 2017-18 to 2020-21. IT
cent years has led to 1118 per cent in- exports have seen a strong ramp-up
department is likely to send more no-
crease in reported information and re- recently, accounting for 24 per cent of
tices said.
sulted in addition of information of about the total services exports in the first
Notices were also sent to small busi- 3 crore persons, the Finance Ministry nine months (April-December) of FY23,
nesses which donated to charitable said in a statement after Finance Minis- from 19 per cent in FY14.
16 | 2023 | JUNE | BANKING FINANCE