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Estonia joins comprehensive income tax reform

The declaration being prepared at the OECD concerns large global companies and does not change the current tax regime for Estonian companies. As a next step, Estonia is now entering close negotiations with EU member states and the European Commission to protect Estonia’s interests in developing an EU directive implementing the agreement. of the OECD.

“The Estonian corporate tax system has been one of the cornerstones of the international competitiveness of the Estonian business environment, which must be firmly protected. As Estonia opposed the introduction of a global minimum tax, we conducted intense negotiations throughout the summer to achieve a situation where this global tax would affect Estonian entrepreneurs as little as possible. Following the successful negotiations, the minimum tax will not change anything for most Estonian entrepreneurs and will only apply to subsidiaries of large international groups, ”Prime Minister Kaja Kallas explained.

“At the same time, the taxation of digital giants has long been a problem. However, such a digital tax can only work if all countries have a similar approach towards tech giants, as digital services know no borders. The large digital business tax affects groups with a turnover of 20 billion dollars and therefore does not affect any business in Estonia, ”Kallas said.

The Prime Minister explained that the tax environment for large multinational companies is changing anyway, regardless of Estonia’s decisions. “We therefore adhere to the global tax agreement. By actively making proposals and vigorously defending our positions, we have the best opportunities to ensure that Estonia’s business environment and fiscal policy continue to work in the interests of a better future for all of us. . ”

Tomorrow, October 8, there will be a meeting of the 140 countries involved in the reform, with a view to approving the two-part tax package. The first pillar of the reform concerns the tax on group profits with a turnover of 20 billion, or so-called digital tax, which Estonia supports.

The second pillar of the reform concerns an overall minimum corporate income tax of at least 15 percent. The minimum tax would only apply to groups with a consolidated turnover of at least 750 million euros per year. The OECD wants to achieve political consensus tomorrow in favor of this proposal, and the countries joining the reform promise to develop and implement the necessary laws in 2023.

If the effective tax rate of a subsidiary operating in a country other than the head office of the group is less than 15 percent, the country of the head office has the right to impose itself the difference between the effective tax and the ‘minimum tax, which means that in the case of Estonia, these subsidiaries may be taxed by another country.

In order to protect its interests, Estonia has conducted intense negotiations to give local subsidiaries of international groups the longest possible tax deferral period, which would allow companies more flexibility in deciding their cash flow. throughout the business cycle, rather than forcing us to tax immediately profits. As a compromise, a period of four years was proposed.

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Recent changes in the highest personal income tax rates in Europe, 2021

In 2019, personal income tax revenue represented 24% of total tax revenue in OECD countries. Countries tax labor income in a variety of ways through payroll taxes, personal income taxes and, in some cases, surcharges.

Between 2018 and 2021, eight European OECD countries changed their top personal income tax rates. Of these eight countries, four have reduced their highest personal income tax rates while the other four have raised their highest rates.

The Czech Republic, Latvia and Lithuania have moved from flat-rate personal income taxes to progressive tax structures. Spain has increased its highest personal income tax rate. Sweden has removed a surcharge. A surcharge in Greece has been temporarily suspended. The Netherlands have slightly changed their personal income tax rates. Turkey has added a new upper personal income tax bracket.

Czech Republic

From 2021, the Czech Republic reintroduced progressive taxation with a maximum rate of 23% on income above 1 million Czech crowns (US $ 78,000). Previously, a flat tax of 15 percent applied.


Greece reduced the top personal income tax tax rate from 55% to 54% (44% income tax plus 10% solidarity surcharge) in 2020. In 2021, the solidarity surcharge has been suspended for all types of income, other than income from public sector employment and pensions. . The maximum rate applies to income over 40,000 € (45,610 USD).


In 2018, Latvia moved from a flat-rate personal income tax to a progressive tax. Prior to this change, Latvia applied a flat tax of 23%. The new system has three separate tranches, at 20%, 23% and 31% (31.4% before 2021). The maximum rate applies to income over € 62,800 (US $ 71,608) in 2021.


In 2019, Lithuania moved from a fixed personal income tax of 15% to a progressive income tax initially with two brackets with rates of 20% and 27%. The current maximum rate is now 32%. The upper bracket applies to income over € 81,162 (US $ 92,545).


The progressive tax system in the Netherlands has gone from four brackets with a maximum personal income tax rate of 52% to three brackets with a maximum rate of 51.75% in 2019. The structure of the brackets has been further improved. amended in 2020, reducing the top personal income tax bracket. at 49.5%.


Spain has a fiscally decentralized system with personal income tax rates which are a combination of national and regional policies. Madrid has the lowest combined personal income tax rate in the country: a local tax rate of 21% plus the current national tax rate of 24.5% gives a combined rate of 45.5 %. The highest rate is 54 percent in the Valencian Community. In 2020, the national rate rose from 22.5 to 24.5, increasing rates across the country.


Sweden removed its highest personal income tax rate in 2020, which added a 5% surtax on income above SEK 703,000 (US $ 76,372). Sweden levies a 20% tax rate on income over SEK 523,200 (US $ 56,839) as well as a variable municipal tax rate. The current average municipal rate is 32.85%.


In 2020, Turkey introduced a new personal income tax rate of 40% that applies to income above TRY 650,000 (US $ 92,527). The new rate has been added to Turkey’s tax brackets of 15, 20, 27 and 35 percent.

European OECD countries with changes in the highest personal income tax rates between 2018 and 2021
Country 2018 tax rate 2019 tax rate 2020 tax rate 2021 tax rate
Czech Republic (CZ) 15% 15% 15% 23%
Greece (GR) 55% 55% 54% 44%
Latvia (LV) 31.4% 31.4% 31.4% 31%
Lithuania (LT) 15% 27% 32% 32%
Netherlands (NL) 52% 51.75% 49.5% 49.5%
Spain (ES) (Madrid) 43.5% 43.5% 43.5% 45.5%
Sweden (SE) 57.1% 57.2% 52.3% 52.9%
Turkey (TR) 35.8% 35.8% 40.8% 40.8%

Note: Income tax rates in Spain vary by region. In 2021, they range from 45.5% in Madrid to 54% in the Valencian Community.

Source: OCDE.Stat, “Table I.7. Highest personal income tax tax rates ”, 2020,; KPMG, “Personal Income Tax Rate Table,” accessed 23 August 2021, rates-online / individual-income-tax-rate-table.html.

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Ohio Municipal Income Tax COVID-19 Case Reviewed by Court of Appeals

There has been an ongoing fight in Ohio since the first stay-at-home order was issued: Should commuters pay income taxes to towns where they no longer physically worked?

The cities said yes. A conservative group called the Buckeye Institute said no. And now three judges from the Tenth Ohio District Court of Appeals will decide who is right.

Ohio law allows local governments like cities to tax people who live and work within their borders. The idea being that the people who work there should help pay for the services they use like sidewalks, roads, police and ambulances.

And cities are quite dependent on this type of tax.

For example, the six largest cities in Ohio (Cleveland, Columbus, Cincinnati, Akron, Toledo, and Dayton) derive about 88% of their income from income tax, a substantial portion of which comes from commuters.

“Cities across the state stand at risk of losing a huge amount of tax revenue,” Columbus City Attorney Zach Klein said in a statement when first filing the complaint in July 2020.

That’s why state lawmakers passed a bill during the shutdown that allowed municipalities to continue collecting taxes from these former commuters until the governor ends the state of emergency. from Ohio.

They then changed their minds and decided that Ohioans could get reimbursements for the days they worked from home in 2021 but not in 2020.

The big legal question

The Buckeye Institute was happy with the legislature’s decision on 2021, lawyer Jay Carson said. But he still believes thousands of Ohioans owe money for 2020.

“We believe that if the General Assembly is to help cities, there are many constitutional avenues they could take to do so,” Carson said.

But letting cities tax people who don’t live or work within their borders is not one of them. He argued that what lawmakers passed in March 2020 violated the state’s constitution and should be struck down by the court as a matter of principle.

“The city has to have some sort of jurisdictional hook,” Carson said.

A Franklin County judge disagreed.

“Put simply, the Ohio General Assembly has a long history of regulating municipal tax authority,” Justice Carl Aveni wrote in his April ruling.

And that’s the point made by Diane Menashe, lawyer for Columbus City auditor Megan Kilgore.

She argued that state lawmakers simply extended a concept existing in state law that allows employees to work away from the main workplace during certain periods while paying municipal income taxes.

“It was aimed at maintaining the status quo during a time of chaos,” Menashe said.

What is happening now?

The three judges who heard the case on Wednesday will have to render a decision, which could be made next week or next year.

“Usually it takes about three to six months,” Carson said. “But you never know.”

Both sides have made it clear that they will appeal if the decision goes wrong with them, which could mean this case is headed to the Ohio Supreme Court.

It is also not the only ongoing trial in the system. The Buckeye Institute appealed a similar case in Hamilton County. And he has two more pending in other parts of the state.

In other words, anyone looking for a refund of their 2020 municipal income taxes should be prepared to wait.

Anna Staver is a reporter for the USA TODAY Network Ohio Bureau, which serves Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal, and 18 other affiliated news organizations across Ohio.

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Worthington collects tax revenue for the Township of Sharon through JEDD

The Town of Worthington begins collecting tax revenue for the Township of Sharon as part of a Joint Economic Development District.

On September 20, the city council created a special JEDD income fund with the aim of collecting tax revenue.

“Worthington will collect income tax for the Township of Sharon,” said board chair Bonnie Michael. “We will receive a fee for our processing, then the majority of the income tax will go to Sharon Township.”

The arrangement will apply to around $ 3 million in payroll for workers employed in the JEDD zone at the Olentangy Valley Center shopping complex, according to Worthington executive assistant Ethan Barnhardt, who is the city’s representative to of JEDD and vice-president of the board of directors of JEDD. .

The 2.5% tax rate is expected to generate about $ 75,000 per year, he said. Of that amount, about $ 60,000 will go to Sharon Township and about $ 15,000 to Worthington for the maintenance and administration of the JEDD, Barnhardt said, although there is still additional revenue for the town after the fees. administrative.

“It’s a win-win solution for both communities and it further deepens our collaborative relationship,” said Barnhardt.

The arrangement was due to start on October 1, he said.

Barnhardt said townships are unable to collect income taxes under Ohio law, and the JEDDs help fill in the gaps and help townships meet their economic development goals.

“The JEDDs were created so that the townships and municipalities can collaborate and agree to extend the fiscal authority of municipalities with the aim of facilitating economic development within the township,” said. “The main advantage for the township is that it does not have to annex its land and that it can start collecting part of the income from income tax that otherwise would not have been collected in the area. unincorporated area. “

The JEDD was created on July 20, 2020, when city council voted to allow City Manager Matt Greeson to enter into a contract with the Township of Sharon, Barnhardt said.

It is an extension of the city and township partnership in which the city provides fire extinguishing and emergency medical services to township residents and businesses.

Sharon Township approved the JEDD in May, according to administrator John Oberle, who is a member of the JEDD board.

Barnhardt said the JEDD was created to “help facilitate economic development and create jobs and economic opportunities” within its borders.

He said the JEDD consists of five plots in Sharon Township at the Olentangy Valley Center – a commercial development in the township off Highway 315 just north of Interstate 270, which is due to be redeveloped in recent years. and received tax incentives from Franklin County in 2018 to stimulate redevelopment of the site, as reported by The Columbus Dispatch in February 2018. These plots include the Hills Market at 7860 Olentangy River Road, the new Bristol Senior Living facility at 7780 Olentangy River Road and several other businesses.

“Worthington and the Township of Sharon have always had a close bond, and it was a logical way for Worthington to help the Township in the redevelopment of the Olentangy Valley Center by generating new income for the Township,” said Barnhardt.

Because the commune was waiving taxes in the Center of the Olentangy Valley as a result of the tax incentives, Oberle said, JEDD was needed to help recover some of that income.

“We are comfortable with this, but we also have a duty to our residents to make sure (that) if we are going to forgo certain tax incentives, we thought that one way to compensate was to create the JEDD”, did he declare. noted. “I anticipate this will help us with some of the costs that have been lost for investment in the development. And it will go to other township costs that are ingrained for the benefit of our residents. It will be a win-win.

“It won’t be a godsend, but it will help us with our budget.”

Oberle said the township was not losing any income because of the tax incentives.

Sharon Township’s annual operating budget for the current fiscal year is approximately $ 3 million, he said.

According to Barnhardt, taxes levied on an employee in JEDD must be withheld by the employer. If there is a tax in the municipality where that person’s residence is located, that municipality can choose to give full or partial credit for taxes paid at a workplace, he said.

“The logic behind this tax system is that people pay taxes where they live and work because they use city services provided both at the workplace and at residence, such as driving. , police and firefighters, ”he said. “If a person works in Sharon Township but does not live there, it is very likely that the employee is already taxed on their income elsewhere.

“With the JEDD, the income tax which was previously withheld where the employee lived would be redirected to the JEDD to cover the costs linked to the redevelopment of the Center de la Vallée d’Olentangy.”

Oberle said tax incentives for owners of Olentangy Valley Center, Columbus-based Continental Real Estate Cos., Include a district tax increase funding through the township and an incentive for the community redevelopment through Franklin County.

Oberle said TIF is redirecting money that would normally be paid in taxes to infrastructure development in support of the site. The CRA “provides property tax exemptions for homeowners who renovate existing buildings or construct new buildings,” according to

The redevelopment of the center of the Olentangy Valley is complete, with the exception of a plot on the north side of the site which is still under development, Oberle said.

A Sheetz gas station and convenience store were offered for this plot, but Sheetz announced that it had withdrawn its proposal in August 2020.

[email protected]


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The Minister of Finance amends the implementing regulations of the Income Tax Act

Mohamed Maait, Minister of Finance, issued Resolution No. 491 for 2021 in order to amend certain provisions of the Regulations for the execution of the Income Tax Law promulgated by Law No. 91 of 2005.

Reda Abdel Qader, chairman of the Egyptian Tax Authority (ETA), said on Monday that the first paragraph of article 51 of the executive regulations will be replaced by the following:

“Pursuant to the provisions of article 42, the competent tax authority is notified of the taxpayer to pay tax on the form (8 buildings), and the taxpayer is required to inform the competent tax administration of the building taxable transfers via the electronic portal of the Egyptian tax administration or by any electronic means on the form (16 bis).

Abdel Qader added that in order to facilitate the procedures and complete the electronic services provided by ETA, a 16-bis form (notification of the transfer of a built property or a building plot) has been made available. available electronically on both the electronic declaration and the automated tax procedures system, and therefore the financier is required to submit a form (16 bis) electronically from the date on which it was made available on the electronic system.

He pointed out that in accordance with Article 42 of the Income Tax Law, property tax is levied at the rate of (2.5%) of the value of the property sold, without any reduction in the total value of the sale of built buildings. real estate or building land, as well as whether the contracts for these transactions are made public or not.

He explained that all real estate and residential units in the villages are exempt from property tax, as well as the actions of the heir until the promulgation of Law No. 158 of 2018 amending Law No. (91) of 2005, amending article 42., in buildings devolved by succession in their inheritance condition, in addition to buildings presented in kind in the capital of joint-stock companies on condition that the corresponding shares are not sold for a period of five years, as well as endowment contracts between assets and branches, nor is it considered a taxable assignment of forced sales and expropriation for the public good or improvement.

He stressed that the delivery of proofs indicating the payment of the property tax has been canceled in the event of a real estate declaration or provision of a service on the real estate being transferred, by Law n ° (5) of 2021.

He added that the owner is required to pay the tax within 30 days from the date of the “land transfer” and that it applies in return for the delay provided by the income tax law to counting from the day after the end of the thirty days. .

He added that in the case of the only act of a natural person with a tax file, the taxpayer is obliged to submit a form (16 bis) on the automated system of tax declarations, as well as to pay the value of the tax on real estate transactions on the system.

In the case of the only act of a natural person who does not have a tax file, Abdel Qader indicated that the financier undertakes several steps, which consist in going to the competent tax office with a copy of the contract of sale and the original visit contract, as well as a copy of the identity document, to open a tax file and obtain a tax identification number. Then the taxpayer creates an account on the automated tax declaration system under the tax registration number, to submit a form (16 bis) on the automated tax declaration system, as well as to pay the value of the tax on real estate transactions on the system.

Abdul Qader said that a form (16 bis inventory) is submitted electronically on the electronic reporting system www. and on the automated tax procedures system

He explained that the Integrated Communication Center receives all inquiries on hotline 16395 or via email [email protected]

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Electronic merchants authorized to register for income tax with domicile: ETA

E-merchants operating in Egypt could register for income tax using their home address, according to Reda Abdel Qader, chairman of the Egyptian Tax Authority (ETA).

The taxpayer must submit a photocopy of the lease or ownership contract of his residence, in addition to a recent electricity bill billed to the registered address to open a tax file.

In a statement released on Monday, Abdel Qader said the finance ministry seeks to achieve tax justice by including e-commerce in the tax community, as part of the government’s efforts to include informal economic activities in the formal system.

He explained that all natural persons and companies that engage in commercial or non-commercial activities, whether through electronic platforms or traditional channels, are subject to income tax in accordance with Law 91 of 2005.

The authority has also asked individuals and businesses that use social media networks for e-commerce to register for income tax and VAT – in case their income reaches EGP 500,000 per year – in accordance with the law.

There are three types of businesses that get into the e-commerce business: First, businesses use e-commerce as one of the various means of selling or distributing. Second, businesses primarily depend on electronic means to sell and distribute their products and services. Third, companies use digital platforms to promote other companies’ products to customers.

In addition, all companies that carry out commercial or non-commercial activities (free professions) are subject to income tax in accordance with Law 91 of 2005.

Abdel Qader said ETA has assigned hotline 16395 to receive inquiries relating to the taxation of e-commerce and online content creation activities.

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State income tax reform can bring us closer to racial equity – ITEP

.ITEP staff

The origins of the racial wealth gap are far from mysterious. A long history of injustices, exclusionary policies, and social practices has created an economic system that prioritizes wealth and perpetuates the historic benefits accorded to white individuals and families.

Ending these inequalities will require a concerted effort in all policy areas at all levels of government. For states, an important component of this effort should be personal income tax reform. A new ITEP report offers a roadmap for creating a fairer tax system. The report emphasizes eliminating regressive tax subsidies that deepen the racial wealth gap and replacing them with policies that strengthen the economic security of families, especially those from historically marginalized communities who are more likely to suffer. to have been left behind by our economic system. By levying higher rates on high earners, taxing investment income fairly, and using refundable tax credits to help low-income families, state tax law can move us closer to racial equity. and economical.

To pave the way for a more racially equitable future, states must move away from ill-conceived regressive policies that reinforce the vast inequalities that exist today.

There are big differences between states in this regard, both in their current tax policies and in the direction that lawmakers would like to take next. Mississippi’s legislative leaders, for example, are determined to eliminate their state’s income tax and resort to more regressive sales taxes, a move that would exacerbate Mississippi’s expansive racial and economic inequalities. In places like Washington, New York and the District of Columbia, by contrast, recent reforms to demand more from high incomes and to increase the take-home pay of low-income families will directly reduce racial inequalities in those places. .

The new ITEP report recommends 10 ways personal income tax reform can be used to reduce the income and wealth gap between races. As a starting point, the report recommends levying higher tax rates on higher income households. But the report also urges lawmakers to look beyond overall tax rates and careful design of income tax bases: that is, the rules that determine how different types of income are. imposed. Fair taxation of investment income from family wealth should be a top priority, as nearly 90% of the types of assets most likely to generate taxable capital gains income are owned by white families, and an overwhelming part of that is owned by a small slice of the white families up there. In the same vein, the report also recommends the repeal of tax subsidies for corporate profits, retirement income and homeowners.

Lawmakers should build on recent successes at the federal and state levels in using refundable tax credits to help low-income families. Policies such as the Working Income Tax Credit (EITC) and the Child Tax Credit (CTC) improve the economic security of a diverse group of families from many different races or ethnicities, but they can be particularly powerful for Blacks, Hispanics, Native people and others. people of color historically excluded from equal economic opportunity.

Tax credits for low- and moderate-income renters are a particularly promising option for reducing racial disparities, as a disproportionate share of this group is made up of households of color. Because renters are much more likely than landlords to have low levels of overall wealth, targeting a tax credit specifically towards renters can be an effective way to reach historically marginalized communities that have been denied the opportunity. to create significant wealth. The report finds that black households, for example, are 2.6 times more likely than white households to be renters with income below the median level.

A well-designed personal income tax generates significant income to fund public services, demands more from wealthy families, and increases the income of families facing difficult economic circumstances. A tax that achieves all of these goals offers one of the most promising ways to begin tackling racial inequalities in income and wealth through the tax code. While state income tax reform alone will not bring racial equity, it can be a productive part of a larger effort to do so.

Read the report

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Employee? Want to save on income tax? Claiming a Section 80C Deduction? These mistakes must be avoided

Save Income Tax with Section 80C Deductions: There’s a common question on everyone’s mind: How do you save payroll tax? And if you want an answer to the question, there are many legitimate ways to save tax under the Income Tax Act of 1961. Section 80C belongs to the same, it probably is the most popular and preferred item for taxpayers because it helps reduce taxable income by making tax-saving investments or making qualifying expenses. Section 80C also has subsections – 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2).

Section 80C of the Income Tax Act came into force on April 1, 2006. It essentially allows certain expenses and investments to be exempted from tax. Here in this article, Amit Gupta, Co-Founder and MD, SAG Infotech, shares his knowledge of how salaried people can save income tax by properly claiming deductions under Section 80C. . avoiding some common mistakes: –

Amit Gupta says: “If you plan your investments well and distribute them wisely among various investments such as Public Provident Fund (PPF), National Pension System (NPS), National Savings Certificate (NSC), reimbursement mortgage, etc., you can claim a deduction. up to Rs 1.5 lakh each year, which will reduce your tax liability. “

Developing further, Gupta adds: “However, there are two important points you should be aware of, the first is that only individuals and HUFs can benefit from the benefits of this deduction and businesses, partnership companies and LLPs cannot. And, the second is that taxpayers are not allowed to deduct according to article 115BAC of the recent 2020 finance law. We observed that if the taxpayer opts for 115BAC under the new tax regime, he will not be able to claim any claim under article 80C, but if the taxpayer opts for the old tax regime for any fiscal year, he can still benefit from the deduction provided for in article 80C.

“If you are not into taxation, it will be a bit difficult to understand every part of it and maximize the savings. But we can still make you more aware of the risks and mistakes that taxpayers usually make because of. of their poor planning, so that you can make the most of them.

1. Do not pay attention to the lockout period

Some deductions under Article 80C are subject to a lock-in period, e.g. term deposits have a lock-in period of 5 years, similarly share-linked savings plans (ELSS) have a lock-in period of 3 years. If the taxpayer violates the blocking period restrictions, the income will be treated as the taxpayer’s income for that year and will be taxable.

Now, taxpayers will have a similar situation with long-term investments like the PPF, which has a 15-year lock-in period to qualify under Section 80C. Thus, taxpayers are advised to choose investments that help them achieve their financial goals. In addition, the taxability of investment returns and the taxability of the amount received at maturity are the two factors that any taxpayer should check before choosing an investment plan.

2. Request for deduction for repayment of private loan

It has been observed that taxpayers try to claim a deduction on the repayment of any type of mortgage loan under section 80C, but it should be understood that the main component of private loans (loans taken out from friends and relatives ) is not covered by section 80C.

If a taxpayer wishes to claim a deduction for the main component of the home loan, he must ensure that the loan must be provided by the specified entities / persons u / s 80C (2) (xviii) (c). Loans granted by a bank, a cooperative bank, the National Housing Bank, the Life Insurance Company, etc. fall under it.

3. Deduction on registration and stamp duties

Expenses such as stamp duties, registration fees and certain other expenses directly related to the transfer of ownership of a dwelling house (only) are permitted under section 80C. For commercial properties, these expenses cannot be deducted under section 80C. Thus, taxpayers should wisely choose the type of property to claim the Section 80C deduction.

4. Error when requesting the deduction for tuition fees

If a taxpayer tries to claim a tuition or tuition deduction, the taxpayer should consider certain provisions before making a claim. The deduction will be available for fees paid for full-time education in India for up to two children, and only the tuition portion of the full fees will be eligible for the deduction. So before you provide any data, be sure to do some math.

5. Too much investment in group insurance plans

Life insurance plans are life insurance plans that are good for saving tax and essential investments. However, investing a large chunk of your hard earned money in it will not give you good returns. So if you want to save more, invest in a term plan, which is also eligible for a tax deduction under section 80C. “

Gupta advises all taxpayers not to rush investment or wait for a last minute deposit. This is because the chances of making a bad investment decision are high in the haste to save tax. “Treat these tax benefits like social benefits and never invest just to save taxes,” he concluded.

(Disclaimer: The opinions / suggestions / advice expressed here in this article are solely by investment experts. Zee Business suggests that its readers consult their investment advisers before making a financial decision.)

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No further extension of the tax filing date after the 15th: FBR

ISLAMABAD – The Federal Board of Revenue (FBR) clarified on Saturday that there will no longer be an extension date for filing tax returns after October 15, 2021.

Unlike in the past, the Federal Board of Revenue uploaded forms for filing income tax returns for TY 2021 on July 1, 2021 and thus granted taxpayers the statutory 90-day deadline to file their tax returns by September 30, 2021. On numerous occasions, FBR has reiterated its principled position that it will not extend this period beyond the set deadline of September 30. At the same time, FBR launched a comprehensive campaign on traditional electronic and print media to maximize its reach and awareness. In addition, FBR has also engaged with national heroes and celebrities to spread the same message on social media. All mobile phone companies have been mobilized to send personalized messages to their combined 130 million subscribers across the country.

The above unprecedented awareness campaign has reached all households and educated the general public on the critical value of tax compliance. This resulted in immense taxpayer traffic to FBR’s website and for the first time, over 1.8 million returns were filed in the 90 days ending September 30. It was only in the last three days that FBR received around 600,000 reports from all over Pakistan.

This extraordinary interest in existing and new taxpayers put enormous pressure on the FBR Iris online portal causing occasional disruption and hampering its functional efficiency, especially on September 30, the last day. In view of the unprecedented increase in the number of users of our website and the difficulties they face due to technical issues, FBR notified a 15-day extension on September 30 and extended the deadline for submitting requests. declarations until October 15, 2021.

Therefore, it is positively hoped that taxpayers old and new alike will benefit from this extended deadline and thus file their tax returns well before the final date of October 15th. It is further reaffirmed that the extension granted on September 30th was only due to the fact that the FBR computer system was overloaded and this has been fixed now, no further extensions will be allowed beyond October 15th. 2021.

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MDT for income tax deferral “welcome”, but concerns remain, industry says

Further delays in Making Tax Digital (MTD) for income tax provide welcome respite for businesses, but uncertainty and implementation issues remain, sources say.

Announced via a written statement to the House of Commons on September 23, the rollout of the program has now been postponed to April 2024. This is the latest in a series of delays, with implementation initially scheduled for 2018.

“While we appreciate the government’s efforts to simplify and harmonize reporting deadlines and accommodate the extra time to prepare, our concerns about the impact of the workload on small businesses and accountants due to MTD are still valid, ”said Glenn Collins, head of policy, technical and strategic engagement at the Association of Chartered Chartered Accountants (ACCA).

“Concerns remain about the levels of support required by SMEs and the ability of small accounting firms to meet the workflow needs of regular reporting unmanageable software costs and the low threshold for reporting under MTD. “

While around 1.2 million businesses (those with taxable income above £ 85,000) have been operating under BAT rules since April 2019, the 2024 implementation will see the compliance requirement expand to the remaining number. Generally speaking, the rules require businesses to keep digital records of their sales and purchases and to use software to submit their VAT returns to HMRC.

However, this upcoming deadline may worry many businesses, with a recent study by The Accountancy Partnership revealing that around a third of UK SMEs still use paper systems for VAT returns. In addition, one in ten people store essential documents in a drawer or shoebox, she found.

Likewise, worrying figures emerged following the initial deployment of MTD for VAT in 2019, with some 120,000 companies (around 10%) not meeting the deadline.

“The level of detail required by HMRC as part of MTD’s quarterly reports could create a ‘bottleneck’ around deadlines as well as unmanageable workloads for accountants and small businesses. This could seriously affect broad compliance and late filing rates, ”Collins adds.

“Over the next 12 months, we would like HMRC to use this time to carefully reassess its proposal to reduce the burden on businesses and accountants.”

Concerns were also expressed by Katharine Arthur, partner and private client manager at haysmacintyre, with her warning that the postponement is likely to be damaging and urging HMRC not to issue any further delays.

“It is welcome to see HMRC listening to relevant trade bodies, however, there comes a time when taxpayers need certainty about a fixed departure date and the government cannot continue to kick the road. “she said.

“With MTD expected to bring billions more to the treasury coffers, its implementation is becoming more and more necessary given the huge holes linked to Covid in public finances. “

However, some reacted more favorably to the delay, with Michael Izza, CEO of the Institute for Chartered Accountants in England and Wales (ICAEW) describing it as “welcome news”.

“The previous start date was far too early and risked causing serious damage to the UK tax system,” he said.

“The new start date will give businesses more time to prepare and their advisors more time to make sure their clients are ready. “

The ICAEW has also expressed its approval that the reform of the base period does not come into effect until April 2024, and that more complex partnerships are not included until April 2025.

“While we still believe that the reform of the base period rules should be abandoned, this is a welcome development,” said Frank Haskew, ICAEW’s chief tax officer.

“Changing [complex partnerships’] the base period rules would lead to a considerable increase in uncertainty and costs, not least due to the need to submit year-end tax figures based on estimates which would then need to be amended to reflect the result real.

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