Welcome to another Friday, chief.

In today’s edition — The Supreme Court rules that businesses have the right to correct clerical GST errors as tax software limitations cannot override legal rights; Samsung faces a ₹5,156-crore tax demand for misclassifying telecom imports.

Bureaucracy vs Common Sense

—Vishwas Ved

Good news—from today, if you ever fat-finger a GST return, you do not have to panic. The Supreme Court just said: ‘Relax, mistakes happen.’ 

Making clear that bureaucracy isn’t bigger than common sense, the court ruled on March 24 that businesses must be given an opportunity to correct clerical and arithmetic errors in their tax filings.

Before this order was passed, any mistakes in tax filings were not forgiven by the tax department. But now if you accidentally turned ₹25,000 into ₹250,000, or vice versa, you will have a chance to correct it.

For years, businesses have suffered because even a small error meant losing out on input-tax credit (ITC). 

The court just did what businesses were hoping for—bringing flexibility in GST compliance. The court told the tax authorities that mistakes do happen and they should be reasonable especially if the government has already gotten its money.

Earlier, whenever a seller made a mistake while reporting GST, the tax bill landed on the buyer who could not claim the ITC. 

And when the aggrieved parties approached the tax authorities, rule books were thrown at them, which allowed them no leeway. In short, corrections were not allowed at all.

But not anymore. The Supreme Court has stepped in to say this is not done.

Making clear that software limitations are not the law, the judges ruled that if the system isn’t flexible enough to handle minor human errors, that’s a problem with the system, not the taxpayer.

Of course, this doesn’t mean the tax authorities will roll out the red carpet for all wanting to amend their GST filings. 

But for now, if you find yourself staring at an inadvertent error in your return, just know that the law is on your side.

When import ‘Tricks’ Backfire

Two global corporate giants, two massive tax battles in India, and one common theme—evasion of import duties. 

A few weeks ago, it was Volkswagen facing a tax demand of $2.8 billion. The case is in the court. This week, it’s Samsung’s turn. It is facing a hefty tax demand of $601 million. The alleged crime is common: misclassifying imports to dodge higher tariffs. 

As the legal battles unfold, the bigger question remains—are these just routine audits or signs of a stricter tax regime? 

Or, are these demands as fair as snow?

Let’s delve into it.

On Tuesday evening, Reuters reported that the Indian government had handed Samsung a ₹5,156-crore ($601 million) surprise just when the company thought it had wrapped up its accounts for the current financial year.

The tax department has accused the company of misclassifying telecom equipment imports to dodge duties.

The company, now assessing legal options, insists it’s just an accounting interpretation issue. But the Indian government has gone to the extent of saying that Samsung “knowingly and intentionally” violated rules in a way that helped it evade a 10-20% tariff.

The investigation into the alleged violation began in 2021, which resulted in a back-tax demand of ₹4,461 crore ($520 million), plus penalty—and an additional ₹695 crore ($81 million) slapped on seven senior executives.

Meanwhile, the tax department says it has received responses from Samsung itself where the company described the equipment as a ‘transceiver’—which is exactly what attracts the tax they were trying to avoid.

See? It seems not every huge tax demand by the Indian government is unfair after all.

The Bigger Picture

While the Samsung and Volkswagen cases bring back the focus on investor-friendliness of India's tax system, it’d be unfair to say that all tax demands are unfair. 

While the two companies will know what awaits them when court rulings come, it cannot be denied that India has indeed tried to clean up its image after the Vodafone and Cairn tax disputes, even scrapping the controversial retrospective tax law in 2021. 

Here’s a recent example of a step taken in the right direction: The Indian government decided this week to do away with "Google tax" altogether.

In place since 2016, Google Tax makes big online companies like Google, Facebook, and Amazon pay extra money when they show ads in India. The rule was meant to ensure foreign companies pay their fair share of taxes when they do business in India.

The US govt took up the matter with India, calling the tax unfair because it only targeted foreign companies. So, India listened to these concerns and decided to change the rule.

Looks like the government finally realised that an additional tax on Google and others was a bit too 'foreign', and not the best way to make friends.

₹390 crore

Bengaluru's 3.49 lakh property owners, out of a total of 20.5 lakh, have not paid their property taxes to the municipal corporation Bruhat Bengaluru Mahanagara Palike and owe ₹390 crore to the municipal body. As many as 1.73 lakh are 'chronic defaulters', and 1.76 lakh are current-year (2024-25) defaulters. The data includes residential properties, non-residential and mixed developments.

— Foreign Assets. A compliance campaign by the Income Tax Department has resulted in taxpayers declaring foreign assets and income worth ₹30,300 crore. Over 30,000 taxpayers revised their income-tax returns or filed belated returns for the assessment year 2024-25 as part of this initiative. The department sent SMS and emails to 19,501 taxpayers, urging them to review their ITRs based on foreign deposit data collected. This led to 11,162 taxpayers revising ITRs, declaring ₹11,259 crore in foreign assets and ₹154 crore in foreign income; 883 taxpayers correcting their status from “resident” to “non-resident” in revised returns; 13,516 taxpayers declaring foreign assets of ₹7,564 crore and foreign income of ₹353 crore.

— Gold Monetisation Scheme. The Union Finance Ministry has announced the discontinuation of the medium and long-term government deposit components of the Gold Monetisation Scheme (GMS) from March 26. This decision comes after a comprehensive review of the scheme’s performance and evolving market conditions, according to the finance ministry statement. The GMS, launched on September 15, 2015, aimed to reduce the country’s dependency on gold imports and mobilise the vast gold holdings of households and institutions for productive use.

— Undisclosed Income. The government has proposed amendments to Finance Bill, 2025, under which tax officers will determine only undisclosed income for block assessments in search cases and not total income of the assessee. The amendment, approved by the Lok Sabha this week, will be made effective retrospectively from September 1, 2024. The changes aim to identify undisclosed income during searches or requisitions, while trusting taxpayers to report their regular income in block income tax returns.

— UPI Blocked. Starting April 1, UPI IDs connected to inactive mobile numbers will be removed. The National Payments Corporation of India will remove these IDs and users with inactive mobile numbers. Banks and payment service providers have been asked to update their databases before March 31 to remove recycled or churned numbers utilising Mobile Number Revocation List available on the Digital Intelligence Platform.

ICYMI | GST: Great Snacks Tax?

Missed last week's update? Tax authorities target the textile industry for misclassifying services to dodge taxes; Mad Over Donuts faces a GST dispute, which could also impact the broader food industry.

Was this email forwarded to you?

The CFO Weekly Digest is a weekly newsletter brought to you in collaboration with The Core.