TDS @ 10% on the benefit or perquisite paid to a resident businessman or professional arising from its business or profession

The Finance Act, 2022 had inserted a new section 194R to the Income Tax Act, 1961 providing for deduction of tax at source (TDS) @ 10% on the benefit or perquisite paid to a resident businessman or professional arising from its business or profession. Section 194R is applicable from July 1, 2022.

Section 194R(1):- Any person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession, by such resident, shall before providing such benefit or perquisite, as the case may be, to such resident, ensure that tax has been deducted in respect of such benefit or perquisite at the rate of ten percent of the value or aggregate of value of such benefit or perquisite. 

Provided that in case where the benefit or perquisite, as the case may be, is wholly in kind or partly in cash and partly in kind, but such part of cash is not sufficient to meet the liability of deduction of tax in respect of whole of such benefit or perquisite, the person responsible for providing such benefit or perquisite shall, before releasing the benefit or perquisite, ensure that tax required to be deducted has been paid in respect of the benefit or perquisite. 

Provided further that the provisions of this section shall not apply in case of resident where the aggregate value of the benefit or perquisite provided or likely to be provided to such resident during the financial year does not exceed twenty thousand rupees. 

Provided also that the provision of this section shall not apply to individual or HUF whose gross receipts or turnover does not exceed one crore rupees for business or fifty lakhs rupees for profession during the financial year immediately preceding the financial year in which such benefit or perquisite is provided by such person.

Whether sales discount, cash discount and rebates are covered under benefit or perquisite? – The answer is No, both the discounts and rebates are not covered under the benefit or perquisite, except the nature provided below:  

a) any incentive is given in form of car, TV, computers, etc. 

b) any person sponsors a trip for his/her recipient and relative upon achieving certain target. 

c) providing free ticket for an event.

The benefit or perquisite given as capital asset will be taxable in the hands of recipient as benefit or perquisite.

Profession Tax on Salary & Wages; effective from April 01, 2022

 Finance department of Gujarat vide notification no GHN-35-PFT-2022-S.3(2)(10)-TH dated 08th April 2022 revised profession tax slab for salary and wage earners. According to this notification there will no profession tax on salary & wages up to Rs. 12000/- per month. This notification will be effective from April 01, 2022.

 

Sr. No.	Class of Persons	Rate of Tax per Month
1	A)   Salary & wages earners of the state government, Central Government, Panchayats, Public Sector Undertakings of the State & Central Government and Grant-In-Aids institutions whose monthly salaries or wages are
	i)                    Up to Rs 12,000/-	Zero
	ii)                   More than 12,000/-	Rs. 200/-
	B)    Salary & wages earners other than those mentioned in sub-entry (A) above, whose institutions whose monthly salaries or wages are
	i)                    Up to Rs 12,000/-	Zero
	ii)                   More than 12,000/-	Rs. 200/-

 

Explanation I: Where any salary or wages are payable according to any period other than a month, the monthly salary or wages shall, for the purpose of this entry, be reckoned on the basis of the actual amount of salary or wages paid or payable for a month.

Explanation II: Where a person ceases to be a salary or wages earner before the end of any month, his liability to pay the tax for that month shall be proportionately reduced.

Source: Gujarat Professional Tax rates on Salary and Wages

Areas of Jurisdiction for Competent Authorities under Prohibition of Benami Act, 1988

The government empowered under section 7 of the Prohibition of Benami Property Transactions Act 1988 as amended by Finance Act, 2021, allocated the areas of jurisdiction among the Competent Authorities authorized under sub-section (1) of section 5 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 for the purpose of the said Act. 

Jurisdictions are as below:

S.  No.	Name of Competent   Authority		Jurisdiction
1.	Competent Authority Kolkata		ll the cases referred by Income Tax Authorities* exercising the powers and performing the functions under the Prohibition of Benami Property Transactions Act, 1988 having headquarters at Kolkata, Bhubaneshwar, Patna, Guwahati.
2.	Competent Authority Chennai		All the cases referred by Income Tax Authorities* exercising the powers and performing the functions under the Prohibition of Benami Property Transactions Act, 1988 having headquarters at Bengaluru, Chennai, Kochi, Hyderabad, Panaji.
3.	Competent Authority New Delhi		All the cases referred by Income Tax Authorities* exercising the powers and performing the functions under the Prohibition of Benami Property Transactions Act, 1988 having headquarters at Delhi, Bhopal, Raipur, Chandigarh, Ludhiana, Jaipur, Lucknow, Kanpur.
4.	Competent Authority   Mumbai		All the cases referred by Income Tax Authorities* exercising the powers and performing the functions under the Prohibition of Benami Property Transactions Act, 1988 having headquarters at Mumbai, Ahmedabad, Surat, Pune, Nagpur.

* The territorial area wise jurisdiction of the respective Income Tax Authorities in this regard will be same as provided for in CBDT Notification No 40/2017/F. No. 173/429/2016-ITA-I dated 18-05-2017 [S.O. 1621(E)] published in Part II, Section 3, Sub-section (ii) of the Gazette of India, Extraordinary.

The work performed by the Competent Authorities authorized under sub-section (1) of section 5 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976) in exercise of powers conferred under section 7 of the Prohibition of Benami Property Transactions Act 1988 will be in addition to the work already being performed by the Competent Authorities.

Source: Ministry of Finance (Department of Revenue) (Competent Authority Cell) 

 

TDS/TCS compliance for Section 206AB and 206CCA

Section 206AB and 206CCA inserted in the Income-tax Act,1961 (effective from 1st July 2021), imposed higher TDS/TCS rate on the "Specified Persons' defined as under,

For the purposes of this section ' specified person" means a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be collected, for which the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years. 

Provided that the specified person shall not include a non-resident who does not have a permanent establishment in India.

To facilitate Tax Deductors and Collectors in identification of Specified Persons as defined in sections 206AB and 206CCA, the Central Board of Direct Taxes ("CBDT") has directed the specified income-tax authority for furnishing information to the Tax Deductor / Tax Collector, having registered in the reporting portal of the Project Insight through valid TAN. This information is available through the functionality "Compliance Check for Section 206AB& 206CCA". 

This functionality "Compliance Check for Section 206AB& 206CCA" is made available through (https://report.insight.gov.in) of Income-tax Department.

Source: https://www.incometaxindia.gov.in/communications/notification/notification01_2021-compliance-check-functionality.pdf

Guidelines for filling Income Tax Returns

The Central Board of Direct Taxes (CBDT) notified the instructions are guidelines to help the taxpayers for filling the particulars in ITR-1 SAHAJ, ITR-2, ITR-3 ITR-4, ITR-5, ITR-6, and ITR-7,  for the Assessment Year 2021‐22 relating to the Financial Year 2020‐21.

The CBDT has not made significant changes to ITR forms in comparison to last year to help the taxpayers in view of the ongoing crisis due to the COVID pandemic. There is no change in the manner of filing of ITR Forms as compared to last year either, the tax body further mentioned.

1. Form ITR-1 Sahaj is a simple form mostly filed by a large number of small and medium taxpayers, which can be filed by an individual having income up to Rs 50 lakh and who receives income from salary, one house property, or other sources, like interest, etc.
2. Similarly, ITR-4 Sugam can be filed by individuals, Hindu Undivided Families (HUFs), and firms (other than limited liability partnerships (LLPs)) with total income up to Rs 50 lakh and income from business and profession computed under the presumptive taxation provisions.
3. ITR-2 can be filed by the Individuals and HUFs that do not have income from business or profession, and are not eligible for filing ITR-1 Sahaj.
4. Taxpayers earning from business or profession can file Form ITR-3.
5. Taxpayers other than individuals, HUFs and companies, i.e. partnership firms, LLPs etc., can file Form ITR-5.
6. ITR-6 can be filed by the companies. Trusts, political parties, charitable institutions, etc., claiming exemption income under the Income-Tax Act will have to file ITR-7.

Extension of the due dates under Income Tax

 The Central Board of Direct Taxes (CBDT) has notified the extension of the due dates for filing Income Tax Return, Tax Audit, TDS Statement etc vide Circular No. 9 of 2021, F. No.225/49/2021-ITA-II, dated 20^th May, 2021. The Board has issued a circular under section 119 of the Income-tax Act, 1961 providing relaxation in respect of the 14 compliances as below:

As per the circular, the Statement of Financial Transactions (SFT) for the Financial Year 2020 21, required to be furnished on or before 31st May 2021 under Rule 114E of the Income-tax Rules, 1962 and various notifications issued thereunder, may be furnished on or before 30th June 2021.

      Further, the Statement of Reportable Account for the calendar year 2020, required to be furnished on or before 31st May 2021 under Rule 114G of the Rules, may be furnished on or before 30th June 2021.

     The Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21, required to be furnished on or before 31st May 2021 under Rule 31A of the Rules, may be furnished on or before 30th June 2021.

     Also, the Certificate of Tax Deducted at Source in Form No 16, required to be furnished to the employee by 15th June 2021 under Rule 31 of the Rules, may be furnished on or before 15th July 2021.

    TDS/TCS Book Adjustment Statement in Form No 24G for the month of May 2021, required to be furnished on or before 15th June 2021 under Rule 30 and Rule 37CA of the Rules, may be furnished on or before 30th June 2021.  

      The Board further said that the Statement of Deduction of Tax from contributions paid by the trustees of an approved superannuation fund for the Financial Year 2020-21, required to be sent on or before 31st May 2021 under Rule 33 of the Rules, may be sent on or before 30th June 2021;  

     The Statement of Income paid or credited by an investment fund to its unit holder in Form No 64D for the Previous Year 2020-21, required to be furnished on or before 15th June 2021 under Rule 12CB of the Rules, may be furnished on or before 30th June 2021.

       The Statement of Income paid or credited by an investment fund to its unit holder in Form No 64C for the Previous Year 2020-21, required to be furnished on or before 30th June 2021 under Rule 12CB of the Rules, may be furnished on or before 15th July 2021.

    Further, the due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 31 July 2021 under sub-section (1) of section 139 of the Act, is extended to 30th September 2021.  

     Also, the due date of furnishing of Report of Audit under any provision of the Act for the Previous Year 2020-21, which is 30th September 2021, is extended to 31st October 2021.  

    The due date of furnishing Report from an Accountant by persons entering into international transaction or specified domestic transaction under section 92E of the Act for the Previous Year 2020-21, which is 31 October 2021, is extended to 30th November 2021.  

     The due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 31 October 2021 under sub-section (1) of section 139 of the Act, is extended to 30th November 2021.

     Further, the due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 30th November 2021 under sub-section (1) of section 139 of the Act, is extended to 31st December 2021.

     Lastly, the due date of furnishing of belated/revised Return of Income for the Assessment Year 2021-22, which is 31 December 2021 under sub-section (4)/sub-section (5) of section 139 of the Act, is extended to 31st January 2022.

The CBDT clarified that the extension of the dates as referred to in clauses (9) (12) and (13) above shall not apply to Explanation 1 to section 234A of the Act, in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (i) to (vi) of sub-section (1) of that section exceeds Rs. 1 lakh.

The Board further clarified that in case of an individual resident in India referred to in sub-section (2) of section 207 of the Act, the tax paid by him under section 140A of the Act within the due date (without extension under this Circular) provided in that Act, shall be deemed to be the advance tax.

Budget 2021- Direct Tax

The Union Budget 2021-22 was presented by the Hon’ble Finance Minister Nirmala Sitharaman on 1st February 2021 in the Parliament. Highlights of Direct Tax Proposals are: Budget 2021- Highlights of Direct Tax Proposals