TCS on sale of goods

In order to widen and deepen the tax net the Finance Act, 2020 has amended the provisions of section 206C to levy TCS on sale of goods by inserting a sub-section (1H) to section 206C. Which is effective from 01.10.2020.

Salient features

New Income Tax Return Forms effective from Financial year 2019-20/ Assessment year 2020-21.

Central Board of Direct Taxes (CBDT) has notified the new Income Tax Return (ITR) forms for FY 2019-20/ AY 2020-21 (i.e. ITR 1 Sahaj, 2, 3, 4 Sugam, 5, 6, 7 and ITR-V), vide Income-Tax (12th Amendment) Rules, 2020.

Few key changes notified in the Income Tax Returns (ITR) for the F/Y 2019-2020:

• House ownership: Individual taxpayers who are joint owners of house property cannot file ITR 1 or ITR 4, from now on wards.
• Passport: You have to disclose the Passport number if held by the taxpayer. This is to be furnished both in ITR 1-Sahaj and ITR 4-Sugam. Hopefully, it will be made mandatory in other ITR Forms as and when they are notified.
• Cash deposit: For those filing ITR 4-Sugam, it has been made compulsory to declare the amount deposited as cash in a bank account, if such amount exceeds Rs 1 crore during the FY.
• Foreign travel: If you have spent more than Rs 2 lakh on travelling abroad during the FY, you need to disclose the actual amount spent.
• Electricity Bill: If your electricity bills have been more than Rs 1 lakh in aggregate during the FY, you need to disclose the actual amount.
• Subsequent Investment details: Details of investment/ expenditure qualifying for deduction under chapter VIA with bifurcation of details of investment/ expenditure made during the period from April 1, 2020 to June 30, 2020. Details of payment/ acquisition/ purchase/ construction for the purpose of claiming under section 54 to 54GB, utilized between April 1, 2020 to June 30, 2020. Information regarding compliance of conditions during April 1, 2020 to June 30, 2020 for claiming deduction under section 10AA. A new schedule “Schedule DI” has been added.
• In ITR-4, PAN number is made optional if the Aadhaar number is provided; in section 44AD, one new clause has been added as the electronic mode in addition to electronic clearance and reduced the presumptive income from 8% to 6%. In section 44AE for presumptive income from goods carriages, the ceiling of maximum row is removed and a new validation “Number of vehicles should not exceed 10 vehicles at any time during the year” is added.  

Find attached CBDT notification of ITR forms: ITR 1 to ITR 7 

NEW CRITERIA FOR MSME CLASSIFICATION

Ministry of Micro, Small and Medium Enterprises [MSME] has vide Notification dated 1st June, 2020 revised definition of MSME.

Earlier, the criteria for manufacturing units and service units were different. Now those distinctions between Manufacturing and Service MSMEs are being removed. They will all be defined similarly.

Criteria for classification of micro, small and medium enterprises, namely:— 

• A micro enterprise is defined as one where the investment in Plant and Machinery or Equipment does not exceed one crore rupees and turnover does not exceed five crore rupees; 
• A small enterprise is defined as one where the investment in Plant and Machinery or Equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and
• A medium enterprise, where the investment in Plant and Machinery or Equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees. 

Please find attached notification or can be referred at:  https://pib.gov.in/PressReleasePage.aspx?PRID=1628345

Notification: MSME definition Gazette Notification

Changes in CARO 2020 in comparison to CARO 2016

MCA Notifies Companies (Auditor’s Report) Order, 2020 (CARO 2020). The CARO, 2020 is applicable for audit of financial statements of eligible companies for the financial years commencing on or after the 1st April, 2019.

 Read more: Changes in CARO 2020 in comparison to CARO 2016

Union Budget 2020- Analysis of Direct Tax Proposals

On 1^st of Feb., 2020 Union Finance Minister Mrs. Nirmala Sitaraman has introduced the Finance Bill 2020. This year Government of India has introduced out of box proposals when we look into the direct tax proposals.  Some of the proposals are:- New optional Tax slabs for Individuals and HUF, Concessional Tax rates to co-operatives, Tax incentives to startups, widening of tax net, E-Appeals introduced, Very hard penalty provisions on fake invoices, Dividend Distribution Tax on corporate removed, Compliance provisions for trusts have been strengthened, significant change in threshold limit for tax audit, changes in return filing date, Modification in establishing residential status and the most important provision regarding taxation of an  Indian citizen who is not liable to tax in any other country or territory shall be deemed to be resident in India. 

Read the full Article:
Union Budget 2020- Analysis of Direct Tax Proposals

SUMMARY OF UNION BUDGET 2020-21

Finance Minister Smt. Nirmala Sitharaman, today unveiled a series of far-reaching reforms, aimed at energizing the Indian economy through a combination of short-term, medium-term, and long term measures.

Read More:SUMMARY OF UNION BUDGET

Source: Press Information Bureau, Government of India, Ministry of Finance

KEY HIGHLIGHTS OF UNION BUDGET 2020-21

Finance Minister Smt. Nirmala Sitharaman, today unveiled a series of far-reaching reforms, aimed at energizing the Indian economy through a combination of short-term, medium-term, and long-term measures.

Three prominent themes of the Budget

1. Aspirational India - better standards of living with access to health, education and better jobs for all sections of the society
2. Economic Development for all - “Sabka Saath , Sabka Vikas , Sabka Vishwas”.
3. Caring Society - both humane and compassionate; Antyodaya as an article of faith. 

Three broad themes are held together by:

• Corruption free, policy-driven Good Governance.
• Clean and sound financial sector.
• Ease of Living underlined by the three themes of Union Budget 2020-21.

Read more: KEY HIGHLIGHTS OF UNION BUDGET 2020-21

SOURCE: Press Information Bureau, Government of India, Ministry of Finance

DEDUCTION OF TAX AT SOURCE

INCOME TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961 DURING THE FINANCIAL YEAR 2019-20

Central Board of Direct Taxes has released CIRCULAR NO 4/2020, dated 16th January, 2020, on deduction of Tax at source (TDS) on salary. 

The circular in itself is very detailed one, comprising rates of income-tax as per Finance Act, 2018, broad scheme of tax deduction at source from salaries, method of tax calculation, payment of tax on perquisites by employer, computation of average income tax, salary from more than one employer, relief when salary paid in arrear or advance, information regarding income under any other head, computation of Income under the head ―Income from House Property, adjustment for excess or shortfall of deduction, salary paid in foreign currency, persons responsible for deduction of tax and their duties, computation of income under the head ―salaries, rebate, TDS on payment of accumulated balance under recognized provident fund and contribution from approved superannuation fund, Drawing and Disbursing Officers (DDOs) to obtain evidence /proof of claims, calculation of income-tax to be deducted, and other miscellaneous issues like form no 12BA, form no 12BB, revised procedure for furnishing qtly E-TDS/TCS statement by deductors/collectors, the procedure of furnishing form 24G, person responsible for filing form 24G in case of state govt departments/central govt departments, procedure of preparation of quarterly statement of deduction of tax u/s 200 (3), and form no. 10 BA.

Circular No.4/2020, Dated 16/01/2020

Source: https://www.incometaxindia.gov.in/