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

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 

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/

Life Insurance - Taxability and tax exemptions

Life Insurance is a compulsion for anyone who has financial responsibilities. In addition to the basic life insurance amount, one needs to add cover as and when liabilities increase. Riders are additional benefits in a life insurance policy and are optional. Premiums paid towards insurance plan qualify for a tax benefit under the Income tax Act, 1961. In this article taxability and tax benefits are discussed with respect to life insurance policies only.
Read more:https://https://drive.google.com/open?id=1rpUy0C3yztDeE6Zb2dfGb6wtiOvkoKyn

Due date for tax audit extended

Utilizing the powers under section 119 of the Income Tax Act, 1961, CBDT has extended the date of filing Tax Audit from 30th Sept. 2017 to 31st Oct. 2017 for A.Y.2017-2018
Copy of the Order:https://drive.google.com/open?id=0B1rRav-P4-8JY0lqazVDUDhucTg

FURNISHING OF STATEMENT OF FINANCIAL TRANSACTIONS UNDER FORM 61A

Under the Income Tax Laws a new concept of furnishing of “Statement of financial Transactions” in Form No 61A (previously called as ‘Annual Information Return (AIR)’, has been introduced. These statements will help the tax authorities to collect information on certain prescribed high value transactions undertaken by a person during the year.

Read More:

https://drive.google.com/open?id=0B1rRav-P4-8JQkFPcDBGUC1BYmM
Form 61A
https://drive.google.com/file/d/0B1rRav-P4-8JWG1Za2Q4VHgzMW8/view?usp=sharing

User Guide on Report Generating Utility for For 61A
https://drive.google.com/open?id=0B1rRav-P4-8JeGNleE1UWTREQkU

Source: https://incometaxindiaefiling.gov.in/eFiling/Portal/StaticPDF/SFT_Report_Generation_Utility_User_Guide.pdf

200% Penalty- Section 270A, of The Income Tax Act, 1961

After demonetization of `500 and `1000 currency notes by Government of India the most talked about penal provision is penalty @200% on misreported income. Section 98 of Finance Act 2016 has inserted this new section 270A in Income Tax Act 1961, it provides the procedure to charge penalty for under reporting and misreporting of income. This atrocious penal provision on under reporting and misreporting of income is effective from 1st day of April, 2017 i.e. applicable for financial year 2016-17. 

Read More:
https://drive.google.com/file/d/0B1rRav-P4-8JQ2RVMDlpaVh4NWs/view?usp=sharing

Extension of due date for submission of Income Tax return

CBDT vide order u/s 119 dated 09/09/2016 has extended the 'due date' for submission of Returns of Income from 30/09/2016 to 17/10/2016 in the case of income tax assessees throughout India who are liable to file their Income tax returns by 30/09/2016. For details:
http://incometaxindiaefiling.gov.in/eFiling/Portal/StaticPDF_News/Extension-of-date-of-filing-return-09-09-2016.pdf

TCS important amendments w.e.f.01.06.2016

Tax Collected at Source TCS important amendments effective from 1st June, 2016
Read More:
https://drive.google.com/file/d/0B1rRav-P4-8JSWpqNXpjcmdRTG8/view?usp=sharing

ONLINE VERIFICATION OF PAN, SERVICE TAX AND CENTRAL EXCISE REGISTRATION

PAN - Online Verification

By using the PAN Verification facility, one can know/verify the Permanent Account Number (PAN). This facility is refered to as "PAN Verification" or "Know Your PAN". This facility can be accessed from : 

https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourPanLink.html

This facility can be used to verify the PAN of individuals as well as non-individual PAN holders like firm, company, etc. To verify the PAN one has to provide basic details of the PAN holder which cover Date of Birth/Date of Incorporation of the PAN holder and surname, middle name and first name of the PAN holder.

After providing the details in the system, the verification code appearing on the screen is to be entered and then the request is to be submitting by clicking on "Submit". On clicking "Submit" the PAN verification request will be submitted. If the details provided in the system are correct and match with the database of the Income-tax Department, the Permanent Account Number linked with the respective details will be displayed along with the name and jurisdiction of the PAN holder. The status of the PAN, i.e., whether active or not will also be displayed.

Using the above discussed facility one PAN can be verified at a time. The bulk PAN verification facility can be used by Government and non-Government entities who wish to verify multiple PANs. To use the facility of "Bulk PAN Verification" one has to get himself registered as "Bulk PAN Verification User". Check the following link for registering as a "Bulk PAN Verification User" :

https://incometaxindiaefiling.gov.in/e-Filing/Registration/RegistrationHome.html

After getting registered as a "Bulk PAN Verification User", the user can carry on verification of multiple PANs by uploading the bulk PAN verification query.

Service Tax and Central Excise registration- Online Verification

The facility enables the Assessee to view its details (name, address, location code) as present in the Assessee Master provided by CBEC. Details of Assessee codes allotted for Service Tax and Central Excise can be viewed using this facility.

https://cbec-easiest.gov.in/EST/AssesseeVerification.do

SIMPLIFIED ITR FORMS

Government notifies simplified ITR forms; now taxpayers earning exempt income above Rs 5,000 can file ITR-1 and 4S

https://drive.google.com/file/d/0B1rRav-P4-8JTDRkMk56Mk9xOE0/view?usp=sharing

Proposed TDS and TCS Amendments under Finance Bill, 2015

The Finance Bill, 2015 proposes to streamline the provisions of TDS and TCS under the Income Tax Act. The key proposals seek to bring uniformity between the TDS and TCS provisions, strengthen TDS provisions relating to salary income, resolve the uncertainty surrounding taxation of interest payments by cooperative banks to members and encompass reporting requirements under section 195(6) of the Income Tax Act to those payments that are not chargeable to income tax.

Read the Article:

https://drive.google.com/file/d/0B1rRav-P4-8JQ3docEpzOTNGZ00/view?usp=sharing

FINANCE BILL 2015-2016

FINANCE BILL 2015-2016
https://drive.google.com/file/d/0B1rRav-P4-8JWE5NTm9ORW5rQ0E/view?usp=sharing

ASSESSEE NOT ENTITLED TO INTEREST ON REFUND OF EXCESS SELF-ASSESSMENT TAX PAID

RULES DELHI HIGH COURT

Refund of excess self-assessment paid by assessee was not eligible for interest as the provisions of Section 244A would not apply thereto.

Read More:

https://drive.google.com/file/d/0B1rRav-P4-8JODV3U3NUNGJLZjA/view?usp=sharing

CBDT extended the due date for filing of Income Tax Return

Read the full text:

https://drive.google.com/file/d/0B1rRav-P4-8JejNjUkRzLVdHT2s/edit?usp=sharing

INCOME-TAX (NINTH AMENDMENT) RULES, 2014 - AMENDMENT IN RULE 28AA AND SUBSTITUTION OF FORM NO. 13

NOTIFICATION NO. 46/2014[F.NO.133/10/2014-TPL]/SO 2487(E), DATED 24-9-2014

In exercise of the powers conferred by section 295 read with section 197 of the Income ‐tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income‐tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (9thAmendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962,—

(a)		in rule 28AA, for sub-rule (4) and sub-rule (5), the following sub-rules shall be substituted, namely:—
		"(4) The certificate for no deduction of tax shall be valid only with regard to the person responsible for deducting the tax and named therein.
		(5) The certificate referred to in sub-rule (4) shall be issued direct to the person responsible for deducting the tax under advice to the person who made an application for issue of such certificate.
		(6) The certificate for deduction of tax at lower rate shall be issued to the person who made an application for issue of such certificate, authorising him to receive income or sum after deduction of tax at lower rate.";
(b)		in Appendix-II, for Form No.13, the following Form shall be substituted, namely:—

Form No.13 [See rules 28 and 37G] Application by a person for a certificate under sections 197 and/or 206C(9) of the Income-tax Act, 1961, for no *deduction/collection of tax or *deduction/collection of tax at a lower rate Link for Form No. 13:- https://drive.google.com/file/d/0B1rRav-P4-8JR0tmdGVQX29WWG8/edit?usp=sharing

Guidance Note on Tax Audit

The Institute of Chartered Accountants has released a Guidance Note on Tax Audit under section 44AB of the Income Tax Act, 1961 (Revised 2014 Edition).

Recently in July, 2014 the CBDT amended the formats of tax audit reports, thereby expanding the scope of audit tremendously. The Direct Taxes Committee of the Institute of Chartered Accountants of India has come out with the Seventh edition of Guidance Note not only for ready reference by Chartered Accountants but also by assessing officers and in various judicial forums. 

Full Text of Guidance Note:
https://drive.google.com/file/d/0B1rRav-P4-8JdnVfS3YtOXhyZVk/edit?usp=sharing

Date for obtaining and furnishing of the report of audit under section 44AB from 30th day of September, 2014 to 30th November, 2014.

The Central Board of Direct Taxes (CBDT) has extended the due date for obtaining and furnishing of the report of audit under section 44AB of the Act for Assessment Year 2014-15 in case of assessees who are not required to furnish report under section 92E of the Act from 30th day of September, 2014 to 30th November, 2014.

It has further been clarified that the tax audit report under section 44AB of the Act filed during the period from 1st April, 2014 to 24th July, 2014 in the pre-revised Forms shall be treated as valid tax audit report furnished under section 44AB of the Act.

Read more
"Order Under Section 119 of the Income-tax Act, 1961"
https://drive.google.com/file/d/0B6Ir9PZ0VdOHUEFfaDZXejNjMWs/edit?usp=sharing

Revised Tax Audit Report

CBDT has issued a Notification No. 33/2014 dated 25-07-2014 and revised Form 3CA, 3CB and 3CD. 

Notification is attached herewith and will be applicable from the date of its publication in official gazette.

Revised form 3CA, 3CB and 3CD

https://drive.google.com/file/d/0B3dVi3eBp2ZCcUFKM0VMUzRESTlVSm94eTQ5TU5kTS1yekgw/edit?usp=sharing

Key Changes in Form 3CD

https://drive.google.com/file/d/0B1rRav-P4-8JQzd3Qy13ZDM0LVE/edit?usp=sharing