5 Things i.e. LPG Cylender Price, Income Tax, EPF, Cheque Book and Banking Rules to TDS will change from 1st April, 2021

Top 5 things that will change for you from April 1, 2021 - LPG cylinder price, income tax, EPF, Cheque book, banking rules to TDS

Financial Year 2020-21 is about to end and new Financial Year 2021-22 is going to begin from 1st April 2021. With the arrival of the new financial year, there are some major changes taking place which are going to affect an earning individual's money matter to a larger extent. Changes in LPG cylinder price, banking rules due to merger of banks, income tax rule changes in terms of EPF investment, TDS/TCS deduction, etc. are some of the glaring changes that are going to take place from 1st April 2021. We list out the top 5 changes that are going to have a direct impact on your budget and monetary affairs.

Change in LPG cylinder price

On the first date of every month, the central government announces the LPG cylinder price. In March 2021, LPG price in New Delhi was increased from Rs 769 per LPG cylinder to Rs 819 per LPG cylinder price. Since petroleum prices in the global markets are rising, there can be further rise in the LPG cooking gas price on 1st April 2021.

Cheque book, passbook of 7 banks to become non-functional

If you have bank account in any of these seven public sector banks — Dena Bank, Vijaya Bank, Corporation Bank, Andhra Bank, Oriental Bank of Commerce, United Bank of India and Allahabad Bank — then your passbook and cheque book will become non-functional from 1st April 2021. This will happen because of the merger of these banks in various other banks. Dena Bank and Vijaya Bank have been merged with Bank of Baroda, Oriental Bank of Commerce and United Bank of India have been merged with Punjab National Bank (PNB), Corporation Bank and Andhra Bank have been merged with Union Bank of India.

Income Tax rule on EPF investment

From 1st April 2021, one's investment in EPF account is no more free from the income tax. From 1s April 2021, one's investment in EPF above Rs 2.5 lakh in a financial year is taxed. One's EPF interest on EPF investment above Rs 2.5 lakh in a particular year is taxable.

Income Tax rule on TDS

Income tax rule for TDS (Tax Deducted at Source) will get changed from 1st April 2021, which is just a few days away. In her budget speech, Sitharaman said that if a person doesn't file income tax return (ITR), then in that case, the TDS rate on bank deposits would double. That means, even if an earning individual doesn't fall in the income tax slab, the TDS rate levied on them will be doubled (in case the earning individual does not file ITR)

LTC cash voucher scheme

The central government notified the Leave Travel concession or LTC cash voucher scheme's exemption in place of a leave travel concession (LTC). Under this scheme, an employee can claim an exemption under LTC allowance against the purchase of specified goods or services. This scheme is only available till 31st March 2021, i.e. money must be spent by this date to avail of the scheme.

Source: ZeeBusiness

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Taxpayer must complete 7 Tax Task before 31st March, 2021

7 tax tasks to complete before 31 March 2021

There are certain tax tasks which we need to complete by the 31st March 2021. Here we are taking a look at some of them.

As we are approaching the end of the financial year 2020-21, there are certain tax tasks which we need to complete by the 31st March 2021. Let us discuss those tasks in detail.

1. Submitting the details of salaries received from earlier employer

If you are a salaried person and were employed with more than one employer in the current year, please furnish details of your salaries from the previous employer/s in Form No. 12B, to your current employer immediately so as to ensure proper tax deductions on your aggregate salary earning is made by the current employer. In case you fail to do so, you may get a shock at the time of filing of your income tax return (ITR) finding that you have huge tax (along with interest) to pay. This happens because all the employers would have given the benefits of initial exemption as well as various deductions, resulting into deduction of lower tax on aggregate basis.

2. Submit the proof of expenses to your employer

There are certain exemptions which are available to employees on expenses actually incurred. For items like House Rent Allowance (HRA) and Leave Travel Assistance (LTA) unless you submit the necessary documents, the employer will treat these allowances as taxable and deduct tax thereon. If you fail to submit the documents, you can still claim these items as exempt and claim the refund for the excess tax while filing your ITR.

3. Verify quantum of deductions available from your bank records

Most of us use ECS debit facility for items like life insurance premium, SIP for equity linked saving schemes (ELSS), home loan EMIs etc. It might have happened that, due to any reason, the ECS might not have been debited. Likewise, even in case you have issued a cheque for such items, the same might not have been yet presented to the bank. So please verify the details from your bank statement and cross check that for all the eligible deductions factored into by you amounts have been debited in your bank account. In case some items have not been debited, please ensure that either the payment is made for the same or investments are made in any alternate product available before the year end.

4. Payment of advance tax

You are required to pay advance tax on your current year’s income, in case your net tax liability for the year after reducing the tax deducted at source from all the sources exceeds ten thousand rupees. Senior citizens not engaged in any business or profession are not required to pay advance tax. Though advance tax has to be paid in four instalments in the ratio of 15%, 30%, 30% and 25%, but in case you miss all the four instalments, at least pay the same by 31st March, as advance tax paid by 31st March is also treated as advance tax. Failure to pay adequate advance tax attracts punitive interest.

Even if you are salaried and tax has been deducted from your salary, you still have to pay advance tax on any other income like rent, interest, dividend, capital gains etc. in case the aggregate tax liability exceeds Rs 10,000. For self-employed where the tax deducted is not sufficient enough to cover the aggregate tax liability, they also have to pay advance tax. Even in cases of interest income where the tax is deducted at source at the rate of 10%, you may still have to pay advance tax in case you are in a higher tax slab.

5. Minimum contribution to PPF account and NPS account

In case you have a PPF account either in your own name or in the name of children or spouse, you have to contribute minimum Rs 500 every year in each account to avoid the account becoming dormant. A dormant account can be made active by payment of a nominal amount and contribution of Rs 500 for each year of default. Likewise, in case you have an NPS account, you need to deposit minimum of Rs 500 every year in your account failing which the account gets frozen. A frozen account can be reactivated by paying a nominal penalty and one time contribution of Rs 500.

6. File your pending income tax return for financial year 2019-2020

In case you have not yet filed your income tax return for the last financial year, i.e. 2019-2020, you have the last chance to file it by 31st March 2021, that too with penalty.

7. Book long-term capital gains on listed shares and equity mutual funds schemes upto Rs 1 lakh

Section 112A long-term capital gains on listed equity shares and equity-oriented schemes are fully exempt upto Rs 1 lakh and the balance is taxed @10%. So you can book long-term capital gains upto one lakh of rupees before march 31st March, 2021 in case not yet booked. In case you have made these investments for long term, you may decide to sell the shares the same day and buy the same next day or carry out these transactions with different brokers on the same day. The purchase and redemption of the units can be done the same day. By this strategy you can minimise your overall tax liability.

Source : Financial Express

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Last Chance to e-File IT Return for A.Y. 2015-16 on 31st March 2017

Once the e-Filed returns are processed and the return is termed as defective, assesse is facilitated to submit the response against defective notice (u/s 139(9)) sent by CPC/AO.

The last date for submission of a valid return for AY 2015-16 expires on 31st March 2017 u/s 139. Those taxpayers whose returns for AY 2015-16 have been declared invalid u/s 139(9) by CPC are requested to file their return u/s 139(4)/139(5) before 31 March 2017.

Process
The detailed process to submit the Response to defective notice is as below

• Login on to www.incometaxindiaefiling.gov.in with your User ID, Password and Date of Birth/ Incorporation
• Go to e-File -> e-File in response to notice u/s 139(9)
• On successful validation if there is any defective notice raised by either CPC/AO, the below screen will be displayed
• Assesse must click on “Submit” link under Response column for the respective defective notice number in order to submit the response.
• For defective notice raised by AO, the below screen will be displayed.
• Assesse selects the ITR from the drop down and uploads the respective XML file and clicks on Submit. Once the response is successfully submitted, the below success page will be displayed.
• For defective notice raised by CPC, the below screen will be displayed.
• If the assesse Agrees with the defect i.e. assesse selects Yes under column “Do you agree with defect?”, Select ITR Form Name, Assesse needs to upload the respective return XML.
• If the assesse does not agree with the defect i.e. assesse selects No under column “Do you agree with defect?”, Assesse needs to provide the remarks under column Assesse Remarks as shown in the below screen.
• If the Error Code value is “3” and the assesse does not agree with the defect i.e. e-File in response to assesse selects No under column “Do you agree with defect?”, Assesse needs to provide the additional information as shown in the below screen.
• If the company is FII/FPI i.e. if the assesse selects YES in the dropdown displayed under Details for Error Code 3 table, further details needs to be provided by assesse as displayed in the below screen and assesse needs to click on Submit.
• If the company is FII/FPI i.e. if the assesse selects NO in the dropdown displayed under Details for Error Code 3 table, Assesse needs to provide the respective remarks in the text box provided and click on Submit.
• On successful submission of the response by the assesse, the below success screen is displayed.
• Assessees can click on “View” link under Response column to view the response submitted. The below details will be displayed.
• Click on Transaction ID to know the details of response submitted.

Note: To view the XML or ITR (PDF), please do to My Account -> e-Filed Returns/Forms
 

Withdrawal of Defective response submitted

• Assesse is allowed to withdraw the response submitted for any defective return within 3 days of submission.
• Assesse needs to click on Withdraw link under Response column.
• Details of the submitted response will be displayed. Assesse needs agree to withdraw by checking the checkbox and click on Confirm Withdrawal button.
• Once the response has been withdrawn successfully the below screen is displayed.

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Where TDS is applicable and how to avoid it.

Salary income: Employer deducts TDS on total income, including income other than salary after taking into account all deductions and exemptions. This saves the individual the hassle of paying tax himself.

TDS rate : As applicable to individual based on his income and deductions.

Interest income: TDS is deducted by banks on FDs and RDs if the interest exceeds Rs 10,000 a year. TDS does not end tax liability. Someone in a higher tax slab will need to pay additional tax. Those in lower income bracket can seek a tax refund.

TDS rate : If PAN has been provided, TDS is 10% of income. Otherwise it is 20% of income.

EPF withdrawals: Withdrawals from Employee Provident Fund are subject to TDS if you withdraw before five years of service. However, no TDS is deducted on withdrawals of less than Rs 30,000.

TDS rate : If PAN has been provided, TDS is 10% of the withdrawal. Otherwise it is 20% of the amount.

Property sale: TDS is applicable if the value of the property exceeds Rs 50 lakh. If instalments are being paid TDS is deducted on each instalment. The buyer must obtain a Tax Deduction Account Number to deduct TDS. TDS has to be de -posited along with Form 26QB within a week from the end of the month in which TDS was deducted. Buyer must give TDS certificate to the seller.

TDS rate : If PAN has been provided, TDS is 1% of sale value. Otherwise it is 20 ..

On NRIs: NRIs are not permitted to submit Form 15G/H for NRO deposits and TDS is mandatory on all incomes. In case of resident Indians, TDS kicks in only if interest exceeds Rs 10,000 a year. But there are no such threshold for NRO deposits. Easwar committee has recommended easing of TDS rules for NRIs.

TDS rate : 30% on interest income from bank deposits, 20% from corporate deposits, 15% on short-term capital gains if securities transaction tax (STT) has been paid and 10% on longterm capital gains. If no STT is paid on short-term gains, TDS is 30%. Flat rate of 20% on sale of property.

How to avoid it

TDS can be avoided by submitting Form 15G or 15H. Form 15H is for senior citizens. It can be submitted if there is no tax on total income. Form 15G is for everybody else, except NRIs. It can be filed if tax on total income is nil and total interest income is less than the basic exemption limit.

Source: The Economic Times

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Maximum Penalty of Rs. 10000 on Delay in Filing of Income Tax Returns

Delay in filing Income Tax returns will now attract fine upto Rs 10,000

For income below Rs. 5 lakh, filing returns after July will attract a fine of Rs. 1,000, while for income above Rs. 5 lakh it will be Rs. 5,000, if it is filed after the due date but on or before December 31 of the assessment year.

The Budget has proposed imposing a fine for not filing income tax returns within the due date. For income below Rs. 5 lakh, filing returns after July will attract a fine of Rs. 1,000, while for income above Rs. 5 lakh it will be Rs. 5,000, if it is filed after the due date but on or before December 31 of the assessment year. It has also proposed a fee of Rs. 10,000 in any other case.

At a post-Budget event organised by the Institute of Chartered Accountants of India, Hasmukh Adhia, revenue secretary said that those who have an income of Rs. 5 lakh and above and file returns after July but till December will face a fine of Rs. 5,000. “This fine will be raised to Rs. 10,000 if the return is filled after December,” he said.

Time limit for filing revised return reduced

Under Section 139(5) of the Income Tax Act, an assessee can file revised return within two years from the end of the relevant fiscal year or before the completion of assessment by tax authorities, whichever is earlier. The Finance Bill proposes to reduce the time limit for filing such revised return to one year from the end of relevant fiscal year or before the completion of the assessment by tax authorities, whichever is earlier. This amendment shall be effective from fiscal year 2017-18.

A revised return can be filed if the assessee has filed the return within the due date. For filing the revised return, one has to enter the acknowledgement number and the date of filing of the original return in the revised form.

The Budget has also proposed to reduce the time limit for completion of assessment under Section 153 of the I-T Act. In assessment year 2018-19, it will be 18 months from the end of the assessment year. From assessment year 2019-20, it will be 12 months from the end of the assessment year. It has also reduced the time limit for completion of re-assessment. In respect of notices served under Section 148 of the I-T Act on or after April 1, 2019, the time limit for completion of assessment or re-assessment will be 12 months from the end of the financial year in which the notice is served.

Interest on refund

Under Section 244(A) of the I-T Act, an assessee is entitled to receive interest on refund because of excess payment of advance tax, tax deducted or collected at source. The assessee will, in addition to the refund amount, will receive simple interest on such refund at the rate of 1.5% for every month or part of a month from the date on which claim for refund is made in the returns or in case of an order passed in appeal, from the date on which the tax is paid to the date on which refund is granted.

Source: The Financial Express

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Updated Income Tax Slabs w.e.f. 01st April, 2017

Income Tax Slabs: Here Are New Tax Rates Applicable From April 2017

Bringing some cheers to the individual tax payers, Finance Minister Arun Jaitley halved the income tax rate to 5 per cent for individuals having taxable income between Rs. 2.5-Rs. 5 lakh compared to 10 per cent earlier. Meanwhile, Mr Jaitley increased the tax burden of people having taxable income between Rs. 50 lakh-Rs. 1 crore by imposing an additional surcharge of 10 per cent on the 30 per cent tax amount which was already there to offset the revenue loss to the exchequer. 

Here are the new tax slabs post Budget 2017-18 which will come into effect from April 1, 2017(Assessment Year 2018-19):

General Category (for person up to 60 years age)

In the general category- person up to 60 years of age- tax will be applicable if income is more than Rs. 2.5 lakh. For income of Rs. 0-Rs. 2.5 lakh no tax will be applicable. A tax of only 5 per cent will be applicable if income is between Rs. 2.5-5 lakh. Further, the income tax rebate of up to Rs. 5,000 which was earlier given for taxable income up to Rs. 5 lakh, has been reduced to Rs. 2,500 and it will be available for taxable income of up to Rs. 3.5 lakh. It means if an individual has a taxable income of Rs. 3 lakh, his net tax liability will be zero (tax @5% on Rs. 1 lakh is Rs. 2,500 minus rebate of Rs. 2,500).

Income                               Tax
Up to Rs. 2.5 lakh               Nil
Rs. 2,50,001-Rs. 5 lakh      5%
Rs. 500,001-Rs. 10 lakh     20%
Above Rs. 10 lakh              30%

For income between Rs. 5-10 lakh, a tax of 20 per cent will be applicable and for income above Rs. 10 lakh a tax rate of 30 per cent will be applicable. However, people having taxable income of more than Rs. 50 lakh but less than Rs. 1 crore, a new surcharge of 10 per cent will be imposed along with the a tax of 30 per

cent. For example, if an individual has a taxable income of Rs. 55 lakh, his tax liability will now increase from Rs. 15.19 lakh earlier to Rs. 16.57 lakh now (income tax of Rs. 14.62 lakh plus surcharge of Rs. 1.46 lakh and education & higher education cess of Rs. 48,263). If taxable income is more than Rs. 1 crore, then the surcharge will increase to 15 per cent of tax plus education and higher education cess of 3 per cent. However, on taxable incomes where surcharges are applicable, tax payers get the benefit of marginal relief, if applicable.

Senior citizens (for person between 60-80 years age)
For senior citizens falling in the tax bracket of Rs. 0 to Rs. 3 lakh, no tax will be applicable. For income between Rs. 3-5 lakh, a tax rate of 5 per cent will be applicable. The tax rate and surcharge will be same as general category for income between Rs. 5-10 lakh and above Rs. 10 lakh.

Income                              Tax
Up to Rs. 3 lakh                 Nil
Rs. 3,00,001-Rs. 5 lakh     5%
Rs. 5,00,001-Rs. 10 lakh   20%
Above Rs. 10 lakh             30%

Super senior citizens (for person above 80 years age)

For people aged above 80 years no tax will be applicable for income up to Rs. 5 lakh. A tax rate of 20 per cent and 30 per cent will be applicable for income between Rs. 5 lakh and Rs. 10 lakh and Rs. 10 lakh and above respectively as in case of general category.

Income                              Tax
Up to Rs. 5 lakh                 Nil
Rs. 5,00,001-Rs. 10 lakh   20%
Above Rs. 10 lakh             30%

Source: www.profit.ndtv.com

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Salaried Taxpayee can claim disability u/s. 80U upto Rs. 125000/- for A.Y. 2017-18

Deductions in respect of a person with disability (section 80U)

Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of Rs 75,000/-.  However, where such individual is a person with severe disability, a higher deduction of Rs 1,25,000/- shall be allowable.

DDOs should note that 80DD deduction is in case of the dependent of the employee whereas 80U deduction is in case of the employee himself. However, under both the sections, the employee shall furnish to the DDO the following:
1. A copy of the certificate issued by the medical authority as defined in Rule 11A(1) in the prescribed form as per Rule 11A(2) of the Rules. The DDO has to allow deduction only after seeing that the Certificate furnished is from the Medical Authority defined in this Rule and the same is in the form as mentioned therein.
2. Further in cases where the condition of disability is temporary and requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority as in 1 above and furnished before the DDO.
3. For the purposes of sections 80DD and 80 U some of the terms defined are as under:-
(a) “Administrator” means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 ;
(b) “dependant” means—

• in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;
• in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year;

(c) “disability” shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 and includes “autism”, “cerebral palsy” and “multiple disability” referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;
(d) “Life Insurance Corporation” shall have the same meaning as in clause (iii) of sub-section (8) of section 88;
(e) “medical authority” means the medical authority as referred to in clause (p) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or such other medical authority as may, by notification, be specified by the Central Government for certifying “autism”, “cerebral palsy”, “multiple disabilities”, “person with disability” and “severe disability” referred to in clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;
(f) “person with disability” means a person as referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;
(g) “person with severe disability” means—

• a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995; or
• a person with severe disability referred to in clause (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

(h) “specified company” means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.

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Salaried Taxpayee are not claimed the Income under the head "Salaries" - New Circular

INCOMES NOT INCLUDED UNDER THE HEAD "SALARIES" (EXEMPTIONS)

Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act :-

The value of any travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding (a) on leave to any place in India or (b) after retirement from service, or, after termination of service to any place in India is exempt under Section 10(5) subject, however, to the conditions prescribed in Rule 2B of the Rules.

For the purpose of this clause, "family" in relation to an individual means:

• the spouse and children of the individual; and
• the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual.

It may also be noted that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.

Death-cum-retirement gratuity or any other gratuity is exempt to the extent specified from inclusion in computing the total income under Section 10(10). Any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence service is exempt.  Gratuity received in cases other than those mentioned above, on retirement, termination etc is exempt up to the limit as prescribed by the Board. Presently the limit is Rs. 10 lakhs w.e.f. 24.05.2010 [Notification no. 43/2010 S.O. 1414(E) F.No. 200/33/2009-ITA-1 dated 11th June 2010].

Any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all- India services or to the members of the defence services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority] or a corporation established by a Central, State or Provincial Act, is exempt under Section10(10A)(i). As regards payments in commutation of pension received under any scheme of any other employer, exemption will be governed by the provisions of section 10(10A)(ii). Also, any payment in commutation of pension from a fund referred to in Section 10(23AAB) is exempt under Section 10(10A)(iii).

Any payment received by an employee of the Central Government or a State Government, as cash-equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement, whether on superannuation or otherwise, is exempt under Section 10(10AA)(i). In the case of other employees, this exemption will be determined with reference to the leave to their credit at the time of retirement on superannuation or otherwise, subject to a maximum of ten months' leave. This exemption will be further limited to the maximum amount specified by the Government of India Notification No.S.O.588(E) dated 31.05.2002 at Rs. 3,00,000/- in relation to such employees who retire, whether on superannuation or otherwise, after 1.4.1998.

Under Section 10(10B), the retrenchment compensation received by a workman is exempt from income-tax subject to certain limits. The maximum amount of retrenchment compensation exempt is the sum calculated on the basis provided in section 25F(b) of the Industrial Disputes Act, 1947 or any amount not less than Rs.50,000/- as the Central Government may by notification specify in the Official Gazette, whichever is less. These limits shall not apply in the case where the compensation is paid under any scheme which is approved in this behalf by the Central Government, having regard to the need for extending special protection to the workmen in the undertaking to which the scheme applies and other relevant circumstances. The maximum limit of such payment is Rs. 5,00,000/- where retrenchment is on or after 1.1.1997 as specified in Notification No. 10969 dated 25-06-1999.

Under Section 10(10C), any payment received or receivable (even if received in installments) by an employee of the following bodies at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of public sector company, a scheme of voluntary separation, is exempt from income-tax to the extent that such amount does not exceed Rs. 5,00,000/-:

1. A public sector company;
2. Any other company;
3. An Authority established under a Central, State or Provincial Act;
4. A Local Authority;
5. A Cooperative Society;
6. A university established or incorporated or under a Central, State or Provincial Act, or, an Institution declared to be a University under section 3 of the University Grants Commission Act, 1956;
7. Any Indian Institute of Technology within the meaning of Section 3 (g) of the Institute of Technology Act,1961;
8. Such Institute of Management as the Central Government may by notification in the Official Gazette, specify in this behalf.

The exemption of amount received under VRS has been extended to employees of the Central Government and State Government and employees of notified institutions having importance throughout India or any State or States. It may also be noted that where this exemption has been allowed to any employee for any assessment year, it shall not be allowed to him for any other assessment year. Further, if relief has been allowed under section 89 for any assessment year in respect of amount received on voluntary retirement or superannuation, no exemption under section 10(10C) shall be available.

Any sum received under a Life Insurance Policy (Sec 10(10D), including the sum allocated by way of bonus on such policy other than the following is exempt under section 10(10D):

• any sum received under section 80DD(3) or section 80DDA(3); or
• any sum received under a Keyman insurance policy; or
• any sum received under an insurance policy issued on or after 1.4.2003, but on or before 31-03-2012, in respect of which the premium payable for any of the years during the term of the policy exceeds 20 percent of the actual capital sum assured; or
• any sum received under an insurance policy issued on or after 1.4.2012 in respect of which the premium payable for any of the years during the term of the policy exceeds 10 percent of the actual capital sum assured; or
• any sum received under an insurance policy issued on or after 1.4.2013 in cases of persons with disability or person with severe disability as per Sec 80U or suffering from disease or ailment as specified in Sec 80DDB, in respect of which the premium payable for any of the years during the term of the policy exceeds 15 percent of the actual capital sum assured

However, any sum received under such policy referred to in (iii), (iv) and (v) above, on the death of a person would be exempt.

Any payment from a Provident Fund to which the Provident Funds Act, 1925, applies or from any other provident fund set up by the Central Government and notified by it in the Official Gazette is exempt under section 10(11).

Under section 10(13A) of the Act, any special allowance specifically granted to an assessee by his employer to meet expenditure incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee is exempt from Income-tax to the extent as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. According to Rule 2A of the Rules, the quantum of exemption allowable on account of grant of special allowance to meet expenditure on payment of rent shall be the least of the following:

1. the actual amount of such allowance received by the assessee in respect of the relevant period i. e. the period during which the accommodation was occupied by the assesse during the financial year; or
2. the actual expenditure incurred in payment of rent in excess of one-tenth of the salary due for the relevant period; or

• where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for the relevant period; or
• where such accommodation is situated in any other places, 40% of the salary due to the employee for the relevant period.

For this purpose, "Salary" includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.

It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof from the total income of the employee.  Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto Rs.3000/- per month will be exempted from production of rent receipt. It may, however, be noted that this concession is only for the purpose of

tax-deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent.

Further if annual rent paid by the employee exceeds Rs 1,00,000 per annum, it is mandatory for the employee to report PAN of the landlord to the employer. In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.

Section 10(14) provides for exemption of the following allowances :-

• Any special allowance or benefit granted to an employee to meet the expenses wholly, necessarily and exclusively incurred in the performance of his duties as prescribed under Rule 2BB subject to the extent to which such expenses are actually incurred for that purpose.
• Any allowance granted to an employee either to meet his personal expenses at the place of his posting or at the place he ordinarily resides or to compensate him for the increased cost of living, which may be prescribed and to the extent as may be prescribed.

However, the allowance referred to in (ii) above should not be in the nature of a personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to his place of posting or residence.

The CBDT has prescribed guidelines for the purpose of Section 10(14) (i) & 10 (14) (ii) vide notification No.SO 617(E) dated 7th July, 1995 (F.No.142/9/95-TPL)which has been amended vide notification SO No.403(E) dt 24.4.2000 (F.No.142/34/99-TPL). The transport allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of duty is exempt to the extent of Rs. 1600 p. m. or Rs 3200 p.m. (for a person who is blind or deaf and dumb or is orthopaedically handicapped with disabilities of lower extremes) vide notification S.O.No. 395(E) dated 13.05.98 r/w S.O. No. 1002 (E) dated 13.04.2015 & S.O. No. 2604 (E) dated 23.09.2015.

Under Section 10(15)(iv)(i) of the Act, interest payable by the Government on deposits made by an employee of the Central Government or a State Government or a public sector company out of his retirement benefits, in accordance with such scheme framed in this behalf by the Central Government and notified in the Official Gazette is exempt from income-tax. By notification No.F.2/14/89-NS-II dated 7.6.89, as amended by notification No.F.2/14/89-NS-II dated 12.10.89, the Central Government has notified a scheme called Deposit Scheme for Retiring Government Employees, 1989 for the purpose of the said clause.

Any scholarship granted to meet the cost of education is not to be included in total income as per provisions of section 10(16) of the Act.

Section 10(18) provides for exemption of any income by way of pension received by an individual who has been in the service of the Central Government or State Government and has been awarded "Param Vir Chakra" or "Maha Vir Chakra" or "Vir Chakra" or such other gallantry award as may be specifically notified by the Central Government. Family pension received by any member of the family of such individual is also exempt [Notifications No.S.O.1948(E) dated 24.11.2000 and 81(E) dated 29.1.2001, which are enclosed as per Annexure VIII & IX]. “Family” for this purpose shall have the meaning assigned to it in Section 10(5) of the Act. DDO may not deduct any tax in the case of recipients of such awards after satisfying himself about the veracity of the claim.

Under Section 17 of the Act, exemption from tax will also be available in respect of:-

• the value of any medical treatment provided to an employee or any member of his family, in any hospital maintained by the employer;
• any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or of any member of his family:
• in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees;
• in respect of the prescribed diseases or ailments as provided in Rule 3A(2) of the Rules in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines as provided in Rule 3(A)(1)of the Rules,
• premium paid by the employer in respect of medical insurance taken for his employees (under any scheme approved by the Central Government or Insurance Regulatory and Development Authority) or reimbursement of insurance premium to the employees who take medical insurance for themselves or for their family members (under any scheme approved by the Central Government or Insurance Regulatory and Development Authority);
• reimbursement, by the employer, of the amount spent by an employee in obtaining medical treatment for himself or any member of his family from any doctor, not exceeding in the aggregate Rs.15,000/- in an year;
• As regards medical treatment abroad, the actual expenditure on stay and treatment abroad of the employee or any member of his family, or, on stay abroad of one attendant who accompanies the patient, in connection with such treatment, will be excluded from perquisites to the extent permitted by the Reserve Bank of India. It may be noted that the expenditure incurred on travel abroad by the patient/attendant, shall be excluded from perquisites only if the employee's gross total income, as computed before including the said expenditure, does not exceed Rs.2 lakhs.

For the purpose of availing exemption on expenditure incurred on medical treatment, "hospital" includes a dispensary or clinic or nursing home, and "family" in relation to an individual means the spouse and children of the individual. Family also includes parents, brothers and sisters of the individual if they are wholly or mainly dependent on the individual.

It is pertinent to mention that benefits specifically exempt u/s 10(13A), 10(5), 10(14), 17 etc. of the Act would continue to be exempt. These include benefits like house rent allowance, leave travel concession, travel expense allowance on tour and transfer, daily allowance to meet tour expenses as prescribed, medical facilities subject to conditions.

In this connection it is to be noted that as per sec. 10 (14) read wit rule 2BBany allowance granted to meet the cost of travel on tour or on transfer includes any sum paid in connection with transfer, packing and transportation of personal effects of such transfer shall be exempt. Also any allowance, whether, granted for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence form his normal place of duty shall be exempt.

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Income Tax Department awarded for e-Filing Income Tax Return

Income Tax Department receives Silver Award for e-filing of Income Tax Returns project in the National Awards on e-Governance 2016-17.

The Income Tax Department is proud to announce that it has been conferred the Silver Award in the National Awards on e-Governance-2016-17 for the e-filing of Income Tax returns and other forms project in the category “Incremental Innovations” in existing projects.

The award is in recognition of the achievements of the Department in the area of eGovernance and for significant innovations in successful e-Governance programs in the current Award period. The e-filing of Income Tax returns project had already won the Silver Award in the National Awards on e-Governance in 2007-08.

The path breaking innovations introduced by the Department in the e-filing of Income Tax returns project are:

i. Introduction of Electronic Verification Code (EVC)- This innovation introduced in July 2015 enables the citizen to electronically verify Income tax returns and other forms using EVC through third party authentication services provided by Aadhaar using Aadhaar OTP, authentication by banks using net banking, ATM, bank account validation and security depositories such as NSDL and CDSL using demat account validation. The taxpayer can use any of these authenticating mechanisms to receive an Electronic Verification Code (EVC) which can be entered after submission of a return to verify and complete the process. This year alone over 1.1 Cr Income Tax returns have been electronically verified using EVC thereby obviating the need to submit a paper copy of the ITR-V to CPC Bangalore as was being done earlier.

ii. Securing taxpayer account using E-filing Vault- This innovation aims at adding one more level of authentication to the process of login to the “My Account” of the tax payer and for resetting of password by leveraging the EVC concept. E-filing Vault enables the tax payer to completely secure the e-filing account to prevent any unauthorized access.

iii. Easy compliance through Non-Filers Monitoring and E-Sahyog- This innovation aims at providing convenience to the tax payer for submitting tax compliance response through the e-filing portal. The taxpayer can now sitting at home or office any time any where respond to any letter from the Department seeking taxpayer clarification regarding non filing of return or any mismatch in Income Tax return. This innovation has the potential to significantly reduce compliance cost and increase voluntary compliance.

The Income Tax Department is spurred by the recognition received and is encouraged to initiate more innovations to facilitate taxpayers through its e-Governance programs.

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TDS Payment on Superannuation Fund and Provident Fund w.e.f. 01.06.2015

TDS ON PAYMENT OF ACCUMULATED BALANCE UNDER RECOGNISED PROVIDENT FUND AND CONTRIBUTION FROM APPROVED SUPERANNUATION FUND

The trustees of a Recognized Provident Fund, or any person authorized by the regulations of the Fund to make payment of accumulated balances due to employees, shall in cases where sub-rule(1) of Rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an employee is paid, make therefrom the deduction specified in Rule 10 of Part A of the Fourth Schedule to the Act.

The accumulated balance is treated as income chargeable under the head “Salaries”.

Where any contribution made by an employer, including interest on such contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on the amount so paid shall be deducted by the trustees of the Fund to the extent provided in Rule 6 of Part B of the Fourth Schedule to the Act. TDS should be at the average rate of tax at which, the employee was liable to be taxed during the preceding three years or during the period, if that period is less than three years, when he was member of the fund.

The deductor shall remain liable to deduct tax on any sum paid on account of returned contributions (including interest, if any) even if a fund or part of a fund ceases to be an approved Superannuation fund.

As per section 192A of the Act, w. e. f. 01.06.2015 the trustees of the EPF Scheme 1952 framed under section 5 of the EPF & Misc.

Provisions Act, 1952 or any person authorized under the scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognized provident fund is includible in his total income owing to the provisions of Rule 8 of Part A of Fourth Schedule not being applicable at the time of payment of accumulated balance due to the employee, deduct income tax thereon @ 10% if the amount of such payment or aggregate of such payment exceeds Rs 50,000/-. In case the employee does not provide his/her PAN No., then the deduction will have to be made at maximum marginal rate.

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How Salaried Employee (Taxpayee) Calculate Income Tax ?

All salaried Employee (Taxpayee) should submit income Tax Return Annual but deduct Tax as TDS every Month from his monthly salary u/s. 192 of Income Tax Act, 1961.

There are three major factor to calculate Income Tax for Salaried Employee which are as under :

Method of Tax Calculation:

Every person who is responsible for paying any income chargeable under the head "Salaries" shall deduct income-tax on the estimated income of the assessee under the head "Salaries" for the financial year 2016-17. The income-tax is required to be calculated on the basis of the rates given above, subject to the provisions related to requirement to furnish PAN as per sec. 206AA of the Act, and shall be deducted at the time of each payment. No tax, however, will be required to be deducted at source in any case unless the estimated salary income including the value of perquisites, for the financial year exceeds Rs. 2,50,000/- or Rs.3,00,000/- or Rs. 5,00,000/-, as the case may be, depending upon the age of the employee.

Payment of Tax on Perquisites by Employer:

An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at its option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee.  However, the employer will have to pay the tax at the time when such tax was otherwise deductible i.e. at the time of payment of income chargeable under the head “salaries” to the employee.

Computation of Average Income Tax:

For the purpose of making the payment of tax mentioned in Payment of Tax on Perquisites by Employer above, tax is to be determined at the average of income tax computed on the basis of rate in force for the financial year, on the income chargeable under the head "salaries", including the value of perquisites for which tax has been paid by the employer himself.

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Easy Steps to Upload Income Tax Return A.Y. 2017-18

Upload Income Tax Return A.Y. 2017-18

To Upload ITR , please follow the below steps:

Step - 1 :  Download the ITR preparation software for the relevant assessment year to your PC / Laptop from the "Downloads" page.

Step - 2 :  Prepare the Return using the downloaded Software.

Gather all the information regarding your income, tax payments, deductions etc.Pre-populate the personal details and tax payments/TDS by clicking on the 'Pre-fill' button. Compare with the information you have to ensure that nothing is left out.Enter all data and click on 'Calculate' to compute the tax and interest liability and final figure of Refund or Tax payableIf Tax is payable- remember to pay immediately and enter the details in appropriate schedule. Repeat above step so that tax payable becomes zeroGenerate and save the Income Tax Return data in XML format in the desired path/place on your PC/Laptop.

Step - 3 :  Login to e-Filing website with User ID, Password, Date of Birth /Date of Incorporation and enter the Captcha code.

Step - 4 :  Go to e-File and click on "Upload Return".

Step - 5 :  Select the appropriate ITR, Assessment Year and XML file previously saved in Step 2 (using browse button).

Step - 6 :  Upload Digital Signature Certificate (DSC), if applicable.

Please ensure the DSC is registered with e-Filing.

Step - 7 :  Click on "Submit" button.

Step - 8 :  On successful submission, ITR-V would be displayed (if DSC is not used). Click on the link and download the ITR-V. ITR-V will also be sent to the registered email. If ITR is uploaded with DSC, the Return Filing process is complete.
OR
The return is not uploaded with DSC, the ITR-V Form should be printed, signed and submitted to CPC within 120 days from the date of e-Filing. The return will be processed only upon receipt of signed ITR-V. Please check your emails/SMS for reminders on .non-receipt of ITR-V.

Upload Income Tax Return process is complete now.

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Filing of Revised Income Tax Returns by the Tax Payers Post De-Monetisation of Currency

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 14 December, 2016.

PRESS RELEASE

Sub: Filing of Revised Income Tax Returns by the Tax Payers Post De-Monetisation of Currency

Under the existing provisions of section 139(5) of the Income-tax Act, 1961 (‘Act’), Revised Return can only be filed if any person, who has filed a return under section 139(1) of the Act or in response to notice u/s 142(1), discovers any omission or any wrong statement therein. Post demonetization of the currency on 8th November, 2016, some taxpayers may misuse this provision to revise the return-ofincome filed by them for the earlier assessment year, for manipulating the figures of income, cash-in-hand, profits etc. with an intention to show the current year’s undisclosed income (including the unaccounted income held in the form of demonetized currency in current year) in the earlier return.

It is hereby clarified that the provision to file a revised return of income u/s 139(5) of the Act has been stipulated for revising any omission or wrong statement made in the original return of income and not for resorting to make changes in the income initially declared so as to drastically alter the form, substance and quantum of the earlier disclosed income.

It is brought to the notice of tax payers that any instance coming to the notice of Income-tax Department which reflects manipulation in the amount of income, cash-in-hand, profits etc. and fudging of accounts may necessitate scrutiny of such cases so as to ascertain the correct income of the year and may also attract penalty/prosecution in appropriate cases as per provision of law.

(Meenakshi J.Goswami)

Commissioner of Income Tax

(Media and Technical Policy)

Official Spokesperson, CBDT.

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Latest Procedure for furnishing and Verification of Form 27BA.

F.Ro. DGIT(S)/CPC(TDS)/NOTIFICATION/2016-17

Government of India

Ministry of Finance

Central Board of Direct Taxes

Directorate of Income-tax(Systems)

New Delhi.

Notification No. 12/ 2016

New Delhi, 8th December, 2016

Subject: — Procedure for the purposes of furnishing and verification of Form 27BA for removing of default of Short Collection and/or Non Collection of Tax at Source – Reg.

1. As per first proviso to sub-section (6A) of section 206C of Income-tax Act, 1961, any person, other than a person referred to in sub-section (ID), responsible for collecting tax in accordance with the provisions of this section, who fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an asses see in default in respect of such tax if such buyer or licensee or Iessee —

(i) has furnished his return of income under section 139;

(ii) has taken into account such amount for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed.

2. As per sub-rule (1) of Rule 37J of Income-tax Rules, 1962, the certificate from an accountant under the first proviso to sub-section (6A) of section 206C shall be furnished in Form 27BA to the Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems) in accordance with the procedures, formats and standards specified under sub-rule (2), and verified in accordance with the procedures, formats and standards specified under sub rule (2).

3. In exercise of the powers delegated by ghe Central Board of Direct Taxes (Board) under sub-rule (2) of Rule 37J of Income Tax Rules, 1962 the Principal Director General of Income-Tax (Systems) hereby authorizes the Income Tax Authorities mentioned at Col. No. 1 to receive the form type mentioned in Col.No.2 to be filed in the mode specified at Col. No. 3 for the assessment years mentioned at Col. No. 4 and pertinent to defaults under Sections of the Act mentioned at Col. No. 5:

Click Here to Read Full Notification.

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Key Highlights of Proposed Amendment in Income Tax Law after Demonetisation.

Changes proposed in income tax law after demonetisation in 10 points

The government moved an amendment in the Lok Sabha, seeking to change income tax laws for taxing of undisclosed income in the wake of demonetisation.

The government moved an amendment in the Lok Sabha, seeking to change income tax laws for taxing of undisclosed income in the wake of demonetisation. The proposed tax rate on people disclosing their unaccounted wealth is around 50 per cent, much higher than the 30 per cent tax rate at the highest slab.

The government said that “there have been representations and suggestions from experts that instead of allowing people to find illegal ways of converting their black money into black again, the government should give them an opportunity to pay taxes with heavy penalty and allow them to come clean.”

This will help the government mobilise “additional revenue for undertaking activities for the welfare of the poor but also the remaining part of the declared income legitimately comes into the formal economy,” the government said in its objective for introducing the amendment. 

Here are key highlights of the proposed amendment to tax laws:

1. According to the proposed amendment, if the declarant comes clean on his undisclosed income he/she shall be required to pay tax at 30 per cent of the undisclosed income and penalty at 10 per cent of and a surcharge of 33 per cent.
2. This comes around to an effective tax rate of around 50 per cent, say tax experts.
3. This is higher than the 45 per cent tax rate that was charged under the Income Disclosure Scheme, 2016, which provided a one-time opportunity to domestic black money holders to disclose wealth and come clean. The Income Disclosure Scheme was open from June to September.
4. The surcharge will be called ‘Pradhan Mantri Garib Kalyan Cess’.
5. In addition, to tax surcharge and penalty, the declarant shall have to deposit 25 per cent of undisclosed income in a scheme to be notified by the central government under Pradhan Mantri Garib Kalyan Deposit Scheme, 2016′.
6. The deposit shall earn no interest and the amount deposited shall be allowed to be withdrawn only after 4 years of deposit.
7. This amount is proposed to be utilised for the programmes of irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood, etc.
8. For those who continue to hold onto undisclosed cash and are caught by tax authorities, the tax rate could go up to 85 per cent.
9. Revenue Secretary Hasmukh Adhia said the deterrent provisions were necessary so that people have the fear of hoarding black money.
10. Deposits which have been already made from November 10 will be covered under Pradhan Mantri Garib Kalyan Deposit Scheme.

Source: TDSMAN

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Pay 50% Tax in Pradhan Mantri Yojana and escape from all explanation of Deposits

No need to explain source of deposits taxable at 50% under Pradhan Mantri Yojna

The Government has announced demonetization of existing currency of Rs. 500/1000 with effect from the 9th November, 2016. However, concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 ('Act') could possibly be used for concealing black money. So, the Government has introduced Taxation Laws (Second Amendment) Bill, 2016 in the Lok Sabha to amend the provisions of Income-Tax Act.

The Government has announced Pradhan Mantri Garib Kalyan Yojana 2016 (PMGKY) in the Taxation Laws (Second Amendment) Bill, 2016. As per this PMGKY black money deposited in banks or held in cash can be offered for taxation at 49.9% (i.e., 30% tax, 9.9% surcharge and 10% penalty).

The Revenue Secretary, Hasmukh Adhia said that Income-tax department will not ask for the source of funds deposited in banks if the entire income is declared under PMGKY.

It would be the last chance to come clean for black money holders. Any detection of black money by AO thereafter (other than search cases) would attract 83.25% tax.

From bare reading of this statement of Revenue Secretary, doubts arise as to whether any corrupt official or corrupt member of political party or any criminal can also come clean by paying 49.90% tax under PMGKY.

No, any criminal or corrupt person cannot avail of benefit of this PMGKY as he is specifically excluded from purview of PMGKY.

Doubts also arise as to how Government will come to know that any corrupt person or any criminal is offering income under PMGKY as Income-Tax Act Dept. will not ask for source of funds deposited in banks?

Even if we assume that any corrupt person or any criminal has availed of benefit of this PMGKY, then also benefit of such PMGKY will be denied when such fact comes to notice of the dept. In that scenario, action will be taken under respective provision of IPC and Prevention of Corruption Act and that person will be liable to pay tax at 83.25%.

Source: TAXMANN

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Complete procedure of online bulk income tax return filing.

The online bulk e-return of Income Tax filing process is very simple even also Bulk PAN validation, Bulk PAN application, Bulk TDS return, Bulk ITR V Request, Bulk PAN/TAN Request, Bulk Digital Signature etc. also by using e-Return Intermediary (ERI) User Registration.  The filing of ITR forms with the relevant Income Tax Authorities. We can e-file the tax returns on request as well.

The ERI Registration Number is available only for Companies and Firms but it is non-mandatory. If the registering ERI Admin belongs to company/firm category, Date of Incorporation is mandatory.

e-Return Intermediary (ERI) User Features :

Pre-requisites:

• ERI Admin should be registered in e-Filing application.
• ERI Sub-user must be created and activated by ERI Admin.

To read more details for Online Bulk Income Tax Return Filing Click Here.

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Tax consequences of depositing cash into bank account

Tax consequences of depositing cash into bank account

The recent demonetization of Rs.500 and Rs.1000 currency has created waves across the country. The decision was like a sudden bolt from the blue. When it was announced on 8th night at 8.30 p.m. or so, no one would have comprehended the depth and enormity of the measure vis a vis the possible fallout of the decision. With 6 days after the announcement some of the general conclusions or expressions of the commoner / intellectuals are as under:

(i) It would reduce the money circulation by Rs.3 lakh crores which would be a gain or profit to the Government. This could be used to cover fiscal deficit.

(ii) The hoarders (mostly said to be politicians) will not be able to use the old currency (estimated at 20% of the total money circulation) and thus they would become mere papers. The tendency to hoard currency would not be there for at least, the next few years.

(iii) When there is sudden reduction in money circulation, people would reduce or avoid extravagant expenses / acquisitions and would use money only for the needs than for their pleasures and desires. It could in turn cripple high end businesses such as automobile, foreign travel, real estate and construction sectors.

(iv) This experience would make people to keep their money in bank account so that any repeat of such demonetization will not discomfort them again.

(v) The poor daily wage earners are left with no choice but they may be forced to accept the old currency since they are at the mercy of the employer who may have lots of such old currencies. In fact, it is happening in some places such as construction workers, daily wage labourers etc. However, this kind of practice can continue only upto the d-day i.e. 30.12.2016.

(vi) Currency- GDP ratio of our nation at 12% reflects high dependence on hard cash and this might force a temporary slump in economy due to demonetization.

(vii) Demonetization of currencies (Rs.500 and Rs.1000) which comprise more than 85% of the total currency circulation would lead to some temporary collateral damages and till the new currencies replace them to the extent it is exchanged, the economic activity would remain sluggish.

Announcements on Income-tax implication

On 8th night the Hon'ble Prime Minister declared that there would be no limit in depositing the old currencies. This statement prima facie would have made any taxpayer to assume that the accounted cash on hand is eligible for deposit without any hassles. However, the announcement on the next day by the Finance Minister and other officials of the Revenue Department stating that the deposits upto Rs.2.50 lakhs will not be checked and amounts deposited in excess thereto would be probed by the Income-tax department has upset many genuine taxpayers.

Taxpayers who have disclosed cash balance at the end of the last fiscal i.e. 31st March, 2016 could deposit their cash balance in hand as on 8th instant in their bank account. The announcement that any deposit above Rs.2.5 lakhs however would invite verification by the Income-tax department might create a fear psychosis among the taxpayers. The other blunt statement that penalty @ 200% would be levied in the case of such deposits not being accounted might create further damage to the regular taxpayers confidence.

The Prime Minister's statement that honest taxpayers would not be harassed needs to be looked into in the backdrop of the above statements of verifying the income-tax returns filed vis a vis the possibility of imposing penalty.

Allaying the fear

It would not be farfetched if the Government allays the fear of the regular taxpayers by giving specific assurance as regards the verification and the possibility of penalty levy. For example, a taxpayer declaring income above Rs.30 lakhs in every assessment year consistently, with natural instinct to hold cash like any other Indian, may have cash balance which he is eligible to deposit into his bank account. But the statement bullying them that it would be verified and could be exposed to penalty, given the departmental officials attitude and skill sets, would not encourage him to deposit the entire cash balance into his bank account.

It is well known fact that litigation in income-tax law is common in India and even for legitimate genuine transactions, taxpayers undergo the ordeal for completing their tax assessments.

Income tax provisions

Taxpayers maintaining books of account on day to day basis may not feel the heat of demonetization since the genuine books of account and the cash balance thereon could be deposited into their bank account. However, the attitude to maintain books of account on day to day basis is very poor across the country and in spite of the taxpayers declaring huge income for tax assessment, the books of account are so weak that they do not dare to claim their books as proper and correct.

Majority of the personal income-tax payers admit income based on the future projected investment needs besides meeting their eligibility criteria for loan lending by financial institutions and banks. Based on the future investment requirements the incomes are either jacked up or understated besides the willingness at that point of time to cough out money towards income tax.

Section 69A of the Income-tax Act deals with taxation of 'unexplained money'. As per this section where in any financial year the taxpayer is found to be owner of any unexplained money which is not recorded in the books of account and he offers no explanation about the nature and source of acquisition of the money, the tax authority may deem such amount to be the income of the taxpayer of such financial year and tax it at a flat rate of 30%.

Now, amounts deposited in the bank account if not reflected in the books of account, but voluntarily offered as income by the taxpayer by citing section 69A could be subjected to tax at 30% as per section 115BBE. However, this could also prompt the tax authorities to probe the preceding years' books of account and pick holes for levy of penalty.

Distinction between depositors

Distinction between a taxpayer having legitimate cash on hand and another taxpayer who offers cash on hand as income on voluntary basis needs to be maintained.

A regular taxpayer having paid tax has done no crime except holding cash with himself. If such cash is deposited based on the preceding years admitted income and other parameters, the government has to assure him of the relief from verification. This could be achieved by online confirmation of the deposit with details of income in the preceding specified number of assessment years. If such simplified confirmation is put in place, many taxpayers who hold cash i.e. accounted cash would be relieved of the dilemma of the tax consequence of depositing such money in to their bank account.

On the other hand, a taxpayer who deposits money into bank account and gives admission of such money as income on voluntary basis subjecting it to tax under section 115BBE should not be spared for the reason that the taxpayer has not availed such benefit which was available under the Income Declaration Scheme (IDS). If such depositor is spared then the declarants under the IDS would get prejudiced since they have to pay tax at 45% as against this depositor who will pay tax only at 30%.

Conclusion

At this juncture of the demonetization of currencies and the option for depositing such currency into the bank account, the professionals have a responsible role to play. It would not be out of place if all the finance professionals play their role in the interest of the nation to uproot black money besides eradicating corruption by giving proper and timely advice as per the letter and spirit of law.

The decision too demonetize is a courageous one which requires full backing of every responsible citizen for ensuring that India remains prosperous even in his posterity. However, on the part of the Government, words of assurance to the genuine taxpayers must be given instead of bland statements which could only send incorrect signals to them.

Source : Artical By V.K.Subramani on Taxmann.com

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Tax Impact on Unaccounted Cash Deposit

Recently, Government introduced Demonetization whereby currency notes of Rs. 500 and Rs. 1000/- have been declared as invalid legal tender with effect from 9.11.2016 is most likely to witness huge cash deposits in bank accounts within the window period expiring on 30.12.2016. Media reports have appeared attributed to Government sources that in case substantial amount of cash is deposited in banks declaring it as current year’s unaccounted income and applicable tax @ 30% plus surcharge etc. is paid, still penalty @ 200% of the tax can be imposed as per provisions of section 270A of the Income Tax Act, 1961.

When any person deposits some cash amount in his bank account and it is established that such deposit is an unaccounted money (black money), then the entire deposit shall be charged to tax without providing the benefit of slab rates.  The impart of Tax on unaccounted money are as under :

Unaccounted Money Rs. 10,00,000/-

Tax on Income at 30%        = 3,00,000
Add: Surcharge at 12%       = NIL
Add: Education cess at 3%   =    9,000
Total Tax                   = 3,09,000
Penalty at the rate of 200% = 6,18,000
Total Tax and Penalty       = 9,27,000
Benefit Amount              =   73,000

Interest u/sec. 234B and 234C will also be charged and after that one may end up paying more than the amount deposited in the bank account.

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