Before Cash Withdrawals from PPF and POS must know rules - ITR Filing

Before Cash Withdrawals from PPF and POS must know rules - ITR Filing

Income Tax Return (ITR) Filing: MUST know top 5 rules for cash withdrawals from PPF, post office schemes

Income Tax Return (ITR) Filing: The Department of Post has introduced a new income tax rules for tax deducted at source (TDS) deduction in respect of aggregate cash withdrawal above Rs 20 lakh by an account holder of National (Small) Savings Schemes, including Public Provident Fund (PPF).

New income tax provisions in Section 194N of the Income Tax Act will be applicable from 1st July 2020 for non-ITR filer under section 194N of Income Tax Act 1961 if a recipient has not filed the returns of income for the previous three assessment years.

Here are the top 5 income tax rules that an earning individual must know irrespective of the fact that they are filing ITR or not:

1] For non-ITR filers: If aggregate cash withdrawal exceeds Rs 20 lakh but does not exceed Rs 1 crore during a financial year, the income tax payable will be 2 per cent of the amount exceeding Rs 20 lakh.

2] For non-ITR filers: If cash withdrawal exceeds 1 crore during a financial year, the income tax payable will be 5 per cent of the amount above Rs 1 crore.

3] For ITR filers: If cash withdrawal exceeds Rs 1 crore during a financial year. The income tax payable will 2 per cent of the amount above Rs 1 crore.

4] These changes in the income tax rules are not yet incorporated and to facilitate Post Offices CEPT has identified and extract the details of such depositors for the period from 1st April 2020 to 31st December 2020.

5] CEPT will forward the list to concerned Circle/CBS CPCs of the concerned circles with details of the account, PAN number available along TDS amount to be deducted.

Source: ZeeBusiness

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F.D. and Tax Saving.

Generally speaking all bank FDs are safe as banks are rigorously monitored by RBI. The FD in Government owned banks like SBI, PNB are the safest. This is because government would intervene and pay the depositors. Next is big private banks like ICICI & HDFC followed by smaller private banks. After this we have small finance banks. Co-operative banks are worst of the lot and I

would not trust them with my money. So until there are compelling circumstances keep away from co-operative banks. You can learn from recent example where Yes Bank was rescued by the government and no depositors suffered. However depositors of PMC Bank (a co-operative bank) are still suffering. You can learn more about this in our detailed article about How safe is your Bank Fixed Deposit?

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Latest Updates on Income Declaration Scheme, 2016

The Income Declaration Scheme, 2016 (hereinafter referred to as ‘the Scheme’) came into effect on 1st June, 2016.  This "the Scheme" is recently amended by CBDT i.e. these rules may be called the Income Declaration Scheme, (Third Amendment) Rules, 2016 and Clarifications on the Income Declaration Scheme, 2016.  The CBDT has issued three sets of FAQs vide Circular Nos. 17, 24, 25 & 27 of 2016.

The Highlights from such changes are as under:

• The CBDT has amended the valuation rules to determine fair value of property declared under IDS on basis of stamp duty valuation.
• Where loans, creditors, advances received, share capital, payables etc. are disclosed in the audited balance sheet but are fictitious in nature and cannot be directly linked to acquisition of a particular asset, then such fictitious liabilities can be disclosed under the IDS as such without linking the same with the investment in any specific asset.
• The income declared under the IDS for an earlier assessment year can be taken into account to explain the related transactions of the subsequent assessment years in assessment proceedings pending before the Assessing Officer provided there is a nexus between the two.
• No adverse action shall be taken against the declarant by the income-tax department solely on the basis of cash deposits made in banks consequent to the declaration made under the Scheme.
• The period of holding of immovable property declared under the IDS shall be taken on the basis of its actual date of acquisition and not from 1.6.2016.
• Payment made under the IDS can be made in cash to the banks. Thus, RBI has been requested to issue instructions to banks to allow payment of tax under the IDS in cash.

Click Here to view All about IDS, 2016

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Tax implications of fixed deposits

If you are in the higher tax bracket, that is 20% or 30%, make sure that you pay the additional interest before filing your tax returns.

The biggest disadvantage of FDs is that the interest earned is subject to taxation. This eats into the returns.

Taxed as per income bracket

The interest earned on the FDs is added to the depositor's income and taxed as per income bracket. This reduces its attractiveness, especially for those in the highest tax bracket.

Pay tax even if bank cuts TDS

The bank will cut the tax at source (Tax Deducted at Source) before paying the interest, if the interest exceeds Rs 10,000 in a financial year.  But this is at the marginal rate of 10%. If you are in the higher tax bracket, that is 20% or 30%, make sure that you pay the additional interest before filing your tax returns. This is a common mistake most depositors do. It is a hassle if you receive a notice from the Income-Tax department for non payment of taxes. You will have to prove that not paying the tax was not deliberate and you may have to pay tax plus the penalty for the delay.

For ensuring that the bank has deducted TDS on your FD by checking Form 26AS. But sometimes if the bank deducts TDS but fails to submit the same to the I-T department, you may still get a notice.

If your PAN card details are not updated with the bank, the TDS will be deducted at 20%. And if you are in the 10% tax bracket, this will mean having to file for refund while filing tax returns, which can be a hassle. These are some of the things to keep in mind.

Form 15G and 15H

If your income is below the taxable limit and you have no then submit Form 15G to avoid TDS. For senior citizens whose income is below the taxable limit the form is 15H.

Reduce your TDS

You can also reduce your TDS by spreading your deposits across several banks so that the interest earned in a financial year remains less than Rs 10,000. But this will only reduce the TDS. You will still have to pay income tax as per your tax bracket.

Source: Business Standard

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Interest Rate @ 9.1% for Investment in 'Sukanya Samridhi Account' During 2014-15

Recently, Hon'ble Prime Minister declared by Office Memorandum dated 20-01-2015 the Interest Rate on Investment in "Sukanya Samridhi Account" during Fin. Year 2014-15 is 9.1%.  The scheme of "Sukanya Samridhi Account" is specially for Girl Child which announcement by Finance Minister in his Budget Speech 2014-15.  The details is as under:

SUKANYA SAMRIDHHI ACCOUNT RULES, 2014 - RATE OF INTEREST TO BE ALLOWED ON INVESTMENTS IN SAID SCHEME DURING FINANCIAL YEAR 2014-15

OFFICE MEMORANDUM [F.NO. 2/3/2014.NS-II], DATED 20-1-2015

Subject: Launch of scheme for Girl Child named "Sukanya Samridhhi Account" by Hon'ble Prime Minister - rate of interest reg.

In compliance of announcement by Finance Minister in his Budget Speech 2014-15 the Government of India has introduced a new scheme named "Sukanya Samridhhi Account" vide Notification No.GSR No.863(E), dated 2nd December, 2014. It has been decided to allow 9.1% rate of interest on investments in the scheme during the financial year 2014-15.

This has the approval of Union Finance Minister.

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ITAT says cash deposit of above 10 lakhs in bank account doesn’t indicate that income has escaped assessment.

The assessee had deposited cash in excess of Rs 10 lakhs in his saving bank account but he had not filed return of income. The AO reopened the assessment of assessee, as he had reason to believe that there was an escapement of income of Rs 10 lakhs. The Tribunal held that the AO proceeded on the fallacious assumption that bank deposits constituted undisclosed income and overlooked fact that the source of deposit need not necessarily be income of the assessee

Facts:

(a)		The assessee had deposited Rs 10 lakhs (approx) in his saving bank account but no return of income was filed by him. The AO reopened the assessment of assessee, as he had reason to believe that there was an escapement of income of Rs 10 lakhs on part of assessee.
(b)		The instant appeal was filed against validity of reassessment proceedings.

The Tribunal held in favour of assessee as under:

(1)		At the stage of recording the reasons for reopening the assessment, the formation of prima facie belief that an income has escaped the assessment is necessary. However, it is also necessary that there must be something which indicates, even if not establishes, the escapement of income from assessment.
(2)		Merely because some further investigation had not been carried out, which, could have led to detection to an income escaping assessment could not be a reason enough to hold the view that income had escaped assessment.
(3)		In the instant case, merely the fact that deposits have been made in a bank account do not indicate that these deposits constitute an income which had escaped assessment.
(4)		AO proceeded on the fallacious assumption that bank deposits constituted undisclosed income and overlooked the fact that the sources of deposit need not necessarily be income of the assessee. The reassessment proceedings could not be resorted to unless there was reason to believe, rather than suspect, that income had escaped assessment. Thus, reassessment proceeding was to be set aside.

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Substantial Reduction in TDS Deposited during Financial Year 2014 - CPC (TDS)

CPC (TDS) has issued a follow up communication to all deductors regarding substantial reduction in the amount of Tax Deposited during the period April 1 to August 31, 2014  as compared with the corresponding period in Financial Year 2013.

The issued communication has been given below:

Dear Deductor (TAN: ),

As per the records of the Centralized Processing Cell (TDS), it has been observed that there is substantial reduction in the amount of Tax Deposited during the period April 1 to August 31, 2014 as compared with the corresponding period in Financial Year 2013.

It may be possible that either the Tax may not have been deducted at source at appropriate rates or the Tax deducted may not have been deposited, within stipulated time. In such case, this may lead to Short / Late Deduction and /or Short / Late Payment Defaults.

Please make note of the following important information:

• Please note the provisions of section 200(1) of the Income Tax Act, 1961; in this regard:

Duty of Person deducting Tax:

• Any person deducting any sum in accordance with [the foregoing provisions of this Chapter] shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs.
• Any person being an employer, referred to in sub-section (1A) of section 192 shall pay, within the prescribed time, the tax to the    credit of the Central Government or as the Board directs.
• Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time,[prepare such statements for such period as may be prescribed] and deliver or cause to be delivered to the prescribed income-tax authority or the person authorized by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed.

• If the tax is not paid in accordance with the provisions of the Act, it may attract penal Interest u/s 201(1A) and 220(2) of the Act.
• Any such interest paid above will not be considered as deductible expense under the provision of section 43(ia) of the Act.

Actions to be taken:

• If any amount needs to be deducted and/ or deposited, immediate action may be taken at the earliest.
• Please inform us with the reason for “No Tax Deposited” at info@tdscpc.gov.in.

For any assistance, call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

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New Post Office Rule - Time Deposit Account be renewed Automatically on Maturity.

The Post office Department has been issued a notification No. GSR222(E) [F.NO.2/7/2012/NS-II], DATED 13-3-2014 with new amendment as amendment in Rule 6 regarding automatically renewal of Time Deposit Account which is in a CBS Branch of Post Office.  The detailed notification is as under

POST OFFICE TIME DEPOSIT (AMENDMENT) RULES, 2014 - AMENDMENT IN RULE 6

NOTIFICATION NO. GSR 222(E) [F.NO.2/7/2012/NS-II], DATED 13-3-2014

In exercise of the powers conferral by Section 15 of the Government Savings Bank Act, 1873 (5 of 1873), the Central Government hereby makes the following rules further to amend the Post Office Time Deposit Rules, 1981, namely:—

1. (1) These rules may be called the Post Office Time Deposit (Amendment) Rules, 2014.

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

2. In Post Office Time Deposit Rules, 1981—

   (i) in Rule 6, sub-rule (3), after clause (b), the following clause shall be inserted, namely:—

        "(c) where a deposit in an account standing at the post office working on Core Banking platform become due for repayment, the account shall be automatically renewed from the date of maturity for the same period for which it was opened initially and the deposit shall be eligible for rate of interest ' applicable on the date of renewal."

        in rule 8,—

        (a) clause (a) shall be omitted;

        (b) for clause (aa), the following clause shall be substituted, namely:—

         (aa) Where a deposit in 1-year, 2-year, 3-year or 5-year account is withdrawn prematurely before the expiry of 1 year from date of deposit, interest at the rate applicable to post office savings account from time to time shall be payable to the depositor."

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Time Limit to Purchase the Immovable Property and Scheme of Deposits.

The transactions would come in the capital gain tax purview and the difference between the sale consideration and the indexed cost of acquisition would be taxable long term capital gain.

The long term capital gain tax arising from the transfer of plot could be saved u/s 54F if you invest the sale consideration for purchase of a residential house property/flat.

Time limit to Purchase the Property:
Exemption u/s 54F is available if the Assessee invests net sale consideration for purchase of a residential house property

• within One year before or two years after the date of transfer; or
• constructs a residential house within a period of three years from the date of the transfer of the original house.

Scheme of Deposits:
Although under section 54F, the taxpayer is allowed 2 years to purchase or 3 years for construction of the house property, but the capital gain on transfer of the original assets is taxable in the previous year in which the transfer took place. The return of income of that previous year is to be filed before the specified date i.e., due date. Hence, the tax payer will have to take a decision for the purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable.

To avoid the above situation, the Income Tax Act has specified an alternative in the form of a Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS). The amount of net sale consideration, which is not utilized by the assessee for purchase or constructions of the new house before the due date of furnishing the return of income, need to be deposited by him/her under the Capital Gain Accounts Scheme, before the DUE DATE of furnishing the return. After Deposits, the amount already utilized by the assessee for purchase/ cnstructions of the new house, along with the amount so deposited, shall be eligible for exemption under section 54F in the year in which LTCG has arisen. Later on, whenever you purchase the flat within a specified time slot, you can make the payment from the CGDAS.

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Special Deposit Scheme 1975-Payment of interest.

Special Deposit Scheme 1975 – Payment of interest for the calendar year 2012
 

Please refer to our letter DGBA.CDD.H-3986/15.01.001/2011-12 dated December 22, 2011, on the captioned subject.
 

2. In this connection, we advise that interest for the calendar year 2012 may be promptly disbursed to the SDS account holders, @ of 8.6% per annum from 1st January 2012 to 31st March 2012 and @ 8.8% per annum from 1st April 2012 to 31st December 2012, through electronic mode such as ECS/NECS/ NEFT/RTGS or by way of account payee cheques on January 01, 2012 itself, subject to instructions, as applicable now, contained in paragraphs 3 and 4 of our circular CO.DT.No.15.01.001/H-3527/2003-04 dated December 30, 2003.
 

3. Please issue suitable instructions to all your Deposit Offices and acknowledge receipt.

Click Here for Notification

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