Disclosure of Information U/s. 138 - CBDT amends Notification.

SECTION 138 OF THE INCOME-TAX ACT, 1961 - DISCLOSURE OF INFORMATION RESPECTING ASSESSEES TO SPECIFIED OFFICER, AUTHORITY OR BODY PERFORMING FUNCTIONS UNDER ANY OTHER LAW - NOTIFIED AUTHORITY UNDER SECTION 138(1)(a)(ii) - AMENDMENT IN NOTIFICATION NO. SO 576(E) [NO.137 (F.NO 225-21-2003-ITA-II)], DATED 23-5-2003

NOTIFICATION NO.12/2017 (F.NO.225/120/2016-ITA.II)], DATED 21-2-2017

In exercise of the powers conferred by sub-section (2) of section 138 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to all the relevant factors, hereby makes the following amendment in the notification of Government of India in the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) published in the Gazette of India, Part II, section 3, sub-section (ii) vide number S.O. 576(E), dated the 23rd of May, 2003, namely:—

In the said notification, in the proviso, in clause (ii), for the words and figures, "the notifications issued under section 138 from time to time", the words, brackets and figures, "provisions of sub-section (1) of section 138 of the Act" shall be substituted and shall be deemed to have been substituted with effect from 23rd May, 2003.

ANNEXURE

Explanatory Memorandum

Notification No. 137 dated 23-5-2003 SO (E)-576 issued by the Central Govt., in exercise of its powers under section 138(2) of the Income-tax Act, 1961 ('Act'), prohibited providing information/record/ document to any person or authority by the Income-tax Authorities. While the said notification prescribed a general prohibition in furnishing of information/documents before any person/authority, two exceptions were, however, mentioned where the information can be made available. The first exception pertained to providing information by DGIT (Systems) in respect of records or data related to PAN, tax deduction account number and computerization of income-tax records of taxpayers. The second exception was related to disclosure of information in accordance with notifications issued under section 138 of the Act from time to time.

As notification dated 23-5-2003 was issued under sub-section (2) of section 138, which starts with a non-obstante clause, the implication appeared to be that the information could be provided only to the authorities/ persons which are so notified under section 138(1)(a)(ii) of the Act by the Central Government while disclosure of information under section(s) 138(1)(a)(i) and section 138(1)(b) of the Act was prohibited. Therefore, an apprehension was raised by some of the stakeholders that the said notification puts restriction on the powers of the authorities mentioned in sub-sections (1)(a)(i) & (1)(b) of section 138 of the Act, thereby, making these provisions virtually redundant.

Therefore, in order to remove any ambiguity in interpretation of the said notification, Central Government, with retrospective date, has decided to clarify that clause (ii) of the proviso in the notification dated 23/05/2003 would mean the disclosure of any information in accordance with the provisions of section 138(1) from time to time.

The above partial amendment in notification dated 23-5-2003, would, in effect, remove the restraint placed by the notification dated 23-5-2003 and harmonize it with provisions of section 138 of the Act.

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Cash Transactions Verification of Taxpayers under SOP - CBDT

Recently, CBDT has issued Standard Operating Procedure (SOP) to the followed by the Assessing Officers in verification of Cash Transaction relating to demonetisation.

Post Demonetisation of Rs. 500 and Rs. 1000 notes on November 8, 2016 several malpractices has been noticed.  The Income Tax Department is enquiring/seeking information and analysing instances of deposits to identify cases involving risk of tax evasion.  Based upon vast amount of information of cash deposits collected and analysed by CBDT, a number of persons have been identified in those case the cash transactions did not appear to be in line with their profile available with the Income-Tax Department (ITD).  In such cases, it has been decided to undertake on-line verification of select transcations through jurisdictional Assessing Officers (AOs).

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Income Tax Department (ITD) launches Operation Clean Money

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 31st January, 2017.

Press Release

Income Tax Department (ITD) launches Operation Clean Money [स्वच्छ धन अभियान]

Income Tax Department (ITD) has initiated Operation Clean Money, today. Initial phase of the operation involves e-verification of large cash deposits made during 9th November to 30th December 2016. Data analytics has been used for comparing the demonetisation data with information in ITD databases. In the first batch, around 18 lakh persons have been identified in whose case, cash transactions do not appear to be in line with the tax payer’s profile.

ITD has enabled online verification of these transactions to reduce compliance cost for the taxpayers while optimising its resources. The information in respect of these cases is being made available in the e-filing window of the PAN holder (after log in) at the portal https://incometaxindiaefiling.gov.in. The PAN holder can view the information using the link “Cash Transactions 2016” under “Compliance” section of the portal. The taxpayer will be able to submit online explanation without any need to visit Income Tax office.

Email and SMS will also be sent to the taxpayers for submitting online response on the efiling portal. Taxpayers who are not yet registered on the e-filing portal (at https://incometaxindiaefiling.gov.in) should register by clicking on the ‘Register Yourself’ link.  Registered taxpayers should verify and update their email address and mobile number on the efiling portal to receive electronic communication.

A detailed user guide and quick reference guide is available on the portal to assist the taxpayer in submitting online response. In case of any difficulty in submitting on line response, help desk at 1800 4250 0025 may be contacted.

Data analytics will be used to select cases for verification, based on approved risk criteria. If the case is selected for verification, request for additional information and its response will also be communicated electronically. The information on the online portal will be dynamic getting updated on receipt of new information, response and data analytics.

The response of taxpayer will be assessed against available information. In case explanation of source of cash is found justified, the verification will be closed without any need to visit Income Tax Office. The verification will also be closed if the cash deposit is declared under Pradhan Mantri Garib Kalyan Yojna (PMGKY).

The taxpayers covered in this phase should submit their response on the portal within 10 days in order to avoid any notice from the ITD and enforcement actions under the Income-tax Act as also other applicable laws.

(Meenakshi J Goswami)

 Commissioner of Income Tax

 (Media and Technical Policy)

 Official Spokesperson, CBDT.

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Clarification on Filing of SLPs/Appeals - CBDT

CIRCULAR NO. 5/2017

FTS No. 279157/ITJ

Government of India

Ministry of Finance

Central Board of Direct Taxes

New Delhi, Dated 23rd January, 2017

Subject: Measures for reducing litigation - Clarification on Circulars 21/2015 and 8/2016 reg.

Instructions were issued vide CBDT Circular No. 21/2015 dated 10.12.2015, to the effect that appeals/SLPs should not be filed in cases where tax effect does not exceed the monetary limits specified under para 3 of the said Circular.  It was also clarified therein that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed in the said Circular.

2.  In para 8 of the aforesaid Circular No. 21/2015, it has been unambiguously and expressly provided that adverse judgements relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in Circular or even if there is not tax effect:

a.  Where the Constitutional validy of the provisions of an Act or Rule are under challenge, or

b.  Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or

c.  Where Revenue Audit Objection in the case has been accepted by the Department.

d.  Where the addition relates to undisclosed foreign assets/bank accounts.

The direction to "contest on merits" negates the mechanical filling of appeals in these cases.

3.  However, it has been noticed that para 8(c) of Circular No. 21/2015, regarding cases where addition made on account of Revneue Audit Objection is deleted, is being erroneously interpreted and appeals are being mechanically filed by the Department without proper examination of the case on merits.  This is contrary to the instructions contained in Circular No. 21/2015 and Circular No. 8/2016.  It is, therefore, clarified that the import and intent of para 8 of the Circular No. 21/2015 is that even on issues mentioned in the said para, appeas against the adverse judgment should only be filed on merits.

4.  Accordingly, henceforth, appeals should not be filed by the Deaprtment in violation of instructions mentioned above.  Further, appeals that may have been filed in violation of these instructions may be withdrawan.

5.  The above may be brought to the notice of all concerned.

Sd/-

(Neekita Bansal)

DS(ITJ),

CBDT, New Delhi

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No Advance Tax No Credit of TDS under PMGKY - CBDT FAQs

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 18th January, 2017.

PRESS RELEASE

Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016

The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY) has commenced on 17th December, 2016 and is open for declarations up to 31st March, 2017.

CBDT has received queries from stakeholders seeking clarifications about various provisions of the Scheme. The issues raised have been examined and a set of twelve FAQs has been issued on 18.01.2017 vide Circular No.2 of 2017. The Circular inter alia provides

 clarifications on issues such as the deposits eligible for being declared under the Scheme, eligibility for making a declaration under the Scheme, adjustment of seized cash against the payment of tax,surcharge and penalty under the Scheme etc.

The Circular has been uploaded on the official website of the Income-tax Department www.incometaxindia.gov.in for viewing.

(Dr. Binod Kumar Sinha)

Commissioner of Income Tax

(Media & Technical Policy)

& Official Spokesperson, CBDT

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Registration Procedure for Statement of Financial Translations (SFT)

DGIT(S)-ADG(S)-2/e-filing notificatn/106/2016

Government of India

Ministry of Fiance

Central Board of Direct Taxes

Directorate of Income Tax (Systems)

Notification No. 13 of 2016

New Delhi, 30th December, 2016

Procedure for Registration for statement of Financial Transactions (SFT) as per section 285BA of Income Tax Act, 1961 read with Rule 114E of Income Tax Rules, 1962

Section 285BA of the Income Tax requires specified reporting persons to furnish statement of Financial Transaction.  Rule 114E of the Income Tax Rules, 1962 (here under referred as the Rules) specifies that the statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in Form No. 61A.

2.  As per sub rule (6)(a) of Rule 114E, every reporting person shall communicate to the Principal Director General of Income Tax (Systems) the name, designation, address and telephone number of Designated Director and the Principal Officer and obtain a registration number.

3.  As per sub rule (4)(b) of Rule 114E Principal Director General of Income-Tax (System) shall specify the procedures, data structures and standards for ensuring secure capture and transmission of data, evolving and implementing appropriate security, archival and retrieval policies.

4.  In exercises of the powers delegated by Central Board of Direct Taxes ("Board) under Sub Rule (4)(a) and (4)(b) of Rule 114E of the Income Tax Rules, 1962, the Principal Director General of Income Tax (Systems) hereby lays down the following procedures:

a)  Registration and generation of Income Tax Department Registered Entity Identification Number (ITDREIN) :  The reporting financial institution is required to get registered with the Income Tax Department by logging in to the e-filing website (http://incometaxindiaefiling.gov.in) with the log in ID (PAN).  A link to register reporting financial institution has been provided under "My Account>Manage ITDREIN".  Once ITDREIN is generated, the reporting entity will receive a confirmation e-mail on the registered e-mail ID and SMS at registered mobile number.  There will be no option to de-activate ITDREIN, once ITDREIN is created.

b)  Submission of details of reporting entity:  After generation of ITDREIN, the reporting financial institution will be required to submit details of the reporting entity on the screen.  Once registered, the reporting entity will have an option to edit the details.

c)  Registration of designated director and principal officer:  After submission of reporting entity details, the reporting financial institution will be required to submit the details of designated director and principal officer.  The designated director and principal officer will receive and confirmation e-mail with an activation link.  An SMS along with OPT (One time Password) will also be sent to the registered Mobile Number.  For completion of registration, the designated director and principal officer should click on the Activation Link, enter the Mobile PIN (OPT), Password and Confirm Password and click on Activate Button.  On success, the registration will be complete.

Sd/-

(S.S.Rathore)

Pr.DGIT(Systems),CBDT

To Download Notification (Click Here)

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Extend Due Date of Dispute Resolution Scheme by One Month - New Year Taxpayer's Gift

One Month Extend for Declaration under Dispute Resolution Scheme

MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION

New Delhi, the 29th December, 2016

S.O. 4222(E).— In exercise of the powers conferred by section 202 of the Finance Act, 2016 (28 of 2016), the Central Government hereby amends the notification of the Ministry of Finance (Department of Revenue), number S.O. 1902(E) dated the 26th May, 2016, published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) dated the 26th May, 2016, namely:—

2.  In the said notification, for the figures, letters and words “31st day of December, 2016”, the figures, letters and words “31st day of January, 2017” shall be substituted. 

[Notification No. 124/2016/F.No. 142/11/2016-TPL]

Dr.T.S.MAPWAL, Under Secy.

Note: Principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii)   dated the 26th May,2016 vide notification under S.O. 1902(E) dated the 26th May, 2016.

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Threshold Limit of Salary increases from Rs.15000 to 21000 for ESIC

MINISTRY OF LABOUR AND EMPLOYMENT

NOTIFICATION

New Delhi, the 22nd December, 2016

G.S.R. 1166(E).—Whereas certain draft rules further to amend the Employees’ State Insurance (Central) Rules, 1950 were published in the Gazette of India, Extraordinary, Part-II, section 3, sub-section (i) vide number G.S.R. 957(E), dated the 6th October, 2016, as required by sub-section (1) of section 95 of the Employees’ State Insurance Act, 1948 (34 of 1948), inviting objections and suggestions from all persons likely to be affected thereby before the expiry of a period of thirty days from the date on which the copies of the Official Gazette in which the said notification was published were made available to the public;

And whereas, the copies of the said Official Gazette were made available to the public on the 6th October, 2016;

And whereas, objections and suggestions received from persons likely to be affected thereby have been considered by the Central Government;

Now, therefore, in exercise of the powers conferred by section 95 of the said Act, the Central Government, after consultation with the Employees’ State Insurance Corporation, hereby makes the following rules further to amend the Employees’ State Insurance (Central) Rules, 1950, namely:-

1. (1) These rules may be called the Employees’ State Insurance (Central) Third Amendment Rules, 2016.

   (2) They shall come into force from 1st day of January, 2017.

2. In the Employees’ State Insurance (Central) Rules, 1950, in rule 50, for the words “fifteen thousand rupees” occurring at both the places, the words ‘twenty one thousand rupees” shall be substituted.

[F. No. S-38012/02/2013-SS-I]

RAJEEV ARORA, Jt. Secy.

Note: The principal rules were published in the Gazette of India vide notification number S.R.O. 212 dated the 22nd June, 1950 and lastly amended vide notification number G.S.R. 959(E), dated the 6th October, 2016.

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Clarifications on the Direct Tax Dispute Resolution Scheme, 2016

F.No.142/11/2016-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

(TPL Division)

Clarifications on the Direct Tax Dispute Resolution Scheme, 2016

The Direct Tax Dispute Resolution Scheme, 2016 (hereinafter referred to as ‘the Scheme’) incorporated as Chapter X of the Finance Act, 2016 provides an opportunity to tax payers who are under litigation to come forward and settle the dispute in accordance with the provisions of the Scheme. The provisions of the Scheme have been clarified vide Circular No.33 of 2016 dated 12.09.2016. Subsequently, further queries have been received from the field authorities and other stakeholders. The Central Government has considered the queries and decided to clarify the same in the form of questions and answers as follows.-

Question No.1: There are cases where the Assessing Officer (AO) has made addition on account of provisions under section 9 of the Income-tax Act, 1961 (the Act), which was later retrospectively amended, especially with regard to royalty and fees for Technical Services.  What would be the position of the case of an assessee vis-à-vis the Scheme, where an addition has been made by AO before such retrospective amendment? Whether the case would be treated as one being in consequence of retrospective amendment and accordingly whether the assessee would be eligible to avail the benefit of the Scheme?

Answer: As per clause (g) of sub-section (1) of section 201 of the Finance Act, 2016, ‘specified tax’ includes a tax which is validated by an amendment made to the Income-tax Act with retrospective effect. Hence, a case where an addition has been made by AO before such retrospective amendment and the addition has got validated by such amendment, is eligible to avail the Scheme provided a dispute in respect of such addition/tax is pending as on 29.02.2016.

Question No.2: There are assessees who have filed writ petitions in Courts against the constitutional validity of retrospective amendment to the Income-tax Act. Can the assessees who have filed such writs in Courts still contest the constitutional validity of such amendments, even after availing the benefit under the Scheme?

Answer: As per section 203(3)(a) of the Finance Act, 2016, where the declaration under the Scheme is in respect of specified tax and the declarant has filed any writ petition before the High Court or the Supreme Court against any order in respect of the specified tax, he shall withdraw such writ petition with the leave of the Court wherever required and furnish proof of such withdrawal along with the declaration filed under the Scheme. It is hence clear that if the assessee avails the Scheme, he cannot contest the constitutional validity of retrospective amendment in the High Court or Supreme Court.

Question No.3: There are cases where assessees are in different stages of appeal for different years on similar issue(s). In such a situation, if an assessee avails the benefits of the Scheme for a particular year/years, whether the revenue would withdraw its appeal against the assessee, in the year(s) in which the assessee has got the relief? If such is the case, at what stage would the revenue withdraw its appeal?

Answer: In respect of ‘tax arrear’, the Scheme is available only if dispute is pending before Commissioner (Appeals). Hence the question of withdrawal of appeal by revenue does not arise in such cases.

In respect of ‘specified tax’, section 203(3) of the Finance Act, 2016 states that the declarant before opting for the said Scheme has to withdraw his pending appeal or writ petition. It also states that in a case where the declarant has initiated or given notice for proceeding of arbitration, conciliation or mediation, he shall withdraw such notice or claim prior to filing of the declaration under the Scheme. The Scheme nowhere speaks of withdrawal of any appeal or proceeding by the revenue. Hence, the question of withdrawal of appeal by the revenue owing to opting of the Scheme by the assessee in some other year(s) on a similar issue does not arise.

Question No.4: Can the tax payments under the Scheme be allowed to be made in instalments, as granted under IDS, 2016?

Answer: Since, the date of making payment under the Scheme is provided in Section 204 of the Finance Act, 2016 itself, the tax payments under the Scheme cannot be allowed to be made in instalments.

Question No.5: Whether an assessee is eligible to make a declaration in respect of ‘specified tax’ where a dispute was pending as on 29.02.2016 in form of a reference made by AO before the Committee constituted by CBDT on 28.08.2014 under section 119 of the Act, but the final order determining the ‘specified tax’ thereon was passed after 29.02.2016, and the appeal/writ/arbitration/conciliation/ mediation etc. in respect of the same was filed before commencement of the Scheme i.e. 01.06.2016?

Answer: As per the provisions of the Scheme, a declarant may make a declaration in respect of a ‘specified tax’ for which a dispute was pending as on 29.02.2016. The term ‘dispute pending as on 29.02.2016’ refers to the tax determined under the Income-tax Act or the Wealth-tax Act which has been disputed by the assessee. In the above referred case, the specified tax has been determined by AO after 29.02.2016; hence the question of dispute pending in respect of such tax as on 29.02.2016 does not arise. Therefore, the assessee in the present case is not eligible to avail the Scheme.

Question No.6: Whether a penalty order under section 271C or 271CA of the Income-tax Act for which an appeal is pending with CIT(Appeals) is covered under the Scheme?

Answer: As per the Scheme, ‘tax arrear’ in case of penalty is linked to the total income finally determined. Since, penalty order under section 271C or 271CA is not linked to the assessment proceedings, such orders are not covered under the Scheme.

Question No.7: Whether the cases in which, consequent upon search, assessments have been completed under section 143(3) of the Act shall be eligible to avail the Scheme?

Answer: As the search cases are not eligible for the Scheme, an assessment made consequent to search under section 143(3) read with section 153B of the Act is not eligible to avail the Scheme.

Question No.8: Clause(5) of section 203 of the Finance Act, 2016, refers to deemed revival of ‘consequences’ under the Income-tax Act or the Wealth-tax Act, as the case may be, under which proceedings against the declarant are or were pending. There is no explicit reference to deemed revival of ‘proceedings’. Please clarify?

Answer: Clause (5) of section 203 provides that in a case where the conditions specified therein are not fulfilled, it shall be presumed as if the declaration was never made under the Scheme; therefore, in case of rejection of declaration, the proceedings pending against the assessee before issuance of certificate under 204(1) shall stand revived.

(Dr. T.S. Mapwal)

Under Secretary to the Government of India

Copy to:

1. The Chairperson, Members and all other officers in CBDT of the rank of Under Secretary and above.

2. All Pr. Chief Commissioners/ Pr. Director General of Income-tax – with a request to circulate amongst all officers in their regions/ charges.

3. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn.)/ Pr. DG (NADT)/ Pr. DGIT (L&R).

4. CIT (M&TP), CBDT.

5. Web manager for posting on the departmental website.

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Clarifications on Indirect Transfer provisions under the lncome Tax Act. 1961

Circular No.41 of 2016

F.No. 500/43/2012-FT&TR

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

(FT&TR-Division)

Clarifications on Indirect Transfer provisions under the lncome Tax Act. 1961

Under the indirect transfer provisions contained in section 9(1)(i) of the Income Tax Act, 1961 ('Act'), all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India or through the transfer of a capital asset situate in India, shall be deemed to accrue or arise in India. Explanation 5 thereof clarifies that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India. Explanation 6 provides that the said Explanation 5 will be applicable, if on the specified date the value of such assets exceeds the amount of Rs. 10 crore and represents at least 50% of the value of all the assets owned by the company/entity.  Explanation 7, however, provides a carve out from the applicability of Explanation 5 to small investors holding no right of management or control of such company / entity and holding less than 5% of the total voting power/ share capital/ interest of the company/ entity that directly or indirectly owns the assets situated in India. Section 285A of the Act casts a reporting obligation on the Indian concern whose shares are substantially held directly or indirectly by a company or entity registered or incorporated outside India.

2. Queries have been received by the Board about the scope of the indirect transfer provisions. In this regard, the Board constituted a Working Group on 15th June, 2016 to examine the issues raised by stakeholders. The Board has considered the comments of the Working Group on the said issues and the following clarifications are issued:

Read Full Clarification Click Here.

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Digital Payment Effects on Turnover - IT Notification

Government of India 

Ministry of Finance 

Department of Revenue (CBDT) 

Circular No. 40/2016 

North Block, New Delhi, the 9th of December, 2016 

Subject: - Directions under section 119 of the Income-tax Act, 1961-regd.

Recent initiatives of the Government to curb the black economy in the country has encouraged people to shift towards digital mode of payment while making financial transactions. By adopting digital mode of payment, no financial transactions would remain undisclosed and consequently an enhanced turnover of business might get reflected in the books of accounts. Under the circumstances, an apprehension has been raised that increased turnover in the current year may lead to reopening of earlier years' cases involving lower turnover u/s 147 of the Income-tax Act, 1961 ('Act') by the Assessing Officer causing undue harassment to tax payers. 

2. It is hereby clarified that reopening of cases u/s 147 of the Act is feasible only when the Assessing Officer "has reason to believe that any income chargeable to tax has escaped assessment for any assessment year" and not merely on the basis of any reason to suspect. Mere increase in turnover, because of use of digital means of payment or otherwise, in a particular year cannot be a sole reason to believe that income has escaped assessment in earlier years. Hence, Assessing Officers are advised not to reopen past assessments in cases merely on the ground that the current year's turnover has increased. 

3. The above may be brought to the notice of all for necessary and strict compliance. 

4. Hindi version to follow. 

Sd/-

(Rohit Garg) 

Director-ITA.II, CSDT 

(F. No. 225/326/2016/ITA.II) 

Copy to:
i.   Chairman, CBDT and all Members, CBDT
ii.  PS to Revenue Secretary
iii. All Pr.Chief-Commissioners/Pr. Directors-General ofIncome-tax
iv.  All JS/CsIT, CBDT
v.   ADG(PR,PP & OL) with request for placing on official handle of the department
vi.  Add!. CIT, Data base Cell for uploading on Departmental Website
vii. Web manager for uploading on incometaxindia.gov.in & placing in public domain
viii.ITCC, Central Board of Direct Taxes (3 copies)
xi.  Pro DGIT(Vigilance), N.Delhi
x.   C&AG, N.Delhi
xi.  Guard file

SD/- 

(Rohit Garg) 

Director-ITA.II, CSDT 

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Filing of Offline Challans with IEPF Authority - Clarification

Clarification Regarding Filing of Offline Challans with IEFF Authority under Companies Act. 

To

All Stakeholders,

Nodal Officer's (IEPF) of Concerned Companies.,

All Regional Director's & Registrar of Companies of Min of Corp. Affairs

Subject: Clarification Regarding Filing of Offline Challans with IEFF Authority under Companies Act.

Sir.

In accordance with Investor Education Protection Fund (Accounting, Audit, Transfer, and Refund) Rules, 2016, notified on 05,09.2016, it is mandatory for the companies depositing amounts to IFPF under section 125 of Companies Act 2013 to:-

(i) generate challan online only;

(ii) file form IEPF-1 mentioning the SRN No. of challan (online mode only).

2. All companies transferring the amount to IEPF are, therefore, requested to ensure that the  above procedure iS followed. The challans not generated on MCA 21 portal will not be accepted after 15.12.2016.

3. This issues with the approval of the Competent Authority.

Yours faithrully,

(Monika Gupta)

Deputy Director

Copy to :-
1. CEO, IEPF Authority
2. Sr. AO, IEPF Authority
3. E-Governance Cell/ MCA and to place this circular on Ministry's/ Authority website.
4. Guard File

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Download Taxation Laws (2nd Amendment) Bill-2016

Taxation Laws (Second Amendment) Bill, 2016 introduced in Lok Sabha; A scheme namely, ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY) proposed in the Bill. 

Evasion of taxes deprives the nation of critical resources which could enable the Government to undertake anti-poverty and development programmes. It also puts a disproportionate burden on the honest taxpayers who have to bear the brunt of higher taxes to make up for the revenue leakage. As a step forward to curb black money, bank notes of existing series of denomination of the value of Rs.500 and Rs.1000 [Specified Bank Notes(SBN)] have been recently withdrawn the Reserve Bank of India.

Concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 (the Act) can possibly be used for concealing black money. The Taxation Laws (Second Amendment) Bill, 2016 (‘the Bill’) has been introduced in the Parliament to amend the provisions of the Act to ensure that defaulting assessees are subjected to tax at a higher rate and stringent penalty provision.

Further, in the wake of declaring specified bank notes “as not legal tender”, there have been 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 so that not only the Government gets 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.

In this backdrop, an alternative Scheme namely, ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY) has been proposed in the Bill. The declarant under this regime shall be required to pay tax @ 30% of the undisclosed income, and penalty @10% of the undisclosed income. Further, a surcharge to be called ‘Pradhan Mantri Garib Kalyan Cess’ @33% of tax is also proposed to be levied. In addition to tax, surcharge and penalty (totaling to approximately 50%), the declarant shall have to deposit 25% of undisclosed income in a Deposit Scheme to be notified by the RBI under the ‘Pradhan Mantri Garib Kalyan Deposit Scheme, 2016’. This amount is proposed to be utilised for the schemes of irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood, etc., so that there is justice and equality.

An overview of the amendments proposed in the Bill are placed below;

Download 2nd Amendment Bill 2016 - Taxation Laws Click Here.

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Bank Reported to CBDT about Cash Transaction Above Rs. 2.5 Lacs - Notification

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION

New Delhi, the 15th November, 2016

G.S.R. 1068(E).—In exercise of the powers conferred by section 285BA, read with section 295 of the Incometax 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 (30thAmendment) Rules, 2016.
   (2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 114B, in the Table, for serial number10 and entries relating thereto the following serial number and entries shall be substituted, namely:-

3. In the said rules, in rule 114E, —
(i) in sub-rule (2), in the Table, after serial number11 and entries relating thereto the following serial number and entries shall be inserted, namely:-

(ii) in sub-rule (5), the following proviso shall be inserted, namely:-
“Provided the statement of financial transaction in respect of the transactions listed at serial number (12) in the Table under sub-rule (2), shall be furnished on or before the 31st day of January, 2017.”.

[Notification No. 104/2016/F. No. 370142/32/2016-TPL]

Dr. T.S. MAPWAL, Under Secy.

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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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Clarification on the Income Declaration Scheme, 2016 - CBDT

Recently CBDT had issued a circular on Clarification on the Income Declaration Scheme, 2016.  The circular provides an opportunity to persons who have not paid full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty totaling in all 45% of such undisclosed income declared.  As this the Income Declaration Scheme Rules, 2016 called as IDS Rules notified.

The CBDT has considered the same and the following clarifications are issued :

Question No.1: Will the information contained in the declaration be shared with other law enforcement agencies?
Answer: No; the information contained in the declaration shall not be shared with any other law enforcement agency. The information will also not be shared within the Income Tax Department for any investigation in respect of a valid declaration.

Question No.2: Whether immunity will be provided under other economic laws including Service Tax, VAT, Companies Act, SEBI Act & regulations 7 etc.?
Answer: The Scheme provides immunity under the Income-tax Act, 1961, the Wealth-tax Act, 1957 and the Benami Transactions (Prohibition) Act, 1988. Immunity from Benami Transactions (Prohibition) Act is subject to the condition that the property will be transferred to the declarant (being the person who provided the consideration for the property) latest by 30th September, 2017. However, as mentioned in response to Question No.1 above, the information contained in the declaration made under the Scheme will not be shared with any other tax or law enforcement agency.

Question No.3: Where the value of immovable property determined under Rule 3 of the IDS Rules is lower than the value adopted or assessed/assessable by stamp valuation authority referred in section 50C or section 43CA of the Income-tax Act, whether value of such property is to be declared as per Rule 3 of the IDS Rules, or as per section 50C/43CA?
Answer: The value of the property for the purposes of declaration in such cases shall be computed as per Rule 3 of the IDS Rules even if such value is lower that the value adopted or assessed/assessable by stamp valuation authority.

Question No.4: Whether credit for tax deducted, if any, in respect of income declared shall be allowed?
Answer: Yes; credit for tax deducted shall be allowed only in those cases where the related income is declared under the Scheme and the credit for the tax has not already been claimed in the return of income file for any assessment year.

Question No.5: Where a valid declaration is made after making valuation as per the provisions of the Scheme read with IDS Rules and tax, surcharge & penalty as specified in the Scheme have been paid, whether the department will make any enquiry in respect of sources of income, payment of tax, surcharge and penalty?
Answer: No.

Question No.6: What is the purpose of obtaining the information about the nature of undisclosed income in the last column of table at point (I) relating to nature of undisclosed income in Annexure to Form-1?
Answer: The purpose of obtaining information about the nature of undisclosed income is to know whether the undisclosed income is in the form of moveable asset, immovable asset, gold, jewellery or cash. Here, the nature of income need not be confused with the source of income. There is no need to indicate the source of income at all. In the column meant for nature of undisclosed income one has to write the nomenclature such as ‘immovable property’, ‘moveable property’, ‘gold’, ‘jewellery’ or ‘cash’ etc. This will enable the taxpayer to establish the link between the income declared under the scheme and the claim, if any, made in respect of such undisclosed income in the return of income filed subsequently or during any assessment proceedings.

Question No.7: In case the value of immovable property is evidenced by registered deed, whether the value as per registered deed or the market value as on 01.06.2016 is to be declared?
Answer: As per Rule 3 of the IDS Rules, the fair market value of an immovable property shall be the higher of its cost of acquisition and the price that the property shall ordinarily fetch if it is sold in the open market as on 1st June, 2016. The value mentioned in the registered deed shall be relevant for determining the cost of acquisition and the same can be taken as the fair market value only where it is higher than the price that the property shall ordinarily fetch if sold in the open market as on 1st June, 2016.

Question No.8: In case a declaration relating to investment in undisclosed asset is made under the Scheme, whether any investigation will be initiated against the seller in respect of such declaration?
Answer: No.

Question No.9: What are the advantages of the Scheme as against declaring the past undisclosed income as current income in the return of income to be filed for Assessment Year 2017-18? How will the Department identify the year in which the undisclosed income was earned.
Answer: In this regard, the following points may be noted:

• Declaration of past undisclosed income in the current year amounts to false verification of return of income which shall attract prosecution under the Income-tax Act.
• If anyone attempts to disclose past undisclosed income in the current year, he will have to explain the source of income and substantiate the manner of earning the said income. In case of disclosure under the Scheme, there is no need to explain the source of income.
• Declaration of past undisclosed income in the current year cannot explain assets acquired in the past or provide any immunity in respect of the same.
• The Income-tax Department is in receipt of large volume of information from various sources such as registrars of property, banks, financial institutions, stock exchanges, tax deductors etc. The Department has launched a comprehensive data-mining and compliance management programme in the form of ‘Project Insight’ which will generate a large volume of reliable information about financial transactions undertaken by taxpayers and the relevant year in which the transaction was undertaken.

Question No.10: In a case the declarant earned undisclosed income of Rs. 90 lakh in previous year 2010-11. Out of the same, he acquired an immovable property in the previous year 2011-12 for Rs.50 lakh, made personal expenditure to the extent of Rs.20 lakh and balance Rs.20 lakh is left with him as cash in hand on 01.06.2016. The fair market value of the immovable property as on 01.06.2016 is Rs.80 lakh. What is the amount to be declared under the Scheme?
Answer: The declarant in this case has to declare the following:
(i) Rs. 80 lakh being fair market value of the immovable property as on 01.06.2016
(ii) Rs. 20 lakh being the cash in hand as on 01.06.2016
(iii) Rs. 20 lakh being the balance of undisclosed income [Rs. 90 lakh – (Rs.50 lakh + Rs. 20 lakh)] which is not represented in the form of investment in any asset. Thus the total undisclosed income to be declared in this case will be Rs. 1.20 crore.

Question No.11: A person invested his undisclosed income in a house property in the previous year 2010-11 which has not been let out. The person also owned another house property from disclosed sources, which has been claimed as self-occupied property for the purposes of computation of income under the head income from house property. In case the person declares the undisclosed house property at its fair market value on 01.06.2016, whether any action will be taken for bringing the annual value of the undisclosed property to tax as income from house property by deeming it to be let property as provided under section 23(4)(b) of the Income-tax Act for the earlier previous years?
Answer: No. However, where the house property was let-out during the relevant period, the actual rent received or receivable will be required to be declared under the Scheme in addition to the fair market value of the house property as on 01.06.2016.

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New amendment to calculate Interest u/s. 234A on Self Assessment Tax.

SECTION 234A OF THE INCOME-TAX ACT, 1961 - INTEREST FOR DEFAULTS IN FURNISHING RETURN OF INCOME - CHARGEABILITY OF INTEREST UNDER SECTION 264A ON SELF-ASSESSMENT TAX PAID BEFORE DUE DATE OF FILING OF RETURN OF INCOME

Interest under section 234A of the Income-tax Act, 1961 (hereinafter the Act) is charged in case of default in furnishing return of income by an assessee. The interest is charged at the specified rate on the amount of tax payable on the total income, as reduced by the amount of advance tax, TDS/TCS, any relief of tax allowed under section 90 and section 90A, any deduction allowed under section 91 and any tax credit allowed in accordance with the provisions of section 115JAA and section 115JD of the Act. Since self-assessment tax is not mentioned as a component of tax to be reduced from the amount on which interest under section 234A of the Act is chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of filing of return.

2. It has been held by the Hon'ble Supreme Court in the case of CIT v. Prannoy Roy, 309 ITR 231 (2009) that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income-tax return for the relevant assessment year. Accordingly, the present practice of charging interest under section 234A of the Act on self-assessment tax paid before the due date of filing return was reviewed by CBDT.

3. The Board has decided that no interest under section 234A of the Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income.

4. This Circular may be brought to the notice of all officers for compliance.

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Due date of filing of Online DVAT return for 3rd Quarter extended to 05.02.2016

A day before Government of National Capital Territory of Delhi, Department of Trade and Taxes has issued circular regarding extension of period of Filling of online return for third quarter of 2015-16, in Form DVAT-16, DVAT-17 and DVAT-48 to 05.02.2016.  The details of this circular are as follows:

GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI

DEPARTMENT OF TRADE AND TAXES

(POLICY BRANCH)

VYAPAR BHAWAN, IP. ESTATE, NEW DELHI-110 002

No.F.7(420)/VAT /Policy/ 2011/PF/1380-85

Dated 28/01/2016

Circular No. 36 of 2015-16

Sub : Filling of online return for third quarter of 2015-16- extension of period thereof

In exercise of the powers conferred under Rule 49A of the Delhi Value Added Tax Rules, 2005, I, S.S. Yadav, Commissioner, Value Added Tax, do hereby extend the last date of filling of online/hard copy of third quarter return for the year 2015-16, in Form DVAT-16, DVAT-17 and DVAT-48 along with required annexure/enclosures to 05.02.2016.

However, the tax due shall continue to be paid in the usual manner as per the provisions of section 3(4) of the Delhi value Added Tax Act, 2004. The dealers filling the returns through digital signature need not file hard copy of the return/Form DVAT-56

(S.S. Yadav)

Commissioner, VAT

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Notified Additional Modes to Generate EVC (Electronic Verification Code) - CBDT

CBDT has issued a notification recently regarding Additional modes to generate Electronic Verification Code for electronically filed Income Tax Return.  The Principal Director General of Income (Systems) lays down the procedures, data structure and standards for additional modes of generation of Electric Verification code in addition to EVC prescribed vide earlier Notification No. 2/2015 dated 13th July, 2015.

The Additional Modes of Generation of Electronic Verification Code are as follows:

1. Bank Account Details.
2. Demat Account Details.

Where the EVC is generated by giving bank details to file e-filing website http://incometaxindiaefiling.gov.in, assessee has to provide the following bank account details:

• Bank Account No.
• IFSC
• Email ID
• Mobile No.

These details provided by the assessee along with PAN and Name as per e-filing database will be vailied against the details of taxpayer registered with bank.  If the pre-validation is successfully completed, assessee can opt for "Generate EVC using Bank Account details" option while verifying the Income Tax Return.

Where the EVC is generated after Demat account authentication using Demat Details registered with CDSL/NSDL., assessee have to provide the following details:

• Demate Account No.
• Email ID
• Mobile No.

These details provided by the assessee along with PAN and Name as per e-filing database will be validated against the details of taxpayer registered with depository (CDSL/NSDL). If the pre-validation is successfully completed, assessee can opt for "Generate EVC using Demat Account Details" option while verifying the Income Tax Return.

Other Conditions:

The additional mode of EVC generation will come into effect from the issue of this notification.  All the condition shall remain same as specified in notification No. 2/2015 dated 13.07.2015 issued by Pr. DGIT (Systems), New Delhil.

To read Notification 1/2016 dated 19th Jan. 2016 Click Here.

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Issue of Refunds upto Rs.5000/- without outstanding arrears is upto Rs.5000/- in Non-CASS cases for A.Y. 2013-14 & 2014-15.

CBDT has issued an Office Memorandum regarding issue refunds up to Rs. 5,000 without adjustment of outstanding tax liability for Asstt. Year 2013-14 and 2014-15.

CBDT further state that to convey the decision that in order to provide relief to the small taxpayers, refunds upto Rs. 5000/- and refunds in cases where arrears demand upto Rs. 5000/- may be issued without any adjustment of outstanding arrears under section 245 of the Act during Fin. Year 2015-16.

As on 09.10.2016, there are 64938 cases of refunds below Rs. 5000/- involving Rs. 1148.14 Crore in non-CASS case for Asstt. Year 2013-14 and 2014-15 pending in AST.  It is requested that the Assessing Officers be directed to issue these refunds without any adjustment of arrears under section 245.  Similarly, the non-CASS cases for these assessment years where the refund amount is more than Rs. 5000/- but the outstanding arrears is Rs. 5000/- or less may also be processed for issue of refund without any adjustment under section 245.

Download Office Memorandum (Click Here)

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