10 POINTS TO REMEMBER IN BUDGET 2019-20

10 POINTS TO REMEMBER IN BUDGET 2019-20

Following the tradition for last 8 years, here are my ten major points from budget for 2019-2020, presented today.

     

1. No income tax for income up to Rs. 5 lakhs. Once income exceeds, the effective tax slabs and rates will be as follows;

           

Effective Income Tax slab for individuals	Rate/s of Income Tax
Income up to Rs. 5 Lakhs	0%/Nil tax
Once income exceeds Rs. 5 lakhs
Income from Rs.2.5 Lakhs to 5 Lakhs	5%
Income from Rs. 5 Lakhs to 10 Lakhs	20%
Income from Rs. 10 Lakh and above	30%

2. Standard deduction for salaried persons has been increased to Rs. 50,000 from earlier Rs. 40,000.
3. Long term capital gains exemption under section 54 for sell of residential house has been extended to two residential houses from one earlier, for capital gains up to Rs. 2 Crores.
4. Exemption of interest income on bank deposits raised to Rs. 40,000 from Rs. 10,000 earlier, for TDS deduction.
5. No tax on notional rent income of second self-occupied residential house.
6.  Rs. 6,000 will be provided to farmers every year, owning lands up to 2 hectares.
7. Rs. 3,000 pension per month will be provided to all persons working in unorganised sector, having monthly income up to Rs. 15,000, after they complete 60 years of age subject to rules and contribution in this regard.
8. Composition scheme for GST for turnover up to Rs. 1.5 Crore for business (GST @ 1%) and Rs. 50 lakhs for professionals (GST @6%).
9. Single window clearance for film shootings for Indian Filmmakers/Directors/Producers.
10. Complete digitisation of income tax matters including filings, refunds and scrutiny, without face to face meeting with income tax officers. This will be beneficial for people and professional on the move/change in there residential /business addresses.

CA. Brijesh Baranwal

Mumbai

For queries and suggestion, please email @ cabrijesh@yahoo.co.in

FILING INCOME TAX RETURNS IN INDIA- FOR RESIDENTS AND NON RESIDENT INDIANS (NRIs)

INCOME TAX IN INDIA

Government of India needs money for its expenses and development activities which is collected in the form of taxes and Income Tax is probably the biggest source of revenue of government of India.

As per Press Release dated 07.11.2017, the provisional figures of Direct Tax collections up to October, 2017 show that net collections are at Rs. 4.39 lakh crore which is 15.2% higher than the net collections for the corresponding period of last year. Net Direct Tax collections represent 44.8% of the total Budget Estimates of Direct Taxes for F.Y. 2017-18 (Rs. 9.8 lakh crore). Gross collections (before adjusting for refunds) have increased by 10.7% to Rs.5.28 lakh crore during April-October, 2017. Refunds amounting to Rs. 89,507 crore have been issued during April, 2017 to October, 2017.

TAXABLE INCOME

In India, Income of the whole financial year is clubbed together under following five heads, i.e.

1.      Income from Salary,

2.      Income from House Property,

3.      Income from Business/Profession,

4.      Income from Capital Gains and

5.      Income from Other Sources (For those income/s not covered in above 4 heads).

INCOME TAX RETURN-FILING REQUIREMENTS

Under the provisions of Indian Income Tax Laws, if the income of a person exceeds the basic exemption limit, filing of Income Tax Return (ITR) is required. However, In those cases where a person have an asset or financial interest in an entity located outside India or he/she is signing authority in a foreign bank account, then filing of Income Tax Return (ITR) is mandatory even if income is below exemption limit.

Section 139 of the Income Tax Act, 1961 provides that;

139. [(1) Every person,—

(a)		being a company or a firm; or
(b)		being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,

shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.

It further provides that a person, being a resident other than not ordinarily resident in India, who is not required to furnish a return under this sub-section and who at any time during the previous year,—

(a)		holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or
(b)		is a beneficiary of any asset (including any financial interest in any entity) located outside India,

shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed.

LIST OF INCOME TAX RETURNS APPLICABLE FOR AY 2017-2018 (FY 2016-2017)

S. NO.	ITR FORM	APPLICABLE FOR THE CATEGORY
1.	ITR 1	For Individuals having Income from Salaries, one house property, other sources (Interest etc.) and having total income upto Rs.50 lakh.
2.	ITR 2	For Individuals and HUFs not carrying out business or profession under any proprietorship.
3.	ITR 3	For individuals and HUFs having income from a proprietary business or profession.
4.	ITR 4	For presumptive income from Business & Profession.
5.	ITR 5	For persons other than:- (i) Individual, (ii) HUF, (iii) Company and (iv) Person filing Form ITR-7.
6.	ITR 6	For Companies other than companies claiming exemption under section 11.
7.	ITR 7	For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F).

TIME LIMIT FOR FILING INCOME TAX RETURN

S. No.	Type of Assessee	Time Limit
1.	Company or a person whose accounts are required to be audited or a working partner of a firm whose accounts are required to be audited (Tax Audit cases).	30th September
2.	In the case of an assessee who is required to furnish a report referred to in section 92E (Cases involving Transfer Pricing provisions).	30th November
3.	In case of any other assesse.	31st July

FILING OF BELATED RETURN

The last date for filing Income Tax Return is July 31 of each year (with few certain exceptions as provided above) which can be belatedly filed up to March 31. For example, Income Tax Returns for  Assessment Year 2017-18 (Financial Year 2016-2017), can be filed belatedly till 31st March 2018.

Section 139 (4) (w.e.f. 1-4-2017) provides that:

Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

REVISION OF INCOME TAX RETURN

Section 139 (5)  (w.e.f. 1-4-2017) provides that:

If any person, having furnished a return under sub-section (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

DEFECTS IN INCOME TAX RETURN

As per sub-section (9) of Section 139, Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return :

Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return.

CONCEPT OF BLACK MONEY

The income which is taxable but not disclosed in proper Income Tax Return and due taxes have not been paid, is considered Black Money.

REFUND OF EXCESS TAX

Although filing Income Tax Return is a legal requirement with a consequential penalties etc. for non-compliance, one can claim refund of excess taxes (TDS), after adjusting the final tax with the same.

SPECIAL POINTS FOR NRIs

Although the provisions mentioned above are applicable for NRIs also, there are certain points which are of special significance for NRIs and while filing Income Tax Returns in India, NRIs should consider the same, for example;

1.      Finding out Residential status,

2.      Taking benefits of Double Tax Avoidance Agreement (DTAA),

3.      Special Deductions and Exemptions for NRIs etc.

Author: CA. Brijesh Baranwal

The Author is a Mumbai based, Practicing Chartered Accountant. In case of queries and suggestions, please contact: cabrijesh@yahoo.co.in

Disclaimer- This write up is only for awareness purpose and professional opinion may be required depending upon the particular facts.

TDS ON PAYMENT OF RENT MORE THAN RS. 50,000 PER MONTH BY INDIVIDUALs/HUFs

TDS ON PAYMENT OF RENT MORE THAN RS. 50,000 PER MONTH BY INDIVIDUALs/HUFs

EXISTING LAW

There is an existing provision for deduction of TDS (deduction of tax at source) under section 194-I in the Income Tax Act, 1961 for individuals/HUFs, wherever tax audit is applicable.

INTRODUCTION OF SECTION 194-IB

Now, the Government has widened the scope by introducing a new section 194-IB from June 1, 2017.

Main points of this section are as follows;

1.      This section requires that every individual and HUF paying rent more than Rs. 50,000/- per month (or part of a month) for the use of any land or building or both, need to deduct TDS at the rate of 5%.

2.      However if the PAN of recipient is not available, rate of TDS will be 20% (limited to the rent of last month of the tenancy).

3.      TDS amount shall be deducted in the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be.

4.      The TDS so deducted shall be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QC.

5.      Further every person responsible for deduction of tax under section 194-IB shall furnish the certificate of deduction of tax at source in Form No.16C (TDS certificate) to the payee within fifteen days from the due date for furnishing the challan-cum-statement in Form No.26QC.

6.      "Rent" for the above purposes means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.

Relevant Section and Notification are below given for further understanding.

SECTION 194-IB. (1)

Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I, responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent of such income as income-tax thereon.

(2) The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.

(4) In a case where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

Explanation.—For the purposes of this section, "rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.]

NOTIFICATION FROM THE CBDT 

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION

New Delhi, the 8th June, 2017

INCOME-TAX

G.S.R. 561(E).—In exercise of the powers conferred by section 295 read with section 194-IB of the Incometax Act, 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 (13th Amendment) Rules, 2017.

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

2. In the Income-tax Rules, 1962 (hereafter referred to as the principal rules), in rule 30, –

(a) after sub-rule (2A), the following sub-rule shall be inserted, namely:-

“ (2B) Notwithstanding anything contained in sub-rule (1) or sub-rule (2), any sum deducted under section 194-IB shall be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QC.”;

(b) after sub-rule (6A), the following sub-rule shall be inserted, namely:—

“(6B) Where tax deducted is to be deposited accompanied by a challan-cum-statement in Form No.26QC, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it electronically within the time specified in sub-rule (2B) into the Reserve Bank of India or the State Bank of India or any authorized bank.”.

3. In the principal rules, in rule 31, after sub-rule (3A), the following sub-rule shall be inserted, namely:—

“(3B) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3), every person responsible for deduction of tax under section 194-IB shall furnish the certificate of deduction of tax at source in Form No.16C to the payee within fifteen days from the due date for furnishing the challan-cum-statement in Form No.26QC under rule 31A after generating and downloading the same from the web portal specified by the Principal Director General of Income-tax (Systems)or the Director General of Income-tax (Systems) or the person authorised by him.”

4. In the principal rules, in rule 31A, after sub-rule (4A), the following sub-rule shall be inserted, namely:—

“(4B) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3) or sub-rule (4), every person responsible for deduction of tax under section 194-IB shall furnish to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (System) or the person authorised by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) a challan-cum-statement in Form No.26QC electronically in accordance with the procedures, formats and standards specified under sub-rule (5) within thirty days from the end of the month in which the deduction is made.”

CA. Brijesh Baranwal

(Practicing Chartered Accountant)

Mumbai

Note:

1. The above write up is only for awareness purpose and should not be considered as expert opinion.

2. Please feel free to share with your friends and everyone without any copy right issues.

3. In case of queries and suggestions, please contact: cabrijesh@yahoo.co.in

GEARING UP FOR INCOME TAX RETURNS FILING

Taxes are the biggest source of revenue of government of India, for its day to day expenses and social welfare measures. Normally tax collections are divided in Direct Tax and Indirect Tax category. Income Tax comes under the Direct Taxes group and this is biggest source of  revenue under this category. Direct Tax Collections have increased from Rs. 68,305 Cr. in the year 2000-2001  to Rs. 7,42,295 Cr. in the year 2015-2016.

 

Once again, season of Income Tax Return filing has arrived. So, as a preparatory measure, some relevant points are discussed hereunder.

 

DIFFERENT HEADS UNDER WHICH INCOME IS COMPUTED

There are five heads under which income is computed for taxation purposes;

1.      Income from salary,

2.      Income from house property,

3.      Profits and gains of business or profession,

4.      Capital gains and

5.      Income from other sources

FILING OF INCOME TAX RETURN

Section 139 of the Income Tax provides that;

139. [(1) Every person,—

(a)		being a company or a firm; or
(b)		being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,

shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.

It further provides that a person, being a resident other than not ordinarily resident in India, who is not required to furnish a return under this sub-section and who at any time during the previous year,—

(a)		holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or
(b)		is a beneficiary of any asset (including any financial interest in any entity) located outside India,

shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed.

TIME LIMIT FOR FILING INCOME TAX RETURN

S. No.	Type of Assessee	Time Limit
1.	Company or a person whose accounts are required to be audited or a working partner of a firm whose accounts are required to be audited	30th September
2.	In the case of an assessee who is required to furnish a report referred to in section 92E	30th November
3.	In case of any other assessee	31st July

                                       

FILING OF BELATED RETURN

Section 139 (4) further provides that “Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

The following sub-section (4) shall be substituted for the existing sub-section (4) of section 139 by the Finance Act, 2016, w.e.f. 1-4-2017 :

(4) Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

REVISION OF INCOME TAX RETURN

Sub-section (5) of Section 139 provides that “ If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

The following sub-section (5) shall be substituted for the existing sub-section (5) of section 139 by the Finance Act, 2016, w.e.f. 1-4-2017 :

(5) If any person, having furnished a return under sub-section (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

DEFECTS IN INCOME TAX RETURN

As per sub-section (9) of Section 139, Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return :

Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return.

INCOME TAX RETURN FORMS

S. No.	Type of Income Tax Return Form	Assessees for whom applicable
1.	ITR 1 (SAHAJ)	For Individuals having Income from Salary & Interest
2.	ITR 2	For Individuals & HUFs not having Income from Business or Profession
3.	ITR 2A	For Individuals & HUFs not having Income from Business or Profession and Capital Gains and who do not hold foreign assets
4.	ITR 3	For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship
5.	ITR 4	For Individuals & HUFs having income from a proprietory business or Profession
6.	ITR 4S (SUGAM)	For Individuals/HUF/Partnership Firm having income from presumptive Business
7.	ITR 5	For persons other than, (i) individual, (ii) HUF, (iii) company and (iv) person filing ITR7
8.	ITR 6	For Companies other than companies claiming exemption under section 11
9.	ITR 7	For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)

DOCUMENTS REQUIRED FOR FILING INCOME TAX RETURN

1.      A copy of last year's income tax return,

2.      Form 16 for salaried assesses and Form 16A for others,

3.      Bank Statements along with Bank Account No. and IFSC Codes,

4.      Aadhar,

5.      Mobile No. and Email ID,

6.      Savings certificates/Deductions,

7.      Balance Sheet, P&L Account Statement and other Audit Reports wherever applicable,

8.      Other relevant documents.

WAYS OF  FILING INCOME TAX RETURN

There are different kinds of professionals present to assist filing Income Tax Return, such as;

1.      By the assesse himself,

2.      Chartered Accountants,

3.      Income Tax Return Preparers,

4.      Advocates and other professionals practicing in taxation,

5.      Website of various private vendors etc.

FEES FOR FILING INCOME TAX RETURN

Normally fee for filing Income Tax Return depends upon data and complexity of the particular case. Income Tax Department has provided all forms on their website which may be used for the purpose. An assessee can prepare and file return himself if he so desires or take help of tax professionals. While fees of Chartered Accountants and other professionals are subject to personal negotiations there are Income Tax Return Preparers (TRPs) available, whose fees may be determined by the Government and they may be incentivized on the basis of tax collections, by the Government itself. TRPs are supervised by the Government. However, The Committee for capacity building of CA Firms and small & medium practitioners of the Institute of Chartered Accountants of India has also published a minimum recommended scale of fees for Chartered Accountants which may also be followed.

So, gear up and file your income tax return without waiting for the last day as events during that time might force you to miss the deadline.

Author: CA. Brijesh Baranwal

The Author is a Practicing Chartered Accountant and based in Andheri (West), Mumbai. In case of queries and suggestions, please contact: cabrijesh@yahoo.co.in

Disclaimer- This write up is only for awareness purpose and facts of particular case may require independent professional opinion.