Income Tax

1. No more ‘self-declaration’ from employees for TDS tax deductions:

W.e.f. 1st June, 2016, employees whose salaries are liable to TDS u/s 192, would be required to give declaration in a new Form 12BB to the employer. Presently, employees who want to claim tax deductions are required to file self-declarations of tax savings/deductions to employer along with the evidences of such tax savings for every financial year. Employer was liable to deduct tax at source on the estimated income of employees after considering such self-declarations of tax savings. New Form no. 12BB has been notified for such purposes. Employees are now required to submit evidences/particulars of tax savings to employer in Form no. 12BB. Please download the notification here.

2. Revised due dates for filing TDS Returns:

W.e.f. 1st June, 2016, due dates for filing of quarterly TDS returns by persons (other than government) have been extended. Due dates for filing TDS return for the quarter ended 30th June, 30th September, 31st December and 31st March have been extended to 31st July, 31st October, 31st January and 31st May respectively (old dates were 15th July, 15th October, 15th January and 15th May respectively).

3. Mandatory quoting of PAN for Purchases or Sales of any goods or services exceeding Rs. 2 Lakhs per transaction w.e.f. 1st January, 2016

Background:

One of the recommendations of the Special Investigation Team (SIT) on Black Money was that quoting of PAN should be made mandatory for all sales and purchases of goods and services where the payment exceeds certain threshold. Accepting this recommendation, the Finance Minister made an announcement to this effect in his Budget speech. Hence, with effect from 1st January, 2016, quoting of PAN will be required for transactions of sales and purchases of goods and services of an amount exceeding Rs.2 Lakhs per transaction regardless of the mode of payment.

There are 3 basic duties cast upon the tax payer vide this change:

  • Obtaining PAN/Form 60 alongwith proof of identity and address from customers/suppliers for transactions of sales and purchases of goods and services exceeding Rs. 2 lakhs per transaction – from 1-1-2016 onwards
  • Filing of half yearly Return in Form 61. (For assesses to whom tax audit provisions apply) – from 1-1-2016 onwards
  • Filing of annual information Return in Form 61A. (For assesses to whom tax audit provisions apply) – from 1-4-2016 onwards

Table explaining new provision regarding Mandatory quoting of PAN:

Sr. No. Nature of Transaction Requirement w.e.f.1st January, 2016
1 Purchases or sales of any goods or services PAN or Form 60 alongwith proof of identity and address to be obtained from buyer/customer/seller/supplier if:Purchase/ sale of any goods or services exceeds Rs.2 Lakhs per transaction irrespective of mode of payment.
2 Purchase of jewellery/bullion Same as above

Rule 114 also provides for other situations where PAN is to be compulsorily quoted. These details are available in the copy of government notification which can be downloaded here

FAQs pertaining to the above rule:

Sr. No. FAQ Answer
1 Whether PAN Card copy has to be obtained under the new rule? It is strongly recommended to obtain PAN Card copy from the customer/supplier and preserve the same.
2 What if supplier or customer is not having PAN? In that case, one has to obtain declaration in Form 60 alongwith proof of identity and address from the supplier/customer.Where a person, entering into any transaction, is a minor and who does not have any income chargeable to income-tax, obtain the permanent account number of his father or mother or guardian.

Revised Form 60 can be download here.

Form 60 has to be preserved for a period of 6 years from the end of the financial year in which transaction has taken place.

There is provision of rigourous imprisonment with fine if any wrong declaration is made in Form 60.

3 We have entered into different transactions of sale with a customer as below:-
Rs. 1,50,000
on 1-1-2016 - Rs. 1,60,000 on 5-1-2016

Whether PAN has to be obtained in above case?

In our opinion, No, since the two transactions will be considered as separate.It is advisable to obtain two invoice wise separate payments in such case.
4 Whether PAN of supplier or customer has to be mentioned in the Sales Invoice or Bill? It is mandatory to mention the same in the Invoice/Bill. Further, the exact name as appearing in PAN should be mentioned in the Invoice.
5 What if invoice/bill is prepared in trade name of proprietor and name on PAN Card is of individual? In case the supplier/customer is proprietor, it is recommended to also mention the name of proprietor on Invoice/Bill/Debit Note etc., if the Invoice/Bill/Debit note carries the trade name of proprietor.e.g. M/s XYZ Enterprise (Prop: Mr. ABC)
6 Whether any persons are exempted from quoting PAN? - Central, State Governments and Consular
offices- Non-Residents as defined u/s 2(30)
7 Whether any statement has to be filed with the Department furnishing the information of PANs or Form 60 collected from customers/suppliers? A return containing details of Form 60 collected from customers/suppliers has to be filed by a person to whom Tax Audit provisions are applicable.The return has to be filed in Form No. 61.The return has to be filed bi-annually as below:

- For Form 60 received from 1-10 to 31-3 – Form 61 has to be filed by 30-4

- For Form 60 received from 1-4 to 30-9 – Form 61 has to be filed by 31-10

Special registration number has to be obtained for filing of this Form. The procedure for the same has not yet been outlined.

8 Whether any annual statement/return has to be filed? A return containing details of cash receipts in aggregate exceeding Rs. 2 lakhs during the financial year collected from customers has to be filed by a person to whom Tax Audit provisions are applicable. This requirement is applicable from FY 2016-17 onwards.Such return has to be filed in Form 61A by 31st May after end of financial year. This requirement is applicable from FY 2016-17 onwards.Special registration number has to be obtained for filing of this Form. The procedure for the same has not yet been outlined.

4. Big Relief to Indian businesses: CBDT has made changes in requirements of Form 15 CA/CB:

Bird’s eye view of changes in Requirements of Form 15 CA & 15 CB & Foreign remittances under Sec 195:

  • 1) No Form 15CA & 15CB will be required to be furnished by individuals for remittances which do not require RBI approval .
  • 2) No 15CA/15CB for import payments: List of payments which do not require submission of Forms 15CA & 15CB has been expanded from 28 to 33 including payments for imports (Sr. No 7 & 8).
  • 3) CA certificate in Form No. 15CB will be required only for payments made to non-residents which are chargeable to tax & the amount of payment during the year exceeds Rs. 5 lakh.

The amended Rules will become applicable from 01.04.2016.
Download the relevant notification here.

5. Cost Inflation Index is 1081 for FY 2015-16

Cost Inflation Index for FY 2015-16 for the purpose of Income Tax Act, 1961 notified. The index is “1081″.

6. Manner of Furnishing Return of Income for every Assessee w.e.f. 1.4.2015 – Notification No 41 of 2015/S.O. 1014(E), Date 15/04/2015:

Sr No Manner of furnishing ITR Individual / HUF Company Person required to furnish ITR -7 Firm / LLP or any other person who is required to file ITR 5
1 Digitally If Audited u/s 44AB In all Cases In case of Political Party If Audited u/s 44AB.
2 Digitally or through EVC or Electronically and thereafter by submitting ITR V to Bangalore 1 If Return furnished in ITR 3 or 4.2 If Ordinary Resident assessee: - Having asset or financial interest outside India or - Signing Authority in any account outside India or - Earning income from outside India.3 Any relief claimed u/s 90,90A or deduction u/s 91.4 If any audit report furnished electronically under proviso to sub rule 2 of Rule 12.5 Whose Total Income exceeds Rs 5,00,000 or claims any refund. (Except Super Senior Citizen i.e 80 years or more furnishing return in ITR 1 or 2) Not Applicable In any other case other than above. In any other case other than above.
3 Paper Form In any other case than above Not Applicable Not Applicable Not Applicable

Important Notes for Paper Form :

Paper Form ITR is applicable in case of ITR 1 and ITR 2 only:-

  • If Income is below Rs 5,00,000 and there is no refund.
  • In case if there is tax payable but liability becomes nil on account of TDS and Self Assessment.
  • If Income in case of Super Senior Citizen exceeds Rs 5,00,000 and even there is refund.

7. New forms 3CA, 3CB & 3CD prescribed:

Download presentation of CA Anuj J. Sharedalal given at Income Tax Bar Association Ahmedabad at HT Parekh Convention Hall, AMA, Ahmedabad on 6th August, 2014

The Central Board of Direct Taxes (Income Tax Department) has prescribed new Form No. 3CA, Form No. 3CB and Form No. 3CD (These forms lay down the contents of Tax Audit Report to be certified by assessee’s tax auditor under the Income Tax Act, 1961) vide Notification dated 25th July, 2014:

  • The key changes in the new Form No. 3CD are as follows:
  • 1. Part A – Clause 4 –
    To furnish registration numbers or any other allotted numbers under indirect tax laws like excise, service tax, sales tax, customs,etc.
  • 2. Part B – Clause 11(b) –
    If the books of accounts are not kept at one location, to furnish the addresses of locations along with the details of books of accounts maintained at each location
  • 3. Part B – Clause 17 –
    To furnish certain details in cases where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of a State Government (stamp duty value or ‘jantri value’) referred to in section 43CA or 50C.
  • 4. Part B – Clause 19 –
    Comparison of amount debited to Profit & Loss Account vis-a-vis amount admissible as per the Income Tax Act, 1961 as deduction under certain sections to be given
  • 5. Part B – Clause 21(a) –
    Item wise details of amounts debited to the profit and loss account, being in the nature of capital, personal, advertisement expenditure etc. to be given
  • 6. Part B – Clause 21(b) -
    Details of amounts inadmissible u/s 40(a), details of TDS deducted but not deposited before time limit u/s 200(1) & u/s 139(1) including details of TDS not deducted in case of payments to non-residents. Details like name and address of payee to be given.
  • 7. Part B – Clause 21(d) -
    Details like Name and PAN of payee to whom payment in violation of Sections 40A(3) & 40A(3A) (i.e. amounts exceeding Rs. 20,000 or 35,000 in certain cases paid otherwise than by account payee cheque or bank demand draft) has been made to be given.
  • 8. Part B – Clause 27(a) -
    The word MODVAT replaced by CENVAT. To furnish amount of Central Value Added Tax credits availed of or utilized during the previous year and its treatment in the profit and loss account and treatment of outstanding Central Value Added Tax credits in the accounts.
  • 9. Part B – Clause 28 –
    If during the previous year the assessee has received shares of a company not being a company in which the public are substantially interested, below fair market value calculated as per provisions of section 56(2)(viia), details of the same to be furnished.
  • 10. Part B – Clause 29 –
    If during the previous year the assessee received any consideration for issue of shares which exceeds the fair market value of the shares calculated as per the provisions of section 56(2)(viib), details to be furnished
  • 11. Part B – Clause 32(c) –
    If the assessee has incurred any speculation loss or loss referred to in section 73A (loss in business specified in section 35AD) during the previous year, details to be furnished.
  • 12. Part B – Clause 34(a) –
    Detailed information on TDS or TCS deducted or collected to be given in the following manner:
    • (i) TAN
    • (ii) Sections under which TDS or TCS deducted or collected
    • (iii) Nature of Payment
    • (iv) Total Amount of payment (including non-tax deductible or collectible portion)
    • (v) Total amount on which tax was to be deducted or collected
    • (vi) Total amount on which tax actually deducted or collected
    • (vii) Total amount of tax actually deducted or collected on (vi) above
    • (viii) Total amount on which tax actually deducted or collected at less than specified rate
    • (ix) Total amount of tax actually deducted or collected at less than specified rate
    • (x) Amount of tax deducted or collected but not deposited
  • 13. Part B – Clause 34(b) –
    Details of late filing of TDS/TCS returns to be furnished
  • 14. Part B – Clause 34(c) –
    Details of Interest Payable u/s 201(1A) and 206C(7) to be furnished mentioning section, date of payment, amount of interest paid
  • 15. Part B – Clause 39 -
    Details of qualifications or disagreements of service tax auditor to be given if audit under Service tax was conducted
  • 16. Part B – Clause 40 –
    Details regarding Turnover, GP Ratio, NP Ratio, Stock in trade/turnover ratio, Material consumed/FG Produced ration to be given for preceding previous year also.
  • 17. Part B – Clause 41 –
    Details of demand raised or refund issued under any tax laws other than Income-tax Act, 1961 and Wealth tax Act, 1957 alongwith details of relevant proceedings.

- You may download the notification by clicking on the below hyperlink:

http://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=NOTF&schT=&csId=ef5161fa-4162-4f07-8cde-ed1d991313db&NtN=&yr=ALL&sec=&sch=&title=Taxmann%20-%20Direct%20Tax%20Laws

8. New procedure for E-filing Returns, Form No. 26AS and other work in respect of Income Tax Matters:

  • Income Tax Department has laid down new procedure for E-filing Returns, Form No. 26AS and other work in respect of Income Tax Matters.
  • Assessee has to obtain registration by obtaining PIN through Mobile Number and E-mail ID.
  • It is provided that each Mobile/E-mail ID shall be entitled to use the same for ten assessees only.
  • It is advised to procure the PIN through Mobile / E-mail ID as early as possible.

9. PAN Forms revised:

  • - CBDT has revised PAN Application Forms 49A and 49AA w.e.f. from 16th May, 2014 vide its notification no. 26/2014, dated 16th May, 2014.
  • - Revised Forms 49A and 49AA provide an option to get assessee’s mother’s name printed on PAN Card. Persons applying for New PAN card or for revised PAN card can avail this option.
  • - Please note that an applicant cannot have names of both the parents printed on the PAN Card. Assessee cannot have both mother’s and father’s names printed on PAN card.
  • - In case Applicant does not exercise the option, then by default father’s name will get printed on PAN card.
  • - Download Forms here:

10. Cost Inflation Index is 1024 for FY 2014-15

12 June , 2014
Cost Inflation Index for FY 2014-15 for the purpose of Income Tax Act, 1961 notified. The index is “1024″.
Read more at –
http://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=NOTF&schT&csId=e46f6aa5-8882-4b70-8806-feeb0c3159bf&NtN&yr=ALL&sec&sch&title=Taxmann+-+Direct+Tax+Laws