Processing ITR U/s 143(1)(a)(vi) and Responding to Intimation

Section 143(1)(a)(vi) of the Income-tax Act, 1961 (‘Act’) as introduced vide Finance Act, 2016, w.e.f. 01.04.2017, prescribes that while processing the return of income, the total income or loss shall be computed after making adjustment for addition of income appearing in Form 26AS or Form 16A or Form 16 (the three Forms) which has not been included in computing the total income in the return.

Process to be followed by the Tax Payer

As intimations proposing adjustments in identified returns under section 143(1)(a)(vi) of the Act would be shortly issued by the CPC-ITR, Bengaluru, the process to be followed by the taxpayers for filing the response is as under:

For furnishing the response electronically, taxpayer is required to login in to his account in the e-filing site and choose the option (View-Returns/Forms). In a case where communication/intimation has been issued to the taxpayer u/s 143(1)(a)(vi) of the Act, the status will be displayed in the dashboard as ‘Response to Communication/Intimation u/s 143(1)(a) is pending’. The taxpayer can click on the same and submit his response.

If Tax Payer Fully agrees:

Where upon receiving the awareness message or formal intimation u/s 143(1)(a)(vi) of the Act, if the taxpayer fully agrees with the proposed adjustment, he is required to file a revised return in response.

If Tax Payer Fully disagrees:

Where upon receiving the awareness message or formal intimation u/s 143(1)(a)(vi) of the Act, the taxpayer disagrees with the proposed adjustment, he is required to file a reconciliation statement (in the format to be provided by CPC-ITR on the e-filing site) in support of his contention.

If Tax Payer Partially agrees:

Where upon receiving the awareness message or formal intimation u/s 143(1)(a)(vi) of the Act, if the taxpayer partially agrees with the proposed adjustment, he is required to (i) file a revised return for the part of the proposed adjustment with which he is in agreement & (ii) file a reconciliation statement (in the format to be provided by CPC-ITR on the e-filing site) for the part of the proposed adjustment with which he is not in agreement.

Based upon response of the taxpayer as indicated above and the information so available with the CPC-ITR, thereafter, such returns shall be taken up for processing by CPC-ITR as per provisions of section(s) 143(1), 143(1)(a)(vi) read with Instruction No.s 9 & 10/2017 of CBDT.
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Taxing the Crypto Transaction Simplified

Source: ClearTax.

For Hassle free Tax Compliance contact us at 9900397777.

Key Highlights of 26th GST Council Meet

26th Meeting held on 10 March 2018. Some of the key recommendations of the GST Council are highlighted below:

E-way Rules:

E-way rules will apply from 1st April 2018 for all inter-state movement of goods.

For Intra-State movement of goods, e-way Bill System will be introduced w.e.f. a date to be announced in a phased manner but not later than 01st June, 2018

Reverse charge mechanism and TDS and TCS postponed:

The Council has further pushed out applicability of reverse charge mechanism on purchases made from unregistered dealers. With this postponement, it is recommended you exercise reasonable caution while preparing/renewing contracts for the next financial year with unregistered suppliers and provide for a clause to cover for RCM, when it comes into play.

Export promotion schemes further extended for 6 months:

This is likely to ease up working capital pressures on exporters in the coming months. The benefits will continue while e-wallet is being readied for launch. It is also hoped returns are further simplified so procedure of refund claims eases up.
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Indra Nooyi Inspirational Story (By: Startup Stories)

Video Courtesy: Youtube

Modus Operandi of PNB Scam (Source: The Hindu)

Source: The Hindu (Storyboard: Satwik Gade)

Quick Insights to The Chit Funds (Amendment) Bill, 2018

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval to introduce the Chit Funds (Amendment) Bill, 2018 in Parliament. In order to facilitate orderly growth of the Chit Funds sector and remove bottlenecks being faced by the Chit Funds industry, thereby enabling greater financial access of people to other financial products, the following amendments to the Chit Funds Act, 1982 have been proposed:

a)    Use of the words "Fraternity Fund" for chit business under Sections 2(b) and 11(1) of the Chit Funds Act, 1982, to signify its inherent nature, and distinguish its working from "Prize Chits" which are banned under a separate legislation;

b)    While retaining the requirement of a minimum of two subscribers for the conduct of the draw of the Chit and for the preparation of the minutes of the proceedings, the Chit Funds (Amendment) Bill, 2018 proposes to allow the two minimum required subscribers to join through video conferencing duly recorded by the foreman, as physical presence of the subscribers towards the final stages of a Chit may not be forthcoming easily. The foreman shall have the minutes of the proceedings signed by such subscribers within a period of two days following the proceedings;

c)    Increasing the ceiling of foreman's commission from a maximum of 5% to 7%, as the rate has remained static since the commencement of the Act while overheads and other costs have increased manifold;

d)    Allowing the foreman a right to lien for the dues from subscribers, so that set-off is allowed by the Chit company for subscribers who have already drawn funds, so as to discourage default by them; and

e)    Amending Section 85 (b) of the Chit Funds Act, 1982 to remove the ceiling of one hundred rupees set in 1982 at the time of framing the Chit Funds Act, which has lost its relevance. The State Governments are proposed to be allowed to prescribe the ceiling and to increase it from time to time.

Source: Govt of India Press Release

Quick Insights to Unregulated Deposit Schemes Bill, 2018

In a major policy initiative to protect the savings of the investors, the Union Cabinet chaired by the Prime Minister Narendra Modi has given its approval to introduce the following bills in the Parliament:-

(a) Banning of Unregulated Deposit Schemes Bill, 2018 in parliament &

(b) Chit Funds (Amendment) Bill, 2018

Details:

The Banning of Unregulated Deposit Schemes Bill, 2018 will provide a comprehensive legislation to deal with the menace of illicit deposit schemes in the country through,

a)    complete prohibition of unregulated deposit taking activity;

b)    deterrent punishment for promoting or operating an unregulated deposit taking scheme;

c)    stringent punishment for fraudulent default in repayment to depositors;

d)    designation of a Competent Authority by the State Government to ensure repayment of deposits in the event of default by a deposit taking establishment;

e)    powers and functions of the competent authority including the power to attach assets of a defaulting establishment;

f)     designation of Courts to oversee repayment of depositors and to try offences under the Act; and

g)    listing of Regulated Deposit Schemes in the Bill, with a clause enabling the Central Government to expand or prune the list.

Salient Features:

The salient features of the Bill are as follows:

a)    The Bill contains a substantive banning clause which bans Deposit Takers from promoting, operating, issuing advertisements or accepting deposits in any Unregulated Deposit Scheme. The principle is that the Bill would ban unregulated deposit taking activities altogether, by making them an offence ex-ante, rather than the existing legislative-cum-regulatory framework which only comes into effect ex-post with considerable time lags.

b)    The Bill creates three different types of offences, namely, running of Unregulated Deposit Schemes, fraudulent default in Regulated Deposit Schemes, and wrongful inducement in relation to Unregulated Deposit Schemes.

c)    The Bill provides for severe punishment and heavy pecuniary fines to act as deterrent.

d)    The Bill has adequate provisions for disgorgement or repayment of deposits in cases where such schemes nonetheless manage to raise deposits illegally.

e)    The Bill provides for attachment of properties/ assets by the Competent Authority, and subsequent realization of assets for repayment to depositors.

f)     Clear-cut time   lines   have   been   provided for attachment of property and restitution to depositors.

g)    The Bill enables creation of an online central database, for collection and sharing of information on deposit taking activities in the country.

h)    The Bill defines "Deposit Taker" and "Deposit" comprehensively.

i)     "Deposit Takers" include all possible entities (including individuals) receiving or soliciting deposits,   except specific  entities  such  as  those  incorporated   by legislation.

j)     "Deposit" is defined in such a manner that deposit takers are restricted from camouflaging public deposits as receipts, and at the same time not to curb or hinder acceptance of money by an establishment in the ordinary course of its business.

k)    Being a comprehensive Union law, the Bill adopts best practices from State laws, while entrusting the primary responsibility of implementing the provisions of the legislation to the State Governments.

Source: Govt of India Press Release

Elon Musk Motivational Video (By: Startup Stories)

Video Courtesy: Youtube

Alert: Get your ITR filed before 31st March 2018 for FY 2015-16 & FY 2016-17

You might have received notice from IT Department saying:

Greetings from Income Tax Department.
It is observed that you have not filed the Income Tax Return for ABCDEXXXXF for AY 2017-18.

Therefore, it is advised that you may ascertain your tax liability for AY 2017-18 and file your Income Tax Return (ITR) without any further delay. Last date to file your return for AY 2017-18 is 31st March 2018. However, you are advised to file the Income Tax Return much before the last date to avoid last minute rush.

Please note that the law has changed and ITR for AY 2017-18 CANNOT be filed beyond 31st March 2018.

Please also link your PAN with Aadhaar on the e-Filing website. If your mobile is already linked with Aadhaar, then you can e-verify your ITR using Aadhaar OTP. e-Verification is Simple and Easy, you can e-Verify your return through NetBanking / Pre-Validated Bank Account / Bank ATM / Pre-Validated Demat Account. No need to send ITR-V to CPC Bangalore if you e-verify. To know more on e-Verification click here.

In case you require any assistance in filing of Income Tax Return, please visit www.incometaxindiaefiling.gov.in or call on 1800 103 0025.

Disclaimer: Please ignore this email if you have already filed the IT Return for AY 2017-18.

The maximum time period to file the Income Tax Return is 31st March' 2018 for the Financial Year 2015-16 and 2016-17. 

Position after amendment of Section 139(4) by the Finance Act' 2016: 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.

Hence, get the Income Tax Return filed for the Financial Year 2015-16 and 2016-17 to avoid any adverse consequences of non-filing of the income tax return.

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Budget 2018-Sops for Senior Citizens

It has been proposed to increase the deductions available to senior citizens towards interest, health insurance and medical expenses as outlined below.

The above proposals will effectively increase the deduction available for senior citizens by up to INR 100,000.

*For the purpose of section 80 DDB, the distinction between senior citizen and very senior citizen has been removed.

** The scope of deduction has been widened to include interest earned on fixed deposits and post office deposits under the proposed insertion of section 80TTB for senior citizens.

Tax deduction at source in respect of interest income to senior citizen

Section 194A of the Act is proposed to be amended so as to raise the threshold for deduction of tax at source on interest income for senior citizens from existing INR 10,000 to INR 50,000. The proposed amendment shall be applicable with effect from 01 April, 2018.

National Pension Scheme (NPS)

It is proposed to extend the exemption available in respect of withdrawal (on closure or opting out) from the NPS scheme to all subscribers. Currently, exemption of 40% of the amount payable was allowed to employees. The proposed amendment shall be effective from 01 April, 2018.

Budget 2018-Taxation of LTCG on Sale of Equity Shares

Currently, LTCG arising from transfer of long term capital assets, being equity shares of a company or a unit of equity oriented fund or a unit of business trusts, on which STT has been paid is exempt from income-tax under section 10(38) of the Act. In Budget 2018, with the withdrawal of Sec 10(38), there is a proposal of a parallel introduction of Section 112A to tax LTCG on sale of Equity shares, Units of equity oriented funds or Units if business trusts at a concessional rate of 10% on the gains in excess of Rs.1 lakh without providing the benefits of indexation or the benefit of computation of capital gains in foreign currency in the case of non-residents.

The provisions of this section will apply from the Financial Year (FY) 2018-19 i.e. AY 2019-20. This otherwise means, any transfer carried out after 1 April 2018, resulting in LTCG in excess of Rs.1 lakh will attract tax at the rate of 10 percent.

Determining the Cost of Acquisition

A method of determining the Cost of Acquisition (“COA”) of such investments has been specifically laid down according to which the COA of such investments shall be deemed to be the higher of-

1.    The actual COA of such investments; and

2.    The lower of-

Fair Market Value (‘FMV’) of such investments; and

the Full Value of Consideration received or accruing as a result of the transfer of the capital asset i.e. the Sale Price

Further, the FMV would be the highest price quoted on the recognized stock exchange on 31 January 2018. In case there is no trading of the said asset in such stock exchange, the highest price on a day immediately preceding 31 January 2018 shall be considered to be the FMV. In effect, the taxpayer can claim the highest price quoted on the recognized stock exchange on 31 January 2018 as the COA and claim the deduction for the same.

Union Budget 2018-Key Takeaways

Individuals and salaried class

a.    Slab rates kept same.

b.    Education Cess and SHEC rates increased to 4% from existing 3%.

c.     Salaried assessee to avail a standard deduction of Rs.40,000/-

The standard deduction of Rs.40,000 replaces medical allowance of Rs 15,000 and transport allowance of Rs 1600 per month i.e. 19,200 per annum, the effective additional benefit on account of the standard deduction would be an additional income exemption of Rs 5,800.

Particulars	Until AY 2018-19	From AY 2019-20
Gross Salary (in Rs.)	5,00, 000	5,00,000
(-) Transport Allowance	19,200	Not Applicable
(-) Medical Allowance	15,000	Not Applicable
(-) Standard Deduction	Not Applicable	40,000
Net Salary	4,65,800	4,60,000

For senior citizens

a.    Health insurance premium contribution in case of senior and very senior citizens extended to Rs. 50,000/- with corresponding amendment under section 80D.

b.    No TDS on interest from FD upto Rs 50,000.

c.     Quantum of deduction under section 80DDB for medical treatment in case of a senior citizen and very senior citizen increase from Rs. 60,000 and Rs.80,000 respectively to Rs. 1,00,000/-

Others

a.    Reduction in corporate tax rate to 25% for companies having a turnover of Rs 250 crores and less

b.    Charitable / Religious Trusts claiming exemption under section 11 & 12 or under section 10(23C) for a business conducted by them will be needed to follow the provisions of section 40(a)(ia), 40A and 40A(3) i.e. TDS compliance to be ensured, Cash payments to restrict within limits of Rs. 10,000 only.

c.     Payment received on termination or modification of terms and conditions of a contract relating to business now to attract taxation.

d.    A businessman converting stock in trade into capital asset has to pay the tax on the appreciation.

e.    Number of amendments made in the Income Tax Act to give sanctity to the ICDS applicability like:

·         Marked to market losses as per ICDS to be permissible under section 36.

·         Foreign exchange difference in revenue items arising as per ICDS applicability to be recognised as profit or loss.

·         Insertion of section 43CB proposed to provide validity to the applicability of percentage completion method on construction contracts.

f.     Immovable property relating stamp duty valuations having impact under section 43CA, 50CA and 56(2)(x) relaxed to the extent of 5% difference of the consideration received or accruing as a result of transfer.

g.    Changes in income computation formula in case of truck and loading tempo operators under section 44AE for heavy goods vechile Rs.1000 per ton of gross vehicle weight formula on per month basis to be adopted and for other vehicle Rs.7500/- as old provision to continue.

h.    Reduction in scope of exemption claimable under section 54EC from any long-term capital asset to the long-term capital arising on account transfer of land or building or both only. Further the redemption period of bonds also proposed to be increased to 5 years.

i.      An employee leaving the job may be in receipt of any compensation or other payment from any person in connection with such termination or for the modification of terms and conditions of such employment shall be taxable for the same as income by way of other sources, amendment proposed under section 56.

j.      Certain amendments made under section 79, 115JB and 140 to acknowledge and provide relief in cases covered under the Insolvency and Bankruptcy Code 2016.

k.     Increase in scope of section 80IAC by modifying the definition of ‘eligible business’ as to include even start-up engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment or wealth creation. Further last dated of incorporation of business extended from 31.3.2019 to 31.03.2021.

l.      Relation of minimum number for days of employment of an employee to 240 days also relaxed to just 150 days in case of footwear or leather products even.

m.   New deduction section 80PA proposed to be inserted to provide 100% deduction to Producer Companies from eligible business being marketing of agricultural produce grown by the members or purchase of agricultural implements, seeds, livestock or other articles intended for agriculture or processing the agricultural produce of the members.

n.    Section 80TTB to be inserted to provide relief to senior citizens in respect of income arising in form of interest from banking company, cooperative society and post office to the extent of Rs. 50,000 for a financial year. However, in such case the benefit of section 80TTA shall not be available.

o.    Proposed insertion of section 112A to tax long term capital gain arising on account of transfer of listed shares and units of equity oriented mutual fund units @ 10% on an amount exceeding Rs. 1 lakh. However cost for such purposes prima-facie to take color from fair market value as on 31.01.2018.

p.    Dividend in the nature of section 2(22)(e) also to attract dividend distribution tax on company @ 30%.

q.    Alignment of dividend distribution tax rates on dividends distributed by various kinds of mutual funds under section 115R.

r.     Prima-facie adjustment under section 143(1) on account of mismatch between form 26AS and form 16 or 16A not to take place wef AY 2019-2020.

s.     New sub-section (3A) proposed to be inserted under section 143 to bring up an e-assessment procedure as per Budget Speech of Hon’ble Finance Minister.

t.     ICDS further strengthened by making necessary amendment in section 145A.

u.    New section 145B proposed to provide certain exceptions of taxation in certain special cases.