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Wednesday 14 February 2018

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 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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Monday 12 February 2018

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.

Sunday 11 February 2018

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.
Until AY 2018-19
From AY 2019-20
Gross Salary (in Rs.)
5,00, 000
(-) Transport Allowance
Not Applicable
(-) Medical Allowance
Not Applicable
(-) Standard Deduction
Not Applicable
Net Salary
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/-
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.