Author: team desk

Restore commuted pension after 12 years instead of 15 years – Central govt employees

Budget 2025: ‘Restore commuted pension after 12 years instead of 15 years’ – Central govt employees demand

Budget 2025: Ahead of the Union Budget 2025, central government employees have again requested the Centre to look into their commuted pension restoration demand. At present, the government restores the commuted pension of a retiree after 15 years from the commutation date.

The Staff Side of the National Council Joint Consultative Machinery (NC JCM), representing millions of employees, has formally requested Finance Minister Nirmala Sitharaman to reduce the restoration period for the commuted portion from the current 15 years to 12 years.

Restoration demand for commuted pension: Key arguments

In a recent letter, Gopal Mishra, Secretary of NC JCM, argued that the government recovers the entire commuted pension within 11 years with interest. The letter also said that many state governments are restoring the commuted portion of the pension after 12 years. “There is no justification for recovering the 40% commuted Pension from the Pensioners for 15 years. Therefore, it is requested that the Government may kindly restore the commuted Pension after 12 years from the date of commutation.”

Restoration demand for commuted pension: Key arguments

In a recent letter, Gopal Mishra, Secretary of NC JCM, argued that the government recovers the entire commuted pension within 11 years with interest. The letter also said that many state governments are restoring the commuted portion of the pension after 12 years. “There is no justification for recovering the 40% commuted Pension from the Pensioners for 15 years. Therefore, it is requested that the Government may kindly restore the commuted Pension after 12 years from the date of commutation.”

The JCM was set up to promote harmonious relations and cooperation between the government as employer and the general body of employees in matters of common concern.

Historical context and need for change in pension commutation period

In the past, central government employee representatives and unions have also agreed with this proposal to reduce the timeframe for the restoration of the commuted portion of pension from 15 years to 12 years.

The Confederation of Central Government Employees and Workers, which represents about 7 lakh staff across various central departments, last wrote to Union Cabinet Secretary TV Somanathan, urging the government to review the pension commutation rules. The pension commutation rules were framed 38 years ago by amending Rule 10A of Central Civil Services (Commutation of Pension) Rules, 1981.

The Confederation in its letter said that in comparison to the parameters prevailing earlier in the year 1986, the current parameters have undergone a drastic change especially, the interest rate, life expectancy, mortality rate, death rate, actual values and risk factor which is at just 2%.

The letter also mentioned the 5th Pay Commission report that suggested bringing down the timeframe for restoration of commuted pension to 12 years from 15 years.

The Confederation also attached a detailed note, explaining why the Supreme court judgement in Common Cause (supra) of 1986 needs a fresh look into the matter as many parameters have changed in the last 38 years.

The 5th Central Pay Commission had recommended for 12 years restoration of commutation after an in-depth study. The central government has neither accepted this report nor rejected it, with an intimation of reasons of rejection, hence it has acquired a legal status, the note said.

The Confederation further highlighted disparities in interest rates, pointing out that while central government employees are charged 8% interest on commuted pensions, pensioners from institutions like LIC face a lower rate of 6.1%. Such inconsistencies, it argued, contribute to financial inequities for retired employees.

The path ahead for central govt employees
To address these concerns, the Confederation has proposed amendments to the Central Civil Services (Commutation of Pension) Rules, 1981, and the implementation of a revised commutation table. It concluded that a 12-year restoration period “reflects current realities and would bring much-needed relief to pensioners.”

With growing support from employee bodies and expert recommendations, this demand for pension reform could become a pivotal aspect of Budget 2025, potentially transforming the retirement landscape for central government employees.

Resolving PAN Card Deactivation: Letter Drafting and Jurisdictional AO

Check PAN Card is Active or Not?

Due to duplication, the government of India has deactivated more than 11 lakh PAN cards. In addition to this, over 1,500 PAN cards have been identified as fake as they were provided to either an individual with a false identity or to non-existing individuals.

According to Indian law, an individual cannot have more than one PAN card, and having one attracts a fine of Rs.10,000 under Section 272B of the Income Tax Act of 1961.

Certain individuals may have had more than one PAN card due to an error. However, it is important to check if their PAN card is still active or not. Following the steps given more, individuals can find out whether their PAN card is still active or not.

Step  1

Step  2

  • Once the next page opens, individuals will have to fill in the necessary details which includes their name, age, gender, date of birth, status, registered mobile number and then click on ‘submit’.
  • In case an individual has over one PAN card, a notice will be displayed.

Step  3

  • After this, to the individual’s’ mobile number, an OTP or One Time Password will be sent. This OTP will have to be provided.

Step  4

    Note : This section No more  Right Now

PAN Deactivation by Income Tax Department

The Income Tax Department is conducting a drive to deactivate PAN from income tax assessees who have been given multiple PAN cards. Ideally, an individual is supposed to have only 1 PAN. Several people have many PAN cards either with or without their knowledge.

This new mission of the IT Department is slowly having an impact on the people who have multiple PAN cards. They are unable to access their cards to file their IT returns. This is because the PAN that is being used by them to file returns may have been deactivated most likely. When the PAN is cancelled the taxpayer’s income tax e-filing login will also get blocked. This causes big trouble to the taxpayer as he or she will not be able to file IT returns on the e-filing platform of the Income Tax Department. The taxpayer will also not be able to check intimations or notifications or reply to communications made by the Income Tax Department through the website.

Steps to Take When your PAN Gets Deactivated

When the PAN that you use for filing your tax returns gets deactivated, you may go through many hassles. You can take the necessary steps as soon as possible in order to rectify this issue:

Step  1 – You will first have to draft and send a letter to your jurisdictional AO in the Income Tax Department requesting them to activate your PAN.

Step  2 – You will have to attach certain documents mandatorily to activate your PAN. The documents include a copy of the PAN on which you usually file your Income Tax Returns, an Indemnity Bond in favor of the Income Tax Department, and a copy of Income Tax Returns filed for the most recent three years on the PAN that has been deactivated.

You need to note that it will take a minimum of 10 to 15 days for the department to reactivate your PAN once your request letter is received by them.

What you Should do When you Receive an Online Notification From the Income Tax Department?

At times, you may get a notification or an intimation from the Income Tax Department regarding some update and you may be required to respond online. If your PAN has been deactivated, your e-filing login credentials will also be blocked and hence, you will be unable to give the response. In such cases, you will need to get in touch with your Jurisdictional AO to activate your PAN as soon as possible. Once your PAN is activated, you will need to ensure that you give your online response.

ITR Filing Deadline: Why Some Individuals Are Receiving Emails from the Income Tax Department

As the deadline for filing Income Tax Returns (ITRs) for the fiscal year 2020-21 approaches, many individuals have recently received emails from the Income Tax Department regarding significant transactions pointed out in their Annual Information Statement (AIS). Here’s a breakdown of what you need to understand about these communications and how to handle them:

Recipients of these communications

Individuals are being contacted by the Income Tax Department due to irregularities or notable transactions identified in their financial records.

The Income Tax Department reaches out to taxpayers through the AIS/Compliance Portal to gather feedback on information obtained from various sources. Taxpayers may be required to respond or clarify inquiries raised in the e-Campaign section to complete the process.

Highlighted transactions

The e-Campaigns initiated by the Income Tax Department may address various concerns, including non-filing of returns or significant/high-value transactions carried out by the taxpayer during the fiscal year.

Understanding the communication

Explains that the messages displayed in the AIS/Compliance Portal’s e-Campaign section indicate that the tax department has uncovered information inconsistent with the income reported in the taxpayer’s ITR.

Deadline for updated returns

Eligible taxpayers are able to file an updated Income Tax Return to rectify errors or omissions in their previously submitted returns. This may lead to additional tax liability upon recalculating income. The deadline to file an updated return for the fiscal year 2020-21 (Assessment Year 2021-22) is March 31, 2024.

Responding to the communication

Since the deadline to file ITR-U is near, the tax department is sending emails pertaining to FY 2020-21 to some taxpayers stating that their case has been selected for e-Verification under e-Verification scheme 2021 visible under the tab ‘e-Campaign’ after clicking ‘Notices’ tab of the Compliance Portal.

He further explained that emails are sent to taxpayers who have either not filed their ITR or whose disclosed information in the filed ITR does not match with the information available with the Department.

Accessing the communication

On the ITR e-filing portal, navigate to the pending action tab and select “Compliance Portal”. Then, proceed to the e-Campaign tab to access a list of transactions flagged by the tax department.

By clicking on each flagged transaction, taxpayers can view additional details about the specific transaction. Transactions marked with an “e” are those that may not need to be disclosed in the ITR according to the income tax system, typically received after recent years’ ITR processing.

Tax experts recommend that these communications are sent to improve compliance and validate financial transactions. a specialized tax filing assistance platform, explains that the purpose of these communications is to verify financial transactions based on information obtained by the tax department.

The department examines data from various sources, including TCS returns, TDS returns, specified financial transactions (SFT) returns, and other relevant channels. Additionally, the department systematically collects and assesses data concerning goods and services tax (GST), import/export activities, as well as transactions involving securities, derivatives, commodities, and mutual funds.

This is achieved by leveraging information provided by diverse third-party entities.

Essential Actions for GST Compliance at the End of the Financial Year

With the financial year drawing to a close, it’s crucial for businesses to proactively ensure compliance and streamline processes for filing GST returns for March 2024. Here are 10 essential actions to consider:

1. Reconciliation of Outward Supplies:
– Communicate with clients to identify any necessary amendments in relation to invoices/credit notes issued during the year for reporting in GSTR-1 of March 2024.

2. Reconciliation of ITC/Cash balance:
– Ensure that input tax credit and Cash balance as per books of accounts are reconciled with the GST portal, making necessary corrections in the books of accounts or GST return for March 2024 if discrepancies are found.

3. Revenue Reconciliation:
– Reconcile the revenue in the books of accounts with the turnover reported in GST returns filed, addressing any differences through corrections in GST returns or books of accounts. Prepare a reconciliation file to avoid surprises during statutory audit or GST annual return filing.

4. Apply for Letter of Undertaking (LUT)
– If you are an Exporter/Supplier to SEZ unit/authority, file an application for obtaining LUT on the GST portal before 31 March 2024 for the FY 2024-25.

5. Reconciliation of Input Tax Credit (ITC):
– Reconcile the amount of ITC reported in GSTR 3B and booked in books of accounts with the auto populated input tax credit to ensure efficient closure of books.

6. Reversal/Reclaim of Input Tax Credit:
– Report any required reversal/reclaim of input tax credit in GSTR 3B of March 2024 as per the provisions of S. 17 of CGST Act read with Rule 42/43 to avoid interest levy.

7. Discharge the RCM liability and claim corresponding ITC:
– Report any missed RCM liability and claim eligible ITC in GSTR 3B for the month of March 2024, analyzing expenses incurred during the year.

8. Non-payment of consideration by recipient within 180 days:
– Reverse any claimed ITC on invoices outstanding for more than 180 days in GSTR 3B and re-claim on payment to the supplier, after analyzing the creditors ageing.

9. Opt for Composition Scheme by filing CMP-02:
– Eligible taxpayers may file an intimation under Form CMP-02 on or before 31 March 2024 to opt for the composition scheme for the next financial year.

10. Start new series of documents from 01 April 2024:
– Ensure to commence a new series of documents (e.g., Tax invoice, Credit notes, Debit notes) from 01 April 2024.

Additionally, it is important to prioritize payment to Suppliers registered as Micro and Small Entities (MSME):
– Categorize creditors into MSME and Non-MSME.
– Identify and make payments for outstanding invoices for Micro and Small entities with UDYAM registration before the due dates.

Income-Tax Last Date Reminder or Face Up to 200% Penalty

March 31, 2024, marks the deadline for eligible taxpayers to file their updated income tax return (ITR-U) for AY 2021-22 (FY 2020-21). It is crucial to adhere to this deadline, as failing to do so may result in penalties of up to 200% of the income tax evaded. The ITR-U serves as a means to rectify any previously made errors, such as under-reporting or misreporting of income. Additionally, individuals who were required to file ITR as per tax rules but missed the due date can also use the ITR-U for compliance.

It is important to note that failure to rectify these errors before being detected by the tax department can result in significant financial penalties. Since the assessment year 2017-18, the introduction of section 270A stipulates a penalty of either 50% or 200% of the tax payable for concealing income. Prior to this, as per Section 271 of the Income Tax Act, 1961, the maximum penalty stood at up to 300% of the tax payable until assessment year 2016-17. Therefore, it is imperative for eligible taxpayers to fulfill their filing obligations by the designated deadline to avoid these repercussions.

What is ITR-U?

ITR-U or Updated ITR is to be filed in Form ITR-U which has been prescribed under Rule 12AC of the Income Tax Act. In enables a taxpayer to file/update the tax returns within 2 years from the relevant assessment year. For example, Updated ITR for AY 2023-24 can be submitted till March 31, 2026.

Who is eligible to file ITR-U?

To be considered eligible to file ITR-U, the taxpayer is required to fill in the reasons for updating the return. The taxpayer can furnish an updated, revised, or belated return with omission, error, or wrong statement in the earlier return of income, putting in the following reasons.

Who is not eligible to file ITR-U?

Under the given situations, filing of ITR-U is not applicable.

  • In case the updated return is a return of the loss.
  • Increase in refund/claiming of refund, resulting from the updated return.
  • If the total tax liability is reduced from the return filed earlier.
  • Additional Losses are to be adjusted against the income.
  • Search/survey/prosecution proceedings are initiated for that A.Y. under section 132.
  • In case the books of accounts have been called for under section 132.
  • Assessment/reassessment/ revision is pending or completed for the A.Y.
  • The AO has information against such person under the Prevention of Money Laundering Act or Black Money, Tax Act or Benami Property Transactions Act, or Smugglers and Foreign Exchange Manipulation Act, and the same has been reported to the assessee.
  • In the case of other persons to be notified by the Board.

What is the format of ITR-U?

ITR-U Form is comprised of two parts, part A and part B.

Part A: General Information-139(8A)

(A1) PAN: The PAN details of the assessee are required to be furnished.

(A2) Name: The name of the assessee is required to be filled in.

(A3) Aadhaar Number: The Aadhaar No. of the assessee is required to be furnished.

(A4) Assessment Year: The assessment year for which the assessee is eligible to file an ITR-U is required to be filled.

(A5) Whether return previously filed for this assessment year?: Select the option as Yes or No for the previously filed return.

(A6) If yes, Whether Filed u/s 139 (1) or Others: Select the section under which the previous return has been filed.

(A7) If applicable, enter form filed, Acknowledgement no. or Receipt No. and Date of filing the original return (DD/MM/YYYY): Enter the acknowledgment no. and date on which the return has been filed.

(A8) Are you eligible for filing an updated return as per the conditions laid out in the first, second, and third provisos to section 139(8A)? (Yes/No): Select the option as Yes or No to verify whether you are eligible to file an ITR as per section 139(8A)

(A9) Please choose the ITR form for updating your income (ITRs 1-7 to be selected from the drop-down and filled as per the details made available by the e-filing utility – see instruction): Select the relevant ITR Form from the dropdown.

(A10) Select the Reasons for filing the ITR- U: The relevant reason for filing the ITR- U return is to be selected.

(A11) Are you filing the updated return during the period of up to 12 months from the end of the relevant assessment year or between 12 -24 months from the end of the relevant assessment year?: Select the period of filing of ITR-U.

(A12) (a) Are you filing the updated return to reduce carried forward loss or unabsorbed depreciation or tax credit? Yes/No

(A12) (b) If yes, please specify the assessment years were carried forward loss or unabsorbed depreciation or tax credit is being affected because of this updated return: Select whether the effect was in the revised return or in the updated return.

Part B: ATI Computation of Total Updated Income and Tax Payable

1 (A) Head of income under which additional income is being returned as per Updated Return: Enter the amount in the relevant head of income if additional incomes are there that need to be shown in the updated ITR or ITR-U.

1 (B) Total income as per last valid return (only in cases where the Income Tax Return has previously been filed): Enter the total income as per the schedule TI.

2. Total income as per Part B-TI: Enter the Amount payable, if any that needs to be shown in Part B-TTI.

3. The amount payable, if any (To be taken from the ―Amount payable of Part B-TT of the updated ITR): Enter the Amount payable, if any that needs to be shown in the Part B-TTI.

4. Amount refundable, if any (To be taken from ―Refund‖ of Part B-TTI of the updated ITR: Mention the details of any amount refundable as under part B-TTI of ITR-U.

5. The amount payable on the basis of last valid return (only in applicable cases): Enter the amount payable on the basis of the last valid return.

6. (i) Refund claimed as per last valid return if any (Please see instruction)

6. (ii) Total Refund issued as per last valid return, if any (including interest u/s 244A received: Enter the Refund amount claimed in the last return.

7. Fee for default in furnishing return of income u/s 234F: Enter the Amount of Late Fee u/s 234F if any.

8. Regular assessment tax, if any: Enter the regular assessment tax amount if payable.

9. Aggregate liability on additional income: Enter the aggregate liability amount on the additional income.

10. Additional income-tax liability on updated income [25% or 50% of (9-7)]: At this point, additional amount of tax will be calculated @ 25% or 50%
25% in case of the updated ITR is filed within 12 months and 50% in case the updated ITR is filed after 12 months but before 24 months.

11. Net amount payable (9+10): Enter the net amount payable including the aggregate amount and the additional tax amount paid.

12. Tax paid u/s 140B: Enter the tax amount paid for the additional income.

13. Tax due (11-12): Enter the tax due amount.

14. Tax Payments (Only as per Updated Return): Enter the Tax amount paid in the challan for the self-assessment tax.

Now make the ITR-U filing process hassle-free and automated with Webtel’s ITR Filing Utility.

What is the time limit to file ITR-U?

The time limit for filing ITR-U is 24 months from the end of the relevant assessment year, as per the income tax provisions related to ITR-U, applicable from 1st April 2022. This implies that in the current financial year 2023-24, you can file ITR-U for AY 2021-22 and AY 2022-23.

Is there an additional tax payment requirement for ITR-U filing?

Please note that an Updated ITR cannot be filed if there is no additional tax liability. That is why this return must contain the details of additional tax deposited.

Further, the taxpayer is required to pay an additional 25% interest on the tax due for filing the updated ITR within the preceding 12 months. This interest can rise to 50% in case the updated ITR is filed after the 12-month period but before the completion of 24 months from the end of the relevant Assessment Year.

A taxpayer updating the returns for FY 2020-21 (AY 2021-22) will need to pay the tax due and interest along with an additional 50% of tax and interest.

How to verify the updated return?

The updated ITR can be verified only by using a Digital Signature Certificate (DSC). Alternatively, an Electronic Verification Code (EVC) can be used in non-tax audit cases.

SC ruling on Income-tax searches big relief to taxpayers

Supreme Court has held that the income tax (I-T) department cannot reopen completed assessments under the Section 153A of the I-T Act, unless “incriminating material” is unearthed during search and seizure operations. Any other material emanating from the search can’t be relied on for issuing re-assessment orders.

The ruling, tax experts said, could give much relief to taxpayers, as it reduces the scope for arbitrary re-assessments by the taxman. A battery of current litigation is due to reassessment orders not supported by incriminating material under Section 153A, which was withdrawn in 2021, but remains applicable to past cases.

However, the court said that completed or “unabated” assessment can be reopened under Section 147 and 148 of the I-T Act, if “any other material proof” recovered by the assessing officer (AO) indicate certain income has escaped assessment. Essentially, these two Sections allow the AO to reassess returns in case any income stream other than disclosed by the taxpayer is detected by her and she holds proof of that.

Section 153A outlines the system for assessing income in the case of a “searched person”, as per which the AO could reopen assessment of the tax return filed by such person for six assessment years immediately proceeding the year of search, provided incriminating material is discovered during the search procedure. Though this is the legal position, in an increasing number of instances, reassessment orders have been issued with addition to income, without any unearthing of incriminating material, and relying on other material emanating from search. The SC order virtually bars the tax authorities from adopting such practice.

“…in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments or unabated assessments. Meaning thereby, in respect of completed or unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961,” said the ruling by Supreme Court judges MR Shah and Sudhanshu Dhulia.

The ruling came in respect to a number of appeals filed by the revenue department, which were dismissed by the apex court.

Tax experts noted that the scheme of conducting tax assessment pursuant to a search conducted by tax authorities has been riddled with numerous controversies. Section 153A, which was introduced in 2003 and withdrawn in 2021, sought to ease the procedural hurdles. It required every taxpayer who has been subjected to a search to file a revised tax return for six proceeding years. Controversy arose as to what would be scope of assessment post such filing of returns by the taxpayers.

“The Supreme Court has now clarified that the re-assessment under the Section 153A pursuant to a search, should be restricted to income unearthed from incriminating material found during the search,” S Sriram, partner, Lakshmikumaran & Sridharan Attorneys, said, adding that the judgment would have a significant effect on the cases where the revenue authorities have proceeded on making plausible adjustment to taxable income, based on material not emanating out of the search.

“All such additions would now go, though they might legally be maintainable. The additional elbow room provided by the Supreme Court by clarifying that notices can be issued u/s 147/ 148 of the Act would be of very little help to the Revenue, as the applicability of the Section itself would not apply to searches conducted post 31st March, 2021,” he said.

Section 147 provides for reopening of assessment proceedings while Section 148 allows the AO to assess or reassess any income that has escaped assessment.

“The moot point before the apex court was whether reassessment of completed years can be initiated by revenue in absence of any incriminating material found during a search. The Court has held that an incriminating material is a prerequisite for the Revenue to assume jurisdiction to assess or reassess the income for block assessment period in case of completed assessments,” explained Abhishek A Rastogi, founder of Rastogi Chambers, who is also arguing before writ Courts on notices issued under Section 148.

The Supreme Court has upheld previous rulings of the Delhi and Gujarat High Courts on the matter. Amit Maheshwari, tax partner, AKM Global said, “The only remedy available to the department would be to initiate the reassessment proceedings under sections 147/148 of the Act. This judgment would help several taxpayers who had been litigating on this aspect. We would see a lot of reassessments now (under Section 147/148), which were already on the rise.”

Vishwas Panijar, partner, Nangia Andersen LLP, noted that the Delhi High Court ruling of 2015 had upheld two very important principles relating to search cases. These included that assessments can not be conducted arbitrarily but should be purely based on seized material and in the absence of any incriminating material, assessment and/or reassessment of the abated proceedings can be conducted. “Reassessment by its very nature is detrimental to the taxpayer, hence a higher degree of care needs to be taken by the department while invoking the provisions,” he further noted.

New Remittance Rules

Affluent Indians, who have been legitimately parking a slice of their wealth outside the country for a decade, are in a catch-22 situation.

These rich residents, who spread their money across currencies and markets, are now unsure how to diversify their savings, with the Reserve Bank of India (RBI) yet to spell out whether they can hold fixed deposits (FDs) with overseas banks.

A new rule restrains them from keeping money beyond six months in offshore bank accounts. The rule requires them to ‘invest’ the unused money remitted from India in foreign securities, mutual funds, properties and other permitted assets.

Most interpret that ‘FDs’ are not included as permitted investments under the revised Liberalised Remittance Scheme (LRS) which allows a resident Indian to transfer $250,000 a year abroad to invest or lend.

“This leaves certain unanswered questions. An Indian resident is allowed to maintain a foreign bank account for investment or realisation purposes. Typically, a foreign bank will have a requirement of maintenance of minimum balance but the new LRS framework does not provide flexibility to retain excess funds in the bank account beyond a period of 180 days. So, how does one maintain a minimum balance and have an account with the bank?

Under the LRS framework, an Indian resident can retain and reinvest the income earned from his investments made under the scheme. However, the unused foreign exchange — unless reinvested — must be repatriated back to India within 180 days from the date of such receipt.

“Also, based on a literal reading, even foreign FDs may not be permitted to be made since these would qualify as investments made into ‘unlisted debt’. So, planning realisations and remittances back into India while dealing with a cycle of 180 days would be administratively cumbersome… RBI should provide flexibility to Indian residents to enable them to maintain such minimum balances in their foreign bank accounts,”

Besides senior tax and legal practitioners, large banks, on behalf of their clients, had approached the RBI for clarification. Many were taken aback when the FAQs released by RBI a fortnight ago did not clear the air.

Audit trail mandatory for all company

Jamshedpur branch of ICAI (Institute of Chartered Accountants of India) organized a seminar on the topics related to removal of non-compliance, demand of time and audit trail in the auditorium of Singhbhum Chamber of Commerce, Bistupur.

On this occasion, the chief speaker who had come from Delhi company secretary Divesh Goyal, elaborated on the related topic. He said that in today’s times, non-compliance has no place in our accounting and auditing system. Very strict action is being taken against the non-compliant company.

He told that the government has made audit trail mandatory for the entire company from 01 April 2023. In this, the entire company will have to keep a complete record of the changes in its account and the chartered accountants will have to review it during the audit. ICAI’s Regional Council member Ranchi, CA Manisha Biyani also expressed views.

Earlier, the seminar was inaugurated by the guests by lighting the lamp.

More than 100 chartered accountants of the city took advantage of this seminar.

Traffic Rules: New update! Now 2000 challan will be deducted even when wearing a helmet, know new traffic rule

According to the new traffic rules, even if you are wearing a helmet, a challan of Rs 2000 can be deducted. How can this happen, today we will inform you about it. According to the Actual Motor Vehicle Act, motorcycles, scooters are driven.

According to the new traffic rules, even if you are wearing a helmet, a challan of Rs 2000 can be deducted. How can this happen, today we will inform you about it. According to the Actual Motor Vehicle Act, if you are not wearing a helmet strip while driving a motorcycle, scooter, then your challan of Rs 1000 as per rule 194D MVA and if you are wearing a defective helmet (without BIS) then your 1000 rupees according to 194D MVA Invoice may be deducted.

In such a situation, despite wearing a helmet, you may have to face a challan of 2000 rupees for not following the new rules. Our aim is to make you aware by giving you information about traffic rules. So that road accidents can also be prevented.

Invoice of more than 20 thousand will be deducted, do not make this mistake

Apart from this, according to the new Motor Vehicle Act, you may have to face a heavy fine of Rs 20000 for overloading the vehicle. Apart from this, an additional fine of Rs 2000 per tonne will also have to be paid for doing so. This has happened in the past also when cases of deducting challans of several thousand have come to the fore.

How to know whether invoice has been deducted or not

Go to https://echallan.parivahan.gov.in website. Select the option of Check Challan Status. You will get the option of Challan Number, Vehicle Number and Driving License Number (DL). Select the option of Vehicle Number. Fill the required information asked and click on ‘Get Detail’. Now the challan status will appear.

How to fill traffic challan online

Go to https://echallan.parivahan.gov.in/. Fill the required details and captcha related to the challan and click on Get Details. A new page will open on which the details of the challan will be displayed. Find the challan you want to pay. Along with the challan, the option of online payment will appear, click on it. Fill in the payment related information. Confirm payment. Now your online challan has been filled.

No Late Fee of GSTR 4 for Nil GST Payers

According to the Central Board of Indirect Taxes and Customs ( CBIC ), dealers, are opted under the composition scheme under GST. And being late for filing their GSTR-4 are eligible for a full late fee waived. If they do not have any tax liability.

A composition dealer is a small taxpayer that has to pay a fixed percentage of their turnover as GST instead of paying GST at the regular rate. This scheme is beneficial for small taxpayers with an annual turnover of up to Rs. 1.5 crore. A dealer who chooses the composition plan is required to pay GST once a year, by the 30th of April following a fiscal year.

The notification further stated that:-

The government has stated that if a registered person fails to submit their GST return on Form GSTR-4 by the deadline for the fiscal quarters ending in July 2017 and March 2019 or the fiscal years ending in 2019–20 and 2021–22, but files it between 1st April 2023 to 30th June 2023, they will not have to pay a late fee if the total amount of central tax payable in the return is nil.

The late fee payable under section 47 of the Act shall be waived if it is more than Rs. 250, but less than or equal to Rs. 250, will still have to be paid. This will be added as the seventh condition to notification No. 73/2017-Central Tax dated 29th December 2017, issued by the Ministry of Finance (Department of Revenue) of the Government of India.

To make GST compliance simpler, the following changes were made:

  • A maximum of Rs. 500 will be charged as a late fee for filing GSTR-4 between April 1 and June 30, 2023, for the fiscal years 2019–20 to 2021–22.
  • For FY 2017–18 to 2021–22, the late fee for Form GSTR-9 filings made after April 1 but before June 30 of that year would be limited to Rs. 20,000.
  • Turnover-based late fees for GSTR-9 will become effective starting in the fiscal year 2022–23- Rs. 50 per day, up to 0.04% of turnover, for up to 5 crores in revenue and up to 0.04% of the turnover, or Rs. 100 per day, for turnover between Rs. 5 and Rs. 20 crores
  • Revenue beyond 20 crores- Rs. 200 per day, up to 0.5% of revenue A maximum of Rs. 1,000 will be charged as a late fee for filing Form GSTR-10 between April 1 and June 30, 2023.

Media statement NPCI: Recent media/social media Alert on UPI ‘KYC scams’ user’s mobile or App getting hacked

NPCI Media Statement: NPCI, 28th March 2023. UPI does not expose the sender’s KYC details and neither does it lead to a user’s mobile or App getting hacked

High Court Restrains Institute Of Cost Accountants Of India From Using‘ ICAI’ Acronym

Institute Of Chartered Accountants Of India Vs. Institute Of Cost Accountants Of India (Delhi High Court)

The Delhi High Court has restrained Institute Of Cost Accountants Of India from using “ICAI” acronym, a trademark which stands registered in favour of Institute of Chartered Accountants of India, for the institution or services provided by it.

Justice C Hari Shankar also directed Institute Of Cost Accountants Of India to remove ICAI acronym from all existing web pages and other physical or virtual representations in which it is used, within three months.

The court was hearing a suit filed by Institute of Chartered Accountants of India seeking an injunction against Institute of Cost Accountants of India from using the ICAI mark.

It was the case of Institute of Chartered Accountants of India that the mark ICAI was registered in its favour in Class 41 relating to “Education and Providing of Training.” It was stated that Institute Of Cost Accountants Of India is engaged in same activity, except that it is concerned with Cost Accountants whereas Institute of Chartered Accountants of India related to Chartered Accountants.

Case Law Details Case Name : Institute Of Chartered Accountants Of India Vs. Institute Of Cost Accountants Of India (Delhi High Court)

Appeal Number : CS(COMM) 271/2021

Date of Judgement/Order : 21/03/2022

Download Judgment/Order Download

Here’s what taxpayers need to know about new tax rules from April 1st 2023

Here’s what taxpayers need to know about new tax rules from April 1st, as per Abhishek Soni, Co-founder & CEO of Tax2win

Tax rates which a taxpayer needs to pay on their income and income from other sources will be changing from April 1st, 2023. In Budget 2023, Finance Minister Nirmala Sitharaman announced key major changes for hard-working middle-class citizens who pay taxes. A new tax regime has been formed, while the old tax regime still continues. But the taxpayer has an option from old and new tax rules. For those who don’t choose between the two, the new tax regime will become a default tax rate for them.

New financial year (FY 2023-24) and bid farewell to FY 2022-23, we can expect some significant changes coming into effect from April 1, 2023. These changes will involve the introduction of new rules or reforms to existing ones, as announced by the finance minister, Nirmala Sitharaman, in the Budget 2023.”

1. The updated income tax slab for the new tax regime will be as follows:

– Above ₹15 lakh income, the tax rate would be 30%

– Between ₹12 lakh to ₹15 lakh income, the tax rate would be 20%

– Between ₹9 lakh to ₹12 lakh income, the tax rate would be 15%

– Between ₹6 lakh to ₹9 lakh income, the tax rate would be 10%

– Between ₹3 lakh to ₹6 lakh income, the tax rate would be 5%

– From NIL to ₹3 lakh income, there will be no taxes levied.

2. The basic exemption limit has been increased to ₹3 lakh from ₹2.5 lakh to make the new tax regime more attractive. The highest tax rate of 30% will be levied on income above ₹15 lakh.

3. The surcharge rate has been reduced to 25% from 37% under the new tax regime for individuals earning more than 5 crores. Previously, the high surcharge rate of 37% applied to people whose income exceeded ₹5 crores. However, under the new tax regime, the surcharge rate is reduced to 25% for any income over ₹2 crores for individuals who opt for this new tax regime.

The revised surcharge rates under the new tax regime are as follows:

– Taxable income above 50 lakhs but up to ₹1 crore: 10%

– Taxable income above 1 crore but up to ₹2 crore: 15%

– Taxable income above 2 crores: 25%.

4. The new tax regime will be the default tax regime for salaried individuals who have not declared their choice.

– However, individuals and HUFs will have the option to choose between the old and new tax regimes every financial year, provided they do not have any business income.

– Individuals and HUFs with business income will have the option to choose once-in-a-lifetime. This means that once they have opted for the new regime, they will have one chance to return to the old regime. They cannot choose the new income tax regime again in future years once they have chosen the old one.

5. Section 87A rebate is available under both income tax regimes. Under the old tax regime, a rebate of ₹12,500 is available for incomes up to ₹5 lakh. For the new tax regime, the rebate has been increased to ₹25,000 if the taxable limit does not exceed ₹7 lakh. The budget 2023 announcement raises the rebate limit to Rs. 7 lakh from ₹5 lakh under the new tax regime.

7. The introduction of the new tax regime has caused much confusion regarding which option to choose. Therefore, the Income Tax Department has launched an ‘Income tax calculator’ to assist taxpayers in determining which income tax regime will be better for them in FY 2023-24.

8. The proposal to introduce a standard deduction in the new tax regime has been made in Budget 2023. Under this, salaried individuals, pensioners, and family pensioners will benefit from a standard deduction of ₹50,000/-. There is no change in the standard deduction provided under the old tax regime.

9. The finance minister has revised the turnover limits under section 44AD from ₹2 crore to ₹3 crore for specified businesses, including Micro, Small, and Medium Enterprises (MSMEs). The Budget 2023 has also amended section 44ADA and revised the presumptive taxation limits of gross receipts from previous limits of ₹50 Lakhs to ₹75 Lakhs for specified professions.

Section 80D of the Income Tax Act- Tax benefits of health insurance policies

Health insurance is a form of insurance that covers medical expenditures incurred by an individual for long-term well-being. Ultimately, health insurance allows individuals and families to cover the high expenses of medical treatment. There are tax advantages to purchasing and having health insurance coverage. The premium amount paid for health insurance is tax deductible. Section 80D of the Income Tax Act allows you to claim tax benefits on your health insurance premiums. As a result, based on an interview with various industry experts, here’s how you can get tax breaks on your health insurance premiums.

One of the advantages of having a health insurance policy, apart from financial protection of the family, is also prudent tax planning. Premium paid towards a family’s health insurance policy is eligible for exemptions under Section 80D of Income Tax benefit though there is an upper ceiling to it. The premium for health insurance policy depends upon the sum insured, members, getting covered, and their age.

Typically, family floater policies offer coverage to entire family ~ self, spouse, dependent children, and dependent parents in a single policy. Tata AIG’s MediCare Premier family floater policy offers coverage up to INR 3 Crore sum insured and premium paid qualifies for income tax exemption under applicable provisions. One can avail tax deductions under Section 80D up to ₹1lakh for Self and Family if Eldest is above 60 years + Senior Citizen Parents

Also, customers looking for maximum tax advantage can also opt for a higher tenure policy like 2 years or 3 years, while tax deductions can be claimed for each year up to the defined limit. We are Tata AIG are offering long-term discounts on our various retail health product offerings like Tata AIG Medicare, Tata AIG Medicare Premier, and Tata AIG Medicare Plus”

Amar Ranu, Head – investment products & Advisory, Anand Rathi Shares & Stock Brokers

A health insurance policy is a product that protects you from the financial consequences of a wide range of health-related expenses, from minor illnesses and injuries to critical diseases.

As per Section 80D of the Income Tax Act, the premium paid for a health insurance policy is deductible from the taxable income. The upper limit for the deductible amount is Rs. 25,000 and can be extended to up to Rs. 50,000 for senior citizens (with effect from 1 April, 2018). This implies that the policyholder is now eligible to enjoy a deduction of up to Rs. 75,000 from the taxable income. In rare cases, when the age of both the proposer and his parents is more than 60 years, the deductible amount can extend up to Rs. 1,00,000 (Rs. 50,000+Rs. 50,000).

CA Arpit Jain, Joint MD, Arihant Capital
In many countries, including India, health insurance premiums are tax-deductible, which means that individuals can claim them as a deduction on their income tax returns. This tax benefit can help to reduce the overall cost of health insurance and make it more affordable for individuals and families.

In general, taxpayers must meet certain requirements to claim a tax deduction for health insurance premiums, such as

• The insurance must be purchased for the taxpayer, their spouse, or their dependents.

• The insurance must provide coverage for medical expenses, including doctor visits, hospitalization, and prescription drugs.

The tables below provide an overview of how much insurance premium towards your health policy qualifies for exemption under Section 80D of the Income Tax Act and the total cash benefit for individuals falling in different income brackets.

TABLE ASelf, Family, Dependent ChildrenDependent ParentsTotal Tax Deduction u/s 80D
Individuals & Parents below age 60yrs250002500050000
Individuals & Family below age 60; but parents above 60yrs250005000075000
Individuals, Family & Parents above 60yrs5000050000100000
Members of HUF250002500025000
TABLE B: Tax BenefitPremium% of RebateTax Rebate
Slab Rs. 2.50 Lacs to Rs. 5.00 Lacs250005.20%1300
Slab Rs. 5.00 Lacs to Rs. 10.00 Lacs2500020.80%5200
Slab above Rs. 10 Lacs2500031.20%7800

For example, if you are only paying for insurance premiums for yourself and your spouse, the total deduction you can claim is ₹25,000. Now if you fall under the income slab of ₹10 lacs and above, you will save a total of ₹7,800 in taxes by claiming this deduction under Section 80D of ITA.

To claim this deduction, you will need to provide your premium payment receipt and your insurance policy copy which shows the name of the family members and their relation and age. It is important to note, to take the benefit of this deduction, the premium should be paid in any mode other than cash. Premium paid in cash will not be considered. However, the payment for Preventive Health check-ups can be done in cash.

Siddharth Singhal, Business Head – Health Insurance, Policybazaar.com

Buying a health insurance policy not just ensures a sound financial safety during medical exigency but also serves as an actual tax-saving tool. The insured person can save tax under Section 80D. Any policyholder is entitled to this tax rebate for health insurance premium paid either for self, partner, dependent children, and even for parents. 

For self, partner, dependent children the maximum tax exemption is Rs. 25,000, while for parents (aged less than 60 years), an additional exemption of ₹25,000 is available. However, if the parents are aged 60 years or above, the deduction is ₹50,000 while, if both the taxpayer and parents are above 60 years, the tax exemption amount goes up to Rs.1 lakh. 

Moreover, policyholders are entitled for claim deduction of Rs. 5,000 against preventative medical check-ups under Section 80D of the IT Act. This exemption is within the standard limit under Section 80D (Rs. 25,000 for self, partner and children, and ₹50,000 for senior citizen parents). Whether an individual is paying health premium for critical illness insurance or indemnity based insurance i.e. family floater plan or a senior citizen health plan or individual mediclaim policy, they are eligible to get tax rebate through Section 80D.

Sujit Bangar, Founder, Taxbuddy.com

We all are aware about health insurance benefit for tax deductions. Where we get confused are two things.

Firstly , deduction for health insurance is different from deduction under 80C bracket. This health insurance deduction is over and above 150k limit of 80C.

Secondly, we all do regular health check up. Especially, everybody amongst us has done RTPCR test once or twice. This expenditure can be claimed as deduction u/s 80 D upto ₹5,000/- . We should not mis out on this.

Save Capital Gain Tax on Sale of Commercial Property?

1. Introduction

Investment in real estate has been one of the most ancient and great sources of investment towards building a continuous and stable income ensuring financial security. It is an age old practice in India, that existed even before the advent of various financial instruments viz equity, mutual funds and the like. Investment in commercial properties is done mainly with the purpose of either own use or letting it out.

2. What is Capital Asset?

When one sells a commercial/ residential property or a plot or even shares/ bonds, whatever gain is made, the same is taxed under the head “Capital Gains” under Income-tax Act, 1961 and the asset is classified as Capital Asset. The only exemption in this case is for agricultural property, hence, when a rural agricultural property is sold, the gain on sale of such property is not taxed under the head “Capital Gains”.

3. What is Commercial Property?

When one sells a commercial/ residential property or a plot or even shares/ bonds, whatever gain is made, the same is taxed under the head “Capital Gains” under Income-tax Act, 1961 and the asset is classified as Capital Asset. The only exemption in this case is for agricultural property, hence, when a rural agricultural property is sold, the gain on sale of such property is not taxed under the head “Capital Gains”.

3. What is Commercial Property?

A Commercial Property refers to a real estate which is used for business activities. When a shop or an office building is let out, then in case of sale of such property, the gain is taxed under the head “Capital Gains”, whereas any rent received on the same is taxed under the head “Income from House Property”. Commercial property thus, typically refers to a building that house businesses, land that is intended to make a profit, and larger residential rental properties.

4. What is Capital Gain?

A property which is bought and not sold within a period of 24 months, is classified as Long-Term Capital Asset. Any property which is held for a period of more than 24 months is categorized as Long-Term Capital Asset and gains arising on its sale are called Long-Term Capital Gains (hereinafter called LTCG). Whereas, if the property is sold before 24 months, then gains arising on its sale are classified as Short-Term Capital Gains (hereinafter called STCG).

This bifurcation is important for the reason that LTCG is taxed at the rate of 20% whereas STCG is taxed as per the slab rates applicable to the assessee in due course.

5. How to Save Tax on Sale of Commercial Property?

As mentioned under the Income Tax Act, 1961 (hereinafter called the Act), on sale of a commercial property, the capital gain earned on the same can be saved in the following ways-

5.1 Section 54F

In case the entire sale proceeds (and not only the capital gain) from the sale of commercial property is invested into a new residential house, then one is completely exempted from payment of any tax on such capital gain.

Time limit for making the investment is:

  • 1 year prior to the date of sale, or
  • 2 years after the date of sale, or
  • 3 years after the date of sale in case of construction of house property.

Tax implications if only a part of the entire sale proceeds is invested in the new residential house property can be understood with the help of an example as follows-

Mr. X purchased a commercial property in 2010-11 for Rs. 10 Lakhs and in the year 2022-2023 it is sold for Rs. 25 Lakhs.

ParticularsAmount (Rs.)
Sale Proceeds25,00,000
Less: Indexed Cost of Acquisition (10,00,000*331/167)20,00,000 (approx.)
Long Term Capital Gains5,00,000
New House Property Purchase Price15,00,000
Exemption u/s 54F (Cost of New House*Capital Gain/Sale Proceeds)(15,00,000*5,00,000/25,00,000)3,00,000
Taxable Capital Gain (5,00,000 – 3,00,000)2,00,000
Tax Rate20%

Amendment: Vide the Finance Bill, 2023, it is proposed to impose a limit on the maximum deduction that can be claimed by the assessee under Section 54 and 54F of the Act to Rs. 10 crores, applicable from the previous year 2023-24. It has been provided that if the cost of the new residential property purchased is more than Rs. 10 crores, then the cost of such asset shall be deemed to be Rs. 10 crores.

Note: Exemption under section 54F is not available if –

  • one owns more than 1 residential property on the date of sale of commercial property, or
  • another residential house property is purchased within a period of 1 year or in case of construction of residential house property within a period of 3 years from the date of transfer of commercial property.

5.2 Section 54EC

In case the entire or part of long-term capital gains (and not the sale proceeds) from the sale of commercial property are invested in specified bonds like National Highways Authority of India (NHAI), REC bonds within a period of 6 months from the date of sale of the commercial property and also before filing of the income tax return for the respective period in which such transfer has been made, the assessee is exempted from payment of tax on such capital gain. However, the exemption under Section 54EC is restricted to a maximum investment of Rs. 50 lakhs.

One must stay invested in such bonds for a period of 5 years. In case the amount is withdrawn before 5 years, then the exemption that was availed shall be withdrawn and taxed in the year of such withdrawal.

An assessee may invest the part of sale proceeds of commercial property in a Residential House Property as well as invest the remaining balance portion of capital gain in bonds as mentioned under Section 54EC and avail the exemption and escape from paying any capital gain tax.

5.3 Capital Gain Account Scheme

In case where the assessee, before filing the income tax return is unable to purchase a residential house property or construct a house property, then the unutilised amount shall be invested or deposited in a separate bank account called Capital Gain Account Scheme, and the same can be utilised further for purchase or construction of the house property within a period of 2 or 3 years respectively, to avail the exemption.

If the said amount is not utilised for purchase of house property within the stipulated time period, then the exemption availed shall be withdrawn and the unutilised amount shall be treated as capital gain in the previous year in which the period aforementioned expires.

Amendment: Vide the Finance Bill, 2023, for the purpose of deposit in the Capital gain Account Scheme, it is proposed to restrict the investment up to Rs. 10 crores.

6. Conclusion

Real Estate is surrounded by numerous income tax provisions starting from purchase of property, maintenance of the same, till the point it is sold. Thus, it is very important for an assessee to understand taxation on real estate transactions as it would help him/ her do the necessary tax planning and accordingly, save taxes. Section 54F is one of the schemes that could incredibly benefit an assessee if adequately used. However, violation of any of the rules and regulations as mentioned in the provisions of the said section to avail the benefits will land one in a problematic situation. Thus, understanding all the aspects of Section 54F of the Act before opting for is very crucial.

Finance Minister’s big announcement on pension of government employees, proposal in Finance Bill

Union Finance Minister Nirmala Sitharaman introduced the Finance Bill 2023 in the Lok Sabha on Friday. During this, the opposition MPs created a ruckus regarding the Adani-Hindenburg issue. There was a demand from the MPs of the opposition parties that a JPC should be constituted regarding this matter. The Finance Bill 2023 was passed amid much hue and cry. During this, Finance Minister Nirmala Sitharaman said that there is a need to improve the National Pension System implemented for government employees.

Will be formed under the leadership of Finance Secretary

The Finance Minister said that I propose to constitute a committee to look into the matter related to the pension of government employees. This committee will be constituted under the leadership of the Finance Secretary. Earlier, he said that such representations have been received that there is a need for reform in the National Pension System (NPS) applicable to government employees. Apart from this, the Finance Minister said that credit card payments are not being accepted on foreign visits under the Liberalized Remittance Scheme (LRS). This should also be seen by RBI.

Proposed to be exempted from capital gains tax

According to the report, in the Finance Bill 2023, debt mutual funds, which invest less than 35 percent of their assets in equity. It is proposed to keep such investors separate from long term capital gains tax. In this way only short term capital gain tax will be applicable on mutual funds. Holders of such mutual fund schemes, who invest 35 per cent of their assets in equity shares after getting the approval of the House, will be taxed as per the slab.

Demand to restore old pension scheme

Let us tell you that there is a demand from the Central and State Government employees to restore the old pension scheme. The old pension (OPS) has been restored by the governments of Himachal Pradesh, Punjab, Chhattisgarh, Rajasthan and Jharkhand. Employees of some other states are planning to go on strike demanding restoration of old pension. Meanwhile, a strict warning has been issued by the Central Government for the employees. On behalf of the central government, a warning was given to protest or sack the employee who went on strike.

Finance Bill 2023 passed in Lok Sabha, key amendments

Finance Bill 2023 was passed in the Lok Sabha without a discussion on Friday. The Bill, which gives effect to tax proposals for the fiscal year starting April 1, A total of 64 official amendments were proposed in the Bill.

Some of the amendments in the Finance Bill 2023 are:

1. Mutual Funds (MFs) having less than 35 percent AUM (Assets under management) in domestic equity are to be taxed as short-term capital gains.

2. Enhanced tax benefits to offshore banking units operating in GIFT City (Gujarat International Finance Tec-City). Offshore banking units to get 100 percent deduction on income for 10 years.

3. Tax on Royalty or technical fee earned by foreign (non-resident) Cos hiked from 10 percent to 20 percent.

4. No Change in tax on non-par savings insurance products (Rs 5 lakh cap remains).

5. No change in taxation on REITS/INVITS despite representation (‘Repayment of loans’ from REITS to the investor to be taxed as ‘income from other sources and NOT as capital gains).

6. No change in residential housing Rs 10 crore cap on capital gains re-investment.

7. All credit cards payments for foreign tours to be considered under LRS. The Reserve Bank of India (RBI) to look into the payments made through credit cards for foreign tours which escape tax at source.

8. A committee to be set up under the finance secretary on the pension system to address the needs of employees and also maintain fiscal prudence.

9. Tax Collection at Source (TCS) shall apply to all Liberalized Remittance Scheme (LRS) even if within India.

10. Tax proposed on the income from debt mutual fund at the applicable rate since it is of the nature of interest income

11. Marginal relief proposed to the tax that one pays should not be more than the income that exceeds 7 lakh (Rs 100 in this case).

12. The Securities Transaction Tax on sale of options hiked to Rs 2,100 on a turnover of Rs 1 crore, compared to the earlier Rs 1,700.

Handling Income Tax Notices form Income-tax Department

Notice from the Income Tax department brings about lots of stress. But it does not always has to mean bad tidings.Sometimes, it could be informing you about some tax refunds too!The important thing to remember is to understand the reason for receiving the notice and replying to it timely and correctly! 

Also, the IT department is currently busy tightening its noose around the black money hoarders. Therefore, a lot of taxpayers are going to be receiving these notices in the near future. 

How will you Receive the Notice from the Income Tax Department

The intimation from the I-T department would be sent on the email id provided during the e-filing of Income Tax Returns. 

If CPC is processing the returns, the sender’s email id would be: intimations[@]cpc.gov[dot]in. 

The Notice would arrive by Post to the address as per PAN details. 

Verify the address associated with the PAN number by:

  • Visiting the e-filing ITR site.
  • Logging in with your PAN number as the User ID and a secure password.
  • Filling in your date of birth details and verifying the captcha.
  • Under ‘Profile Settings’ you can then opt for the ‘PAN details’ from the dropdown menu and confirm. 

Income Tax Notices are Sent Under which sections

Five different types of Notices are send under different sections of the I-T Act of 1961. 

Notice Under SectionReason
142The Notice is sent under this Section to the taxpayer to scrutinize the documents and accounts that were submitted by him in support of the filed ITR.
143(1)The taxpayer receives an intimation under this Section if there is a requirement to adjust or demand additional tax in situations where a calculation error or an incorrect information has been detected in the filed ITR.
143(2)The Notice under this Section is for scrutiny assessment after the assessing officer has done a detailed inquiry.
148The intimation under this Section is sent for reassessment purposes if the income tax officer thinks that a particular income escaped assessment.
156The Notice under this Section intimates the taxpayer regarding some payable dues. It includes fine, penalty, interest, tax, or any such sum.

What to do when you Receive the Notice

First and foremost, never ignore the tax notice from the Income Tax department! 

Panicking and stressing would not help you out either. Therefore, remain calm and work out the details for complying with the Notice. 

Because non-compliance to the requirements of the notice could cost you Rs.10,000 as penalty. 

This is over and above the balance amount that you have to pay as overdue taxes and the penalty interest on paying late taxes! 

What you should do is: 

  • Check your Personal Details

Verify your details on the Tax Notice, your name, address, PAN number, etc. It could be that the Notice was meant for a similarly named person! 

Especially cross-check the PAN number because the I-T notices are issued based on PAN details. 

For e-notifications, check the ‘document identification number’. It is used by the tax department for all its external communications! 

  • Check the Sender’s Details

The Notice from the Income Tax department would always have the details of the sending tax officer. 

His name, designation, stamp, signature, official address, and most importantly the income tax ward and circle, would be mentioned in the Notice. 

  • Understanding the Notice

You have to understand why you have received the Notice for the I-T department. 

  • Save the Envelope

The envelope would have the Speed Post number which can tell you when the Notice was sent to you 

This can become a crucial piece of evidence in case of any dispute 

  • Keep Copies of the Notice

This is an important communication from the tax department. Therefore, avoid losing it by making copies of it or saving its scanned image on your PC. 

  • Verify its Validity

An I-T Notice served for scrutiny assessment purposes under Section 143(3), had to be issued within 6 months of the assessment year of the financial year for which the tax returns was filed. 

Check for the validity of the Notice issued, because if served outside of those first 6 months of the assessment year, the Notice is considered invalid! 

In case the tax assessor has suspicions regarding incorrect income reporting and tax evasions, a Notice can be issued u/S 148. 

The case can be reinvestigated up to 6 years after the relevant assessment year has ended! 

If the amount under scrutiny is below Rs.100,000, than a maximum  of 4 years returns need be examined. 

What Response should you Give When you Receive an Intimation from the I-T Department

Let us present your reply to the Notices from the Income Tax department in a tabular form: 

I-T Act SectionsReasonYour Response
143(1)ANo Claim or Refund ReturnYou don’t need to take any action. Just take a print out for your records.
143(1)BInforming you about a RefundAgain, this requires no action. Just take a print out for your records. Periodically check your bank statement for the refund credit.
143(1)CIntimating you of your due tax liabilityVerify it against your Form 26AS. Once you have paid the requisite tax, e-file the revised returns.
143(2)Your tax file got selected for random scrutinyFirst check the validity of the Notice. If valid, appear before the I-T officer at the prescribed time and date with all the relevant documents and answer all questions honestly.The requested details could be regarding all your sources of income, relief received from a claim of loss, allowances, exemptions, and deductions.
143(3)Income Tax department has information regarding income concealmentYou would be requiring professional services of a Chartered Accountant.
142(1)Not filed tax returns or a tax enquiry intimation for scrutinyIn case you are yet to file your income tax returns, do so as soon as possible. If you have already filed then, take your documents to the assessing officer for further scrutiny.
148Income has escaped assessmentE-file revised returns with necessary documents.
156Additional tax on incomeIf you think that this demand is viable, you can pay the amount, e-file revised returns with the challan of tax paid.If you think that this demand is unjust, you can file for rectification.
154Rectifications for mistakes in filing Income Tax ReturnsYou can seek professional help for the same or file for rectification at the I-T department’s official site.

When should you Ask for an Expert’s Advice

Not every Notice received from the I-T department needs an intervention from a certified Chartered Accountant. 

If the intimation is about simple matters like deduction amount or TDS mismatch, mathematical error, and likes, the taxpayer can respond to the I-T Notice on your own. 

But when the Notice is regarding serious matters like scrutiny or reassessment u/S 148, it is advisable that you seek a professional’s help. 

Hiring a CA to respond to your tax Notice on your behalf would be costly but the issue will be resolved in a timely and correct manner. 

But it is essential that you understand the reason for receiving the Notice, action taken on your behalf, and its implications, thoroughly. 

You cannot leave the entire matter on the CA only! 

Things to Remember

Just make sure that the response is sent within the stipulated time. Send over the information or documentation that is ready and if needed, request for some more time. 

For example, the scrutiny Notice can ask for documents like brokerage statements, rent receipts, payslips, bank statements, etc. Collecting and submitting all the documents together within the given time frame may be difficult. 

You can submit the documents you have gathered already and convey them to the I-T officer and request for a time extension. 

This would also convey your intent to comply with the demands of the department! 

Once you have collected all the relevant information, write a cover letter cataloguing all the documents that you are submitting. 

Make a few copies of the entire set. Get the copy of the cover letter acknowledged and file it for future reference and proof that the documents were duly submitted. 

For random scrutiny under Section 143(2), no specific documents are specified. In such cases, gather all the necessary documents like loan details, income information, major expense, bank statements, etc. 

In the End

Receiving an I-T Notice does not signify an end of the world scenario! You just need to stay calm and think about the steps you need to take next to respond to the Notice. 

Do not consider not replying to the Income Tax Notice because then you will be penalized further! 

You just need to consider all the factors and decide whether you will be responding to the Income Tax department Intimation on your own or will you be hiring a chartered accountant or a tax professional to handle the issue for you

Income increase and tax benefits for Govt employees, pensioners

7th Pay Commission Latest News: The real increase in minimum pay of Central Government Employees due to the implementation of the 7th Central Pay Commission (CPC) recommendations was 14.3% compared to the minimum pay under VIth CPC. The increase in pay in VIth CPC was 54% compared to Vth CPC.

Also, the increase in minimum pay under Vth CPC compared to the previous CPC was 31%. The Union Miniser of State in the Ministry of Finance, Pankaj Chaudhary, shared this information in a written reply to a query in the Lok Sabha on Monday (March 20).

The Minister also shared details of various tax-relief measures announced for employees, and pensioners since 2014. These are:

1. Through Finance (No. 2) Act 2014, the basic tax exemption limit applicable in the case of individuals, was enhanced from Rs. 2 lakh to Rs 2.5 lakh. Further, this Act also increased the limit for claiming deduction under section 80C of the Income Tax Act, 1961(the Act) from Rs 1 lakh to Rs 1.5 lakh

2. Finance Act, 2017 reduced the rate of income Tax for individuals whose total income is between Rs 2.5 lakh to Rs 5 lakh from 10% to 5%.

3. Standard deduction of Rs. 40,000 was introduced for salaried taxpayers as well as pensioners vide Finance Act, 2018 which was further increased to Rs. 50,000 vide Finance Act, 2019.

4. Finance Act, 2019 also provided for full tax rebate for individuals having taxable annual income up to Rs. 5 lakh under section 87A of the Act.

5. In order to provide relief to senior citizens including those senior citizens receiving pension, Finance Act, 2018 provided various incentives which included,-

  • increase in the limit of deduction on account of payment of health insurance premium and/or medical expenditure from Rs 30,000 to Rs 50,000 under section 80D of the Act;
  • increase in the limit of deduction for medical expenditure in respect of certain critical illness from Rs 60,000 and Rs 80,000, in the case of senior citizens and very senior citizens respectively, to Rs 1,00,000 in the case of all senior citizens (of the age of 60 years or more) under section 80DDB of the Act;
  • a deduction of Rs 50,000 was provided to senior citizens on interest income from deposits with banks, co-operative societies and post offices under section 80TTB of the Act and the threshold level for tax deducted at source on interest income for senior citizens was increased from Rs 10,000/- to Rs 50,000 under section 194A of the Act.

6. In order to ease the compliance burden on senior citizen pensioners who are of 75 years of age or above having pension and interest income, the Finance Act, 2021 provided that such persons shall be exempted from the requirement of filing of income tax if the full amount of tax payable has been deducted by the paying bank.

72,42,156 is the highest number of ITR filing in a day on 31st July 2022

72,42,156 is the highest number of ITR filing in a day on 31st July 2022


42.92% of total returns were processed within a span of 24 hours of furnishing of ITR

19 banks onboarded on online tax payment system TIN 2.0

The Government has taken a number of measures in recent years to maintain continuity and stability of taxation, further simplify and rationalise various provisions to reduce the compliance burden, promote the entrepreneurial spirit and provide tax relief to citizens. This was stated by the Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Lok Sabha today.

The Minister stated that the details of the some such measures are as per ANNEXURE.

Giving out more details, the Minister stated that the maximum, minimum and average amount of income tax returns filed and processed by the Income Tax e-filing portal within a span of 24 hours for A.Y. 2022-23 is as under:

  • Lowest number of ITR filing in a day: 01(on 10th April 2022 – i.e. on the day ITR 1 & 4 deployed)
  • Highest number of ITR filing in a day: 72,42,156 (on 31st July 2022, i.e., the due date for filing the returns u/s 139(1))
  • Average number of ITR filing in a day: 2,82,559 (Total returns filed from 10th April to 2022 to 31st December 2022: 7,51,60,817. No of days: 266. 7,51,60,817/266 = 2,82,559)

Moreover, the Minister stated, for A.Y. 2022-23, 3,02,40,121 ITRs (i.e. 42.92% of total returns) were processed within a span of 24 hours of furnishing of ITR.

Giving out more information, the Minister stated that it is a continuous and ongoing endeavour to improve the tax payer portal (e-filing portal). Some of the steps taken in this regard include roll out of online tax payment system (TIN 2.0) on which till now 19 banks have onboarded. Further this portal made available new payment modes to taxpayers for payment of taxes. This has led to faster credit of taxes paid. Further, educational videos and FAQs are continuously being uploaded on the portal to create awareness among taxpayers on relevant topics for easier tax compliance. Recently, facility for co-browsing has been enabled on the portal for providing help to the taxpayers by the helpdesk team in respect of issues related to portal.

Further, the Minister stated that the common Income Tax Return (“CTR”) has been proposed as a common return form for all persons except Trusts. The proposed Return aims to bring ease of filing returns and reduce the time for filing the ITR by individuals and non-business-type taxpayers considerably. The taxpayers will not be required to see the schedules that do not apply to them. Schedules have been designed smartly in a user-friendly manner with better arrangement, logical flow, and with increased scope of pre-filling. It will also facilitate the proper reconciliation of third-party data available with the Income-tax Department vis a vis the data to be reported in the ITR to reduce the compliance burden on the taxpayers. Draft of the CTR was uploaded in public domain inviting comments from all stakeholders.

Income Tax department has the following grievance redressal mechanisms:

  • e-Nivaran module on e-filing portal
  • High Pitched Assessment committees in each Pr. CCIT charge
  • Tax Payer Charter Cells (TPCC) in each Pr. CCIT charge.
  • CPGRAM on the DARPG portal.

The Minister further stated that strengthening the grievance redressal mechanism is an ongoing and continuous process. With enhanced monitoring and reducing the response time to the various grievances filed by taxpayer, an impetus has been given in the various grievance redressal mechanisms. The increased digitalisation of procedures under the Act has also contributed to the improvement in the disposal of taxpayer grievances, the Minister stated.

Income-tax Donations Know Key Things Before Claiming Deduction

Income Tax Return: You need to check the exemption limit on your donation receipt and claim deduction accordingly while filing your return.

Are All Donations 100% Exempt From Income Tax?

No. It is important to note that not all donations are eligible for tax exemption. The Income Tax Act specifies certain conditions that must be met for donations to qualify for tax benefits.

For example, donations made in cash above a certain threshold are not eligible for tax exemption, and donations made to political parties are not eligible for tax benefits.

According to the information available on the official website of the IT department, not all donations qualify for 100% exemption from tax.

The categories for tax deduction, based on whom you donated to (charitable institution, fund set up by Government, scientific research, etc.) are as follows:

  1. Donations entitled for 100% deduction without qualifying limit
  2. Donations entitled for 50% deduction without qualifying limit
  3. Donations entitled for 100% deduction subject to qualifying limit
  4. Donations entitled for 50% deduction subject to qualifying limit

You need to check the exemption limit on your donation receipt and claim deduction accordingly while filing your return.

Section 80G Of Income Tax Act

Section 80G is a provision of the Income Tax Act, 1961 in India that allows taxpayers to claim a deduction for donations made to certain charitable institutions and funds. The purpose of this section is to encourage individuals and companies to make donations to registered charitable organisations and to provide tax benefits to them.

Donations made to certain specified entities, such as the Prime Minister’s National Relief Fund, the National Defence Fund, and the Swachh Bharat Kosh, are eligible for a 100% deduction.

Under Section 80G, donations made to specified entities such as charitable trusts, institutions, and funds are eligible for a deduction from the taxable income of the donor. The amount of deduction depends on the type of entity to which the donation is made and the percentage of the donation that is eligible for the deduction.

To claim the deduction under Section 80G, the taxpayer must obtain a receipt or certificate from the donee institution stating the name and address of the institution, the amount donated, and the registration number of the institution under Section 80G.

Government is set to make it obligatory for them to file annual transparency reports

Bringing more transparency in the functioning of auditors of large listed firms, the government is set to make it obligatory for them to file annual transparency reports. The National Financial Reporting Authority (NFRA), which had earlier floated a draft paper for suggestions, is expected to make a formal announcement on it shortly, mandating auditors of large listed firms to file these reports, starting from the current fiscal.

“The objective of the annual transparency report is to ensure better governance of auditors. The public comments have come in and it is likely that the NFRA will start implementing this requirement at the earliest,” said a person familiar with the development.

The NFRA, which is the regulator of the auditing profession and accounting standards, published draft requirements for preparation of these ATRs in January this year. The deadline for submission of comments was initially kept as February 16, but was later extended to February 24.

The NFRA is understood to have examined the comments and it is unlikely that there will be a significant change in the ATR framework. The only concern is whether firms would be able to compile the reports from this fiscal year, as the draft had proposed that each firm should publish it within three months of the end of a financial year. “There could be some teething troubles as it would be the first year of implementation,” noted another source.

According to the draft, the requirement of an ATR would be implemented in a gradual manner across the audit profession, engaged in the audit of public interest entities falling within the purview of the NFRA, starting with the auditors and audit firms performing the audit of the top 1,000 listed companies (by market capitalisation) from the financial year ending March 31, 2023.

The ATR would provide a detailed description of the statutory auditors, details about any collaborations, working alliances and membership of any international network, information on their revenue, apart from audit and non-audit services provided by them, as well as details about internal governance systems. Audit firms would have to first submit it to the NFRA and then publish it on their websites.

Guidelines on the proposed angel tax

finance ministry will come out with the guidelines on the proposed angel tax next month to clarify how the tax will be levied and will also provide valuation guidelines. However, there will be no rethink on the Budget proposal to make the levy applicable to non-residents as well.

“Genuine startups registered with the department for promotion of industry and internal trade (DPIIT) will not be impacted. Valuation rules on how the investment will be calculated will also be issued. The objective is not to hurt genuine businesses but only ensure that those people who are trying to evade taxes come under the tax net,” said a person familiar with the development.

Valuation guidelines are necessary as the Income Tax Act and the Foreign Exchange Management Act value such investments using different methodologies.

Union Budget 2023-24 has proposed amendments in Section 56(2) VII B of the Income Tax Act and bring non-residents within its ambit to eliminate the possibility of tax avoidance.

At present, if an Indian unlisted company issues shares at a price exceeding its fair market value, it is liable to be taxed at a rate of 30%. Popularly known as the ‘angel tax’, it was initially introduced in 2012. Businesses incorporated before April 2016 can apply for exemptions from this section and Sebi-registered alternative investment funds (AIFs) are also exempt. About 80,000 startups registered with the DPIIT will be exempt.

The provision is now proposed to be extended to foreign investors as well, effective April 1, 2023, and has rattled startups who are concerned that it would impact fund-raising.

Sources indicated that while there will be no rethink on the proposal, the government will come out with clear rules through a notification clarifying the scope and intent of the tax proposal. “The rules are likely to be notified by April 15 once the Finance Bill is passed,” a source familiar with the development said, adding that it would clarify how and on whom the tax liability would fall.

Industry bodies and associations are understood to have also discussed the issue with the finance ministry and put forth their representations raising concerns that it could severely dent their ability to raise funds from foreign investors.

Tax experts have pointed out that startups could look at registering in other countries and foreign investors may also reconsider their investment strategies for the country and could look at operating through an AIF structure.

“The proposed changes may indeed have quite the contrary effect (and) drive away foreign investment from India. While we have witnessed several companies contemplating internalisation of their structures in the recent past, the suggested amendments to Section 56(2)(viib) may lead to a preference towards externalisation of structures to allow flexibility in deal structuring,” Nishith Desai Associates had said.

Income Tax Department sending messages to taxpayers certain significant financial transactions relating to FY 2022-23 (AY 2023-24)

Income Tax Department is sending messages to taxpayers regarding payment of advance tax keeping in view transactions incurred during the financial year 2022-23 i.e assessment year 2023-24. The last date to make payment of advance tax is 15/03/2023.

“Attention DHA——– ENTERPRISES (PAN XXXXX2657X ) Income Tax Department has received information about certain significant financial transactions relating to FY 2022-23 (AY 2023-24). Please view transactions under e-Campaign tab on Compliance Portal and remember to pay appropriate Advance Tax. You can access Compliance Portal by login to the e-filing Portal (https://www.incometax.gov.in), and clicking Annual Information Statement (AIS) available under Services tab. On Compliance Portal, click e-Campaign tab. Campaign Type – Significant Transactions. – ITD”

Step to view transaction

Step 1: Log in to your income tax e-filing account.

Step 2: In the home page, go to ‘Pending Actions’> Compliance Portal > ‘e-Campaign (AY 2023-24 Onwards)’.

Step 3: Select the relevant e-campaign.

After redirecting from the e-filing portal, the landing page of the e-campaign view will be displayed. Select the relevant e-campaign and click on ‘provide feedback in AIS’.

If you don’t have active e-campaigns or e-verifications, you will get the message – “No Compliance Record has been generated for you”.

Step 4: Select the information category

Step 5: Submit Response

Critical Rule 36(4) covering all amendments and timelines! Helpful in GST Audits & Assessments

One pager on Journey of critical Rule 36(4) covering all amendments and timelines!!
May be helpful in ongoing GST Audits & Assessments.

RULE 36(4)-AVAILABILITY OF ITC ON THE BASIS OF GSTR-2A/2B [GSTR1 OF SUPPLIER] CHRONOLOGY OF AMENDMENTS

Introduced initially as following:

“36(4)- Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”

EXISTING RULE 36(4) AS ON DATE

36(4) No input tax credit shall be availed by a registered person in respect of invoices or debit notes the details of which are required to be furnished under subsection (1) of section 37 unless,

(a) the details of such invoices or debit notes have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1 or using the invoice furnishing facility; and

(b) the details of input tax credit in respect of such invoices or debit notes have been communicated to the registered person in FORM GSTR-2B under sub-rule (7) of rule 60]

Document Date -09/03/2023

GST amount to be adjusted if there is an issue of mismatch in GST Return with Bank Statement

The Hon’ble Allahabad High Court in Vriddhi Infratech India Pvt. Ltd v. Commissioner, Commercial Tax and Ors. [Writ Tax No. – 4 of 2022 dated February 23, 2023] has set aside the order passed by the Revenue Department, on the grounds, that the Revenue Department and the Appellate Authority have committed the misreading of FORM GSTR-09 filed by the assessee. Directed the Revenue Department to adjust the GST amount deposited by the Petitioner.

Facts:

Vriddhi Infratech India Pvt. Ltd. (“the Petitioner”) was issued a Notice (“the Notice”) dated June 23, 2020 as per Section 61 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) claiming that the Petitioner’s annual return, filed in the FORM GSTR-09 dated January 30, 2020, showed a turnover of INR 129.52 lakhs, which did not match its bank statement.

The Petitioner has challenged the Order-in-Original dated June 4, 2021 (“the OIO”) passed, as per Section 61 of the CGST Act and Section 74 of the CGST Act and the Order-in-Appeal (“the OIA”) dated October 26, 2021 on the grounds, that the GST amount which could not be deposited in the Financial Year (“F.Y.”) 2017-18, but in June, 2018, to be adjusted in the F.Y. 2018-19.

The Petitioner contended that, the very basis of the Notice is wrong, as its FORM GSTR-09 shows the turnover amount of INR 129.52 lakhs with regard to supply made to unregistered persons under the B2C Category and the Revenue Department (“the Respondent”) did not consider the entire form, which at its end shows the total turnover of INR 20,37,13,502.00 lakhs through FORM GSTR-09 in the F.Y. 2017-18.

Issue:

Whether the Respondent has misread the FORM-GSTR-09 filed by the Petitioner?

Held:

The Hon’ble Allahabad High Court in Writ Tax No. – 4 held as under:

  • Observed that, the Respondent and the Appellate Authority have committed the misreading of FORM GSTR-09.
  • Directed the Respondent to adjust the GST amount deposited by the Petitioner in the F.Y. 2018-19.
  • Directed the Respondent to release the security amount deposited under the interim order.
  • Set aside the OIO and the OIA.

Big relief to taxpayers on recovery proceedings

In a move that will help taxpayers till the GST Tribunal is set up, the Bombay High Court has said they can get relief from recovery proceedings if they file a declaration of intent to appeal against the order of the revenue authorities.

If such a declaration is filed, the taxpayer should be given 15-day period to do so before tax authorities initiate recovery proceedings against them, the court said.

The ruling comes on a set of writ petitions seeking to invoke Article 226 of the Constitution on the ground that though the statute provides an appeal to an Appellate Tribunal under the State Good and Services Tax Act, it has not been constituted. A challenge was also raised to the validity of statutory provisions.

“These two measures, according to us, will substantially reduce the litigation which has arisen due to the non-constitution of the GST Tribunal,” said the division bench of Justices Abhay Ahuja and Nitin Jamdar in their ruling. For the ruling, the court interpreted a Maharashtra state tax circular on this issue.

The ruling assumes importance given the large number of disputes pending between taxpayers and GST authorities, as the GST Tribunal is yet to be set up even five years after the indirect tax levy was introduced. The GST Council, chaired by Union finance minister Nirmala Sitharaman, had in its last meeting adopted the report on GST Tribunals and it is expected that the amendments for this will be passed in the second half of the Budget session of Parliament. Tax authorities are hopeful that the tribunals will be functional by the end of this year.

Under the GST law, taxpayers can appeal against orders of the assessing officers to the commissioner (appeals). Any appeal beyond this has to be filed with the GST Tribunal. However, as there is no tribunal at present, these cases are taken up by the high courts.

Breaking: Calcutta High Court slaps ₹20,000 costs on Income Tax officer for issuing notice to non-existent entity twice

The Calcutta High Court recently imposed ₹20,000 as personal costs on an income tax Assessing Officer (AO), Bitan Roy, after the Court found that he had issued an assessment notice to a company that no longer existed after its amalgamation with another entity in 2019. [Orbit Projects Private Limited Vs Income Tax Officer, Ward 5(1), Kolkata & Ors.]

Justice Md. Nizamuddin also found that this was not the first time that AO Roy had issued such a notice to the same non-existing entity.

Rather, it was noted that earlier, in March 2022, the High Court had quashed another notice under Section 148 of the Income Tax Act, 1961 which was issued by the same officer to the same non-existing entity.

The AO’s repeated lapse was not taken well by the Court.

“…. in spite of quashing of such notice by this court on earlier occasion, again the assessing officer has issued the impugned notice dated 27th May, 2022 against the very same non-existing entity. Such conduct reflect, total non-application of mind by the Assessing Officer, namely Bitan Roy, Ward No.V(1), Kolkata, and rather it is contumacious also and in total disregard and defiance of earlier of the order of this court,” the Court said in its March 2 order.

This led Justice Nizamuddin to quash the challenged notice and impose personal costs of ₹20,000 on Roy, which was ordered to be recovered from his salary and paid to the petitioner-company.

This was not the first time that AO Roy found himself at the receiving end of the Court’s ire.

Last month, Justice Nizamuddin imposed costs of ₹10,000 on the same officer for a Section 148 notice issued to another assessee, Silvertoss Vanijya Private Limited.

The Silvertoss case concerned an assessment notice issued to the company by the AO, despite the High Court having quashed similar assessment proceedings in November 2021.

Justice Nizamuddin had criticised the AO for his non-application of mind in the November 2021 order as well.

In the February 8, 2023 order passed subsequently, the judge went on to observe,

“Conduct of the officer as appears that he is not mentally in a position to discharge his duty and that the reason best known to him as appears from his conduct that he is harassing the petitioner by inviting for this unnecessary litigation and cost of which is to be incurred by the petitioner and by the Government also from public exchequer for defending such type of cases.”

This aspect was also factored in by the judge in his March 2 order.

The Court has now also directed that the matter be communicated to the higher authorities for necessary steps.

The Court has now also directed that the matter be communicated to the higher authorities for necessary steps.

“Let a copy this order be communicated to the Principal Chief CIT, West Bengal and Sikkim, by the office of the Ministry of Law and Justice, who will take note of this order about the affairs going on in his department and take necessary steps”, the latest order stated.

Advocates Avra Mazumder, Ramesh Patodia, Megha Agarwal, and Samrat Das appeared for the petitioner-company. Advocate Smita Das De appeared for the respondents.

Step by Step Calculation of Income Tax on Salary

Paying income tax is a right, not a burden. Here’s a detailed guide to help you calculate your income tax on salary, as follows:

Step One: Calculate your gross income

Your gross income is the total salary received before taxes and other deductions. This includes salary components like house rent allowance (HRA), leave travel allowance (LTA), special allowance, lunch allowance, training, mobile and internet allowance, etc.

Now, take out the exemptions you get under salary components, particularly HRA (only if you’re living in a rented apartment) and LTA, and you’ll arrive at your net salary. 

Gross salary – (HRA & LTA) = Net Salary

Also, if you have any additional income from other sources such as rental income, interest earned from deposits, add that amount with the net salary. 

Net salary + additional income 

Step Two: Remove tax deductions 

The Government of India allows standard deduction of INR 50,000 from the net salary of an employee.

Net salary – INR 50,000

Besides standard deduction, tax deductions can be claimed under following sections of the Income Tax Act, 1961.

  • Section 80C: Taxpayers can claim up to INR 1.5 lakh of deduction from investments including Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), Employee Provident Fund (EPF), Sukanya Samriddhi Yojana (SSY), etc.
  • Section 80CCD(1B): Additional tax benefits can be claimed up to INR 50,000 under Section 80CCD(1B), which pertains to the contributions made towards the National Pension Scheme (NPS).
  • Section 80D: The Central Government provides provisions for taxpayers to claim deductions and benefits in respect to health insurance premium paid under Section 80D of the Income Tax Act.
  • Section 80TTA: Tax deduction on the interest earned on an individual’s savings account with a bank, cooperative society or post office, can be claimed up to INR 10,000. 
  • Section 24: A deduction up to INR 2 lakh can be claimed on the interest paid on home loan in a financial year. Forbes Advisor India has prepared a detailed guide on how to avail home loan tax benefits.
  • Section 80EE: Taxpayers can avail tax benefits on the interest portion up to INR 50,000 per financial year on home loan.
  • Section 80E: Tax deduction of interest paid on education loan is allowed for tax deduction.
  • Section 80G: Tax deduction on donations to a charitable organization above INR 2,000 can be made under Section 80G of the Income Tax Act, 1961.

Step Three: Tax deduction as per income tax slab

Once you’ve understood all tax deductions that can be claimed, your net taxable income is subject to taxation as per the income tax slab. There are two income tax slab options available, namely old and new tax regimes, for taxpayers to choose from. However,  as per the announcement made in the Union Budget 2023-24, the tax rebate limit under the new tax regime has been increased to INR 7 lakh from INR 5 lakh. Moreover, the new income tax regime will be a default regime from now onwards, but taxpayers will have the option to choose the old regime. 

Let’s have a look at the Income tax slab for the financial year 2023-24 for taxpayers are as follows:

New Tax Regime 2023-24 (Default)

Net Annual Income RangeNew Regime Tax Rate
INR 0-3 lakhNil
INR 3-6 lakh5%
INR 6-9 lakh10%
INR 9-12 lakh15%
INR 12-1520%
Above INR 15 lakh30%

Old Tax Regime

NET ANNUAL INCOME RANGEOLD REGIME TAX RATE
Up to INR 2.5 lakhNil
INR 2.5 lakh to INR 5 lakh5% (tax rebate u/s 87A is available)
INR 5 lakh to INR 7.5 lakh20%
INR 7.5 lakh to INR 10 lakh20%
INR 10 lakh to INR 12.5 lakh30%
INR 12.5 lakh to INR 15 lakh30%
Above INR 15 lakh30%

Gross taxable Income – eligible deductions = Net taxable income

Benefits of Timely Filing of ITR

  • ITR filing report of last three years is mandatory to avail loans from banks.
  • Helps you avail refund on tax deduction at source (TDS) on investments and savings.
  • Filing ITR enables taxpayers to carry forward losses of the current year to the next financial year.
  • ITR report is a mandatory requirement for opening a current account.
  • Filing ITR beyond the due date leads to the additional interest of 1% every month.

How to Pay Income Tax Using Income Tax E-Filing Portal

Every salaried individual whose income is taxable must file their Income Tax Returns (ITR). While there are various income tax filing software as well as banking apps to help taxpayers file their ITR online, the official website of the Income Tax Department has made the process easier and seamless.

Note: New taxpayers need to register their PAN card and mobile number to create a login username and password, and follow the process to file their income tax return:

Log in to the e-filing portal (https://www.incometax.gov.in/iec/foportal/) using user ID and password

On the dashboard, click on “e-File” and select “e-Pay Tax”

Click on “New Payment” 

Select the “Assessment Year”

Select “Type of payment (minor head)”

Add the “tax break-up” details

Pay the tax using banking credentials of either netbanking, debit card, NEFT/RTGS, or authorized payment gateway option.