CBDT, on 5th June 2021, said that familiarization with the new system may take some time, so, the Department requests the patience of all taxpayers/stakeholders for the initial period after the launch of the new portal and while other functionalities get released since this is a major transition.
The mobile app will also be released subsequent to the initial launch of the portal, to enable taxpayers to get familiar with the various features, CBDT added.
New tax payment system will be launched on June 18th, 2021 after the advance tax instalment date to avoid any taxpayer inconvenience, CBDT said in a press release.
The Income Tax Department is launching its new e-filing portal http://www.incometax.gov.in on 7th June, 2021. The new e-filing portal is aimed at providing taxpayer convenience and a modern, seamless experience to taxpayers. Some of the highlights of the new portal are detailed hereunder:
New taxpayer friendly portal integrated with immediate processing of Income Tax Returns (ITRs) to issue quick refunds to taxpayers;
All interactions and uploads or pending actions will be displayed on a single dashboard for follow-up action by taxpayer;
Free of cost ITR preparation software available with interactive questions to help taxpayers for ITRs 1, 4 (online and offline) and ITR 2 (offline) to begin with; Facility for preparation of ITRs 3, 5, 6, 7 will be made available shortly;
Taxpayers will be able to proactively update their profile to provide certain details of income including salary, house property, business/profession which will be used in pre-filling their ITR. Detailed enablement of pre-filling with salary income, interest, dividend and capital gains will be available after TDS and SFT statements are uploaded (due date is June 30th, 2021);
New call center for taxpayer assistance for prompt response to taxpayer queries. Detailed FAQs, User Manuals, Videos and chatbot/live agent also provided;
Functionalities for filing Income Tax Forms, Add tax professionals, Submit responses to Notices in Faceless Scrutiny or Appeals would be available.
It is clarified that the new tax payment system will be launched on June 18th, 2021 after the advance tax instalment date to avoid any taxpayer inconvenience. The mobile app will also be released subsequent to the initial launch of the portal, to enable taxpayers to get familiar with the various features. Familiarization with the new system may take some time, so, the Department requests the patience of all taxpayers/stakeholders for the initial period after the launch of the new portal and while other functionalities get released since this is a major transition. This is another initiative by CBDT towards providing ease of compliance to its taxpayers and other stakeholders.
CBDT issues refunds of over Rs. 26,276 crore to more than 15.47 lakh taxpayers between 1st April, 2021 to 31st May, 2021. Income tax refunds of Rs. 7,538 crore have been issued in 15,02,854 cases & corporate tax refunds of Rs. 18,738 crore have been issued in 44,531 cases.
Income Tax Department has send an email to all taxpayers and professionals who are using DSC on existing Income Tax Portal asking that they have to re-register their DSC on new income tax portal. The details are attached in the following picture:
CBDT issues clarification wrt limitation time for filing of appeals before CIT (Appeals) under Income-tax Act, 1961 in consonance with directions issued by Hon’ble Supreme Court in Suo Motu WP (Civil) No 3 of 2020 vide order dated 27th Apr, 2021. Circular No 10 of 2021 dated 25.05.2021 is issued.
1.The provisions of this sections are applicable with effect from 1st October, 2020.
The section provides that in case of sale of goods of the value or aggregate of such value more than Rs 50 lakhs in any PY, (other than the goods being exported out of India or goods covered in 206C (1) or 206C(1F) or 206C(1G)] seller shall collect TCS from the buyer @0.1% of the sale consideration in excess of Rs 50 lakhs.
SPECIAL POINTS TO BE REMEMBERED
If the buyer (collectee) does not furnish PAN or Aadhar the TCS rate shall be 1%.
Since TCS is to be collected on the receipt amount, the section applies on all sale consideration including any advance amount received on or after 1st Oct 2020 irrespective of the fact that the sale was carried out before 1st Oct or not.
The calculation of the amount of sales consideration for ascertaining the eligibility for collection of tax at source as regards to Rs 50 lakhs shall be computed from 1st April 2020.
NON-APPLICABILITY
Sale of services as this section applies to sale of goods only.
Any consideration for fuel supplied to non-resident airlines at airports in India.
EXPLANATION TO THE WORDS
SELLER: A person whose Turnover or Gross Receipts from the business carried on by him more than Rs 10 Crore in last Previous year.
BUYER: A person who purchases any goods, but does not include
(a) Central Govt, State Govt, embassy, High Commission, Legation, commission, consulate, trade representation of a foreign State, Local Authority
(b) A person importing goods into India or any other notified person.
EXAMPLES
Mr. Sham has Turnover Rs 20Cr in last PY. He Sold goods to Mr. Ram up to 30/09/20 worth Rs 40 Lakhs and Rs 20 Lakhs from 1/10/21 to 31/03/21.
LATE FILING FEES AND PENALTY FOR FAILURE TO FURNISH/DELAY IN FURNISHING THE TDS/TCS STATEMENTS
Before understanding the penalty provisions for failure to furnish the statement of Tax Deducted at Source or statement of Tax Collected as Source (i.e. commonly known as TDS/TCS return) we shall first have a look at the few basic duties of a person liable to deduct/collect tax at source and due dates for filing of TDS/TCS return.
Duties of the person liable to deduct/collect tax at source
He shall obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be) and quote the same in all the documents pertaining to TDS/TCS.
He shall deduct/collect the tax at source at the applicable rate.
He shall pay the tax deducted/collected by him to the credit of the Government.
He shall file the periodic TDS/TCS statements, i.e., TDS/TCS return.
He shall issue the TDS/TCS certificate in respect of tax deducted/collected by him.
Due Dates for filing of TDS/TCS return
The due dates for filing of TDS/TCS return for different quarters of Financial Year 2021-22 are as follows:
Quarter ending
Due date for filing of TDS return (Both for Government and other Deductor)
Due date for filing of TCS return
30th June 2021
31st July 2021
15th July 2021
30th September 2021
31st October 2021
15th October 2021
31st December 2021
31st January 2021
15th January 2022
31st March 2022
31th May 2022
15th May 2022
Basic provisions
A person who fails to file the TDS/TCS return or does not file the TDS/TCS return by the due dates prescribed in this regard has to pay late filing fees as provided under section 234E and apart from late filing fees he shall be liable to pay penalty under section 271H. In this part you can gain knowledge about the provisions of section 234E and section 271H.
Late filing fees under section 234E
As per section 234E, where a person fails to file the TDS/TCS return on or before the due date prescribed in this regard, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. The amount of late fees shall not exceed the amount of TDS.
TDS/TCS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. It should be noted that Rs. 200 per day is not penalty but it is a late filing fee.
Illustration
The quarterly statement of TDS i.e. TDS return for the first quarter of the year 2021-22 is filed by Mr. Kapoor on 4-4-2022. Tax deducted at source during the quarter amounted to Rs. 8,40,000. What will be the amount of late filing fees to be paid by him for delay in filing the TDS return?
**
The due date for filing of TDS return for the first quarter of the year 2021-22 i.e. April 2021 to June 2021 is 31st July, 2021. The return is filed on 4th April, 2022, thus there is a delay of 247 days as computed below:
Particulars
Days
August 2021
31
September 2021
30
October 2021
31
November 2021
30
December 2021
31
January 2022
31
February 2022
28
March 2022
31
April 2022
4
Total
247
From the above computation it can be observed that there is a delay of 247 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 247 days the late filing fees will come to Rs. 49,400.
Particulars
Days
August 2021
31
September 2021
30
October 2021
31
November 2021
30
December 2021
31
January 2022
31
February 2022
28
March 2022
31
April 2022
4
Total
247
From the above computation it can be observed that there is a delay of 247 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 247 days the late filing fees will come to Rs. 49,400.
Illustration
The quarterly statement of tax collected at source i.e. TCS return for the first quarter of the year 2021-22 is filed by Mr. Krunal on 4-8-2021. Tax collected at source during the quarter amounted to Rs. 84,000. What will be the amount of late filing fees to be paid by him for delay in filing the TCS return?
**
In case of Non-Government deductor, the due date of filing the TCS return for the first quarter of the year 2021-22 i.e. April 2021 to June 2021 is 15th July, 2021. The return is filed on 4th August, 2021, thus there is a delay of 20 days as computed below:
Particulars
Days
July 2021
16
August 2021
4
Total
20
From the above computation it can be observed that there is a delay of 20 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 20 days the late filing fees will come to Rs. 4,000.
Illustration
The quarterly statement of tax collected at source i.e. TCS return for the first quarter of the year 2021-22 is filed by Mr. Krunal on 4-8-2021. Tax collected at source during the quarter amounted to Rs. 84,000. What will be the amount of late filing fees to be paid by him for delay in filing the TCS return?
**
In case of Non-Government deductor, the due date of filing the TCS return for the first quarter of the year 2021-22 i.e. April 2021 to June 2021 is 15th July, 2021. The return is filed on 4th August, 2021, thus there is a delay of 20 days as computed below:
Particulars
Days
July 2021
16
August 2021
4
Total
20
From the above computation it can be observed that there is a delay of 20 days. Late filing fees under section 234E will be charged at Rs. 200 per day, thus for 20 days the late filing fees will come to Rs. 4,000.
Illustration
The quarterly statement of Tax deducted at source i.e. TDS return for the last quarter of the year 2021-22 is not filed by Mr. Raj till 31st May, 2022. Can he file the TDS return of last quarter of the year 2021-22 after 31st May, 2022 without payment of any late filing fees?
**
The due date of filing the TDS return for the last quarter of the year 2021-22 i.e. January 2022 to March 2022 is 31st May, 2022. The return is not filed till 31st May, 2022 and hence late filing fees under section 234E of Rs. 200 per day of default will be levied. TDS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. Hence, in this case, Mr. Raj cannot file the TDS return without payment of late filing fees of Rs. 200 per day.
Computation of fee under Section 234E at the time of processing of TDS/TCS statement
Section 200A of the Income-tax Act provides for processing of TDS statements for determining the amount payable or refundable to the deductor. Provisions of Section 200A has been amended by the the Finance Act, 2015 so as to enable computation of fee payable under under section 234E at the time of processing of TDS statements.
As the mechanism of TCS statement is similar to TDS statement, a new section 206CB has been inserted by Finance Act, 2015 to provide for processing of TCS statements on the lines of existing provisions for processing of TDS statement contained in section 200A of the Income-Tax Act. The new section 206CB also provides for mechanism for computation of fee payable under section 234E at the time of processing of TCS statement.
Penalty under section 271H
As per section 271H, where a person fails to file the statement of tax deducted/collect at source i.e. TDS/TCS return on or before the due dates prescribed in this regard, then assessing officer may direct such person to pay penalty under section 271H. Minimum penalty can be levied of Rs. 10,000 which can go upto Rs. 1,00,000. Penalty under section 271H will be in addition to late filing fees prescribed under section 234E.
Apart from delay in filing of TDS/TCS return, section 271H also covers cases of filing incorrect TDS/TCS return. Penalty under section 271H can also be levied if the deductor/collector files an incorrect TDS/TCS return. In other words, minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000 can be levied if the deductor/collector files an incorrect TDS/TCS return.
No penalty will be levied under section 271H for the failure to file the TDS/TCS return, if the person proves that after paying tax deducted/collected by him, along with the late-filing fee and interest (if any), to the credit of the Central Government, he had filed the TDS/TCS return before the expiry of a period of one year from the due date of filing the TDS/TCS return. In other words, no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied:
The tax deducted/collected at source is paid to the credit of the Government.
Late filing fees and interest (if any) is paid to the credit of the Government.
The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.
It should be noted that the above relaxation is applicable only in case of penalty levied under section 271H for delay in filing the TDS/TCS return and not in case of filing incorrect TDS/TCS statement.
Apart from above relaxation, in following two cases the taxpayer can get relief from penalty under section 271H:
Under section 273A(4) the Principal Commissioner of Income-tax or Commissioner of Income-tax has power to waive or reduce the penalty levied under the Income-tax Act. Penalty can be waived or reduced by the Commissioner of Income-tax if the conditions specified in section 273A(4) in this regard are satisfied.
Apart from shelter of section 273A(4), section 273B also provides immunityfrom penalty in genuine cases. As per section 273B, penalty under section 271H will not be levied if the taxpayer proves that there was a reasonable cause for failure.
Illustration
The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2021-22 is filed by Mr. Krunal on 4-4-2022. Tax deducted at source during the quarter amounted to Rs. 84,000. Before filing the TDS return he has paid the TDS, interest and late filing fees to the credit of the Government. Will he be liable to penalty under section 271H for delay in filing the TDS return?
**
Penalty under section 271H can be levied for delay in filing the TDS return. In this case, the due date of filing the TDS return for the first quarter of the year 2021-22 i.e. April 2021 to June 2021 is 31st July, 2021. The return is filed on 4th April, 2021, thus there is a delay of 247 days (i.e. less than a year). As per section 271H(3) no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied :
The tax deducted/collected at source is paid to the credit of the Government.
Late filing fees and interest (if any) is paid to the credit of the Government.
The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.
In the present case, all the aforesaid conditions are satisfied because the delay in filing the TDS return is of less than 1 year and interest and late filing fees are paid before filing the TDS return, thus penalty under section 271H will not be levied.
The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.
Illustration
The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2021-22 is filed by Mr. Rahul on 20-8-2022. Tax deducted at source during the quarter amounted to Rs. 1,84,000. Before filing the TDS return he has paid the TDS, interest and late filing fees to the credit of the Government. Will he be liable to penalty under section 271H for delay in filing the TDS return?
**
Penalty under section 271H can be levied for delay in filing the TDS return. The due date of filing the TDS return for the first quarter of the year 2021-22 i.e. April 2021 to June 2021 is 31st July, 2021. The return is filed on 20th Aug., 2022, thus there is a delay of 385 days (i.e. more than a year). As per section 271H(3) no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied :
:
The tax deducted/collected at source is paid to the credit of the Government.
Late filing fees and interest (if any) is paid to the credit of the Government.
The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.
In the present case, all the aforesaid conditions are satisfied because the delay in filing the TDS return is of less than 1 year and interest and late filing fees are paid before filing the TDS return, thus penalty under section 271H will not be levied.
The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.
Illustration
The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2021-22 is filed by Mr. Rahul on 20-8-2022. Tax deducted at source during the quarter amounted to Rs. 1,84,000. Before filing the TDS return he has paid the TDS, interest and late filing fees to the credit of the Government. Will he be liable to penalty under section 271H for delay in filing the TDS return?
**
Penalty under section 271H can be levied for delay in filing the TDS return. The due date of filing the TDS return for the first quarter of the year 2021-22 i.e. April 2021 to June 2021 is 31st July, 2021. The return is filed on 20th Aug., 2022, thus there is a delay of 385 days (i.e. more than a year). As per section 271H(3) no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied :
The tax deducted/collected at source is paid to the credit of the Government.
Late filing fees and interest (if any) is paid to the credit of the Government.
The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.
In the above case, the delay is of more than 1 year and hence the above immunity will not be available. Thus, the Assessing Officer can levy penalty under section 271H. Minimum penalty of Rs. 10,000 and maximum penalty of Rs. 1,00,000 can be levied by the Assessing Officer. However, Mr. Rahul has following two remedies to get relief from penalty:
He can apply to Principal Commissioner of Income-tax or Commissioner of Income-tax under section 273A(4) to seek relief from penalty.
He can seek relief under section 273B by proving that there was a reasonable cause for failure.
The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.
Illustration
The quarterly statement of tax deducted at source i.e. TDS return for the first quarter of the year 2021-22 is filed by Mr. Sharma on 10-7-2021. The particulars of the tax deducted at source as mentioned in TDS return are incorrect. Will he be liable to pay penalty under section 271H for delay in filing the TDS return and for furnishing the inaccurate particulars in the return?
**
Penalty under section 271H can be levied for following defaults:
(1) Delay in filing the TDS/TCS quarterly statement i.e. TDS/TCS quarterly return.
(2) Furnishing incorrect TDS/TCS quarterly statement i.e. TDS/TCS quarterly return.
In the present case Mr. Sharma has filed an incorrect TDS return and hence he shall be held liable to pay penalty under section 271H. Minimum penalty of Rs. 10,000 and maximum penalty of upto Rs. 1,00,000 can be levied. Mr. Sharma will have no remedy under Section 271H(3) to claim relief from penalty for furnishing of inaccurate particulars in the return. However, the taxpayer can seek relief in the following way:
He can apply to Principal Commissioner of Income-tax or Commissioner of Income-tax under section 273A(4) to grant relief from penalty.
He can seek relief under section 273B by proving that there was a reasonable cause for failure.
The same provision as discussed above will apply in case of delay in filing the statement of tax collected at source i.e. TCS return.
Income Tax Department has recently informed to all stakeholders that new income tax e-filing portal will be launched on 7th June 2021.
It has also informed about new tax payment system which will be Incorporated in new e-filing portal.
Under new tax payment system, taxpayers can pay taxes with multiple new payment options using net banking, UPI, credit card and RTGS/ NEFT from any account of taxpayer in any bank.
The Income Tax Department has tweeted on 20th May 2021 that:
Income Tax Department to launch its new e-filing portal http://www.incometax.gov.in/ on 7th June, 2021. Existing ITD portal ie http://www.incometaxindiaefiling.gov.in/home would not be available to taxpayers/ other stakeholders for a brief period of 6 days i.e. from 1st June, 2021 to 6th June, 2021.
The new e-filing portal (http://www.incometax.gov.in/) is aimed at providing taxpayer convenience and a modern, seamless experience to taxpayers. It is another step by CBDT to provide ease of compliance to its taxpayers & other stakeholders.
The Board of Direct Taxes (Income Tax Department) vide circular No. 09/2021, (F. NO.225/49/2021-ITA-1I dated 20.05.2021, in exercise of its power under section 119 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) has issued circular w.r.t. Extension of time limits of certain compliances to provide relief to taxpayers in view of the severe pandemic and spike in Covid-19 cases:
Extension Table
SrNo
NatureofExtension
Originalduedate
NewDueDates
1
Statement of Financial Transact ions u/s 285BA (SFT)
31.05.2021
30.06.2021
2
Statement of Reportable Account under Rule 114G
31.05.2021
30.06.2021
3
Statement of Tax deduction at source for the quarter ending 3151 March 2021
31.05.2021
30.06.2021
4
Issue of TDS certificates in Form 16 for the Financial Year 2020- 21
15.06.2021
15.07.2021
5
TDS/TCS Book adjustment statement in Form 24G for the month of May 2021
15.06.2021
30.06.2021
6
Statement of Deduction of Tax in the case of superannuationfund for FY 2021
31.05.2021
30.06.2021
7
Statement of Income paid or credited by an investment fund to its unit’s holder in Form 64D for FY 2021
15.06.2021
30.06.2021
8
Statement of Income paid or credited by an investment fundto its unit’s holder in Form 64C for FY 2021
30.06.2021
15.07.2021
9
Income Tax Returns – Normal assessee without audits – FY2021
31.07.2021
30.09.2021
10
Filing of Audit Reports viz. Tax Audit Reports, Form 67 etc. – FY 2021
30.09.2021
31.10.2021
11
Due date of Furnishing Report from Accountant in respect ofInternational Transactions covered u/s 92E
31.10.2021
30.11.2021
12
Corporate assessee or Firm covered whose accounts required to be audited or Partner of Firm whose accounts are required to be audited or any assessee other than Corporate and Firm whose accounts are required to be audited
31.10.2021
30.11.2021
13
Assessee required to furnish return u/s 92E in respect of international Transactions
30.11.2021
31.12.2021
14
Belated Returns and Revised Returns
31.12.2021
31.01.2021
Kindly Note that:Note: all above extensions is planned in view of New ITD portal to belaunched from June 7,,2021.
Clarifications by CBDT:
1. Non – Applicability: the extension of the dates as referred to in clauses(9), (12) and (13) above shall not apply to Explanation 1 to section 234A of the Act, incases where the amount of tax on the total income as reduced by the amount asspecified in clauses (i) to (vi) of sub-section (1) of that section exceeds one lakhrupees.
2. For the purpose of Clarification 1, in case of an individual resident inIndia referred to in sub-section (2) of section 207 of the Act, the tax paid by him undersection 140A of the Act within the due date (without extension under this Circular)provided in that Act, shall be deemed to be the advance tax.
Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.
The Directorate of Income Tax (Systems) has written a Letter to all Principle Chief Commissioners/ Chief Commissioners/ Directors General of Income Tax stating that e-filing services of Income Tax Department will not be available from 1 June 2021 to 6 June 2021 due to launch of new e-filing portal.
In the case of Ritul Jewels Private Limited v/s National Faceless Assessment Centre & Ors., Hon’ble Bombay High Court stays order passed under Faceless Assessment Scheme due to following reasons:
(1.) Order passed without considering adjournment request,
(2.) Order passed without granting personal hearing,
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The taxes on income can be finalized only on the completion of the previous year. However, to enable a regular flow of funds and for easing the process of collection of taxes, Income-tax Act has provisions for payment of taxes in advance during the year of earning itself or before completion of previous year. It is also known as Pay as your earn concept.
Taxes are collected by the Government through the following means:
1. Voluntary payment by taxpayers into various designated Banks such as Advance tax, Self-Assessment tax, etc.
2. Taxes deducted at source
3. Taxes collected at source
4. Equalisation Levy
Q.2 Under how many heads the income of a taxpayer is classified?
Section 14 of the Income-tax Act has classified the income of a taxpayer under five different heads of income, viz.:
Salaries
Income from house property
Profits and gains of business or profession
Capital gains
Income from other sources
Q.3 What is gross total income?
Total income of a taxpayer from all the heads of income (as discussed in previous FAQ) is referred to as Gross Total Income.
Q.4 What is the difference between gross total income and total income?
Total Income is the income on which tax liability is determined. It is necessary to compute total income to ascertain tax liability .Section 80C to 80U provides certain deductions which can be claimed from Gross Total Income (GTI). After claiming these deductions from GTI, the income remaining is called as Total Income.In other words, GTI less Deductions (under section 80C to 80U) = Total Income (TI). Total income can also be understood as taxable income. Following table gives a better understanding of the difference between GTI and TI :
Computation of gross total income and Taxable Income
Particulars
Amount
Income from salary
XXXXX
Income from house property
XXXXX
Profits and gains of business or profession
XXXXX
Capital gains
XXXXX
Income from other sources
XXXXX
Gross Total Income
XXXXX
Less : Deductions under Chapter VI-A (i.e. under section 80C to 80U)
(XXXXX)
Total Income (i.e., taxable income)
XXXXX
Note : Inter source losses, inter head losses, brought forward losses, unabsorbed depreciation, etc., (if any) will have to be adjusted (as per the Income-tax Law) while computing the gross total income.
Note: If the eligible assessee has opted for concessional tax regime under section 115BAA, 115BAB, 115BAC and 115BAD, the total income of assessee is computed without claiming specified exemptions or deductions:
Q.5 How to round off total income before computing tax liability?
As per section 288A, total income computed in accordance with the provisions of the Income-tax Law, shall be rounded off to the nearest multiple of ten. Following points should be kept in mind while rounding off the total income:
First any part of rupee consisting of any paisa should be ignored.
After ignoring paisa, if such amount is not in multiples of ten, and last figure in that amount is five or more, the amount shall be increased to the next higher amount which is in multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is in multiple of ten and the amount so rounded off shall be deemed to be the total income of the taxpayer.
Illustration for better understanding
If the taxable income of Mr. Keshav is Rs. 2,52,844.99, then first paisa shall be ignored, i.e., 0.99 paisa shall be ignored) and the remaining amount of Rs. 2,52,844 shall be rounded off to Rs. 2,52,840 (since last figure is less than five). If the total income is Rs. 2,52,845 or Rs. 2,52,846.01, then it shall be rounded off to Rs. 2,52,850 (since the last figure is five or above).
Q.6 Can I claim deduction for my personal and household expenditure while calculating my taxable income or profit?
No, you cannot claim deduction of personal expenses while computing the taxable income.
While computing income under various heads, deduction can be claimed only for those expenses which are provided under the Income-tax Act.
Q.7 Most of my income is given away in charity and I am left with just enough money to meet my personal requirements. What will be considered as my income?
What is done after the income is earned by you will not give you tax exemption. However, contribution to approved institutions will give you the benefit of deduction from taxable income under section 80G subject to limits specified therein.
Q.8 My daughter stays in USA. She owns a house in India and has let it out. She has asked tenants to pay rent to me. She has not received any rent. Is she still liable to tax? What if she transfers the house to me?
Rental income is charged to tax in the hands of the owner of the property. Your daughter is the owner of the house and, therefore, she is liable to pay tax, even though you receive rent. If the house is transferred to you, then you will become the owner and you will have to pay Income-tax on the rental income.
Q.9 Is there any limit of income below which I need not pay tax?
At this moment (i.e., for the financial year 2021-22) Individual, HUF, AOP, and BOI having income below Rs. 2,50,000 need not pay any Income-tax. In respect of resident individuals of the age of 60 years and above but below 80 years, the basic exemption limit is Rs. 3,00,000 and in respect of resident individuals of 80 years and above, the limit is Rs. 5,00,000. For other categories of persons such as co-operative societies, firms, companies and local authorities, no basic exemption limit exists and, hence, they have to pay taxes on their entire income chargeable to tax.
Q.10 How to compute the total tax liability?
After ascertaining the total income, i.e., income liable to tax, the next step is to compute the tax liability for the year. Tax liability is to be computed by applying the rates prescribed in this regard. Following table will help in understanding the manner of computation of the total tax liability of the taxpayer.
Computation of total income and tax liability for the year
Particulars
Amount
Income from salary
XXXXX
Income from house property
XXXXX
Profits and gains of business or profession
XXXXX
Capital gains
XXXXX
Income from other sources
XXXXX
Total of head wise income
XXXXX
Set off of cosses
XXXXX
Gross Total Income
XXXXX
Less : Deductions under Chapter VI-A (i.e., under section 80C to 80U))
(XXXXX)
Total Income (i.e., taxable income)
XXXXX
Tax on total income to be computed at the applicable rates (for rates of tax, refer “Tax Rate” section)
XXXXX
Less : Rebate under section 87A (discussed in later FAQ)
(XXXXX)
Tax Liability After Rebate
XXXXX
Add: Surcharge (discussed in later FAQ)
XXXXX
Tax Liability After Surcharge
XXXXX
Add: Health & Education cess @ 4% on tax liability after surcharge
XXXXX
Tax liability before rebate under sections 86, section 89, sections 90, 90A and 91 (if any) (*)
XXXXX
Less : Rebate under sections 86, section 89, sections 90, 90A and 91(if any) (*)
(XXXXX)
Tax liability for the year before pre-paid taxes
XXXXX
Less: Prepaid taxes in the form of TDS, TCS and advance tax
(XXXXX)
Tax payable/Refundable
XXXXX
(*) Rebate under section 86 is available to a member of association of persons (AOP) or body of individuals (BOI) in respect of income received by such member from the AOP/BOI.
Rebate (i.e., relief) under section 89 is available to a salaried employee in respect of sum received towards arrears of salary, gratuity, etc.
Rebate under sections 90, 90A and 91 is available to a taxpayer in respect of double taxed income, i.e., income which is taxed in India as well as abroad.
Note : For provisions relating to Minimum Alternate Tax (MAT) in case of corporate taxpayers and Alternate Minimum Tax (AMT) in case of non-corporate taxpayers refer tutorial on “MAT/AMT”.
Q.11 How to round off the tax liability?
As per section 288B, tax payable by the taxpayer or tax refundable to the taxpayer shall be rounded off to the nearest multiple of ten, following points should be kept in mind while rounding off the tax :
First any part of rupee consisting of any paisa should be ignored.
After ignoring paisa, if such amount is not a multiples of ten, and the last figure in that amount is five or more, the amount shall be increased to the next higher amount which is a multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is a multiple of ten; and the amount so rounded off shall be deemed to be the tax payable by the taxpayer or refundable to the taxpayer.
Illustration for better understanding
If the tax liability or refund due to Mr. Keshav is Rs. 2,52,844.99, then first paisa shall be ignored, (i.e., 0.99 paisa shall be ignored) and the remaining amount of Rs. 2,52,844 shall be rounded off to Rs. 2,52,840 (since last figure is less than five). If the tax liability or refund due is Rs. 2,52,845 or Rs. 2,52,846.01, then it shall be rounded off to Rs. 2,52,850 (since the last figure is five or above).
Q.12 What is rebate under section 87A for F.Y 2021-22 and who can claim it?
An individual who is resident in India and whose total income does not exceed Rs. 5,00,000 is entitled to claim rebate under section 87A. Rebate under section 87A is available in the form of deduction from the tax liability. Rebate under section 87A will be lower of 100% of income-tax liability or Rs. 12,500. In other words, if the tax liability exceeds Rs. 12,500, rebate will be available to the extent of Rs. 12,500 only and no rebate will be available if the total income (i.e. taxable income) exceeds Rs. 5,00,000.
Q.13 Can a partnership firm or HUF claim rebate under section 87A?
Rebate under section 87A is available only to a resident individual, hence, any person other than a resident individual cannot claim rebate under section 87A.
Q.14 Can a non-resident claim rebate under section 87A?
Rebate under section 87A is available only to an individual who is resident in India, hence, non-residents cannot claim rebate under section 87A.
Q.15 What is surcharge and how it is computed?
Surcharge is an additional tax levied on the amount of income-tax. In case of individuals/HUF/AOP/BOI/artificial juridical person, surcharge is levied @ 10% on the amount of income-tax where the total income of the taxpayer exceeds Rs. 50 lakh but doesn’t exceeds Rs. 1 crore.
Surcharge is levied @ 15% of income-tax where the total income of the taxpayer exceeds Rs. 1 crore but doesn’t exceeds Rs. 2 crore.(*).
Surcharge is levied @ 25% of income-tax where the total income of the taxpayer exceeds Rs. 2 crore but doesn’t exceeds Rs. 5 crore(*).
Surcharge is levied @ 37% of income-tax where the total income of the taxpayer exceeds Rs. 5 crore(*).
In case of Firm, co-operative society and local authority surcharge is levied at 12% if total income exceeds Rs 1 crore.
In case of a domestic company surcharge is levied @ 7% on the amount of income-tax if the total income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 12% on the amount of income-tax if total income exceeds Rs. 10 crore (*).
In case of a foreign company surcharge is levied @ 2% on the amount of income-tax if the total income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 5% on the amount of income-tax if total income exceeds Rs. 10 crore (*).
(*) A taxpayer can claim marginal relief from the amount of surcharge, subject to certain conditions. Refer to next FAQ for concept of marginal relief.
Illustration for better understanding
Mr. Kapoor is a doctor, his total income for the year amounted to Rs. 44,00,000. Will he be liable to pay surcharge, if yes, then how much?
**
Surcharge is additional tax levied on the amount of income-tax. In case of individuals surcharge is levied @ 10% on the amount of income-tax where the total income of the taxpayer exceeds Rs. 50 lakh. In this case, total income of Mr. Kapoor is below Rs. 50 lakh, hence, he will not be liable to pay surcharge.
Q.16 What is marginal relief and how it is computed?
The concept of marginal relief is designed to provide relaxation from levy of surcharge to a taxpayer where the total income exceeds marginally above Rs. 50 lakh, Rs. 1 crore, Rs. 2 crore, Rs. 5 crore or Rs. 10 crore, as the case may be.
Thus, while computing surcharge, in case of taxpayers (i.e. Individuals/HUF/AOP/BOI/ artificial juridical person) having total income of more than Rs. 50 lakh marginal relief shall be available in such a manner that the net amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 50 lakh by more than the amount of income that exceeds Rs. 50 lakh.
In case of a company, surcharge is levied @ 7% (2% in case of foreign company) on the amount of income-tax if the total income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 12% (5% in case of foreign company) on the amount of income-tax if total income exceeds Rs. 10 crore. Hence, in case of company whose total income exceeds Rs. 1 crore but does not exceeds Rs. 10 crore, marginal relief will be computed as discussed above, but in the case of company having total income above Rs. 10 crore marginal relief is available in such a manner that the net amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax and surcharge on total income of Rs. 10 crore by more than the amount of income that exceeds Rs. 10 crore.
Illustration for better understanding
Mr. Mukesh is salaried employee (age 40 years). His total income from salary for the year 2021-22 amount to Rs. 51,00,000. Will he liable to pay surcharge, if yes, then how much and will he get the benefit of margin relief?
**
Surcharge is additional tax levied on the amount of income-tax. In case of taxpayers (i.e. Individuals/HUF/AOP/BOI/artificial juridical person), surcharge is levied @ 10% on the amount of income-tax where the total income of the taxpayer exceeds Rs. 50 lakh. In this case, total income of Mr. Mukesh exceeds Rs. 50 lakh and hence he will be liable to pay surcharge. Marginal relief is available in cases where the total income is slightly above Rs. 50 Lakh. The Computation of normal tax liability (i.e. liability without marginal relief) and tax liability under marginal relief (i.e. liability after marginal relief) will be as follows:
(1) Normal tax liability (i.e. without marginal relief)
Tax on total income before surcharge (*)
13,42,500
Add: Surcharge (@10% on the amount of income-tax of Rs. 13,42,500
1,34,250
Tax liability after surcharge (i.e., normal tax liability)
14,76,750
(*) The normal tax rates for the financial year 2021-22 applicable to an individual below the age of 60 years are as follows:
Nil upto income of Rs. 2,50,000
5% for income above Rs. 2,50,000 but upto Rs. 5,00,000
20% for income above Rs. 5,00,000 but upto Rs. 10,00,000
30% for income above Rs. 10,00,000.
Apart from above rates, cess will be computed separately.
(2) Tax liability under marginal relief (i.e. after marginal relief)
Tax on Rs. 50 lakh (at the above discussed rates)
13,12,500
Add: Income above Rs. 50 lakh
1,00,000
Tax liability under marginal relief
14,12,500
Conclusion
Normal tax liability (i.e. without marginal relief) comes to Rs. 14,76,750 and tax liability under marginal relief comes to Rs. 14,12,500. It can be observed that tax liability under marginal relief is lower and, hence, Rs. 14,12,500 will be the tax liability before cess. Total tax liability will be computed as follows:
Rs.
Tax liability after marginal relief (*)
14,12,500
Add: Health & education cess @ 4%
56,500
Tax liability
14,69,000
(*) In this case, surcharge paid by Mr. Mukesh will be Rs. 70,000 computed as follows:
Rs.
Tax liability (before cess) on Rs. 51,00,000 after considering the provisions of marginal relief
14,12,500
Tax liability (before cess) at normal rates on Rs. 51,00,000 if surcharge is not levied
13,42,500
Surcharge (i.e. increase in tax liability)
70,000
Illustration for better understanding
Mr. Raja is businessman (age 35 years). His total income for the year 2021-22 amounted to Rs. 1,02,00,000. Will he be liable to pay surcharge, if yes, then how much and will he get the benefit of marginal relief?
**
Surcharge is additional tax levied on the amount of income-tax. In case of taxpayers (i.e. Individuals/HUF/AOP/BOI/artificial juridical person), surcharge is levied @ 10% on the amount of income-tax where the total income of the taxpayer exceeds Rs. 1 crore. In this case, total income of Mr. Raja exceeds Rs. 1 crore and hence he will be liable to pay surcharge. Marginal relief is available in cases where the total income is slightly above Rs. 1 crore. The Computation of normal tax liability (i.e. liability without marginal relief) and tax liability under marginal relief (i.e. liability after marginal relief) will be as follows:
(1) Normal tax liability (i.e. without marginal relief)
Tax on total income before surcharge (*)
28,72,500
Add: Surcharge (@15% on the amount of income-tax of Rs. 28,72,500 )
4,30,875
Tax liability after surcharge (i.e., normal tax liability)
33,03,375
(*) The normal tax rates for the financial year 2021-22 applicable to an individual below the age of 60 years are as follows:
Nil upto income of Rs. 2,50,000
5% for income above Rs. 2,50,000 but upto Rs. 5,00,000
20% for income above Rs. 5,00,000 but upto Rs. 10,00,000
30% for income above Rs. 10,00,000.
Apart from above rates, cess will be computed separately.
(2) Tax liability under marginal relief (i.e. after marginal relief)
Tax on Rs. 1 crore (at the above discussed rates)
28,12,500
Add: Surcharge on income-tax @ 10% (if income is Rs. 1 crore)
2,81,250
Add: Income above Rs. 1 crore
2,00,000
Tax liability under marginal relief
32,93,750
Conclusion
Normal tax liability (i.e. without marginal relief) comes to Rs. 33,03,375 and tax liability under marginal relief comes to Rs. 32,93,750. It can be observed that tax liability under marginal relief is lower and, hence, Rs. 32,93,750 will be the tax liability before cess. Total tax liability will be computed as follows:
Rs.
Tax liability after marginal relief (*)
32,93,750
Add: Health & education cess @ 4%
1,31,750
Tax liability
34,25,500
Illustration for better understanding
Mr. Karan is a businessman (age 35 years). His total income for the year 2021-22 amounted to Rs. 1,07,00,000. Will he be liable to pay surcharge, if yes, then how much and will he get the benefit of marginal relief?
**
Surcharge is additional tax levied on the amount of income-tax. In case of taxpayers (i.e. Individuals/HUF/AOP/BOI/artificial juridical person) surcharge is levied @ 15% on the amount of income-tax where the total income of the taxpayer exceeds Rs. 1 crore. In this case, total income of Mr. Karan exceeds Rs. 1 crore and hence he will be liable to pay surcharge. Marginal relief is available in cases where the total income is slightly above Rs. 1 crore. The computation of normal tax liability (i.e. liability without marginal relief) and tax liability under marginal relief (i.e. liability after marginal relief) will be as follows :
(1) Normal tax liability (i.e. without marginal relief)
Tax on total income before surcharge (*)
30,22,500
Add: Surcharge (@15% on the amount of income-tax of Rs. 30,22,500)
4,53,375
Tax liability after surcharge (i.e., normal tax liability)
34,75,875
(*) Tax rates are discussed in previous illustration.
(2) Tax liability under marginal relief (i.e. after marginal relief)
Tax on Rs. 1 crore (at the rates discussed in previous illustration)
28,12,500
Add: Income above Rs. 1 crore
7,00,000
Tax liability under marginal relief
35,12,500
Conclusion
Normal tax liability (i.e. without marginal relief) comes to Rs. 34,75,875 and tax liability under marginal relief comes to Rs. 35,12,500. It can be observed that normal tax liability (i.e. without marginal relief) is lower and, hence, Rs. 34,75,875 will be the tax liability before cess. Total tax liability will be computed as follows:
Rs.
Normal tax liability i.e. tax liability after surcharge of Rs. 4,53,375
34,75,875
Add: Health & education cess @ 4%
1,39,035
Tax liability
36,14,910
Q.17 What is minimum alternate tax?
For details on minimum alternate tax (MAT) refer to tutorial on”Minimum Alternate Tax and Alternate Minimum Tax”
Q.18 What is alternate minimum tax?
For details on alternate minimum tax (AMT) refer to tutorial on “Minimum Alternate Tax and Alternate Minimum Tax”
In view of severe pandemic, the Central Board of Direct Taxes, in exercise of its powers under Section 119 of the Income-tax Act, 1961, provides following relaxation in respect of Income-tax compliances by the taxpayers:
a) Appeal to Commissioner (Appeals) under Chapter XX of the Income-tax Act, 1961 for which the last date of filing under that Section is 1″ April 2021 or thereafter, may be filed within the time provided under that Section or by 31″ May 2021 , whichever is later;
b) Objections to Dispute Resolution Panel (DRP) under Section 144C of the Income-tax Act, 1961, for which the last date of filing under that Section is 1″ April 2021 or thereafter, may be filed within the time provided under that Section or by 31″ May 2021 , whichever is later;
c) Income-tax return in response to notice under Section 148 of the Income-tax Act, 1961, for which the last date of filing of return of income under the said notice is 1″ April 2021 or thereafter, may be filed within the time allowed under that notice or by 31″ May 2021, whichever is later;
d) Filing of belated return under sub-section (4) and revised return under sub-section (5) of Section 139 of the Income-tax Act,1961 for Assessment Year 2020-21, which was required to be filed on or before 31 ” March 2021 , rnay be filed on or before 31″ May 2021 ;
e) Payment of tax deducted under Section 194-IA, Section 194-IB and Section 194M of the Income-tax Act, 1961 and filing of challan-cum-statement for such tax deducted, which are required to be paid and furnished by 30’h April 2021 under Rule 30 of the Income-tax Rules, 1962, may be paid and furnished on or before 31″ May 2021 ;
f) Statement in Form No. 61, containing particulars of declarations received in Form No.60, which is due to be furnished on or before 30’h April 2021 , may be furnished on or before 31″ May 2021.
Section 11 of Income Tax Act, 1961- Income from property held for charitable or religious purposes
Sub Section (1) of Section 11
Subject to the provisions of sections 60 to63, the following incomeshall not be included in the total income (i.e. Exempt) of the previous year of the person in receipt of the income
(a)
(b)
(c)
(d)
income derived from property held under trust wholly for charitable or religious purposes,to the extent to which such income is applied to such purposes in India; ANDwhere any such income is accumulated or set apart for application to such purposes in India,to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property;
income derived from property held under trust in part only for such purposes,the trust having been created before the commencement of this Act,to the extent to which such income is applied to such purposes in India; ANDwhere any such income is finally set apart for application to such purposes in India,to the extent to which the income so set apart is not in excess of fifteen per cent of the income from such property;
income derived from property held under trust – created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, ANDfor charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India: Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income;
Income in the form of voluntary contributionsmade with a specific direction that they shall form part of the corpus of the trust or institution.
For the purposes of clauses of (a) and (b) –
Explanation – 1
in computing the fifteen per cent of the income which may be accumulated or set apart, any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the income; (Clause-1)
Situation (Clause-2)
Reason
Year of application
Notes
Sec.11(1B) {Where clause 2 not satisfied}
if, in the previous year, the income applied to charitable or religious purposes in India falls short of eighty-five per cent of the *income derived* during that year from property held under trust, or, as the case may be, held under trust in part, by any amount—
for the reason that the whole or any part of the income has not been received during that year, OR
so much of the income applied to such purposes in India during the previous year in which the income is received or during the previous year immediately following as does not exceed the said amount, AND
Exemption is allowed only at the option of the person in receipt of the income.Option shall be exercised before the expiry of the time allowed u/s 139(1).
In the previous year immediately following the previous year in which the income was received;
such income shall be deemed to be the income of the person in receipt
for any other reason,
so much of the income applied to such purposes in India during the previous year immediately following the previous year in which the income was derived as does not exceed the said amount,
In the previous year immediatelyfollowing the previous year in which the income was derived.
Rule 17(1): To exercise aforesaid option Form No. 9A shall be furnished electronically either underdigital signature or electronic verification code, on or after 1st day of April of relevant AY and before the expiry of time allowed u/s 139(1).
Explanation – 2
Any amount credited or paid, out of income referred to in clause (a) or clause (b) read with Explanation 1, to any other trust or institution registered under section 12AA, being contribution with a specific direction that they shall form part of the corpus of the trust or institution, shall not be treated as application of income for charitable or religious purposes.
From the above it can construed that Payment of any amount to any other charitable or religious trust with a specific direction shall not be considered as application of income. Hence any contribution to any other religious or charitable trust in general (i.e. without any specific direction) can be considered as application of income.
Explanation – 3
The provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) of section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable under the head “Profits and gains of business or profession”
S.No.
Section
Description
1
40(a)(ia)
30% of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sec.139(1), is not deductible in computing the income chargeable under the head of PGBP.
2
40A(3)
Where the assesse incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise by an account payee cheque drawn on a bank or account payee bank draft or use of electronic paying system through a bank, exceeds Ten thousand rupees, no deduction shall be allowed in respect of such expenditure.
3
40A(3A)
Where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, or use of electronic clearing system through a bank account, the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds ten thousand rupees.
(1A) for the purposes of sub section (1)
(a)
(b)
where a capital asset, being property held under trust wholly for charitable or religious purposes,is transferred and the whole or any part of the net consideration is utilized for acquiring another capital asset to be so held,then, the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely; (i)(ii) where the whole of the net consideration is utilized in acquiring the new capital asset,the whole of such capital gain; where only a part of the net consideration is utilized for acquiring the new capital asset,so much of such capital gain as is equal to the amount, if any, by which the amount so utilized exceeds the cost of the transferred asset;
where a capital asset, being property held under trust in part only for such purposes,is transferred and the whole or any part of the net consideration is utilized for acquiring another capital asset to be so held,then, the appropriate fraction of the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:— (i)(ii) where the whole of the net consideration is utilized in acquiring the new capital asset,the whole of the appropriate fraction of such capital gain in any other case,So much of the appropriate fraction of the capital gain as is equal to the amount, if any,By which the appropriate fraction of the amount utilized for acquiring the new asset exceeds the appropriate fraction of the cost of the transferred asset.
Note: “appropriate fraction” means the fraction which represents the extent to which the income derived from the capital asset transferred was immediately before such transfer applicable to charitable or religious purposes.
Sub-section (2) of Section 11
Situation – Further exemption for accumulating more than 15%
Conditions
Where eighty-five per cent of the income referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied,to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part,for application to such purposes in India,such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income
Assessee shall furnishes a statement in the *prescribed form* and in the prescribed manner to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years;The money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5);The statement referred to in clause (a) is furnished on or before the due date specified under sub- section (1) of section 139 for furnishing the return of income for the previous year.
Note: If the income so set apart or accumulated not able to apply in the period of five years due to court order, intervening period shall be excluded. *Rule 17(2): The statement shall be furnished in Form-10 before the expiry of the time allowed u/s 139(1).* Explanation: Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub- section (1), read with the Explanation to that sub-section,which is not applied, but is accumulated or set apart,to any registered Trust or Institution Sec.12AA fund or institution or trust or any university or other educational institution or any hospital or other medical institution Sec.(23C)(iv) / (v) / (vi) Shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter.
Sub-section (3) of Section 11
Exemption withdrawn conditions – Only for amount the amount over & above 15% [Sec.11(2)]
Effect
Any income referred to in sub-section (2) which – is applied to purposes other than charitable or religious purposes as aforesaid or ceases to be accumulated or set apart for application thereto, orceases to remain invested or deposited in any of the forms or modes specified in sub-section (5), oris not utilized for the purpose for which it is so accumulated or set apart during the period referred to in clause (a) of that sub-section or in the year immediately following the expiry thereof,is credited or paid to any trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in Sec.(23C)(iv) / (v) / (vi).
Shall be deemed to be the income of such person The previous year in which it is so applied or ceases to be so accumulated or set apart or ceases to remain so invested or deposited or credited or paid or, as the case may be,The previous year immediately following the expiry of the period aforesaid.
Sub-section (3A) of Section 11
Notwithstanding anything contained in sub-section (3), where due to circumstances beyond the control of the person in receipt of the income,any income invested or deposited in accordance with the provisions of clause (b) of sub-section (2)cannot be applied for the purpose for which it was accumulated or set apart
the Assessing Officer may, on an application made to him in this behalf, allow such person to apply such income for such other charitable or religious purpose in India as is specified in the application by such person and as is in conformity with the objects of the trust;And thereupon the provisions of sub-section (3) shall apply as if the purpose specified by such person in the application under this sub-section were a purpose specified in the notice given to the Assessing Officer under clause (a) of sub-section (2).
(Exception) Providedthat the Assessing Officer shall not allow application of such income by way of payment or credit made for the purposes referred to in clause (d) of sub-section (3) of section 11 i.e. Sec.12AA OR Sec.10(23C)(iv)/(v)/(vi)
Provided furtherthat in case the trust or institution, which has invested or deposited its income in accordance with the provisions of clause (b) of sub-section (2),is dissolved,The Assessing Officer may allow application of such incomeFor the purposes referred to in clause (d) of sub-section (3) In the year in which such trust or institution was dissolved.
Sub-section (4) of Section 11
For the purposes of this section “property held under trust” includes a business undertaking so held,and where a claim is made that the income of any such undertaking shall not be included in the total income of the persons in receipt thereof,
the Assessing Officer shall have power to determine the income of such undertaking in accordance with the provisions of this Act relating to assessment;and where any income so determined is in excess of the income as shown in the accounts of the undertaking,Such excess shall be deemed to be applied to purposes other than charitable or religious purposes.
Income from a business undertaking shall be included in the income of the trust if, assesse made claim to AO to not to include.AO has the power to determine the income of the business undertaking in accordance with provisions of the act.If AO found excess income over the income shown in the BOA shall be deemed to be applied to the purposes other than charitable or religious purposes.
Sub-section (4A) of Section 11
Sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) shall not apply in relation to any income of a trust or an institution, being profits and gains of business, unless the business is incidental to the attainment of the objectives of the trust or, as the case may be, institution, and separate books of account are maintained by such trust or institution in respect of such business.
Sub-section (5) of Section 11
The forms and modes of investing or depositing the money referred to in clause (b) of sub-section (2) shall be the following
(i)
investment in savings certificates as defined in sec.2(c) of the Government Savings Certificates Act, 1959 (46 of 1959), and any other securities or certificates issued by the Central Government under the Small Savings Schemes of that Government
(ii)
deposit in any account with the Post Office Savings Bank
(iii)
deposit in any account with a scheduled bank or a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank)
(iv)
investment in units of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963)
(v)
investment in any security for money created and issued by the Central Government or a State Government
(vi)
investment in debentures issued by, or on behalf of, any company or corporation both the principal whereof and the interest whereon are fully and unconditionally guaranteed by the Central Government or by a State Government
(vii)
investment or deposit in any public sector company Provided that where an investment or deposit in any public sector company has been made and such public sector company ceases to be a public sector company,— (A) such investment made in the shares of such company shall be deemed to be an investment made under this clause for a period of three years from the date on which such public sector company ceases to be a public sector company; (B) such other investment or deposit shall be deemed to be an investment or deposit made under this clause for the period up to the date on which such investment or deposit becomes repayable by such company
(viii)
deposits with or investment in any bonds issued by a financial corporation which is engaged in providing long-term finance for industrial development in India and which is eligible for deduction u/s 36(1)(viii)
(ix)
deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction u/s 36(1)(viii)
(ixa)
deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for urban infrastructure in India.
(x)
investment in immovable property
(xi)
deposits with the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964)
(xii)
any other form or mode of investment or deposit as may be prescribed
Rule 17C: For the purposes of Sec.11(5)(xii) (Other form of prescribed investments)
(i)
investment in the units issued under any scheme of the mutual fund referred to in clause (23D) of section 10 of the Income-tax Act, 1961;
(ii)
any transfer of deposits to the Public Account of India
(iii)
deposits made with an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both
(iv)
investment by way of acquiring equity shares of a depository as defined in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996)
(v)
investment made by a recognized stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) (hereafter referred to as investor) in the equity share capital of a company (hereafter referred to as investee)— which is engaged in dealing with securities or mainly associated with the securities marketwhose main object is to acquire the membership of another recognized stock exchange for the sole purpose of facilitating the members of the investor to trade on the said stock exchange through the investee in accordance with the directions or guidelines issued under the Securities and Exchange Board of India Act, 1992 (15 of 1992) by the Securities and Exchange Board of India established under section 3 of that Act; andin which at least fifty-one per cent of equity shares are held by the investor and the balance equity shares are held by members of such investor;
(vi)
investment by way of acquiring equity shares of an incubatee by an incubator.
(vii)
investment by way of acquiring shares of National Skill Development Corporation
(viii)
investment in debt instruments issued by any infrastructure Finance Company registered with theReserve Bank of India
(ix)
investment in “Stock Certificate” as defined in clause (c) of paragraph 2 of the Sovereign Gold Bonds Scheme, 2015, published in the Official Gazette vide notification number G.S.R. 827(E), dated the 30th October, 2015.
Sub-section (6) of Section 11
Object
Effect
Cause
In this section where any income is required to be applied or accumulated or set apart for application
then, for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset,
Acquisition of which has been claimed as an application of income under this section in the same or any other previous year.
Sub-section (7) of Section 11
Where a trust or an institution has been granted registration u/s 12AA(1)(b) or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] and the said registration is in force for any previous year,
Then, nothing contained in sec.10 [other than clause (1) and clause (23C) thereof] shall operate to exclude any income derived from the property held under trust from the total income of the person in receipt thereof for that previous year.
Summary: If the trust is registered u/s 12AA or 12A, then any exemption u/s 10 shall not apply Exception: Sec.10(23C)
CBDT amends Income Tax rule 2DB which relates to conditions to be satisfied by the pension fund for exemption under section 10(23FE) and substitutes/amends Form No. 10BBA – Application for notification under sub-clause (iv) of clause (c) of Explanation 1 to the clause (23FE) of section 10 of the Income-tax Act, 1961 (Pension Fund)
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
New Delhi
Notification No. 32/2021- Income Tax Dated: 15th April, 2021
G.S.R. 274(E).—In exercise of the powers conferred by sub-clause (iii) of clause (c) of Explanation 1 to the clause (23FE) of section 10 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. Short title and commencement. – (1) These rules may be called the Income-tax (10th Amendment) Rules, 2021.
(2) They shall come into force from the date of their publication in the Official Gazette.
In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), in rule 2DB,-
(i) after clause (iii), the following proviso shall be inserted, namely:−
“Provided that the provisions of clause (iii) shall not apply to any payment made to creditors or depositors for loan taken or borrowing for the purposes other than for making investment in India;”;
(ii) clause (iv) shall be omitted;
(iii) after clause (vi), the following Explanation shall be inserted, namely:−
‘Explanation: For the purposes of this rule, “loan and borrowing” shall have the same meaning as assigned to it in sub-clause (b) of clause (ii) of Explanation 2 to clause (23FE) of section 10.’.
In the principal rules, in rule 2DC, in sub-rule (1), for the word “Explanation”, the word and figure “Explanation 1” shall be substituted.
In the principal rules, in the APPENDIX II, for Form No. 10BBA the following Form shall be substituted, namely:-
“Form No. 10BBA
[See sub-rule (1) of rule 2DC]
Application for notification under sub-clause (iv) of clause (c) of Explanation 1 to the clause (23FE) of section 10 of the Income-tax Act, 1961
(Pension Fund)
To,
The Member (Legislation), CBDT (For application during Financial Year 2020-2021)**/
The Member (Having control over the Foreign Tax and Tax Research Division) (For application during other financial year)**
Madam/ Sir,
The applicant is a Pension Fund and interested in making investment in terms of clause (23FE) of section 10 of the Income-tax Act, 1961 and therefore, it is requested that necessary notification may kindly be issued, the details for which are as under:
(a) Name of the Pension Fund
:
(b) Address of the Pension Fund
:
(c) Tax Identification Number of the country of residence
:
(d) Country of residence
:
(e) Permanent Account Number (PAN)
:
It is hereby certified that-
(a) the Pension Fund is created or established under the law of______ (please mention the name of the foreign country including any of its political constituents like province/ state/ local body etc.) and is regulated under that law;
(b) the Pension Fund is not liable to tax in the foreign country mentioned at (a) above or if liable to tax, exemption from taxation for all its income has been provided by such foreign country;
(c) the Pension Fund is responsible for administering or investing the assets for meeting the statutorily obligations and defined contributions of one or more funds or plans established for providing retirement, social security, employment, disability, death benefits or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be;
(d) the earnings and assets of the Pension Fund are used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in (c) above and no portion of the earnings or assets of the pension fund inures any benefit to any other private person barring any payment made to the creditors or depositors or loan or borrowing taken for purposes other than for making investment in India; and
(e) the Pension Fund does not participate in the day to day operations of investee ^ barring any monitoring mechanism to protect the investment with the investee including the right to appoint directors or executive director .
In support of the claims made above, the following documents are attached:
(a) documents constituting the Pension Fund and any later amendment thereto, and
(b) any other relevant document or information.
Verification*
I, _____________ , son/ daughter/ wife** of Shri _____________ , solemnly
declare that to the best of my knowledge and belief, the information given in this application and the annexures and documents, if any, accompanying it are correct and complete and particulars shown therein are truly stated.
I further declare that to the best of my knowledge; I have not concealed any fact or information which could be relevant for this application.
I also declare that I am making this application in my capacity as ____________ (designation) and that I am
holding PAN/ Aadhaar** _____ and I am competent to make this application and verify it.
Verified today the__________ day of_____________
Place
(Signature)
Name
Notes: 1. **Delete whichever is not applicable.
*To be signed by the person competent to verify the return of income under section 140 of the Income-tax Act, 1961.
3.^ An “investee” shall have the same meaning as in clause (i) of Explanation 2 to clause (23FE) of section 10 of the Income-tax Act, 1961.
¥ loan and borrowing shall have the same meaning as in sub-clause (b) of clause (ii) of Explanation 2 to clause (23FE) of section 10 of the Income-tax Act, 1961.”.
[Notification No. 32/2021/ F. No.370142/28/2020-TPL]
NEHA SAHAY, Under Secy. (Tax Policy and Legislation Division)
Note: – The principal rules were published in the Gazette of India Extraordinary, Part III, section 3, sub-section (ii), vide notification number S.O. 969(E), dated the 26th March, 1962 and last amended vide
The postponement is not carried forward even though the taxpayer is in no way responsible for the delay in hearing the appeal in the Income Tax Appellate Tribunal (ITAT). The Delhi High Court had termed this provision of the Income Tax Act as arbitrary and biased.
A three-member bench of the Supreme Court has recently partially repealed a provision of the Income Tax Act. This provision does not allow the postponement of the tax assessment to extend beyond 365 days. Then even if the taxpayer is not responsible for the delay in hearing. The Supreme Court has upheld the Delhi High Court’s decision to partially repeal this provision.
Explain that the postponement is not carried forward even though the taxpayer is not in any way responsible for the delay in hearing the appeal in the Income Tax Appellate Tribunal (ITAT). The Delhi High Court had termed this provision of the Income Tax Act as arbitrary and biased.
Third provision of section 254 (2A) of Income Tax Act 1961
In fact, the third provision of Section 254 (2A) of the Income Tax Act 1961 does not allow the ITAT to extend the stay order granted by ITAT on the tax assessment made by a taxpayer of the Income Tax Department beyond 365 days. This provision is effective from 1 October 2008. Of course there is no reason for any delay in appeal or hearing on behalf of the taxpayer, even then there is a provision to extend the postponement beyond 365 days. The Delhi High Court repealed the third provision of section 254 (2A) and now the Supreme Court has also approved it. After the fresh order, the postponement order of ITAT will not automatically end after 365 days if there is no delay from the taxpayer.
The Income Tax Department has launched the offline utility for taxpayers filing ITR – 1 and 4 for 2020-21 fiscal year.
As per the online e-filing portal, “the user can now download and fill the offline utility for ITR 1 & 4 (AY 2021-22)” It also stated that the utility for other ITRs will be enabled shortly.
The offline utility is available on the e-filing portal and is based on new technology “JSON” (JavaScript Object Notation), which is a light weight format for storing data.
The Financial Year 2020-21 has been a year full of challenges, both, globally as well as for India due to the COVID-19 pandemic. The Government has, from time to time, come out with several initiatives to mitigate the economic hardship caused to the people due to the effect of the pandemic. To provide immediate relief to the taxpayers, both individuals and business entities, the Government has issued income tax refunds in majority of the pending cases with alacrity.
Accordingly, the Central Board of Direct Taxes (CBDT) has issued refunds of more than Rs. 2.62 lakh crore to more than 2.38 crore taxpayers from 1st April, 2020 to 31st March, 2021, as against total refunds of Rs. 1.83 lakh crore issued during the corresponding period of the previous fiscal, marking an increase of almost 43.2%. Income tax refunds of approximately Rs. 87,749 crore have been issued in 2,34,27,418 cases whereas corporate tax refunds of approximately Rs. 1,74,576 crore have been issued in about 3,46,164 cases during the said period.
It has been the endeavour of the Government to come out with various measures to ease the economic fallout of the pandemic and in line with the same, CBDT has issued pending refunds expeditiously.
The Central Government extends the last date for linking of Aadhaar number with PAN from 31st March, 2021 to 30th June, 2021, in view of the difficulties arising out of the COVID-19 pandemic.
Further, the date for issue of notice under section 148 of Income-tax Act,1961, passing of consequential order for direction issued by the Dispute Resolution Panel (DRP) & processing of equalisation levy statements also extended to 30th April, 2021.
Central Government extends the last date for linking of Aadhaar number with PAN from 31st March, 2021 to 30th June, 2021, in view of the difficulties arising out of the COVID-19 pandemic.(1/2)@nsitharamanoffc@Anurag_Office@FinMinIndia
Changes in Income Tax from 1st April 2021 You Must Know
Pre-Filed ITR Forms
The Prefilled Forms will have information of Capital Gains from Listed Securities, Dividend Income, Interest from Banks/Post Office, etc. It aims to make the filling of the IT returns simple as well as urge more persons to disclose their incomes, and deliver improved transparency in the procedure. The taxpayers are now aware of the extent of data accessible with the income tax department, there is more possibility that they will reveal the correct incomes and not misrepresent in order to save tax.
Interest on Provident Fund
Employees have to contribute 12% of their basic wage plus dearness allowance towards PF. Earlier provident fund was exempt from tax but from Budget 2021 has proposed that Interest on Employee Contributions to Provident fund over fts. 2.5 lakhs should Taxable. The government has raised the threshold limit of tax-exempt contributions to the Provident Fund (PF) to Rs 5 lakh (from Rs 2.5 lakh announced in Budget 2021), subject to certain conditions. This increased tax-exempt limit is applicable to only those PF contributions where there is no employer contribution. This announcement was part of the amendments made to the Finance Bill, 2021 at the time of passing of the Bill in the Lok Sabha on March 23.
TDS/TCS Rate if ITR not filed
A new sec 206AB has been inserted in Income Tax Act as a special provision providing for higher rate for TDS for the non-filers of income tax return (ITR).
The Proposed Rate on Non-Filer is higher of the following:
5%
Twice the rate specified in the relevant provision of the Act
Twice the rate or rates in force
Similarly, a new sec 206CCA has been inserted in Income Tax Act as a special provision providing for higher rate for TCS for the non-filers of income tax return (ITR).
The Proposed Rate on Non-Filer is higher of the following:
5%
Twice the rate specified in the relevant provision of the Act
Senior Citizen
Persons whose age is above 75 years and who has only interest income, they need not file income tax return. Bank will deduct the income tax which he has to pay and deposit to the government. The condition is the person should have only pension income and interest from fixed deposit should accrue in the same bank.
The Budget 2021 has proposed to insert a new section to provide a relaxation from filing the return of income for senior citizens who are above 75, if the following conditions are satisfied :-
The senior citizen is resident in India and of the age of 75 or more during the previous year.
The senior citizen who has pension and no other income. However, he or she may have interest income from the same bank in which he or she is receiving his or her pension income.
This bank is a specified bank. The central government will be notifying a few banks, which are banking company, to be the specified bank.
He or she has to furnish a declaration to the specified bank. The declaration containing such particulars, in such form and verified in such manner, as may be prescribed.
Income Escaping & Search assessments
The provisions related to income escaping assessment provide that if the assessing officer has reason to believe that any income chargeable to tax has escaped assessments year, he may assess or reassess or recompute the total income of such year under section 147 of the act by issuing notice under section 148.
LTC Cash Scheme
The central government’s LTC cash voucher scheme is an alternative to travel requirements needed to claim benefits. Employees can buy goods and services which incur GST of 12 percent or more, and then claim submit the invoice to the employer. You’ll have to spend three times the deemed LTC fare to avail this scheme though. The maximum deemed LTC fare under the scheme is Rs. 36,000 per person.
All purchases should be made via digital payment methods only and the invoice much clearly mention GST number and the amount of GST paid with the purchase. Employees must make purchases between October 12 2020 and March 31 2021. Those who have opted for the new simplified tax slabs will not be able to enjoy the benefits of this scheme.
Thanks for Reading My Article on “Changes in Income Tax from 1st April 2021 You Must Know”
Finance Minister Smt. Nirmala Sitharaman has introduced ‘Notice of Amendments’ to the Finance Bill, 2021 in the Lok Sabha. More than 100 changes have been proposed to the original Finance Bill, 2021 which was introduced in the Union Budget, 2021-22.
The CBDT inserts a new Form 15E under rule 29BA to the provisions of section 195.
Section 195 was amended by the Finance (No. 2) Act, 2019 to authorise the board to prescribe the form and manner of filing the application to govern the appropriate proportion of such sum so chargeable and upon determination tax to be deducted as per section 195 on that proportion only.
Form 15E is an Application for a grant of certificate for determination of the appropriate proportion of sum (other than Salary), payable to a non-resident, chargeable in case of the recipients. The form will come into effect from 1st April 2021.
It can file Form 15E electronically on the Income-tax portal using a DSC or EVC.
Assessing Officer shall analyse the application and on being satisfied that the whole of such sum would not be the income chargeable in case of the recipient, may issue a certificate for the purpose of TDS determining the appropriate proportion of such sum chargeable under the provision of section 195 of the Act.
The Assessing Officer shall take the following information into consideration.
tax payable on the estimated income of the previous year relevant to the assessment year;
tax payable on the assessed or returned or estimated income, as the case may be, of preceding four previous years;
existing liability under the Income-tax Act, 1961(43 of 1961) and Wealth-tax Act, 1957(27 of 1957);
advance tax payment, tax deducted at source, and tax collected at source for the assessment year relevant to the previous year till the date of making an application under sub-rule (1).
The certificate shall be valid only for the payment to non-resident named therein and for such period of the previous year as may be specified in the certificate, unless it is rescinded by the Assessing Officer at any time before the expiry of the specified period.
An application for a fresh certificate may be made, if the assessee so desires, after the expiration of the period of validity of the earlier certificate or within three months before the expiry. The Principal Director General of Income-tax or the Director-General of Income-tax, as the case may be, shall lay down procedures, formats, and standards for ensuring secure capture and transmission of data and uploading of documents and the Principal Director General of Income-tax or the Director-General of Income-tax shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the furnishing of Form No 15E and issuance of Certificate under sub-rule (3).
Disclaimer: The content of this article is intended to provide a knowledge of the subject matter. Suggestions and feedback to improve the task are welcome. The article and opinions therein are based on my understanding and interpretation of the law and provisions prevailing as on date. The contents of this article are for information purposes only and does not constitute an advice or a legal opinion. The opinion may vary according to one’s interpretation of the law. We love to hear your feedback at gadhiaandassociates@gmail.com
The Income Tax Department carried out searches on 17.03.2021 in the case of a prominent builder and developer group based in Mumbai. Searches were also conducted in the case of dealers engaged in the business of trading of mobiles accessories. In all, 29 premises located in Mumbai were covered under search operation, while 14 premises were covered under survey action.
The real estate group is developing a commercial Mall, having 950 units exclusively for the mobile accessories business. Of these, about 905 of the units have been sold starting from 2017 till date. The evidences stored in a pen drive found in the searched premises revealed that the builder group, has taken an amount of Rs. 150 crore as on-money receipts over and above the agreement value, which is not accounted for in the books of accounts on sale of such units. Further, similar evidence of on-money amounting to Rs. 70 crore has been found in the pen drive pertaining to a residential-cum-commercial project. Cash amounting to Rs. 5.50 crore has been found and seized from various premises of this group. The receipts of on-money for sale of shops/flats by the builder in various projects recorded in digital form have been seized.
In respect of the dealers engaged in the business of mobile accessories, various incriminating evidence has been found pertaining to out-of-books sales. The group imports goods from China and sells these goods to various parties all over India. The imports are under invoiced and payments are made through hawala channels. 13 secret godowns containing unaccounted stock have been discovered, wherein the stock is being inventorised and valuation is under progress.
Further, evidence of unaccounted investments in properties by the said dealers amounting to Rs. 40.5 crore has been detected. Out of this, unaccounted investments worth Rs. 21 crore are against the purchase of units in the said commercial Mall. Four undisclosed bank accounts in the names of employees have also been detected, which are used to collect the sale proceeds from the retail vendors of the groups. The total deposits in the bank accounts amount to Rs. 80 crore.
This operation has revealed that the entire sector of trading in mobile accessories is largely unaccounted. The main components are imported from China through Mumbai and Chennai ports. Search has revealed that the dealers are undervaluing the sales and purchases in a major way. The transactions with Chinese counterparts take place through the We-Chat app. The Department has recovered the We-chat messages using forensics. The information pieces are being verified and collated to extract information regarding the quantum and cost of Chinese imports.
Unaccounted cash of Rs. 5.89 crore has been seized, so far, in this operation. The searches, as yet, have resulted in the detection of undisclosed income of around Rs. 270 crore. Further investigations and the exercise of valuation of unaccounted stock are in progress.
Be Alert: Income Tax Department Conducts Searches due to Non Compliance of Faceless Assessment Notices
The Income Tax Department carried out search on 17.03.2021 on a group engaged in the business of real estate, housing, hospitality and retail liquor trade. The search operation was carried out at 12 different premises located in Samalkha, Gurugram, Rohtak and Panchkula.
The search action emanated due to non-compliance to faceless scrutiny assessment notices selected and issued through a computerised system. Notices under the Faceless Assessment Scheme sent to certain assessees were consistently not complied with even though received by them. Data analytics revealed that the recipients were persons of no/low means. Subsequent internal and discreet enquiries revealed that the said persons were the front for the above said group and were also the benamidars of some of the group members.
Further enquiries revealed that the persons to whom the notices were issued were engaged in the liquor business run by the group. It was found that such persons to whom liquor licences were issued were the benamidars of the main group members. They were persons of no means and they have stated on oath that they have no knowledge of the business being run in their names. It seems that their names have been misused to avail the quota reserved for SC/ST section. Further investigation is on to establish the money trail and real ownership. Suitable action under Benami Prohibition Act will be taken in all such cases.
During the search, evidence has been found proving bogus booking of flats in the name of employees/relatives and unidentifiable persons, in the affordable housing scheme project of the group. The company has allotted houses to the employees of the group members, whose un-encashed cheques have been found at the premises. However, flats have been further sold to the actual buyer at a premium of Rs. 6 lakh to 10 lakh each. The premiums have been received in cash and not accounted for in the books. Premium in cash has been charged from the other buyers as well, in this affordable housing scheme. Thus, there is not only misuse of the scheme but also tax evasion which is estimated to be not less than Rs. 36 crore.
During the search, evidence was found that the group has claimed bogus expenses on account of building material like cement, raiti, iron bar etc. of around Rs. 100 crore, in previous years, leading to huge evasion of taxes. Further, it was seen that the group is also regularly claiming huge bogus business promotion expenses, in the previous years, and laundering the cash siphoned off as unaccounted investment in immovable properties.
Substantial evidence has also been found that the group has routed their unaccounted income of Rs. 70 crore in the form of bogus share capital and unsecured loan, through a shell company which has been invested in the buy-out of a real estate project from a popular builder in the area of Gurugram. Evidence in the form of property documents and title deeds have been found regarding investment in benami properties in India as well as out of the country. The matter is being examined further.
The group has incurred unaccounted expenditure for personal and office purposes in cash running into crores of rupees. This also includes expenditure for taking various approvals for projects and lavish marriage expenses.
During the search, unexplained investment in jewellery of approximate Rs. 3 crore has been found. 4 bank lockers of the group have also been found and put under restraint.
CBDT issues clarification on continuation of concessional rate of tax on interest income of FPIs. It has been clarified that the concessional rate of 5% will continue to be applicable on certain interest income of FPIs. Press release issued on the same today.
CBDT issues clarification on continuation of concessional rate of tax on interest income of FPIs. It has been clarified that the concessional rate of 5% will continue to be applicable on certain interest income of FPIs. Press release issued on the same today. pic.twitter.com/yDXndQ4UQh
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