The facility to view tax and computation sheet for demand raised by AO is made available to the assessee in the e-Filing portal. After Login, select e-File Response to Outstanding Tax Demand, click on download button next to demand amount to download the details pdf. In case of demand raised by CPC or raised manually outside the system, assessee needs to request for resend of intimation request or Jurisdictional Assessing Officer respectively.
Showing posts with label cit. Show all posts
Showing posts with label cit. Show all posts
Income Tax Jurisdiction (PAN India)
NEW JURISDICTION OF THE PR. CIT/CIT CHARGE; ADDL. CIT/ JT. CIT RANGES & ASSESSING OFFICERS / TAX RECOVERY OFFICERS OF THE PR. CHIEF CIT, STATE WISE
(click below)
http://www.incometaxindia.gov.in/Pages/jurisdiction.aspx
OFFICERS OF THE PR. CHIEF CIT, KANPUR, (UP (WEST) AND UTTARKHAND REGION), KANPUR (click below)
http://office.incometaxindia.gov.in/kanpur/Documents/Jurisdiction/jurisdiction-details.pdf
Source Income Tax Site
http://www.incometaxindia.gov.in/Pages/jurisdiction.aspx
OFFICERS OF THE PR. CHIEF CIT, KANPUR, (UP (WEST) AND UTTARKHAND REGION), KANPUR (click below)
http://office.incometaxindia.gov.in/kanpur/Documents/Jurisdiction/jurisdiction-details.pdf
Source Income Tax Site
CBDT finally extended due date all over India to 31.10.2015
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
PRESS RELEASENew Delhi, 1st October, 2015
Subject: Extension of date for filing of Income tax returns and tax audit reports to 31st October 2015 – regarding
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
PRESS RELEASENew Delhi, 1st October, 2015
Subject: Extension of date for filing of Income tax returns and tax audit reports to 31st October 2015 – regarding
The issue of extension of last date for e-filing returns of income and audit reports u/s 44AB due by 30th September, 2015 has been the subject matter of litigation in various High Courts across the country. While some High Courts have ruled in favour of the extension of due date, some others have ruled otherwise. In order to avoid discrimination between taxpayers residing in different jurisdictions and to be fair to all, and also in view of paucity of time to approach the Hon’ble Supreme Court by way of Special Leave Petition, the Government has decided that across the country, all the returns of income and audit reports u/s 44AB which were due for e-filing by 30thSeptember, 2015, may now be filed by 31st October, 2015.
Necessary order u/s 119 of the Income-tax Act, 1961 has been issued by CBDT in this regard.
(Shefali Shah)
Pr. Commissioner of Income Tax (OSD)
Official Spokesperson, CBDT
Tax Audit Date Extended?- Fake Order doing rounds
Sunday Evening when I was enjoying the evening with family suddenly My Email and Whatapps Message box shown spike of messages which were coming from our viewers and friends. The Most of the Messages/Emails were in respect of one Income Tax order in which it is claimed that Due date for Income Tax Return is been extended to 15th October 2015 from current 30th September 2015.
We checked the Notification for its authenticity and found that the same cannot be relied for the following reasons :-
We checked the Notification for its authenticity and found that the same cannot be relied for the following reasons :-
1. We confirmed with CBDT officials and they denied issue of any such Notifications.
2. We checked the official Websites of Income Tax, Government of India and Finance ministry and have not found any such notification, Order or announcement.
3. Income Tax Press release starts with F. No. while in this order it started with PF N0.
4. in Address of ICAI Pin code is 110001 instead of 110003.
5. Income Tax Office is in North Block not West Block.
6. Income Tax Department do not have ITEN division. Normally such announcement comes from TPL Division or ITA.II Division.
7. Its been issued on Saturday -26.09.2015 a day when CBDT offices were closed.
8. At the top date is 26.09.2015 but in signature the date is mentioned as 26/05/2015.
9. In Subject orders mentions extension of date of ITR but in body the Notification discussed about section 44AB related to Tax Audit.
10. Due dates for Tax Audit Returns is been specified under section 139(1) not under Section 44AB. Order which is doing rounds on Social media is as follows :-
We request our readers to not to rely on any such notification unless they confirm the same with official website of Government of India or they may check our website where we will update them if any such announcement comes.
Source Online Article
CBDT notifies New ITR-3, ITR-4, ITR-5 ITR-6 & ITR -7 for A.Y. 2015-16
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB- SECTION (ii)]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
[CENTRAL BOARD OF DIRECT TAXES]
NEW DELHI
NOTIFICATION
New Delhi, the 29th day of July, 2015
1. (1) These rules may be called the Income-tax (Tenth Amendment) Rules, 2015.
(2) They shall be deemed to have come into force with effect from the 1st day of April, 2015.
2. In the Income-tax rules, 1962, in Appendix-II, for FORM ITR-3, FORM ITR-4, FORM ITR-5, FORM ITR-6 and FORM ITR-7, the following FORMS shall respectively be substituted, namely:-
[NOTIFICATION NO. 61/2015/ F.No.142/1/2015-TPL]
(Gaurav Kanaujia)
Director to the Government of India
Note.- The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii) vide notification number S.O.969(E), dated the 26th March, 1962 and last amended vide notification number S.O.1683 (E), dated 24.06.2015.
_______________________________________________
To Download the Excel Utility follow the below link:
https://incometaxindiaefiling.gov.in/
Received Gift? Check taxability before enjoying!
We receive gifts in cash, ornaments, land, car, gadgets, vouchers and many more on various occasions like on birthday, marriage, achievements and even sometimes out of gratitude too. Feel special and happy on its receipt, right? But have you ever bothered to check its taxability under Indian Income Tax Law? If not, then here are the provisions of income tax law related to gift. Some of the gifting transactions are to be taxed under the Income Tax Act, 1961 and the onus to offer such gift for tax and then to pay tax on it; is on the recipient of such gift. Remember in this article, we will be testing only those transactions for “taxability” which are having gift value exceeding Rs.50,000/- and that too received without consideration i.e. nothing is exchanged for such gift by an individual on or after October 1, 2009.
There are 3 aspects of the transaction which need to be considered in consolidation before concluding its taxability…
1. Money or Property received as Gift.
2. Relationship with the person gifting such money or property.
3. Occasion on which gift is received.
Let us first understand; what are those things which can be a taxable gift under the law.
1. Money i.e. cash or cheque or draft.
2. Property: The term “Property” is specifically narrated in the law. So besides those items, other gifts will not come in the purview of taxability and property includes;
i. immovable property being land or building or both;
ii. shares and securities;
iii. jewellery;
iv. archaeological collections;
v. drawings;
vi. paintings;
vii. sculptures;
viii. any work of art;
ix. bullion (bullion w.e.f June 1, 2010)
Lesson: Receipt of Gift other than in Money or Property is not liable for tax.
Second aspect to be look upon is the relationship with the person gifting such money or property. Income Tax Act has excluded transactions of gift received from relatives from taxing and relative with respect to an individual includes;
i. spouse of the individual;
ii. brother or sister of the individual;
iii. brother or sister of the spouse of the individual;
iv. brother or sister of either of the parents of the individual;
v. any lineal ascendant or descendant of the individual;
vi. any lineal ascendant or descendant of the spouse of the individual;
vii. spouse of the person referred to in items (ii) to (vi)
Lesson: Receipt of Gift in Money or Property from a relative is not liable for tax.
Now coming to occasions, gift received on specified events or circumstances is excluded from taxability such as;
i. on the occasion of the marriage of the individual;
ii. under a will or by way of inheritance;
iii. in contemplation of death of the payer or donor;
iv. from any local authority;
v. from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in section 10(23C);
vi. from any trust or institution registered under section 12AA.
Lesson: Receipt of Gift in Money or Property from a relative or from a non-relative on specified occasion/circumstances is not liable for tax.
So whenever you will be doing a taxability test for any gift transaction, go by each of these step and conclude. But it is not as simple and straight as it looks; it also includes many other aspects relating to computation and documentation; so it is always advised to consult your Tax Advocate or Tax Advisor on receipt of gift or if possible before entering into such gifting transactions.
Article found online
Tax Planning - Income From House Property
F.A.Q. on Income from House Property
Q1. How is income to be computed, if a property is partly let out and partly self-occupied?Answer. It has to be treated as two residential units and income from each unit has to be computed according to law by allocating common outgoings on a basis proportionate to area of occupation.
Q2. Is it necessary that the person must be a legal owner in order that the income should be computed under the head “income from property”?Answer. No. If a person is entitled to the income under the law, such income is bound to be assessed under the head “income from property”. Tax laws are generally concerned with beneficial ownership as laid down in CIT vs. Podar Cement Pvt. Ltd.
Q.3. Is municipal tax deductible in computation of income from: (i) self-occupied property; and (ii) where demand notice is reserved but it has not been paid?Answer. Since income from one self-occupied property is nil, subject only to deduction of interest the question of deduction of municipal tax does not arise. For let out proper-ties, municipal tax is deductible only if it is paid during the year.
Q.4. Is deduction for repairs available, when tenant undertakes repairs under the rental agreement? What is meant by repairs?Answer. By repairs we mean only substantial repairs as held in CIT vs. Parbutty Churn Law 1965 57 ITR 609 Cal and Sir Shadi Lai & Sons vs. CIT. Where even substantial repairs other than normal maintenance is undertaken by tenant, annual value should get enhanced by the extent of repairs which should have been borne by the landlord so that any deduction for repairs then available to landlord will neutralise the amount added to annual rent. It would, therefore, mean that where there is specific stipulation that all repairs will be borne by tenant, there can be no deduction for repairs.
Q5. Is an annual charge on rent receivable on account of mortgage of property for obtaining funds for business or paying income tax deductible under section 24(1)(iv) of the Income Tax Act, 1961 ?Answer. No. Since it is a charge created voluntarily by the assessee, it is not deductible as was held in CIT vs. Indramani Devi Singhania in case of a business loan and CIT vs. Tarachand Kalyanji in the case of a charge created for payment of excess profit tax In the latter case, it was held that the amount is not deductible even if the charge has been created before 1st April, 1969, when such amount was deductible in law.
Q6. What are the conditions for deduction of unrealised rent?Answer. Rule 4 of the Income-tax Rules as substituted by the Income-tax (Eighth Amendment) Rules, 2001 prescribes the conditions as under:
Unrealised rent—For the purposes of the Explanation below sub-section (1) of section 23, the amount of rent which the owner cannot realise shall be equal to the amount of rent payable but not paid by a tenant of the assessee and so proved to be lost and irrecoverable where,—
(a) the tenancy is bona fide;
(b) the defaulting tenant has vacated, or steps have been taken to compel him to vacate the property;
(c) the defaulting tenant is not in occupation of any other property of the assessee;
(d) the assessee has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or satisfies the Assessing Officer that legal proceedings would be useless.
Q7. Is salary paid to a caretaker deductible?Answer. No. Only deductions specified under section 24 are deductible.
Q8. How is the income of co-owned property computed?Answer. Income has to be split up between co-owners and each co-owner has to be assessed as his share of the income as provided under section 26 of the Act.
Q9. Where an assessee borrows a second loan for repaying the first loan taken for acquiring a property, will the interest on second loan be deductible as amount borrowed for acquiring the property?Answer. Yes. It is so conceded in Board’s Circular No. 28 dated 20th August, 1969.
Q10. Ground rent—whether arrears of earlier years deductible?Answer. No. The deduction under section 24(1 )(v) is confined to the ground rent of previous year, and thus arrears of earlier years are not deductible. Ground rent is no longer deductible from A.Y.2002-2003.
Q11. Interest deductible under section 24(1 )(vi): whether simple interest or compound Interest?Answer. Only simple interest is deductible.
Q12. What is the treatment given to loss from property?Answer. Loss from property can be set off against other heads of income in the same year and to the extent unabsorbed, it will be carried forward and set off in next eight years.
Q13. Where municipal valuation is higher than the rent charged, what is the basis of computation of property income?Answer. The law requires that either annual value as fixed by the local authorities or actual rent received, whichever is higher, should be treated as annual value. But where the assessee is unable to enhance the rent due to Rent Control Act, there is a case for acceptance of rent receivable as the basis. It was so held in CIT vs. Sampathammal Chordia 2000 245 ITR 290 Mad.
Q14. Are municipal taxes allowed on the basis of tax leviable for a year or on the basis of payment? If it is on the basis of what is leviable, what happens if demand for earlier years is received only during the year with the result that the payments for earlier years are made during the year?Answer. Section 23(1) allows property tax levied by local authority on the basis of payment from assessment year 1985-86 vide amendment by Taxation Laws (Amendment) Act, 1984 so that the controversy in the prior law is now avoided. So, the amount paid during the year, including any amount of arrears for earlier years, is deductible in the year of payment.
Q15. Where the assessee is a mutual association having a property, will the property income be covered by the principle of mutuality so as to be exempt?Answer. Yes, it has been held that principle of mutuality applies even to income from house property in Chelmsford Club vs. CIT (2000) 243 ITR 89 (SC).
Q16. The assessee — Mrs. A is in enjoyment of the property but the right is limited only for life under a Will in her favour. Who has to pay the tax, whether she as the person in enjoyment of the property as the holder of life interest or the remainderman treated as the owner in law?Answer. Ownership is a bundle of rights. Right to enjoy the property is also a right which is part of such ownership right. Hence it will be assessable in the hands of life interest owner. It has been so held in Estate of Ambalal Sarabhai vs. CIT 2000 245 ITR 445 Guj.
Q17. Where an assessee receives interest on deposit taken from a tenant, is it necessary to enhance the annual value by the notional interest which would have otherwise been payable?Answer. Where actual rent received is more than the fair rent, i.e., annual value fixed by the local authorities, notional interest need not be added. It was so held in CIT vs. J.K. Investors (Bombay) Ltd. 2001) 167 CTR (Mad) 163. Where such notional interest is to be taken, as for example, where no rent is charged because of such interest free deposit, the interest or other income earned by deployment of the interest free deposit will have to be correspondingly reduced from the annual value but the law does not provide for the same.
But it stands to reason that such reduction may have to be allowed, though it is doubtful whether such reasonable interpretation will be acceptable to revenue.
Q18. Is it open to the Assessing Officer to substitute reasonable rent where the property is let out to an associate company at a lower rate?Answer. Since annual value is not the only criterion, it is open to the Assessing Officer to adopt a reasonable rate where it is let out at a concessional rate. It was so held in T. V. Sundaram Iyengar & Sons Ltd. vs. CIT.
Q19. Where the property is in existence for less than 12 months, is it possible to assess the income as income from property since the scheme of the Act is to assess the annual rent? Does the income escape assessment in such cases?Answer. The argument that the property should have been held for entire 12 months to be assessable under the head ‘Income from property’ was accepted in P.J. Eapen vs. CIT. But it was held that such income will be assessable under ‘Other sources’. The decision is open to doubt because there is no reason why the proportionate income should not be assessed with reference to the period of holding because such proportionality is recognised in section 23 where the property is let out for part of the year and used for own residence for rest of the year under section 23(2)(a)(ii). Hence, similar apportionment should be possible though the annual value is with reference to the income which the property might fetch if let out from year to year.
Q20. Where the deduction under section 24 exceeds the available income, can such excess be allowable?Answer. Where the property is partly let out and partly used for own residence, the deduction under section 24(1) will be limited to the income determined under that clause under the substituted section 24 by Finance Act, 2001. with effect from 1.4.2002, there are no detailed deductions but only 30% of annual value and interest on borrowed capital subject to the limit of ` 30,000 for self-occupied property with enhanced limit up to `2.00 lakhs subject to conditions as to the date of the loan and the date of construction. Hence, there can be a loss from the property depending upon interest on borrowed capital. It is only in respect of annual value, that there cannot be loss.
Q21. There is a practice of receiving deposit instead of rent. The assessee accounts for interest on such deposits as its income. Should he also account for notional income from property?Answer. The answer was against the assessee in S.Ujjanappa vs. CIT, where it was held that ownership confers the duty to account for notional income from such property. The issue as to whether it involves double taxation was not posed in this case. Interest income earned by the assessee on the deposits or notional interest when used in business could have been set off against such income. There is clearly double taxation implicit in such cases. In Webb’s Agricultural & Automobile Industries vs. ITO , a car received by way of lottery winnings brought to tax as income was held to be eligible for depreciation, though assessee had not paid for the same, because of the notional cost. This line of reasoning should avoid elimination of double taxation by setting off the two incomes one notional and the other real as between them, but the law on the subject is still nebulous.
Q22. Is the amount of interest paid on unpaid consideration for acquiring property deductible as interest on borrowing under section 24(1 )(vi) of the Income-tax Act?Answer. In the context of similar interest on unpaid consideration for acquiring a business; the Supreme Court had held in Bombay Steam Navigation Co. (1953) P. Ltd. vs. CIT that such interest is not deductible under section 36(1)(iii) of the Income-tax Act, 1961. But in the same case, it was found that it can be allowed as deduction under section 37 of the Act. It is for this reason that it has felt that in absence of similar residuary clause, interest on unpaid consideration for acquiring property would not be deductible.
However it was found in CIT vs. Sunil Kumar Sharma following CIT vs. R.P. Goenka and J.P. Goenka that it makes no difference, whether the buyer borrows from a third party to acquire a property or gets the necessary financial assistance from the seller of the property. It should be construed that the seller is the lender and the purchaser is the borrower. It would thus appear that such interest is deductible.
Q23. What is the change in respect of computation of property income by the Finance Act, 2005?Answer. There is no change in computation of property income, but the incentive for re-payment of loan for acquiring a property is enlarged by removing the limit of Rs. 20,000 in respect of such repayment and by providing such repayment as an outright deduction from the gross total income by the new section 80C substituting section 88, subject, however, to the limit of total deduction under section 80C to Rs. 1.50 lakh. Interest payable on such loan would be admissible as deduction, if the property were let out, subject to limit of Rs. 30,000 in case of self- occupation.
Q24. If a person puts up a property on leased land, is the lease rent deductible as income from property?Answer. There is no special provision for deduction of lease rent as was available in the pre-existing law under section 24 either as an annual charge on the property or as ground rent, but all the same, what is payable on leased land gets diverted at source and should not be part of the annual value, so that in determination of annual value, the amount should be deductible. Any other view could not be reasonable. An alternative argument may well be that if it is not deductible, income itself may not be assessable as a property income as the assessee is not the full owner of the property, so that income will be assessable as from “Other sources”, so that the deduction in such a case cannot be denied, though the assessee may not be eligible for an ad hoc deduction at 30%; but only actual repairs, where it is assessable as income from other sources.
Q25. Where a landlord undertakes to meet the expenses of watch and ward, corridor, lighting, lift, etc., are such expenses deductible from property income?
Answer. Expenses which are ordinarily borne by the tenant, but undertaken by the landlord according to terms of rental agreement will go to reduce the annual value, because the rental value of the property can only be the net income after meeting the tenant’s burden.
Q26. Where the assessee allows the property to be used by firm of which he is a partner without charging rent, is he entitled to self-occupation allowance or depreciation?Answer. Since the firm is not a separate legal entity, the use of property by the firm should be treated as use and occupation of the property by the partner itself, so that self-occupation benefit will be available from income from such property. If the property is used for business, there is eligibility for depreciation also.
Q27. Where a partner allows the use of the property by the firm and charges rent for the same, would he be entitled to ad hoc deduction at 30% or depreciation of the property because of the use for business?Answer. Since the rent is received from a firm of which he is a partner, the amount of rent receivable may not be treated as received in his capacity as landlord, but as a partner. If the property is used for business, the owner should be entitled to depreciation. It was so held in CIT vs. Ramlubhaiya R. Malhotra following A.M. Ponnuranga Mudaliar vs. CIT. The latter decision was followed in CIT vs. Texspin Engineering and Manufacturing Works.
Q28. In the case where a tenant sublets the property, is the rent paid by the tenant deductible from the income from subletting?Answer. Since the tenant is not the owner, the income should ordinarily be assessable as income from other sources, so that the rent paid should be deductible. Even if it were lease- hold property, the rent paid may have to be taken into account in determining the annual value. Contrary view taken in CIT Hemraj Mahabir Prasad Ltd. would need review.
Q.29. Where the assessee borrows money on mortgage of his property for his daughter’s marriage, is such interest paid deductible from the property income?
Answer. Merely because the loan is charged on the property, interest does not become deductible, because the amount is not borrowed for purpose of acquiring or constructing the property.
Source Online ArticleQ2. Is it necessary that the person must be a legal owner in order that the income should be computed under the head “income from property”?Answer. No. If a person is entitled to the income under the law, such income is bound to be assessed under the head “income from property”. Tax laws are generally concerned with beneficial ownership as laid down in CIT vs. Podar Cement Pvt. Ltd.
Q.3. Is municipal tax deductible in computation of income from: (i) self-occupied property; and (ii) where demand notice is reserved but it has not been paid?Answer. Since income from one self-occupied property is nil, subject only to deduction of interest the question of deduction of municipal tax does not arise. For let out proper-ties, municipal tax is deductible only if it is paid during the year.
Q.4. Is deduction for repairs available, when tenant undertakes repairs under the rental agreement? What is meant by repairs?Answer. By repairs we mean only substantial repairs as held in CIT vs. Parbutty Churn Law 1965 57 ITR 609 Cal and Sir Shadi Lai & Sons vs. CIT. Where even substantial repairs other than normal maintenance is undertaken by tenant, annual value should get enhanced by the extent of repairs which should have been borne by the landlord so that any deduction for repairs then available to landlord will neutralise the amount added to annual rent. It would, therefore, mean that where there is specific stipulation that all repairs will be borne by tenant, there can be no deduction for repairs.
Q5. Is an annual charge on rent receivable on account of mortgage of property for obtaining funds for business or paying income tax deductible under section 24(1)(iv) of the Income Tax Act, 1961 ?Answer. No. Since it is a charge created voluntarily by the assessee, it is not deductible as was held in CIT vs. Indramani Devi Singhania in case of a business loan and CIT vs. Tarachand Kalyanji in the case of a charge created for payment of excess profit tax In the latter case, it was held that the amount is not deductible even if the charge has been created before 1st April, 1969, when such amount was deductible in law.
Q6. What are the conditions for deduction of unrealised rent?Answer. Rule 4 of the Income-tax Rules as substituted by the Income-tax (Eighth Amendment) Rules, 2001 prescribes the conditions as under:
Unrealised rent—For the purposes of the Explanation below sub-section (1) of section 23, the amount of rent which the owner cannot realise shall be equal to the amount of rent payable but not paid by a tenant of the assessee and so proved to be lost and irrecoverable where,—
(a) the tenancy is bona fide;
(b) the defaulting tenant has vacated, or steps have been taken to compel him to vacate the property;
(c) the defaulting tenant is not in occupation of any other property of the assessee;
(d) the assessee has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or satisfies the Assessing Officer that legal proceedings would be useless.
Q7. Is salary paid to a caretaker deductible?Answer. No. Only deductions specified under section 24 are deductible.
Q8. How is the income of co-owned property computed?Answer. Income has to be split up between co-owners and each co-owner has to be assessed as his share of the income as provided under section 26 of the Act.
Q9. Where an assessee borrows a second loan for repaying the first loan taken for acquiring a property, will the interest on second loan be deductible as amount borrowed for acquiring the property?Answer. Yes. It is so conceded in Board’s Circular No. 28 dated 20th August, 1969.
Q10. Ground rent—whether arrears of earlier years deductible?Answer. No. The deduction under section 24(1 )(v) is confined to the ground rent of previous year, and thus arrears of earlier years are not deductible. Ground rent is no longer deductible from A.Y.2002-2003.
Q11. Interest deductible under section 24(1 )(vi): whether simple interest or compound Interest?Answer. Only simple interest is deductible.
Q12. What is the treatment given to loss from property?Answer. Loss from property can be set off against other heads of income in the same year and to the extent unabsorbed, it will be carried forward and set off in next eight years.
Q13. Where municipal valuation is higher than the rent charged, what is the basis of computation of property income?Answer. The law requires that either annual value as fixed by the local authorities or actual rent received, whichever is higher, should be treated as annual value. But where the assessee is unable to enhance the rent due to Rent Control Act, there is a case for acceptance of rent receivable as the basis. It was so held in CIT vs. Sampathammal Chordia 2000 245 ITR 290 Mad.
Q14. Are municipal taxes allowed on the basis of tax leviable for a year or on the basis of payment? If it is on the basis of what is leviable, what happens if demand for earlier years is received only during the year with the result that the payments for earlier years are made during the year?Answer. Section 23(1) allows property tax levied by local authority on the basis of payment from assessment year 1985-86 vide amendment by Taxation Laws (Amendment) Act, 1984 so that the controversy in the prior law is now avoided. So, the amount paid during the year, including any amount of arrears for earlier years, is deductible in the year of payment.
Q15. Where the assessee is a mutual association having a property, will the property income be covered by the principle of mutuality so as to be exempt?Answer. Yes, it has been held that principle of mutuality applies even to income from house property in Chelmsford Club vs. CIT (2000) 243 ITR 89 (SC).
Q16. The assessee — Mrs. A is in enjoyment of the property but the right is limited only for life under a Will in her favour. Who has to pay the tax, whether she as the person in enjoyment of the property as the holder of life interest or the remainderman treated as the owner in law?Answer. Ownership is a bundle of rights. Right to enjoy the property is also a right which is part of such ownership right. Hence it will be assessable in the hands of life interest owner. It has been so held in Estate of Ambalal Sarabhai vs. CIT 2000 245 ITR 445 Guj.
Q17. Where an assessee receives interest on deposit taken from a tenant, is it necessary to enhance the annual value by the notional interest which would have otherwise been payable?Answer. Where actual rent received is more than the fair rent, i.e., annual value fixed by the local authorities, notional interest need not be added. It was so held in CIT vs. J.K. Investors (Bombay) Ltd. 2001) 167 CTR (Mad) 163. Where such notional interest is to be taken, as for example, where no rent is charged because of such interest free deposit, the interest or other income earned by deployment of the interest free deposit will have to be correspondingly reduced from the annual value but the law does not provide for the same.
But it stands to reason that such reduction may have to be allowed, though it is doubtful whether such reasonable interpretation will be acceptable to revenue.
Q18. Is it open to the Assessing Officer to substitute reasonable rent where the property is let out to an associate company at a lower rate?Answer. Since annual value is not the only criterion, it is open to the Assessing Officer to adopt a reasonable rate where it is let out at a concessional rate. It was so held in T. V. Sundaram Iyengar & Sons Ltd. vs. CIT.
Q19. Where the property is in existence for less than 12 months, is it possible to assess the income as income from property since the scheme of the Act is to assess the annual rent? Does the income escape assessment in such cases?Answer. The argument that the property should have been held for entire 12 months to be assessable under the head ‘Income from property’ was accepted in P.J. Eapen vs. CIT. But it was held that such income will be assessable under ‘Other sources’. The decision is open to doubt because there is no reason why the proportionate income should not be assessed with reference to the period of holding because such proportionality is recognised in section 23 where the property is let out for part of the year and used for own residence for rest of the year under section 23(2)(a)(ii). Hence, similar apportionment should be possible though the annual value is with reference to the income which the property might fetch if let out from year to year.
Q20. Where the deduction under section 24 exceeds the available income, can such excess be allowable?Answer. Where the property is partly let out and partly used for own residence, the deduction under section 24(1) will be limited to the income determined under that clause under the substituted section 24 by Finance Act, 2001. with effect from 1.4.2002, there are no detailed deductions but only 30% of annual value and interest on borrowed capital subject to the limit of ` 30,000 for self-occupied property with enhanced limit up to `2.00 lakhs subject to conditions as to the date of the loan and the date of construction. Hence, there can be a loss from the property depending upon interest on borrowed capital. It is only in respect of annual value, that there cannot be loss.
Q21. There is a practice of receiving deposit instead of rent. The assessee accounts for interest on such deposits as its income. Should he also account for notional income from property?Answer. The answer was against the assessee in S.Ujjanappa vs. CIT, where it was held that ownership confers the duty to account for notional income from such property. The issue as to whether it involves double taxation was not posed in this case. Interest income earned by the assessee on the deposits or notional interest when used in business could have been set off against such income. There is clearly double taxation implicit in such cases. In Webb’s Agricultural & Automobile Industries vs. ITO , a car received by way of lottery winnings brought to tax as income was held to be eligible for depreciation, though assessee had not paid for the same, because of the notional cost. This line of reasoning should avoid elimination of double taxation by setting off the two incomes one notional and the other real as between them, but the law on the subject is still nebulous.
Q22. Is the amount of interest paid on unpaid consideration for acquiring property deductible as interest on borrowing under section 24(1 )(vi) of the Income-tax Act?Answer. In the context of similar interest on unpaid consideration for acquiring a business; the Supreme Court had held in Bombay Steam Navigation Co. (1953) P. Ltd. vs. CIT that such interest is not deductible under section 36(1)(iii) of the Income-tax Act, 1961. But in the same case, it was found that it can be allowed as deduction under section 37 of the Act. It is for this reason that it has felt that in absence of similar residuary clause, interest on unpaid consideration for acquiring property would not be deductible.
However it was found in CIT vs. Sunil Kumar Sharma following CIT vs. R.P. Goenka and J.P. Goenka that it makes no difference, whether the buyer borrows from a third party to acquire a property or gets the necessary financial assistance from the seller of the property. It should be construed that the seller is the lender and the purchaser is the borrower. It would thus appear that such interest is deductible.
Q23. What is the change in respect of computation of property income by the Finance Act, 2005?Answer. There is no change in computation of property income, but the incentive for re-payment of loan for acquiring a property is enlarged by removing the limit of Rs. 20,000 in respect of such repayment and by providing such repayment as an outright deduction from the gross total income by the new section 80C substituting section 88, subject, however, to the limit of total deduction under section 80C to Rs. 1.50 lakh. Interest payable on such loan would be admissible as deduction, if the property were let out, subject to limit of Rs. 30,000 in case of self- occupation.
Q24. If a person puts up a property on leased land, is the lease rent deductible as income from property?Answer. There is no special provision for deduction of lease rent as was available in the pre-existing law under section 24 either as an annual charge on the property or as ground rent, but all the same, what is payable on leased land gets diverted at source and should not be part of the annual value, so that in determination of annual value, the amount should be deductible. Any other view could not be reasonable. An alternative argument may well be that if it is not deductible, income itself may not be assessable as a property income as the assessee is not the full owner of the property, so that income will be assessable as from “Other sources”, so that the deduction in such a case cannot be denied, though the assessee may not be eligible for an ad hoc deduction at 30%; but only actual repairs, where it is assessable as income from other sources.
Q25. Where a landlord undertakes to meet the expenses of watch and ward, corridor, lighting, lift, etc., are such expenses deductible from property income?
Answer. Expenses which are ordinarily borne by the tenant, but undertaken by the landlord according to terms of rental agreement will go to reduce the annual value, because the rental value of the property can only be the net income after meeting the tenant’s burden.
Q26. Where the assessee allows the property to be used by firm of which he is a partner without charging rent, is he entitled to self-occupation allowance or depreciation?Answer. Since the firm is not a separate legal entity, the use of property by the firm should be treated as use and occupation of the property by the partner itself, so that self-occupation benefit will be available from income from such property. If the property is used for business, there is eligibility for depreciation also.
Q27. Where a partner allows the use of the property by the firm and charges rent for the same, would he be entitled to ad hoc deduction at 30% or depreciation of the property because of the use for business?Answer. Since the rent is received from a firm of which he is a partner, the amount of rent receivable may not be treated as received in his capacity as landlord, but as a partner. If the property is used for business, the owner should be entitled to depreciation. It was so held in CIT vs. Ramlubhaiya R. Malhotra following A.M. Ponnuranga Mudaliar vs. CIT. The latter decision was followed in CIT vs. Texspin Engineering and Manufacturing Works.
Q28. In the case where a tenant sublets the property, is the rent paid by the tenant deductible from the income from subletting?Answer. Since the tenant is not the owner, the income should ordinarily be assessable as income from other sources, so that the rent paid should be deductible. Even if it were lease- hold property, the rent paid may have to be taken into account in determining the annual value. Contrary view taken in CIT Hemraj Mahabir Prasad Ltd. would need review.
Q.29. Where the assessee borrows money on mortgage of his property for his daughter’s marriage, is such interest paid deductible from the property income?
Answer. Merely because the loan is charged on the property, interest does not become deductible, because the amount is not borrowed for purpose of acquiring or constructing the property.
Reasons Why PAN Card is Important in India
Importance of PAN Card in IndiaPAN card i.e. permanent account number is provided by Income tax department to every income tax payer. But do you know that PAN card is compulsory and required by following authorities while doing financial transactions with them:
While opening a new bank account
It is must to produce a photocopy of PAN card while applying for a new bank account be it public / private / co-operative or other banks. However in the recently started financial inclusion program – Pradhan Mantri Jan Dhan Yojana (PMJDY), PAN card was not required by participating banks. Check out PMJDY benefits.
Applying for credit or debit card
Quoting your PAN is must when applying for debit or credit card. Not submitting this will straight away result in application getting rejected. Credit card application rejection can cause problem in getting loan, credit card etc. in future and impact your credit score.
Insurance payment
CBDT has mandated insurance policy holder to furnish PAN details while making any premium payment to insurance companies for amount exceeding Rs. 50,000 in an year.
Purchase or sell of vehicle
If you are are planning to buy or sell vehicle whose cost is greater than Rs. 5,00,000 then submitting a copy of PAN card is compulsory.
Buying or selling property (immovable asset)
Any property transaction for amount exceeding Rs. 5 Lacs requires this number to be mentioned in the property document. Buying or selling is impossible if you do not have this. In case, it is a joint property then PAN details of each person is required.
Jewellery purchase
High value jewellery purchase for amount greater than Rs.5,00,000 (5 Lacs) requires buyer to provide PAN number.
Fixed or cash deposit
Opening a fixed deposit account or cash deposit for amount greater than Rs. 50,000 at any bank requires the permanent account number. Failure to submit the same would result in TDS getting deducted at 20% if the interest amount of FD account exceeds Rs. 10,000 which is higher than the current 10%.
New telephone connection
All telecom companies have been mandated by Government of India to get PAN details of each applicant for normal or cellular connection to keep a tab on terrorism, extortion charges etc.
Investing in securities
Transactions exceeding Rs. 50,000 for equities/mutual fund/debentures/bonds requires investor’s PAN card.
Opening account at broker
For trading in share market, you need to open account with a share broker for which submitting PAN details is mandatory. Failure to provide this will result in rejection of your application.
There our several other reasons for which PAN Card is important, which might not be discussed above.
Article source allonmoney.com
PAN Card - Is it so Important in India ?
PAN, or Permanent Account Number, is a unique 10-digit alphanumeric identity allotted to each taxpayer by the Income Tax Department under the supervision of the Central Board of Direct Taxes. It also serves as an identity proof. PAN is mandatory for financial transactions such as receiving taxable salary or professional fees, sale or purchase of assets above specified limits, buy mutual funds and more.
The primary objective of PAN is to use a universal identification key to track financial transactions that might have a taxable component to prevent tax evasion. The PAN number remains unaffected by change of address throughout India.
WHO MUST APPLY FOR PAN?* Anybody who earns a taxable income in India, including foreign nationals who pay taxes here
* Anybody who runs a business (be it retail, services or consultancy) that had total sales, turnover or gross receipt exceeding Rs 5 lakh in the previous financial year
HOW TO APPLY?Use 'Form 49A' or 'Form 49AA' as applicable to you. Find more details at www.incometaxindia.gov.in
You can find the location of PAN card offices in any city from the websites of the Income Tax Department or National Securities Depository Limited (NSDL) https://www.tin-nsdl.com/tin-facilities.php.
You will need copies of proof of Identity and address.
Payment can be made using cash, cheque or demand draft.
You can also apply online through websites of the I-T Department or NSDL.
If you are applying online, the processing fee can be paid via net banking, credit card or debit card.
After applying, track the status of your application online https://tin.tin.nsdl.com/tan/servlet/PanStatusTrack
You can find the location of PAN card offices in any city from the websites of the Income Tax Department or National Securities Depository Limited (NSDL) https://www.tin-nsdl.com/tin-facilities.php.
You will need copies of proof of Identity and address.
Payment can be made using cash, cheque or demand draft.
You can also apply online through websites of the I-T Department or NSDL.
If you are applying online, the processing fee can be paid via net banking, credit card or debit card.
After applying, track the status of your application online https://tin.tin.nsdl.com/tan/servlet/PanStatusTrack
WHY GET A PAN NUMBER?For payment of direct taxes
To file income tax returns
To avoid deduction of tax at higher rate than due
To enter into specific transaction such as:
To file income tax returns
To avoid deduction of tax at higher rate than due
To enter into specific transaction such as:
(a) Sale or purchase of immovable property valued at Rs 5 lakh or more
(b) Sale or purchase of a vehicle other than a two wheeler
(c) Payment to hotels or restaurants an amount exceeding Rs 25,000 at any one time
(d) Payment in cash an amount exceeding Rs 25,000 in connection with travel to any foreign country
(e) Payment of an amount of Rs 50,000 or more to the Reserve Bank of India for acquiring bonds
(f) Payment of an amount of Rs 50,000 or more to a company or an institution for acquiring bonds or debentures
(g) Payment of an amount of Rs 50,000 or more to a company for acquiring shares
(h) Any mutual fund purchase
(j) Deposit exceeding Rs 50,000 with any single banking institution in 24 hours.
(k) Payment exceeding Rs 5 lakh for purchase of bullion and jewellery
(b) Sale or purchase of a vehicle other than a two wheeler
(c) Payment to hotels or restaurants an amount exceeding Rs 25,000 at any one time
(d) Payment in cash an amount exceeding Rs 25,000 in connection with travel to any foreign country
(e) Payment of an amount of Rs 50,000 or more to the Reserve Bank of India for acquiring bonds
(f) Payment of an amount of Rs 50,000 or more to a company or an institution for acquiring bonds or debentures
(g) Payment of an amount of Rs 50,000 or more to a company for acquiring shares
(h) Any mutual fund purchase
(j) Deposit exceeding Rs 50,000 with any single banking institution in 24 hours.
(k) Payment exceeding Rs 5 lakh for purchase of bullion and jewellery
Article source online
HUF with only Female Members
A Hindu widow being the sole surviving member, cannot constitute a HUF. Gangamma Vs. Agl. ITO (1991) 188 ITR 1 (Ker.). After the Amendment in the Hindu Succession Act, in 2005, a Hindu Widow and her unmarried daughter can constitute a HUF, even when the widow had not adopted a son since, daughter is also a coparcener.
Question:- Whether a person with wife and two daughters only can have HUF?
Answer:- Whether only one male member is suffice to form an HUF is now legally well settled as per decision of Supreme Court in case of Gowli Buddana vs CIT (1966) 60 ITR 293 . An HUF is no different than a joint property. The concept of HUF is very simple codified in Hindu law .A Hindu joint family consists of lineally descended persons -like Great Grand father, Grand father ,father, uncle, son etc. All these persons have right over common ancestral property by birth. The dictum that once Hindu undivided family always Hindu undivided family” has been accepted all along.
The expression ‘Hindu undivided family’ in the Income-tax Act is same as a joint family which may consist of a single male member and widows of deceased male members. In Dr Prakash B Sultane v CIT ([2005] 148 Taxman 353) the Bombay High Court held that that the property does not lose its character merely because at one point of time there was only one male member or one co-parcener.
In this case , the assessee was a doctor by profession assessable in his hands as an individual. The assessee was a member of a bigger Hindu undivided family which was partitioned on January 1, 1972. At the time of partition and right up to January 22, 1980 the assessee was a bachelor. During these years, the income from assets on partition was assessed in his hands as his individual income.
When the assessee got married on January 22, 1980, he claimed that the income from assets received on partition is assessable in status of the Hindu undivided family consisting of himself and his wife.
The Assessing Officer observed that the decisions referred to by the assessee were considered in the judgment of the Madhya Pradesh High Court in CIT v. Vishnukumar Bhaiya (142 I.T.R. 357). Relying upon this judgment, he rejected the application of the assessee and continued to assess his income from the Hindu undivided family property in his individual capacity. In the above case also, the assessee had obtained his share on partition before his marriage and, on his marriage, had claimed the status of Hindu undivided family. His claim was rejected on the ground that “until a son is born the status of the assessee would continue to be that of an individual. However, the High Court ruled otherwise and upheld the contention of the assessee that once HUF property always HUF property”
HUF without Females –A Single male coparcener without a female member does not constitute a HUF. The only way by which a single coparcener can constitute a HUF is to marry a woman. He and his wife would constitute a HUF. Premkumar Vs. CIT (1980) 121 ITR 347 (All.)
Wife in a HUF: For Example, Mr.A / Mrs.A / Mr.B (Son) / Mr.C Daughter of a HUF, then Mrs. A wife of Mr.A is called a member only and not a coparcener. Hence, she cannot ask for partition but when the property is partitioned, she will get an equal share as that of a coparcener. Wife, not being a coparcener obviously cannot become a karta .
Widow in a HUF – With the passing of the HIndu Succession Act, 1956, widow has been designated as class I heir to male HIndu dying intestate. In case of sole surviving coparcener having only a wife but no issue the widow is entitled to succeed to the entire estate of her deceased husband, if he died intestate. The entire interest of the deceased in coparcenery will be part of the estate passing on the death of such person. Bhariben S. Jhaveri Vs. CED (1999) 238 ITR 995 (Guj.). When a Hindu Widow adopts a male heir, the HUF would be constituted by the Hindu widow along with the adopted son. C. Krishnaprasad Vs. CIT (1974) 97 ITR 493 (SC). After the Hindu Succession Act’s amendment in 2005, even widows of predeceased sons are now legally entitled for inheriting the deceased’s property even if they had remarried.
Females and Gift: A Female member (Wife) can gift her property so as to constitute it as HUF Property. CIT Vs. M. Balasubramanian (1990) 182 ITR 117 (Mad.)Daughters are now coparceners. Hence, now, they can throw their individual assets into Family Hotch Potchsubject to the provisions of Sec.64(2).
Question:- Whether a person with wife and two daughters only can have HUF?
Answer:- Whether only one male member is suffice to form an HUF is now legally well settled as per decision of Supreme Court in case of Gowli Buddana vs CIT (1966) 60 ITR 293 . An HUF is no different than a joint property. The concept of HUF is very simple codified in Hindu law .A Hindu joint family consists of lineally descended persons -like Great Grand father, Grand father ,father, uncle, son etc. All these persons have right over common ancestral property by birth. The dictum that once Hindu undivided family always Hindu undivided family” has been accepted all along.
The expression ‘Hindu undivided family’ in the Income-tax Act is same as a joint family which may consist of a single male member and widows of deceased male members. In Dr Prakash B Sultane v CIT ([2005] 148 Taxman 353) the Bombay High Court held that that the property does not lose its character merely because at one point of time there was only one male member or one co-parcener.
In this case , the assessee was a doctor by profession assessable in his hands as an individual. The assessee was a member of a bigger Hindu undivided family which was partitioned on January 1, 1972. At the time of partition and right up to January 22, 1980 the assessee was a bachelor. During these years, the income from assets on partition was assessed in his hands as his individual income.
When the assessee got married on January 22, 1980, he claimed that the income from assets received on partition is assessable in status of the Hindu undivided family consisting of himself and his wife.
The Assessing Officer observed that the decisions referred to by the assessee were considered in the judgment of the Madhya Pradesh High Court in CIT v. Vishnukumar Bhaiya (142 I.T.R. 357). Relying upon this judgment, he rejected the application of the assessee and continued to assess his income from the Hindu undivided family property in his individual capacity. In the above case also, the assessee had obtained his share on partition before his marriage and, on his marriage, had claimed the status of Hindu undivided family. His claim was rejected on the ground that “until a son is born the status of the assessee would continue to be that of an individual. However, the High Court ruled otherwise and upheld the contention of the assessee that once HUF property always HUF property”
HUF without Females –A Single male coparcener without a female member does not constitute a HUF. The only way by which a single coparcener can constitute a HUF is to marry a woman. He and his wife would constitute a HUF. Premkumar Vs. CIT (1980) 121 ITR 347 (All.)
Wife in a HUF: For Example, Mr.A / Mrs.A / Mr.B (Son) / Mr.C Daughter of a HUF, then Mrs. A wife of Mr.A is called a member only and not a coparcener. Hence, she cannot ask for partition but when the property is partitioned, she will get an equal share as that of a coparcener. Wife, not being a coparcener obviously cannot become a karta .
Widow in a HUF – With the passing of the HIndu Succession Act, 1956, widow has been designated as class I heir to male HIndu dying intestate. In case of sole surviving coparcener having only a wife but no issue the widow is entitled to succeed to the entire estate of her deceased husband, if he died intestate. The entire interest of the deceased in coparcenery will be part of the estate passing on the death of such person. Bhariben S. Jhaveri Vs. CED (1999) 238 ITR 995 (Guj.). When a Hindu Widow adopts a male heir, the HUF would be constituted by the Hindu widow along with the adopted son. C. Krishnaprasad Vs. CIT (1974) 97 ITR 493 (SC). After the Hindu Succession Act’s amendment in 2005, even widows of predeceased sons are now legally entitled for inheriting the deceased’s property even if they had remarried.
Females and Gift: A Female member (Wife) can gift her property so as to constitute it as HUF Property. CIT Vs. M. Balasubramanian (1990) 182 ITR 117 (Mad.)Daughters are now coparceners. Hence, now, they can throw their individual assets into Family Hotch Potchsubject to the provisions of Sec.64(2).
Article Submitted by
Kanwal K. Juneja
Advocate and Tax Advisor
Kanwal K. Juneja
Advocate and Tax Advisor
TDS deducted, no need to file Income Tax Return? - A Misunderstanding of Common Man
Arjuna (Fictional Character): Krishna, Income Tax Department is sending notices to Taxpayers for not filling Returns of last 3-4 years based on TDS, etc. What are they?
Krishna (Fictional Character): Arjuna, Income Tax department send notices to Taxpayers on the basis of information linked with PAN , such as TDS by Banks on FDRs, Mutual Fund transaction, Immovable Property Transactions, Cash Transaction in Saving A/c, Credit Card Transaction etc. Many Taxpayers thinks that there is no need to file Income Tax Return as their TDS is already being deducted on Income earned. It is a big misunderstanding for beginners or common man. If Taxpayer has Taxable Income in any year or if he has Refund to claim then it is necessary for him to file Income Tax Return. Further if a notice is received even after Return is filed then compliance of it should be given. Further Limit of TDS deduction and basic exemption limit for taxable income, both are different. Hence even income is below taxable income, TDS is deducted by the payer and above misunderstanding starts. Further salaried persons also have same understanding, as they feel that on their total salary TDS is deducted, hence all tax is paid, no need to file return, etc.
Arjuna: Krishna, What is relation between Income Tax and TDS?
Krishna: Arjuna, TDS means Tax deducted at Source. According to Income Tax Act, in some specified Transactions like salary, rent, interest, commission, fees, etc, while paying or accounting expenditure, whichever is earlier, TDS have to be deducted and required to be paid to the Government treasury. This means the Payer pays Taxes of the Receiver. E.g. “A” is employee at “B” and his monthly salary is Rs. 60,000 then “B” has to deduct TDS from salary of “A” and required to pay TDS to Government. That means TDS depends on the type of Transaction. But responsibility for filling Income Tax Return lies with the receiver. The receiver Taxpayer has to show all the Income received in Financial Year from Salary, Rent, Interest, etc. in Income Tax Return. After considering all incomes, deductions, etc and after computing the tax if it comes to Income Tax payable then it should be paid or if refund arises then it should be mentioned in return. Taxpayer has to mention the details of TDS Credit received in Income Tax Return. I.e, reconciliation of TDS as per Form 26AS and Income Tax return filed needs to be done. Any mis match may lead to further notice to taxpayer.
Arjuna: Krishna, who should file Income Tax Return?
Krishna: Arjuna, A Person is required to file Income Tax Return if he has Taxable income i.e. his Income is exceeding basic exemption limit (For FY 2014-15 Rs. 2.5 lakhs) even if Tax liability arises or not. If TDS of a person is deducted and Refund arises, same can be claimed, by filing Income Tax Return. E.g. many taxpayers have only income of Interest on deposits. If Interest received is not exceeding Basic Exemption Limit then it is not necessary to file Income Tax Return. But if TDS is deducted on the Interest then he has to file Income Tax Return for getting refund. To save himself from TDS deduction such Taxpayers can file Form 15G or 15H before receiving Income for not deducting TDS.
Arjuna: Krishna, what precautions should one takes before filling Income Tax Return?
Krishna: Arjuna, Every Taxpayer should download 26AS from the Income Tax department’s website. Income and TDS as per 26AS should be verified with the Income Tax Return. Taxpayer may have to face the Department if Income is shown less than the Income shown in 26AS.
Arjuna: Krishna, if a Taxpayer receives a notice for not filling Income Tax Return, then what should be done?
Krishna: Arjuna, the Taxpayer has to give Online Compliance if he receives notice for not filling Income Tax Return in this Year and its Status has to be mentioned. The Taxpayer has to mention whether he has filed Income Tax return or not, if he has filed, then he needs to mention the Return filling date, Acknowledgement No., Circle/ Ward and whether online or paper form. If return is not filed then the reason for non-filing is required to be given. Further he has to mention whether the notice received is for his own PAN or for other related PAN. The Taxpayer can file previous year’s returns on the basis of the said notice. If it comes to tax payable then Taxpayer should pay tax and interest, file return and then submit online compliance.
Arjuna: Krishna, What should the Taxpayer learn from the Income Tax Return, TDS and Notice?
Krishna: Arjuna, the responsibility of TDS deduction is of the deductor, Filling of Income Tax Return is of self and to draw notice is of the Department. If a Taxpayer files Income Tax Return correctly then department will not issue notice and no online compliance has to be made. Many taxpayers think that after the TDS is deducted there is no need to File Income Tax Return. A small confusion / misunderstanding in the eyes of law becomes complex in future. Like our health may get damaged, if we don’t pay attention to minor illness. This means Compliance of law and Disease of body should be cured immediately otherwise its effects may create complication in future.
Krishna (Fictional Character): Arjuna, Income Tax department send notices to Taxpayers on the basis of information linked with PAN , such as TDS by Banks on FDRs, Mutual Fund transaction, Immovable Property Transactions, Cash Transaction in Saving A/c, Credit Card Transaction etc. Many Taxpayers thinks that there is no need to file Income Tax Return as their TDS is already being deducted on Income earned. It is a big misunderstanding for beginners or common man. If Taxpayer has Taxable Income in any year or if he has Refund to claim then it is necessary for him to file Income Tax Return. Further if a notice is received even after Return is filed then compliance of it should be given. Further Limit of TDS deduction and basic exemption limit for taxable income, both are different. Hence even income is below taxable income, TDS is deducted by the payer and above misunderstanding starts. Further salaried persons also have same understanding, as they feel that on their total salary TDS is deducted, hence all tax is paid, no need to file return, etc.
Arjuna: Krishna, What is relation between Income Tax and TDS?
Krishna: Arjuna, TDS means Tax deducted at Source. According to Income Tax Act, in some specified Transactions like salary, rent, interest, commission, fees, etc, while paying or accounting expenditure, whichever is earlier, TDS have to be deducted and required to be paid to the Government treasury. This means the Payer pays Taxes of the Receiver. E.g. “A” is employee at “B” and his monthly salary is Rs. 60,000 then “B” has to deduct TDS from salary of “A” and required to pay TDS to Government. That means TDS depends on the type of Transaction. But responsibility for filling Income Tax Return lies with the receiver. The receiver Taxpayer has to show all the Income received in Financial Year from Salary, Rent, Interest, etc. in Income Tax Return. After considering all incomes, deductions, etc and after computing the tax if it comes to Income Tax payable then it should be paid or if refund arises then it should be mentioned in return. Taxpayer has to mention the details of TDS Credit received in Income Tax Return. I.e, reconciliation of TDS as per Form 26AS and Income Tax return filed needs to be done. Any mis match may lead to further notice to taxpayer.
Arjuna: Krishna, who should file Income Tax Return?
Krishna: Arjuna, A Person is required to file Income Tax Return if he has Taxable income i.e. his Income is exceeding basic exemption limit (For FY 2014-15 Rs. 2.5 lakhs) even if Tax liability arises or not. If TDS of a person is deducted and Refund arises, same can be claimed, by filing Income Tax Return. E.g. many taxpayers have only income of Interest on deposits. If Interest received is not exceeding Basic Exemption Limit then it is not necessary to file Income Tax Return. But if TDS is deducted on the Interest then he has to file Income Tax Return for getting refund. To save himself from TDS deduction such Taxpayers can file Form 15G or 15H before receiving Income for not deducting TDS.
Arjuna: Krishna, what precautions should one takes before filling Income Tax Return?
Krishna: Arjuna, Every Taxpayer should download 26AS from the Income Tax department’s website. Income and TDS as per 26AS should be verified with the Income Tax Return. Taxpayer may have to face the Department if Income is shown less than the Income shown in 26AS.
Arjuna: Krishna, if a Taxpayer receives a notice for not filling Income Tax Return, then what should be done?
Krishna: Arjuna, the Taxpayer has to give Online Compliance if he receives notice for not filling Income Tax Return in this Year and its Status has to be mentioned. The Taxpayer has to mention whether he has filed Income Tax return or not, if he has filed, then he needs to mention the Return filling date, Acknowledgement No., Circle/ Ward and whether online or paper form. If return is not filed then the reason for non-filing is required to be given. Further he has to mention whether the notice received is for his own PAN or for other related PAN. The Taxpayer can file previous year’s returns on the basis of the said notice. If it comes to tax payable then Taxpayer should pay tax and interest, file return and then submit online compliance.
Arjuna: Krishna, What should the Taxpayer learn from the Income Tax Return, TDS and Notice?
Krishna: Arjuna, the responsibility of TDS deduction is of the deductor, Filling of Income Tax Return is of self and to draw notice is of the Department. If a Taxpayer files Income Tax Return correctly then department will not issue notice and no online compliance has to be made. Many taxpayers think that after the TDS is deducted there is no need to File Income Tax Return. A small confusion / misunderstanding in the eyes of law becomes complex in future. Like our health may get damaged, if we don’t pay attention to minor illness. This means Compliance of law and Disease of body should be cured immediately otherwise its effects may create complication in future.
Article Source Tax Guru
A gist of the main amendments in Union Budget 2015
The
Finance Bill, 2015 proposes to make amendments in direct tax provisions by
proposing amendments to the Income-tax Act, 1961, Wealth-tax Act, 1957, Finance
Act, 1994 and Finance (No.2) Act, 2004.
A gist of
the main amendments is given below:-
Direct Taxes
1.
Rates of
tax
It is
proposed that there will be no change in the rate of personal income-tax and
the rate of tax for companies in respect of income earned in the financial year
2015-16, assessable in the assessment year 2016-17.
It is
further proposed to levy a surcharge @12% on individuals, HUFs, AOPs, BOIs,
artificial juridical persons, firms, cooperative societies and local
authorities having income exceeding `.1 crore.
Surcharge
in the case of domestic companies having income exceeding `.1 crore and
upto `.10 crore
is proposed to be levied @ 7% and surcharge @ 12% is proposed to be levied on
domestic companies having income exceeding `.10 crore.
The
education cess on income-tax @ 2% for fulfilment of the commitment of the
Government to provide and finance universalised quality based education and 1%
of additional surcharge called ‘Secondary and Higher Education Cess’ on
tax and surcharge is proposed to be continued for the financial year 2015-16
for all taxpayers.
2. Measures to curb black money
With a
view to curbing the generation of black money in real estate, it is proposed to
amend the provisions of section 269SS and 269T of the Income-tax Act so as to
prohibit acceptance or re-payment of advance in cash of `.20,000 or
more for any transaction in immovable property. It is also proposed to
provide a penalty of an equal amount in case of contravention of such
provisions.
Offence
of making false declaration/documents in the transaction of any business
relating to Customs (section 132 of the Customs Act) to be predicate offence
under PMLA to curb trade based money laundering.
3.
Job
creation through revival of growth and investment and promotion of domestic
‘manufacturing’ and ‘Make in India’
With a
view to obviate the problems faced by small companies and to facilitate the
inflow of technology, it is proposed to amend the provisions of section 115A of
the Income-tax Act so as to reduce the rate of tax on royalty and fees for
technical services from 25% to 10%.
With a
view to facilitating generation of employment, it is proposed to amend the
provisions of section 80JJAA of the Income-tax Act so as to provide that tax
benefit under the said section shall be available to a ‘person’ deriving
profits from manufacture of goods in a factory and paying wages to new regular
workmen. The eligibility threshold of minimum 100 workmen is proposed is to
reduced to fifty.
Additional
depreciation @ 20% is allowed on new plant and machinery installed by a
manufacturing unit or a unit engaged in generation and distribution of
power. However, if the asset is installed after 30th September of
the previous year only 10% of the additional depreciation is allowed. It
is proposed to allow the remaining 10% of the additional depreciation in the
subsequent previous year.
4.
Minimum
government and maximum governance to improve the ease of doing business
It is
proposed to amend the provisions of section 92BA of the Income-tax Act so as to
increase the threshold limit for applicability of transfer pricing regulations
to specified domestic transactions from
`.
5 crore to
`.
20 crore.
It is
proposed to amend the provisions of section 2(15) of the Income-tax Act so as
to include ‘yoga’ as a specific category of activity in the definition of
‘charitable purpose’ and also to provide relief for activities in the nature of
business undertaken by genuine charitable organizations subject to the
condition that aggregate receipts from such activity is less than 20% of the
total receipts.
It is
proposed to exempt the income of Core Settlement Guarantee Fund established by
Clearing Corporations as per mandate of SEBI.
It is proposed
to amend the provisions of section 255 of the Income-tax Act so as to increase
the monetary limit from `.5 lakh to
`.15 lakh,
for a case to be heard by a Single Member Bench of the ITAT.
It is
proposed to amend the provisions of the Income-tax Act so as to provide tax
neutrality on transfer of units of a scheme of a Mutual Fund under the process
of consolidation of schemes of Mutual Funds as per SEBI Regulations, 1996.
It is
proposed to amend the provisions of the Income-tax Act so as to provide a mechanism
to pre-empt the repetitive appeals by the revenue in the same assessee’s case
on the same question of law year after year.
It is
proposed to empower the Board to prescribe rules for grant of relief in respect
of taxes paid in foreign jurisdictions.
It is
proposed to abolish the levy of Wealth-tax with effect from 2016-17 (Assessment
Year) for reducing the compliance burden on the tax payers. The revenue loss on
account of such abolition is proposed to be compensated by increase in the
existing surcharge by 2% in case of domestic companies and all non corporate
taxpayers.
With a
view to rationalise the dispute resolution mechanism available to taxpayer in
the form of Settlement Commission, it is proposed to provide that while making
an application to the Settlement Commission for an assessment year which has
been re-opened by the Assessing Officer, the assessee can make an application
for other assessment years in which the proceedings could be re-opened provided
the return of income for such assessment years has been furnished by the
assessee with a view to obviate the problems faced by small companies and to
facilitate the inflow of technology, it is proposed to amend the provisions of
section 115A of the Income-tax Act so as to reduce the rate of tax on royalty
and fees for technical services from 25% to 10%.
With a
view to facilitating generation of employment, it is proposed to amend the
provisions of section 80JJAA of the Income-tax Act so as to provide that tax
benefit under the said section shall be available to a ‘person’ deriving
profits from manufacture of goods in a factory and paying wages to new regular
workmen. The eligibility threshold of minimum 100 workmen is proposed is to
reduced to fifty.
Additional
depreciation @ 20% is allowed on new plant and machinery installed by a
manufacturing unit or a unit engaged in generation and distribution of
power. However, if the asset is installed after 30th September of
the previous year only 10% of the additional depreciation is allowed. It
is proposed to allow the remaining 10% of the additional depreciation in the
subsequent previous year.
5.
Improving
the quality of life and public health through Swachh Bharat Initiatives
It is
proposed to provide that the donations (other than the CSR contributions made
in accordance with section 135 of the Companies Act, 2013) made to Swachch
Bharat Kosh (by both resident and non-resident) and Clean Ganga Fund (by
resident) shall be eligible for 100% deduction under section 80G of the
Income-tax Act.
6.
Benefits
to middle class taxpayers
With a
view to encourage savings and to promote health care among individual
taxpayers, a number of measures are proposed to be taken by way of incentives
under the Income-tax Act. The same are enumerated below:-
It is
proposed to provide that investment in Sukanya Samriddhi Scheme will be eligible
for deduction u/s 80C and any payment from the scheme shall not be liable to
tax.
It is
proposed to increase the limit of deduction u/s 80D of the Income-tax Act from `.15,000 to
`.25,000 on
health insurance premium (in case of senior citizen from `.20,000 to
`.30,000).
It is also proposed to allow deduction of expenditure of similar amount in case
of a very senior citizen not eligible to take health insurance.
It is
proposed to increase the limit of deduction in case of very senior citizens u/s
80DDB of the Income-tax Act on expenditure on account of specified diseases
from `.60,000 to
`.80,000.
It is
proposed to increase the limit of deduction u/s 80DD of the Income-tax Act in
respect of maintenance, including medical treatment of a dependant who is a
person with disability, from `.50,000 to
`.75,000.
It is also proposed to increase the limit of deduction from `.1 lakh to
`.1.25 lakh
in case of severe disability.
It is
proposed to increase the limit of deduction u/s 80U of the Income-tax Act in
case of a person with disability, from `.50,000 to `.75,000.
It is also proposed to increase the limit of deduction from `.1 lakh to
`.1.25 lakh
in case of severe disability.
It is
proposed to increase the limit of deduction u/s 80CCC of the Income-tax Act on
account of contribution to a pension fund of LIC or IRDA approved insurer from `.1 lakh to
`.1.5 lakh.
It is
proposed to increase the limit of deduction u/s 80CCD of the Income-tax Act on
account of contribution by the employee to National Pension Scheme (NPS) from `.1 lakh to
`.1.50
lakh. It is also proposed to provide a deduction of upto `.50,000
over and above the limit of `.1.50 lakh
in respect of contributions made to NPS.
It is
proposed to amend the provisions of section 197A of the Income-tax Act so as to
provide the facility of filing self-declaration of non-deduction of tax by the
recipients of taxable maturity proceeds of life insurance policy.
Under the
existing provisions of the Income-tax Act, an individual buying an immovable
property from a resident is required to deduct tax but is not required to
obtain TAN for depositing the tax so deducted. With a view to extend the
same facility to an individual or HUF purchasing an immovable property from a
non-resident, it is proposed to relax the requirement of obtaining TAN by the
individual or HUF who is required to deduct tax on acquisition of immovable
property from a non-resident.
It is
proposed to provide that donation made to National Fund for Control of Drug
Abuse (NFCDA) shall be eligible for 100% deduction under section 80G of the
Income-tax Act.
Details
of tax deductions referred to in para 99.
· Deduction
u/s 80C `.1,50,000
· Deduction
u/s 80CCD `.50,000
· Deduction
on account of interest
on house property loan
(Self occupied property) `.2,00,000
· Deduction
u/s 80D on health Ins `.25,000
· Exemption
of transport allowance `.19,200
Total
`.4,44,200
7.
Stand
alone proposals to maximise benefits to the economy
With a
view to providing a uniform method of computation of period of stay in Indian
for the purposes of determination of ‘resident’ status in the case of a India
seafarer, whether working on a Indian-ship or foreign-ship, it is proposed to
provide an enabling power to CBDT to prescribe the same in the rules.
In search
cases, it is proposed to allow seized cash to be adjusted towards the
assessee’s tax liability under his settlement application.
With a
view to ensuring proper deduction of tax on payments made to non-residents, it
is proposed to amend the provisions of section 195 of the Income-tax Act so as
to provide for enabling power to the CBDT for capturing information about
prescribed foreign remittances which are claimed to be not chargeable to tax.
Mr. K.K. Juneja
Advocate
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