Income Tax Updates for the Month of September 2019

The objective of this document is to summarize all the updates of Income Tax (Notifications, Circulars, other amendments and updates) for the Month of September 2019 at one place. The same are being summarized below, along with certain important press release and clarifications.

1. Central Government prescribed E-assessment Scheme, 2019 for the purpose of making scrutiny assessment u/s 143(3) ¹

1.1. Central Government authorised CBDT to set up various e-assessment centres to facilitate the conduct of e-assessment proceedings

SI No.	E-assessment centres	Function / Role
i.	National e-assessment centre (NeAC)	To facilitate the conduct of e-assessment proceedings in a centralised manner, NeAC has been setup. NeAC is the ultimate jurisdictional authority to make assessment as per the provisions of this Scheme
ii.	Regional e-assessment centres (ReAC)	CBDT may setup ReAC, to facilitate the conduct of e-assessment proceedings in the region of a Principal Chief Commissioner. Jurisdictional authority in the concerned region to make assessment as per the provisions of this Scheme
iii.	Assessment Units (AUs)	Perform the function of making assessment, which includes: Identification    of     material      points/issues    for        the computation of liability/refund Seeking information/clarification on points/issues so identified Analysis of information furnished by the assessee/any other person Such other functions
iv.	Verification Units (VUs)	Perform the function of verification, which includes: Enquiry, cross verification, examination of books of accounts Examination of witnesses & recording of statements Such other functions
v.	Technical Units (TUs)	Perform the function of providing technical assistance, which includes: Any assistance/advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management Any other technical matter
vi.	Review Units (RUs)	Perform the function of review of the draft assessment order, which includes checking whether the: Relevant & material evidence has been brought on record Relevant points of fact & law have been duly recorded in the draft order Issues on which addition/disallowance should be made have been discussed in the draft order Applicable judicial decisions have been considered and dealt with in the draft order or Checking for arithmetical correctness of modifications proposed, if any Such other functions

1.2. Assessment under this scheme shall be made as per the procedure prescribed

Procedure for E-assessment Scheme, 2019

1.3. All the communication between e-assessment centres or with the assessee or any other person for information/documents/evidence etc.., shall be through National e-assessment Centre (NeAC)

For the purpose of making assessment under this scheme, all communication with respect to information/documents/evidence/any other details

• Among the assessment unit, review unit, verification unit, technical unit; or
• With the assessee or any other person
  Shall be through NeAC

1.4. After completion of assessment, NeAC shall transfer all the electronic records of the case to the jurisdictional A.O for initiating proceedings under the Act

After completion of assessment, NeAC shall transfer all the electronic records of the case to jurisdiction Assessing Officer (A.O) for:

• Imposition of penalty;
• Collection and recovery of demand;
• Rectification of mistake;
• Giving effect to appellate orders;
• Submission of remand report or furnishing of any other report or any representation to be made or any record to be produced before the
  • Commissioner (Appeals)
  • Appellate Tribunal
  • Courts
• Proposal of sanction for initiation of prosecution and filing of compliant before the court

However, the NeAC may transfer the case to the jurisdictional A.O at any stage of the assessment proceedings.

1.5. During the course of assessment proceedings, any unit may send recommendations to NeAC for initiation of penalty proceedings under the Act for non-compliance by the assessee/any other person

• During the course of assessment proceedings, any unit may send recommendations to NeAC for initiation of penalty proceedings under Chapter XXI of the Act against assessee/any other person for non-compliance of any notice, direction or order Issued under this scheme.
• On receipt of such recommendations, NeAC shall serve a show cause notice on the assessee/any other person.
• On receipt of response, the same shall be sent to concerned unit by NeAC
• After taking into consideration of response, the said unit shall:
  • Make & send draft penalty order; or
  • Drop the penalty after recording reasons and intimate to NeAC
• NeAC shall levy penalty as per the said draft order and serve a copy of the same

1.6. Appeal against assessment done by NeAC shall be made before the jurisdictional Commissioner (Appeals)

1.7. Authentication of electronic record can be done by affixing DSC or electronic signature or electronic authentication technique

Also Check income tax slab for ay 2018 19.

1.8. Every notice/order/any other communication shall be delivered to the assessee/any other person and they shall file response in the manner prescribed

• To assessee – every notice, order or any other communication under this scheme shall be delivered, by way of:
  • Placing authenticated copy in the assessee’s registered account; or
  • Sending authenticated copy to the registered e-mail address of the assessee or his authorised representative; or
  • Uploading authenticated copy on the assessee’s Mobile App; and
    followed by a real time alert.
• To any other person – every notice, order or any other communication under this scheme shall be delivered, by sending authenticated copy to the registered e-mail address of such person, followed by a real time alert.
• Response by assessee – shall file his response through his registered account.
• Acknowledgement by NeAC – upon filing response, acknowledgement will be sent by NeAC which shall be deemed to be authenticated.

1.9. Assessee is entitled to ask for personal hearing through video conferencing to make oral submissions/present his case before income-tax authority (in any unit)

• A person is not required to present either personally or through authorised representative in connection with any proceedings under this scheme.
• However, in case where a modification is proposed in the draft order and an opportunity is provided to assessee by issuing show cause notice,
  • the assessee/authorised representative, shall be entitled to seek personal hearing to make his oral submissions/present his case before the income-tax authority (in any unit) and
  • such hearing shall be conducted exclusively though video conferencing, including use of any telecommunication application software which supports video telephony, in accordance with procedure laid down by the Board
• Any examination/recording of the statement of the assessee/any other person shall be conducted by tax authority exclusively through video conferencing, including use of any telecommunication application software which supports video telephony, in accordance with procedure laid down by the Board.
• Board shall establish suitable facilities for video conferencing to ensure that the benefit is not denied merely on the ground that assessee/authorised representative/any other person does not have access to video conferencing at his end.

2. In all other cases, assessment shall be conducted electronically through ‘E-proceeding’ facility during the FY 2019-20 except in few specified cases²

a) In all cases (other than covered under e-Assessment Scheme, 2019), assessment u/s 143(3) during the FY 2019-20, shall be conducted electronically through “E-Proceeding” facility in the “E-filing” account.

b) Personal hearing/attendance may take place in the following situations with respect to above, where:

i. Books of accounts to be examined;

ii. A.O invokes provisions of Sec 131 – (Power regarding discovery, inspection, production of evidence etc..,)

iii. Examination of witness is required to be made by the assessee or department

iv. Assessee requests for personal hearing to explain the matter against adverse view in show-cause notice issued by A.O

c) Assessment through “E–proceeding” is not mandatory during the FY 2019-20, in the following cases:

i. Where assessment u/s 153A (Search), 153C (assessment of income of any other person), 144(Best judgement).

ii. Assessment u/s 147 (income escaping), due to difficulties in migration of data from ITD to ITBA etc.

iii. In set-aside assessments

iv. Non-PAN cases

v. Return filed by assessee in paper mode and does not have an ‘E-filing’ account

vi. In extraordinary circumstances such as complexities of the case or administrative difficulties etc.., jurisdictional Pr.CIT/CIT can permit

3. President of India has given ordinance to the tax concessions announced by FM³

3.1. Option has been given to pay concessional effective tax @25.17% to existing domestic companies & @17.16% to new domestic manufacturing companies without availing any tax incentives/exemptions

SI No	Nature of domestic company	Current ETR (%)	ETR if option exercised (%)	Conditions / benefits if option exercised
1.	Existing Domestic Companies			Applicable w.e.f FY 2019-20 Not eligible for any tax incentives/exemptions Not required to pay MAT Option has to be exercised one time on or before the due date of filing of tax return Option once exercised can’t be withdrawn.
	a) Turnover > Rs.400 Crore during the FY 2017-18
	Income ≤ Rs.1 crore	31.20%	25.17%4
	Income > Rs.1 crore ≤ Rs.10 crore	33.38%	25.17%
	Income > Rs.10 crore	34.94%	25.17%
	b) Other domestic companies ( in existence on or before 30-Sep-2019)
	Income ≤ Rs.1 crore	26%	25.17%
	Income > Rs.1 crore ≤ Rs.10 crore	27.82%	25.17%
	Income > Rs.10 crore	29.12%	25.17%
2.	Existing Domestic Companies – Continues to avail  tax incentives/exemptions			Can opt for 25.17% effective tax rate after the expiry of tax holiday/exemption period MAT rate reduced from 18.5% to 15% (plus applicable surcharge and cess)
3.	New Domestic Manufacturing Companies incorporated on or after 01-Oct-2019			Applicable w.e.f FY 2019-20 Has to commence manufacturing on or before 31.03.2023 Not eligible for any tax incentives/exemptions Not required to pay MAT Option has to be exercised on or before the due date of filing of first tax return Option once     exercised can’t be withdrawn
	Income ≤ Rs.1 crore	26%	17.16%5
	Income > Rs.1 crore ≤ Rs.10 crore	27.82%	17.16%
	Income > Rs.10 crore	29.12%	17.16%

3.2. Enhanced surcharge of 25%/37% shall not be applicable on tax payable on capital gains arising from transfer of certain securities

SI No	Capital Asset	Assessee	Taxability Section	Applicable Surcharge
1.	Equity share in a company Liable Units of equity oriented fund Units of business trust        for STT	Individual,    HUF, AOP, BOI & AJP	STCG- 111A LTCG- 112A	10% or 15%
2.	Any security including derivatives	Foreign Portfolio Investors (FPI)	115AD	10% or 15%

3.3. Any business transaction between the company (opt for 17.61%) and any other person shall fall under specified domestic transaction (SDT) and transfer provisions will be applicable accordingly

3.4. No tax on buy back of shares in the hands of listed companies announced buy-back of shares prior to 05-July-2019

4. CBDT notified additional depreciation @30% on motor cars & 45% on motor buses/lorries/taxies acquired during “23-Aug-2019 to 31-Mar-2020” and put to use on or before 31-Mar-2020⁶

SI No.	Block of Assets	Acquired during the period	Put to use	Depreciation – % of WDV
1.	Motor cars – other than those used for hiring business	23-Aug-2019                        to 31-Mar-2020	On or before 31-Mar-2020	30%
2.	Motor buses, motor lorries & motor taxies – other than those used for hiring business	23-Aug-2019                        to 31-Mar-2020	On or before 31-Mar-2020	45%

5. CBDT notified cost inflation index for the FY 2019-20 as 289⁷

6. CBDT extended the due date for filing of ITRs & tax audit reports from 30-Sep-2019 to 31-Oct-2019⁸

7. CBDT notified tolerance range of 1% for wholesale trading & 3% in all other cases for the FY 2018-19 (AY 2019-20)⁹

“Wholesale trading” means trading in goods, which satisfies the following conditions:

i. Purchase cost of finished goods ≥ 80% of total cost of such trading activities; and

ii. Average monthly closing inventory of such goods ≤ 10% of sales of such trading activities

8. CBDT notified revised forms & rules for approval u/s 80G (5)(vi), exemption u/s 10(23C)(iv),(v)&(vi)to any fund or institution¹⁰

• Applicable w.e.f 05-Nov-2019
• Form No.56 – Application of approval for exemption u/s 10(23C) (iv), (v) & (vi)
• Form No.10G – Application of approval u/s 80G(5)(vi)

9. TDS not applicable on cash withdrawals by commission agent/trader (registered with APMC) for making payment to farmers for purchase of agriculture produce ¹¹

10. Credit of tax deducted on cash withdrawals shall be available in the same year of tax deducted¹²

11. CBDT extended due date for linking of PAN with Aadhaar from 30-Sep-2019 to 31-Dec-2019¹³

12. Monetary limits for filing appeal by department not applicable in cases of organized tax evasion activity, subject to order of CBDT¹⁴

13. CBDT extended the date for condonation of delay in filing audit report in Form No.10B by trust/institution for AY’s 2016-17 & 2017-18 from 30-Sep-2019 to 31-Dec-2019¹⁵

14. Approval of Commissioner of Income Tax (Intl. taxation) not required for applications of non-resident for certificates u/s 197/195 if tax foregone is up to Rs.10 crore¹⁶

• Applicable for all pending applications as on date or filed hereafter

15. CBDT has issued clarifications on certain issues relating to filing of return forms ITR-5, ITR-6 & ITR-7 for the FY 2018-19 (AY 2019-20)¹⁷

SI No	Question	Reply from department
A.	Clarifications regarding Form ITR-6
1)	In case of share transfer, how the below columns to be filled up in shareholding – Schedule SH-1 by an unlisted company (other than a start-up)?
	a) Name of shareholder	Current shareholder (as on yearend)
	b) Date of allotment	Date of transfer of     shares as per companies register
	c) Face value per share	Face value as per original allotment
	d) Issue Price per share	Price at which shares issued by the company to original shareholder
	e) Amount received	Total amount received (up to year end) by the      company from the original shareholder
	In case of share transfer, how the below columns to be filled up in shareholding – Schedule SH-2 by a start-up company?
	a) Name of shareholder	Current shareholder (as on yearend)
	b) Date of allotment	Date of transfer of     shares as per companies register
	c) Face value per share	Face value as per original allotment
	d) Issue Price per share	Price at which        shares issued by the company to original shareholder
	e) Paid up value per share	Total amount received (up to year end) by the      company from the original shareholder
	f) Share premium	Premium per share at which shares allotted by the company to original shareholder
2)	How to fill up PAN of shareholder, in case of not having PAN (Non-resident / foreign company) or not available?	It is mandatory to mention PAN of the shareholder in Schedule SH-1, if available.
	a) Shareholder is a non-resident & does not have PAN	Mention – NORES9999N
	b) PAN not available	Mention – NOAVL9999N
3)	How to fill up schedule SH-1 by non-profit company (i.e. Sec 8 of Companies Act, 2013/Sec 25 of Companies Act, 1956 – No share capital)	Details are not required to be filled up if taxpayer selects “Yes” option for “are you a company registered under Sec 8/Sec 25?” at the beginning of Schedule SH-1
4)	How to fill up schedule AL-1 by an unlisted company & AL-2 by a start-up company, if they do not hold any assets at the year end?	Details are not required to be filled up if taxpayer selects “No” option for “do you have assets & liabilities at the year end?” at the beginning of Schedule AL-1/AL-2
B.	Clarifications regarding Form ITR-5
5)	While filing return of AOP/BOI, tax is calculating at maximum marginal rate (MMR). However, they are subject to tax at slab rate. How to file return?	In Part – A General, particulars of members of AOP /BOI (i.e. PAN, Aadhaar etc..,) to be provided along with their respective sharesIn case details are not provided/incorrectly provided (i.e. total % of share is not 100%), applicable tax @MMR
6)	I am a private trust and unable to file ITR-2 for AY 2019-20. Which ITR form to be filled?	ITR-5
7)	How the income of investment fund or business trust to be     shown in ITR-5 under different schedules (i.e. head wise)?	Investment fund claiming exemption u/s 10 have to enter the exempt income directly in column 12(b) of Part B – TI (computation of income) Business trust claiming exemption u/s 10 have to enter the exempt income directly in column 12(c) of Part B – TI Such entities not required to fill up the head wise details in Schedule BP, HP, CG, OS & SI etc..,
C.	Clarifications regarding Form ITR-7
8)	I am a trust registered under section 12A/12AA filing return in ITR-7. The amount received as corpus donation should be treated as exempt. However, utility is including this amount as part of total income?	Corpus donation would not be included in total income, if the below mentioned details in Part A – General are mentioned correctly;
	a) Section under which registered or approved, in the table “details of registration/approval under the Income-tax Act”	Section 12A/12AA
	b) Please specify the section under which the exemption is claimed, in the column – Filing Status	Select Section 11 from the drop-down
9)	I am a trust / society / company claiming exemption u/s 10/13A/13B & filing return in ITR-7. However, utility is charging tax even on the amount shown as exempt income?	Shall enter directly in the relevant column of Part B – TI (computation of income) in ITR-7· Income & expenditure statement shall be furnished in the applicable schedule i.e. schedule IE-1, IE-2, IE-3 or IE-4· Such entities not required to fill up the head wise details in Schedule BP, HP, CG, OS & SI etc..,

16. CBDT entered into 26 advance pricing agreements (APAs) in the first 5 months of FY 2019-20¹⁸

• Out of 26, 1 is Bilateral APA entered with United Kingdom and remaining 25 are Unilateral APA
• APAs entered pertaining to various sectors like Information Technology (IT), Banking, Semiconductor, Power, Pharmaceutical, Automobile etc.
• International transactions covered in APAs include the following:
• Provision of marketing support services
• Provision of back office (ITeS) support services
• Provision of software development services
• Back office engineering support service
• Contract manufacturing
• Trading & distribution
• Payment of royalty for use of technology & brand
• Payment of charter charges
• Corporate guarantee
• Intra-group services
• Interest on financial instruments

17. Income-tax compliance calendar for the month of October, 2019

SI No	Due Date	Activity
1)	7th October	For deposit of TDS/TCS for the month of September, 2019
2)	15th October	For issue of TDS certificate in Form No.16B for tax deducted u/s 194-IA (i.e. TDS on sale of property) in the month of August, 2019 For issue of TDS certificate in Form No.16C for tax deducted u/s 194-IB (i.e. TDS on rent) in the month of August, 2019 For filing of quarterly TCS return (i.e. Q2 – July to Sep 2019)
3)	30th October	For deposit of tax deducted u/s 194-IA on sale of property in the month of September, 2019 For deposit of tax deducted u/s 194-IB on rent payment by individual in excess of Rs.50K in the month of September, 2019 For issue of TCS certificate for Q2
4)	31st October	Income tax return for the AY 2019-20, if the assessee is a) Company (Transfer Pricing not applicable) b) Non-corporate (whose books of accounts are required to be audited) c) Working partner of a firm whose accounts are required to be audited Tax Audit report in Form No.3CB/3CD for the above mentioned assessees for the AY 2019-20 Form No.67 – for the above mentioned assessees claiming foreign tax credit for the AY 2019-20 Statement in Form No.10 – for accumulation of income for future application by charitable organizations For filing of quarterly TDS return (i.e. Q2 – July to Sep 2019)

Thank you for the patient reading. Hope this document has added value to your knowledge.

For feedback or comments, please write to [email protected]

Notes:-

1. Refer Income Tax  Notification No.61/2019 dated 12-Sep-2019

2. Refer Income Tax Circular No. 27/2019 dated 26-Sep-2019

3. Refer Ordinance No.60 dated 20-Sep-2019

4. Corporate tax rate @22%, Surcharge @10% & Health & Education Cess@4%

5. Corporate tax rate @15%, Surcharge @10% & Health & Education Cess@4%

6. Refer Income Tax Notification No.69/2019 dated 20-Sep-2019

7. Refer Income Tax Notification No.63/2019 dated 12-Sep-2019

8. Refer Order No.F.No.225/157/2019/ITA.II dated 27-Sep-2019

9. Refer Notification No.64/2019 dated 13-Sep-2019

10. Refer Notification No.60/2019 dated 05-Sep-2019

11. Refer Notification No.70/2019 dated 20-Sep-2019

12. Refer Notification No.74/2019 dated 27-Sep-2019

13. Refer Notification No.75/2019 dated 28-Sep-2019

14. Refer Circular No.23/2019 dated 06-Sep-2019

15. Refer Circular No.28/2019 dated 27-Sep-2019

16. Refer office memorandum F.No.275/16/2019-IT(B) dated 02-Sep-2019

17. Refer Circular No.26/2019 dated 26-Sep-2019

18. Refer Press release dated 04-Sep-2019

Disclaimer:

This document had been written to provide updates under Income Tax in a simple manner. The author shall not be responsible for any of the decision made based on the contents of this document.