The new Returns for filing has been notified and enabled for filing for the Assessment Year 2019-20. The presentation covers the changes in the Finance Act for reporting of Income as well as new requirements for filing of Return of Income.
Glance of General Changes of Income
Expansion of Scope of Definition of Income
Provision of section 40(a)(ia) and section 4A(3), 40A(3A) made applicable to religious/charitable institutions. Relevant section 1 1 explanation 3, and section 10 (23C) Thirteenth proviso.
A standard deduction of up to Rs. 40,000/- allowed out of salary income. Deduction on account of Transport allowance and reimbursement of medical expenses withdrawn.
Glance of General Changes in Presumptive Income
Computation of Income under Presumptive Taxation amended [Section 43CA and Section 43CB]
Gross vehicle Weight has been defined under the Motor Vehicle Act to mean in respect to any vehicle the total weight of the vehicle and load certified and registered by the registering authority as permissible for that vehicle.
Unladen Weight means the weight of a vehicle or trailer including all equipments ordinarily used with the vehicle or trailer when working, but excluding the weight of a driver or attendant: and where alternative parts or bodies are used the unladen weight of the vehicle means the weight of the vehicle with the heaviest such alternative part or body.
Glance of General Changes in Capital Gains
> Liberalization in Taxation of capital gains on transfer of immovable property. Third proviso that stamp duty value shall be deemed to be consideration for the purpose of section 48 only if it exceeds 105% of the declared consideration.
> Section 54EC amended w.e.f. 01.04.2019 to provide.
◊ Exemption of long term capital gain on investment in Capital Gain Bonds restricted to immovable property only. Section 54EC (1) amended.
◊ The holding period of capital gain bonds u/s 54EC increased to 5 years from 3 years for capital gain arising in F.Y 201 7-18 and onwards (section 54EC).
> Long Term capital Gain on transfer of equity shares and units of equity oriented find has been subjected to tax (Section 1 12A).
◊ Exemption u/s 10(38) is withdrawn for transfer made after 01.04.2018.
◊ The rate of tax on such LTCG has been prescribed @ 10% in excess of Rs. 1,00,000/- subject to conditions of payment of STT on shares acquired after 01.10.2004.
◊ The method of calculation of cost of acquisition has been provided in newly inserted section 55(2)(ac)
◊ The new section 112A applies to all assesses i.e. corporate, non-corporate, resident and non-resident, it is not applicable to Foreign Institution Invertors (FII).
> Beneficial tax regimes for International Financial Services Centre (IFSC)
◊ to promote the development of world class financial infrastructure in India, it is proposed to amend the section 47 of the Act, to provide exemption for the capital gains arising from transactions entered into by a non-resident on a recognized stock exchange located in any IFSC;
◊ if the consideration is paid or payable in foreign currency for the bonds or GDRs, Rupee Denominated Bonds of an Indian company or Derivatives.
> No indexation is allowed while calculating the capital gain on sale of equity share/units of equity oriented fund or a unit of business trust for sales effected after April 1, 2018;
> Computation of cost of acquisition of capital asset acquired before 01.02.2018 will be higher of
◊ Cost of acquisition of asset shall be the lower of
♦ The Actual Cost of the Asset or
♦The Fair Market value of such shares or the actual consideration received or accruing as a result of a transfer (Section 55(2) (ac))
> The Fair market value of listed equity share shall mean its highest price quoted on the stock exchange on January 3, 208. However, if there is no trading in such shares on such exchange on January 31, 2018, the highest price of such asset on such exchange on a date immediately preceding January 31, 2018. While in case of units which are not listed on recognized stock exchange, the net asset value of such units as on January 3, 2018 shall be deemed to be its FMV.
Provisions Applicable for AY 20 19-20 (Finance Act, 2018)
> Measures to curb strategies used by MNCs for artificial avoidance of PE, Loophole under Para 5 of Article 5 of India’s DTAA, BEPS recommendation to address the above loophole;
> Taxability of digital transactions on principles of Significant Economic Presence; Provisions for Section 9 to be studied in detailed before arriving at any conclusion;
> ‘Accumulated Profits’ redefined for purpose of Deemed Dividend- Section 2(22)(d)
> the accumulated profits/losses of an amalgamated company shall be increased by the accumulated profits of the amalgamating company (whether capitalized or not) on the date of amalgamation
> Dividend payouts of equity oriented mutual fund subject to DDT [Section 115R, Section 115T];
> Relaxation in provisions of carry forward and set off of losses for companies applied for Insolvency under IBC [Section 79];
> Relief from MAT for companies who have applied for Insolvency [Section 115JB];
> Non-Individual entity to obtain PAN, if they enter into a financial transaction of an amount aggregating to Rs. 2.50 lakhs or more in a financial year [Section 139A];
ICDS Amendments (Finance Act, 2018)
> Marked to market losses
> any marked to market loss or other expected loss as computed in accordance with the ICDS shall be allowed as deduction;
> Foreign currency gains or losses
> any gain or loss arising on account of any change in foreign exchange rates shall be treated as income or loss on certain transactions;
> Construction contracts-
> Section 43CB which says that the profits and gains arising from construction contract or a contract for providing service is to be determined in accordance with the ICDS notified
> Revenue Recognition
> New section 145B to tax the export incentives as income of the previous year in which reasonable certainty of its realization is achieved;
> Valuation of Inventory
> necessary amendment in Section 145(2), and provides that the valuation of inventory shall be made at lower of cost or net realizable value in accordance with ICDS.
> No-deferment of tax on conversion of stock-in-trade into capital asset
> Any profit or gains arising from conversion of inventory into capital asset shall be charged to tax as business income under Section 28. the FMV of the inventory as on the date of conversion, shall be deemed to be the full value of the consideration of such inventory.
For the purposes of computation of capital gains arising from transfer of such converted capital assets, the FMV as on the date of conversion shall be the cost of acquisition as per Section 49 and the period of holding for such capital asset shall be reckoned from the date of conversion or treatment.
Provisions Applicable for AY 2018-19 (Finance Act, 2018)
> Section 115BA, a domestic company can opt to pay tax at the rate of 25% if they are engaged in the business of manufacturing or production etc;
> Section 56 to exclude the transfer of capital asset or money between a wholly owned subsidiary company and its holding Company out of ambit of residuary income;
> AMT chargeable at the rate of 9% instead of 18% for units located in IFSC;
Non applicability of MAT in case Foreign Companies opt for presumptive taxation if its total income comprises consists only profits and gains from business referred to in section 44B or section 44BB or section 44BBA or section 44BBB.
Provisions Applicable (Finance Act, 2018)
> Trading in agricultural commodity derivatives are not speculative transaction – Section 43(5) to provide that transaction in agricultural commodity derivatives done through a registered stock exchange or registered association would be treated as non-speculative transaction even if the same is not chargeable to CTT.
> Disallowance of expenditure paid in cash by Trusts;
> Royalty and FTS payments by NTRO to a non-resident is exempt from tax (AY 2018-19);
> NPS withdrawal exemption extended to non-employees;
> Deemed dividend isn’t taxable in hands of receivers- 30% Tax to be paid by the Payer.
Provisions relating to Assessments
> No adjustment under section 143(1) on account of mismatch with Form 26AS;
> No deduction of expenses even if unexplained income is determined by Assessing Officer;
> Chartered Accountants can file appeal to ITAT against the penalty order of Assessing Officer under section 271J;
> E-proceedings extended to all scrutiny assessments;
> Higher penalty for default in furnishing AIR [Section 271 FA]
Chapter VIA Deductions Amendments
> Section 80 D – Mediclaim Deductions
◊ In case of single premium health insurance policies which covers more than one year, deduction shall be allowed on proportionate basis for all those years for which health insurance cover is provided, subject to the specified monetary limit.
Chapter VIA Deductions Amendments
> Deduction limit under section 80DDB is enhanced to Rs. 1 Lac;
> Deductions under Section 80JJAA is extended to footwear and leather industry;
> New deduction introduced for Farm Producer Companies [Section 80PA];
> Deduction of Bank Interest under Section 80TTA up to Rs. 50,000 for Senior Citizens;
> Section 80IAC introduced to allow deductions to promote new start ups
Stringent Action on Non-Filers
> Section 80AC introduced to extend the disallowance of deductions under Section 80H to Section RRB, if return not filed within the due date specified under Section 139(1);
> Stringent prosecution for not filing the ITR [Section 276CC]
◊ Provides for imprisonment of up to 2 years in case a person doesn’t file the return of income;
◊ Exemption given if the return is furnished till end of assessment year or if the tax payable is up to Rs. 3,000- Companies excluded;
◊ Targets to prevent abuse of the exemption provided on the basis of amount of tax payable by shell companies or by companies holding Benami properties.
Glance of Changes in the Tax Rates
DUE DATES (AS OF NOW)
PROVISIONS OF THE IT ACT
Section 139(4) Belated Return
Section 139(5) Revised Return
Section 139(9) Defective Return
Significant Reasons for Changes in ITR
CRISP ITR-1- INDIVIDUAL & HUF (1 PAGE SIMPLIFIED FORM)
Who Can File ITR-1
Who Cannot File ITR-1
ITR-7 (For Trust)
Changes in ITR-1
Income from Salary
Income from other sources
For 80G / GGA deductions
Changes in ITR-2/ITR-3
|Part A –General
The amended Form seeks comprehensive details with respect to Residential Status for individuals in India and requires assessee to tick on applicable option
|The Form requires details as under:
_ You were in India for 182 days or more during the previous year [section 6(1)(a)]
_ You were in India for 60 days or more during the previous year, and have been in India for 365 days or more within the 4 preceding years [section (6)(1)(c)] [where Explanation 1 is not applicable]
B. Resident but not Ordinarily Resident
_ You have been a non-resident in India in 9 out of 10 preceding years [section 6(6)(a)]
_ You have been in India for 729 days or less during the 7 preceding
years [section 6(6)(a)]
_ You were a non-resident during the previous year.
(i)Please specify the jurisdiction(s) of residence during the previous
year and the Taxpayer Identification Number(s)
(ii) In case you are a Citizen of India or a Person of Indian Origin (POI), please specify –
Total period of stay in India during the previous year (in days)
Total period of stay in India during the 4 preceding years (in days)
|Schedule Part –A General||Changes|
|In case of Representative assessee, the Form now seeks ‘Capacity of the Representative||Drop down to be provided
|Sec. 94A details||Transactions with Countries falling under Notified Jurisdictional Areas u/s. 94A are no longer required to be disclosed in Income Tax Return.|
|Directorship details||The Form requires details as under:
Whether you were Director in a company at any time during the previous year? (Tick)
_ _ Yes _ No
If yes, please furnish following information
Name of Company PAN, Whether its shares are listed or unlisted, Director Identification Number (DIN)
Changes in ITR-2/ITR-3/ITR-5/ITR-6/ITR-7
Changes in ITR-2/ITR-3
Changes in ITR-2/ITR-3/ITR-5/ITR6/ITR-7
Changes in ITR-2/ITR-3
Additional Information in ITR-3
Additional Information in ITR-4
Additional Information in ITR-5
Additional Information in ITR-6
Total Salary from all employers, irrespective of whether Form 16 has been issued or not, should be entered in
Income details in ITR 1 /ITR 4S or Schedule Salary in all other ITR’s.
Interest income from fixed deposits, savings bank account etc. should be entered in Income from other Sources of ITR 1 or in Schedule OS-Income from Other Sources in all other ITR’s
DEFECTIVE RETURNS UNDER EFILING
ITR 3/4/5/6– has been filled but Code mentioned under Nature of Business is 601 or 602 or 603 or 604 which are incorrect codes.
All ITR forms –No Income details or tax computation has been provided in ITR but details regarding taxes paid have been filled and filed
ITR 3,4,5 & 6 –In audit information 44AB flag is Y but Part A P&L and or Part A BS not filled
CONSEQUENCES OF LATE FILING
Various Alternative Mechanisms available for e-Verification of Returns
EVC- Through Net banking
EVC –Through Bank Account Number
EVC –Through Demat Account Number
EVC- Through Registered E-mail ID & Mobile Number
EVC –Through Aadhar OTP
New Changes Proposed
Avoid Last Days…
Some Useful Tips
Any Further Help Required
New Call Centre Numbers
For Income Tax Realted Queries: ASK: 1800 180 1961 For Rectification and Refund: CPC: 1800 425 2229 For E-Filing of Returns:
E-filing: 1800 4250 0025