Three-tier TP Documentation & threshold Requirement

Three-tier Transfer Pricing Documentation & threshold Requirement

www.carajput.com; III-Tier

www.carajput.com; III-Tier

Taxpayers are expected to maintain, on a yearly basis, a collection of detailed information and documentation relating to international transactions performed with AEs or specified domestic transactions. Rule 10D of the Income Tax Rules of 1962 provides for accurate records and documents to be kept by the taxpayer. These specifications may generally be divided into two sections.

The very first part of the rule sets out required documents/data which must also be preserved by a taxpayer; the second part of the rule specifies that sufficient documentation is kept to support the data/analysis/studies recorded below the first part of the law. The second part also includes a suggested list of such supporting documentation, like government papers, reports, surveys, technical papers/market research studies performed by credible organizations, price publications, relevant agreements, agreements, and communications.

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Taxpayers with cumulative foreign transactions just below the defined INR 10 million threshold and specified domestic transactions below the INR 50 million thresholds are exempted from keeping the defined documents. However, even in these situations, it is crucial that the documents preserved should be sufficient to sustain the price of the arms-length of international transactions or defined domestic transactions.

Both required records and details must be preserved at the same time (to the extent possible) and must be in order by the due date of the filing of the tax return. Businesses subject to the regulations are usually expected to file their tax returns on or before 30 November following the conclusion of the tax year in question. The required records must be retained for a period of nine years from the end of the applicable tax year and must be revised on a continual basis an annual basis. Supporting document provisions also extend to multinational companies whose income is subject to Indian tax liability.

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Applicable Transfer Pricing Documentation

www.carajput.com; Transfer Pricing

www.carajput.com; Transfer Pricing

Purpose

Timeline

Applicable -Form 3CEB Chartered Accountant’s report in respect of the international transaction Within 8 months from the end of the financial year.
Last Date:- 31st October 2020
TP Study Report Analysis to show international transactions are at arm’s length Within 8 months from the end of the financial year.
Last Date:- 31st October 2020

Structure of three-tier transfer pricing documentation:

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www.carajput.com; the structure of III-Tier·         Local File-This must be recorded by the Organization itself.

·         Master File-Requires to be filed with the IT department.

·         Nation by Nation Study – Requires to be sent to the IT Department.

Applicability of CbCR

Particulars

Threshold

Consolidated revenue of International Group INR 5500 Crore

Note:

Turnover to be taken for Master File is the Accounting Year (i.e., for F.Y 2019-20, accounting Year will be 2019-20)

Compliance applicable on Transfer Pricing

Master File– Forms and Timelines

Section 92D (Master File Forms)

Purpose

Conditions Apply

Timeline

Form 3CEAA Part A: – Basic Limited details to be furnished. Every constituent entity/ designated constituent entity of an international group has to file Part-A irrespective of the turnover. Within eight months from the end of the FY.
For Assessment Year 2020-21:- 30th November 2020
Part B: – Detailed details to be furnished. (Broadly same as OECD Master File) 1.       Total revenue > 500 cr; and
2.       Aggregate international transactions> 50 cr or; intangible related transactions > 10 cr.
Form 3CEAB To notify the Constituent Entity designated for furnishing Master File When there is more than one CE in India. 30 days before the due date of furnishing Form 3CEAA.
For Assessment Year 2020-21:- 31st October 2020

Transfer pricing rules wouldn’t really apply if the arms-length price results in a downward revision of the income taxed in India.

Burden of proof

The responsibility of establishing the arm’s length existence of the transaction rests mainly with the taxpayer. If during the audit process on the basis of content, details, or records in their possession, the tax authorities are of the opinion that the arm’s-length price did not apply to the transaction or that the taxpayer did not maintain / Produce sufficient and accurate documentation / Details/information, the overall taxable income of the taxpayers may be computed as follows after the hearing right has been provided.

                       Compliance Under CBCR

CbCR – Forms and Timelines :

Particulars Purpose When to file? Timeline
Form 3CEAC To intimate Alternate Reporting Entity

or PE (Whether itself or some other)

If international Total revenue > 5500 crores (If CE is resident in India) 2 months prior to the due date for furnishing Form 3CEAD.
To intimate Alternate Reporting Entity

or PE (Whether itself or some other)

For Assessment Year 2020-21:- 31st October 2020
Form 3CEAC CBCR Reporting requirement If international  Total revenue > 5500 crores Within twelve months following the end of reporting accounting year.
For Assessment Year 2020-21:- 31st December 2020
Form 3CEAC To notify the Constituent Entity designated for furnishing CBCR, only if there is more than one Constituent Entity in India (and conditions given in note 1 below are fulfilled) If international Total revenue > 5500 crores Not Specified yet as per the Final Rules.
S.No Turnover Compliance to be made
1. a)   Upto 500 Crores All Constituent Entity /Designated Constituent Entity of the international group to file Part A of Form 3CEAA
    b)   >500 crores but < 5500 crores
    c)   International transaction < 50 crore and;
    d)   Intangible related transactions < 10 crores
2. a) >   500 crores but < 5500 crores; and Part A and Part B of Form 3CEAA
    b)   International transaction > 50 crore; or
    c)   Intangible related transactions > 10 crores
3. a)   > 5500 crores CBCR requirements apply on entity
4. a) >5500 crores; and Details to be Maintain and furnish Master File. Also, CBCR requirements apply on entity
    b)   International transaction > 50 crores; or
    c)   Intangible related transactions > 10 crores

Time-Time for Creating Transfer Pricing Documents

www.carajput.com; Creating Transfer pricing

www.carajput.com; Creating Transfer pricing

Regrettably, the timeline for processing the report varies from country to country. Many countries need details to be ready when a tax return is filed. Other countries want to see something ready at the time of the audit.

Even so, the whole rationale of the transfer pricing legislation is to consciously enforce the Arm’s Length concept. You do this by determining the right transfer price before the actual transaction takes place. What this means is that you build up the transfer pricing paperwork over the year when you’re doing the business. Not at end of each year, like that.

https://carajput.com/learn/rulespenaltiesmethodsdocumentation-required-in-transfer-pricing.html

TP : LIBOR IS THE BEST BENCHMARK FOR INTEREST-FREE LOAN GRANTED TO AE

Summarizing

The latest events have given rise to a renewed emphasis on transfer pricing practices. Standard reporting standards are now in place to address (assumed) abusive tax practices.

The aims of such provisions are, first of all, to increase awareness of the transfer pricing legislation and the environment of adherence. In addition, the report provides policymakers with an analysis of possible threats. In the end, it makes the future audit much simpler.

There are many three reports to be given. Master File, Local File, Country-by-Country Chart. The Country-by-Country report is for major Multi-National Companies with a turnover of Dollars 750 million or more.

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Tax Planning Tips towards availing Tax-saving/Benefits

Tax Planning Tips towards availing Tax-saving/Benefits

www.carajput.com;Save Income Tax

www.carajput.com; Save Income Tax

Right now that most of us don’t start earning, we’re all wondering why someone needs to hear about the tax-savings mess. But when we get our first salaries and see the amount of tax reduced, we know how much efficient tax management is required. Yet most of us are unable to take advantage of all the tax-saving opportunities that we have. Most of the time, we fail to claim a deduction under chapter VI i.e Section 80C, mostly because we don’t know about the investment that saves our tax and lack of understanding of other options.

Where would you save up to 78,000 annually?

Investment Tax applicable Surcharge (4%) Total amount
In the U/s 80C (NPS, Term Life Insurance, ELSS, PPF, etc.) ₹150,000 ₹45,000 ₹1,800 ₹46,800
NPS under Section 80CCD (1B) ₹50,000 ₹15,000 ₹600 ₹15,600
Health insurance for self, family and parents under Section 80D ₹50,000 ₹15,000 ₹600 ₹15,600

Let’s address in depth the various sub-sections under Chapter VI deductions  and other benefits :

In this blog, we’re going to tell you about some strategies that could save you tax above Rs. 1.5 lakh. Here are some possibilities that will help you invest money in tax benefits;

www.carajput.com;tax incentive

www.carajput.com; tax incentive

  1. Investment in National Pension Scheme under Section 80CCD (1B)

Under Section 80C, you can claim a deduction up to Rs 1.5 lakh by donating to the National pension scheme or NPS per year. Besides this, by adding another Rs 50,000 you will claim an extra deduction under Section 80CCD (1B). This implies you can minimize your tax value by Rs 15,600 by investing in NPS if you fall below a 30 percent tax bracket. Also included in this is 4 percent educational cess.

  1. Health Insurance under Section 80D

Today health insurance is not an option but a requirement. If you do not have a health insurance policy then your financial stability will be negatively impacted by a medical crisis. But health insurance policies come with some tax incentives so more and more consumers are adopting it.

Under Section 80D, you can obtain tax incentives for the additional payment charged for your insurance cover. And the incentives can be applied for – a regular life insurance policy, health insurance providers, and child-care plan as well. You can also receive a tax deduction for routine health check-ups, as long as it is under the insurance coverage limits.

Type of policy Deduction limit from Tax
Individual, spouse & children, and if anyone is a senior citizen Rs. 50,000
Parents which are not a senior citizen Rs. 25,000
The parent which are a senior citizen Rs. 50,000

If your immediate family and not parents are insured by the insurance scheme, then you can demand up to Rs 25,000 on the premium charged. If an individual above the age of 60 is covered by the scheme then the maximum you can demand is Rs 50,000. Besides, if you have taken any scheme for your parents, then the premium is Rs 25,000 for non-senior citizens. And it’s Rs 50000, for senior citizens. This is beyond the limitations of family protection.

Let us take a look at one case. Suppose Anil, a 35-year-old working professional, has acquired a health insurance policy covering him, his wife, and child. Under Section 80D, he may in a financial year claim up to Rs 25,0000 for this policy. This policy also includes preventive health check-ups. For this policy, he pays Rs 18,000 each year and another Rs 4,000 for a preventive health check-up. Under Section 80D, he may claim a Rs 22,000 deduction.

Now for his parents, who are senior citizens, taken another health policy. He will demand deductions up to Rs. 50,000 under this scheme. In total, he could claim a deduction for two policies up to Rs 75,000.

  1. Disabled Dependent under Section 80DD

If a taxpayer caring for a disabled dependent, then he can claims tax deductions under Section 80DD. This deduction is provided as a support to the disabled family members. A disability dependent may come under this section are spouse, children, parents, and sibling  It may be any family member of the Hindu Undivided Family (HUF).

It is important to ensure that the disabled dependent has not claimed a deduction under section 80U for receiving compensation under this act. Under the section, Disabilities which are covered –

  • Blindness
  • Low vision
  • Loco-motor disability
  • Hearing impairment
  • Mental retardation
  • Mental illness
  • Autism
  • Cerebral palsy

May you demand deductions on Expenses for the care, caring, development, and rehabilitation of disabled persons.

  • For the premium paid for these particular conditions on policies
  • But the deduction amount depends on the severity of the disease. The taxpayer will demand deductions up to Rs 75,000 if the injury is up to 40 percent. If the individual with a disability is at least 80% disabled, then the taxpayer will demand a deduction up to Rs 1,25,000.
  1. Interest on Education loan under Section 80E

Section 80E states that tax incentives can be obtained on the interest portion of an educational loan. And, that does not have a fixed limit. This deduction can be received by either the student or the guardians, whoever makes the repayment. However, this advantage will be accessed from the first year of the loan to the eighth year or until the loan period is complete, whichever is earlier.

Let’s suppose, for example, you finish the repayment period within six years, so you will take advantage of the gain for six years. On the other hand, even after the eight-year term, you will continue to repay the college debt, but in any situation, this tax incentive can not be taken advantage of.

  1. Interest on Saving Bank account under Section80TTA & 80TTB

We already have money in the banks and we get an interest in it. Any individual and HUF can claim a tax deduction on the interest paid. Taxpayers who are not senior citizens which claim exemptions under Section 80TTA and senior citizens which demand tax under Section 80TTB. Tax deductions can not be claimed on interest earned on Fixed Deposit, Recurring Deposit, or term deposits.

Section 80TTA:

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www.carajput.com; Section-80TTA

Under this clause, the maximum amount to be deducted is Rs 10,000. You can demand a deduction of interest earned up to Rs 10,0000. And if you have several savings accounts, the interest earned from all the deposits will be combined. Surplus income will be defined as income from other sources and taxable profits. This deduction is given on interest received –

  • From a bank deposit account
  • From a savings account with a cooperative organization engaged in the banking industry
  • From a savings account with a postal office

This deduction is NOT permitted for interest received on time deposits. Term deposits mean deposits which are repayable at the end of fixed periods. It is not permitted for –

  • Interest in fixed deposits
  • Interest in recurrent deposits
  • Any other deposits of time

Section 80TTTB:

This section was initiated as a reward for senior citizens to use as their source of revenue, interest earned by saving savings accounts and deposits on 1 April 2018. Senior citizens can assert tax deductions as high as Rs 50,000 under such a provision.

Amount of deductions allowed: A deduction of less than Rs 50,000 or a sum from a defined income is permitted from the total income. Mentioned income is the sum of all of the following income:

  • Interest in deposit accounts (savings or fixed deposits);
  • Interest in deposits held in a cooperative company engaged in banking operations, like a cooperative land mortgage bank or a cooperative land development bank; or
  • Interest in deposits at the post office

    www.carajput.com;summary

    www.carajput.com; summary

  1. PPF (Public Provident Fund)

Established by the National Savings Organization and sponsored by the Government of India, PPF is a long-term fund (read 15 years) that you can use for purposes such as raising your child or retiring.  This ensures the investment you make, the profits you receive, and the gains from the growth are absolutely tax-free. You will also demand tax benefits for the amount you spend according to Section 80C of the Income Tax Act.

For PPF the minimum contribution is just Rs. 500. For a financial year, you can spend up to 1,50,000 Rs. The central government sets the interest rate for PPF along with many other savings schemes and revises the rates each quarter.

  1. EPF (Employee Provident Fund)

T hat is only if, of course, you deduct the money after retirement! Premature withdrawal if you have kept the EPF account for 5 consecutive years is tax-free. The amount of interest would be tax-free too. Accordance with Section 80C you can demand tax deductions for the amount invested.

You should pay 12 percent of your basic salary to EPF compulsorily while your employer contributes equally. EPF includes a company employing 20 or more employees with a rate of 12 percent applied to these organizations. However, the EPF rules specify that under some requirements and conditions those organizations that have less than 20 employees will contribute to 10 percent. You may also make voluntary contributions in excess of that limit. How much can you help? In your EPF, you could spend up to 100 percent of your minimum salary plus dearness allowance. Both of the investments you make will receive the same rate of interest. The tax and withdrawal regulations would also be similar for such voluntary contributions.

Remember that the employer’s contribution to the Employee pension scheme (EPS) would be 8.33 percent. Rs 1250 will be spent in EPS for any employee whose basic salary is Rs. 15,000 or more. If the basic salary is less than Rs. 15,000, so EPS will earn 8.33 percent of the wage. The average interest rate for EPF is 8.55 percent, measured on the basis of the monthly operating balance. Assume you receive a basic salary of Rs. 50,000, the EPF balance will be Rs. 1.29 lakhs at the end of one year considering the existing interest rate. If you include the balance of your EPS it will be Rs. 1.34 lakhs.

Today, after one month of resigning from service, EPF customers will deduct 75 percent of their overall account balance.

  1. ULIP (Unit-Linked Insurance Plan)

A portion of the ULIP premium, being a hybrid option, will go into insurance coverage and another portion will be deposited in the stock market. The premium you pay counts under Section 80C for tax exemptions and the returns you will obtain on maturity will also be excluded from tax under Section 10(10D) of the Income Tax Act.

According to the Insurance Regulatory and Development Authority (IRDAI) of  India’s, the overall annual fund management fees can be 1.35 percent. The minimum insurance plan must therefore be 10 times the average premium, it has reported. These rules guarantee that the premiums do not reduce the returns, and insurance coverage is not negligible.

You can select from the fund options that insurer offers that come with various asset allocations. Based on your risk profile, investing in both equity and debt may allow you to invest more in equity, debt, or have a balanced approach. Post-tax returns from ULIPs may be between 7 percent -9 percent.

  1. SSY (Sukanya Samridhi Yojana)

    Are you going to have a baby girl? SSY is also one of the best long-term initiatives to produce tax-free returns. The average interest rate of the program is 8.1%. Pursuant to Section 80C, the money deposited will be registered as a tax deduction. The minimum deposit balance is Rs. 250 and you can invest Rs. 1.5 lakhs in a financial year.

    You can create an SSY account before your child turns 10. You’ll handle your account until you get married, or 21 years from the opening date of your account, whichever is earlier. Once she turns 18, you will make a partial withdrawal for your daughter’s education.

  2. Contribution Given to political party

Section80GGC

  • If, in the previous year, any individual except the local authority and any artificial legal entity, wholly or partially supported by the government, contributes to any political party or political trust. The tax incentive is required to pay 100% of the amount only if the donation is not paid in cash.

Section GGB

  • If, in the preceding year, any Indian Corporation contributes to any political party or political trust and to the expenses incurred, directly or indirectly, by an advertising company in any publication by or on behalf of a political party. The deduction shall be given to 100% of the value of the donation only if the donation is not paid in cash.
  1. Investment in notified equity saving scheme Section 80CCG

If a resident person (may be ordinarily resident or not ordinarily resident) invests in registered equity or listed unit or equity-oriented fund. The tax benefit shall be given to a resident person for 3 financial years of assessment, beginning with the assessment year applicable to the preceding year in which the listed share or the listed share of the equity-oriented fund was first acquired. The incentive is given at 50 percent of the amount invested, but the tax incentive is not allowed at more than Rs. 25.000.

  1. Contribution to certain pension fund Section 80CCC

Where an individual has made a contribution of taxable income to LIC or to some other eligible insurer under an eligible pension scheme. The tax benefit is the sum of the deposit of Rs. 1,50,000, whichever is less. However, the pension earned or the amount withdrawn by the applicant or his / her candidate is taxable in the year of receipt. There were also two subsections in this section:
Section 80CCD (1): NPS investments are eligible for tax deductions under this provision. Any Indian citizen between the ages of 18 and 60 can invest in NPS and make use of this tax benefit. This profit may also be asserted by NRIs. The maximum deduction that can be made under this clause is 10% of your income (including basic salary + DA). For self-employed people, the cap is 20% of their gross net income. Also, the maximum profit you will enjoy per year under this section is 1.5 lakh.
Section 80CCD (1b): This clause allows for an extra deduction of 50,000 for investment in NPS. This is over and beyond the 1.5 lakh available in Section 80CCD(1).

So, in brief, you can make use of a total income tax deduction of 2 lakh a year when you invest in pension fund Section 80CCC i.e NPS.

  1. Housing Loan

Section 80C

  • Housing loan principal payments: whether you have borrowed a home loan, the portion of EMI that is used to repay the principal sum is qualified for tax deductions under Section 80C. The amount you pay as interest is not eligible to claim deduction under this provision.
  • If a person or HUF has taken a loan for his first house which is self-occupied or leased or vacant (deemed to be disposed of) then he may obtain a maximum tax reward of Rs. 1,50,000 only for payment of the principal amount repaid.

Section 80EE with Section 24 and Section 80EEA

www.carajput.com;Home-Loan-Tax-Benefit

www.carajput.com; Home-Loan-Tax-Benefit

  • The deductions under this clause are only applicable to individuals. This means that whether you are a HUF, AOP, a corporation, or any other form of the taxpayer, you can not assert any advantage under this clause.
  • Limit of amount: this deduction (up to Rs. 50,000) exceeds the cap of Rs 2 lakh in compliance with section 24 of the Act on income tax. Learn more about the deduction of Rs 2 lakh on home loan interest here.
  • In order to claim this deduction, you need not own any other property on the date of the approval of the loan from a financial institution.
  • Conditions to be met for the claim deduction
    House value should be Rs 50 lakhs or less
    Loan to the house must be Rs 35 lakhs or less

When you’re in a position to comply with both Section 24 and Section 80EE of the Income Tax Act, be swift to assert the benefits. Next, reach the deductible maximum under section 24, which is Rs. 200,000. Then proceed to claim additional benefits under section 80EE. In addition to the Rs 2 lakh limit authorized under section 24, these deductions are also permitted.

The additional deduction is allowed to the individual in respect of interest paid on loan taken for residential house property to provide benefits for first home buyers. The tax incentive shall not allow Rs. 50,000. The Union budget 2019 announced a new section 80EEA to increase the tax advantages of interest deductions to Rs 1,50,000 for housing loans for affordable homes over the term 1 April 2019 to 31 March 2020. The taxpayer should be a first-time homeowner and should not be eligible for a tax deduction 80EE. The tax incentive is only available until the repayment of the loan continues.

14. Section 80TTA

Section 80TTA allows you to demand a deduction of Rs. 10,000 on your interest earnings. This deduction is really only applicable to individuals and to HUFs. The deduction shall be entitled on:

  • Money earned in a savings bank account.
  • Profit earned on a savings bank account with a cooperative organization engaged in banking activities
  • Profit in a savings bank account with a post office

Your whole interest income would count as a deduction if it is less than 10,000. If your interest income is more than Rs. 10,000, your deduction shall be limited to Rs. 10,000.

CONCLUSION: What you need to know about saving income taxes

Prior to actually selecting a tax-saving instrument, it is necessary to take into account the degree of risk, lock-in time, liquidity, and returns. There is no point in opting for a tax-saving plan unless it fits the particular needs as well. It also helps to keep up-to-date on the latest trends in tax-saving legislation. Barring Section 80C, most taxpayers are not acquainted with some other parts of the Income Tax Act that allow them to substantially keep their tax burden. It is Strongly advised ways to save taxation under Sec 80C & 80D

  • Investment Rs 1.5 lakh under Section 80C to limit your net income
  • Buy Medical Insurance & seek a deduction of up to Rs. 25.000 (Rs. 50.000 for senior citizens) for a medical insurance premium under Section 80D.
  • Claim deductions up to Rs 50,000 for housing loan Interest under Section 80EE

Govt. scheme Launched for Public and National Benefits

National committee on deduction benefits u/s 35AC

Regards 

Rajput Jain & Associates

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Section 234F -Fee (Penalty) for delay in filing Income-tax return

Under this section, the fee (penalty) is levied if the Income-tax return is not filed within the due date. It is likely to be increased from 1st April 2018 onward as per Section 234F of the Income Tax Act. Provisions of Section 234F of the Income Tax Act are as follows.

 Section 234F: New penalty for late filing of Income Tax Return under section 234F is introduced in Budget 2017. This penalty is applicable for the assessment year commencing from the 1st Day of April 2018. If a person who is compulsorily required to file Income Tax Return (ITR) under section 139, doesn’t file a return on time then he is liable to a penalty as follows

Total Income Return filed Fee (Penalty)
Exceeds Rs. 5 Lakh On or before 31st December of Assessment Year but after the due date Rs. 5,000/-
In any other case Rs. 10,000/-
Upto Rs. 5 Lakh After the due date Rs. 1,000/-

 Let us discuss the above provision below:-

AMOUNT OF PENALTY

For a person with a Total Income of more than Rs. 5,00,000. The penalty amount would be as follows:-

  1. If ITR is filed on or before 31st December following the last date – Rs. 5,000
  2. If ITR is filed after 31st December – Rs. 10,000

For a person with a Total Income of up to Rs. 5,00,000 – Rs. 1,000

Before 1st April 2018 – The penalty for Late Filing would be as follows-

Up to FY 2016-17, taxpayers who do not file their income tax returns in a stipulated time period are liable to a fine (penalty) of Rs. 5,000.

It is further noted that liability to pay the penalty of Rs.5,000 is arises when an Income Tax Officer issues a notice for a late filing of the income tax return. It is worthwhile to note that the penalty for the late filing of income tax return is based on the conclusion of the assessing officer.

Contract us to Know more about the consequences and penalties for late filing income tax returns. We also handle tax & registration services 

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 Delay in the deposit of Employer provident fund during the lockdown

Aware of the penalty of Section-234f for late filing of ITR

 

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CBDT doubles penalty for failing to submit ITR before the due date

CBDT doubles penalty for failing to submit ITR before the due date

The CBDT extended the deadline for filing the tax return for the year 2019-20 to 10 January 2021, beyond the usual date of 31 July due to the ongoing coronavirus pandemic. Under the Regulation, individuals under 60 years of age who earn Rs 250,000 or more annually are required to submit an ITR, while the limit for senior citizens or those between 60 and 80 years of age is Rs 500,000. This year, the CBDT increased the penalty amount for missing the deadline by imposing a fine of up to INR 10K as opposed to the INR 5k imposed last year. The procedure of charging late filing fees under section 234F was introduced in the 2017 budget and became effective for the FY 2017-2018 or 2018-19.

The high late filing fee is only relevant if the Gross income of the taxpayer, i.e. income after eligible deductions and tax exemptions, exceeds INR 500k in the existing FY. Individuals with a taxable income of up to INR 500k will have to pay a fine of INR 1k  if they file an ITR after 10 Jan 2021. For individuals with a taxable income of more than INR 500k, the very same penalty will be raised INR 10k.

In the Budget 2019, exemptions to the above-mentioned Income tax rule as a result of the modifications proposed by Govt of India, which specifies that the below categories of persons will not be excluded from the penalty.

1. Individuals who has make the deposited total more than INR 100,00,000/-, shall grow in 1 or more Indian bank accounts.

2. Individuals who have bear expenses more than INR 2,00,000/- due to international Travel.

3. Individuals who incur total costs of INR 2,00,000/- & more because of electricity consumption.

Late filing of ITR fees also confirms that interest payable on the tax refund is calculated on or after April 1 of the relevant AY. In the case of late filings, the individual loses some amount of interest.

CBDT Circular dated on 13th July 2020: CBTD allows to verify previous ITR one time relaxation for verification for the FY 2014-15 TO FY 2018-19  by September 2020

www.carajput.com;CBDT: INCOME TAX

www.carajput.com; CBDT: INCOME TAX

The tax return filer effectively makes a declaration by reviewing the tax return that the information contained in the return are correct.

Normally, the tax return must be checked within 120 days of the filing of the income tax return or any extended date announced by the tax department.

The procedure for filing income tax returns is not complete until the tax return is checked. The return will not be processed by the tax department until, and until confirmed. If not confirmed, the return is invalid.

1) By circular no. 3/2020 of 13 July 2020, CBDT offered one more-time opportunity for taxpayers whose income tax returns had been filed electronically but were awaiting verification.

2) Now any taxpayer whose ITR is pending for verification can verify their ITR by 30 September 2020 or before that date.

3) It is possible to check ITR for the duration 2014-15 to FY 2018-19 via this one-time relaxation scheme

4) All these checked ITRs are to be issued by 31 December 2020 or before.

5) ITRs may be checked by EVC or by a properly signed hard copy being sent to CPC Bangalore.

Note: if any lawsuits against taxpayers have been launched in view of the fact that the taxpayer has not filed a report for that year then the value of relaxation can not be used

Benefits:-

  • In the event of failure to acknowledge return, AO may initiate proceeding u / s 144 as such returns filed are deemed invalid.
  • The carryforward of loss can get permitted, ThanksRajput Jain & Associates

Read the related links:

Tax filing Changes are taken into account when filing ITR for FY-2019-20

How to e-file a return using EVC without sending a signed copy of ITR-V?

Aware of a penalty of Section-234f for late filing of ITR

Relaxation for verification of ITR

Verification of ITR Filing Status

common mistake done while filing ITR

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

Essential key concepts Gift Taxation: Income Tax

Essential Key concepts Taxation on gifts

www.carajput.com; Income Tax (Gift taxation)

www.carajput.com; Income Tax (Gift taxation)

Gifts up to Rs 50,000 per year are exempt from tax in India. In addition, donations from particular relatives, such as parents, spouses, and siblings, are also exempt from tax. Gifts are taxable in other cases. The gift tax in India falls under the Income Tax Act as there is no specific gift tax after the Gift Tax Act of 1958 was enacted in 1998.

In India, gifts are given on a number of occasions, such as celebrations such as Diwali, Holi, or the occasion of marriage, to express love for our loved ones. Nevertheless, gifts are now also used for tax planning reasons as, in multiple given to a specific, any amount of gifts received is exempt from tax. Some people whose gifts they got in their ITR claim that they’re still gifts obtained out of love and affection.

Even so, it’s not the right way, since donations are tax-exempt only in such specific circumstances or where they are obtained by particular persons. Non-disclosure of gifts could result in penalties of between 50 and 200 percent of the tax payable on the income attempted to be avoided.

  1. Gifts received from the employer

There are occasions when employers give the employee a present on a special occasion or to boost their productivity, or because they do well. An employee shall be liable for gifts received from the employer only if the value of such gift is equal to or greater than Rs. 5,000. Gifts below Rs. 5,000 in value within the financial year shall be excluded from vat. These gifts shall be taxable as perquisites under the Head of Salary Income.

  1. Gifts received from any other person;

Section 56(2)x) of the Income Tax Act, 1961 deals with the taxability of gifts received by a person, except the employer, throughout the year. This provision shall apply regardless of the status of the resident or of the class of assessee. The donor or donor can be an individual, a partnership business, LLP, a corporation, AOP, BOI, a cooperative society, or an artificial legal body, whether resident or non-resident.

Previous gifts from a resident to a non-resident are, even then, claimed to be non-taxable in India as the recipient used to claim that income does not accrue or arise in India. In order to make sure that the receipt of gifts is also taxed in the hands of non-residents, Section 9 has been amended by the Finance Act (No. 2), 2019, to provide that income is considered to have accrued or to have arisen in India as a result of the payment of gifts (exceeding Rs. 50,000) without adequate consideration by a resident to a non-resident. It does not provide proof of the taxability of the gift of the estate as referred to in Section 56(2)(x), inter-alias, immovable property, gold, securities, etc.

Therefore, after the amendment, it may be inferred that gifts in the nature of money in the hands of non-residents provided by resident persons would be paid in their hands, even though gifts of any other manner are also beyond the control of the Income Tax Act.

2.1. Gifts received in cash form

Where even a person receives any amount of money without consideration and the total value of that sum exceeds Rs. 50,000, the total aggregate value of that sum shall be taxed on the basis of capital income from other sources. For the determination of the threshold, the aggregate amount of receipt from different sources and persons throughout the year shall be considered.

2.2. Gifts obtained in the form of real estate

Immovable property received by the assessee for the year, either without consideration or for lack of consideration, shall be deemed to have been income in his hands and to have been taxable in that year if the receipt is within a period of time.

  • If the immovable property is received without consideration as well as the stamp duty value of the property reaches Rs. 50,000, the stamp duty value of the immovable property shall be liable to tax.
  • If an immovable property is obtained for payment far less than the stamp duty value, the discrepancy between the stamp duty value and the compensation shall be taxable if the difference meets the above two limits: Rs . 50,000; or 10% of the consideration

For all cases, the cap of Rs. 50,000 shall be reviewed for each transaction and not for all transactions as a whole.

2.3. Gifts received in the form of Movable Goods

Movable property as described in the Act shall include any property in the form of shares and stocks, jewels, historical artifacts, sketches, portraits, sculptures, any work of art, or bullion. In which the transaction includes any other movable property, such as car furniture, the excess consideration for the fair market value shall not be taxed. In this case, the deemed income shall be calculated as follows given way :

If any property is obtained without regard and the total fair market value of it reaches Rs. 50,000, the entire fair market value of such property shall be paid.

3. Gifts Exempt

I Upon the occurrence of a specified incident
  • On the occasion of marriage of an individual
  • By will or by means of inheritance
  • Considering the death of the payer or of the donor.
II Due to the status of the Doner
  • The gift is to be accepted from any specified relative;
  • Gifts obtained by any local authority;
  • Gifts earned from any fund or foundation or university or other educational institution or hospital or medical institution or from any trust or institution referred to in Section 10(23C);
  • Gift received from any trust or institution registered under section 12A/12AA/12AB[2];
  • Gift obtained by an person from a trust formed or established exclusively for the benefit of the relative of the recipient.
III. Owing to the position of the Donee
  • Gifts shall be handled by any trust or institution registered under section 12A/12AA/12AB2;
  • a certain fund or trust or institution, or any university or other educational institution, or any hospital or medical institution referred to in Section 10(23C)(iv)/(v)/(vi)/(via).
IV Due to transactions not considered to be a transfer
  • Any distribution of capital assets to the full or partial division of the HUF[Section 47(i)]
  • the transfer of capital assets by an Indian parent company to its subsidiary company;
  • Transfer of a capital asset to a merger, demerger or company reorganization scheme such that the requirements laid down in Section 47(vi) to Section 47(vii) are fulfilled.
V Other class of persons who have been notified
  • Immovable property acquired by a citizen of an illegitimate colony in the NCT of Delhi, pursuant to the requirement that such transaction must be regularized by the Central Government on the basis of the most current power of attorney, the selling document, the will, etc.
  1. The first and only manner to save the tax via a gift

The alternative tax can be saved is by offering gifts to your parents or legitimate guardians or to a kid who is a major. Nonetheless, when you contribute the sum, your taxable income stays the same. However, the interest they earn from other products by continuing to invest these funds becomes their own income. So, presuming that their income is lower, you can rest in peace knowing that the money is not going to be taxed.

Previously, so when long-term capital gains (LTCG) tax was effective, gift money can also be invested in a mutual fund or stock for 1 year and used as tax-free income. However, it is not feasible now as the LTCG tax has been reintroduced with effect from 1 April 2018.

  1. Are gifts, both in cash and kind, taxable?

Actually, all sorts of donations, including dollars, jewelry, real estate, paintings, or some other valuables, are taxable. However, if the amount of cash or the value of the gift in kind is less than Rs 50,000, the same amount would not be taxable.

Also, read the link mentioned below;

Taxation on Income from Equity and Debt Mutual Fund

Basic of Bitcoin Taxation in India

Top Taxation Relaxation to MSMS

Highlights of International Taxation

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

What is the process of applying Instant Free PAN through Aadhaar e-KYC : FM launches

FM launches Instant PAN through the Aadhaar-based e-KYC Knowledge Process to get Free PAN

www.carajput.com;PAN

www.carajput.com; PAN

In accordance with the statement made in the budget of the Union, the Minister for Finance and Corporate Affairs of the Finance Minister officially unveiled the PAN Instant Allocation Service (on a near-real-time basis) here today. This facility is now available to those PAN applicants who have a valid Aadhaar number and a mobile number registered with Aadhaar. The allotment process is paperless and an electronic PAN (e-PAN) is issued free of charge to the applicants.

It may be remembered that the budget of the Union for 2020 requires Smt. Nirmala Sitharaman FM  had announced that it would soon be launching an instant PAN service. In paragraph 129 of the Budget Address, the Finance Minister said, “In the last budget, I implemented the interchangeability of PAN and Aadhaar, for which the required rules had already been notified. In order to further accelerate the process of assignment of PAN, we will soon launch a program in which PAN will be instantly allocated electronically on the basis of Aadhaar without any need to fill out a comprehensive application form.

The Instant PAN facility via Aadhaar-based e-KYC was officially launched today, but its trial-based ‘Beta’ edition was released on 12 February 2020 on the Income Tax Department’s e-filing website. Since then, 6,77,680 instant PANs have been released with a processing period of around 10 minutes, until 25 May 2020.

It can also be noted that, as at 25.05.2020, a total of 50.52 crore Accounts have been allotted to citizens, out of which roughly 49.39 crores is allotted to individuals and more than 32.17 crores are so far seeded with Aadhaar.

The instant PAN application method is very quick. Instant PAN applicants are expected to visit the Income Tax Department’s e-filing website to provide their valid Aadhaar number and then apply the obtained OTP to their registered Aadhaar mobile phone. Upon effective completion of this process, a 15-digit recognition number is created. If required, the applicant can, at any time, check the status of the request by providing its valid Aadhaar number, and on positive submission, download the e-PAN. The e-PAN will also be submitted to the user via e-mail if it is registered with Aadhaar.

The introduction of the immediate PAN facility is just another step by the Income Tax Department towards Digital India, making it easier for taxpayers to comply.

It is compulsory to connect your PAN card to Aadhaar by 30 June of this year, otherwise, it will become inoperative. The income tax department also allowed all income taxpayers to use their Aadhaar numbers instead of the PAN.

What is the process of Instant online PAN for Free Using Aadhaar?

PAN stands for Permanent Account Number, by means of which all tax-related information for a person/company is registered. It serves as the primary key to the storing of knowledge that is spread throughout the world. Therefore, one person can not have more than one PAN card or two people can not have the same PAN. The PAN is valid for life.

the Minister for Finance and Corporate Affairs of the Union Smt. Nirmala Sitharaman has launched a new facility through the 2020 budget, where people will be able to access instant PAN through the Aadhaar number without having a comprehensive application form. The facility is completely paperless and no physical submission is required. The Instant PAN allocation service is for users who have a valid Aadhaar number. PAN is issued to applicants in PDF format free of charge.

The process to Apply Instant Free PAN through Aadhaar :

www.carajput.com;PAN flowchart

www.carajput.com; PAN

Step by Step Process to apply for PAN online free of charge:

Step 1: Go to https:/www.incometaxindiaefiling.gov.in / home and click “Instant PAN”

It’s going to lead you to the Instant PAN through the Aadhaar tab.

Stage 2: Now press the “Get New PAN” button

It will forward you to the PAN application form

Step 3: Filing a PAN form

You will be asked to include your Aadhaar number for the PAN assignment after phase 2.

Enter the 12-digit Aadhaar code, select “I confirm that” checkbox, enter Captcha, and press “Generate Aadhaar OTP”

The OTP will be sent to the registered mobile number or to the Aadhaar phone. Enter the OTP and validate the number of Aadhaar.

Now validate the Aadhaar details, i.e. the address indicated on the Aadhaar card. Please also check your Email Address.

After you have provided the details above, click on “Submit PAN Request.”

After you have submitted details, a 15-digit recognition number will be generated. Save it from your history.

Check the status of your PAN card by repeating Step 2 and clicking “Check Status / Download PAN”

Aadhaar-based PAN distribution FAQ

  1. What’s the PAN?

Answer: PAN, or Permanent Account Number, is a special 10-digit alphanumeric code. The Income Tax Department issues PAN in compliance with the Income Tax Act & Regulations. Financial institutions and agencies are also required to have PAN.

  1. What is Instant PAN based on Aadhar card?

Answer: Aadhaar-based instant PAN allocation service is to provide PAN in near-real-time. You are required to quote a valid Aadhaar number issued by the Indian Unique Identification Authority (UIDAI) and not linked to any PAN. The e-KYC details for that Aadhaar number shall be shared with the Specific Identity Authority of India (UIDAI). After due process of e-KYC details in the Income-tax database, you get a PAN.

  1. Is this PAN right? Is it separate from the PAN provided by other types of applications?

Answer: Yes, the PAN is valid. It is not distinct from the PAN provided by the Income-Tax Department by other modes of application. After due process of e-KYC details in the Income-tax database, you get a PAN.

  1. Is this PAN right? Is it separate from the PAN provided by other types of applications?

Answer: Yes, the PAN is valid. It is not distinct from the PAN provided by the Income-Tax Department by other modes of operation. However, this PAN is paperless, online, and free of charge.

  1. If I apply for Instant PAN, how am I going to get the assigned PAN?

Answer: You can access the PAN by uploading the Aadhaar number to Test the status of the PAN. You can also get the PAN in PDF format via e-mail if your e-mail ID is registered with Aadhaar.

  1. Do I have to pay for using this Instant PAN-based Aadhaar facility?

Answer: No, this facility is free of charge.

  1. What’s the e-PAN?

Answer: e-PAN is a digitally signed PAN card issued in electronic format by the Department of Income Tax.

  1. Would be e-PAN a proper PAN form?

Answer: Yes, e-PAN is a valid PAN proof. e-PAN contains a QR code with demographic details of the applicant for PAN, such as name, date of birth, and photograph. This information can be obtained via a QR code scanner. E-PAN is hereby acknowledged by Notification No. 7 of 2018 dated 27.12.2018, issued by the Chief Inspector General of Income-tax (Systems). Click here to view the notification (https://www.incometaxindiaefiling.gov.in/eFiling/Portal/e-PAN_PDF_and_App_Links/notification_7_2018_pan.pdf).

  1. Where can I download the QR code reader from?

Answer: This can be downloaded from the connection given on the QR Code Reader website.

  1. May I use this facility if I have a PAN already? May I ask for a separate PAN?

Answer: No, no. Pursuant to Section 272B(1) of the Income Tax Act, an individual with more than one PAN is liable to pay a penalty of Rs.10,000.

  1. Who can apply for the assignment of Instant PAN through Aadhaar e-KYC?

Answer: Applicants of PAN who have an Aadhaar number from UIDAI and have registered their mobile number with Aadhaar may apply.

  1. Can foreign citizens apply for PAN via e-KYC?

Answer: No,

  1. Is there any mandatory requirement to apply through e-KYC?

Answer: Yes, the mobile number of PAN applicants should be registered with UIDAI in the Aadhaar database.

  1. May I apply for a PAN if my Aadhaar card isn’t active?

Answer: No, you can’t apply.

  1. How is Aadhaar verified by instant PAN?

Answer: UIDAI sends an OTP to the registered mobile number through the Aadhaar e-KYC process.

  1. What if I don’t have an OTP?

Answer: You can resubmit your Aadhaar e-KYC page to get a new OTP. If you don’t have an OTP yet, you need to contact UIDAI.

  1. How many times is it possible to produce OTP?

Answer: Any amount of times,

17 If Aadhaar authentication is rejected during e-KYC, what should I do?

  • Answer: Aadhaar authentication can be refused due to incorrect OTP. The problem can be solved by entering the correct OTP. If it is indeed denied, you need to contact the UIDAI.
  1. would I need a Digital Signature Certificate (DSC) to apply for a PAN card through an Aadhaar-based Instant PAN facility?

  • Answer: No,
  1. would I have to request a physical copy of the KYC application or proof of the Aadhaar card?

Answer: No, It’s an online operation. No paperwork is needed.

20. Do I need to upload an e-KYC scanned photo, signature, etc.?

  • Answer: No,
  1. Will I have to give an acknowledgment or a record if an instant PAN is used in e-KYC Aadhaar mode?

  • Answer: No, The PAN user will use the Aadhaar number to know the status of the Instant PAN application and to produce PAN in PDF format.
  1. Would I need to carry out an in-person check (IPV)?

  • Answer: No, Aadhaar based e-KYC does not require any in-person verification.
  1. Which centers are assigned to PAN by e-KYC?

  • Answer: PAN allocation through Aadhaar e-KYC is permitted only via the e-filing website.
  1. Can we give a different address to the Aadhaar card address?

  • Answer: No, The address available to UIDAI in the Aadhaar database will be registered in the PAN database.
  1. How would I track the progress of my Instant PAN application?

Answer: when the request is submitted, the applicant can verify the status of the request by following the following steps:

(a) To access the PAN, kindly go to the Income Tax Department’s e-filing website. (Url: https://www.incometaxindiaefiling.gov.in)

(b) Click the link- ‘Instant PAN through Aadhaar'(https://www1.incometaxindiaefiling.gov.in/e-FilingGS/Services/ApplyePANThroughAadhaar.html).

(c) Click the link- ‘Check Status of PAN’ (https://www1.incometaxindiaefiling.gov.in/e-FilingGS/Services/ePANStatus.html?lang=eng).
(d) Apply the Aadhaar number in the space given, then send the OTP sent to the registered Aadhaar mobile phone.

  1. would I get a PAN card?

Answer: No, no. You will be given an e-PAN that is a legitimate type of PAN.

  1. Where can I get a physical PAN PAN card?

  • Answer: If you have assigned a PAN, you can obtain a printed physical PAN card by submitting a PAN to the links below.

https://www.onlineservices.nsdl.com/paam/ReprintEPan.html
https://www.utiitsl.com/UTIITSL_SITE/mainform.html

  1. Can I make any changes in my existing PAN through this facility?

Answer: No. Please use the Change Request Facility provided on the links below-
https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html
https://www.pan.utiitsl.com/panonline_ipg/forms/csfPan.html/csfPreForm

Also, read the recommended links;

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

New Income Tax Scheme 30 percent additional deduction on New Payroll expenses for certain assesses : Section 80JJAA

New Income Tax Scheme 30 percent additional deduction on New Payroll expenses for certain assesses: Section 80JJAA

www.carajput.com;TDS Section 80JJAA

www.carajput.com; TDS Section 80JJAA

In order to encourage job generation in India, the Government enacted Section 80JJAA under Chapter VIA of the Income Tax Act, 1961, which provides for deductions for the employment of new workers. It shall refer to any assessee who has company income and who is liable for audit pursuant to section 44AB of the Income Tax Act, 1961. The rule is useful to newly formed start-ups and companies. The assessee will not be given a deduction if the business is established by changing the existing business or if the business is bought from another entity. The assessee will be excluded if he opts for a new tax regime or an existing tax regime of 115BAC from the previous year 2020-21.

How it is that will I get an extra 30 percent deduction from payroll payments for company and start-ups under Income Tax Chapter 80JJAA?

Only two types of deductions are available under the new tax regime for fiscal year 2020-21. The first concerns the employer’s contribution to the employee’s National Pension System (NPS) account and the second concerns Section 80 JJAA. Here’s a peek at who will gain from Section 80JJAA under the current income tax regime:

Section 80JJAA shall extend from AY 2017-18. This provision provides for deductions for extra payroll expenses for new hires under Chapter VI-A of the Income Tax Act. The deduction may be reported by assesses who have started a new company, employed new staff and their tax records need to be audited.

Quantum of deductions under this section: The assessee shall earn a discount of 30 percent of the increased staff costs for three successive years from the year in which the assessee continues to incur additional staff costs. To order to assert the benefit, the assessee is required to file Form 10DA. Form 10DA is to be submitted by the Practitioner Chartered Accountant on behalf of the assessee on the Income Tax e Filing Portal before or at the time of filing the income tax return.

What would you mean by extra personnel costs?

Additional employee cost means total emolument/ salary/ wages paid or payable to additional employees during the previous year. In the case of new business additional employee cost shall be emolument paid or payable to employees employed during that period.

Conditions for alleging deduction under Section 80 of the JJAA in the ITR

The assessee shall comply with the following requirements for demanding deductions under Section 80 of the JJAA:

  • The assessee shall have profits from ‘Company End’ and shall be required to have his / her account audited in compliance with Section 44AB along with the CA report in Form 10 DA.
  • The assessee will be modern, not built by breaking up or restoring an existing business.
  • The Company business should not be acquired through a transfer from any other person.
  • The exclusion under Section 80 of the JJAA must be stated in the income tax return.

Note:

  1. In the case of an existing commercial enterprise, no deduction shall be allowed unless there is a change in the number of employees. For example, the total number of employees as of 31/03/2019 was 100, and, in the previous year, 2019-20, 15 workers left the job and 15 new workers Attached there will be no deduction under this section. If 20 new workers have entered in the example specified, the deduction would be provided on the emolument charged to five employees.
  2. If the salary is paid in cash, the assessee shall not be liable for the deduction under Section 80JJAA.
  3. Additional staff do not include-

(a) The worker whose emolument/salary is more than Rs. 25.000 a month;

(b) An employee working for less than 240 days in the intervening year (in the case of the manufacture of garments or boots or leather goods working for less than 150 days in the PY)

(c) Workers do not invest in the Approved Provident Fund;

(d) Worker for whom the whole fee is paid by the government under the Workers pension scheme notified in compliance with the law of the employees’ provident fund & miscellaneous provision act, 1952.

(e) As provided for in the Financial Act 2018, if an employee is working for less than 240 days or 150 days in the preceding year in the case of the manufacture of garments or footwear or leather goods but is working for more than 240 days or 150 days in the subsequent year, he shall be considered to have been employed in the subsequent year. Consequently, the contractor will be able to subtract 30 percent of the increased payroll expenses of those workers in the next year.

Also, read the related links:

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

New Revise TDS / TCS return filing due date & Payment due date for 2020

New Revise TDS / TCS return filing due date & Payment due date for 2020 as per the Taxation and Other Regulations (Relaxation of Some Provisions) Order, 2020.

www.carajput.com;CBDT; TDS Certificate

www.carajput.com; CBDT; TDS Certificate

The deadlines for specific GST and Income Tax legislation have been expanded by the Minister of Finance. Pandemic COVID-19 has forced a lockout in India. There are many challenges for businesses and professionals during this period, including different compliances under tax legislation.

Various reliefs are provided with respect to the submission of the TDS / TCS declaration and the issue of the certificate in the “Taxation and Other Laws (Relaxation of Other Provisions) Order 2020” for the quarter ended 31.03.2020.

LATEST CURRENT UPDATE: the deadline date of the Tax return under I T Act 1961 filing for FY 2019-20 (AY 2020-21) is increased to 10th Jan 2021. For Income tax audit & Transfer pricing Audit, the deadline is 15th Feb 2021.

ITR filing deadline for the FY 2019-20

Taxpayer Type Deadline for Income tyax Tax Filing – FY 2019-20
Individual 10th Jan 2021
BOI 10th Jan 2021
HUF 10th Jan 2021
AOP 10th Jan 2021
Income tax Audit 15th Feb 2021
Businesses (Requiring TP Report) 15th Feb 2021

How to file TDS return Online

Complete Coverage of Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020

calendar year 2020 has begun with many challenges, with the revised due dates for various TDS related return filings and tax payments following.

Complete Chart of TDS

1.       Rates of TDS FY 2020-21

 

Section

 

Nature of Income

Rate of TDS applicable for the period Threshold

Limit for deduction tax

01-04-2020 to 13-05-2020 14-05-2020 to 31-03-

2021

193 Interest on Securities 10% 7.50%
194 Dividend 10% 7.50% Rs. 5,000 in

case of Individual

194A Interest other than interest on Securities 10% 7.50% Rs. 5,000 to

Rs. 50,000

194C Payment to Contractors –   1%: If deductee is an individual or HUF

–   2%: In any other case

–   0.75%: If deductee is an individual or HUF

–   1.50%: In any other case

–   Single payment : Rs. 30,000

–   Aggregate

payment: Rs. 100,000

194D Insurance Commission –   10%: If deductee is a domestic Company

–   5%: In any other case

–   7.50%: If deductee is a domestic Company

–   3.75%: In any other

case

15,000
194G Commission and other payments on sale of lottery

tickets

5% 3.75% 15,000
194H Commission and

Brokerage

5% 3.75% 15,000
194-I Rent –  10%: If rent pertains to the hiring of immovable property

–  2%: If rent pertains to the hiring of plant and machinery

–  7.50%: If rent pertains to the hiring of immovable property

–  1.50%: If rent pertains to the hiring of plant and

machinery

2,40,000
194-IB Payment of Rent by Certain Individuals or

HUF

 

5%

 

3.75%

50,000

 

194J Royalty and Fees for Professional or Technical Services –  2%: If royalty is payable towards sale, distribution or exhibition of cinematographic films

–  2%: If the recipient is engaged in the business of operation of call Centre

–  2%: If sum is payable towards fees for technical services (other than professional services)

–  10%: In all other cases

–  1.50%: If royalty is payable towards sale, distribution or exhibition of cinematographic films

–  1.50%: If the recipient is engaged in the business of operation of call Centre

–  1.50%: If sum is payable towards fees for technical services (other than professional services)

–  7.50%: In all other

cases

–  Director’s fees: Nil

–  Others: Rs. 30,000

194M Payment to contractor, commission agent, broker or professional by certain Individuals

or HUF

5% 3.75% 50 lakhs
194N Cash withdrawal –  2%: In general if cash withdrawn exceeds Rs. 1 crore

–  2%: If the assessee has not furnished return for the last 3 assessment years and cash withdrawn exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore

–  5%: If the assessee has not furnished return for last 3 assessment years and cash withdrawn exceeds Rs. 1 crore

–  1.50%: In general if cash withdrawn exceeds Rs. 1 crore

–  1.50%: If the assessee has not furnished return for the last 3 assessment years and cash withdrawn exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore

–  3.75%: If the assessee has not furnished return for last 3 assessment years and cash withdrawn exceeds Rs. 1

crore

–  If a person defaults in the filing of return: 20 lakhs

–  If no default is made in the filing of return: Rs 1 crore

  1. Tentative rates of TCS
Section GST liable to TCS Rate of TDS applicable for the period
14-05-2020 to 31-03-

2021

14-05-2020 – 31-03-

2021

Section 206C(1) Alcoholic liquor for human

consumption

1% 0.75%
Section 206C(1) –           Timber obtained under Forest lease

–           Timber obtained by any mode other than under a forest lease

–           Any other forest produce not being timber or tendu

leaves

2.50% 1.875%
Section 206C(1) Tendu leaves 5% 3.75%
Section 206C(1) Minerals, being coal or ignite or iron ore 1% 0.75%
Section 206C(1) Scrap 1% 0.75%
Section 206C(1C) Parking Lot 2% 1.50%
Section 206C(1C) Toll Plaza 2% 1.50%
Section 206C(1C) Mining & quarrying 2% 1.50%
Section 206C(1F) Motor Car 1% 0.75%
Section 206C(1G) Overseas tour travel package 5% 3.75%
Section 206C(1G) Remittance of Forex under LRS of Rs. 7 lakh or more in a financial year §                  0.5%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education

§                  5%: In any other case

     0.375%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education

     3.75%: In any other case

Section 206C(1H) Sale of goods in excess of Rs.

50 lakh

0.10% 0.075%

Attributable Due Date for TDS E-filing Returns for Fy 2019-20.

Quarter Quarter Period Last Date of Filing
1st Quarter 1st April to 30th June 31st July 2019
2nd Quarter 1st July to 30th September 31st Oct 2019
3rd Quarter 1st October to 31st December 31st Jan 2020
4rd Quarter 1st January to 31st March 30th June 2020 Read Rescript 2020

Changes in the interest rate for the delay in the deposit of TDS / TCS in time as provided for in the Taxes and Other Laws (Relaxation of Other Provisions) Legislation, 2020.

TDS / TCS Changes to Covid19 by Ministry of Finance

  • “Government to infuse Rs 50,000 crores of liquidity by reducing the rate of TDS, the rate of non-salaried specified payments made to residents, and the rate of Source Tax Collection for specified receipts by 25% of the current rate”
  • “Among other steps, the due date of all income tax returns for the fiscal year 2019-20 will be extended from 31 July 2020 and 31 October 2020 to 30 November 2020 and the tax audit from 30 September 2020 to 31 October 2020”
  • “The period of the Vivad se Vishwas scheme for making payment without an additional amount will be extended to 31 December 2020”
  • Advanced tax, self-assessment tax, standard tax, TDS, TCS, equalization fee, STT, CTT late payments made between 20 March 2020 and 30 June 2020, the lower interest rate at 9% instead of 12%/18 percent per year (i.e. 0.75 percent per month instead of 1/1.5 percent a month) will apply. There is no late fee/penalty available.
  • The government extended the scope of the lower or nil TCS, TDS credential until 30 June 2020 due to a coronavirus pandemic.

Arrival Due date for TDS & TCS Payment Deposit for Government & Non-Government Companies

  • The due date for the submission of the TCS deposit is the 7th of the next month.

TDS Deposit Due Date as follows:

  • For non-governmental entities-7th of the next month (with the exception of March where the due date is scheduled for April 30th)
  • Government departments
  • If you pay via Challan-7th of next month
  • If paid via book-entry, the same day on which the TDS is deducted.

TDS Deposit Due Date as follows

As per section 201(1A) Interest at the rate of 1 % per month or part of the month on the amount of TDS deductible from the date of tax until the date of tax actually deducted shall be charged for the late deduction.

Also, interest for late payment at a rate of 1.5 percent per month or part of the month on the amount of the payment.

Interest in late payment of TDS: amendments made pursuant to Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 dated 24th March 2020:

For late payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20 March 2020 and 30 June 2020, the interest rate will be reduced by 9 percent instead of 12 per cent/18 percent per year (i.e. 0.75 percent per month instead of 1/1.5 percent per month). No late fee/penalty shall be paid for any delay in respect of that time.

Interest in late payment of TCS or failure to collect TCS:

In the event that the collector responsible for collecting the tax at source does not raise it or refuses to pay it to the Government, he shall be liable to pay basic interest at a rate of 1% a month or part thereof on the balance of that tax from the date on which the tax was collected to the date on which the tax was actually charged and that interest shall be paid until furnish.

Applicable Interest on late payment of Tax deducted at souses before the COVID -19

SECTION NATURE OF DEFAULT INTEREST SUBJECT TO TDS/TCS AMOUNT PERIOD FOR WHICH INTEREST IS TO BE PAID
201A Non deduction of TDS, either in whole or in part INTEREST : 1% per month From the date on which tax deductable to the date on which tax is actually deducted
After deduction of tax, non-payment of tax either in whole or in part INTEREST : 1.5% per month From the date of deduction to the date of payment

Note: above said interest required to be paid before filing of TDS return.

Punishment

You will have to pay a fine equal to the amount deducted/collected under the provisions of the Income Tax Act.

Prosecution (Sec 276B)

As per the prosecution (Sec 276B), if a person refuses to pay the payment to the Central Government, the TDS deducted by him under the provisions of Chapter XVII-B shall be entitled to obtain a strict penalty of at least three months, which may be expanded to seven years. The fine depends on the conditions or inquiry conducted by the appointed tax authority/assessment officer.

Penalty (Section 234E)

The deductee of the TDS shall be liable to pay a fine of INR 200/-per day before the full sum of the TDS is paid. However, the penalty shall not exceed the actual amount of the TDS.

Late Filing Fees :

For the delayed fee of TDS after deduction under Section 201(1A), you have to pay interest at a rate of 1.5 percent per month from the date of the deduction to the actual date of the deposit. It should also be remembered that interest is measured on a monthly basis rather than on a number of days. Half of a month will also be regarded as a whole month.

What is important to remember here is that

The estimation of interest on the balance of the TDS owed starts on the day from which the TDS was withheld rather than the day from which it was due.

PENALTIES (Section 271H)

Pursuant to this rule, the Assessing Officer may direct a person who has not filed a TDS payment on time with a minimum of INR 10,000, which may even be extended to INR 1,000,000.

If the following conditions are met, no penalty will be levied (under section 271H) for late payment of TDS / TCS returns:

  • The tax deducted at the source must be paid to the credit of the government.
  • No penalty will be levied if interest and late filing fees are paid to the Government’s credit.
  • Before the one-year period expires, the TDS / TCS return has been filed from the due date.

TDS for the purchase of immovable property

For the purchase of immovable property on which TDS applies, the return, together with the payment of TDS, must be made before the 30th of the following month. For example, TDS for property purchased in May must be deposited by 30 June.

In Dec 2020

Recent Income Tax and GST Due Dates of Filling date Extended
1. Income Tax Returns Due Dates for:
(a) Companies
(b) If any person which is other than Co. whose accounts are needed to be audited in income tax or any other law
(c) a partner of a firm whose accounts are required to be audited under the Income Tax Act or any other law
(d) any person who is required to furnish Transfer Pricing report u/s 92E under Income Tax Act.
has been extended from 31st January 2021 to 15th February 2021.

2. Income Tax Returns Due Dates for Any other Persons not covered in point 1 above has been extended from 31st December 2020 to 10th January 2021.

3. Due to Extention the Consequently Due Date for filling of Tax Audit Report has been extended from 31st Dec 2020 to 15th Jan 2021.

4. GST Annual Return (in form GSTR-9C and 9) for Financial Year 2019-20 has been increased from 31st Dec 2020 to 28th Feb 2021.

5. Due Date for making the declaration under Vivid se Vishwas has also been extended from 31st December 2020 to 31st January 2021.

6. Today (31.12.2020) is the last date to hold AGM for 2019-20, avail LLP Settlement & Cos Fresh Start Scheme 2020 & file GSTR-9A for 18-19 by Composition person.

Related Articles/Information

Summary of Important Due date of July and Aug 2020

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