5 things you must know about income tax return for FY2019-20 FAQs on ITR Filing

Keeping in view the challenges faced by individual taxpayers in meeting the statutory and regulatory compliances owing to the current pandemic, the government has recently extended income tax return (ITR) filing deadline for FY2019-20 by a month till December 31. The due date of furnishing ITRs for taxpayers whose accounts need to be audited has also been extended till January 31, 2021.

If you haven’t filed your ITR yet, then you can relax a bit as the government has given you some more time to file your return. However, if you are still wondering how to file your ITR or if you have some queries related to tax return, you can refer to these FAQs on ITR filing, which will help resolve some of your queries.

1. What are the modes for filing of return of income?

Return of income can be filed in paper mode or e-filing mode. If the return of income is filed through electronic mode, then the assessee has the following three options:

(a) E-filing using a Digital Signature (DSC);
(b) E-filing without a Digital Signature; or
(c) E-filing under Electronic Verification Code (EVC).

If the return of income is filed using a DSC or under EVC, then there is no requirement of sending the signed copy, ITR-V (i.e., acknowledgement of return filed electronically) to Bangalore CPC. However, if the return is filed without using DSC or without EVC, the assessee shall send the signed copy of ITR V on the following address within 120 days of uploading the return either by ordinary post or by speed post only:

Income Tax Department – CPC, Post Bag No.-1, Electronic City Post Office, Bangalore -560100, Karnataka

2. When is it mandatory to file the return of income for an individual or HUF?

Income exceeding the threshold limit

If the income of an individual or HUF (resident or non-resident), before claiming the following deductions or exemptions, exceeds the maximum exemption limit, then him/it must file the return of income:

(a) Exemption under Section 10(38)6;
(b) Deduction under Section 10A,10B,10BA;
(c) Exemption under section 54, 54B, 54D, 54EC, 54F, 54G, 54GA or 54GB7; and
(d) Deduction under Section 80C to 80U.

Assets outside India

An individual, being a resident and ordinary resident in India, shall file his return of Income, even if his income does not exceed the maximum exemption limit, if he:

(a) Holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India;
(b) Has signing authority in any account located outside India; and
(c) Is a beneficiary of any asset (including any financial interest in any entity) located outside India.

Seventh Proviso to Section 139(1)

Filing of return of income is mandatory irrespective of the amount of gross total income if an assessee’s case is covered by the seventh proviso to Section 139(1). This provision requires every person, who is otherwise not required to file the return due to the reason that his income does not exceed the maximum exemption limit, to file the return of income if during the previous year he has:

(a) deposited more than Rs 1 crore in one or more current account maintained with a bank or a co-operative bank;
(b) incurred more than Rs 2 lakh for himself or any other person for travel to a foreign country; or
(c) incurred more than Rs 1 lakh towards payment of electricity bill.

3. Whether individuals are required to mention details of assets and liabilities in ITR-1 (Sahaj)?

Individuals/HUFs are required to furnish details of assets and liabilities at year-end only when their taxable income exceeds Rs 50 lakh. The Schedule AL, wherein the details of assets and liabilities are to be furnished, is available only in ITR-2 and ITR-3. Thus, the individual or a HUF who has to report the details of assets and liabilities has to opt for filing of return in ITR-2 or ITR-3.

4. My income is Rs 60 lakh. What details about assets and liabilities do I need to mention in income-tax return?

Schedule AL requires individuals/HUFs to declare the value of assets and liabilities if their total income exceeds Rs 50 lakh. If a taxpayer is required to provide information in this Schedule, he shall provide the details of cost of immovable property, jewellery, vehicles, shares, bank and cash balance, etc., at the year-end. Further, the taxpayer is also required to disclose the address of the immovable property and description of movable assets.

“If a taxpayer has acquired assets by way of gift, Will or any other mode specified under section 49(1) of the Income-tax Act, 1961, the asset shall be reported at the cost at which the previous owner has acquired it as increased by the cost of improvement incurred by such previous owner or by the taxpayer, as the case may be. If the cost of acquisition of the previous owner can’t be determined, the value may be estimated at the circle rate or market value of assets, as the case may be,” says CA Naveen Wadhwa, DGM, Taxmann.com.

5. Who are required to file return of income electronically?

For the Assessment Year 2020-21, every taxpayer has to file Income-tax return electronically except a super senior citizen (whose age is 80 years or above during the previous year 2019-20) who furnishes the return either in ITR-1 or ITR-4.

The various options for filing of a return have been enumerated below.

Source: Professional Updates

10 things to know about new provision of TCS on sale of goodsa

With effect from October 1, 2020, Section 206C(1H) of the Income-tax Act, 1961 has come into force which requires collection of tax by a seller, whose total sales, gross receipts or turnover in the preceding financial year exceeds Rs 10 crore. The tax shall be collected from the amount received as consideration for the sale of goods in excess of Rs 50 lakh in any previous year.

So if you are buying goods of more than Rs 50 lakh be ready to pay TCS on the same and claim the credit at the time of filing your income tax return.

In this article, we have touched upon 10 important key issues about this requirement.

1. Timing of collecting TCS
The tax should be collected at the time of receipt of amount from the buyer if the sale consideration received in a previous year exceeds Rs 50 lakh. There is no requirement to collect TCS on any sale consideration received before October 1, 2020.

This provision shall apply on all sale consideration (including advance received for sale) received on or after October 1, 2020 even if the sale was carried out before October 1, 2020.

2. How to compute the threshold limit of Rs 50 lakh?
The threshold of Rs 50 lakh shall apply to the entire financial year starting from April 1, 2020. If up to September 30, 2020 the seller has already received Rs 50 lakh or more from the buyer, tax under this provision shall be col ..

3. Whether TCS to be collected on sale of service?
TCS shall be collected on the consideration for “sale of any goods”. The term ‘goods’ is not defined in the Income-tax Act. The term ‘goods’ is of wide import. Anything which comes to the market can be treated as goods. Therefore, the sale of services are not subject to collection of TCS.

4. Whether TCS has to be collected on Sale of Immovable Property?
TCS is required to be collected on sale of goods. As per Section 2(7) of the Sales of Goods Act, 1930, ‘goods’ means every kind of movable property. Thus, the immovable property shall not be treated as ‘goods’. Consequently, the TCS shall not be collected from the sale of immovable property.

5. Whether TCS has to be collected on GST amount?
TCS is required to be collected on the sale consideration inclusive of GST. The CBDT has clarified that since the collection is made with reference to receipt of the amount of sale consideration, no adjustment on account of indirect taxes including GST is required to be made for the collection of tax under this provision.

6. Rate of collecting TCS
The tax shall be collected by the seller of goods at the rate of 0.1 per cent of the sale consideration exceeding Rs 50 lakh if the buyer has furnished his PAN or Aadhaar. If buyer does not submit PAN or Aadhaar, then, the tax shall be collected at the rate of 1 per cent.

The rate of TCS has been reduced to 0.075 per cent till March 31, 2021 due to the economic situation arising out of the COVID-19 pandemic. However, if the buyer does not submit the PAN or Aadhaar, the tax shall be collected at the rate of 1 per cent.

7. Requirement to collect TCS on advance received from the buyer
TCS is required to be collected under this provision from the advance received for sale. If the trigger event (i.e., receipt of sale consideration) has occurred before October 1, 2020, no liability to collect tax will arise.

On the contrary, where the sale has been made before October 1, 2020 but the sale consideration is received after the said date, the same shall be subject to TCS. Consequently, it would apply on all sale consideration, including advance, received on or after October 1, 2020 even if the sale was carried out before October 1, 2020.

8. No requirement to collect TCS on branch transfers
The TCS under this section is required to be collected by any person, being a seller receiving consideration for the sale of goods. Thus, the existence of two distinct parties as ‘seller’ and ‘buyer’ is a pre-requisite to construe a transaction as a sale. The condition of sale is not fulfilled in the context of branch transfer. Therefore, the provisions of this section shall not apply in the case of branch transfers.

9. Due date to deposit TCS
Tax collected during the month shall be deposited on or before the seventh day of the next month in which tax has been collected. For example, the TCS collected in the month of October shall be deposited by November 7, 2020.

10. Consequences for failure to collect or pay TCS
If a collector fails to collect or after collection fails to pay it to the credit of the Central Government, he shall be liable to pay interest at the rate of 1 per cent for every month or part thereof on the amount of tax he failed to collect or pay. The interest shall be calculated for the period starting from the date on which tax was required to be collected and ending on the date on which tax is deposited. The interest  .

Source: Professional Updates

Finance ministry clarifies on income tax returns filing deadline extention for corportates

The finance ministry has notified the extended due date for filing income tax returns (ITR) for the 2019-20 fiscal.

While the deadline for filing ITR by individual taxpayers has been extended by a month till December 31, the due date for those taxpayers whose accounts need to be audited has been extended to January 31, 2021.

Nangia Andersen LLP Partner Sandeep Jhunjhunwala said although the government had announced the extension of ITR and audit report filing due dates last week, but there was an ambiguity if such extension is available for corporates to whom tax audit and transfer pricing reporting was not applicable, for instance, foreign companies having no associated enterprise in India and yet earning income from Indian sources.

“Today’s notification has cleared the air by extending the due dates for such entities as well.

“Consequently, all Indian and foreign companies who are not liable to obtain a tax audit or do not maintain transfer pricing documents can now file ITR by January 31, 2021, whereas individuals not liable to tax audit will have to file their tax returns by December 31, 2020,” Jhunjhunwala said.

The government had earlier in May extended various due dates for filing ITRs for the 2019-20 fiscal from July 31 to November 30, to give compliance relief to taxpayers due to the COVID-19 pandemic.

Source: Professional Updates

How much income tax private sectors employees can save

The Income Tax Department has extended the income tax exemption available under the LTC cash voucher scheme to employees of state governments, state-owned enterprises and private sector. The government had on October 12 allowed payment of cash allowance equivalent to LTC fare to Central Government employees subject to fulfilment of certain conditions. The payment of cash allowance is subject to maximum of ₹36,000 per person as Deemed LTC round trip fare subject to fulfilment of prescribed conditions.

Here are 5 things to know about the income tax exemption on LTC cash voucher scheme:

1) This clarification provides the exemption for private sector employees who are eligible to claim the leave travel allowance, says Aarti Raote, Partner, Deloitte. Unfortunately, employees who have opted for the simplified tax regime will not be able to take the benefit of the exemption, she says, adding that “this is a welcome step by the government given the festive season is just round the corner.”

2) To avail this tax benefit, the employee is required to spend three times the eligible amount on the purchase of goods/services which carry a GST rate of not less than 12% from GST registered vendors/service providers through digital mode.

An employee who spends less than three times of the deemed LTC fare under the cash voucher scheme shall not be entitled to receive full amount of deemed LTC fare and the related income-tax exemption and the amount of both shall be reduced proportionately.

Explaining further the CBDT said if the deemed LTC Fare is ₹80,000 ( ₹20,000 x 4), then the amount to be spent under the scheme is ₹2,40,000. Thus, if an employee spends ₹2,40,000 or above on specified expenditure, he shall be entitled for full deemed LTC fare and the related income-tax exemption. However, if the employee spends ₹1,80,000 only, then he shall be entitled for 75 per cent (i.e. Rs. 60,000) of deemed LTC fare and the related income-tax exemption. In case the employee already received ₹80,000 from employer in advance, he has to refund ₹20,000 to the employer as he could spend only 75 per cent of the required amount

3) The maximum deemed LTC fare per person is Rs. 36,000, which would entail a maximum deduction of Rs. 144,000 for a person with a family of four, says Sraswathi Kasturirangan, Partner, Deloitte. This could translate to a tax benefit around Rs. 61,556 at the maximum marginal rate of 42.744%, she adds.

4) “The expenditure could be incurred during the period from the 12th of October, 2020 to 31st of March, 2021. Suitable vouchers indicating the GST number and the amount of GST paid is required to be submitted. Where a lower amount of expenditure is incurred, the exemption shall be available in a proportionate manner,” says Sraswathi Kasturirangan.

“Employees could consider the expenditure on purchase of white goods such as refrigerators, washing machines, mobiles, two wheelers/ four wheelers other than electric vehicles for this purpose since the GST rate for these would meet the above criteria. Further the GST rates for most services would fall under this category,” she adds.

5) The employees have to exercise an option for the deemed LTC fare in lieu of the applicable LTC in the Block year 2018-21.

Source: Professional Updates

MAJOR CHANGES INTRODUCED IN ITR- 2 IN 2020-21

FORM NO. 2

1. Resident but Not an Ordinary Resident and Non Resident Individuals have to file their income tax returns in ITR -2 even in case total income is below Rs.50 lacs.
2. The Assessee should disclose in case he is filing return other than Proviso 1 to Section 139(1)
a. Cash deposit above Rs. 1 crore in the current Accounts in bank
b. Expenditure incurred above Rs. 2 lacs for every travel for himself or for others.
c. Expenditure incurred above Rs. 1 Lacs on .account of house only

3.  Resident individuals having house property more than one ………. shall also file ITR-2
– ITR-2 continues to apply to resident individual having income exceeding Rs. 50 lacs
– Individuals having income from profit and gains of business, cannot file ITR 2
– In case an individual is a director in a Company or holds unlisted Company’s equity shares, following should also be disclosed
– Name of the company, type of Company, PAN number, listed or unlisted DIN
– In case of short-term / long-term capital gains from sale of land / building or both, the details of buyer’s, name, PAN, Aadhaar No., share of ownership, and address has to be given.

4. A separate Schedule 112A for the calculation of the long-term capital gains on the sale of equity shares or units of Business Trusts which are liable to be taxed.
5. Under other source a taxpayer should provide the details of “any other income’.
6. The details of deduction against income from other sources should be provided.
7. Deduction under section 57:-
a. Expenses (in case other than family Pension)
b. Deduction under section 57 (ii)(a) (in case of family Pension only)
c. Depreciation (available only if income offered in i c of schedule OS)

8. Schedule VI A for tax deduction amended to include deduction under section 80EEA and 80EEB.

9. In case of business trust or investment fund the details of ‘capital gains’ income and ‘dividend’ income should be provided.
10. The details of tax deduction claim for investment or payments or expenditure made between 1st April, 2020 to 30th June, 2020 in schedule d “D I” of part “B” should be mentioned.


10.  Long term capital gains –

Payments / acquisitions / purchase consideration for the purpose of claiming deduction under section 54 / 54 CB

 Amount utilized out of capital gains account (as per SL B10 a of schedule CCs specially amount utilized between 1st April, 2020 to 30th June, 2020.

11. Short term capital gain-

 Under section 54B account utilized out of capital gain account as per SL No. A 6a of schedule “CG” and amount utilized between 1st April, 2020 to 30th June, 2020 separately

12. While providing the details of bank account if a taxpayer selects multiple bank accounts for credit of refund, the Income Tax Department may choose any account for processing the refund.

 Details of bank account for refund -to be given

 

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How to file Income Tax Returns

In this article, we will discuss in detail about the documents needed for filing IT Returns in India.

1.  Select the applicable ITR Form.

Taxpayers have to choose the ITR form applicable to them for the A.Y. 2020-21 considering their heads of income & threshold limit of income. If you select an incorrect form, it may be rejected & may be treated as if no return has been filed. Consequently, penalty provisions may be attracted for late filing unless it is rectified before the end of assessment year.

ITR-1 (SAHAJ) :- For Resident Individual having Income from Salary/Pension, One House Property & from other sources( excluding winning from lottery & from Race Horses) and Agricultural Income upto Rs. 5000. But following cannot use. ITR 1 form :-

  • Total Income exceeding Rs. 50 Lakh.
  • If the Assessee is a Director in a company.
  • Have made any investments in unlisted equity shares of a Company at anytime during the previous year.
  • Has any assets including financial interest in any entity located outside India
  • Have signing authority in any account located outside India.
  • In cases where loss is brought forward in house property from previous years.
  • Having any foreign assets or foreign income.

ITR-2 :-  For Individuals & HUFs not having Income from Profits& gains of Business/Profession.

ITR -3 :- ForIndividuals & HUFs  having Income from Profits&gains of Business/Profession.

ITR-4 (SUGAM) :- For Individuals & HUFs (other than LLPs), being a Resident having total income up to Rs. 50 lakhs and having income from Business/Profession which is computed on presumptive basis  u/s 44AD, 44ADA, 44AE but not for Individual who is either a Director in company, or has invested in unlisted equity shares.

ITR-5 :- For Firms, LLPs, AOPs, BOIs, Artificial Juridical Person(AJP), Estate of deceased, Estate of insolvent, Business trust & Investment Fund.

ITR-6 :- For Companies other than companies claiming exemption u/s 11 of IT Act, 1961 i.e. for charitable purposes.

ITR-7 :- For persons including companies required to furnish return u/s 139(4A) or 139(4B) or 139(4C) or 139(4D). Any Person who derives income from property held under trust or other legal obligations wholly or partly from charitable or religious purposes & partly for voluntary contributions, assessable as representative assessee.

2.  Prepare the statements of accounts i.e. B/S & P/L in the respective format prescribed in the return which is very similar to format under schedule VI of the Companies act, 1956.

3. Compute the income under each source first and than each various head of income and arrive Total Income and ascertain Tax liability / refund as the case may be and get it checked with a tax preparer.

4. Collect the necessary information to fill the return.

List Of Additional Information to be kept ready for Form ITR-1

Name, Address, Pan No, Mobile No, Pin Code of the Assessee.

  1. Area/Locality
  2. Alternate Mobile Number & Email Address.
  3. Aadhaar number / Aadhaar Enrolment ID.
  4. Return U/S 139(1) i.e. if income exceeds taxable limit of Rs. 250000 / 300000/  500000 for Normal Assessee, Senior Citizen super senior citizen as applicable else complies with any one or more of the following condition.
  • Whether occupied one house property or
  • Whether owner/lessee of motor vehicle or
  • Whether incurred expenditure for himself or for any other person for travel to a foreign country.
  • Whether he is a holder of a credit card issued by any institution.
  • Whether he is a member of a club and entrance fee exceeds Rs. 25000 or more.

5. Whether he has incurred any expenditure on consumption of electricity exceeding Rs. 100000 in a year (Form No.2 & others)

6. Whether he has incurred any expenditure on consumption of electricity exceeding Rs. 100000 in a year (Form No.2 & others)

7. Whether he has incurred any expenditure on consumption of electricity exceeding Rs. 100000 in a year (Form No.2 & others)

8. Income from house property whether (Form No.2 & others):-

  • self occupied
  • let out or deemed let out.
  • Corporation tax paid
  • Interest payable on capital borrowed from bank/any institution upto Rs. 200000
  • Arrear rent received during the year less 30%

9. Other Information:-
Details of all bank accounts held in India at any time during the previous year.
IFS code of the bank, name of the bank, account number
Minimum one account should be selected for refund credit
IT details of advance tax and self assessment tax payments
– BSR Code
– Date of deposit
– Serial number of challan
– Tax paid
 

TDS / TCS details:-

 Tan of deductor / collector

 Pan / Aadhar number of the tenant

 Name of deductor / collector / tenant

Gross Payment / receipt which is subject to tax deduction / collection

Year of Tax deduction / collection

Tax Deducted / collected

TDS / TCS credit claimed this year

Verification:- 

Name

Fathers name

Pan No:

Capacity in which Signing

Mode

Two ways of filing

1. Electronically on E-filing web portal of Income tax Department

-Digitally Signing the verification part or

-Authenticating by way of Electronic Verification Code(EVC) or

-By sending duly signed paper Form ITR –V to CPC within 120 days of filing

2. In paper form at the designated office of Income Tax Department alon with duly signed ITR V

10. Documents :

  • Form 16 (salary certificate) & 16A
  • 26AS
  • Proof of house rent paid
  • Proof of claiming exemption u/s 10 if any(all forms)
  • Receipt for corporation tax paid.

11. To claim deduction under chapter VI A, details &information:-

  • LIC
  • PPF
  • Tuition fees, education fees
  • Mediclaim amount paid
  • payment to National pension scheme
  • House rent paid
  • Donation under section 80G
  • Medical expenses for specified diseases under section 80DDB
  • long term investment in bonds up to rRs.20,000
  • Money spent for a disabled person by a resident under section 80U
  • Interest on loan for higher education for himself or relative under section 80E
  • Interest on loan for residential house up to Rs.150000 under section 80EEA and eligibility information
  • Interest for electric vehicle loan upto Rs.150000 Under Section 80EEB

In case of revised return original return filing acknowledgement slip and date. 

 In case of Return under………………………….Notice- Unique No, / Document Identification Number DIN, date of notice

12. Documents :-

  • LIC receipt
  • PPF passbook
  • Receipt for school fee
  • Receipt paid for NPS
  • Donation receipt and appeal, if any with PAN, Reference number and exception grant number under section 80G of Donee
  • Evidence for medical expenses received form insurance company
  • Loan schedule for repayments on education loan and residential house
  • rent receipt to claim deduction under section 80GG
    In case of other deduction- proof of payment

 Additional information forForm No. 2

  1. Residential status country of residence and TIN number
    Specially in case of non- resident – whether citizen of India or POI holder  Total period of stay in India in the previous year.
     
  2. In case of filing by representative Assessee-  Name, capacity, Address, PAN number 
  3. If the Assessee is  Director in a company –Name of the company, PAN No: DIN No,  whether listed/ unlisted 
  4. Whether held any share of unlisted Company, if yes – Opening balance, number of shares purchase, number of shares, amount, transfe of shares ………………………………
  5. Salary – Name of the employer

New procedure for registration, approval, etc. of certain entities deferred to 1st October, 2020

In view of the unprecedented humanitarian and economic crisis, the CBDT has decided that the implementation of new procedure for approval/ registration/notification of certain entities shall be deferred to 1st October, 2020. Accordingly, the entities approved/ registered/ notified under section 10(23C), 12AA, 35 and 80G of the Income-tax Act, 1961 (the Act) would be required to file intimation within three months from 1st October, 2020, i.e, by 31st December, 2020. Further, the amended procedure for approval/ registration/ notification of new entities shall also apply from 1st  October, 2020.

The necessary legislative amendments in this regard shall be proposed in due course.

Various representations were received in the finance ministry expressing concerns over the implementation of the new procedure from 1st June, 2020 due to the outbreak of novel corona virus (COVID-19) and consequent lockdown. There have been a number of requests to defer the applicability of the new procedure.

 

It may be noted that The Finance Act, 2020 rationalized the procedure relating to approval/ registration/ notification of certain entities referred to in sections 10(23C), 12AA, 35 and 80G of the Act, with effect from 1st June, 2020. As per the new procedure, the entities already approved/ registered/ notified under these sections would be required to file intimation within three months, i.e, by 31st August, 2020. Further, the procedure for approval/ registration/ notification of new entities has also been rationalized with effect from 1st June, 2020.

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Source URL :  https://pib.gov.in/PressReleasePage.aspx?PRID=1622387

 

Why Questioning Forms an Important Part of Internal Audit?

There is a lot that goes into the process of an audit. The auditor acquires and analyses a lot of things before giving out a final report. Apart from looking into the accounts, the client interview also plays a valuable role in the process. An auditor in Kolkata interviews some of the top position holders in the company for insights. But this is not received very well. Auditors are often discouraged from asking too many questions. It is believed to ruin the relationship between the client and the auditor. But is this true?

chartered accountant Kolkata

Questioning Leads to Solution

Well, the reality is far from this statement. Questions are fundamental in an internal audit. The more questions the auditor asks you, the better he or she will understand your company. The auditor is an expert in the field, no doubt. But every company works differently, and the auditor will need real and honest inputs from your side to decode discrepancies if any. You shouldn’t challenge the expertise of an auditor if they ask a lot of questions. Every question is important. The thought of an issue being stupid or irrelevant shouldn’t cross your mind. If, in any case, some items make you uncomfortable, be open about how you feel.

sm gupta 2

Another tip for you is that when you are answering questions, do not lie. Auditors in Kolkata will know when you lie. They have many tricks rolled up their sleeves to determine whether you are telling the truth. Being dishonest will only put you in trouble. A small mistake will harm your reputation, which is the last thing you want during an audit. Many clients also discover new threads of thought when they are answering questions. Some questions help you in looking at some shortcomings from a different perspective, which makes a massive difference in the long run.

An auditor is strongly familiar to the industry but that strength arises from questioning. As it grants you the option to attain adequate knowledge. So, it is always wise for an auditor to analyse data, interview clients to evaluate the situations and facilitate changes. Questioning makes the process smooth and perfect.