Changes in Income Tax Website w.e.f 22.09.2017

To enable effective communication between the tax payer and the income tax department the income tax portal has made certain changes. Anyone logging in to the income tax portal after 22.09.2017 have to fill in a form before accessing any facility in the portal.

Change #1 : Bank Account Details – Data of one of the bank account is now made mandatory.

Change #2: Email Ids & Mobile No : Single Mobile No. or Email Id cannot be used for more than 3 logins which was earlier 10. The problem now is any email id or mobile number which has been used earlier for more than 3 numbers is not being allowed. Hence change of number or email id has become imperative. Hopefully the department will change this requirement to allow atleast registration for 3 ids.

Change #3: OTP verification : it is not just sufficient to fill in the form but now you also need to approve the details of the mobile number / email id by authenticating it using an OTP that will be sent to email / mobile .

Click on this link to know more Update Profile Details

 

Section 80C: Tuition Fees

Circular 1/2017 dated 02.01.2017 has been issued by the Income Tax Department which deals with computation of TDS for income tax assessees.

A part of the circular deals with tuition fees. There is an important clarification provided by the department which clears a lot of questions on tuition fees deduction under section 80C. The extract of the circular is reproduced as below:

Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.

Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, prenursery and nursery classes.

It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.

Hence following can be noted for deduction

1. Full-time education
2. Play school activities, prenursery and nursery classes are covered.
3. All fees paid towards education including computer fees, exam fees, library fees etc is covered.
4. Donations or Capitation Fees or Development fees or similar fees only is excluded (generally what is taken into specific fund by the educational institution is not allowed. Since there is no income tax on such receipts to the institutions generally in the nature of trust)
5. Education expenditure of self is not allowed.
6. Education expenditure upto Rs.1.50 Lakhs is allowed as deduction under Section 80C  (expenditure should not be for more than 2 children) 
7. Fees can be partly claimed by both the parents.
8. Fees paid for education outside India is not allowed as deduction
9. Deduction is available irrespective of the fact that the children of the assessee has attained 18 years.
10. Transportation Fees, Uniform Fees, Hostel Fees, Mess Fees etc which are not directly associated with education is not allowed.

 

 

Reset your Income tax password

Any person who has registered with the income tax website http://www.incometaxindiaefiling.gov.in and has forgotten the password can reset the password using the OTP Method.

Step # 1: Click on “Login Here” in the income tax website.

Step # 2: Click on “Forgot Password?”

Step # 3: Fill in the details

User Id is PAN

Step # 4: Choose the option – Reset using OTP

Step # 5: Select one of the following options :

• Option A: Registered Email ID & Phone No.
• Option B: New Email ID & Phone No.

Option A – Registered Email Id & Phone No.

1. Registered Email Id & Phone No. will be displayed
2. Click on “Validate” PIN’s will be sent to the email & mobile phone.
3. Enter the PIN in the website and click on validate
4. On success enter the new password and click on confirm
5. Click on “Submit”
6. Once the password is reset, a success message will be displayed and after 12 hours your account can be accessed using the new credentials.

Option B- New Email ID & Phone No.

1. If you have efiled you returns before then it will ask for details such as 26AS TAN, OLTAS CIN, Bank account no used to file the income tax returns.
2. In case you haven’t filed your returns before then it will ask for the new email Id & Phone No.
3. Click on Validate
4. OTP will be sent to your email & mobile
5. Click on Submit
6. Once the password is reset, a success message will be displayed and after 12 hours your account can be accessed using the new credentials.

 

Section 234E : TDS Late filing fees

Section 234E : Late filing fees and penalty for failure to furnish / delay in furnishing of TDS / TCS Statements

Basic rules of TDS / TCS 

1. Obtain TAN Number for deduction or collection of tax under income tax.
2. Make payment to the government by challan on or before due date.[March – 30th April | Other Months – 7th of Succeeding month]
3. File the TDS / TCS returns before due date. [Q1 – 31st July | Q2 – 31st October | Q3 – 31st January | Q4 -31st May]
4. Issue TDS / TCS certificate before due date to the concerned person.

Penalty for breaking the rules

Penalty is applicable under Section 234E as well as under Section 271H, in this part we are discussion on the penalty provisions as per Section 234E. Section 271H shall be dealt with separately.

Penalty will be equal to Rs.200 per day of delay in filing of TDS returns however, it shall not be more than the amount to be deposited to the department.

For Eg. If the amount to be deposited to government is Rs.3000 and there is 20 days delay the penalty shall be capped to Rs.3000 and shall not be Rs.4000.

Computation of penalty

Section 200A of the income tax act provides for processing of TDS statements for the purpose of determining the amount payable or refundable to the deductor. Similar provisions are contained in Section 206CB for processing of TCS statements.

Procedure to comply with penal provisions

Pay 234E using the TDS challan by selecting Fees under section 234E. Once filed revise the statements to include this challan and file it by selecting penalty in the statement.

This article is for information purpose only. Care has been taken to include the proper details however, if any improvements can be made or in case of any clarifications please use the comment box below. You can also contact me at mrpraveenca@gmail.com

Update: Changes in taxation from 01.04.16

CHANGES APPLICABLE FROM 01.06.2016

It’s often said change is the only constant. This is very true when it comes to Indian Taxation. There are a slew of changes envisaged in the Finance Act of 2016 that are applicable from 01.06.2016. The changes are important and path breaking. Let’s have a look at the various changes.

A.INCOME TAX

1. Changes in the Tax Deduction at Source  [TDS] & Tax Collection at Source [TCS]

1.1.    TCS on sale of goods and services – Section 206C(1D) Every person, being a seller, who receives any amount in cash as consideration for sale of goods, bullion, jewellery or providing of any service shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equivalent to 1% of sale consideration as income tax, if such consideration – –          For bullion exceeds Rs.2 Lakhs –          For jewellery exceeds Rs. 5 Lakhs –          For any goods, other than those referred above or any service exceeds Rs.2 Lakhs. Provided that if any transaction covered under TDS or TCS will not be applicable on it. 1.2.    Exceptions to TCS on sale of goods and services  – Section 206C(1E) – Not yet Prescribed 1.3.    TCS on sale of Motor Vehicles– Section 206C(1F) Every person, being a seller, who receives any amount as consideration for sale of motor vehicle of the value exceeding Rs.10 Lakhs, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 1% of the sale consideration as income tax.

NOTE

• If even a single rupee of cash payment is made TCS will be on the entire amount. Rs.10 Lakhs of sale Rs.20 K received in cash balance in cheque the entire 10 Laks is subject to TCS
• If cash payment is made exceeding the limit for different invoices each invoice under the limit then TCS provisions are not applicable.
• Provision to obtain lower deduction certificate is available in Form 13
• In case the buyer doesn’t have PAN, Form 60 has to be obtained. The copy Form 60 has to be maintained for 10 years.

1.4.    For the purpose of deduction of tax in the case of contractors  (194C) the yearly aggregate limit has been increased from Rs.75,000 to Rs.1,00,000  1.5.    For the purpose of deduction of tax for commission agents (194H & 194 ) the aggregate limit has been increased from Rs.5,000 to Rs.15,000. Further the rate of tax has been reduced from 10% to 5%  1.6.    Form 15H (SC) & Form 15G can be now furnished for rental income as well. [Form 15G/H have to be uploaded using DSC in the income tax website]  1.7.    Due date for filing of TDS return has been extended from 15th of succeeding month to 31st of succeeding month for all quarters except Q4. [Due dates now are 31st July, 31st October, 31st January, 31st May] [Word of caution – TCS returns filing due dates aren’t changed]

 

2. Changes in the dates for Advance tax.

• There is no distinction between advance tax payments for companies and non-companies from hereon.

15th June	15%
15th September	45%
15th December	70%
15th March	100%

• In the case of assessee’s declaring income tax on presumptive basis, 100% of the tax due has to be remitted before 15^th

3. Equalisation Levy

 It is determined with reference to the gross amount of the payment and the rate of equalisation levy applicable on it, which is full and final tax.

 Specified Services:

1. Online advertisements
2. Provision for digital advertising space or any other facility as notified

Applicability: 

Service Provider	Service Receiver	Applicability
Resident	Resident	Not Applicable
Resident	Non Resident with PE	Not Applicable
Resident	Non Resident without PE	Applicable
Non Resident with PE	Resident	Not Applicable
Non Resident with PE	Non Resident with PE	Not Applicable
Non Resident with PE	Non Resident without PE	Applicable
Non Resident without PE	Resident	Not Applicable
Non Resident without PE	Non Resident with PE	Not Applicable
Non Resident without PE	Non Resident without PE	Not Applicable

 

Non Applicability:

Further it’s not applicable to following transactions:

1. Services is for purposes not for business and profession
2. Aggregate amount of consideration for services received / receivable in the previous year doesn’t exceed Rs.1,00,000/-

Taxation:

• Not part of the income tax act but part of the Finance Bill – 2016.
• Certain provisions of the income tax are applicable to equalisation levy
• Levy shall be @ 6% on the gross amount of service provided
• 7^th of succeeding month shall be due date of payment of levy to the government.
• Interest at the rate of 1% per month or part of shall be charged in case of delay u/s 170.
• Penalty for non-compliance can be upto the amount of levy
• Penalty for deduction and non-remittance will be Rs.1000 per day but shall not exceed the liability.
• If equalisation levy is not paid by the deductor such expenses shall be disallowed under section 40a(ib)
  

Prescribed Statement:

1. To be filed once an year and the due date shall be 30^th June immediately following the financial year.
2. Will have one more year for revising the returns.
3. 100 per day penalty for delay in filing the returns.

B.SERVICE TAX LAW

 Applicability of Krishi Kalyan Cess[KKC]

•  50% shall be collected on value of service chargeable to service tax. [Total tax to be collected now will be 14% + SBC of 0.50% + KKC of 0.50% = 15.00%]
•  CENVAT can be claimed against KKC paid unlike SBC
•  KKC is not a cess but a tax itself charged at 0.50%
•  KKC shall not be charged on the abatement value as per Notf. 28/2016-ST

Income Tax: Deduction of tax for payment towards FTS outside India

Here is a reckoner for deduction of tax or withholding of tax for payments made out side India.

The following needs to be taken note of before following the reckoner.

1) The present rate of taxes for foreign companies is 40% with addition of surcharge and cess the rate will go up to 43.26%

2) Whenever there is non availability of PAN 20% tax has to be deducted u/s 206AA

3) DTAA rate is different from one treaty to another most of the treaties give 10% rate for FTS, we have taken the same for computation purpose.

4) Section 115A has been recently amended and the tax rate is now brought down to 10% however we need to add surcharge and cess to the rate. This will work out to 10.815% which is rounded off to 10.82%

Kindly consult your Chartered Accountant before making any decisions. Please use the comment column to communicate anything with me.

Taxation of Royalty & Fees for Technical Services [FTS]

Rate of tax has been changed from 25% to 10% with effect from 01.04.2015

Applicability and Non Applicability of Section 194A

I have come across lot of confusion between clients, auditors and income tax authorities over applicability of Section 194(A) – TDS on interest other than interest on securities. Hence, this post I will be updating this post regularly so kindly hang on for this for the time being. 

APPLICABLE

1. On Interest paid or payable
   1. Payer is Company – Then TDS has to be done
   2. Payer is HUF & Individual – Applicable only if in the previous year the case is audited under Section 44AB
2. Interest paid to NBFC like ‘Kotak Mahindra Prime Ltd’ ‘Bajaj Finance’ ‘DHFL’ ‘India Infoline’

 NOT APPLICABLE

1. If interest expenditure per person does not exceed Rs.10,000 by banking co, co-op, other notified institutions, post office etc
2. 5000 in all other cases
3. Any amount paid to or credited to
   1. Banking company under Banking Regulation Act, Co Operative banks and societies in the business of banking.
   2. Financial Corporation established by an act.
   3. LIC
   4. UTI
   5. Other notified institutions: Eg. REC, HDFC
4. Interest paid to partner by a firm
5. Interest paid on taxes

 

Section 43CA of Income Tax: Stamp Duty valuation to prevail over Sale

HISTORY OF THE SECTION

Pursuant to the great success found by the Income tax department in the form of Section 50C which has brought a deeming fiction to the value of sales consideration in case of transfer of a capital asset, it has introduced a similar deeming mechanism for the purpose of considering the stamp duty valuation instead of actual sale price where the sale price is lesser than the stamp duty valuation.

APPLICABILITY

• Applicable to LAND, BUILDING AND LAND & BUILDING.
• If stamp duty value of the above said capital assets is less than the actual selling price.

ISSUES

Many of the states have increased the stamp duty values of the properties at which they are going to be registered. There could be a posh locality in a city which has a stamp duty valuation of 15,000 per sq.feet, however in the same locality if a person is selling odd sized, odd shaped flats then there wont be market for the same. For ex. there is a triangle shaped flat and there are no buyers for the same, hence he decides to sell the same at 10,000 per sq.feet. No matter what rate is selling the same plot, but he has to pay the stamp duty at the rates decided by the government. Income tax department is trying to do the same thing to stop people from making transactions below the stamp duty valuation.

But there could be real genuine transactions that could be below the stamp duty valuation like the example quoted above. In all these cases the seller has to be prepared to go through the legal course.

It is understood that the department will collect details of all properties registered during an year. Further the data will be filtered in to find such registrations that have happened where in the sale value is lesser than the stamp duty valuation. Notice will be automatically be generated to all these sellers.

The course of action what the seller can take is as follows:

• Declare the actual sales value in the Income tax return without considering the provisions of Section 43CA.
• When the department issues a notice fight against the notice saying that the stamp duty valuation is more than the fair market value.
• The department has the power to appoint a valuation expert for valuing the FMV of the property.
• Once the valuation is done and if the FMV is greater than the Stamp duty value then tax will be levied on stamp duty value.
• If the FMV is lesser than the stamp duty value but higher than the actual sale price then tax shall be levied on FMV.

Sale agreement date shall be considered for determining the stamp duty value and not the sale deed date.

We finally hope the government is not trying to kill the goose that lays golden eggs.

Capital Gains