INCOME TAX RETURNS RECENT AMENDMENTS & PRACTICAL ASPECTS. CA Gautam Nayak Ahmedabad Branch of WIRC of ICAI 1 st June 2013

Transcription

1 INCOME TAX RETURNS RECENT AMENDMENTS & PRACTICAL ASPECTS CA Gautam Nayak Ahmedabad Branch of WIRC of ICAI 1 st June 2013

2 OBLIGATION TO FILE RETURNS OF INCOME S.139 All companies/ firms (including LLP) s.139(1)(a) ) irrespective of level of income Other than company/firm, if total income exceeds maximum amount not chargeable to tax s.139(1)(b) R & OR having foreign asset or signing authority for foreign bank account also liable to file return 4 th proviso to s.139(1) Indl/HUF/AOP/BoI/Artificial Juridical Person having total income exceeding maximum amount not chargeable to tax before deduction u/ch.via/s.10/10b/10ba also liable 5 th proviso to s.139(1) CNK 2

3 OBLIGATION TO FILE RETURNS OF INCOME S.139 Person having business loss/capital loss seeking carry forward to file return of income s139(3) s.139(3) Person having income from property held in trust for charitable/ religious purposes with total income before s.11/12 exemption exceeding max. amt. not chargeable to tax liable s.139(4a) Political party with total income before s.13a exemption exceeding max. amt. not chargeable to tax liable s.139(4b) Research assocn, news agency, professional regulatory body, khadi/village ill industry development body, educational/medical di l institn, trade union, public regulatory body, infrastructure debt fund liable if total income before exemption exceeds max amt not chargeable to tax s.139(4c) CNK 3

4 OBLIGATION TO FILE RETURNS OF INCOME S.139 University/college/institn [s.35(1)(iii)] liable to file Position where: Exemption u/s.10aa/10c Exemption under DTAA Only Income liable to flat rate of tax u/s.115a Interest with TDS deducted s.115a(5) Royalty & FTS with TDS deducted NRI with only investment income/ltcg & TDS deducted s.115g Non-resident with GDR interest/dividend income - s. 115AC(4) Non-resident sportsmen/entertainers/sports asscns. s.115bba(2) CNK 4

5 DUE DATES EXPLN 2 TO S.139(1) Type of Assesse Company, Person requiring audit of a/cs under IT Act or any other law, Working partner of firm subject to audit Person required to furnish transfer pricing report u/s.92e (includes person subject to domestic transfer pricing audit) Other cases Due Date 30 th September 30 th November 31 st July CNK 5

6 E FILING OBLIGATION S.139(1B) rws rule 12 Person other than co/person required to furnish Form ITR 7 with total income exceeding Rs.5 lakh (Rs.10 lakh for AY ) to e file returns (either with digital signature or with ITR V) applicable to charitable trusts losing/not having exemption R & OR individual/huf having foreign assets/signing authority for foreign bank account to e file returns (either with digital it signature or with ITR V) Firm/Individual/HUF subject to tax audit to e file return with digital signature Person claiming foreign tax credit u/s.90/90a/91 to e file returns (either with digital signature or with ITR V) wef AY CNK 6

7 E FILING OBLIGATION Company to e file return with digital signature Persons required to furnish Form ITR 7 may file paper p return or e file returns (either with digital signature or with ITR V) E filing optional for charitable trusts E filing of Audit Reports u/s.44ab (tax audit), s.92e (transfer pricing international & domestic) and s.115jb (MAT) wef AY No e filing of other audit reports Form 10B (charitable trusts), Form 10BB (educational/medical institutions), Form 29C (AMT report), Form 10CCB (80-IA, etc) Practical Difficulties Wealth tax rules not yet amended for e filing of returns, though sections amended by Finance Act 2013 CNK 7

8 FORMAT OF RETURNS Form No Applicable To Not Applicable To 1 (Sahaj) Individual having Individual having: income only from i. More than one HP Salaries, Family ii. B/f losses under HP or loss under OS Pension, HP, Other iii. Winnings from Lottery or Income from Race Horses Sources iv. R & OR having foreign assets/ signing authority in foreign bank account v. Claimed foreign tax credit/ relief u/s.90/90a/ 91 vi. Exempt income exceeding Rs.5,000 2 Individual/HUF Individual/HUF having business/professional income 3 Individual/HUF who is partner in a firm 4S (Sugam) Individual/HUF having presumptive business income computed u/s 44AD/44AE Individual/HUF having any other business/professional income Individual/HUF : i. Being R & OR having foreign assets/ signing authority in foreign bank account ii Claiming foreign tax credit/ relief u/s 90/90A/ 91 iii. Having exempt income exceeding Rs.5,000 44AD/44AE ii. Claiming foreign tax credit/ relief u/s.90/90a/ 91 CNK 8

9 FORMAT OF RETURNS Form No Applicable To Not Applicable To 4 Other Individual/HUF having business/ professional income 5 Person other than Individual/HUF/company Persons required to file return u/s.139(4a),(4b),(4c) or (4D) ITR 7 Individual/HUF/company (4D) ITR 7 6 Company Company required to file ITR 7 7 Person (including company) required to file return u/s.139(4a),(4b), (4C) or (4D) CNK 9

10 ATTACHMENTS TO RETURN Not required to enclose: Computation of tax payable Proof of tax payment/deduction Form/Audit report required to be filed with return Now e filing required of audit reports u/s.44ab, 92E & 115JB To be filed before due date CNK 10

11 AMENDMENTS IN RETURN FORMS Form Nos 2, 3 & 4 Amended Schedule CG Capital Gains CNK 11

12 NEW REQUIREMENTS IN RETURN FORMS Form Nos 2, 3 & 4 New Schedule FSI Details of Income Accruing or Arising Outside India CNK 12

13 INCOME ACCRUING OR ARISING OUTSIDE INDIA ISD Code to be taken as Country Code If TIN not allotted,,passport p number to be mentioned Only income included in total income to be included in this schedule, not exempt income If posted outside India, salary income accrues outside India Where part of services for which salary received rendered outside India, whether proportionate salary income accrues outside India? Whether income from export of goods or services accrues or arises outside India? CNK 13

14 AMENDMENTS IN RETURN FORMS Form Nos 2, 3 & 4 Amended Schedule TR Details of Taxes Paid Outside India CNK 14

15 AMENDMENTS IN RETURN FORMS Form Nos 2, 3 & 4 Amended Schedule FA Details of Foreign Assets CNK 15

16 DETAILS OF FOREIGN ASSETS Foreign Bank Accounts & Accounts in which signing authority additional requirement of mentioning account number Additional requirement to give details of trusts, created under laws of foreign country, in which assessee is trustee No requirement in case where beneficiary covered by financial interest in any entity? Earlier Any Other Asset - now Any Other Asset in the Nature of Investment Assets such as foreign debtors, assets of foreign branches need not be disclosed d CNK 16

17 DETAILS OF FOREIGN ASSETS Bank accounts in joint names same bank account to be shown for each joint account holder Peak balance to be converted into Indian currency exchange rate on date of peak balance to be taken SBI TT buying rate Financial interest would include title holder, irrespective of whether beneficial owner Financial interest in entity would include: Ownership through agent, nominee, attorney, etc. Share or voting power in a corporation Interest in partnership profits/capital Beneficial or ownership interest in a trust Voting power, equity interest, assets or interest in profits of any other entity CNK 17

18 NEW REQUIREMENTS IN RETURN FORMS Form Nos.3 & 4 New Schedule AL Assets & Liabilities at the end of the year CNK 18

19 ASSETS & LIABILITIES Applicable only to persons having business income where total income exceeds Rs.25 lakh Applicable only to assets & liabilities other than those of business/of the partnership firm Not required in Form 2 Assets at cost, not at market value or wealth tax valuation Total cost of each category only to be disclosed, not list of individual assets working to be kept separately Whether foreign assets & liabilities also to be included? CNK 19

20 ASSETS & LIABILITIES Details of Cost of Immovable Asset Land, Building Total Cost of all Land, of all Buildings Agricultural land to be included Whether includes property agreed to be purchased possession & conveyance pending? Whether includes property agreed to be purchased & possession taken conveyance pending? Cost whether payment yet to be made to be included? Cost whether includes stamp duty, registration fee, transfer fee, brokerage? Whether pre-emi interest on housing loan forms part of cost? Whether interest on loan for purchase of land forms part of cost? CNK 20

21 ASSETS & LIABILITIES Financial Assets not all financial assets only bank deposits, shares & securities, insurance policies, loans & advances & cash in hand Deposits in bank (including balance in any account) Savings bank balances as per bank passbook/statements or as per personal accounts of assessee? Adjustment for reconciliation items Fixed Deposits whether interest accrued to be added? PPF Account/Senior Citizens Savings Scheme Account with banks whether to be included? Whether Post Office MIS Deposits or Savings Accounts to be included? CNK 21

22 ASSETS & LIABILITIES Shares & Securities Shares of both private limited as well as public limited & listed companies Both equity & preference shares Taxable as well as tax free bonds to be included Mutual fund units to be included Whether includes 8% Savings (Taxable) GoI Bonds? Whether includes NSC? Does not include company deposits Purchase/Sale contract before 31 st March but delivery after 31 st March Reconciliation with demat account CNK 22

23 ASSETS & LIABILITIES Cost of Shares & Securities To be taken on FIFO basis for demat shares Cost of bonus shares to be taken as nil Cost of rights shares to be taken as amount paid to co plus amount paid for purchase of rights entitlements t Whether valuation to be taken for old shares or actual cost? CNK 23

24 ASSETS & LIABILITIES Insurance Policies Whether only life insurance or also general insurance? What is cost of life insurance policy? Only premium paid, or whether bonus to be included? In cases of partial cash back received, whether cost to be reduced? By amount of cash back or proportionately? CNK 24

25 ASSETS & LIABILITIES Loans & Advances Does not include deposits company deposits not to be taken Interest bearing as well as interest free loans to be taken Whether to include loans to partnership firm by partner? Advances for purchase of property/other assets whether to be taken? All personal loans to be included d loans to personal help CNK 25

26 ASSETS & LIABILITIES Cash in Hand As at year end practical difficulty Actual amount not only if it exceeds Rs.50,000 Whether foreign currency in hand also to be included conversion at rate as on which h date? CNK 26

27 ASSETS & LIABILITIES Jewellery, Bullion, etc. Includes ornaments made of gold, silver, precious metals, and precious or semi precious stones Also includes bars/ ingots of gold, silver, etc. Whether includes: Gold/silver coins Silver utensils Gold watch CNK 27

28 ASSETS & LIABILITIES Archaelogical Collections, Drawings, Paintings, Sculptures, Works of Art Determination of cost where not purchased received as gift Whether following to be included: Stamp Collections Coins/Currency Note Collections Valuable Old Edition Books, Maps Photographic Collection CNK 28

29 ASSETS & LIABILITIES Vehicles, yachts, boats and aircrafts Would include cars as well as two wheelers Only personal vehicles vehicles used in business of running on hire not to be included At cost, not market rate or insured value In case of partner of firm, would include car held in own name on which depreciation claimed against remuneration from firm would not include share in cars of firm CNK 29

30 ASSETS & LIABILITIES Liabilities In relation to assets [for WT, s.2(m), debts incurred in relation to assets] t] Would include loans taken for acquisition of assets, unpaid purchase price of assets Loans taken against security of assets whether to be included? Wealth tax liability whether to be included Cir No.663 dated in context of wealth tax Personal liability Not debt incurred by assessee but created by statute CNK 30

31 ASSETS & LIABILITIES May practically require preparation of personal balance sheet Whether assets held in trust to be included? If so, whether liability towards beneficiaries also to be shown? Consequences of non-disclosure of assets/mistake in quantum of disclosure whether amounts to concealment? CNK 31

32 NEW REQUIREMENTS IN RETURN FORMS Form No 4 New Schedule Schedule AMT Computation of Alternate Minimum Tax payable u/s 115JC CNK 32

33 NEW REQUIREMENTS IN RETURN FORMS Form Nos 4 New Schedule Schedule AMTC Computation of tax credit u/s 115JD CNK 33

34 OTHER POINTS Amendment to expln to s.139(9) treatment of return as defective if self assessment tax and interest not paid before filing of return of income (wef ) Applicable to returns filed after that date What if mistake in computing interest resulting in short payment of interest would return not be processed unless difference paid? Limits for tax audit increased to Rs.1 crore/rs.25 lakh wef AY CNK 34

35 BEST PRACTICES Prepare checklist to be filled in and signed by client Check that amendments applicable to client taken into account prepare checklist of amendments and fill up for each client Compare with previous years return Ensure that all items considered Allowances/disallowances having impact for current year Brought forward losses taken into account correctly Review personal accounts/bank summaries Review, compare and reconcile Form 26AS Prepare letter to be filed on e filing of return for disputed aspects CNK 35

36 THANK YOU!