Standard Deduction Rs. 50,000 or Rs. 52,500

People are confused regarding Standard Deduction in the New Tax Regime.

Watch the video to clear the confusion

 https://youtu.be/dPkZcl2xEFs

Presumptive Scheme for Professional Like CA, Lawyers, etc under section 44AG of Income Tax Act

Draft Report of Justice R.V. Easwar (Retd) Committee to simplify the provisions of Income-tax Act, 1961 has recommended presumptive income scheme for professional were estimated income will be 33.33% of receipts in case it is less than one crore and taxes will be computed accordingly.  

1.  A PRESUMPTIVE INCOME SCHEME FOR PROFESSIONALS

The existing scheme of taxation provides for a simplified presumptive income scheme for persons engaged in business. The Committee was of the view that this scheme is quite popular amongst small traders. It was felt that there is a strong case for introducing a similar simplified presumptive income scheme for professionals. Accordingly, the Committee recommends the introduction of a presumptive income scheme whereby the income from profession will be estimated to be thirty three and one-third (33 1/3%) of the total receipts in the previous year. The benefit of this scheme will be restricted to professionals whose total receipts do not exceed one crore rupees during the financial year.

2. AMENDMENTS RECOMMENDED

Based on the aforesaid recommendation, the following amendment should be made in the Income-tax Act, 1961:-

Special provision for computing
profits and gains of profession on presumptive basis [Section 44AG] In the Income-tax Act, after section 44AF, the following section shall be inserted with effect from the 1st day of April, 2017,- “44AG.

(1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible profession, the profits and gains of such profession chargeable to tax under the head “Profits and gains of business or profession” shall be deemed to be –
(i) a sum equal to thirty three and one-third per cent of the gross receipts of the assessee in the previous year on account of such profession; or
(ii) a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee.

(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed : Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.

(3) The written down value of any asset of an eligible profession shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

(4) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible profession are lower than the profits and gains specified in sub-section (1), shall be required to keep and maintain such books of account and other documents as required under sub ­section (5) of section 44AA and get them audited and furnish a report  of such audit as required under sub-section (2) of section 44AA provided the gross receipts from such profession exceed rupees twenty lakhs.

Explanation.— For the purposes of this section:

(a) “eligible assessee” means — 

(i)  an individual, Hindu undivided family or a partnership firm, who is a resident, but not a limited liability partnership firm as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009); and

(ii) who has not claimed deduction under any of the sections 10A,10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C". Deductions in respect of certain incomes” in the relevant assessment year;

(b) “eligible profession” means,—

(i) the legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or  interior decoration or any other profession as may be prescribed; and

(ii) whose total gross receipts in the previous year does not exceed an amount of one crore rupees.

Refund Under Provisions of Income Tax Act, 1961

Section 237 of the Income Tax Act, 1961 deals with refund of excess tax paid by the assessee. If any person or assessee satisfies the assessing officer that the amount of the tax paid by him or paid by any person on his behalf during any previous assessment year exceeds the amount with which he is properly chargeable under the act for that year, he is entitled to refund of excess amount paid.

The authority will also after considering the facts and circumstances of the case issue order for the refund of excess tax paid by the assessee. It is right of the assessee to demand excess tax paid over as tax assessed.

Section 238 ;- Generally a refund can be claimed the person , who has paid the same but in a case of clubbing of income under provisions of Sections 60 to 64 , the refund is claimed by the person, in whose income , income of others are clubbed. In case of liquidation of a company its official liquidator or in case of death or incapacity of a person his/her legal representative will claim the refund.

Time Limit of Refund Claim;- Refund will be claimed in Form no. 30 and verified in prescribed manner and within a period of one year from the last date of the assessment year.

Note: The department (CBE&C) has directed the assessing officers to consider the claim of refunds if filed beyond the time period as prescribed on the following terms and conditions;

1. The cases where delayed claims of refund are being considered would be taken up for scrutiny.
2. The refund has arised due to excess tax deducted/ collected at source and payment of advance tax also and refund does not exceed Rs. 50, 00,000 for one assessment year.
3. The income of the assessee is not taxable in the hand of any other person.
4. No interest will be admissible on the belated refund claims.
5. No claim has been entertained if a period of 6 assessment years has been passed.

Refund in case of appeal; – (Section 240)

If any refund arises from any order of the assessing authority, the assessee has not required to file form for the refund; the assessing officer is bound to order for refund suo motu.

Interest on refund( Section 244A):- The interest will be payable by the department in case of refund, the interest @6% p.a. will be paid from the date of payment of tax or penalty to the date of grant of refund or date of signing of order. No interest will be payable if the excess payment of less than 10% of the tax determined under provisions of Section 143(1) of the Income Tax Act, 1961.

The period of interest will be the date of payment of tax to the date of actual payment of refund.

If there is delay on the part of the assessee, then the interest for the period, which attributable on the part of the assessee will not be given by the department.

Note: in cases when assessment has been reframed under provisions of sections 141(1), 143(3), 154,155. 250, 254, 260, 262 etc., the amount on which the interest was payable was increased/decreased; the interest portion will also increase/decrease accordingly. The Assessing officer may issue demand notice for recovery of excess interest paid in those cases.

The denial of interest by the department has not been made unless an opportunity is given to the assessed of hearing.

Note: the interest will not be paid on TDS deducted erroneously by paying party. As decided in case of Universal Cables Limited v. At CIT [2010] 191Taxman 370(MP), the assessee has deducted tax source erroneously under Section 194A in respect of payment to IDBI, though no tax was required to be deducted from such payment. On assessee’s request, the department granted refund of the amount deducted. The court held that on such refund interest will not be available under section 244A.

Note: The department cannot deny the payment of refund to the assessee on the ground that the TDS certificate in respect of TDS deducted at sources has not been submitted by the assessee within time, if taxes has been deducted and timely paid to the government.

SET-OFF REFUND AGAINST OUTSTANDING TAX DUES;-

Section 245; – empowers the Assessing Officer to adjust refund due to any assessee of any assessment year against any outstanding tax due of the previous years. But no adjustment of refund against tax due will be made without giving a notice to the assessee in this regard.
If Assessing Officer has adjusted the refund against tax due without proper notice in this regard to the assessee , then it will be against the provisions of Section 245 and liable to be quashed.

Fresh intimation is required under Section 245; any notice or information under provisions of Section 141(1) is not intimation.

As decided in the case of S.S. Ahluwalia v. ITO [1996] 135 CTR (Gauhati) 225, where certain assessment had been held to be bad, the amount of tax recovered for such assessment years which become refundable cannot be retained by the department for being adjusted against tax due in respect of other assessment years.

As it is decided that an assessee cannot ask the department to adjusted amount of refund against any tax payable by him of any assessment year.

The demand of one person cannot be adjusted against refund of another person, but as decided in case of Glaxo Smith Kline Asia (P.) Ltd. V. CIT[2000] 160 (Delhi), a further implicit requirement is that the revenue will have to be satisfied that the assessee will not be in a position to satisfy the demand of tax and that for the setoff, the outstanding tax amount cannot be recovered at all.

Now a days, what we have paid as tax or TDS/TCS if any deducted or collected has been reflected in Form 26AS.

As decided in the case Court on its own motion v. CIT [2012] 210 taxman452 (Delhi), Revenue cannot make adjustment contrary to procedure prescribed under Section 245 based on the wrong data uploaded by the Assessing Officer. One the amount is correctly and rightly reflected in Form 26AS, small or technical mismatch in return should not be make a ground to deny credit of amount paid. In cases TDS data reflected in Form 26AS requires rectification, notice should be issued to the assessee to revise or correct mistake and only if necessary rectification or correction is made, an order under section 143(1) should be passed and demand should be raised.

HOW TO CLAIM INCOME TAX REFUND OF EARLIER YEARS OF WHICH ITR IS NOT FILED

In India, most of us still file Income Tax Returns just to claim refunds of Taxes which are deducted by the payer of our Income i.e. Banks, Governments, Insurance Companies etc or taxes paid extra by us either at the time of Self Assessment or Advance.

These taxes are refunded after filing of Income Tax returns.

Now most of us even being well educated forget to file the Income Tax return or we don't have knowledge of the process to get the Income Tax refund. 

Many of the cases are still pending and there are a lot of persons who have refund of Lakhs of rupees but are not being able to get the refund due to non filing of Income Tax returns.

Since at a particular Financial Year a return can just be filed for 2 years that is Previous year and a year previous to that year, thus refunds can only be claimed of maximum 2 years. 

At present refund of Income Tax can be claimed only of year 2013-2014 and 2014-2015. 

Now this has created a lot of difficulty for genuine cases where return of Income could not be filed. 

To remove the hardship faced, Income Tax department with its CIRCULAR 9/2015 [F.NO.312/22/2015-OT], DATED 9-6-2015 has issued the process by which Income Tax refunds can be claimed of those cases where Income Tax return is not yet filed.

Now this process can be used to get Income Tax refund of Last six years i.e. of Financial Year 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013 and 2013-2014. The condonation of FY 2013-2014 is of no use as ITR of this year can still be filed with Income Tax Department. 

PROCESS TO CLAIM REFUND OF THE YEAR OF WHICH ITR IS NOT FILED

1. KNOW THE VESTED POWER OF THE OFFICERS OF INCOME TAX- 

The first step in claiming the refund, would be to know the power of the Income Tax Officials. CBDT in its circular has divided the power in the following way:

REFUND AMOUNT                                                    Power Vested With

Below Rs. 10 Lakhs                                    Principal Commissioner/Commissioner of Income Tax

Rs. 10 Lakhs and below Rs. 50 Lakhs       Principal Chief Commissioner/Chief Commissioner of Income Tax

Above Rs. 50 lakhs                                     CBDT

2. APPLICATION FOR CONDONATION OF DELAY

After Selecting the relevant authority a Condonation application has to be filed to the same. A condonation application has to be disposed off by the relevant authority within 6 months of its filing.
 
3. POWERS OF THE OFFICER-

The powers of acceptance/rejection of the application within the monetary limits will be subject to Following conditions:

a.  It should be ensured that the income/loss declared and/or refund claimed is correct and genuine and also that the case is of genuine hardship on merits.

b. The Pr.CCIT/CCIT/Pr.CIT/CIT dealing with the case shall be empowered to direct the jurisdictional assessing officer to make necessary inquiries or scrutinize the case in accordance with the provisions of the Act to ascertain the correctness of the claim.

4. ACCEPTANCE AND PAYMENT OF REFUND

If the Authority accepts the application after due diligence and scrutiny and finds the correctness of the claims, an opportunity will be provided to file the return and claim the refund of Taxes.

5. SUPPLEMENTARY CLAIMS 

A supplementary claim of refund (claim of additional amount of refund after completion of assessment for the same year) can be admitted for condonation provided other conditions as referred above are fulfilled. The powers of acceptance/rejection within the monetary limits delegated to the Pr.CCsIT/CCsIT/Pr.CsJT/CsIT in case of returns claiming refund and supplementary claim of refund would be subject to the following further conditions:

i.		The income of the assessee is not assessable in the hands of any other person under any of the provisions of the Act.
ii.		No interest will be admissible on belated claim of refunds.
iii.		The refund has arisen as a result of excess tax deducted/collected at source and/or excess advance tax payment and/or excess payment of self-assessment tax as per the provisions of the Act.

For the full circular regarding the Condonation of Delay in Filing Refund claims Click Here

Source : CA Samachar

Section 80EE Additional Deduction for Interest on Residential Housing Loan

In order to give a positive thrust to the already booming housing sector the Finance Minister had announced a new section 80EE in the Finance Act, 2013. This section provided deduction on the Home Loan Interest paid by you and is valid for financial years 2013-14 & 2014-15 (Assessment year 2014-15 and 2015-16) only.

Please note the deduction is only towards the INTEREST on your home loan.

Who can avail this Deduction?

The deduction under this section is available only to Individuals – if you are an HUF, AOP, Company or any other kind of tax payer you cannot claim the benefit under this section. The total deduction allowed under this section is Rs 1,00,000.

The Section does not specify if the house should be self occupied to claim this deduction. However, certain other conditions are laid down to claim this deduction.

Other Conditions to claim this Deduction

Besides, being an Individual Tax Payer, there are a set of conditions that you must satisfy before you go on to claim the benefit under this section -

This is your 1st house purchased
Value of this house is Rs 40 lakhs or less
Loan taken for this house is Rs 25 lakhs or less
Loan has been sanctioned by a Financial Institution or a Housing Finance Company
Loan has been sanctioned between 01.03.2013 to 31.03.2014
As on the date loan is sanctioned no other house is owned by the tax payer

Illustrations

Rs 1,00,000 is the maximum allowed deduction. This Rs 1,00,000 can be spread over the 2 financial years 2013-14 and 2014-15.

Section 80EE and Section 24

The Finance Minister in his speech said the following words “This deduction will be over and above the deduction of Rs 150,000 allowed for self-occupied properties under section 24 of the Income-tax Act”.

However when the Act was formulated the section 80EE(4) states “Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year”.

We already know what Section 80EE states, now let us look briefly at Section 24(b) and what does it say-

Tax payer shall be allowed deduction up to Rs 1,50,000 for interest on borrowed capital when these 3 conditions are fulfilled-

Capital is borrowed for acquiring or constructing a property after 01.04.1999
Acquisition or Construction is completed within 3 years from the end of the financial year in which capital is borrowed
The person extending the loan certifies that interest is payable towards loan for acquisition or construction
The pre- construction interest can also be allowed as deduction in five equal installments beginning the year in which the property is acquired or constructed (however this is subject to the overall limit of Rs 1,50,000).

The Finance Minister intended to give this benefit in Section 80EE to the lower income group who are purchasing their first house, if you are able to satisfy conditions of both Section 24 and Section 80EE, both the benefits shall apply to you. First exhaust your limit under section 24 and then go on to claim the additional benefit under section 80EE.

Due Date Of Filing Income Tax Returns Is Proposed To Be Extended Up To 31st August,2015

Income Tax Return Forms ITR 1, 2 and 4S Simplified for Convenience of the Tax Payers 

A New Form ITR 2A Proposed which can be Filed by an Individual or HUF who does not have Capital Gains, Income from Business/Profession or Foreign Asset/Foreign Income; In Form ITR 2 and the New Form ITR 2A, the Main Form will not Contain more than 3 Pages, and other Information will be Captured in the Schedules which will be Required to be filled only if applicable;

As the Software for these Forms is under Preparation, they are likely to be available for e-filing by 3^rdweek of june 2015;Time Limit for Filing these Returns is also Proposed to be Extended up to 31.08.2015;

Only  Passport Number, if available, would be required to be given in forms Itr-2 and itr-2A. Details of Foreign Trips or Expenditure thereon are not required to be Furnished

Forms ITR 1, 2 and 4S for Assessment Year 2015-16 were notified on 15^th April 2015 (15.04.2015). In view of various representations, it was announced that these ITR forms will be reviewed. Having considered the responses received from various stakeholders, these forms are proposed to be simplified in the following manner for the convenience of the taxpayers:-

1)    Individuals having exempt income without any ceiling (other than agricultural income exceeding Rs. 5,000) can now file Form ITR 1 (Sahaj). Similar simplification is also proposed for individuals/HUF in respect of Form ITR 4S (Sugam).

2)    At present individuals/HUFs having income from more than one house property and capital gains are required to file Form ITR-2. It is, however, noticed that majority of individuals/HUFs who file Form ITR-2 do not have capital gains. With a view to provide for a simplified form for these individuals/HUFs, a new Form ITR 2A is proposed which can be filed by an individual or HUF who does not have capital gains, income from business/profession or foreign asset/foreign income.

3)      In lieu of foreign travel details, it is now proposed that only Passport Number, if available, would be required to be given in Forms ITR-2 and ITR-2A. Details of foreign trips or expenditure thereon are not required to be furnished.

4)    As regards bank account details in all these forms, only the IFS code, account number of all the current/savings account which are held at any time during the previous year will be required to be filled-up. The balance in accounts will not be required to be furnished. Details of dormant accounts which are not operational during the last three years are not required to be furnished.

5)    An individual who is not an Indian citizen and is in India on a business, employment or student visa (expatriate), would not mandatorily be required to report the foreign assets acquired by him during the previous years in which he was non-resident if no income is derived from such assets during the relevant previous year.

6)      As a measure of simplification, it has been endeavoured to ensure that in Form ITR 2 and the new Form ITR 2A, the main form will not contain more than 3 pages, and other information will be captured in the Schedules which will be required to be filled only if applicable.

As the software for these forms is under preparation, they are likely to be available for e-filing by 3^rd week of June 2015. Accordingly, the time limit for filing these returns is also proposed to be extended up to 31^st August, 2015 (31.08.2015). A separate notification will be issued in this regard.

                                                                      **********

Source : PIB, Govt of India  

Important Amendment in ITR vide NN.- 41/2015 for AY 2015-16.

CBDT has vide Notification No. 41/2015 Dated 15.04.2015 notified  Forms ITR-1(SAHAJ), ITR-2, ITR-4S(Sugam) for Assessment Year 2015-16 or Financial Year 2014-15.

Some Changes made by N/N - 41/2015 is as follows :- Click here to download notification

1) ITR-1 (SAHAJ) & ITR-4S (Sugam) cannot be filed by individual who has earned any income from source outside India.

2) Introduction of Electronic Verification Code for verification of return of income filed as an option to send ITR-V to CPC, Bangaluru. 

So, Now 3 Mode of Submissions available :

(a) Electronically under digital signature; or

(b) Transmitting the data in the return electronically and thereafter submitting the verification       of the return in Form ITR-V; or

(c) Transmitting the data in the return electronically under electronic verification code.

3) Super Senior citizen are now allowed to file ROI in paper form even though their income exceed Rs 5 lakhs subject to other conditions.

4) Introduction of furnishing Aadhar Card Number in ROI. Which will be used for EVC system introduced as mentioned above.

5) Details of all bank accounts with Bank name, IFSC Code, Name of Joint Holder, if any, Account number, Account balance as on 31.03.2015 mandatorily to be provided. Even those accounts which are closed during the year.

6) Details of Foreign Travel made if any (For resident and nonresident both) includes, Passport No, Issued at, name of country, number of times travelled and expenditure.

7) Details of utilization of amount deposited in capital gain account scheme for years preceding to last two assessment years. Particulars asked include year of utilization, amount utilized, amount unutilized lying idle in capital gain account scheme till the date of filing of return of income.

8) In case of LTCG & STCG not chargeable to tax to Non-resident on account of DTAA benefit, It is required to furnish Country name, Article of DTAA, Tax residency Certificate (TRC) obtained or not?.

9) For Non-resident, Income from other sources, If any income chargeable to tax at special rate provided in DTAA, It is now required to provide details of Name of Country, Relevant article of DTAA, Rate of Tax, Whether TRC obtained or not?, Corresponding rate of tax under income tax act.

10) In schedule FA- Foreign assets disclosure, Following details added.

a) Foreign Bank accounts details: It is now further require to furnish Account number, account opening date, Interest/income accrued from such account, If any along with details of head of income and schedule under which such income is shown, if offered to tax in India.

b) In similar manner, details of income from Financial interest in any entity outside India along with details of income offered to tax in ITR-2 from such income.

c) Similar disclosure requirement is also required for Immovable property outside India, capital asset held outside India, trust held outside India

DOWNLOAD NOTIFICATION

Intimation U/S 143(1)

The intimation under section 143(1) is sent by the IT Department in response to tax return filed by the tax payers. The intimation as the name suggests intimates the tax payer about, any tax and interest payable or if the assessee is eligible for refunds after providing all the
necessary adjustments relating to tax deducted at source, advance tax paid, any tax paid on self – assessment or any
other amount in the nature of tax or interest.

This intimation shall be deemed to be notice for tax demand  under section 156 as the case may be and all the provisions will apply accordingly. 

If there is no sum payable or refundable then the acknowledgement of the return shall be deemed to be intimation.

The total income of an assessee shall be computed after making the following adjustments in the return of income-

a) Any arithmetical error in the return or
b) An incorrect claim apparent from any information in the return.

“An incorrect claim apparent from any information in the return” shall mean such claim on the basis of an entry, in the return,-

a) Of an item which is inconsistent with the entry of similar other item in such return;
b) In respect of which, necessary information to substantiate such entry has not been furnished; or
c) In respect of any deduction, where it exceeds the statutory limit which may be expressed as monetary amount or percentage or ratio or fraction.

The intimation shall be sent before the expiry of one year from the end of the assessment year in which the income was assessable. In other words, before the expiry of one year from the end of
the financial year in which the return was filed.

As per the provisions of Sec154, the Assessing Officer may amend any intimation or deemed intimation u/s 143(1) without prejudice to the provisions of the Act.

If any tax and interest payable arises on the basis of return submitted, the assessee may comply with the deemed
notice of demand by making payment or may make an application for rectification u/s 154.

Intimation u/s 143(1) cannot be treated as conclusion of assessment process because such intimation is a deemed
notice of demand u/s 156.

The department has clarified that the intimation is merely an acknowledgement to the fact that the return filed has been accepted and does not contain any error apparent from record.