Tag: ITR

Tax Query: How to get TDS certificate from mutual funds?

Personal Finance

[ad_1]

Read More/Less


I have a few doubts with respect to my ITR for FY 2020-21 i.e. current AY 2021-22. I have invested ₹20,000 in Templeton India Equity Income Fund in 2006 under NFO. Since then periodical dividends declared under the scheme are getting credited to my savings a/c through ECS regularly and are accounted for in my ITR returns of the respective financial years. Since the Finance Act 2020 is modified and the dividends are now taxable in the hands of investors, the mutual fund has deducted TDS and paid the balance of the dividend to my savings account. Since I have not received Form 16 A for the TDS made by the mutual fund, I have sent a mail to the RTA of the MF. Initially, they have asked for a self-attested copy of my PAN card which I have provided to them. Now the RTA has replied that my PAN was not registered in FY2020-21 with them and was registered subsequently and hence, they are unable to fetch the TDS certificate for the FY2020-21. Since, the TDS was deducted on the dividend amount paid to me, kindly inform me how I can obtain TDS certificate and show them in my returns.

I also request you to kindly inform me how to show them in the current ITR in the absence of Form 16A.

Further, I am a retired pensioner and an amount of ₹15 lakh is invested in PMVVY Scheme and am receiving quarterly amount. Please clarify under what head should the amount be shown. Apart from my pension, during the year I have incomes including interest on bank deposits, dividend income from shares and MFs, interest income from NCDs, sovereign gold bonds, savings bank A/c, infra bonds, interest on NHAI tax-free bonds and short term & long-term capital gains. I have one self-occupied house property. My total income during the year is less than ₹50 lakh and I do not have any agriculture income. In the light of the above, I request you to kindly inform me which ITR return I have to file?

Rama Krishna

Dividend shall be taxable under the head ‘Income From Other Sources’ (IFOS) as per the Act. If your PAN is available with brokerage company/fund manager, the taxes deducted would be reported in your Form 26AS based on which the TDS credit can be claimed in the tax return. Where the company has not deposited the TDS/filed the TDS return, due to absence of your PAN details, you are required to complete the KYC formalities and provide the scanned copy of PAN to enable them to do the needful.

Pension income earned from Prime Minister Vaya Vandana Yojana Scheme (PMVVY) of LIC of India is fully taxable and shall be reported under the head IFOS. Please be informed that bank interest, dividend income from shares/mutual funds, interest income from infrastructure bonds, NCDs and sovereign gold bonds shall be taxable under the head IFOS. Short term capital gain/long term capital gain on sale of shares needs to be reported under the head capital gains.

Considering your income pattern, you are required to file ITR 2 for the FY 2020-21.

In the issue dated September 5, 2021, you have mentioned that if money is gifted to relatives, any interest earned out of that will be taxed in the hands of the recipient only. In a similar manner If shares allotted in an IPO are gifted to spouse, and if they are sold within a period of one year, will the short term capital gain be taxed in the hands of the recipient of the gift? If yes, what sort of record should be kept?

Niranjan

Your spouse is not required to pay any tax on receiving shares from you as a gift. However, Section 64(1)(iv) of the Act provides for clubbing of income in the hands of the transferor when assets are transferred for inadequate consideration. Providing gifts to your spouse would amount to transfer for inadequate consideration. Accordingly, any gains arising from sale of such shares is taxable in your hands. Besides documentation evidencing cost of acquisition of shares, sale consideration, selling expenses, etc., and documentation related to gift (like gift deed) needs to be kept on record.

The writer is Partner, Deloitte India

Send your queries to taxtalk@thehindu.co.in

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , , , , , ,

How to report cryptocurrency gains, losses in income tax return, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


Cryptocurrency, or “crypto” or “tokens”, is all the rage right now. People are buying and using cryptos for varied purposes. Some mine it, that is earn cryptocurrency by solving cryptographic equations with the use of high-power computers, while some use it for buying goods and services, and some even invest in it with a view to earn profits on appreciation of these cryptos or a combination of all the options. Be that as it may, it is important to understand that there could be an “income” on such dealings, and this could be subject to tax.

So, under what head would these transactions need to be reported as each head has its own computational provisions, tax rates, set-off and carry-forward of loss provisions, reporting requirements etc.?

While currently, there are no specific guidance/specific tax provisions on taxation of cryptos in the Income-tax Act, 1961 (the Act), one could draw inference from the general principles of taxation and tax the transactions based on the purpose for which they are used to report the gains and losses in the income tax return (ITR).

One should keep in mind that not reporting transactions in cryptocurrencies in one’s ITR can lead to penal consequences, and in some cases, there could be a risk of prosecution.

Here is a look at how one can report crypto transactions in one’s ITR.

Reporting of cryptocurrency transactions
A taxpayer would have to report transactions related to cryptocurrency as business income if held as stock in trade, or capital gains if held as investments. If reported as business income, then ITR-3 form will be applicable to an individual in FY 2020-21, whereas if it is reported as capital gains from investment, then the individual would have to use ITR-2.

Taxability under business income/capital gains

  • Taxability as capital gains: If cryptos are held as investments, then it could be argued that the profit/loss on such sale needs to be reported as capital gains/loss. If the cryptos are held for more than 36 months, then the gain thereon could be classified as long-term capital gains and be subject to tax at 20%, plus applicable surcharge and cess. Else, they could be classified as short-term capital gains, subject to tax at the applicable personal taxation rates. For long-term capital gains, indexation benefit could be availed to increase the cost on account of inflation.
  • Taxability as business income: If cryptos are held as stock-in-trade, then it could be taxed under the head business income. The income (net of expenses like purchase cost for cryptos, depreciation on computers/laptops, salary, rental expense, cost for maintenance of accounts etc.) from such activity of trading could be taxed as business income. As mentioned above, for individuals having business income, the prescribed ITR Form, i.e., ITR-3 is to be used (in which case, accounts are required to be audited after specified threshold is crossed). Business income is taxed as per the prevailing slab rates (assuming non-presumptive basis of taxation), plus applicable surcharge and cess.

How to report in ITR-2/ITR-3
If cryptos are treated as investment, then long-term capital gains on sale of cryptos would need to be reported under CG schedule of ITR -2/ ITR-3 (if there are sources of business income), it will be reported under the head “From sale of assets where B1 to B8/B9 above are not applicable” for FY 2020-21. Short-term capital gains on sale of cryptos would need to be reported in CG schedule of ITR-2/ITR-3 for FY2020-21, under “STCG on assets other than at A1 or A2 or A3 or A4 or A5 above”. Further, the return of income needs to be filed before the due date to claim carry-forward of capital losses, if any, for set-off in subsequent 8 years against earnings from capital gains.

On the other hand, if treated as business income, then sale of cryptos needs to be reported in Part A -Trading account under “Sale of goods” in ITR-3. The net profit/loss from sale of cryptos after reducing the permissible expenses, needs to be reported under the head, “Net profit before taxes”.

For loss incurred in cryptocurrency transactions, the return of income needs to be filed within the due date (July 31 of the year following the tax year, for an individual without any audit requirement, and October 31 following the tax year, if the individual is subject to a tax audit). For FY 2020-21, the aforesaid extended due dates are December 31, 2021 and February 15, 2022, respectively. If the loss is not a speculative loss, then such loss could be carried forward for 8 Assessment Years (‘AYs’) and set-off against business income.

Reporting of cryptocurrency holdings in ITR
If an individual qualifies as resident and ordinarily resident, there is a requirement to report foreign assets under schedule FA, “Details of Foreign Assets and Income from any source outside India” irrespective of income in the tax return.

However, do keep in mind that there are no clear guidelines from the tax authorities on whether cryptos are to be considered as a foreign asset. As cryptos are digital assets, the location where the server is located and the law of the land under which protection is sought could be treated as the location where these assets are located. If it is determined that cryptos are located outside India, then they need to be reported in schedule FA of the ITR.

Additional reporting requirement in ITR
Further, if the net taxable income of the individual exceeds Rs 50 lakh, Schedule AL of the ITR Form is also required to be filled. This schedule requires an individual to report his immovable assets, jewellery, bullion, etc., archaeological collections, drawings, painting, sculpture or any work of art, vehicles, yachts, boats and aircrafts, financial assets like bank balances, including deposits, shares and securities, insurance policies, loans and advances given, and cash in hand. Further, any liability in relation to such assets are also to be reported such as home loan taken for buying a house etc. Currently, there is no guidance on requirement to report cryptos in schedule AL of the currently notified ITR forms.

Penal consequences for not reporting cryptocurrencies in ITR
It must be noted that non-reporting/non-disclosure of these transactions could have various penal consequences. Some of the penal consequences are:
a) If foreign assets/income are not reported in the FA schedule (mandatory for every individual holding foreign assets irrespective of income), it could attract notice for assessment for up to 17 years under the Act.

b) Further, it can also attract various penal consequences under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Some of these are:
i) A penalty of Rs10 lakh under the provisions of the Black Money Act.
ii) Further, undisclosed foreign income or assets shall be taxed at the flat rate of 30 per cent. No exemption or deduction or set-off of any carried forward losses which may be admissible under the existing Income-tax Act, 1961, shall be allowed.
iii) The penalty for non-disclosure of income or an asset located outside India will be equal to three times the amount of tax payable thereon. This is in addition to tax payable at 30%.
iv) Further, there is a risk of prosecution.

Hence, it is imperative that individuals make proper reporting/disclosures in the tax returns they file and pay appropriate taxes on these transactions when such income is earned. Considering the widespread use of cryptos, and in the absence of guidance on taxability of cryptos, the government should consider coming out with necessary guidelines on taxability of cryptos and the reporting requirements.

(Homi Mistry is a Partner with Deloitte India. With inputs from Ajay Nahata, Senior Manager with Deloitte Haskins & Sells LLP)



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

When interest u/s 234 A, B, C can be levied by the taxman

Personal Finance

[ad_1]

Read More/Less


A coffee time conversation between two colleagues leads to an interesting explainer on tax jargons.

Vina: Thank God, the due date to file our tax returns has been extended up to December 31, 2021. I can now shift my focus on other things, instead of racing to finish this annual obligation.

Tina: True that. But I hope your tax dues for 2020-21 which you have left unpaid, are less than ₹1 lakh?

Vina: That calculation I am yet to do. What’s so special about this ₹1 lakh limit?

Tina: The extension in return filing date does not apply to those who have an unpaid tax liability of more than ₹1 lakh.

Unpaid tax liability here implies one’s tax liability in a year, reduced by advance tax instalments paid, any tax collected or deducted at source, any relief of tax allowed under sections 89, 90, 90 A or 91, or any alternate minimum tax credit allowed to be set off under the IT Act.

Thus, the due date of filing returns for whom the unpaid tax liability exceeds ₹1 lakh, is still July 31, 2021.

Interest at the rate of one per cent per month is levied on your unpaid tax amount, under section 234 A of the Act if tax returns are not filed by the due dates.

Vina: What? So, by not furnishing returns by July 31, 2021, I am liable to pay interest at the rate of one per cent on my tax liability for every month since July 31?

Tina : Yes. But if you have outstanding tax of less than ₹1 lakh, this provision will not be applicable.

Vina: Let me hurry up and check where I stand.

Tina : But wait… Whether your return filing date is July 31 or December 31 this year, you also need to check if interest under sections 234 B and 234 C are applicable.

Vina: Oh, what do these ask for ? More tax, am sure!

Tina : You are partly right. If your tax liability after TDS in any financial year amounts to ₹10,000 or more, then you need to pay advance tax in four instalments during the course of the financial year itself.

Vina: And, if I’ve completely missed this…what happens?

Tina: You will be required to pay interest on any shortfall in advance tax payments under section 234 B and 234C of the Income Tax Act, at the rate of one per cent per month (under each section), for every month of delay.

So, if you file your returns anytime until December 31 due to extension of the deadline (even if your dues are within ₹1 lakh) and decide to pay all the taxes due when filing the return only, the charges under 234 B and C will go up.

While interest is levied under section 234 C for defaults or delays in quarterly payments of advance tax, section 234 B applies when the tax payer has not paid at least 90 per cent of the tax for any financial year as advance tax by April 1 of the following year.

Vina: That’s a lot of insight Tina. Thank you very much for enlightening me. Will go and file my returns ASAP!

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Penalty for missing ITR filing deadline has been cut to half, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


For the financial year 2020-21, the deadline to file income tax return (ITR) is December 31, 2021, (it was extended twice – first from the usual deadline of July 31, 2021, to September 30, 2021, and then to December 31, 2021) due to the pandemic. Till last year, if a taxpayer missed the ITR filing deadline, the maximum penalty he/she would have had to pay was Rs 10, 000.

However, with effect from FY 2020-21, the penalty amount has been reduced by half, i.e., a person filing belated ITR will have to pay a penalty of up to Rs 5,000. Further, if your income is below the taxable limit then you won’t even have to pay the penalty amount if you file your ITR after the deadline subject to certain exceptions. Here is why the penalty this year is half that of last year.

The penalty you will have to pay
In Budget 2021, the government reduced the maximum time allowed to an individual (whose accounts are not required to be audited) for filing ITR by three months. Due to a reduction in the time limit of filing ITR, a consequential amendment was made in Section 234F of the Income-tax Act, 1961 under which the penal amount for filing belated ITR was reduced to a maximum of Rs 5,000 from Rs 10,000 earlier.

Earlier, an individual was allowed time till the end of the financial year, i.e., March 31 to file belated ITR by paying a maximum penalty of up to Rs 10,000.

From this year onwards, the deadline for filing belated ITR is December 31. Accordingly, for FY2020-21 the deadline for filing belated ITR was December 31, 2021, but has been extended twice – first to January 31, 2022, and then to March 31, 2022, due to covid-19. As mentioned above, an individual filing belated ITR by the deadline of March 31, 2022 will now have to pay maximum penalty of Rs 5,000.

Abhishek Soni, CEO, Tax2Win.in, an ITR filing website says, “The last date of filing belated return for FY 2020-21 was December 31, 2021 (originally) which was extended till January 31, 2022 and which is again extended by two months. Now the last date of filing belated ITR is March 31, 2022. This needs to be noted that the deadline for filing the belated return has been extended but late filing fees will be Rs. 5000/- only rather than Rs. 10,000 if you file belated ITR between January 1, 2022 and March 31, 2022.”

Up until last year, there was two-tier penalty structure for missing the ITR filing deadline. If the belated ITR was filed after the expiry of the deadline and on or before December 31, then the individual was required to pay a late filing fee of Rs 5,000. If the ITR was filed between January 1 and March 31, then a late filing fee of Rs 10,000 was levied.

Kapil Rana, Founder & Chairman, HostBook, a fintech startup offering ITR filing services, says, “As per section 234F, till FY 2019-20, if the taxpayer failed to file ITR on or before the due date, then he/she was liable to pay a fee of Rs 5,000 if the tax return was furnished on or before 31st December of the relevant assessment year, otherwise, it will be Rs 10,000 if tax return is furnished after 31st December but from FY 2020-21, the law has been changed. The maximum late filing fees of Rs. 5000 shall be payable if, return is submitted after the expiry of the due date.”

However, there is no change in the penal amount levied on small taxpayers who miss the ITR filing deadline. If you are a small taxpayer whose total income does not exceed Rs 5 lakh during an FY, then the maximum fees you are liable to pay is Rs 1,000 if the ITR is filed any time after the expiry of the deadline (i.e., December 31, 2021) but before March 31, 2022.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

How banks, mutual funds and companies will check if you have filed ITR, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Effective from July 1, 2021, a person who has not filed ITR for the previous two financial years and the aggregate TDS and TCS deducted from payments made to him/her in each of these financial years exceeds Rs 50,000, then such person would be subjected to higher TDS rate.

Deductors of TDS/TCS like banks, mutual fund houses etc can now check if you have filed ITR when your income crosses the TDS limit from July 1, and levy two times the TDS amount if you haven’t filed your tax return. For this purpose, the income tax department has launched a compliance check utility for tax deductors on the department’s reporting portal. Further, the tax department has prepared a list with names of taxpayers who have not filed their ITRs for the previous two fiscals, which can be used by deductors.

Here is a look at how financial institutions will check if individuals have filed ITR or not to see if higher tax has to be deducted from their income. Also, what a taxpayer can do if their name appears on the list of those who haven’t filed ITRs for the previous two years.

When will higher TDS/TCS be levied?
As per the announcement made in Budget 2021, if an individual satisfies the following conditions, then he/she will be subjected to higher TDS/TCS rate:
a) If the individual has not filed income tax return in the two previous financial years for which due date has expired as per section 139(1) of the Income-tax Act, 1961 and
b) Sum of TDS and TCS in each of the financial years is more than Rs 50,000

Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, “If for the relevant financial years an individual has filed belated ITR or filed ITR in response to a notice from tax department, then Section 206AB would not be applicable. It would mean that higher TDS would not be deducted on incomes.”

Compliance check utility for sections 206AB and 206CCA
As mentioned above, a compliance check utility has been launched on the income tax department’s reporting portal: https://report.insight.gov.in/reporting-webapp/portal/homePage.

Here, if an individual comes under the purview of TDS, i.e., his income exceeds the specified limit, then the financial institution such as bank, mutual fund etc., would check if the tax on the income accrued would be deducted either at the normal rate (if the above-mentioned conditions are not satisfied) or at higher rate as mentioned in the newly enacted law.

For instance, if the interest income from fixed deposit during the FY 2021-22 exceeds Rs 40,000 in a financial year, then tax would be deducted on the interest income.

As per the circular, the tax deductor or collector can enter single PAN or multiple PANs of the deductee or collectee on the reporting portal. The deductor or collector will get a response from the reporting portal if the TDS on income of such a person would be deducted at a higher rate.

As per the functionality offered on the reporting portal, a list of persons is prepared by the tax department at the start of the financial year 2021-22. This contains name of taxpayers who have not filed ITR in the previous years, i.e., 2018-19 and 2019-20. These two financial years are taken as the relevant previous years where ITR was not filed and aggregate of TDS and TCS exceeded Rs 50,000 in each of the financial years.

Can your name be removed from the list?
The tax department’s June 22, 2021 circular states that if the specified person, i.e., the person whose name has appears on the list, files ITRs for FY 2018-19 and 2019-20 during the financial year 2021-22, then his name would be removed from the list. Wadhwa says, “The due date of filing ITR for FY 2018-19 and 2019-20 has expired on 30-11-2020 and 10-01-2021 respectively. Thus, an individual cannot file ITR now, unless a notice is received from the income tax department to file ITR.”

If the taxpayer files valid ITR (i.e., filed and verified) for FY 2020-21, then his/her name would be removed from the list. Wadhwa says, “A taxpayer should ensure that once ITR is filed, it is immediately verified. The name from the list on the reporting portal would be removed either once the due date has expired (i.e., after September 30, 2021) or date of filing valid return (filed & verified), whichever is later. Thus, if you have filed and verified ITR before the expiry date (September 30, 2021 for FY 2020-21), then your name would be removed after the expiry of deadline. However, if you file your ITR, say on September 25, 2021, and verify it on say October 15, 2021, then name from the list would be removed from the list after October 15, 2021.” As per income tax laws, a taxpayer can verify his/her return within 120 days of filing ITR.

However, no new names would be added to the list. Wadhwa says, “This would mean that banks, mutual funds or any other deductor would check only once during the FY 2020-21 at the time of deducting taxes from the income accrued. If the name does not appear on the list, then such deductor would continue to deduct taxes at normal rates throughout the year. However, if higher TDS is applicable and ITR for FY2020-21 is filed during the year, then individual would have to inform the deductor, i.e., bank, mutual fund etc. to check the list again after filing ITR and deduct TDS at normal rate.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Is it mandatory to file income tax returns, by only referring to Form 26AS?

Personal Finance

[ad_1]

Read More/Less


What head of income is the compensation received on compulsory acquisition of a house with plot taxable under? Or is it exempt?

Rajan NA

Section 45(5) of the Income Tax Act, 1961 (the Act) deals with taxability of capital gains pursuant to compulsory acquisition of capital asset under any law. A house with plot is a capital asset and gains arising due to compulsory acquisition shall be taxed under the head ‘Capital Gain’. Depending on the period of holding the capital gains may have to be categorized as long-term or short-term .

The query is related to tax deducted at source. Is it mandatory to file income tax returns, by only referring to Form 26AS? I am yet to receive Form 16/16a from the deductor. In another case Form 26AS doesn’t reflect amounts appropriately, partly they have allowed partly they have not given credit. I request you to please clarify what can be claimed as tax paid now, in ITR?

Sivalingam

Income earned during the financial year needs to be offered to tax while filing the tax return in India. An individual is required to collate details of all income earned during the financial year, like salary income, rental income, interest income, etc. and consider the same for tax filing, regardless of whether there has been tax deduction on such income. It may be noted that the details reflected in the Form 26AS are based on the withholding tax returns filed by tax deductor. It is important to reconcile the income and taxes reported in Form 26AS before filing the tax return. The central processing unit (CPC) checks the accuracy of the amounts offered in the tax return by comparing it with 26AS and raises queries in case of discrepancies. Therefore, in case of any difference in the amount, you are required to connect with the deductor so that necessary corrective action can be undertaken which should then reflect in Form 26AS.

The writer is Partner, Deloitte India

Send your queries to taxtalk@thehindu.co.in

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Pandemic lifts home loan demand, rise up to 14% despite restrictions, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


As the pandemic raged, people took to the safety of homes, literally.

Banks home loan portfolios jumped up to 14% in the first quarter despite a rise in Covid cases and restrictions due to the pandemic.

The home loan portfolio of the State Bank of India increased 11 per cent to Rs 5,05,473 crore in the first quarter of the current fiscal ended June 30, 2021, compared with ₹4,55,443 crore in the year-ago period. It forms constituting 23 per cent of the bank’s total domestic advances.

Home loans at Canara Bank increased 13.15 per cent during the first quarter to Rs 65,136 crore. In the previous year, the growth in the portfolio was only 10.6 per cent. Punjab National Bank saw a 6.1 per cent growth in home loans.

Rising ticket size

HDFC saw its average loan size jump from Rs 27 lakh to Rs 29.5 lakh during the Covid pandemic as borrowers sought larger homes with many companies shifting to work-from-home mode.

Even as the average property value purchased by borrowers during the pandemic rose, the affordability of loans for borrowers improved to a 25-year high.

The affordability is measured as the number of years of income required to buy a house.

The affordability improved to 3.2 years of income as against 3.3 years in FY20 and 2.5 years in FY19. This was largely because the annual income of borrowers rose from Rs 15 lakh to Rs 16 lakh even as property values remained at FY18 levels. The average age of the borrower also dipped from 39 years to 38 years.

Growing competition

ICICI Home Finance has launched an on-the-spot home loan for workers and self-employed who do not have income tax returns (ITR) to show their earnings.

Under the ”Big Freedom Month”, ICICI Home Finance aims to assist home loan seekers who do not have income tax returns proof to buy their dream home, it said in a statement.

Carpenters, plumbers, electricians, tailors, painters, welders, auto mechanics, and auto taxi drivers, among others, can avail of the spot home loan by submitting PAN card, Aadhaar card and bank account statement of the past six months.

Prospective homebuyers can visit the ICICI HFC branch to get free consultation from experts.

SBI is also focusing on home loans. It announced a 100 per cent waiver on processing fees till August 31. Before the offer, the processing fee was 0.40 per cent.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

Here’s a ready reckoner on changes in new ITR forms

Personal Finance

[ad_1]

Read More/Less


Last week, the CBDT notified the new ITR forms for assessment year 2021-22. Tax payers can breathe easy this year, given the limited changes in the tax forms. The changes this year are only with respect to certain amendments in the tax law, proposed in the Budget of 2020.

Besides, certain schedules introduced last year to accommodate the relief given to taxpayers during the pandemic have now been removed. For instance, Schedule DI (Detail of Investments/deposit/payment for the purpose of claiming deduction) finds no place in the new ITRs.

Here is a low-down on a few important changes in the new ITR forms, that can come in handy while filing your returns for assessment year 2021-22.

Eligibility tweaks

The exclusion list of ITR-1, that is, persons who cannot file their returns using ITR-1 has got some new frills this year. Now, taxpayers for whom TDS has been deducted under section 194N can no longer file their returns in ITR-1. Per the section, banks (including co-operative societies and post office) are required to deduct TDS at the rate of 2 per cent on cash withdrawals exceeding Rs 1 crore (in aggregate) in the previous year. For non-filers of income tax returns (i.e. those who did not file returns in all of the last three assessment years), the deduction shall be 2 per cent for amounts exceeding ₹20 lakh or at the rate of 5 per cent if withdrawals exceed Rs 1 crore.

In addition, following the recent amendments to tax law, employees who can defer their tax liability on ESOPs cannot file returns in ITR 1 or 4. They have to file returns in forms 2 and 3 only.

ESOP taxation

The Budget of 2020 proposed deferring the tax on ESOPs allotted for employees of a narrow stream of eligible start-ups. ESOPs are taxed twice, in the hands of the recipient employees – once at the time of receipt as a perquisite and next upon subsequent sale of the shares (Capital gains).

Employees of eligible start-ups can now defer the tax on perquisite by 48 months from the end of the relevant assessment year in which the shares are allotted. The Schedule TTI (Computation of tax liability on total income) now requires clear bifurcation of such current and deferred tax amount on ESOPs.

Dividend income

Another Budget amendment was the abolition of DDT and the consequential taxation of the same in the hands of the shareholders. In the ITR forms, apart from withdrawing the redundant mentions of the DDT sections, the Schedule OS (Income from Other Sources) has also been accordingly tweaked to accommodate these amendments. For example, a new row has been inserted to provide deduction for interest expenditure which can be claimed as a deduction under section 57(1) if incurred in relation to dividend income. Further new rows have been added to incorporate dividends earned by non-resident taxpayers, that are chargeable at special rates, under section 115A.

ITR Forms 2, 3 and 4 required taxpayers to provide quarterly break up of dividend income, which helps in computing the interest liability according to advance tax provisions. This break up is now also required to be furnished by taxpayers filing returns using ITR-1.

Concessional tax rates

Starting AY 2021-22, taxpayers can opt for lower tax regime under section 115BAC, by foregoing certain exemptions and deductions. In Part A of all the ITR Forms, taxpayers are required to specify if they are opting for new tax regime under section 115BAC. Assessees with income from business or profession were required to exercise such option on or before the due date for furnishing the returns by filing Form 10-IE. ITR Form-3 hence requires such taxpayers, to furnish the date of filing form 10-IE and its acknowledgement number.

Besides, consequential amendments, with respect to exemptions and deductions foregone have also been made. For instance, in ITR 3, amendments have been made in Schedule DPM (Depreciation on Plant and Machinery) and Schedule UD (Unabsorbed Depreciation), to make one -time adjustment in the written down value of the plant and machinery, for the exemptions now foregone.

New utility

In a bid to ease the burden of taxpayers when filing the returns, the CBDT has launched a new offline utility called JASON for the assessment year 2021-22. The existing excel and java utility have been discontinued. The new JSON utility has currently been enabled for ITR 1and 4 only.

The utility will import and pre-fill the data from e-filing portal to the extent possible. It is enough if taxpayers fill the balance data. However, facility to upload ITR at the e-filing portal using the utility is not yet enabled. It is expected to be available sooner than later.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , , , , ,
1 2 3