Finance Minister proposed the introduction of a scheme of faceless e-assessment in the Union Budget 2019. The object of the scheme is to eliminate the human interface between the assessee taxpayer and the income tax department. The procedure of the scheme will be carried out as a faceless assessment and through electronic mode only.

The top CA firm in Mumbai divides the topic into the following parts for better understanding.

  1. e-assessment Structure
  2. e-assessment Procedure
  3. Procedure for penalty
  4. Procedure for appeal
  5. electronic record and Communication
  6. The appearance of the taxpayer before the centre and unit
  7. Power to specify process and procedure

The e-assessment would be made in respect to such territorial area, or persons or class of persons, or income or class of income, or cases or class of cases, as may be specified by the (CBDT) Central Board of Direct Taxes time to time.

1. E-assessment Structure

For the purpose of e-assessment, the Central Board of Direct Taxes  (CBDT) would set up the below ‘centres’ and ‘units’ and specify their respective jurisdiction:

  • A National e-Assessment Centre to facilitate and centrally control the e-assessment.
  • Regional e-Assessment Centres under the jurisdiction of the regional Principal Chief Commissioner for making an assessment.
  • Assessment units for identifying points or issues, material for the determination of any liability (including refund), analysing information, and such other functions.
  • Verification units for enquiry, cross verification, examination of books of accounts, witness and recording of statements, and such other functions.
  • Technical units for technical assistance including any assistance or advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, the management or any other technical matter.
  • Review units for reviewing the draft assessment order to check whether the facts, relevant evidence and law and judicial decisions have been considered in the draft order.

All the communications between all the units mentioned above, for the purpose of making an assessment under this scheme, would be through the National e-Assessment Centre.

2.  e-assessment Procedure

The e-assessment procedure is as below:

  • A notice under section 143(2) would be served by the National e-Assessment Centre to assess, specifying the issues for the selection of taxpayer’s case for assessment.
  • The taxpayer has a period of fifteen days for filing a response with the National e-Assessment Centre.
  • The National e-Assessment Centre will assign the case selected for the purposes of e-assessment to a specific ‘assessment unit’ in anyone ‘Regional e-Assessment Centre’ through an automated allocation system.
  • Once a case is assigned to an assessment unit, it may make a request to the National e-Assessment Centre for:

a) Obtaining such further information, documents or evidence from the taxpayer or any other person, as it may specify

b) Conducting of certain enquiry or verification by verification unit; and

c) Seeking technical assistance from the technical unit

  • After a request being made by the assessment unit for any documents or evidence, the National e-Assessment Centre shall issue appropriate notice or requisition to the taxpayer or any other person for obtaining the information, documents or evidence requisitioned by the assessment unit
  • After a request being made for certain enquiry or verification as above, the request shall be assigned by the National e-Assessment Centre to a verification unit through an automated allocation system
  • Upon a request being made seeking technical assistance as above, the request shall be assigned by the National e-Assessment Centre to a technical unit in any one Regional e-Assessment Centres through an automated allocation system.

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  • The ‘assessment unit’ shall, after taking into account all the relevant material gathered as above, pass a draft assessment order either accepting the returned income of the taxpayer or modifying the returned income of the taxpayer, as the case may be, and send a copy of such order to the National e-Assessment Centre
  • The ‘assessment unit’ shall, while making a draft assessment order, provide details of the penalty proceedings to be initiated therein, if any
  • The National e-Assessment Centre shall examine the draft assessment order in accordance with the risk management strategy specified by the CBDT, including by way of an automated examination tool, whereupon it may decide to:

a) Finalize the assessment as per the draft assessment order made and serve a copy of such order and notice for initiating penalty proceedings, if any, on the taxpayer, along with the demand notice, specifying the sum payable by, or refund of any amount due to the taxpayer on the basis of such assessment made; or

b) Provide an opportunity to the taxpayer, in case a modification is proposed, by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order; or

c) Assign the draft assessment order to a review unit in any one regional e-assessment centre, through an automated allocation system, for conducting a review of such order

  • The review unit shall conduct a review of the draft assessment order, referred to it by the National e-Assessment Centre, whereupon it may decide to:

a) Concur with the draft assessment order and intimate the National e-Assessment Centre about such concurrence; or

b) Suggest such modification, as it may deem fit, to the draft assessment order and send its suggestions to the National e-Assessment Centre.

  • The National e-Assessment Centre shall, upon receiving the concurrence of the review unit finalise the draft assessment order or provide an opportunity to the taxpayer in case a modification is proposed
  • The National e-Assessment Centre shall, upon receiving suggestions for modifications from the review unit, communicate the same to the assessment unit
  • The assessment unit shall, after considering the modifications suggested by the review unit, send the final draft assessment order to the National e-Assessment Centre
  • The National e-assessment Centre shall, upon receiving the final draft assessment order, finalise the draft assessment order, or provide an opportunity to the taxpayer in case a modification is proposed, as the case may be
  • The taxpayer may, in a case where notice is issued for making submissions against the draft assessment order, furnish his response to the National e-Assessment Centre on or before the date and time specified in the notice given.
  • The National e-Assessment Centre shall:

a) In a case where no response to the show-cause notice is received, finalise the assessment as per the draft assessment order; or

b) In any other case, send the response received from the taxpayer to the assessment unit

  • The assessment unit shall, after taking into account the response furnished by the taxpayer, make a revised draft assessment order and send it to the National e-Assessment Centre
  • The National e-Assessment Centre shall, upon receiving the revised draft assessment order:

a) In case no modification against the interest of the taxpayer is proposed with reference to the draft assessment order, finalise the draft assessment; or

b) In case a modification against the interest of the assessee is proposed with reference to the draft assessment order, provide an opportunity to the taxpayer for hearing and making submissions

  • The response furnished by the taxpayer shall be dealt with by the National e-Assessment centre and the draft assessment order finalised
  • The National e-Assessment Centre shall, after completion of the assessment, transfer all the electronic records of the case to the Assessing Officer having jurisdiction over such case for:

a) Imposition of penalty;
b) Collection and recovery of demand;
c) Rectification of mistake;
d) Giving effect to appellate orders;
e) Submission of remand report, or any other report to be furnished, or any representation to be made, or any record to be produced before the Commissioner (Appeals), Appellate Tribunal or Courts, as the case may be;
f) proposal seeking sanction for the launch of prosecution and filing of a complaint before the Court

  • The National e-Assessment Centre may at any stage of the assessment, if it considers necessary, transfer the case to the Assessing Officer having jurisdiction over such case

3. Procedure for a penalty

  • Any unit may, in the course of assessment proceedings, for non-compliance of any notice, direction or order issued under this scheme on the part of the taxpayer or any other person, send a recommendation for initiation of any penalty proceedings under the income tax law, against such taxpayer or any other person, as the case may be, to the National e-Assessment Centre, if it considers necessary or expedient to do so
  • The National e-Assessment Centre shall, on receipt of such recommendation, serve a notice on the taxpayer or any other person, as the case may be, calling upon him to show cause as to why penalty should not be imposed on him under the income tax law
  • The response to show – cause notice furnished by the taxpayer or any other person, if any, shall be sent by the National e-Assessment Centre to the concerned unit which has made the recommendation for penalty
  • The said unit shall, after taking into consideration the response furnished by the taxpayer or any other person, as the case may be:

a) Make a draft order of penalty and send a copy of such draft to National e-Assessment Centre; or

b) Drop the penalty after recording reasons, under intimation to the National e-Assessment Centre

  • The National e-Assessment Centre shall levy the penalty as per the said draft order of penalty and serve a copy of the same on the taxpayer or any other person, as the case may be

4. Procedure for appeal

An appeal against an assessment order made by the National e-Assessment Centre under this scheme can be filed before the Commissioner Appeals (CIT Appeals) having jurisdiction over the jurisdictional Assessing Officer.

5. Electronic record maintenance and Communication

a) All communications between the National e-Assessment Centre and the taxpayer, or his authorised representative, shall be exchanged exclusively by electronic mode only; and

b) All internal communications between the National e-Assessment Centre, Regional e-Assessment Centres and various units shall be exchanged exclusively by electronic mode only.

All the electronic records issued under the scheme shall be authenticated by the originator by affixing his digital signature.

Every notice or order or any other electronic communication under this scheme shall be delivered to the taxpayer, by way of:

i) Placing an authenticated copy of the communication in the taxpayer’s registered account; or

ii) Sending an authenticated copy thereof to the registered email address of the taxpayer or his authorised representative; and

iii) Uploading an authenticated copy on the assessee’s Mobile App, and followed by a real-time alert to the taxpayer.

The taxpayer shall file his response to any notice or order or any other electronic communication, under this scheme, through his registered account, and once an acknowledgement is sent by the National e-Assessment Centre containing the hash result generated upon successful submission of a response, the response shall be deemed to be authenticated.

6. Appearance of the taxpayer before the centre and units

A person does not require to appear either personally or through an authorised representative in connection with any assessment proceedings under this scheme before the income-tax authority at the National e-Assessment Centre or Regional e-Assessment Centre or any unit set up under this scheme.

In a case where a modification is proposed in the draft assessment order, the taxpayer business like the best Interior designers in Navi Mumbai will be given an opportunity to make submissions against such modifications. The taxpayer his authorised representative is also entitled to a personal hearing before income tax authority in any unit under this scheme. Such hearing would be conducted exclusively through video conferencing, including through video telephony, in accordance with the procedure laid down by the CBDT.

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INTRODUCTION:-

Normally E-way bill means an electronic document generated on the GST portal for the movement of goods.

A person who has registered under GST cannot transport goods, documents, or devices in a vehicle whose value is more than Rs. 50,000 without an e-way bill that has been generated on the website.

When E-way bill is generated?

It is generated when the value of goods being transported is more than Rs. 50,000

  • In relation to a ‘supply’;
  • For a reason other than ‘supply’;
  • Due to inward ‘supply’ from an unregistered person.

For this purpose the supply might of the following below:

  • A supply is made with something (payment) in return in the course of business.
  • A supply is made without anything (payment) in return in the course of business.
  • A supply is made without anything (payment) return.

For this type of movement of goods e-way bills must be generated from the common portal by any best residential Interior designers in Mumbai company.

For some specific goods, the e-way bill must be generated mandatorily even if the value of goods is less than Rs. 50,000.

  • Inter-state movement of goods by the principal to the job worker.
  • Inter-state transport of handicraft goods by a dealer is exempted from GST registration.

Who should generate E-way Bill?

  • Registered person

If a registered person transports goods that value more than Rs. 50,000 then he has to generate E-way Bill.

  • Unregistered person

When the supply is made to a registered person by an unregistered person, he also has to generate E-way Bill.

  • Transporter

Transporters carrying goods by rail, road, air, etc. need to generate E-way Bill if the supplier has not generated it.

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Objective

Whenever a person wants to start any business he/she needs to select the form in which he/she going to operate. If he/she decided to run their business in the form of a Limited liability Partnership (LLP), then there is lots of question that arises in their mind like how to incorporate the company and what is the compliance he/ she has to perform to proceed with their goals of doing business. So, to guide/assist them all I have mentioned some details below which should be kept in mind before taking any decision.

Procedural Part for LLP incorporation 

To incorporate LLP, one should follow the below procedure:

STEP 1DSC requirement

To start the process of Limited Liability Partnership registration in India, first, we need to apply for the digital signature of the designated partners. This is important because all the documents required in the online LLP registration are digitally processed and would require digital signatures (DSC) of the designated partners. DSC certificates can avail from government recognized certifying agencies

STEP 2: DIN requirement

DIN is required by all designated partners or those who are intending to become the designated partners of the proposed LLP. In the current LLP registration process, we don’t need to separately apply for DIN rather during LLP registration when we fill FILLIP FORM where DIN can apply accordingly are allot.

STEP 3: Approval or Reservation of Name

In this, we should apply for the NAME registration facility which has been given by MCA.  We need to give any 2 names, which we want to be the name of LLP. Then, the appropriate authority will Reserve any 1 name out of the 2 provided subject to availability and the same should be intimated to us. After that, we need to incorporate the LLP within 90 days from the name reservation date by filing FORM FILLIP.

STEP 4: Incorporation of LLP

To proceed further, we need to fill FILLIP FORM which can be downloaded from the MCA website. This form requires details such as particulars of

  • the proposed or approved name of the LLP,
  • business activity is supposed to be carried out by the LLP,
  • proof of address of registered office of the LLP,
  • subscriber’s sheet, Interest in other entity, consent to become a designated partner, details of the designated partners along with the DPIN,
  • The total monetary value of the contribution to be made by partners in the LLP etc.

    Document required (before Application)

  • Proof of Office address
  • NOC from the owner of the property.
  • Copy of the utility bills (not older than two months)
  • Subscriber Sheet including Consent.
  • In the case of Designated Partner does not have a DIN, it is mandatory to attach: Proof of identity and residential address of the subscribers (i.e KYC)
  • Details of LLP and/ or company(s) in which partner/designated partner is a director/ partner
  • Partnership Agreement filed in FORM 3.
  • Proof of identity and address of Applicant I, II.
  • Optional Attachment (if any).

STEP 5: Partnership Agreement (FORM 3)

After the FILLIP form, we should fill the details of the LLP Agreement into FORM 3

attach agreement therein.

STEP 6: Closure Procedure

In the end, we have to file the FILLIP and FORM 3 to the MCA website electronically along with the statutory fees.

Conclusion

To conclude, one should apply for the registration of an LLP as the procedure mentioned above so that no interruption will arise thereafter. for more information on LLP registration in India, you click on best ca firms in Mumbai.

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INTRODUCTION:

 A new subsection 1G is introduced in section 206C to apply tax collected at source (TCS) on the sale of overseas packages. TCS is required that the seller of the tour package will collect tax from the buyer over and above of cost of his tour package and will be deposited in the government treasury on a monthly basis seller would then be required to the quarterly file of TCS return separately.

The top ca firm in Mumbai is explained in detail. 

1. TAX COLLECTED AT SOURCE (TCS) :

TCS stands for Tax Collected at the source. The tax is collected by the seller from the buyer at the time of settlement of the bill/invoice. Here, the seller shall be the collector and the buyer shall be the collected. Section 206C (1) specifies tax to be collected at source by every person, being a seller from the buyer of goods.

2. FOREIGN TRAVEL, EDUCATION BECOME COSTLY FROM 1ST APRIL BECAUSE OF TCS:

TCS on foreign travel tour packages remittance rules 2020: The new provisions regarding overseas tour packages require that sellers of foreign tour packages shall collect tax at the rate of 5% and 10% if not PAN and Aadhar numbers are submitted.

If you are planning to study abroad or enjoy an exotic holiday abroad then there is bad news for you, your dream was more expensive now as per the provisions proposed by the Nirmala Sitaraman in budget 2020. Now, new provisions to collect TCS from 1st April 2020 have been proposals TCS will be collected on:

  • Remittance under liberalized remittance scheme (LRS) of RBI for the amount exceeding Rs7 lakhs in a financial year;
  • Sale of an overseas tour package through a tour operator.

DETAILS OF THE NEW PROVISIONS

  1. TCS ON REMITTANCE:

“There was no TCS earlier, but now if a resident individual has to send money abroad through an authorized dealer in excess of Rs 7,00,000 (either one time or in totality during the financial year) then the authorized dealer must collect TCS at the rate of 5 percent at the time of remitting the money or at the rate of 10% if the remitter does not have a PAN /Aadhaar,” he said.

  1.  TCS ON TOUR PACKAGES:

The new provisions regarding TCS on overseas tour packages require that a seller of overseas tour package shall collect TCS at the rate of 5 percent or 10 percent (if PAN /Aadhaar is not available) on the total amount from the purchaser at the time of receiving the payment for the tour package and includes expenses for travel or hotel stay or boarding or lodging.

WHO IS RESPONSIBLE TO COLLECT TCS:

  1. In the case of remittance, any authorized dealer from whom the remittance is made is responsible to collect TCS.
  2. In the case of travel, the person who is the seller of the package is responsible to collect TCS.

TIMELINE FOR COLLECTION OF TCS:

At the time of receiving the amount or at the time of debiting the amount receivable whichever is earlier.

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DIRECT TAX

* Increasing surcharge on income over 2 Crore rupees/year

* Faceless tax scrutiny case selection to be on a random basis

* Propose 2% TDS on 1 Crore rupee/yr cash withdrawal from banks

* Propose to take a slew of measures to boost digital payments

* Launching automated, faceless assessment of tax

* To make pre-filled tax return forms available

* To make Aadhaar, PAN interchangeable to file tax returns

* Tax proposals aim to stimulate growth, housing

* Direct tax mop up 11.37 Lacs Crore rupees FY19 vs 6.38 lacs Crore FY14

* Seeing double-digit growth in direct tax revenue annually

* Corporate tax now 25% for cos with 400 Crore rupees/yr revenue

* Corporate tax cut to cover 99.3% of all cos

INDIRECT TAX

* To raise road, infra cess on petrol, diesel by 1 rupee/ltr

* To up special additional excise on diesel by 1 rupee/ltr

* To up special additional excise on petrol by 1 rupee/ltr

* Proposing certain amendments to Customs Act

* Raising customs duty on precious metals to 12.5%

* Raising customs duty on gold

* Customs duty being exempted on some parts of e-vehicles

* 5% customs duty being imposed on imported books

* To implement fully-automated GST refund module

* GST led to lower rates on almost all commodities

* Tax deduction of 150,000 rupees on e-vehicle loan interest

* Extra 150,000-rupee tax deduction on some small home loans

* RBI, banks to absorb merchant discount rate at small shops

* No merchant discount rate on e-transaction at small shops

10 POINTS OF VISION

* Building social infrastructure among 10 points of vision

* Building pollution-free environment among 10 points of vision

* Digital India in every sector among 10 points of vision

* Make in India with stress on MSME in 10 points of vision

* Water management, clean rivers among 10 points of vision

* Export of food grain in 10 points of vision

* Ayushman Bharat, clean India among 10 points of vision

* Space programmes, safety of citizen in 10 points of vision

GROWTH, INFLATION

* Well within capacity to reach $5-trln economy in few years

* India to become $3-trln economy in FY20

* India now 6th largest economy vs 11th five years ago

REFORMS

* Need to continue undertaking structural reforms

* Need to continue structural reforms to reach $5-trln aim

* Need to invest in job creation in MSMEs

* Need to invest heavily in digital India, job creation

* $5-trln economy target is imminently achievable

* “Gone are the days of policy paralysis”

* Wish to propose many initiatives to kick-start growth

* Reforms needed in power tariffs

* To soon announce policy package for power tariffs

* Model tenancy law to soon be finalised

* Propose several reform measures for rental housing

* PPP to fast develop track, rolling stock, freight svcs

* To have blueprint for water grids, gas grids, airways

* Examining performance of UDAY scheme

* One nation, one grid to ensure power connectivity

* 2 more terminals at Sahibganj, Haldia to be functional soon

* Movement of cargo in river Ganga to rise 4 times in 4 yrs

FINANCIAL SECTOR, MARKETS

* STT to be limited to gap between settlement, strike price

* Propose some leeway in Securities Transactions Tax

* Propose to implement steps to make tax compliance easier

* Bad loan tax norms for most NBFCs at par with banks

* Need for greater parity in tax treatment of NBFCs vs banks

* CBDT to make provisions for pending assessment of start-ups

* Start-ups not to face scrutiny in terms of share premium if they do all required compliances.

* Taking steps to resolve angel tax issue for start-ups

* To start scheme for foreign company in advanced technology sector.

* To start scheme to invite foreign company in sunrise sectors

To give PSU banks 700 bln rupees capital

* Banks’ NPAs reduced by more than 1 trln rupees last year

* Domestic credit growth risen to 13.8%

* To let all NBFC to participate in trade receivable platform

* Propose to return regulation over housing fin company to RBI

* Propose more power to RBI over NBFCs in Finance Bill

* One-time, six-month guarantee to PSU banks to buy some NBFC loans

* Fundamentally sound NBFCs should get funding from banks, MFs

* To undertake steps to improve governance in PSU banks

* Provision coverage ratio of banks highest in 7 years

* Six PSU banks enabled to come out of prompt corrective action.

* To start raising part of borrowing from external market in FX.

* To boost retail participation in CPSE ETFs.

* India’s sovereign external debt to GDP ratio less than 5%.

* To offer ETF participation via ELSS-like system.

* Setting divestment target of 1.05 trln rupees for FY20.

* Government  to reinitiate process of Air India divestment

* Onshore insurers’ net owned funds need cut to 10 bln rupees

* Strategic divestment of PSUs to remain a priority

* Mulling below 51% stake in PSUs on case-to-case basis

* To raise cap on foreign shareholding in some PSUs

* Steps to separate NPS Trust from PFRDA

* Financial gains from cleaning banking sector now visible

* FDI inflows remain robust despite global headwinds

* Important to increase retail invest in T-bills

* Propose to create platform for listing social enterprises.

* To work with regulators for AA bonds as collateral for repo.

* Asked SEBI to mull hiking minimum public shareholding to 35% from current holding of 25%.

* Propose to rationalise existing KYC norms for FPIs

* India needs 20-trln-rupee estimated investment every year

* To put in place action plan to deepen long-term bond mkt

* Action plan to deepen market for long-term bonds

* Invest driven growth requires access to low-cost capital

* To create payment platform for MSMEs

* Large infrastructure can be built on land owned by CPSEs

* To allow FPIs to subscribe to listed debt papers of REITs

* Propose to merge NRI, FPI investment scheme routes

* To mull hiking FDI limit in media, insurance, animation company.

* Contemplating an annual global investors meet in India

* Propose 100% FDI in insurance intermediaries

* To examine suggestions to further open up FDI in aviation

* FDI flows rose 6% to $64.37 bln in FY19

* Propose to make India a more attractive FDI destination

* To take steps for RBI, SEBI depositories’ inter-operability

* To allow FPIs to subscribe to listed debt papers of REITs

* Propose to merge NRI, FPI investment scheme routes

* To mull hiking FDI limit in media, insurance, animation cos

* Contemplating an annual global investors meet in India

* Propose 100% FDI in insurance intermediaries

* To examine suggestions to further open up FDI in aviation

* FDI flows rose 6% to $64.37 bln in FY19

* Propose to make India a more attractive FDI destination

* To take steps for RBI, SEBI depositories’ inter-operability

* To allow FPI invest in listed debt securities of InvITs

* Will take steps to meet 25% public holding in listed PSUs

* Need to encourage continued growth of start-ups

INFRASTRUCTURE, INDUSTRY

* To invest 1 lacs crore rupees in infrastructure over next 5 years

* To set up a panel on long-term funding for infrastructure

 Need to invest heavily in infrastructure

* Rail infra may need an investment of 50 trln rupees 2018-2030

* 2nd stage of Bharatmala to help develop state roads

* To incentivise advanced vehicle battery manufacturing

* Need to develop inland waterways for cargo movement

* To comprehensively restructure national highway programme

* To comprehensively restructure national highway programme

* 210 km of new metro lines operationalized in 2019

* Launching national common mobility card

* To leverage engineering skill for project maintenance work

* Public infra, affordable housing to be taken up in FY20

* To aid cluster-based development of traditional industries

* To use more PPP mode for metro rail network

* Railways to be encouraged to use SPVs for suburban projects

* To use USOF, PPP mode for speeding up BharatNet

* To deal with tax issues of start-ups later in speech

* To start TV programme exclusively for start-ups

FARM SECTOR

* Every rural family to have gas, power connectivity by 2022

* All rural families to have electricity connection by 2022

* Govt keeps Antyodaya at core of all its policies

* Villages, poor, farmers at centre of every govt plan

* Gaon, garib, kisan at centre of every govt plan

* To invest widely in agriculture infrastructure

* Bamboo, khadi, honey to be focus for cluster development

* To invest 802.5 bln rupees to upgrade rural roads in 5 years

* To upgrade 125,000 km of rural roads in 5 years

* 30,000 km roads under PM Sadak Yojana built with green technology

* All-weather roads provided to 97% of habitation

* To have robust framework for fisheries mgmt network

* 19.5 mln homes to be given till 2022 in PM rural house plan

* 15 mln homes completed under PM rural house plan

* APMCs shouldn’t hamper farmers from getting fair price

* Zero-budget farming to be promoted

* Hope to form 10,000 farmer producer organizations

* Aiming for oilseed self-sufficiency, to help cut import bill

* Ease of doing business, living should apply to farmers too

* To create infrastructure for cattle feed manufacturing

* Will support private companies to add value for farm producers

* Zero-budget farming can help double farmers’ income

SOCIAL SECTOR, EDUCATION

* See rapid urbanisation as an opportunity, not challenge

* Constructed 96 mln toilets since Oct 2, 2014

* To expand Swachh Bharat plan to undertake solid waste mgmt

* India to be open-defecation-free by Oct 2

* Over 95% cities have become open-defecation free

Identified 1,592 blocks for Jal Shakti Abhiyan

* To use CAMPA funds for Jal Shakti plan

* Aim water connection to every household by 2024

* To set up national research foundation to assimilate all grants

* To bring new national education policy

* Will bring in new national educational policy

* 3 mln workers joined govt pension plan so far

* Banks to provide assistance under Stand-Up India scheme

* Stand-Up India scheme to continue till 2025

* Expect less labour disputes as laws get streamlined

* Propose to develop 17 iconic tourism sites

* Propose digital repository for tribal heritage

* Propose to revamp India Development Assistance Scheme

* Opened 5 new embassies in Africa FY19, to open 4 more

* Propose to launch mission to integrate traditional artisans

MISCELLANEOUS

* Election 2019 mandate was full of hope for new India

* Voters stamped their approval on a performing government

* People of India voted for national security, economic growth

* Have set the ball rolling for new India

* Govt provided fiscal discipline during 2014-2019

* Average food security amount almost doubled during 2014-19

* Our last-mile delivery stood out, reached everywhere

* Will further simplify the procedure, reduce red tape

* Mega programs initiated in 1st term will continue

* We don’t look down upon legitimate profit-earning

* To take step for virtuous cycle of domestic, foreign investment

* Time right for India to enter aircraft financing, leasing

* Launched co to tap ISRO’s capabilities commercially

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When a taxpayer sells his residential house and from the sale proceeds he acquires another residential house, he can avail tax relief u/s 54 subjects to the condition mentioned in this section.

The salient feature of section 54 is below.

  •  Relief under Section 54 is available only to an individual.
  • The asset transferred should be a long-term capital asset, being a residential house property.
  • The new residential house should be located in India.
  • The number of Capital Gains should not be invested in any commercial space.
  • Income from such house should be chargeable under the head “Income from House Property”

 

Amount of exemption

Exemption under section 54 will be lower of the following:

Amount of capital gains arising on sale of residential house

OR

Amount invested in purchase/construction of new residential house property

If the amount of Capital Gains exceeds Rs. 2 Crores, 1 residential house in India should be purchased within one year before or two years after the date of transfer of old house OR constructed within 3 years after the date of transfer of old house.

If the amount of Capital Gains does not exceed Rs. 2 Crores, then 2 residential houses in India can be purchased within one year before or two years after the date of transfer of old house OR constructed within 3 years after the date of transfer of old house.

If during any assessment year, the assessee has exercised the option to purchase/construct 2 residential houses, then he shall not be entitled to exercise the option for the same or any other assessment year.

If a taxpayer purchases/constructs a house and claims relief under section 54 and then transfers the new house within 3 years from the date of its acquisition/completion of construction, then the benefit claimed under section 54 will be invalid.

At the time of computation of capital gain arising on transfer of the new house, the amount of capital gain claimed as exempt under section 54 will be deducted from the cost of acquisition of the new house.

Capital Gain Deposit Account Scheme

The taxpayer should purchase another house within one year before or two years after the date of transfer of the old house or should construct another house within three years from the date of transfer to be eligible to claim exemption u/s 54. If till the due date of filing the return of income, the capital gain arising on the sale of the house is not utilized (in whole or in part) to purchase or construct another house, then the benefit of exemption can be availed by depositing the unutilized amount in Capital Gains Deposit Account Scheme in any branch of public sector bank, in accordance with Capital Gains Deposit Accounts Scheme, 1988.

The new house can be purchased or constructed by withdrawing the amount from the Capital Gains Deposit Account within the specified time limit of 2 years or 3 years, as the case may be.

Consequences of Non-utilisation of the amount deposited in Capital Gain Deposit Account Scheme.

If the amount deposited in the Capital Gains Account Scheme for which the taxpayer has claimed exemption under section 54 is not utilized within the specified period for the purchase/construction of the residential house, then the unutilized amount (for which exemption is claimed) will be taxed as income by way of long- term capital gains of the year in which the specified period of 2 years/3 years gets over.

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The object of this section is to save capital gain by the sale of long-term capital assets other than residential house property as so many person they sale some of their assets to purchase residential house property so if they fulfill the condition of this section then can save the tax.

Exemption u/s 54F is available to an individual or a Hindu Undivided Family (HUF) only when there is the transfer of any long-term capital asset other than a residential house property.

The Jain Anurag Associates best income tax consultant in Mumbai is explaining blow

The following condition needs to be satisfied in order to avail of the exemption under Section 54F. The amount received on the transfer of long term capital assets is invested in either of the following ways:

The amount is invested to purchase one residential house in India. The investment should be made within a period of 1 year before or 2 years after the date of transfer of the long-term capital asset.

OR

The amount is invested to construct one residential house in India. The investment should be made within a period of three years.

The exemption under section 54F is not available in the following situations:

  1. The assessee already owns more than one residential house on the date of transfer of the long-term capital asset.
  2. The assessee purchases additional residential houses (other than the new residential house purchased/ constructed to claim an exemption under section 54F) within a period of one year from the date of transfer of the long-term capital asset.
  3. The assessee constructs an additional residential house (other than the new residential house purchased/ constructed to claim an exemption under section 54F) within a period of three years from the date of transfer of the long-term capital asset.

In the above three situations, the number of capital gains arising from the transfer of the long term capital asset, which was not charged to tax, will be deemed to be the income from long term capital gains in the previous year in which another residential house is purchased or constructed (other than the new house) whose income is taxable under the head “Income From House Property”.

Circumstances under which exemption under Section 54F would be withdrawn

The assessee cannot transfer the newly purchased or constructed residential house for a period of three years from the date of purchase or date of construction, as the case may be. However, if the assessee transfers the newly purchased/ constructed residential house, then, the capital gain exempted under section 54F would be taxable as long-term capital gain in the previous year in which the residential house is transferred.

Capital Gain Deposit Account Scheme

If the amount is not re-invested within the last date of filing of return of income then, the assessee is required to deposit the unutilized amount into the Capital Gain Deposit Account Scheme. The unutilized amount deposited into the account can be used for purchasing or constructing the residential house within a period of two years or three years as the case may be. If the assessee fails to utilize the amount within the specified period of two or three years, then, the unutilized amount would be treated as a capital gain on a proportionate basis based on the exemption claimed earlier.

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The Finance Act, 2020 has introduced a New Tax Regime by inserting a new Section 115BAC -Tax on Income of Individuals and Hindu Undivided Family under the Income Tax Act, 1961 w.e.f. Assessment Year (AY) 2021-22 i.e. for the Income earned for Financial Year (FY) 2020-21. Under this Section, there is a provision for Individuals and HUF to pay tax at lower rates.

New Rate of Tax mentioned under Section 115BAC of the Act is as under:

Total Income                                                             Rate of Tax

From ₹ 2,50,001 to ₹ 5,00,000                                     5%

From ₹ 5,00,001 to ₹ 7,50,000                                    10%

From ₹ 7,50,001 to ₹ 10,00,000                                  15%

From ₹ 10,00,001 to ₹ 12,50,000                                20%

From ₹ 12,50,001 to ₹ 15,00,000                                25%

Above ₹ 15,00,000                                                     30%

The New Tax Regime is optional. You may or may not opt for the New Tax Regime. In case of not opting for the New Tax Regime, the Old Tax Regime shall be applicable. Even Senior Citizens and Super Senior Citizens can opt for the New Tax Regime. In both the tax regimes, the rebate under section 87A is available to the resident individuals having a total income of equal to or less than ₹ 5 lakhs per annum.
The person opting for concessional tax rates in the New Tax Regime will have to forego certain Exemptions and Deductions are available in the existing Old Tax Regime. In all there are 70 Deductions & Exemptions that are not allowed in the New Tax Regime, out of which the most commonly used are mentioned below:

  1. Leave Travel Allowance (LTA)
  2. House Rent Allowance (HRA)
  3. Conveyance Allowance
  4. Daily expenses in the course of employment
  5. Relocation Allowance
  6. Helper Allowance
  7. Children Education Allowance
  8. Other Special Allowances [Section 10(14)]
  9. Standard Deduction on Salary under Section 16(ia)
  10. Professional Tax
  11. Interest on Housing Loan under Section 24(b)
  12. The loss of ₹ 2 lakh from the house property cannot be set off from your salary income.
  13. Deduction under Chapter VI-A (80C,80D, 80E etc) (Except Section 80CCD(2))
  14. Deduction or Exemption for any other allowances for other perquisites etc

List of Deductions & Exemptions that are allowed in the New Tax Regime:

  1. Transport Allowance for specially-abled people
  2. Conveyance Allowance for expenditure incurred for traveling to work
  3. Investment in Notified Pension Scheme under Section 80CCD(2)
  4. Deduction for employment of new employees under Section 80JJAA
  5. Depreciation under Section 32 except additional depreciation
  6. Any allowance for traveling for employment or on transfer

Choosing between the options of tax regimes

As per the circular issued by CBDT dated April 13, 2020, once the chosen tax regime has been communicated to the employer by the salaried taxpayer, thereafter, employees cannot change the tax regime during that Financial Year. Nevertheless, at the time of filing the Income Tax Return, an individual shall have an option to switch to another tax regime, irrespective of the fact of what has been communicated to the employer.

For Salaried Person – An Individual that has salaried income but no business income has the option to make a choice between the Old Tax Regime and New Tax Regime every year.
For Business Income Person – If a businessman has once opted for the New Tax Regime, they are left with the last option to switch back to the Old Tax Regime.

Application for the opting-in / withdrawal from the New Tax Regime

The Individuals or Hindu Undivided Families have to file Form 10-IE to opt-in or withdraw from the New Tax Regime.

Due Date of Filing Form 10-IE

For Salaried Person – Before filing the Income Tax Return even if Income Tax Return is filed
after the due date.
For Business Income Person – Before the due date of filing the Income Tax Return i.e. 31st July or another date (in the case the due date is extended by the Government)

The person earning Salary Income shall have to file Form 10-IE for every year during which he/she wants to select the New Tax Regime or opt out of it.
A person earning Business Income has to file Form 10-IE twice – First at the time of switching to the New Tax Regime and Second when switching back to the Old Tax Regime.

Non Filing of the Form 10-IE

In case of non-filing of the Form 10-IE by the aforesaid due date, then the taxpayer shall not be allowed to avail the tax benefit of concessional tax rates that are available in the New Tax The regime and the tax rates of the Old Tax Regime will be applicable then.

It is noted that Form 10-IE is required to be filed in an electronic form. Taxpayers can file the form through the Income Tax Department portal to opt for the New Tax Regime for AY 2021-22 and onwards. The form will be filed using either the digital signature or through an electronic verification code (EVC).

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Taxation of F & O ( Future and Option ) Transactions

Futures and Options are the major types of stock derivatives trading in a share market. These are contracts signed by two parties for trading a stock asset at a predetermined price on a future date. Such contracts try to hedge the market risks involved in the stock market trading by locking in the price beforehand.
Future and Option in the share market are contracts that derive their price from an underlying asset (known as underlying), such as shares, stock market indices, commodities, ETFs, etc. Future and Option basics provide individuals to reduce their future risk on their investment through pre-determined prices. However, since the direction of the price movement cannot be predicted, it can cause substantial profits or losses if a market prediction is inaccurate. Typically, individuals well versed with the operations of the stock market primarily participate in such trades.
Section 43(5) of the Income Tax Act has excluded the transactions in F & O Market from being treated as Speculative Transactions. Even though these transactions are non-delivery-based transactions, these transactions would still be treated as Non-Speculative. As such transactions in the F & O Market on the Stock Markets would be treated as Non-Speculative Transactions, they would be taxed just like any other business income. The expenses
incurred for the purpose of Business like Telephone Expenses, Internet Expenses, Electricity Expenses, etc. would also be allowed to be claimed in the Income Tax Return. The tax on the balance taxable income arising on the sale of F & O Transactions would be levied as per the applicable income tax slab rates.

Computation of turnover in case of F & O transactions 

The following is taken into account for the computation of turnover:

  • Profits from the trade
  • Loss from the trade
  • Premium received from the sale of Options
  • In the case of Reverse Trade, the difference should also be added

Turnover can be determined by looking at the following example:

Mr. X is a Futures and Options trader and has incurred a profit and loss from the following 2 transactions:

  1. He acquires Futures in Company A, which are worth Rs.20 lakhs, eventually selling
    them for Rs. 22 lakhs. This sale resulted in him earning a profit of Rs. 2 lakh
  2. He acquires Futures in Company B, which are worth Rs. 10 lakhs, eventually selling
    them for Rs. 9 lakhs. This sale resulted in him suffering a loss of Rs. 1,00,000

Therefore, based on the above transactions, the total turnover can be calculated as follows:

Example 1: Total amount of profit earned = 2,00,000 – 1,00,000 = 1,00,000
Total turnover will be the combination of both profit and loss = 2,00,000 + 1,00,000 = 3,00,000

Example 2: Mr X buys 200 Options at Rs. 20 and sells at Rs. 30.
Firstly, the favourable difference or profit of 2000 (10 x 200) is the turnover. But premium
received on sale also has to be considered turnover, which is 30 x 200 = 6000. So total
turnover on this Options trade = 2000 + 6000 = 8000.

Example 3: Trade 1: 1000 Options bought at 100 and sold at 50. Trade 2: 1000 Options
bought at 50 and sold at 30.

Trade 1
Loss = 50,000 (1,000 x 50)
Selling value of Options = 1000 x 50 = 50,000
Turnover = 1,00,000

Trade 2
Loss = 20,000 (1000 x 20)
Selling value of Options = 1000 x 30 = 30,000
Turnover = 50,000
Total turnover = Turnover of Trade 1 + Trade2 = 1,50,000

When Tax audit required in the case of  F & O Transaction?

If the turnover is more than ₹ 1 Crore or if the Profit disclosed is less than 8% of the turnover from such transactions (6%, if all trades are digital), then the taxpayer would also be required to get the Tax Audit conducted under Section 44AB. This Tax Audit would be required to be conducted by a practicing Chartered Accountant for each year for which the turnover exceeds ₹ 1 Crore or the Profit disclosed is less than 8% or 6% as the case may be.

Treatment of loss arising in F & O Transactions

As the transactions entered into in the F & O Market are treated as Non-Speculative Transactions, the loss arising out of these Transactions would be allowed to be set off against all other incomes except Salary Income.

If the Loss is not set off against the incomes of the same Financial Year, then such loss can be carried forward and set off against the future incomes. However, for the loss to be carried forward and set off, the loss should be disclosed in the Income Tax Return and the Income Tax Return should be filed before the due date of filing of the Return.

If the Loss is not disclosed in the Income Tax Return or the Income Tax Return is not filed before the due date, then the loss would not be allowed to be carried forward. Loss claimed in Income Tax Return filed after the due date of filing of the Return as Belated Return is also not allowed to be carried forward.

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Many people buy insurance policies just to save on taxes. But this is not advisable as the real purpose of insurance is to secure your dependents financially.
The tax benefits, which are often the most-discussed aspect of insurance policies, are actually a positive side to those policies and not the main benefit. And since an insurance policy is an important aspect of our financial lives and those of our dependents, it is important to understand all the aspects of it. So, we should not focus only on tax benefits available under Section 80C, but we should also focus on how the maturity amount is taxed later under Section 10(10D).

Section 10(10D) of Income Tax Act, 1961

The amount of sum assured and any bonus i.e. the policy proceeds paid on maturity or surrender of policy or on the death of the insured are completely tax-free for the recipient subject to certain conditions. These policy proceeds will be taxable in the hands of the insured in the following situations:

  • In case of an insurance policy issued after 1.4.2003 but on or before 31.3.2012
    If the premium payable in any year exceeds 20% of the actual sum assured, then the
    policy proceeds would be taxable in the hands of the insured.
  • For policies issued on or after 1.4.2012
    If the premium payable in any year exceeds 10% of the actual sum assured, then the policy proceeds would be taxable in the hands of the insured.
  • In case the insured suffers from severe disability or disease as specified by the Income Tax Act and Rules and his/her policy was issued on or after 1.4.2013
    For these types of persons, the limit of 10% will be increased to 15% i.e. If the premium payable in any year exceeds 15% of the actual sum assured, then the policy proceeds would be taxable in the hands of the insured. For this purpose, disability has to be one of those specified in section 80U and disease has to be one of those specified in section 80DDB read with Rule 11DD of Income Tax Rules.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

In case the premium payable in any year exceeds the limit i.e. 10%, 15% or 20% of the actual sum assured, as described above, then the whole proceeds from the insurance policy would be taxable in the year of receipt. However, in case of death of the insured, where his nominee(s) receive the policy proceeds the same shall be tax-free in the hands of the nominee(s) even if the premium paid in any year crosses the prescribed percentage of the sum assured.

TDS applicable to the payment of life insurance policy proceeds

According to Section 194DA of the Income Tax Act, 1961, any sum received by an insured Indian resident from an insurer under a life insurance policy shall be subject to TDS @ 1% if the said sum is not exempted under section 10(10D). This means that policy proceeds exempted under section 10(10D) will be given to the insured without TDS. Further, even if these proceeds are taxable as per section 10(10D) but do not exceed ₹ 100,000 then also no TDS is to be deducted by the insurer when making the payment to the insured. However, one needs to carefully note that the ₹ 1 Lakh limit is for TDS u/s 194DA & not for Section 10(10D). It is important that you have to submit the PAN to your insurer or else the rate of TDS would be 20% instead of 1% in cases where TDS is applicable.

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There has been an amendment in Section 194DA in the Union Budget 2019. From 1 st September 2019, the TDS is deducted on the differential amount and not on the entire proceeds of the insurance policy at a rate of 5% instead of the earlier 1%. The above amendment in section 194DA has made it absolutely clear that the entire amount cannot be treated as ‘income’ and it’s only the differential amount that would be taxable as income.

Further, the tax treatment of life insurance policies bought from foreign insurers (those not registered in India) may involve additional conditions which would vary from case to case.

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Section 115BAA was introduced by the Ministry of Finance Government of India through the Taxation (Amendment) Ordinance 2019 on the 20th of September 2019. Several tax amendments are made to the Income Tax Act,1961 through this ordinance. Major Changes are done such as a corporate tax rate reduced for domestic companies. Also, the MAT rate has been reduced from the current 18.5% to 15%.

Let’s discuss the corporate tax rate cut for domestic companies under the following heading.

  1. Brief About New section 115BAA
  2. Eligibility criteria to avail reduced corporate Tax under section 115BAA
  3. Calculation of New Effective Rate of Tax
  4. Option to Carry Forward of MAT Credit / Losses / Unabsorbed Depreciation
  5. Discuss the Availability of Opt-out The Option

 

Brief About New section 115BAA

The new section – Section 115BAA has been inserted in the Income Tax Act, of 1961 to give the benefit for domestic companies to give the option to opt a reduced corporate tax rate. Section 115BAA states that domestic companies have the option to pay tax at a rate of 22% plus a surcharge of 10% and cess of 4%. So the Effective Tax rate will be 25.17%. This section will be applicable from the FY 2019-20 (AY 2020-21) onwards subject to some conditions need to be fulfilled by such domestic companies. The company need not pay tax under MAT if it opts for Section 115BAA.

Eligibility Criteria Of Section 115BAA To Avail Reduced Corporate Tax For Domestic Companies

All domestic companies Who want to opt for reduced corporate Income tax rates @ 22% need to fulfill the below condition are complied with.

i) Such companies should not avail of any exemptions/incentives under different provisions of income tax. Therefore, the total income of such a company shall be computed without claiming any deduction especially available for units established in special economic zones under section 10AA.

ii) Claiming additional depreciation under section 32 and investment allowance under section 32AD towards new plant and machinery made in notified backward areas in the states of Andhra Pradesh, Bihar, Telangana, and
West Bengal.

iii) Claiming deduction under section 33AB for tea, coffee, and rubber manufacturing companies.

iv) Claiming deduction towards deposits made towards site restoration fund under section 33ABA by companies engaged in extraction or production of petroleum or natural gas or both in India.

v) Claiming a deduction under Section 35 for expenditure on scientific research, or an amount paid to a university or research association or National Laboratory or IIT.

vi) Claiming a deduction for the capital expenditure incurred by any specified business under section 35AD.

vii) Claiming a deduction for the expenditure incurred on an agriculture extension project under section 35CCC or on a skill development project under section 35CCD

viii) Claiming deduction under chapter VI-A with respect to certain incomes, which are allowed under sections 80IA, 80IAB, 80IAC, 80IB, and so on, except deduction under sections 80JJAA and 80M.

ix) Claiming a set-off of any loss carried forward or depreciation from earlier years if such losses were incurred in respect of the aforementioned deductions.

x) A claim by an amalgamated company for set-off of carried forward loss or unabsorbed depreciation belonging to an amalgamating company if such loss or unabsorbed depreciation is on account of the above deductions; claiming a deduction for additional/accelerated depreciation. The normal depreciation can however be claimed.

The above losses shall be deemed to have been allowed and shall not be eligible for carrying forward and set off in subsequent years this means that if the company opts for 115BAA then the opportunity for claiming set-off is lost forever Such Domestic companies will have to exercise this option to be taxed under the section 115BAA on or before the due date of filing income tax returns i.e usually 30th September or extended due dates in the relevant assessment year.

Once the company opts for section 115BAA in a particular financial year, it cannot be withdrawn subsequently.
The option should be filed in Form 10-IC, as notified by the CBDT. The form should be submitted online under a digital signature or under an electronic verification code.

There is no such restriction on turnover and the company need not be a new company so any existing company can migrate into this section at any point.

Calculation of New Effective Rate of Tax

The new effective tax rate, which will apply to domestic companies availing the benefit of section 115BAA is 25.168%. The break up such tax rate is as follows:

Base tax Rate 22%
Surcharges 10% on base Rate 2.20%
Cess 4% on Base rate Plus Surcharge 0.968
Total 25.168%

Such companies will not be required to pay Minimum Alternate Tax MAT under section 115JB of the act.

Option to Carry Forward of MAT Credit / Losses / Unabsorbed Depreciation

The domestic companies opting for section 115BAA will not be able to claim MAT credits for taxes paid under MAT during the tax holiday period. The companies would not be able to reduce their tax liabilities under section 115BAA by claiming MAT Credits. The CBDT may issue a clarification on MAT credits in case of companies opting for tax under section 115BAA.

Adjustment of the brought forward losses and unabsorbed depreciation for the purpose of Section 115BAA

The domestic company opting for section 115BAA shall not be allowed to claim set-off of any brought forward depreciation (additional depreciation) for the assessment year in which the option has been exercised and future assessment years.
There is no timeline for the domestic companies to choose a lower tax rate under section 115BAA. So such companies can avail of the benefit of section 115BAA after claiming the brought forward loss on account of additional depreciation and also utilizing the MAT credit against the regular tax payable if any.

Discuss the Availability of Opt-out The Option

The domestic companies who do not wish to avail of this concessional rate immediately can opt for the same after the expiry of their tax holiday period or exemptions/incentives as mentioned earlier.
However, once such a company opts for the concessional tax rate under section 115BAA of the Income Tax Act,1961, it cannot be subsequently withdrawn.

Conclusion

The step taken to reduce corporate Income tax rate is very beneficial for Indian companies and object to introducing this section to promote new business, to promote the make in India campaign, and accelerate the growth of all corporates as no turnover criteria put to avail the benefit of section 115BAA. The new corporate income tax rate is a very competitive rate compared to the rest of the world and certainly attracts Indian and foreign companies to start a business in India.

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Content

  • Introduction About Annual Information System (AIS)
  • Most Common Details reflect in AIS useful for Individual Tax Payer
  • Details relate to Non-resident financial transaction
  • Details of Business and Transaction
  • Conclusion

Introduction about annual information system  (AIS)

As we are all aware the new annual Information statement system (AIS) was introduced in fy 2020-21. The object of AIS is to collect all financial information and details of taxpayers from different sources and compiled them into one statement called AIS.
In an Annual Information Statement (AIS) taxpayers can get all the details of their Income and financial transaction is done so that during the preparation of tax return they can include all the income and details and pay tax accordingly so no chance to get a further notice from the Income-tax department.
In the Annual Information Statement (AIS) almost all financial details are reflected and the most common details which relate to the common taxpayers are…

  1. Income From Salary
  2. Income From Professional And Business Receipts
  3. Rent Received From House Property.
  4. Dividend Income
  5. Interest Earned On Saving Bank Account
  6. Interest Earned On Bank Fd.
  7. Interest Earned On Bond And Other Deposit
  8. Interest Earned From Other Parties
  9. Purchase Sales of Listed Equity Shares.
  10. Purchase Sales of Unit Of Mutual Fund.
  11. Sales Of Immovable Property
  12. Purchase Of Foreign Currency
  13. Purchase Of Car

Most common details reflect in AIS useful for an individual taxpayer

The following details are populated in AIS which is very useful for the individual taxpayer in the preparation of
Income Tax Return.

1. Salary

Employer submits detailed breakup of salary, perquisites, profits in lieu of salary, etc paid to the employee in Annexure-II of the TDS statement (24Q) of the last quarter. This information is also provided by the employer to the employee (taxpayer) in Part B (Annexure) of Form 16. AIS displays all the financial transactions such as salary income, dividend income, interest income from saving/fixed deposits, sale and purchase of securities, etc. With the help of all such financial information, it would be easy for a taxpayer to report the correct information in the income tax return.

2. Rent Received

Tenants responsible for paying rent are liable to deduct tax at source on payment of rent. Deductor reports details of amount paid/credited, date of payment, details of Tax deduction made, etc. in Form 26Q. This information is provided by the deductor to the deductee (taxpayer) in Form 16A. Tenant (Individual/HUF) paying a rent of more than 50,000 is liable to deduct tax while making payment to the landlord. Tenant reports details of rent paid amount paid/credited, property details, date of payment and tax deduction details, etc. pertaining to rent paid in Form26QC.

3. Dividends

Dividend paid/declared by all companies (reporting entity) is reported under the Statement of Financial Transactions (SFT). A company paying/distributing dividends is liable to deduct TDS from the amount paid subject to the threshold applicable in the act and report through form 26Q (quarterly statement). This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

4. Interest from savings bank

Interest paid/credited/accrued on a saving account is reported under the Statement of Financial Transactions (SFT).

5. Interest from the deposit

Bank/deductor at the time paying/crediting interest on deposits is liable to deduct tax from deposit holder paid subject to the threshold applicable in the act. This information is reported by the Bank/deductor in form 26Q (quarterly statement). This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

6. Interest from others

Interest paid/credited/accrued on others (other than a savings account, term deposit, or recurring deposit) is reported under the Statement of Financial Transactions (SFT). Bank/deductor at the time paying/crediting other interest (interest on securities) is liable to deduct tax from deposit holder paid subject to the threshold applicable in the act. This information is reported by the Bank/deductor in form 26Q (quarterly statement). This information is provided by the deductor to the deductee (taxpayer) in Form 16A

7. Interest from income tax refund

Interest received on Income Tax Refund in the financial year is liable to be taxed as Income from other sources.

8. Receipt of accumulated balance of PF from employer u/s 111

Employer/recognized provided fund reports information about the accumulated balance due to an employee in form 26Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

9. Interest from infrastructure debt fund

Information relating to interest paid is reported by the payer in form 27Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

10. Rent payments

Information is reported by the person making payment in form 26QC. This information is provided by the deductor to the taxpayer in Form 16C

11. Cash deposits

Information pertaining to cash deposits in an account other than the current account is reported by reporting entity in form 61A. The information will be shown in the AIS of all account holders to enable the submission of feedback. Information pertaining to cash deposits in the current account is reported by reporting entity in form 61A. The information will be shown in the AIS of all account holders to enable the submission of feedback.

12. Cash withdrawals

Information pertaining to Cash withdrawals from the current account is reported by reporting entity in form 61A. The information will be shown in the AIS of all account holders to enable the submission of feedback. Sometimes, cash withdrawals from accounts other than the current account are reported by the Reporting Entity in SFT-004. The information will be shown in the AIS of all account holders to enable the submission of feedback. Information pertaining to Cash withdrawals is reported by reporting entity through TDS statement 26Q. This information is provided by the deductor to the taxpayer in Form 16A.

13. Cash payments

Information pertaining to Cash payments for goods and services is reported by reporting entity in form 61A. Information pertaining to the Purchase of bank drafts or pay orders or banker’s cheque in cash is reported by reporting entity in form 61A. Information pertaining to the Purchase of prepaid instruments in cash is reported by reporting entity in form 61A.

14. Outward foreign remittance/purchase of foreign currency

Information of outward foreign remittance is reported by the authorized dealers in form 15CC. Information about Remittance under LRS for an educational loan taken from financial institutions mentioned in section 80E (Third proviso to Section 206C(1G)) is reported by the authorized dealer through TCS form 27EQ for specified foreign remittances made by remitter PAN. Information about Remittance under LRS for purposes other than for the purchase of overseas tour packages or for an educational loan taken from a financial institution (Section 206C(1G(a))) is reported by the authorized dealer through TCS form 27EQ for specified foreign remittances made by remitter PAN.

15. Receipt of foreign remittance

Information relating to the payment of royalty or fees for technical services etc., paid to non-residents is reported by the deductor in form 27Q. This information is provided by the deductor to the deducted (taxpayer) in Form 16A. Information is reported by the authorized dealers in form 15CC for foreign remittances made by remitter PAN. Information of receipt of foreign remittance by a remittee is reported by an authorized dealer in form 15CC.

16. Foreign travel

Information is reported by the deductor in TCS form 27EQ (quarterly statement). This information is provided by the collector to the taxpayer in Form 16D. Payment in connection with travel to any foreign country may be reported in Form 61 if the PAN is not furnished by the transacting party. PAN is populated based on aadhar and other attributes of the person.

17. Interest on bonds and government securities

Information relating to interest paid is reported by the payer in form 27Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

18. Insurance commission

Information about the insurance commission received is reported by the payer in Form 26Q on a quarterly basis. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

19. Receipts from a life insurance policy

Receipts from a life insurance policy are exempt under section 10(10D) subject to conditions specified therein. If such conditions are not met, the receipts become taxable and tax is also deducted u/s 194DA. The information is reported by the payer in Form 26Q on a quarterly basis. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

20. Withdrawal of deposits under the national savings scheme

Withdrawals from NSS are taxable. Tax is also deducted on such withdrawals and reported in Form 26Q by the payer on a quarterly basis. This information is provided by the deductor to the deducted (taxpayer) in Form 16A.

21. Sale of land or building

Sales consideration of immovable property transferred is reported under the Statement of Financial Transactions (SFT). The information will be shown in the AIS of all sellers to enable the submission of feedback. The sale of immovable property is also reported in Form 61 where PAN is not furnished by the transacting party. PAN is populated based on aadhaar and other attributes of the person. Information related to receipts under the specified agreement is reported by the person making payment for the specified agreement entered into. This information is provided by the deductor to the deducted (taxpayer) in Form 16A.

22. Receipts from the transfer of immovable property

Information related to receipts from the transfer of immovable property is reported by the buyer of property in Form 26QB. This information is provided by the deductor to the deductee (taxpayer) in Form 16B.

23. Sale of vehicle

The sale of a motor vehicle is reported in Form 61 where PAN is not furnished by the transacting party. PAN is populated based on aadhaar and other attributes of the person.

24. Sale of securities and units of mutual fund

In the SFT reporting of depository transactions, the estimated sale consideration for the debit transaction is determined by the best possible available price of the asset with the depository (e.g. end of day price). The taxpayer will be able to modify the sales consideration and other related information before filing the return. In the SFT reporting of depository transactions, the estimated sale consideration for the debit transaction is determined on the best possible available price of the asset with the depository (e.g. end of day price). The taxpayer will be able to modify the sales consideration and other related information before filing the income tax return.

25. Off-market debit transactions

In the SFT reporting of depository transactions, the depository reports details of off-market debit transactions. The value of the transaction is computed on the basis of the end-of-day price of the security. In case, the consideration is available, the same is also shown.

26. Off-market credit transactions

In the SFT reporting of depository transactions, the depository reports details of off-market credit transactions. The value of the transaction is computed on the basis of the end of day price

27. Purchase of immovable property

Information relating to immovable property is reported by the Property Registrar through SFT. The information will be shown in the AIS of all buyers to enable the submission of feedback. The buyer at the time of making a payment towards the purchase of property is liable to deduct tax from the amount paid to the seller subject to the threshold applicable. This information is reported in form 26QB. Seller of property reports the details of property buyer in schedule CG of ITR. Payment for the purchase of immovable property may be reported in Form 61 if the PAN is not furnished by the transacting party. PAN is populated based on aadhaar and other attributes of the person.

28. Purchase of vehicle

Information is reported by the deductor in TCS form 27EQ (quarterly statement). This information is provided by the collector to the taxpayer in Form 16D. Payment for the purchase of a motor vehicle may be reported in Form 61 if the PAN is not furnished by the transacting party. PAN is populated based on aadhaar and other attributes of the person.

29. Purchase of time deposits

Information relating to the Purchase of Time deposits is reported by reporting entities (such as the bank) in the Statement of Financial Transaction (SFT). Information pertaining to investment in Time deposit is reported in Form 61 where PAN is not furnished by the transacting party. PAN is populated based on aadhaar and other attributes of the person.

30. Purchase of securities and units of mutual funds

Information is reported by reporting entity in the Statement of Financial Transaction (SFT). Purchase of shares (including share application money). Information is reported by reporting entity in the Statement of Financial Transaction (SFT). Information is reported by reporting entities (such as mutual fund companies) in the Statement of Financial Transaction (SFT).

31. Credit/Debit card

Information pertaining to the application for issuance of credit/debit card is reported in Form 61 where PAN is not furnished by the transacting party. PAN is populated based on aadhaar and other attributes of the person.

32. Balance in account

Details of bank accounts other than saving and time deposits opened during the year, as reported in Form 61. Bank account with a balance exceeding 50,000 at the closing of the Financial year, as reported in Form 61.

Details relating to non-resident financial transaction 

1. Interest from specified company by a non-resident u/s 115A(1)(a)(iiaa)

Information relating to interest paid is reported by the payer in form 27Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

2. Income in respect of units of non-resident u/s 115A(1)(a)(iiab)

Information about income in respect of units of Non-Resident is reported by the payer in form 27Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

3. Income and long-term capital gain from units by an offshore fund u/s 115AB(1)(b)

Information about income and long-term capital gain from units payable to an offshore fund is reported by the payer in form 27Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

4. Income and long-term capital gain from foreign currency bonds or shares of Indian companies u/s 115AC

Information about income and long-term capital gain from foreign currency bonds or shares of Indian companies is reported by the payer in form 27Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate. This information is provided by the deductor to the deducted (taxpayer) in Form 16A.

5. Income of foreign institutional investors from securities u/s 115AD(1)(i)

Information about the income of foreign institutional investors from securities is reported by the payer in form 27Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

6. Payment to non-resident sportsmen or sports association u/s 115BBA

Information pertaining to the amount paid to non-resident sportsmen or sports associations is reported by the deductor in form 27Q. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

 

Details of business and transaction 

The chartered accountant in Mumbai shares the details of business and transactions blow

1. Business receipts

Information pertaining to the amount paid to the contractor is reported by the contractee in form 26Q. This information is provided by the deductor to the deductee (taxpayer) in Form 16A. Information pertaining to the amount paid to the service provider is reported by the recipient of services in form 26Q. This information is provided by the deductor to the deductee (taxpayer) in Form 16A

2. Business expenses

Information pertaining to the purchase of alcoholic liquor is reported by tax collectors in TCS form 27EQ (quarterly statement). This information is provided by the collector to the taxpayer in Form 27D.

3. Miscellaneous payments

Information is reported by the person making payment in form 26QD. This information is provided by the deductor to the taxpayer in Form 16D. Purchase of bank drafts or pay orders may be reported in Form 61 if PAN is not furnished by the transacting party. PAN is populated based on aadhaar and other attributes of the person

4. Income distributed by business trust

Information relating to income from units of a business trust is reported by the payer in form 27Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate.

5. Income distributed by investment fund

This information is reported by the deductor in Form 26Q on a quarterly basis So now the income tax department knows more about you & you have to be very careful in the next ITR filing plus proper records to be maintained by all for the above list of items as anytime department will ask about it

6. Receipt of commission etc. on sale of lottery tickets

Commission on lottery business is subject to tax deduction under section 194G. The payer reports such information in Form 26Q on a quarterly basis. This information is provided by the deductor to the deductee (taxpayer) in Form 16A

7. Income from investment in securitization trust

Income from the investment made in a securitization trust is subject to a tax deduction. The payer reports such information in Form 27Q on a quarterly basis. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

8. Income on account of repurchase of units by MF/UTI

Receipt of income on account of repurchase of units by MF/UTI is subject to tax deduction under section 194F. The payer reports such information in Form 26Q on a quarterly basis. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

9. Interest or dividend or other sums payable to the government

Income from interest or dividends or other sums payable is not subject to a tax deduction. The payer reports such information in Form 26Q on a quarterly basis. This information is provided by the deductor to the deductee (taxpayer) in Form 16A

10. Rent on plant & machinery

The tenant paying rent is liable to deduct tax at the applicable rate as per the Act from rent paid. Details of rent on Plant & Machinery are reported by the deductor in TDS form 26Q. The tenant furnishes the details of rent paid on a quarterly basis. This information is provided by the deductor to the deducted (taxpayer) in Form 16A.

11. Winnings from lottery or crossword puzzle

The payer is liable to deduct tax at the applicable rate as per act from winnings from lottery or crossword puzzle etc. Information about winnings is reported by the payer in TDS form 26Q. Information is reported on a quarterly basis. Income is taxable at a special rate. This information is provided by the deductor to the deductee (taxpayer) in Form 16A.

12. Winnings from horse race

The payer is liable to deduct tax at the applicable rate as per act from winnings from the Horse race. Information about winnings is reported by the payer in TDS form 26Q. Information is reported on a quarterly basis and is chargeable to tax at a special rate. This information is provided by the deductor to the deducted (taxpayer) in Form 16A.

 

Conclusion

The new statement Annual Information Statement (AIS) would provide almost all the details about your financial transactions during the year. So far Form 26AS provides information related to taxable income and tax deducted at source (TDS), which will now be replaced with the Annual Information Statement (AIS). The new AIS statement will provide comprehensive information about the taxpayer and will be significantly useful while preparing the tax return and every taxpayer must consider the details reflect in AIS to avoid further notice from the Income-tax department.

We Jain Anurag & Associates, the best ca firm In Mumbai provide all consultancy services to individuals, HNI, NRI, corporate, and start-ups so for any further consultancy you can connect to us.

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LOWER-INCOME TAX FOR DOMESTIC COMPANIES UNDER SECTION 115BAA

The government of India has introduced the Taxation (Amendment) Ordinance 2019 on the 20th of September 2019 where Several amendments are made to the Income Tax Act,1961. Most important changes such as corporate tax rate cut for domestic companies and as well as for manufacturing companies was announced.  MAT rate has also been reduced from the current 18.5% to 15%.

This new section for lower taxation will definitely provide benefits for newly registered companies and existing companies to pay lower taxes and use the money to grow their business.

The top ca firm in Mumbai is discussing the latest provision as below heading.

  1. A new section was inserted under which the government reduced tax for domestic companies.
  2. Eligibility criteria of section 115BAA to avail lower tax rate.
  3. The new effective rate is applicable to domestic companies.
  4. Option for the company to opt out the section 115BAA.

1. SECTION INSERTED UNDER WHICH GOVERNMENT REDUCED TAX FOR DOMESTIC COMPANIES

New section 115BAA has been inserted in the Income Tax Act,1961 where the domestic company has the option to pay tax @ 22% subject to fulfill certain conditions mentioned in the section and the same is applicable from the FY 2019-20 (AY 2020-21) onwards.

2. ELIGIBILITY CRITERIA OF SECTION 115BAA TO AVAIL LOWER TAX RATE UNDER SECTION 115BAA.

All domestic companies shall have an option u/s 15BAA to pay corporate income tax @ 22% (plus applicable surcharge and cess), subject to the following conditions as below.

  1. Such companies should not avail any exemptions/incentives under different provisions of income tax. so the total income of such company shall be computed without:
    • Claiming any deduction especially available for units established in SEZ under section 10AA
    • Claiming additional depreciation under section 32 and investment allowance under section 32AD towards new plant and machinery made in notified backward areas in the states of Andhra Pradesh, Bihar, Telangana, and West Bengal.
    • Claiming deduction under section 33AB for tea, coffee, and rubber manufacturing companies.
    • Claiming deduction towards deposits made towards site restoration fund under section 33ABA by companies engaged in extraction or production of petroleum or natural gas or both in India.
    • Claiming a deduction for expenditure made for scientific research under section 35.
    • Claiming a deduction for the capital expenditure incurred by any specified business under section 35AD.
    • Claiming a deduction for the expenditure incurred on an agriculture extension project under section 35CCC or on a skill development project under section 35CCD.
    • Claiming deduction under chapter VI-A in respect to certain incomes, which are allowed under section 80IA, 80IAB, 80IAC, 80IB, and so on, except deduction under section 80JJAA.
    • Claiming a set-off of any loss carried forward from earlier years, if such losses were incurred in respect of the aforementioned deductions.
  2. Such domestic companies will have to exercise this option to be lower-taxed under the section 115BAA on or before the due date of filing income tax returns i.e normally 30th September of the assessment year and once the company opts for section 115BAA in a particular financial year, it cannot be withdrawn subsequently.

3. NEW EFFECTIVE RATE APPLICABLE TO DOMESTIC COMPANIES

The new effective tax rate, which will apply to domestic companies availing the benefit of section 115BAA is 25.168%. The calculation of the effective tax rate is as below.

Base Tax Rate                        –   22%

Surcharge Applicable           –   2.20%

@10% on Base rate

Cess @ 4% on total tax   –        0.968%

Total Tax                                – 25.168%

Most importantly such companies will not be required to pay minimum alternate tax (MAT) under section 115JB of the act.

Domestic companies who opting for section 115BAA will not be able to claim MAT credits for taxes paid under MAT during the tax holiday period so companies would not be able to reduce their tax liabilities under section 115BAA by claiming MAT credits that they have paid earlier years. CBDT can issue a clarification on MAT credits in case of companies opting for tax under section 115BAA.

Further, the domestic company opting for section 115BAA shall not be allowed to claim set-off of any brought forward depreciation (additional depreciation) for the assessment year in which the option has been exercised and future assessment years.

We should keep in mind that there is no timeline for the domestic companies to choose a lower tax rate under section 115BAA. So such companies can avail the benefit of section 115BAA after claiming the brought forward loss on account of additional depreciation and also utilizing the MAT credit against the regular tax payable if any.

4. OPTION FOR THE COMPANY TO OPT OUT THE SECTION 115BAA

Option u/s 115BAA for lower taxation if company OPT cannot be withdrawn subsequently so it is advisable for domestic companies to before avail lower tax rate mentioned in the section, such companies should avail all their tax holiday period or exemptions/incentives as mentioned above because no time has been defined in the section to OPT the option so in nay financial year companies can avail this option.

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Insolvency Resolution Professional (IRP) is appointed to conduct the insolvency resolution process in accordance with the procedure laid down in the Code. He is a professional with specialized knowledge, training and is recognized by the Insolvency Professional Agency and Insolvency and Bankruptcy Board of India for undertaking insolvency proceedings. The IRP is registered and regulated by the Board. They have a critical role in transactions under the Code. Insolvency Process under the Code starts with a Financial Creditor, an operational creditor or corporate applicant as the case may be who makes an application to the Adjudicating Authority about the debt default by the Corporate together with the name of IP who has consented to act as an interim IP. If no reference is made to the Board about the name of IP, the Adjudicating Authority makes reference to the Board. A financial creditor is a person to whom a financial debt is owed and the loan is disbursed against the consideration for the value of money borrowed etc. Operational debtor refers to an operational debt in respect of the provision of goods and services including employment, repayment of dues to the Govt. authorities, or any local authority.
Duties and functions of Insolvency Professionals:
The Make My Filing Insolvency process under the code should be completed in 180 days from the date of application by the applicant with a one-time extension of 90 days. The duties of an Insolvency professional are quite onerous having regard to the role and responsibility cast on the IP. The duties of IP are:

  • To do a public announcement of the insolvency process in English language newspaper and regional language newspaper circulating at the location of corporate registered office and the principal office etc.
  • To manage the affairs of the debtor as a going concern;
  • To collect information relating to the assets, finances, and operations of the corporate debtor for determining the financial position;
  • To collect all claims received from creditors;
  • To constitute a committee of creditors.

The code also specifies functions and obligations to be observed by the Insolvency Professionals. Where any insolvency resolution, fresh start, liquidation, or bankruptcy process has been initiated, it shall be the function of Insolvency Professionals to take such actions as may be necessary for the manner provided in the Code.

Conclusion:
The Insolvency services professional occupies a strategic position and acts as an intermediary between the debtor/creditors on the one hand and the Adjudicating Authority on the other hand and functions under the watchful eyes of the Agency and the Board. The major benefit is that the process is strictly in a time-bound manner and there is no intervening by other legal authorities so the bank can recover their money in a timely and on the other side operational creditors whose money is due but not paid by debtors can be recovered through this legal process.

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About Cryptocurrency

India has nearly 15-20 million cryptocurrencies with total holdings of above $5 billion which shows vast interest among cryptocurrency investors. With this rapid growth, several crypto- unicorns are emerging. The estimates also highlight that the possible contribution of digital assets will be at $1.1 trillion by 2032.

In this year's Union Budget 2022, Finance Minister Nirmala Sitharaman announced the proposal declaring cryptocurrencies, non-fungible tokens, and any other asset are under ‘Virtual Digital Assets’ which are now subject to gains tax, which is similar to shares in the stock market.

Even as the VDA tax rate is high, investors are happy with the fact that crypto has gained some recognition by finding a mention in the official Budget document for taxation purposes. However, Finance Minister Nirmala Sitharaman has clarified that the imposition of tax on income from VDAs including cryptocurrency doesn't mean they have been declared legal. While much clarity on the legality of cryptocurrency will come through the upcoming bill to regulate Virtual Digital Assets, a number of cryptocurrency investors are confused about the calculation of their tax liability.

In the Union Budget 2022, it has been proposed to introduce a new Section 115BBH for taxation of persons whose sources of income include income from transfer of VDAs. “The proposed section 115BBH seeks to provide that where the total income of an assessee includes any income from transfer of any Virtual Digital Asset, the income tax payable shall be the aggregate of the amount of income-tax calculated on the income of transfer of any Virtual Digital Asset at the rate of 30% and the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the aggregate of the income from transfer of Virtual Digital Asset,” Budget 2022 Memorandum said.

The finance bill memo explicitly states that no deduction in respect of any expenditure (other than the cost of acquisition of a digital asset) or allowance or set-off of any loss shall be allowed to the assessee under any provision of the Act while computing income from transfer of Virtual Digital Assets. Cryptocurrency investors cannot set off any loss arising from the transfer of Virtual Digital Assets and such loss will not be allowed to be carried forward to subsequent assessment years. Surpluses will be taxed and losses cannot be used to set off against profits. Those who receive cryptocurrency as gifts will have to pay tax too.

Taxability on Cryptocurrency

When will you have to pay 30% tax on income from cryptocurrency?

According to the Budget document, 30% tax on cryptocurrency and other VDAs would be applicable from Assessment Year 2023-24. That means all your income from cryptocurrency transactions in FY 2022-23 will be taxed at the rate of 30%. Investors can pay tax on income from cryptocurrency and NFTs till the end of FY 2021-22 as per the existing taxation rules.

For example, if one invests ? 1,00,000 in crypto, and sells it at ? 1,25,000. The investor needs to pay the tax on the profit which is ? 25,000 rather than paying tax on the total amount.
This 30 percent tax on profit also takes into account a 1 percent Tax Deducted at Source (TDS) deposited by the facilitator, exchanges, or a person who is responsible for paying the consideration on every cryptocurrency transaction.

Will you have to pay tax on both gains and losses from cryptocurrency?

Losses arising from the transfer of crypto assets cannot be set off against any other income and also cannot be carried forward. However, the loss arising from the transfer of crypto assets can be set off against gain arising from the transfer of crypto assets in the same financial year.

For example, an individual has a salary income of Rs.20 lakh, gain on sale on Bitcoin of ? 5 lakh, and loss on sale on Ethereum of ? 2 lakh. S/he can set off the loss and the net gain from the sale of crypto assets (both Bitcoin and Ethereum) of ? 3 lakh would be subject to tax @30% plus applicable surcharge (nil in this case) and cess (1.2% viz 4% of 30% tax) resulting in an effective tax rate of 31.2%. The salary income of Rs.20 lakh will be subject to tax at the normal tax slabs ranging from 5% to 30% (plus surcharge and cess) and would also depend on whether the assessee has opted for the optional tax regime under section 115BAC of the IT Act or the pre-existing tax slabs. However, any loss incurred because of investments in this asset class cannot be set off against income from any other sources. In other words, if you incur a loss of ? X from investments in crypto and a profit of ? Y in the stock market, you cannot claim that you would pay a tax on ? Y- ? X. On the other hand, if you get a profit of ? X from investments in crypto and a profit of ? Y in the stock market, you will have to pay taxes on both X and Y.

Will you have to pay more than 30% tax on cryptocurrency income?

While further clarity is required from the Government in this regard, experts' views differ on whether a cryptocurrency investor would have to pay just 30% tax or effectively more than that due to surcharges. The effective tax to be paid on income from transfer of cryptocurrencies, NFTs or other Virtual Digital Assets may be more than 30% as this flat rate is exclusive of applicable surcharge and cess.

Will you have to pay tax for holding cryptocurrency?

You will have to pay tax only when you earn an income from transaction, transfer, or exchange of cryptocurrency or other Virtual Digital Assets. No tax is to be paid for holding cryptocurrency, according to the best ca firm in vashi Navi Mumbai.

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