Higher tax on fictitious odd activities like tuition, knitting, stitching etc. to build capital

https://www.taxmann.com/topstories/105010000000014184/higher-tax-on-fictitious-odd-activities-like-tuition-knitting-stitching-etc-to-build-capital.aspx

FORM 27BA AND FORM 26A

Chartered Accountant Certificate Form 27BA, 26A-When assessee not treated in default for failure to deduct collect or pay income tax u/s 201 or 260C

As per section 201 of the Income Tax Act, 1961 where any person including the principle officer of a company who was responsible for the deduction of tax at source under the provisions of Chapter XVII, commits a default and either;

(a) does not deduct tax at source while making a payment or
(b) after deducting the tax fails to pay whole or any part thereof to the credit of the government

Then such person shall be deemed to be the assessee in default. Being declared as assessee in default exposes the defaulters to many penal consequences. 

Similar provisions are contained in sub-section (6) of section 206C of the Income tax Act, 1961 related to defaults in collecting or payment of Tax Collected at Source.

However both section 201 and 206C contains proviso which provide for relief from being declared as assessee in default on production of a certificate from a chartered accountant in the prescribed format. There are three conditions which are required to be certified by the chartered accountant.

The relevant provisos along with three prescribed conditions are as under:

Section-201(1)

Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident-

Section-206C(6A)

Provided that any person, other than a person referred to in sub-section (1D), responsible for collecting tax in accordance with the provisions of this section, who fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an assessee in default in respect of such tax if such buyer or licensee or lessee-

PRESCRIBED CONDITIONS

(i) has furnished his return of income under section 139

(ii) has taken into account such sum for computing income in such return of income; and

(iii)has paid the tax due on the income declared by him in such return of income

The said certificate from chartered accountants should be in prescribed form as under:

Section	Prescribed Form
201(1)	Form No 26A (Rule 31ACB)
206C(6A)	Form 27BA (Rule 37J)

Amount not dedcutible u/s 40(a)(ia) Please Note that if compliance is made in accordance with the provisio of section 201(1) as above, then for the purpose of section 40(a)(ia) also, it is deemed that the assessee has deducted and paid the tax on the date of furnishing or ITR.  

CA Poonam Jain

poonam.ca.jain@gmail.com

Late filing fees u/s234e

Late Fee cannot be levied in respect of TDS Statements filed before 01.06.2015: ITAT Pune [Read Order] January 17, 2017 |

Recently, in Vidya Vardhani Education and Research Foundation & Ors v. DCIT, the division bench of the Pune ITAT held that late fee under section 234E of the Income Tax Act cannot be levied in respect of TDS statements filed before 01.06.2015 since the said section does not have retrospective effect.
The bench was hearing a bunch of appeals filed against the proceedings under section 200A(3) of the Income-tax Act, on the issue of charging of late fees under section 234E of the Act for belated filing of TDS returns. The appellants, relying upon various decisions, contended that late fee cannot be levied in respect of TDS statements which were filed prior to 01.06.2015 since the provision is not retrospective in nature.
Allowing the appeals, the bench said, “the Legislature had inserted clause (c) to section 200A(1) of the Income Tax Act specifically w.e.f. 01.06.2015 and the case of assessee before us was that in such circumstances where the said amendment was introduced w.e.f. 01.06.2015 and there was nothing to suggest that the said amendment was clarificatory or retrospective in nature, then no such late fees could be charged under section 234E of the Income Tax Act in respect of TDS statements which were filed prior to 01.06.2015.” The bench recalled its order in Maharashtra Cricket Association Vs. DCIT wherein it was held that section 234E of the Act have prospective application only. Based on the above decision, it was held that “where the amendment to section 200A(1) of the Income Tax Act is procedural in nature, then the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Income Tax Act. Accordingly, intimation issued by the Assessing Officer under section 200A of the Act in all the appeals does not stand and the demand raised by charging the fees under section 234E of the Act is not valid and the same is deleted.”

ICAI KYC NORMS

December, 12th 2016

ANNOUNCEMENT OF KYC NORMS

All the members of Institute of Chartered Accountants of India (ICAI), who are in

practice, are hereby informed that the Council has formulated the Know Your Client

(KYC) norms at it's 356th Meeting held on 29th, 30th June and 1st July, 2016.

KNOW YOUR CLIENT (KYC) NORMS
The financial services industry globally is required to obtain information of their clients
and comply with KYC norms. Keeping in mind the highest standards of Chartered Accountancy profession in India, the Council of ICAI thought it necessary to issue such norms to be observed by the members of the profession who are in practice. In light of this background, the Council of ICAI approved the following KYC Norms which are mandatory in nature and shall apply in all assignments pertaining to attest functions.

INDIVIDUAL/ PROPRIETOR	GENERAL INFORMATION	ENGAGEMENT INFORMATION	REGULATORY INFORMATION
	NAME	TYPE OF ENGAGEMENT INFORMATION
	PAN/ADHAR
	BUSINESS DESCRIPTION
	COPY OF LAST AUDITED FINANCIAL STATEMENT
CORPORATE ENTITY	GENERAL INFORMATION	ENGAGEMENT INFORMATION	REGULATORY INFORMATION
	NAME & ADRESS OF ENTITY	TYPE OF ENGAGEMENT INFORMATION	COMPANY PAN NO
	BUSINESS DESCRIPTION		COMPANY IDENTIFICAITON NO
	COPY OF LAST AUDITED FINANCIAL STATEMENT		DIRECTOR'S NAME & ADDRESS
	NAME OF PARENT COMPANY IN CASE OF SUBSIDARY		DIRECTOR'S IDENTIFICATION NO
NON -CORPORATE ENTITY	GENERAL INFORMATION	ENGAGEMENT INFORMATION	REGULATORY INFORMATION
	NAME & ADRESS OF ENTITY BUSINESS DESCRIPTION COPY OF LAST AUDITED FINANCIAL STATEMENT NAME OF PARENT COMPANY IN CASE OF SUBSIDARY	TYPE OF ENGAGEMENT INFORMATION	FIRMS PAN NO PARTNER'S NAME & ADDRESS PARTNER'S PAN /ADHAR/DPIN NO

LTCG FOR NRI

Section - 112, Income-tax Act, 1961

 [Tax on long-term capital gains.

112. (1) Where the total income of an assessee includes any income, arising from the transfer of a long-term capital asset, which is chargeable under the head "Capital gains", the tax payable by the assessee on the total income shall be the aggregate of,—

(a) in the case of an individual or a Hindu undivided family, [being a resident,]—

(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been his total income ; and

(ii) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent :

Provided that where the total income as reduced by such long-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at the rate of twenty per cent ;

                                                                                                                      

(b) in the case of a non-resident (not being a company) or a foreign company,—

(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and

[(ii) the amount of income-tax calculated on long-term capital gains [except where such gain arises from transfer of capital asset referred to in sub-clause (iii)] at the rate of twenty per cent; and

(iii) the amount of income-tax on long-term capital gains arising from the transfer of a capital asset, being unlisted securities, calculated at the rate of ten per cent on the capital gains in respect of such asset as computed without giving effect to the first and second proviso to section 48;]]

Conclusion

Resident Indian and Resident HUF can adjust LTCG against the basic exemption limit.

A Non-Resident Individual or Non-Resident HUF cannot adjust LTCG against the basic exemption limit. Therefore, in the case of NRI even if the taxable income is NIL and he has booked long term capital gain against the capital asset. NRI has to pay LTCG tax at the rate depending on the asset class.

EPF withdrawal amount: Taxation

• If a salaried employee opts for withdrawal after continuous service of five years or above, there will be no TDS deduction on the amount.
• It is important to note that if withdrawal is made before the completion of five years of continuous service, the amount withdrawn will be taxable.
• According to new EPF rules announced by the finance minister in budget for financial year 2015-16, EPF withdrawal (taxable) will attract TDS deduction at the rate of 10% (in cases of registered PAN) or up to a maximum of 30% (in cases of unregistered PAN). However, no TDS will be deducted if the withdrawal amount is under Rs.30,000.
• It is important to note that an individual can submit form 15G during the time of withdrawal if his or her income is less than the basic exemption limit even after the addition of the provident fund withdrawal amount. If a subscriber does not submit his or her PAN, TDS will be deducted at 34% on his or her withdrawn amount. If salaried persons want to avoid TDS, they can submit form no. 15H (senior citizens) or 15G for amount up to Rs.3 lakh and Rs.2.5 lakh respectively (both the said forms are declaration forms which can be used by employees whose income is less than the taxable amount).
• It is important to note that there will be no TDS deduction in cases of transfer of a provident fund account and termination of an employment contract as a result of failing health (employee), cessation/discontinuation of a business venture (employer) or any other cause which may not be in the domain of an employee.

​

Poonam Jain

Chartered Accountant

​Email: poonam.ca.jain@gmail.com

TDS RATE CHART FY 2016-17 AY 2017-18

TDS RATE CHART FY 2016-17 AY 2017-18 (%)
Sec	Nature of Payment	Cut off (Rs.)	Indi/HUF	Others
192	Salaries	-	Avg rates	NA
192A	Premature withdrawal from EPF	30000 (50000)	10	NA
193	Interest on securities	10000	10
194	Dividends	2500	10
194A	Interest Banks/Other	10000/5000	10
194B	Winning from Lotteries	10000	30
194BB	Winnings from Horse Race	5000 (10000)	30
194C	Contractor-Single/Yearly	30K/75K(1Lakh)	1	2
	Transporter(44AE) Declaration with PAN	As above	-	-
194D	Insurance Commission	20000 (15000)	10(5 %)
194DA	Life insurance policy	100000	2 (1%)
194EE	NSS	2500	20 (10%)	NA
194G	Commission /Lottery	1000(15000)	10(5%)
194H	Commission / Brokerage	5000 (15000)	10(5%)
194I	Rent Land  and  Building F&F	180000	10
194I	Rent-Plant/Machinery/equipment	180000	2
194IA	Immovable property	50 Lakh	1
194J	Professional Fees	30000	10
194LA	Immovable Property	2 Lakh (2.5 Lakh)	10

Entries in Red color are applicable wef 01.06.2016