As Narendra Modi government gets set to crack GST whip on tax evaders, India Inc voices concern

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According to Section 132 of the Central GST Bill cleared by the Lok Sabha recently, the taxman can also proceed against anyone for wrongly availing input tax credits.

Many functionaries from corporate India and tax experts have voiced concerns over the government’s plan to give unprecedented teeth to the country’s indirect tax administrators by making tax evasion above `5 crore a “cognizable and non-bailable offence” in the upcoming Goods and Services Tax (GST) regime. According to Section 132 of the Central GST Bill cleared by the Lok Sabha recently, the taxman can also proceed against anyone for wrongly availing input tax credits or refunds above the same threshold, treating it as a cognizable and non-bailable offence, where the police have the authority to arrest the person concerned without warrant.

While non-remittance of tax deducted at source could lead to non-bailable warrant under the Income-Tax Act, this has been sparingly used – one recent instance was that of the Bengaluru High Court denying a request of the I-T department to issue a non-bailable warrant against the beleaguered businessman Vijay Mallya.  The punitive provisions under indirect tax laws have, however, been less biting.

The service tax department had invited the Delhi high court’s ire last September for arresting a senior executive of travel portal MakeMyTrip for failing to deposit tax after collecting it from those who booked hotel room nights via the portal. Disturbed over the fact that the arrest took place without even issuing a show cause notice to the firm and giving it an opportunity to defend itself, the court awarded costs to the travel portal and asked the taxman to refund the service tax collected after the arrest. The tax department went in appeal against the court’s decision and the matter is now before the Supreme Court.

“It may be reasonable to make “collection of tax but non-payment to government’ a non-bailable offence, as there is very little room here for interpretation in such case. But availing tax credits through wrong invoices or obtaining higher-than-admissible refunds are subject to technical interpretations in the early days of GST and it would be extremely stringent to make these non-bailable offences,” Bipin Sapra, Indirect Tax partner at EY said. Echoing the view, Anita Rastogi, partner-indirect tax, PwC India said the country’s indirect laws have never had such tough provisions against tax evasion.

Section 132 of the CGST Bill also spells out the punishment for tax evasions above Rs.1 crore: if the amount evaded exceeds Rs. 5 crore, imprisonment up to five years is possible along with fine, Rs. 2-5 crore evasion could lead to imprisonment extending to three years and fine, Rs.1-2 crore evasion could invite up to 1-year jail term and fine.

Source: http://www.financialexpress.com/economy/as-narendra-modi-government-gets-set-to-crack-gst-whip-on-tax-evaders-india-inc-voices-concern/613908/

New ITR forms for Assessment Year 2017-18 notified by CBDT

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The CBDT has notified new income-tax return forms (ITR forms) for the assessment year 2017-18. It has prescribed simplified version of ITR-1 with fewer columns. A new column has been inserted in ITR Forms to report cash deposits in banks above 2 lakhs during the demonetisation period, i.e., from November 9, 2016 to December 30, 2016.

CBDT had prescribed new ‘Form ITR 4 Sugam’ for taxpayers opting for presumptive taxation scheme. A new column has been prescribed to mention digital receipts as the rate of presumptive income is 6% for such receipts.

The new ITR forms prescribed are listed below:-

ITR_1 For Individuals having Income from Salaries, one house property, other sources (Interest etc.) and having total income upto Rs.50 lakh

ITR_2 For Individuals and HUFs not carrying out business or profession under any proprietorship

ITR_3 For individuals and HUFs having income from a proprietary business or profession

ITR_4 For Presumptive Income from Business & Profession

ITR_5 For persons other than – (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7

ITR_6 For Companies other than companies claiming exemption under section 11

ITR_7 For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)

Changes in new ITR forms are as follows.

1) Simplified one page ITR Form for Salaried class taxpayers

[ITR 1 Sahaj] Now the Govt. has notified simplified one page form ‘ITR-1 Sahaj’ for individuals earning income from salary, pension, one house property and income from other sources. It has removed columns which are not frequently used by the taxpayers.

New ‘ITR-1 Sahaj’ has retained those deductions which are most frequently used by the taxpayers, viz, under Section 80C, 80D, 80G and 80TTA.

If any taxpayer wants to claim deduction under any other provision of chapter VI-A he can specify the relevant Section in column titled as ‘Any other’. Schedules of TDS and TCS have been merged into one in order to make ITR 1 shorter and simpler.

However, new columns have been inserted to report dividend income and long-term capital gains exempt under Section 10(34) and Section 10(38) respectively.

2) Disclosure of cash deposits during demonetization

[ITR 1, 2, 3, 4, 5, 6, 7]  A new column has been introduced in all ITR Forms to report on cash deposited by taxpayers in their bank accounts during the demonetization period, i.e., from November 9, 2016 to December 30, 2016. However, taxpayers are required to fill up this column only if they have deposited Rs 2 lakh or more during the demonetization period.

3) Quoting of Aadhar Number

[ITR 1, 2, 3, 4] The Finance Bill, 2017 as passed by Lok Sabha has introduced a new Section 139AA requiring every person to quote Aadhar number in the return of income. If any person does not possess the Aadhaar Number but he had applied for the Aadhaar card then he can quote Enrolment ID of Aadhaar application Form in the ITR.

It may be noted that firms are also required to Quote Aadhaar number of their Partner/members in new ITR 5. Further, in case of trust Aadhaar number of Author(s) / Trustee(s) / Manager(s), etc., are required to be specified in new ITR 7.

4) Income taxable at special rates

Unexplained income     [ITR 2, 3, 5, 6, 7]

As per Section 115BBE any unexplained credit or investment attracts tax at 60% (plus surcharge and cess, as applicable), irrespective of the slab of income.

Now new columns have been inserted in ITR Forms under ‘Schedule OS’ to report such unexplained income under ‘Schedule SI’.

It may be noted that any taxpayer having unexplained income cannot opt for ITR-1 Sahaj.

Dividend above Rs 10 lakhs

As per Section 115BBDA the dividend received from domestic company is taxable at rate of 10% if aggregate amount of such dividend exceeds Rs. 10 lakh. New column has been inserted in ITR Forms to declare such dividend income in ‘Schedule OS’.

It may be noted that any taxpayer having dividend income above Rs 10 lakhs and covered under Section 115BBDA cannot opt for ‘ITR-1 Sahaj’.

Patent income

A new column has been inserted in ITR Forms to declare royalty income from patent developed and registered in India and chargeable to tax at 10% under section 115BBF.

5) Deduction under section 80EE

[ITR 2, 3, 4] Section 80EE allows deduction on home loan interest for first time home buyers. This deduction is over and above the Rs 2 lakhs limit covered under Section 24(b).

A new field has been provided in new ITR Forms under Schedule VI-A deductions to claim home loan interest under Section 80EE.

6) Declaration of value of assets and liabilities by Individuals/HUF earning above Rs 50 lakhs

[ITR 2, 3, 4] During 2016, the Govt. had introduced new Schedule requiring individuals/HUFs to declare the value of assets and liabilities if their total income exceeds Rs. 50 lakhs. Taxpayers were required to mention cost of immovable property, jewellery, bullion, vehicles, shares, bank and cash balance, etc.

Now tax payers are also required to disclose address of immovable property and description of movable assets in new ITR Forms. Further, new fields have been introduced in ITR Forms for disclosure of ‘Interest held in the assets of a firm or AOP as a partner or member’. Such members/partners are also required to disclose name, address, PAN of the firm or AOP.

7) Registration number of Chartered Accountant Firm

[ITR 3, 5, 6] Now taxpayers are required to mention registration number of firm of Chartered Accountant which has done audit in ITR Forms.

8) Bifurcation of receipt/expenses from business and profession in no account case.

[ITR 3, 5] In old ITR Forms there was no option to bifurcate income and expense of business and profession separately. All receipts were to be clubbed together and shown in ITR.

Now in new ITR forms, there is an option to show receipts from business and profession separately.

9) Deduction of additional depreciation in case of asset put to use for less than 180 days in preceding year

[ITR 3, 5, 6] In case of purchase of an asset which is put to use for less than 180 days, additional depreciation shall be restricted to 50% for that year and remaining would be allowable in the succeeding year.

In old ITR Forms, no column was there under ‘Schedule DPM’ to claim unutilized 50% additional depreciation in succeeding year. Now in new ITR Forms such column has been inserted to claim unutilized 50% depreciation.

10) Segregation of digital receipts and other receipts under presumptive taxation scheme

[ITR 4] As per the presumptive taxation scheme under Section 44AD, 8% of gross receipts or turnover will be deemed as income of the taxpayer. However, in 2017 Union Budget such limit has been proposed to be reduced to 6% for digital receipts of taxpayer.

In new ITR form, new columns have been inserted to show turnover received through digital mode. Consequently, columns have been inserted to show presumptive income at 6% and 8%.

The Finance Act 2016, had introduced the presumptive taxation scheme for professionals as well. Now new ITR 4 Form shows an option to avail such presumptive taxation scheme for professionals under Section 44ADA.

11) Details of receipts as mentioned in Form 26AS under TDS schedule

[ITR 4] ITR 4 which is now applicable for taxpayer opting for presumptive taxation scheme has a new column under the ‘Schedule TDS2’ to show the receipts as mentioned in Form 26AS.

12) Disallowance for non-deducting or non-payment of Equalisation levy

[ITR 3, 5, 6] The Finance Act, 2016 has introduced new provision to deduct 1% Equalization Levy on payment made for certain advertisement services paid to non-residents.

Any default in deduction or payment of Equalization levy would attract disallowance of Section 40(a)(ib). In new ITR Forms a new column has been inserted under ‘Part A-OI’ to mention such disallowance under section 40(a)(ib).

13) Disallowance of any amount payable for use of railway assets

[ITR 3, 5, 6] Any sum payable by the assessee to the Indian Railways for the use of railway assets shall be allowed as deduction on actual payment basis as per section 43B.

A new column has been inserted under ‘Part A-OI’ for disallowance under section 43B in case of non-payment of such amount on or before due date of furnishing return of income.

14) New schedule to report ‘receipt and payment’ account of a company under liquidation

[ITR 6] A new schedule ‘Part A-OL’ has been inserted in ITR 6 to furnish details of ‘receipt and payment’ account of company under liquidation.

15) Changes related to ITR 7 in respect of Charitable Trusts

[ITR 7] Various changes have been introduced in the new ITR 7 form. Now trust is required to furnish following additional details in new ITR 7 –

  1. a) Registration number and date of registration for business trusts registered with the SEBI.
  1. ) ‘Schedule AI’ to report aggregate of income referred to in section 11 and 12 excluding voluntary contribution.
  1. c) ‘Schedule ER’ to report amount applied to charitable or religious purposes (revenue account).
  1. d) ‘Schedule EC’ to report amount applied to charitable or religious purposes (capital account).
  1. e) ‘Schedule 115TD’ to report accreted income of trust under section 115TD

Government notifies simplified ITR forms; e-filing to start from April 1

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The government today notified a simpler, one-page form for filing income tax returns while making it mandatory to quote Aadhaar number and disclose bank deposits of more than Rs 2 lakh post demonetisation.

The Income Tax Return Form-1 (Sahaj) will replace the 7-page form, removing a plethora of columns on deductions from income claimed.

Sahaj can be filed by an individual having income of up to Rs 50 lakh from salary, house property and interest.

Currently, SAHAJ (ITR 1) is filed by salaried employees and ITR 2 by individuals and HUFs whose income does not include income from business.

The government has done away with form ITR 2A (used by individuals & HUFs not having income from business or profession and capital gains and by those who do not hold foreign assets).

Sahaj makes quoting of 12-digit biometric identifier Aadhaar number mandatory along with Permanent Account Number (PAN) and also seeks details of cash in excess of Rs 2 lakh that was deposited in bank accounts in the 50-day post demonetisation window.

ITR 2 and ITR 3 have a Schedule AL requiring assessees to declare their assets and liabilities at the end of the fiscal.

Only 6 crore out of 29 crore persons having PAN file income tax returns at present.

The e-filing facility for ITR-1 is enabled from April 1 and ITRs can be filed till the stipulated deadline of July 31.

While the old ITR form too had column to quote Aadhaar, the government has through an amendment to the Income Tax Act this week made quoting it mandatory.

“The Central Board of Direct Taxes has notified Income- tax Return Forms (ITR Forms) for the Assessment Year 2017-18. One of the major reforms made in the notified ITR Forms is the designing of a one page simplified ITR Form-1 (Sahaj),” CBDT said in a statement.

In the new form, parts relating to tax computation and deductions have been rationalised and simplified for easy compliance.

Besides personal details, an income tax filer needs to disclose only his income from salary or pension, one house property and other sources like interest. Thereafter, deduction claims are to be stated, followed by computation of taxable income.

Bank details are to be filled in the column following that. Details of advance tax, self-assessment tax payments and tax deducted at source come next.

In the column for providing bank details, cash deposited in excess of Rs 2 lakh during November 9 to December 30, 2016 has to be mentioned.

The rationalised ITR will “reduce the compliance burden to a significant extent on the individual tax payer,” the CBDT said, adding that the move would benefit more than two crore tax-payers who will be eligible to file their return of income in this simplified Form.

Instead of 20 columns of deductions in the old form, only four deductions claims in respect of Section 80C, 80D, 80G and 80TTA need to be filled.

“Simultaneously, the number of ITR Forms have been reduced from the existing nine to seven forms. The existing ITR Forms ITR-2, ITR-2A and ITR-3 have been rationalised and a single ITR-2 has been notified in place of these three forms,” it said.

Consequently, ITR-4 and ITR-4S (Sugam) have been renumbered as ITR-3 and ITR-4 (Sugam) respectively.

There will be no change in the manner of filing of ITR Forms and all the returns are to be filed electronically.

However, where return is furnished in ITR-1 (Sahaj) or ITR-4 (Sugam), an individual of the age of 80 years or more, an individual or HUF whose income does not exceed Rs 5 lakh and who has not claimed any refund in the return of income, have an option to file return in paper form.

At the time of filing the form, the taxpayer has to fill in PAN, Aadhaar number, personal information and information on taxes paid. TDS will be auto-filled in the form.

Post July 1, as per amendments to the Finance Bill 2017 as passed by the Lok Sabha, it would become mandatory for an assessee to provide the Aadhaar number or the number showing that he has applied for Aadhaar in the ITR.

Also ITR 4 (filed by Individuals & HUFs having income from a proprietary business or profession) will now be known as ‘Sugam’ and ITR-4S will be substituted.

“Going forward for AY 2017-18, the benefit of using the simplest ITR form i.e. ITR-Sahaj shall not be available to the following category of taxpayers: those earning total income of more than Rs 50 Lakh, those earning dividend income of more than Rs 10 lakh and those whose total income includes cash credits, unexplained investments, unexplained money etc,” said Nangia & Co Partner Suraj Nangia.

Similarly, ITR 4 (Sugam) cannot be used by the following category of taxpayers — those earning dividend income of more than Rs 10 lakh, those whose total income includes cash credits, unexplained investments, unexplained money etc.

“Owing to the aforesaid changes, taxpayers earning income for these sources will have to file a more detailed form containing disclosure in respect of their assets and liabilities, bank accounts etc,” Nangia said.