Deadline for filing revised or belated income tax return for past 2 assessment years is March 31

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The date you actually need to focus on is March 31, because that is the last day to file revised and belated income tax returns (ITR) for assessment years (AY) 2016-17 and 2017-18, with interest, if any, for late filing. This is not to be confused with the deadline for filing taxes for the current financial year, which is on or before July 31. Last year this deadline was extended till August, but the gesture may not be repeated.

So if you are yet to file older ITRs, “there’s still time” to “come clean” as a recent advertisement put out by the income tax department reminds folks. The ad goes on to exhort companies, firms, LLPs, trusts, associations and political parties (whose income prior to claim of exemptions exceeds the minimum chargeable to tax) to file taxes. Similarly, individuals earning over Rs 2.5 lakh have to pay income tax while the exemption limit for senior citizens (aged 60-80 years) is Rs 3 lakh and that for very senior citizens (over 80 years) is Rs 5 lakh.

“If you have deposited large amounts of cash in your bank account or made high value transactions, please consider the same while filing income tax returns,” says the communication, adding that “Non-filing or incorrect filing of return of income may result in penalty and prosecution”. The easy way to do it is online, either by logging into the tax department’s e-filing website (incometaxindiaefiling.gov.in) or the likes of Cleartax.com and Taxspanner.com, which are far more user friendly. Keep in mind that failure to file returns for the AY 2017-18 by March 31 means no second chances.

Belated filing, of course, poses serious drawbacks. Not only do you lose the opportunity to avail of select exemptions and carry forward losses (other than house property loss) for the assessment years for which ITR were not filed, you may have to shell out extra as interest under section 234A, perhaps even sections 234B and 234C, which deal with advance tax. The latter is applicable on all individuals with a tax liability exceeds Rs 10,000 after your employer has deducted the TDS.

For any defaults in filing your ITR, according to Cleartax, “you will be charged an interest amount of 1% per month (simple interest) on the tax amount outstanding. This interest will be calculated from the due date applicable to you for filing of return of the applicable year till the date that you actually file your return.”

Here’s an example. Assume your total tax outstanding is Rs 1 lakh and you forgot to file your return. Your tax liability will calculated at 8% (8 months late till the end of the assessment year on March 31) of Rs 1 lakh, or Rs 8,000, over and above the tax amount that you are due to pay in any case.

That apart, “a penalty of Rs 5,000 shall be levied under section 271F”, says the FAQ on the income tax website. With effect from AY 2018-19, a new section 234F will come into play, under which the penalty for ITRs furnished on or before December 31 is Rs 5,000, but double that amount for later filings. However, penalty “shall be levied @ Rs 1,000 if total income does not exceed Rs 5,00,000” and if the tax evaded “exceeds Rs 25 lakh the punishment could be 6 months to 7 years” adds the website.

Also keep in mind that silly mistakes often creep in when one is trying to beat a deadline, like erroneously leaving a mandatory field empty or forgetting to report interest income. So make sure no discrepancies creep in while filing your returns, else you could be staring at a demand notice from the taxman, which means extra paperwork for you.

Thankfully, at least this headache will disappear from the next assessment year on. Earlier this month the CBDT announced that demand notices won’t be issued in cases of a minor mismatch between a taxpayer’s ITR and the corresponding tax credit data collected from banks and other financial institutions.

Source: Business Today

SEBI READIES P-NOTE FRAMEWORK FOR GIFT CITY

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Market regulator Sebi is readying a framework for issuance of participatory notes (p-notes) from international financial services centres such as GIFT City. It is in talks with FPIs, which act as issuers of p-notes, sources said. The move comes at a time when Indian bourses have terminated licensing of indices and data-feed agreements with their foreign counterparts. This will force overseas investors to either invest directly or come through GIFT City to trade in Indian securities.

The Securities and Exchange Board of India (Sebi) is readying a framework for issuance of participatory notes (p-notes) from the international financial services centres (IFSCs) such as GIFT City. P-notes are derivative instruments that allow overseas investors to invest in a domestic security without having to directly register with Sebi. The market regulator is in talks with foreign portfolio investors (FPIs), which act as issuers of P-notes, according to sources.

The move comes at a time when Indian bourses, including the National Stock Exchange (NSE), have terminated licensing of indices and data-feed agreements with their foreign counterparts.

The snapping of ties will force overseas investors, which use platforms like the Singapore Exchange (SGX) to trade in Indian securities, to either invest directly or come through GIFT City.

GIFT City is designed like an offshore trading platform with low transaction cost. Know-your-customer (KYC) documentation for p-notes issued from the IFSC would have to adhere to anti-money laundering laws, sources privy to the development said. The regulator, however, is expected to do away with strict trading restrictions on these instruments.

At present, no p-note subscriber is allowed to take a derivatives position in

■ Sebi to soon come up with a framework for issuance of p-notes from IFSC, Gujarat

■ The KYC documentation for p-notes from IFSC is likely to be on parwith p-notes issued by on-shore FPIs

■ However, Sebi is expected to relax the trading restrictions on p-notes issued from IFSC

■ On-shore subscribers of pnotes are not allowed to take any position in the Indian derivatives market

■ Indian stock exchanges recently terminated

the market for any other purpose apart from hedging. Also, there are restrictions on transfer of p-notes from one investor to another. According to experts, since the IFSC is a typical offshore destination where only derivatives are traded, Sebi is open to a less-stringent licensing of indices and data-feed agreements with foreign bourses

■ FPIs looking to invest in India can either invest directly or through the IFSC GIFT City, which offers tax benefits and liabilities

“Sebi recently conducted a meeting with some of the big FPIs that had sought the regulator’s permission to issue p-notes from the IFSC. The idea was to provide an entry to those investors who had lost trading opportunity due to the closing of offshore derivatives trading platforms like the SGX,” said another source privy to the development.

There was still a huge appetite among global funds for instruments such as p-notes because these did not amount to direct exposure, experts said. Despite the high KYC requirement, pnotes are still handy for investors that do not want to have a direct exposure to the Indian market due to restrictive laws in their own countries. P-notes also offer a cost advantage for funds that invest a marginal amount of their portfolio in Indian securities.

“The initial rules for p-note issuance from the IFSC could be much simpler with fewer restrictions on issuers since the whole concept was at an evolutionary stage. Once the instruments gain traction, the regulators concerned could consider tightening rules further,” said Tejesh Chitlangi, partner, IC Legal Universal.

The share of p-notes in total FPI investment has gone down significantly in the last decade with Indian regulators cracking down on their misuse. A decade ago, p-notes accounted for half of total FPI inflows. Now they just account for just 3.7 per cent.

Sebi in 2016 tightened KYC norms for p-notes. P-note issuers were asked to follow Indian anti-money laundering rules. Sebi also made it mandatory for FPIs to disclose the end beneficiary of Pnote subscribers.

Source: Press Reader

Qatar economy resilient, continues to perform well, says Seetharaman

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Qatar’s economy has proven its resilience and continues to perform well amid the blockade, improving local liquidity and gaining the confidence of international investors, said Doha Bank CEO Dr R Seetharaman.

“The blockade (on Qatar by a quartet of nations) came as a rude shock to us. But Qatar has withstood… it has proven to be a resilient model. Qatar’s economy was performing around 2.5% last year.

This year we are not expecting less than 3.1% growth,” Seetharaman told Gulf Times in an interview.

He said Qatar improved local liquidity by disinvestment last year.

“If you look at Qatar economy, liquidity was under stress to start with. The government improved local liquidity. Now international investors have reposed confidence in Qatar. The banking system as a whole is improving.

“The loan to deposit ratio in the Qatari banking system has significantly improved and now stands at 112%. This is an improvement of the level, immediately post blockade, which was at 116%.”

Qatar’s banking sector had witnessed credit expansion of around 9%, the deposit book has grown of more than 10.4%, he noted.

He said in the days that followed the blockade, there were challenges in terms of international investors slowing down on Qatar.

“They were concerned about the Qatar economic momentum. Even the rating agencies looked sceptical, which explains the negative outlook on the sovereign.”

But, Seetharaman said, Qatar’s ‘AA’ rating, which is still very high, has not been challenged although the international rating agencies have changed the sovereign outlook to negative. The high rating (A) of Qatar’s banks is also not challenged.

Currently, Qatar holds Aa- by Fitch, AA- by S&P and Aa3 by Moody’s.

“With strong exports, positive economic outlook, and natural gas markets unaffected by the economic blockade, the overall growth for Qatar remains sustainable,” Seetharaman noted.

The International Monetary Fund (IMF) in its latest World Economic Outlook revised up its forecast for world economic growth in 2018 and 2019, saying sweeping US tax cuts were likely to boost investment in the world’s largest economy and help its main trading partners.

Seetharaman also said new global forecast has a 3.9% growth this year and next. The advanced economies are expected to grow by 2.3% in 2018 and 2.2% in 2019.

The emerging and developing economies are expected to grow by 4.9% in 2018 and 5% in 2019.

India is projected to grow at 7.4% of its gross domestic product (GDP) in 2018 making it the fastest growing economy among emerging economies following last year’s slowdown due to demonetisation and the implementation of goods and services tax.

China, which is spearheading the ‘Belt and Road’ concept is expected to grow up to 6.6% this year, he added.

Source: Gulf Times

Shell companies crackdown: Govt removes exemptions from ITR filing

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The Union Budget 2018-19 has rationalised the I-T Act provision relating to prosecution for failure to furnish returns.

Seeking to crackdown on shell companies, the government has proposed to remove exemption available to firms with tax liability of up to Rs 3,000 from filing I-T returns beginning next fiscal.

The Union Budget 2018-19 has rationalised the I-T Act provision relating to prosecution for failure to furnish returns.

Thus, a managing director or a director in charge of the company during a particular financial year could be liable for prosecution in case of any lapse in filing I-T returns for any financial year beginning April 1.

“The income tax departments would now track investments by these companies. Also, the focus will be on those firms that show less profit and also those who file I-T returns for the first time,” a senior finance ministry official said.

There are around 12 lakh active companies in the country, out of which about 7 lakh are filing their returns, including annual audited report, with the ministry of corporate affairs. Of this, about 3 lakh companies show ‘nil’ income.

The Section 276CC of the Income Tax Act provided that if a person wilfully fails to furnish in due time the return of income, he shall be punishable with imprisonment and fine.

However, no prosecution could be initiated if the tax liability of an assessee does not exceed Rs 3,000.

The government has amended the provision with effect from April 1, 2018 and removed the exemption available to companies.

“In order to prevent abuse of the said proviso by shell companies or by companies holding benami properties, it is proposed to amend the provisions… so as to provide that the said sub-clause shall not apply in respect of a company,” it said.

The official said that as many as 5 lakh are companies not filing returns and they could be a potential source of money laundering. “These could be small firms which are engaged in honest business, but there could be some which are a potential threat. We have to look into the data.”

Nangia & Co Managing Partner Rakesh Nangia said though the amendment has been brought about to prevent abuse by shell companies/benami properties, checks similar to those placed in the law for invoking GAAR, should be in place to avoid genuine hardship.

“Though the taxman may be driven by compulsions to ensure proper tax compliance, care must be taken while taking such action. In most developing countries, prosecution for tax matters is applied only in cases of serious tax frauds and not in general compliance matters,” Nangia said.

The Budget announcement follows the recommendation of the task force on shell companies, which was set up in February last year.

In the government’s fight against black money, shell companies have come to the fore as they are seen as potential for money laundering.

Till the end of December 2017, over 2.26 lakh companies were deregistered by the MCA for various non-compliances and being inactive for long.

Shell companies are characterised by nominal paid-up capital, high reserves and surplus on account of receipt of high share premium, investment in unlisted companies, no dividend income and high cash in hand.

Also, private companies as majority shareholders, low turnover and operating income, nominal expenses, nominal statutory payments and stock in trade, minimum fixed asset are some of the other characteristics.

Since last year, the Central Board of Direct Taxes (CBDT) — the apex policy making body of the I-T department — has been sharing with the MCA specific information like PAN data of corporates, Income Tax returns (ITRs), audit reports and statement of financial transactions (SFT) received from banks.

 

Source: Times of India

IT raid cases not to be processed under e-assessment: CBDT

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The soon-to-be rolled out pan India e-assessment system for scrutiny cases of taxpayers will not be applicable to instances where a raid has been conducted against an assessee by the Income Tax (IT) department, the CBDT has said.

It has added that the current system of manual assessment will continue in cases, where the books of accounts or original documents have to be examined, the taxman has to conduct a third-party investigation and where the tax officer has to examine a witness.

It will also be applicable to cases where the taxman has issued a show-cause notice to the assessee, “contemplating any adverse view”, and cases where the taxpayer has requested for a “personal hearing” to explain the matter to the assessing officer.

The Central Board of Direct Taxes (CBDT), the policy- making body of the IT department, issued an instruction yesterday to further explain how the system would work, once fully operational.

“…It is hereby directed that except for search-related assessments, proceedings in other pending scrutiny assessment cases shall be conducted only through the e-proceeding facility…,” the instruction said.

It added that in ranges where the IT offices were not equipped with computer infrastructure and Internet services as of now, the taxman should “complete only 10 per cent of the scrutiny cases having the potential to effect recovery during the current year itself”.

If an assessee objects to the electronic assessment, it may be “kept on hold” for the time being, the instruction said.

Finance Minister Arun Jaitley had, in his budget speech, announced that the process of electronic assessment of tax returns would be launched in the country, which would “almost eliminate person-to-person contact, leading to greater efficiency and transparency”.

CBDT Chairman Sushil Chandra, during a recent interview with , had said the e-assessment procedure would henceforth be handled by two officers, instead of the current system involving a single assessing officer (AO).

The functionality to conduct the e-proceedings would be available for all types of notices, questionnaires and letters issued under various sections of the I-T Act, the CBDT had said earlier.

Source: Times of India

GST mop up could top Rs 1 trillion a month post anti-evasion steps

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Highlights
Once the GST return filing process stabilises, the DGARM will be put to action for 360 degree profiling and matching the database of people filing GST with I-T returns filed
Officials said the revenue estimates for next fiscal are conservative and could go up depending on enforcement actions taken by the government

Revenues from the Goods and Services Tax could cross Rs 1 lakh crore a month towards the end of next fiscal once anti-evasion measures like matching of tax data and e-way bill are put in place, finance ministry officials said on Tuesday.

Once the GST return filing process stabilises completely, the Directorate General of Analytics and Risk Management (DGARM) will be put to action for 360 degree profiling and matching the database of people filing GST with Income Tax returns filed, they said.

The government has budgeted about Rs 7.44 lakh crore from GST in the 2018-19 fiscal beginning April 1. The estimated collection for 8 months (July-February) of the current fiscal is Rs 4.44 lakh crore. The March collection will take place in April, the start of new financial year, 2018-19.

Officials said the revenue estimates for next fiscal are conservative and could go up depending on enforcement actions taken by the government.

Collections under the GST, implemented from July 1 last year, were over Rs 95,000 crore for the first month, while in August the figure was just over Rs 91,000 crore. In September, it was over Rs 92,150 crore, October (Rs 83,000 crore), November (Rs 80,808 crore) and December (Rs 86,703 crore).

As of December 2017, 98 lakh businesses were registered under the GST regime.

“We will soon start matching of the turnover shown in GST returns with the income returns filed with the I-T department. It could begin by second half of next financial year,” a senior finance ministry official said.

“Once these measures are put in place, there is no reason why GST revenues would not average Rs 1 lakh crore every month,” he added.

Another official said that the focus of the department will also be on plugging the gaps in the gold and jewellery industry.

“Gold imports have been rising every month despite a 10 per cent customs duty. But where is this imported gold channelled to? With GST in place, the revenue authorities now have the power to seek details about end supplies,” the official said.

Import of gold attracts a 10 per cent basic customs duty. On top of that, a 12.5 per cent countervailing duty (CVD) was levied prior to GST. Since GST subsumed CVD, the GST rate on gold at 3 per cent has to be paid at the time of imports in the form of Integrated GST with effect from July 1.

India is the world’s second biggest gold consumer after China. The import mainly takes care of the demand of the jewellery industry.

The official said that once the system stabilises, the intelligence agencies within the revenue department could better monitor end usage of the imported gold.

“DGARM would be utilised to provide intelligence inputs and do big data analytics for taxmen for better policy formulation and taking action against tax evaders,” he said.

Set up under the Central Board of Excise and Customs (CBEC), DGARM will use internal and external sources for detailed data mining and risk management.

As per data on GST returns filed by companies opting for composition scheme, as many as 5 lakh firms reported such a turnover which works out to annual sales of Rs 5 lakh only.

Out of 10 lakh businesses that opted for the composition scheme during the July-September period, about 7 lakh have filed GST returns for the quarter.

The official further said that currently, there is little tracking of goods movement from one state to another and the e-way bill would act as a tool to check tax evasion as then movement of stock and its end use would be monitored.

E-way or electronic way bill is for the movement of goods and can be generated on the GSTN (common portal). Movement of goods of more than Rs 50,000 in value cannot be made by a registered person without an e-way bill.

Source: Times of India

Deposited ‘large amount of cash’ during note ban? File ITR by March 31

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The department said it was the final call for filing of belated or revised ITRs for assessment years 2016-17 and 2017-18

The Income Tax Department on Friday urged those who deposited “large amounts of cash” post demonetisation and all companies to file their returns by March 31, failing which they may face penalty and prosecution.

 

It also cautioned eligible trusts, political parties and associations to file their income tax returns by this final deadline and “come clean”.

 

The department, in public advertisements issued in leading dailies, said it was the final call for filing of belated or revised ITRs for assessment years 2016-17 and 2017 -18.

 

It underlined that there was still time for these categories of taxpayers and that they should avoid last minute rush and file the ITRs well before the deadline.

 

“If you have deposited large amounts of cash in your bank account/made high value transactions, please consider the same while filling your ITRs.

 

“Non-filing or incorrect filing of return of income may result in penalty and prosecution,” the public advisory said. It said all companies, firms and limited liability partnership concerns were also required to do so.

 

The deadline is also applicable, it said,to trusts, associations and political parties whose income prior to claim of exemptions exceeds the minimum chargeable to tax. Individuals and Hindu Undivided Families having income more than Rs 2.5 lakh and senior citizens with income of over Rs 3 lakh (60-80 years of age) and Rs five lakh (over 80 years of age) too need to file their returns for the mentioned assessment years, it said.

 

Source: Business Standard