Very Important update for Charitable Trusts and Exempt Institution registered under section 80G, 12A or section 12AA : New – Fresh Registration Required : Last Date 31.12.2020
All Charitable trusts and exempt institution which are already registered under section 80G, 12A or section 12AA of Income Tax Act, 1961 will now be required to obtain FRESH REGISTRATION by December 31, 2020.
Provisions of registration under section 80G, 12AA or section 12A will be redundant from 31st December, 2020 and a new section 12AB will come into force with effect from 01st January 2021.
All the existing registered trusts under the erstwhile section 80G, 12A or section 12AA would move to new provision section 12AB.
The new section 12AB proposes to change the registration process by prescribing the time frame for processing the application and validity of such a registration certificate so granted under the new section 12AB.
An order granting registration or approval shall be passed within 3 months of the application. Such registration or approval shall be valid for 5 years.
Similarly, charitable trusts and exempt institutions which already have Section 80G certificate will now be required to reapply for registration or approval by December 31, 2020.
Banks cannot open a current account for a customer, who has already availed himself of credit facilities from the banking system.
The Reserve Bank of India set new conditions for banks to open current accounts for large borrowers in order to strengthen credit discipline. Use of multiple operating accounts by borrowers—both current well as cash/overdraft accounts—has been observed to be prone to vitiating credit discipline, the RBI said its Statement on Developmental and Regulatory Policies on Thursday.
“The checks and balances put in place in the extant framework, for opening of current accounts, are found to be inadequate,” it said, adding that the central bank has revised its guidelines to bring in appropriate safeguards
The revised norms are also expected to bring in the requisite discipline in collective actions by creditors for speedier resolution of stress in the accounts of borrowers, it said.
The purpose of the revised guidelines is to ensure that borrowers route their payments to and from a current account with a bank that has the largest exposure to the borrower, instead of having multiple current accounts across banks.
Here are the revised guidelines:
Opening Current Accounts
For a borrower with an existing CC or OD Facility The bank cannot open a current account for the borrower and all transactions have to be routed through the cash credit or overdraft account.
For a borrower with No existing CC or OD Facility Banks can open a current account if the total exposure to the borrower is less than Rs 5 crore. As and when the exposure goes beyond Rs 5 crore, the borrower has to inform the bank and, thereafter, it will be governed differently.
Credit Facilities of Rs 5 Crore to Rs 50 Crore
Any lender can open a current account, while non-lending banks can only open a collection account.
Credit Facilities of more than Rs 50 Crore
Any lender can open a current account, while non-lending banks can only open a collection account. Credit Facilities of more than Rs 50 Crore Banks have been mandated to create an escrow mechanism and only the escrow-managing lender or agent can open the current account for the borrower.
The balances in such accounts cannot be used as a margin for availing any non-fund based credit facilities. While there is no prohibition on the amount or the number of credits in ‘collection accounts’, any debits will be limited to the purpose of remitting the proceeds to the escrow account.
The banks should not route any withdrawal transaction from term loans availed by the borrower through current accounts and, instead, funds from term loans should be remitted directly to the supplier of goods and services.
Expenses incurred by the borrower for day-to-day operations should be routed through the cash credit/overdraft account, if the borrower has one; else, it should be routed through a current account.
Conditions to avail CC Or OD Facility When a bank’s exposure to a borrower is less than 10% of Aggregate Banking System Exposure
The CC and OD facility can be availed but it can only be used for credits. Any debit transaction can only be to remit funds to the borrower’s CC or OD account held with a bank which has an exposure of 10% or more of the banking system’s total exposure to the borrower.
When a bank’s exposure to a borrower is more than 10% of Aggregate Banking System Exposure
Banks can provide the borrower with a CC/OD facility. If the borrower has availed loans from more than one bank and more than one bank has an exposure of 10%, the bank to which the funds are to be remitted may be decided mutually between the borrower and the banks.
All large borrowers that have a working capital facility bifurcated between a loan component and a cash credit component need to maintain the balances at individual banks in all cases, including consortium lending.
“The RBI has been concerned about diversion of funds. Therefore, the norm that RBI has put in place is that if a bank opens a current account, they receive a no-objection-certificate from the lending bank, so that the lending bank knows another current account is being opened for its loan customer,” said Rajiv Anand, executive director, Axis Bank.
These conditions have been put in place to bring in credit discipline and ensure that the issue if diversion of funds is much better managed than it is today, he said.
According to Ajay Shaw, partner, DSK Legal, the new conditions are aimed at ensuring that large borrowers do not use multiple accounts and route money to and from them.
“The RBI is insisting that all current accounts should be unified and for large borrowers there should be an escrow or trust and retention mechanism, with a waterfall, to ensure that there is a control of cash-flows.”
In an extreme case, if a borrower had an escrow account in a consortium loan and another lender is brought in, the borrower would then route all payments to the new lender and not to others, he said.
The RBI, according to Shaw, is trying to avoid these situations. “Banks will need to review all their current accounts and they have already begun informing their clients to close accounts and to maintain only one,” he said.
The Central Board of Direct Taxes (CBDT) on Wednesday (July 29) extended the deadline for filing income tax returns for 2018-19 fiscal till September 30 due to corona virus COVID-19 pandemic.
The Central Board of Direct Taxes (CBDT) on Wednesday (July 29) extended the deadline for filing income tax returns for 2018-19 fiscal till September 30 due to coronavirus COVID-19 pandemic.
“In view of the constraints due to the Covid pandemic & to further ease compliances for taxpayers, CBDT extends the due date for filing of Income Tax Returns for FY 2018-19 (AY 2019-20) from 31st July, 2020 to 30th September, 2020,” the Income Tax Department said in a tweet.
It is to be noted that this is the third extension given by the Centre to taxpayers to file both original and revised tax returns for 2018-19 fiscal.
In March, the Centre had extended the due date from March 31 to June 30 due to corona virus COVID-19 pandemic. Later in June, the date was again extended by a month till July 31.
If an individual fails to file the belated ITR, if due, by the deadline (i.e., September 30, 2020), then he/she will not be able to file the income tax return for the financial year 2018-19.
The CBDT has said that an individual can also file a revised ITR for FY2018-19 within this deadline.
In a major relief to companies, the Securities and Exchange Board of India (SEBI) today extended the deadline for submission of financial results for the quarter, half-year, and financial year ended 30 June 2020 to September 15. The SEBI circular said that it has received representations requesting an extension of time for submission of financial results for the quarter or half year-ended 30 June 2020, due to the shortened time gap between the extended deadline for submission of financial results for the period-ended 31 March 2020 and the quarter or half year-ended June 30, 2020.
Under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR Regulations’), a listed entity is required to submit its quarterly, half-yearly, or annual financial results within 45 days or 60 days, as applicable, from the end of each quarter, half year, or financial year.
Accordingly, listed entities were required to submit the financial results for the quarter, half-year-ended 30 June 2020 on or before 14 August 2020.
Earlier, the regulatory body had also extended the timeline for submission of financial results by listed entities for the quarter, half-year, or financial year-ended 31 March 2020 to 31 July 2020, due to the impact of the coronavirus pandemic.
SEBI further said that today’s announcement shall come into force with immediate effect and advised all stock exchanges to bring the provisions of this circular to the notice of all listed entities.
It has asked the stock exchanges to bring the provisions of the circular to the notice of all listed entities and also disseminate on their websites.
Meanwhile, SEBI’s move to relax the deadlines is expected to give more time to companies already struggling with operations part amid the pandemic.
In-line with the efforts to provide relief to the sagging businesses, Finance Minister Nirmala Sitharaman earlier announced to decriminalise some offences under the Companies Act.
The SEBI has also introduced new norms to give more fund-raising flexibility to stressed firms.
The amendments can help promoters get financial investors on board without losing control of the company.
The Income Tax department’s data analysis has identified certain taxpayers with high value transactions who have not filed ITR for AY 2019-20 (i.e. FY 2018-19). In addition to the non-filers, another set of return filers have also been identified wherein the high-value transactions do not appear to be in line with their Income Tax Return.
The Board said that the objective of the e-campaign is to facilitate taxpayers to validate their financial transaction information against information available with the IT department and promote voluntary compliance, especially for the assesses for the FY 2018-19 so that they do not need to get into notice and scrutiny process.
Under this e-campaign the Income Tax Department will send email/sms to identified taxpayers to verify their financial transactions related information received by the I-T department from various sources such as Statement of Financial Transactions (SFT), Tax Deduction at Source (TDS), Tax Collection at Source TCS), Foreign Remittances (Form 15CC) etc,” CBDT said.
It added that the department has collected information related to GST, exports, imports and transactions in securities, derivatives, commodities and mutual funds under information triangulation set up.
The campaign is scheduled for 11 days starting from July 20, 2020 and ending on July 31, 2020.
With the new e-campaign, the taxpayers will be able to access details of their high value transactions on the designated portal. They will also be able to submit online response by selecting among any of these options:
(i) Information is correct,
(ii) Information is not fully correct,
(iii) Information related to other person/year,
(iv) Information is duplicate/included in other displayed information, and
(v) Information is denied.
Also, department has clarified that there would be no need to visit any Income Tax office, as the response has to be submitted online.
This is a dual way move of the department, on one hand this will get more assessees under scrutiny and thus help in identifying defaulters. While on the other hand this will increase the speed of process and avoid unnecessary mental harassment of the assessees.
It may be noted that the last date for filing as well as revising the Income Tax Return for Assessment Year 2019-20 (relevant to FY 2018-19) is 31st July 2020.
The Central Board of Direct Taxes (CBDT) has issued refunds worth Rs 71,229 crore in more than 21.24 lakh cases upto 11th July, 2020, to help taxpayers with liquidity during COVID-19 pandemic, since the Government’s decision of 8th April, 2020 to issue pending income tax refunds at the earliest.
Income tax refunds amounting to Rs. 24,603 crore have been issued in 19.79 lakh cases to taxpayers and corporate tax refunds amounting to Rs. 46,626 crore in 1.45 lakh cases have been issued to taxpayers during COVID-19.
It is stated that the government has laid great emphasis on providing tax related services to the taxpayers without any hassles and is aware that during these difficult times of COVID-19 pandemic, many of the taxpayers are waiting to see that their tax demands and refunds reach finality as quickly as possible.
It is further emphasized that all the refund related cleaning up of the tax demands are being taken up on priority and is likely to be completed by 31st August, 2020.
Also, all applications for rectifications and for giving effect to appeal orders are to be uploaded on the ITBA.
It has been decided to do all the work of rectification and appeal effect on ITBA only.
It is reiterated that taxpayers, for quick processing of their refunds, should provide immediate response to the emails of I-T Department.
A quick response from the taxpayer in this regard would facilitate the I-T Department to process their refunds expeditiously.
Many taxpayers have submitted their responses electronically for rectification, appeal effects or tax credits. These are being attended to in a time bound manner.
All refunds have been issued online and directly into the bank accounts of the taxpayers.
-Through this one time relaxation scheme, ITR for FY 2014-15 to FY 2018-19 can be verified, on or before 30th September 2020. – All such verified ITRs shall be processed on or before 31st December 2020. – ITRs can be verified digitally through EVC or by sending duly signed a copy to CPC Bangalore.
The Central Board of Direct Taxes (CBDT) on Monday notified the one-time relaxation for verification of tax return for the Assessment Year 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20, which are pending due to non-filing of ITR- V form and processing of such returns.
It has been brought to the notice of CBDT that a large number of electronically filed ITR still remains pending with the Income-Tax Department for want of receipt of a valid ITR-V Form at CPC, Bengaluru from the taxpayers concerned.
In law, consequences of non-filing the ITR-V within the time allowed is significant as such a return is/can be declared Non-est in law. Thereafter, all the consequences for non-filing a tax return, as specified in the Income-tax Act,1961 follow.
“The CBDT, in the exercise of powers under section 119 of the Act, in case of returns for Assessment Years 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 which were uploaded electronically by the taxpayer within the time allowed under section 139 of the Act and which have remained incomplete due to non-submission of ITR-V Form for verification, hereby permits verification of such returns either by sending a duly signed physical copy of ITR-V to CPC, Bengaluru through speed post or through EVC/OTP modes as listed in para 1 above.
Such verification process must be completed by 30.09.2020,” the circular said.
However, the circular clarified that this relaxation shall not apply in those cases, where during the intervening period, the Income Tax Department has already taken recourse to any other measure as specified in the Act for ensuring filing of a tax return by the taxpayer concerned after declaring the return as Non-est.
“CBDT also relaxes the time-frame for issuing the intimation as provided in the second proviso to sub-section (1) of Section 143 of the Act and directs that such returns shall be processed by 31.12.2020 and intimation of processing of such returns shall be sent to the taxpayer concerned as per the laid down procedure.
In refund cases, while determining the interest, provision of section 244A (2) of the Act would apply,” the circular said.
Very Important update for Charitable Trusts and Exempt Institution registered under section 80G, 12A or section 12AA : New – Fresh Registration Required : Last Date 31.12.2020
