After PM Modi Order, Enforcement Directorate’s crackdown on Shell Companies begins across 100 cities

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Enforcement Directorate is carrying out searches at 100 locations to detect shell companies.

Weeks after the Prime Minister Narendra Modi’s office ordered a crackdown on shell companies used to launder money, the Enforcement Directorate on Saturday carried out nationwide searches across 100 locations targeting nearly 300 shell companies.

Sources said Saturday’s ED raids on shell firms across more than a dozen states was a direct fallout of the coordinated action against these firms. Among the cities where the Enforcement Directorate teams were conducting raids are Kolkata, Chennai, Delhi, Ahmedabad, Chandigarh, Patna and Bengaluru. In Chennai, officials said searches were being carried out at 13 locations linked to 8 companies.

The PMO had last month identified paper companies, which do not conduct any operations but are used to launder money and evade taxes by other firms, as a big challenge to PM Modi’s war against black money.

As part of this exercise, the government had also decided to create a database of shell companies and their directors. A task force chaired jointly by the Revenue Secretary and Corporate Affairs Secretary was mandated to coordinate action against these dubious companies.

That the 1,155 shell companies detected over the last three years had been used as conduits by over 22,000 beneficiaries to launder money, one government official said, indicated how important it was to target shell companies. These companies face charges of dubious transactions running into more than Rs. 13,300 crore.

It is not clear if today’s multiple ED raids on shell firms are linked to the government’s finding that over 550 people had laundered Rs. 3,900 crore through such companies after the November 8 ban on the high-denomination notes.

An official report had earlier pointed that only 6 lakh of the 15 lakh registered companies file annual return. While it was possible that many of them may be defunct, officials said it could be possible that some of these could be involved in dubious transactions.

The Special Investigation Team to fight Black Money set up on the Supreme Court’s directions had also pointed that proactive detection of shell companies was going to be a key to the success of the government’s campaign.

Source: http://www.ndtv.com/india-news/after-pm-order-crackdown-on-shell-companies-begins-across-100-cities-1676030

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

Expect a visit from taxman if you’ve ignored I-T dept’s email

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0

Income Tax officials could soon be at your doorstep if you have deposited a huge amount during the note-swapping exercise last year, and have not yet explained the source of the cash. “We have tried to keep the exercise non-intrusive. But if people have not come forward, then some kind of verification is needed especially in cases that involve deposits of large sums,” a senior income-tax department official told ET.

Under the ‘Operation Clean Money’, the I-T department had sent out SMSes and e-mails to about 18 lakh people who deposited over Rs 5 lakh each during the 50-day window from November 10 to December 30, because the desposits did not tally with their income.

The depositors were asked by the I-T department to explain the source of the money by logging in to its portal. By February 15, about 7.3 lakh people responded to the emails and explained their deposits.

According to the official, the department is now contemplating issuing notices or carrying out surveys in cases where no response has come or the replies are unsatisfactory.

“In cases where responses are not satisfactory, notices would be issued. In some cases where big sums are involved and response is not satisfactory, surveys could be carried out,” the official said, adding that people could be also asked to come to income-tax offices or tax officers may pay them a visit.

People with unexplained deposits during the demonetisation period have the opportunity to avail the Pradhan Mantri Garib Kalyan Yojana (PMGKY) by paying 50 per cent tax and depositing 25 per cent in non-interest bearing scheme for four years.

Incidentally, the I-T department is soon expected to send out the next batch of emails and SMSes, beginning the part two of the ‘Operation Clean Money’, which will target suspicious deposits below Rs 5 lakh identified through data analytics.

The department is examining the voluminous data received from banks on deposits made during the 50-day period. It is also hiring external experts to work on the data to identify splitting of deposits or use of other means to evade notice.

Source:  http://economictimes.indiatimes.com/articleshow/57261518.cms

 

CAs, Merchant Bankers face fine if assessees file wrong tax information

by | posted in: Accounting Standards, Audit, Due Diligence, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
CBDT chairman Sushil Chandra addressing a CII interactive session on Union Budget 2017-18 in New Delhi on Monday.

From April 1, chartered accountants (CAs), merchant bankers and valuers can’t escape responsibility for filing of incorrect information in certificates or reports attached with income tax returns of assessees.

 

They will be fined Rs 10,000 for each such certificates or reports, according to a provision in the Budget for 2017-18.

 

For this purpose, the Budget has proposed to insert a new section, 271J, in the Income Tax Act.

 

“Under Section 271J… we have entrusted responsibility with chartered accountants, valuers and merchant bankers who files audit, valuation reports and other things…,” CBDT Chairman Sushil Chandra said at a post-Budget interaction with PHD Chamber of Commerce and Industry here. “So, if they file any incorrect information in the returns, they are also liable for a token penalty of Rs 10,000.”

 

The whole system is based on “a lot of faith on CAs and assessees and they have to be more responsible”, he said.

 

While there are many provisions to penalise the defaulting assessees, there was none to penalise CAs, merchant bankers and valuers.

 

A memorandum to the Finance Bill said: “In order to ensure that the person furnishing reports or certificates undertakes due diligence before making such certification, it is proposed to insert a new section (271J in the Act) so as to provide that if an accountant or a merchant banker or a registered valuer furnishes incorrect information in a report or certificate, the assessing officer or the commissioner (appeals) may direct him to pay a sum of Rs 10,000 for each such report or certificate by way of penalty.”

 

Chandra said the objective of the Budget was to improve tax compliance along with increasing tax base and improving ease of doing business.

 

Non-compliance level was high despite low tax, he said, adding that Indians named in various black money reports, including Panama Papers, were among the highest.

 

He pointed to high level of evasion of tax and tendency to export black money to foreign shores in spite of having global practices and standards, emphasising that this has to come down. “The department has done its bit, now it’s time for the taxpayers to show their respect to the law of land,” he said.

 

On long-term capital gains tax, he said the Budget has tried to plug gaps.

 

In the past few years, the tax department has detected Rs 80,000-crore sale consideration through the penny stock mechanism, the CBDT chief said, adding that this was used for conversion of black money into white.

 

However, “neither have we changed capital tax regime nor have we changed any law. So, whosoever was getting the benefit of long-term capital gains through ESOP, IPO and FPO is not going to change”.

 

Nothing is going to change except misuse, he clarified.