Highlights 1. The finance ministry has extended the deadline for filing income tax return 2. New deadline for ITR submission for FY 2018-19 extended to August 31 3. This year CBDT had extended the deadline for employers to file their TDS returns 4. If the ITR is filed between January 1 and March 31, then late filing fees of Rs 10,000 will be levied
The finance ministry has extended the deadline for filing income tax return (ITR) for FY2018-19 by individuals to August 31, 2019 from July 31, 2019. The extension is a much needed relief as there were multiple problems being faced by individuals in filing returns by July 31. July 31 was the deadline to file income tax returns for most individuals and HUFs. This is that category of individuals and HUFs who are not mandatorily required to get their accounts audited for tax purposes.
Many chartered accountant/tax practioner societies had appealed to the government to extend the ITR filing deadline to provide sufficient time to individuals to file ITR properly. There are many reasons for this.
This year CBDT had extended the deadline for employers to file their TDS returns, i.e., Form 24Q, from May 31, 2019 to June 30, 2019 and consequently deadline of issuing Form 16 by the employer was also extended from June 15, 2019 to July 31, 2019. Consequently, employees wait employees waiting to get their Form 16s to file their ITRs were left with only 21 days to file their tax return by the earlier deadline of July 31.
If the ITR is not filed by an individual before the expiry of the deadline, which is usually July 31, then the individual would have to pay a late filing fee of Rs 5,000, if filed by December 31. If the ITR is filed between January 1 and March 31, then late filing fees of Rs 10,000 will be levied.
With extension of the deadline, individuals will have more time to file their ITRs without worrying about late filing fees.
Even though it is easier to fill salary details in ITR-1 this year as individuals are required to just copy-paste the same from Form 16, sources of interest income are required to be provided in greater detail. This could be a tedious process.
Further, while the tax department has started providing pre-filled XML for ITR forms 1 to 4, the pre-filled XML file for ITR-2 does not contain salary details which individuals have to fill-in by themselves. ITR-2 asks individuals to provide detailed break-up of salary such as basic, HRA and so on received by choosing the options from the drop-down menu.
The calculation of long-term capital gains (LTCG) tax on equity shares and equity mutual funds is also a complicated process due to the grandfathering clause which came into effect from FY2018-19 onwards. In addition to that, individuals were also required to provide details such as ISIN code/Folio number, name of shares/units and so on for sale of equity shares and equity mutual funds. However, later on this was made optional.
1. Within 2 years, Tax assessment will be done electronically
2. IT returns processing in just 24 hours
3. Minimum 14% revenue of GST to states by Central Govt.
4. Custom duty has been abolished from 36 Capital Goods
5. Recommendations to GST council for reducing GST rates for home buyers
6. Full Tax rebate upto 5 lakh annual income after all deductions.
7. Standard deduction has been increased from Rs. 40,000 to Rs. 50,000
8. Exemption of tax on second self-occupied house
9. Ceiling Limit of TDS u/s 194A has increased from Rs.10,000 to Rs. 40,000
10. Ceiling Limit of TDS u/s 194I has increased from Rs. 1,80,000 to Rs. 2,40,000
11. Capital Gains Tax Benefit u/s 54 has increased from investment in one residential house to two residential houses.
12. Benefit u/s 80IB has increased to one more year i.e. 2020
13. Benefit has been given to unsold inventory has increased to one year to two years.
Other Areas
14. State share has increased to 42%
15. PCA restriction has abolished from 3 major banks
16. 2 lakhs seats will increase for the reservation of 10%
17. 60000 crores for MANREGA
18. 1.7 Lakh crore to ensure food for all
19. 22nd AIIMS has to be opened in Haryana
20. Approval has to be given to PM Kisan Yojana
21. Rs. 6,000 per annum to be given to every farmer having upto 2 hectare land. Applicable from Sept 2018. Amount will be transferred in 3 installments
22. National Kamdhenu Ayog for cows. Rs. 750 crores for National Gokul Mission
23. 2% interest subvention for farmers pursuing animal husbandry and also create separate department for fisheries.
24. 2% interest subvention for farmers affected by natural calamities and additional 3% interest subvention for timely payment.
25. Tax free Gratuity limit increase to Rs. 20 Lakhs from Rs. 10 Lakhs
26. Bonus will be applicable for workers earning Rs. 21,000 monthly
27. The scheme, called Pradhan Mantri Shram Yogi Mandhan, will provide assured monthly pension of Rs. 3,000 with contribution of Rs. 100 per month for workers in unorganized sector after 60 years of age.
28. Government delivered 6 crores free LPG connections under Ujjawala scheme
29. 2% interest relief for MSME GST registered person
30. 26 weeks of Maternity Leaves to empower the women
31. More than 3 Lakhs crores for defence
32. One lakh digital villages in next 5 years
33. Single window for approval of India film maker.
Tax liability on long term capital gains (LTCG) at the rate of 10% will accrue only when the shares or mutual funds are sold after April 1, 2018.
In the Budget 2018, Union Finance Minister Arun Jaitley had introduced long term capital gains (LTCG) on sale of equity and mutual funds, which will be taxed from April 1 onwards. One must remember that any capital gains arising out of sale of shares in this financial year (2017-18), which means prior to March 31 this year, will not attract any long term capital gains tax.
Seven Things To Know About Tax On LTCG Arising On Equity/ Mutual Funds Sale
1. Tax liability on long term capital gains (LTCG) at the rate of 10% will be charged only when the shares or mutual funds are sold after April 1, 2018.
2. The tax liability will not arise if the shares or mutual funds are sold, at whatever premium, before the beginning of April since the new legislation will come in force with effect from the next financial year, which is April 1.
3. For the tax on LTCG to get liable, there must be a difference of at least Rs. 1,00,000 between the cost of acquisition and the amount of sale.
4. The time period of one year will be calculated from the date of acquisition even if the time period falls in the previous financial year, which is 2017-18.
5. Any gains prior to January 31 are grandfathered. This means the capital gains will be zero if the sale price is more than the cost of acquisition but less than the value on March 31.
For instance, an equity share is acquired on January 1, 2017 at Rs. 100, its fair market value is Rs. 200 on January 31, 2018 and it is sold on April 1, 2018 at Rs. 150.
In this case, the actual cost of acquisition is less than the fair market value as on January 31, 2018. However, the sale value is also less than the fair market value as on 31st of January, 2018. Accordingly, the sale value of Rs. 150 will be taken as the cost of acquisition and the long-term capital gain will be NIL (Rs. 150 – Rs. 150).
6. The tax payer will stand to gain when the shares market price on January 31 was lower against the acquisition cost. Since the higher of two values is chosen (between the cost of acquisition and the price on January 31), the investor stands to gain. Sample this. An equity share is acquired on 1st of January, 2017 at Rs. 100, its fair market value is Rs. 50 on 31st of January, 2018 and it is sold on 1st of April, 2018 at Rs. 150.
In this case, the fair market value as on 31st of January, 2018 is less than the actual cost of acquisition, and therefore, the actual cost of Rs. 100 will be taken as actual cost of acquisition and the long-term capital gain will be Rs. 50 (Rs. 150 – Rs. 100).
7. When the selling price is lower than both cost of acquisition and price on January 31, then instead of the higher of the two values, one has to take the lower of two values for computing the capital gains. Sample this. An equity share is acquired on 1st of January, 2017 at Rs. 100, its fair market value is Rs. 200 on 31st of January, 2018 and it is sold on 1st of April, 2018 at Rs. 50. In this case, the actual cost of acquisition is less than the fair market value as on 31st January, 2018. The sale value is less than the fair market value as on 31st of January, 2018 and also the actual cost of acquisition. Therefore, the actual cost of Rs. 100 will be taken as the cost of acquisition in this case. Hence, the long-term capital loss will be Rs. 50 (Rs. 50 – Rs. 100) in this case.
Budget 2018 has been presented by the Finance Minister Arun Jaitley and here are the key takeaways:
Personal tax
While the personal income tax structure remains the same-that is no new tax slab and no higher exemption limits-as a as a small concession, Jaitley has announced a standard deduction of Rs 40,000 for salaried taxpayers. This will be in lieu of the existing transport allowance and medical expense reimbursement. However, other medical reimbursements in case of hospitalisation will continue.
According to him, the existing allowances amount to Rs 30,000 so the actual tax benefit here on would be Rs 10,000 more for each taxpayer. This move is expected to benefit 2.5 crore people-25-30% of the total taxpayer base–and reduce paperwork along the way. The revenue cost of this concession is pegged at Rs 8,000 crore.
But if he is putting money in your wallets, his other hand is also taking cash away. The education cess levied on the tax you pay (also applicable on corporation tax) has gone up by 1%. The new 4% Health and Education Cess is expected to help the government collect an additional amount of Rs 11,000 crore.
Senior citizens
Apart from farmers and the gareeb nagrik, it is the older demographic that stands to gain the most from the latest Budget. To begin with, tax exemption of interest income from bank deposits has been raised to Rs 50,000 from the current Rs 10,000. He has also proposed to raise the deduction under health insurance premium under Section 80D of the Income Tax Act to Rs 50,000 (from Rs 30,000 currently). In case of senior citizens with critical illnesses the deduction will be Rs 1 lakh. Moreover, Fixed Deposit/Post office interest to be exempt till Rs 50,000. These concessions are expected to give senior citizens extra tax benefit of Rs 4,000 crore.
In addition to tax concessions, the government has proposed to extend the Pradhan Mantri Vaya Vandana Yojana up to March 2020 under which an assured return of 8% is given by Life Insurance Corporation of India (LIC). The existing limit on investment of Rs 7.5 lakh per senior citizen under this scheme is also being enhanced to Rs 15 lakh.
Corporate tax
Jaitley has announced that companies with a turnover of up to Rs 250 crore will now be taxed at 25% (from 30%). According to him, this move will benefit 99% of companies and the revenue foregone is pegged at Rs 7,000 crore in 2018-19. After this, out of about 7 lakh companies filing returns, only about 7,000 companies will remain in 30% tax slab.
The other bit of bad news is that the FM proposed to tax long term capital gains exceeding Rs 1 lakh on sale of equity shares/units of Equity oriented Fund at 10%, without allowing any indexation benefit. To justify his move, he pointed out that the total amount of exempted capital gains had surged to nearly Rs 360,000 crore, as per returns filed for assessment year 2017-18, and that the return on equity was attractive even without exemptions. A major part of this gain has reportedly accrued to corporates and LLPs. So while retail investors will also be hurt by this move, the impact will be most felt by corporates.
However, existing investors will be exempted from capital gains tax up to January 31, 2018. All gains made thereafter this cut-off date will be taxed. This move could earn the government Rs 20,000 crore in revenue in the first year. The revenues in subsequent years may be more.
Petrol/diesel prices
In a rejig of excise duty on petroleum products, the union government has cut basic excise duty on petrol and diesel by Rs 2. The Modi government has also abolished additional excise duty on fuel by Rs 6. Despite that petrol prices are likely to remain the same as a new road cess of Rs 8 per litre has been introduced.
Farmers
The Union Budget 2018 seems to have been the shot in arm it was predicted to be for the slowing agricultural sector of India. Staying true to government’s electoral promise of doubling farmers’ income by 2022, Jaitley kept the minimum support price (MSP) of kharif crops and all rabi crops at one and a half times the production cost of the crops. Currently, most of the rabi crops get that benefit.
In addition, an Agri-Market Infrastructure Fund of Rs 2000 crore will be set up for developing agricultural markets. Jaitley further allotted Rs 500 crore under Operation Greens-to be launched on the lines of ‘Operation Flood’-to address price volatility of perishable commodities and to promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and more.
As per provisions of Budget 2018, government will encourage organic farming by FPOs and Village Producers Organizations (VPOs) in large clusters, preferably of 1000 hectares each. Women Self Help Groups will also be encouraged to take up organic agriculture in clusters under National Rural Livelihood Programme. Also, a sum of Rs 200 crore have been allocated to support organized cultivation of highly specialized medicinal and aromatic plants and aid small and cottage industries that manufacture perfumes, essential oils and other associated products.
Significantly, calling bamboo “green gold”, the finance minister announced the launch of a restructured National Bamboo Mission with an allocation of Rs 1,290 crore. The government will also set up two new funds for the fisheries sector and animal husbandry sector with a total corpus of Rs 10,000 crore.
Explaining that India’s agri-exports potential is as high as $100 billion against current exports of $30 billion, Jaitley wants export of agri-commodities to be liberalized. “I also propose to set up state-of-the-art testing facilities in all the forty two Mega Food Parks,” he added.
Lastly, the Budget not only proposed to raise institutional credit for agriculture to Rs 11 lakh crore for 2018-19 (up from Rs 10 lakh in the current fiscal) but also addressed the issue of air pollution due to burning crop residue. The Finance Ministry said that a special scheme will be implemented to support the efforts of the governments of Haryana, Punjab, Uttar Pradesh and the NCT of Delhi to address air pollution and to subsidize machinery required for disposal of crop residue.
The icing on the cake is the announcement of 100% tax deduction for first five years to companies registered as farmer producer companies with a turnover of Rs 100 crore and above.
Poor families
“From ease of doing business, our government has moved to ease of living for the poor and middle class,” Jaitley said in his speech. But he actually meant only poor families, who have been extended a plethora of schemes and allocations. Take the new National Health Protection Scheme under which annual health coverage of up to Rs 5 lakh per family will be offered for secondary and tertiary care hospitalization. This is expected to benefit over 10 crore vulnerable and under-privileged families. “This will be the world’s largest government funded health care programme,” Prime Minister Narendra Modi said in his address soon after the Budget speech.
The government will also establish 1.5 lakh Health and Wellness Centres under the Ayushman Bharat programme to provide comprehensive health care-including for non-communicable diseases and maternal and child health services-free essential drugs and diagnostic services. The Budget has earmarked Rs 1200 crore for this flagship programme.
In line with the government’s “Housing for All by 2022” promise, Jaitley announced that a dedicated Affordable Housing Fund will be set up, funded from priority sector lending shortfall and fully serviced bonds authorized by the government.
Also on the cards are free LPG connections to 8 crore poor women-up from the initial target of 5 crore beneficiaries-under the Ujjwala Scheme; two crore more toilets under Swachh Bharat mission, and a whopping Rs 16,000 crore allocation for the Saubhagya Yojana, under which four crore poor households are being provided with electricity connection free of charge.
Railways
Jaitley has proposed an ambitious plan for Indian Railways with a focus on modifications and safety rather than new train lines. He announced a capital expenditure allocation of Rs 1.48 lakh crore-the highest ever-for capacity expansion, maintenance of tracks, transforming almost the entire network into broad gauge, redevelopment of railway stations, producing upend coaches, the bullet train project, safety policies and more.
The FM announced that Wi-Fi, CCTVs will be provided in every station and escalators will be provided in stations with more than 25,000 footfalls. In the coming year, there will be a focus on upgradation of signalling and use of fog safety devices. He added that 600 railway stations across the country have been picked for modernisation and 4,000 km of railway network is set to be commissioned for electrification.
According to him, the coming year will be dedicated to building world-class trains and a railway institute will be set up in Vadodara, where the workforce behind high speed railway projects would be trained. There will also be a special focus on the upliftment of suburban trains in Mumbai and Bengaluru.
Education
“In order to further enhance accessibility of quality medical education and health care, we will be setting up 24 new Government Medical Colleges and Hospitals by upgrading existing district hospitals in the country. This would ensure that there is at least one medical college for every three parliamentary constituencies and at least one government medical college in each state,” said Jaitley.
Significantly, by 2022, every block with more than 50% scheduled tribe population and at least 20,000 tribal people will have ‘Ekalavya’ school at par with Navodaya Vidyalas. Jaitley also announced a new scheme for revitalizing school infrastructure, with an allocation of Rs 1 lakh crore over four years. He added that an integrated BEd programme will be initiated for teachers, to improve the quality of teachers.
Custom duties
Custom duty on mobile phones increased from 15% to 20%. The duty applicable on some mobile phone parts and accessories has been hiked to 15% and that on certain parts of TVs to 15%. “To help the cashew processing industry, I propose to reduce customs duty on raw cashew from 5% to 2.5%,” added Jaitley.
Significantly, Budget 2018 has levied a “social welfare surcharge” at 3-10% on imports in place of the Education Cess and Secondary and Higher Education Cess currently in place.
Non-corporate taxpayers operating in IFSC to be charged alternate minimum tax at concessional rate of 9% at par with minimum alternate tax applicable for Corporates.
In order to promote trade in stock exchanges located in International Financial Services Centre (IFSC), the Union Finance and Corporate Affairs Minister Arun Jaitley proposed to provide two more concessions for IFSC.
Presenting the General Budget 2018-19 in Parliament Jaitley proposed to exempt transfer of derivatives and certain securities by non-residents from capital gains tax. Further, the Finance Minister added that non-corporate taxpayers operating in IFSC shall be charged Alternate Minimum Tax (AMT) at concessional rate of 9% at par with Minimum Alternate Tax (MAT) applicable for corporates.
The Government had endeavored to develop a world class international financial services centre in India. In recent years, various measures including tax incentives have been provided in order to fulfil this objective.
– The government has issued repeated warnings against digital currency investments – Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies
The government has sent tax notices to tens of thousands of people dealing in cryptocurrency after a nationwide survey showed more than $3.5 billion worth of transactions have been conducted over a 17-month period, the income tax department said.
Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine exchanges in Mumbai, Delhi, Bengaluru and Pune.
Governments around the world are grappling with how to regulate cryptocurrency trading, and policymakers are expected to discuss the matter at a G20 summit in Argentina in March.
The government has issued repeated warnings against digital currency investments, saying these were like “Ponzi schemes” that offer unusually high returns to early investors.
But it has not so far imposed curbs on an industry estimated to be adding 200,000 users in India every month.
B.R. Balakrishnan, a director general of investigations at the income tax department in the southern state of Karnataka, said notices were sent following the survey to assess the penetration and patterns of virtual currency trade.
“We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality,” he told Reuters.
The tax department has asked people dealing in bitcoin and other virtual currencies such as ethereum and ripple to pay tax on capital gains. They have also asked for details about their total holdings and the source of funds in the tax notice seen by Reuters.
“We found that investors were not reflecting it on their tax returns and in many cases, the investment was not accounted for,” Balakrishnan said.
Bitcoin, the world’s biggest cryptocurrency, soared more than 1,700 percent last year, hitting a record high just shy of $20,000 as institutional and retail investors around the world snapped up the virtual currency.
Its huge gains have attracted the attention of global regulators tasked with protecting investors from fraud.
In recent weeks, Japan and China have made noises about a regulatory crackdown, while South Korean policymakers said they were considering shutting down domestic virtual currency exchanges.
REGULATION
An Indian finance ministry official said a federal committee was looking into the possibility of imposing restrictions on virtual currencies and that eventually parliament would have to legislate a regulatory regime.
Officials at Zebpay, India’s leading bitcoin exchange, said the industry was adding near 200,000 users every month with an estimated trade volume of about 20 billion Indian rupees ($315 million).
“Many of our customers are treating digital currency like gold,” said Zebpay co-founder Saurabh Agarwal.
Aman Kalra, marketing head of Coinsecure, a bitcoin exchange in New Delhi, said more than 150 bitcoins were changing hands every week through its platform. The company has 100,000 registered users and is now launching a platform to sell ethereum and other digital currencies.
“I don’t think anyone in the government should label our business as a ‘Ponzi scheme’, we are not doing anything illegal,” said Kalra.
Tax inspectors said they sought help from experts in blockchain, the technology that underpins bitcoin, to conduct the survey.
In some cases, tax officials themselves participated in the trade to identify loopholes after they found investors had poured in billions of dollars through unregulated exchanges.
I-T department is set to issue notices to 4 to 5 lakh high networth individuals across the country who were trading in bitcoins on exchanges. Last week, the department had conducted surveys across major cities
Widening its probe into bitcoin investments and trade, the Income Tax (I-T) department is set to issue notices to 4 to 5 lakh high networth individuals (HNI) across the country who were trading on the exchanges of this unregulated virtual currency.
The taxman had conducted surveys at nine such exchanges last week to check instances of tax evasion.
The department, official sources said, found that out of the estimated 20 lakh entities registered on these exchanges, about 4 to 5 lakh were “operational” and indulging in transactions and investments.
Sources told PTI that the Bengaluru investigation wing of the tax department, which supervised last week’s operations, has now dispatched the information of the individuals and entities found on these databases to eight other such wings across the country for a detailed probe.
“Those individuals and entities whose records were recovered by the department are now being probed under tax evasion charges. Notices are being issued and they will have to pay capital gains tax on the bitcoin investments and trade,” a senior official privy to the operation said.
About 4-5 lakh HNIs and their businesses are being issued notices which will first seek their relevant financial details and subsequently establish the tax demand, if any, he said.
As the bitcoins or the virtual currencies (VCs) are illegal and unregulated in the country as of now, the IT department has taken action as per the existing provisions, they said.
The survey operations conducted last week, under section 133 A of the Income Tax Act, were undertaken for “gathering evidence for establishing the identity of investors and traders, the transaction undertaken by them, identity of counter-parties, related bank accounts used, among others,” they said.
A survey action under the IT law pertains to the tax officials making a surprise visit to the business premises of the party under action but not their residential ones. The trigger for the action is understood to be the huge spike being registered in the value of bitcoins and other virtual currencies in the recent past.
Suspected black money being converted into white, post demonetisation, through the use of bitcoins was also under the department’s scanner, officials said. Earlier this month, there was a spurt in the value of a bitcoin. It rose from under $10,000 at the start of the year to close to $20,000, before a sharp 20 per cent plunge within hours.
Bitcoin, a virtual currency, is not regulated in the country and its circulation has been a cause for concern among central bankers the world over for quite a while now.
The Reserve Bank of India (RBI) has also cautioned users, holders and traders of virtual currencies. The government has also said that it does not recognise ‘crypto-currency’ as legal tender in India. In March, the Union finance ministry constituted an Inter-Disciplinary Committee to take stock of the present status of virtual currencies both in India and globally and suggest measures for dealing with them.
The committee has submitted its report which is being examined.
The RBI has cleared its stand on cryptocurrencies since long. “There is no underlying or backing of any asset for VCs. As such, their value seems to be a matter of speculation. Huge volatility in the value of VCs has been noticed in the recent past. Thus, the users are exposed to potential losses on account of such volatility in value,” the central bank had said in a December 24, 2013 note.
