CBDT tightens scrutiny rules for assessing officers

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If you have received an income-tax scrutiny notice, there’s no need to be unduly fearful as the government has sought to protect you against possible harassment.

That’s in line with Prime Minister Narendra Modi’s recent message to the tax department that people should not fear such persecution.

The Central Board of Direct Taxes (CBDT) has made it more difficult for assessing officers to expand the scope of a ‘limited’ scrutiny to a complete one.

They will also have to substantiate any contention of possible under-reporting of income and loss of taxes, apart from requiring approval of senior officers.

The guidelines issued recently by the apex direct taxes body call for assessing officers to form a “reasonable view” that there is a possibility of income under-assessment, said an official aware of the move.

Besides, when manually selecting cases for scrutiny in the current financial year, the threshold for metros has been raised to Rs 25 lakh from Rs 10 lakh for instances involving additions in the earlier year.

That is, if an assessing officer finds that some income should have been added to the declaration, the return can’t be opened for scrutiny if the incremental amount is less than Rs 25 lakh.

In the past two years, the government has sought to make the department’s revenue collection efforts less aggressive and move away from what’s been dubbed by some as tax terrorism.

Modi delivered much the same message to tax officials at a meeting last month. Processes are being made less discretionary and increased reliance is being placed on information technology.

E-scrutiny, which allows payees to reply to scrutiny questions over email in metros, has also been started. These latest directives add to measures aimed at ensuring that tax officers don’t embark on fishing expedition even in cases of limited scrutiny under the Computer Aided Scrutiny Selection (CASS) where the perceived risk area is limited to only that particular transaction.

Tax experts welcomed the move. Together with the new scrutiny formats, this will lead to greater accountability of the tax department, said Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP, chartered accountants.

“This would help save precious resources of the department, lead to early closure of assessments and prevent unnecessary harassment,” he said.

Source :  http://economictimes.indiatimes.com/articleshow/53257731.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

Black money: No cut in tax, warns CBDT

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The government on Thursday clarified that tax paid under the ongoing amnesty scheme for persons with undisclosed domestic assets can’t be reduced to an effective 31% from 45% prescribed by enjoying immunity not only for such income declared but also for the other undisclosed income from which the tax is paid.

The Income Disclosure Scheme (IDS) 2016 is the latest in a series of such windows opened by governments to address the scourge of black money and the second by the Modi government.

The government on Thursday clarified that tax paid under the ongoing amnesty scheme for persons with undisclosed domestic assets can’t be reduced to an effective 31% from 45% prescribed by enjoying immunity not only for such income declared but also for the other undisclosed income from which the tax is paid.

The tax department said its earlier answer to a query in this regard, where it said after a valid declaration is made under the scheme, it won’t make any “enquiry in respect of sources of income, payment of tax, surcharge and penalty”, was “limited to the conduct of enquiry by the department”; the clarification, the department said, was in no way intended to modify the tax rate.

The Income Disclosure Scheme (IDS) 2016 is the latest in a series of such windows opened by governments to address the scourge of black money and the second by the Modi government.

The government had found response to an earlier amnesty scheme for Indians with undisclosed assets overseas tepid. The IDS, under which declarations can be made between June 1 and September 30, 2016, provides persons with hidden income a chance to declare such income/assets and pay tax, surcharge and penalty totalling 45% and enjoy immunity.

What necessitated the latest clarification by the I-T department is an interpretation by sections of analysts that its assurance that no enquiry will be made into “the sources of income, payment of tax” allowed one to pay the 45% tax on the fair market value of the declared asset (immovable property) and claim immunity with respect to not only this asset but an additional one equivalent to 45% of the declared asset as “the source of payment of tax”.

Effectively, this would have reduced the tax rate (including surcharge and penalty) on the assets declared plus the source of income for tax payment to 31%. However, the department has now said this has never been the intention.

Giving the example of a person declaring Rs 100 lakh as undisclosed income (as fair market value of immovable property as on June 1, 2016) under the scheme and paying the stipulated 45% tax on it from her “other undisclosed income”, the department has said:

“To get immunity under the scheme in respect of the entire undisclosed income of R145 lakh, the declarant has to declare undisclosed income of R145 lakh (R100 lakh being the undisclosed income represented by the immovable property and R45 lakh being the payment made from undisclosed income), and pay tax, surcharge, penalty under the scheme amounting to R65.25 lakh, ie, 45% of R145 lakh.”

Meanwhile, in recognition of the concerns raised by many quarters that the initial deadline (November 30, 2016) for making payments under the scheme was very tight and force people to make distress sale of assets, the government has revised the schedule for payments:

As per the new schedule, a minimum amount of 25% of the tax, surcharge and penalty will have to be paid by November 30, 2016; a further amount of 25% of the tax, surcharge and penalty by March 31, 2017; and the balance on or before August 30, 2017.

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 Source: http://www.financialexpress.com/economy/tax-outgo-amnesty-scheme-cant-reduced-31per-cent-cbdt/317162/

E-filing: ATM-based Income Tax Return (ITR) validation facility enhanced

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The Income Tax department has widened the ATM-based validation system for filing e-ITRs by taxpayers with the inclusion of Axis Bank, after SBI, as part of its measure to enhance the paperless regime of filing the annual I-T returns.

“Now, Electronic Verification Code (EVC) can also be generated by pre-validating Automated Teller Machine (ATM) provided by Axis Bank. SBI had activated the facility last month. Other banks are also expected to join soon,” a senior I-T department official said.

In May this year, the department had launched the bank account-based validation facility in this regard for those who have not availed the internet banking facility.

 

The new facility is available on the official e-filing portal of the department- http://incometaxindiaefiling.gov.in/ and will work by using the One Time Password (OTP) verification system as activated by the department last year by using the Aadhaar number.

These measures are used to validate the e-ITR so that the taxpayer does not take the trouble of sending the paper-based ITR-V by post to the Bengaluru-based Central Processing Centre (CPC) for final resolution and processing.

The new ITRs have been notified early this year and taxpayers can e-file their ITRs till July 31.

ITR-1 can be filed by individuals having income from salaries, one house property and from other sources including interest.

ITR-2 is filed by Individuals and Hindu Undivided Families (HUFs) not having income from business or profession.

ITR-2A is filed by those individuals and HUFs who do not have income from business or profession and capital gains and who do not hold foreign assets.

Black money window: CBDT issues notification to ensure secrecy

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CBDT today issued a notification making it clear that information about those who declare their black money under the compliance window, ending September 30, will be kept secret.

The notification states that “no public servant shall produce before any person or authority any such document or record or any information or computerised data or part thereof as comes into his possession during the discharge of official duties in respect of valid declaration under the Income Declaration Scheme, 2016.”

The notification also quotes provisions of section 138 of the Income Tax Act which states that taxpayer related information is confidential and cannot be shared.

The fresh notification was issued by the Central Board of Direct Taxes (CBDT), a senior official said, as the department was getting a number of queries with regard to the confidentiality under the Income Declaration Scheme (IDS) or the one-time domestic black money compliance window.

Trade associations and industry bodies had also taken up the issue during their meeting with Finance Minister Arun Jaitley recently.

“The notification now gives legal sanctity to the word of the government that all information related to IDS will be kept confidential. It is aimed to end apprehensions in the minds of potential declarants that their information will find its way in the hands of other probe agencies or will reach the public domain,” the official said.

The IDS is open for four months, between June 1 and September 30 and the CBDT and the IT department have introduced a number of measures to make it a success.

CBDT has so far issued three sets of clarifications on Frequently Asked Questions (FAQs) to clear doubts and answer queries about the IDS.

The department has also published a country-wide list of registered asset valuers for those who wish to declare their untaxed funds and properties under this window.

The CBDT has also directed the taxman to step up publicity by advertising about the IDS at posh markets, clubs and showrooms. Besides, it has promised full privacy would be ensured for those making disclosures for better collections.

Under the scheme, the declarants will have to pay a total of 45 per cent in tax and penalty by November this year. Individuals and entities making disclosures will have immunity from prosecution.

IDS was announced with an aim to flush out black money from the domestic economy. It will apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to financial year 2015-16 or earlier.

Declarations under IDS can either be made online on the official e-filing website of the tax department or before various regional Principal Commissioners of I-T department.

Source : http://economictimes.indiatimes.com/articleshow/53155906.cms

As income-tax returns filing date nears, 7 documents to be kept ready

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The income-tax returns filing season is fast approaching with the initial deadline being July 31. 

The income-tax returns filing season is fast approaching with the initial deadline being July 31. You must be among those preparing to file your returns. But most tax assessees who are required to e-file their returns keep deferring till the last moment.

 

However, even if you are procrastinating, you need to be prepared with all the details that you need to provide in your tax returns. And for that you need a lot of documents to be with you. It may not easy to source these documents at the last moment since some have to obtained from your office, some come by mail and others need to be downloaded. And even if you have all of documents with you, you need to have them filed in a file that is easy to locate.

 

So what are these documents that you need to keep handy at the time of filing? FeMoney asked tax expert Sudhir Kaushik, Co-founder and CFO, Taxspanner.com on documents that are a must in hand. “Keeping documents like Form 16, Form 26AS and home or education loan certificates for obtaining deductions would ensure that your tax filing is hassle-free and complete,” Kaushik said.

 

Here are a list of documents that Kaushik says one should be ready with while filing tax returns:

 

Form-16 and Form-16A

Form-16 is the most basic source of information about the income earned and the tax deducted from your salary during the year. In case you have worked for more than one employer during the financial year 2015-16 then you must collect your Form 16 from all of them. Form 16-A form is also called a Tax Deducted at Source (TDS) certificate and is issued by banks for interest income, capital gains of NRIs, etc. If you have rental income and your landlord has deducted TDS on rent then you should collect Form-16A from the landlord too. Similarly, if you have any commission or professional income, TDS certificate for the same should also be collected.

 

Form-26AS

Your income from all sources, tax deductions and any high-value transaction(s) are reported in this form. I-T department sends notices if the ITR filed by the taxpayer does not match with the information available in Form-26AS. You should get your Form 26AS and match details with your ITR before filing it. If there is some mismatch, you should fix those errors and then file your return. You can download Form-26AS from your net banking account, directly from income-tax department’s website.

 

Bank statements from all bank accounts

You should verify that all the bank transactions carried out during the financial year with respect to income earned, investments made, expenses etc. have been declared in the appropriate sections of your return. This would show dividend income or gifts received above Rs 50,000 on which tax needs to be paid.

 

Home/education loan interest certificates

If you have taken any home/education loan then collect their interest certificate from the lender to claim the right deduction.

 

Investment proofs not submitted to employer

It is possible that some of the investments made by you during the financial year have not been included in the Form-16 issued to you. For example, if you invested in tax-saving tools such as life insurance, Public Provident Fund after proof submission deadline set by your employer, proofs of these investments would not have been submitted to your employer. For such investments, you need to have the proofs for reference while preparing your return.

 

Share/mutual fund transaction statements

These are required to enter details like sale date, purchase date, quantity and amount for computing capital gains/loss.

 

Tax payment challan(s)

If you have paid advance tax and/or self assessment tax then you need to enter the details of the same in your return for accurate computation of tax liability.

Source: http://www.financialexpress.com/article/personal-finance/income-tax-returns-filing-date-july-31-nears-7-documents-to-be-kept-ready/277141/

SEBI to make it easier for fund managers to move to India

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To make it easier for the foreign fund managers keen to relocate to India, markets regulator SEBI is considering allowing them to function as ‘Portfolio Managers’ under an easier regulatory regime.

The move assumes significance in the wake of the government already having announced taxation incentives for the offshore fund managers willing to relocate to India.

A new section in the Income Tax Act provides that the fund management activity carried out through an Eligible Fund Manager (EFM) located in India and acting on behalf of an Eligible Investment Fund (EIF) would not constitute business connection in India of such a fund.

Following the issuance of notification by the tax department in this regard, SEBI held meetings with various stakeholders to discuss the registration framework for EFMs, during which several impediments were pointed out in the existing regulations for Investment Advisers and Portfolio Managers.

Subsequently, SEBI has decided to initiate a consultation process for changes to its norms for Portfolio Managers while putting in place a framework for allowing EFMs to act as Portfolio Managers to their EIFs.

A proposal in this regard would be put up for approval of SEBI’s board next week, a senior official said.

Among the proposed measures, an existing SEBI-registered Portfolio Manager will also be allowed to act as EFM with prior intimation from SEBI and subject to certain conditions.

SEBI also plans to put in place a procedure for registration of an existing foreign-based fund manager desirous of relocating to India, or as a fresh applicant.

Such applicants will be granted registration as Portfolio Managers to act as an EFM, provided they meet existing eligibility norms of being a body corporate, having net worth of Rs 2 crore, appointment of a Principal Officer and minimum two employees with requisite credentials.

The EFMs would be required to segregate the funds and securities of the EIFs from that of other clients, provide information to Sebi on a half-yearly basis, ensure compliance to the Prevention of Money Laundering Act and other regulations.

However, EFMs would be exempted from several provisions of the PMS Regulations with respect to the EIF, and would have to comply with the applicable regulatory and disclosure requirements of the jurisdiction of the EIF.

Source: http://economictimes.indiatimes.com/articleshow/52640330.cms