COVID -19 relief for taxpayers. Last chance to revise ITR for financial year 2019-20
In view of the adverse circumstances arising due to the severe Covid-19 pandemic and also in view of the several requests received from taxpayers, tax consultants & other stakeholders from across the country, requesting that various compliance dates may be relaxed, the Government has extended certain timelines on Saturday.
In the light of multiple representations received (supra) and to mitigate the difficulties being faced by various stakeholders, the Central Board of Direct Taxes (CBDT) has, under section 119 of the Income-tax Act, 1961(the Act), provided the following relaxation in respect of compliances by the taxpayers:
a) Appeal to Commissioner (Appeals) under Chapter XX of the Act, for which the last date of filing under that Section is 1st April, 2021 or thereafter, may be filed within the time provided under that Section or by 31st May, 2021, whichever is later;
b) Objections to Dispute Resolution Panel (DRP) under Section 144C of the Act, for which the last date of filing under that Section is 1st April, 2021 or thereafter, may be filed within the time provided under that Section or by 31st May, 2021, whichever is later;
c) Income-tax return in response to notice under Section 148 of the Act, for which the last date of filing of return of income under the said notice is 1st April, 2021 or thereafter, may be filed within the time allowed under that notice or by 31st May, 2021, whichever is later;
d) Filing of belated return under sub-section (4) and revised return under sub-section (5) of Section 139 of the Act, for Assessment Year 2020-21, which was required to be filed on or before 31st March, 2021, may be filed on or before 31st May, 2021;
e) Payment of tax deducted under Section 194-IA, Section 194-IB and Section 194M of the Act, and filing of challan-cum-statement for such tax deducted, which are required to be paid and furnished by 30th April, 2021(respectively) under Rule 30 of the Income-tax Rules, 1962, may be paid and furnished on or before 31st May, 2021;
f) Statement in Form No. 61, containing particulars of declarations received in Form No.60, which is due to be furnished on or before 30th April, 2021, may be furnished on or before 31st May, 2021.
The above relaxations are the latest among the recent initiatives taken by the Government to ease compliances to be made by the taxpayers with the aim to grant respite during these difficult times.
The GST revenues during April 2021 are the highest since the introduction of GST even surpassing collections in the last month
The gross GST revenue collected in the month of April is at a record high of Rs. 1,41,384 crore of which CGST is Rs. 27,837 crore, SGST is Rs. 35,621, IGST is ₹68,481 crore (including Rs. 29,599 crore collected on import of goods) and Cess is Rs. 9,445 crore (including Rs. 981 crore collected on import of goods).
“Despite the second wave of COVID-19 pandemic affecting several parts of the country, Indian businesses have once again shown remarkable resilience by not only complying with the return filing requirements but also paying their GST dues in a timely manner during the month,” according to a statement by Ministry of Finance.
The GST revenues during April 2021 are the highest since the introduction of GST even surpassing collections in the last month (March’2021). In line with the trend of recovery in the GST revenues over past six months, the revenues for the month of April 2021 are 14% higher than the GST revenues in the last month of March’2021.
During the month, the revenues from domestic transaction (including import of services) are 21% higher than the revenues from these sources during the last month.
GST revenues have not only crossed the Rs. 1 lakh crore mark during successively for the last seven months but have also shown a steady increase. These are clear indicators of sustained economic recovery during this period.
Closer monitoring against fake-billing, deep data analytics using data from multiple sources including GST, Income-tax and Customs IT systems and effective tax administration have also contributed to the steady increase in tax revenue. Quarterly return and monthly payment scheme has been successfully implemented bringing relief to the small taxpayers as they now file only one return every three months.
Providing IT support to taxpayers in the form of pre-filled GSTR 2A and 3B returns and ramped up System capacity have also eased the return filing process.
During this month the government has settled Rs. 29,185 crore to CGST and Rs. 22,756 crore to SGST from IGST as regular settlement.
The total revenue of Centre and the States after regular and ad-hoc settlements in the month of April’ 2021 is Rs. 57,022 crore for CGST and Rs. 58,377 crore for the SGST.
Only the bare minimum changes necessitated due to amendments in the Income-tax Act, 1961 have been incorporated in the forms, CBDT said in the notification for the new ITR forms, in view of the ongoing crisis due to COVID-19 pandemic.
Keeping minimum change and with the view to minimise compliance burden, The Central Board of Direct Taxation (CBDT) has notified new income tax return forms — ITR-1 to ITR-7, for the Assessment Year 2021-22, the ministry of finance said in a statement on April 1.
In this new ITR form for AY 2021-22, the taxpayers will now have dedicated space in each of the ITR forms — Sahaj (ITR-1), Form ITR-2, Form ITR-3, Form ITR-4 (Sugam), Form ITR-5, Form ITR-6, Form ITR-7 and Form ITR-V to describe their investments, CBDT said.
ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) are simpler Forms that cater to a large number of small and medium taxpayers. Sahaj can be filed by an individual having income up to Rs 50 lakh and who receives income from salary, one house property / other sources (interest etc).
Similarly, Sugam can be filed by individuals, Hindu Undivided Families (HUFs) and firms (other than Limited Liability Partnerships (LLPs) having total income up to Rs 50 lakh and income from business and profession computed under the presumptive taxation provisions.
Individuals and HUFs not having income from business or profession (and not eligible for filing Sahaj) can file ITR-2, while those having income from business or profession can file ITR Form 3.
Persons other than individual, HUF and companies i.e. partnership firm, LLP etc can file ITR Form 5. Companies can file ITR Form 6. Trusts, political parties, charitable institutions etc claiming exempt income under the Act can file ITR-7.
There is no change in the manner of filing of ITR forms as compared to last year, the CBDT said.
Key points :
♦ ITR-1 cannot be filed in case tax has been deducted u/s 194N
As per, Section 194N – TDS 194N is required to be deducted if amount of cash withdrawn exceeds –
Exceeds Rs 20 lakhs in case of non-filers of return
Rs 1 crore in all other cases
from banking company or co-operative bank or post-office from one or more accounts maintained by taxpayer.
If tax has been deducted u/s 194N, a person can file –
ITR 2
ITR 3
ITR 4
♦ TDS deducted u/s 194N cannot be carried forward to subsequent years.
It means Credit for tax deducted u/s 194N can be taken in previous year relevant to Assessment year in which tax has been deducted.
♦ Option has been given to Individual or HUF as per Section 115BAC.
From A.Y 2021-22 option is available to Individual & HUF whether to opt New Scheme or not. This option for lower tax regime, by foregoing certain exemptions and deductions, is given to Assessees to select new scheme-Section 115BAC and are required to file Form-10IE before filing the return u/s 139(1).
♦ Change in Schedule 112A-LTCG from sale of equity share or unit of equity oriented fund on which STT is paid.
Sale price per share/unit now added in Schedule 112A, which was not earlier provided.
♦ Dividend also taxable from A.Y 2021-22- As we know Dividend Income taxable from A.Y 2021-22 in hands of Assessee from A.Y 2021-22 so we are required to give quarterly break-up of Dividend received in order to get relief from interest levied u/s 234C.
♦ Changes in Section 44AB- The threshold limit to get books of account audited increased from Rs 1 crore to 10 crores, if the following conditions are satisfied-
His aggregate of all receipts in cash during the previous year does not exceeds 5 % of such receipts.
His aggregate of all payments in cash during the previous year does not exceeds 5 % of such payments
The Double Tax Avoidance Agreement (DTAA) is essentially a bilateral agreement entered into between two countries. The basic objective is to promote and foster economic trade and investment between two Countries by avoiding double taxation.
WHAT IS DOUBLE TAXATION OF INCOME?
When the same income is taxed more than once, due to levying of tax by two or more jurisdictions, on the same income asset or financial transaction, this results in double taxation. This may happen, when an assessee – an Individual or a company, is taxed more than once for the same income in India, either on the basis of place of residence or on the basis of source of accrual, which leads to double taxation.
Countries have started entering into Double Taxation Avoidance Agreements (DTAA) with other countries to resolve double taxation issue so as to ease out the tax burden of their taxpayers. This relief for taxes paid in foreign country is given to taxpayer while taxing the same income in India, which is termed as Foreign Tax Credit (FTC).
B. HOW DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) WORKS?
In any country, the tax is levied based on 1) Source Rule and 2) the Residence Rule.
The source rule holds that income is to be taxed in the country in which it originates irrespective of whether the income accrues to a resident or a non-resident whereas the residence rule stipulates that the power to tax should rest with the country in which the taxpayer resides.
If both rules apply simultaneously to a business entity and it were to suffer tax at both ends, the cost of operating on an international business would become prohibitive and would deter the process of globalization. It is from this point of view that Double Taxation Avoidance Agreements (DTAA) have become significant.
Where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.
Impact of Double Taxation Avoidance Agreement:
1. WHERE DTAA EXISTS (SECTION 90):
There are two methods of granting relief under Double Taxation Avoidance Agreement.
Exemption method – A particular income is taxed in one of the both countries and exempted in the other
Example- For the Income from Dividend, Interest, royalty and fees for technical services Source Rule is applicable in treaty with Greece, Libyan and United Arab Republic. So for citizen of these 3 countries if the dividend, interest, royalty or fees for technical services is arising in India, then it will be solely taxable in India only and for a resident if such income is arising in any of these 3 countries then the income will solely be taxed in these 3 countries and it will not at all be taxable in India.
Tax Credit method- The income is taxed in both the countries as per the treaty and the country of residence will allow the tax credit / reduction for the tax charged in the country of Origin.
Example- Mr. A (an Indian resident) has received salary from a US company for job in US. Since Mr. A is a resident so his global Income will be taxable in India. In this case, source country is US (since the service has been rendered in US) and resident country is India. So at the time of computation of tax liability of Mr. A, the tax paid in US will be allowed as set off against his total tax liability but limited to the tax payable on such foreign income at Indian tax rates.
Therefore DTAA determines which method to be used first and, if the income is taxable only in one country then exemption method shall be used, but if the same is taxable in both countries then tax credit method comes into play.
In case where Bilateral agreement has been entered under section 90 of the Income Tax Act, 1961 with a foreign country then the assessee has an option either to be taxed as per the Double Taxation Avoidance Agreement (hereinafter referred as “DTAA”) or as per the normal provisions of Income Tax Act 1961, whichever is more beneficial to assessee.
Example- As per DTAA between India and Germany, tax on Interest is specified @ 10% whereas under Income Tax Act 1961, it depends on slab rates for individuals & HUF and flat rates (generally 30%) for other kind of assessees (like firm, company etc). Hence, one can follow DTAA and pay tax @ 10% only.
2. WHERE DTAA DOES NOT EXIST (SECTION 91):
i. If any person who is resident in India in any previous year, in respect of income which arose outside India (and which is not deemed to accrue or arise in India), and paid in any country with which there is no agreement under section 90 for the relief or avoidance of double taxation, then he shall be entitled to the deduction from the tax payable in India,
ii. Deduction shall be lower of:
Tax calculated on such double taxed income at the Indian rates.
Tax calculated on such double taxed income at the rate of tax of the said country
Example :Suppose Indian Sportsman, resident of India who earns foreign income in form of match fees being professional and dividend income as his other foreign income from the below mentioned countries, then in such case following provisions and method shall govern his taxability:
Therefore, both Tax Credit method u/s 90 and Section 91 deals with Foreign Tax Credit, but still having DTAA is beneficial because assessee is taxed at rate beneficial to him, which is not so in case of NO DTAA.
C. HOW CREDIT OF FOREIGN TAX IS AVAILED IN INDIA?
Rule 128 governs the credit of taxes paid on income earned in foreign country. An assessee shall be eligible to claim credit of foreign tax paid if he complies with provisions stated under Rule 128 of the Income Tax Rules which are discussed as follows:
1. Analysis of Rule 128 introduced under Indian Income Tax Rules
Applicability of the rules
The rules came into force with effect from 1.4.2017 applicable only for resident assessee for the amount of foreign taxes paid by him in a foreign country. The credit is available only if income corresponding to the taxes is offered for tax or assessed to tax in India during the year in which the credit is claimed.
In the cases where the income for which the foreign taxes paid or deducted is offered to taxes for more than one year, the credit will be given across the years in the same proportion to which the income is offered to tax in India during the year in which credit is claimed.
2. Foreign Tax Credit Defined under sub-rule 2:
i. FTC in case of DTAA countries: Taxes that are covered under the said agreement.
ii. FTC in case of other countries (No DTAA): Tax payable under the law in force in that country in the nature of income-tax referred in Section 91.
The LOWER OF tax payable under the act on such income or the foreign tax paid is eligible as FTC. However, while considering the foreign tax paid, it cannot exceed the amount arrived as per DTAA with that country.
3. Utilization of Foreign Tax Credit:
FTC is eligible for adjustment against the tax, surcharge and cess payable under the IT Act. FTC cannot be adjusted against interest, fee or penalty payable under the IT Act. FTC is not available in case foreign tax or part thereof is disputed by the assessee in any manner.
4. Exception & Conditions relating to Foreign Tax Credits:
Credit is allowed in the year in which the income is offered/assessed in India upon the assessee within six months from the end of the month in which dispute is finally settled and assessee furnishes:
Evidence of settlement of dispute
Evidence that the liability for payment of such foreign tax has been discharged and
Undertaking that no refund in respect of such amount is directly or indirectly been claimed. Further, credit for each source of income shall be calculated separately for a specific country and then aggregated. The rate of exchange to be taken for this purpose is TT buying rate on the last day of the month immediately preceding month in which the tax is paid or deducted.
5. Documents required under Foreign Tax Credit:
Furnish FORM 67 duly verified and certified by a Chartered Accountant on or before furnishing return of income u/s 139(1)
Furnishing following certificates or statement specifying:
Nature of income and,
Amount of Tax paid of which statement given by:
Tax authority of that country, or
Person responsible for deduction of such tax, or
Signed by the assessee:
In this case, it should be accompanied with – an acknowledgment of online payment or receipt or bank counterfoil for proof of payment of tax, if tax is paid by the assessee
In case of tax deduction, proof of such Tax deducted at source
D. JUDICIAL PRECEDENTS UNDER FOREIGN TAX CREDIT
1. WIPRO LIMITED F TS – 565 – HC – 2015 (KAR)
The judgment of WIPRO provides that merely because the taxpayer’s income is exempt from tax due to a limited tax holiday provided under the ITA, does not mean that foreign tax credit can be simply denied.
2. TATA SONS [2011] 43 SOT 27 (MUM AT)
Though DTAA with USA provides credit only the tax paid with the Federal Government, credit was extended to the Taxes paid to State taxes as well. It has considered the relief u/s 91 which was beneficial to the assessee than that of the DTAA.
3. VIJAY ELECTRICALS [2015] 54 COM 19 (HYD AT)
Tax credit is available even if the same is not deposited with the overseas Government in the year in which the income is taxable.
Income tax return filing due date: ITR FOR COMPANIES:- Deadline for filing income tax return for 2019-20 by companies extended by 15 days to Feb 15, 2021and for individuals by 10 days to Jan 10, 2021
In a major development, Income Tax department has extended the deadline for ITR filings. The deadline for filing income tax return for 2019-20 by companies extended by 15 days to Feb 15, 2021. Further, the deadline for filing income tax returns by individuals extended by 10 days to January 10, 2021. Also, the last date to declare under Vivad se Vishwas Scheme extended to 31st January 2021, it was expiring on December 31st.
Deadline for filing income tax return for 2019-20 by companies extended by 15 days to Feb 15, 2021 & deadline for filing income tax returns by individuals extended by 10 days to Jan 10, 2021
Taking to Twitter, Income Tax Department said, “In view of the continued challenges faced by taxpayers in meeting statutory compliances due to outbreak of COVID-19, the Govt further extends the dates for various compliances. Press release on extension of time limits issued today:”
Earlier, direct tax professionals had sought extension for tax audit report, income tax returns for audit cases and time limit for AGMs in the wake of the ongoing pandemic scenario. The Direct Taxes Professionals Association (DTPA) had urged Finance Minister Nirmala Sitharaman for extension of date of furnishing of tax audit report under section 44AB to February 28 and the due date of filing of income tax returns of assessment year 2020-21 in audit cases to March, 31, 2021.
Meanwhile, the IT department on Wednesday said more than 4.54 crore tax returns for 2019-20 fiscal have been filed till December 29. In the comparable period last year, 4.77 crore income tax returns were filed. At the close of deadline for filing ITRs without payment of late fees for fiscal 2018-19 (assessment year (AY) 2019-20), over 5.65 crore returns were filed by taxpayers.
In a tweet on Wednesday, the Income Tax department nudged taxpayers to file their ITRs by the due date. “More than 4.54 crore Income Tax Returns for AY 2020-21 have already been filed till 29th of December, 2020,” the I-T department said.
The data released by the tax department showed that over 2.52 crore ITR-1 have been filed till December 29, 2020, lower than the 2.77 crore filed till August 29, 2019.
Over 1 crore ITR-4 have been filed till December 29 as compared to 99.50 lakh filed till August 29, 2019. An analysis of the data showed that individuals filing tax return for fiscal 2019-20 have slowed so far in the current year, while filings by businesses and trusts have increased.
Returns in ITR-1 Sahaj can be filed by an ordinarily resident individual whose total income does not exceed Rs 50 lakh, while form ITR-4 Sugam is meant for resident individuals, Hindu Undivided Families (HUFs) and firms (other than LLP) having a total income of up to Rs 50 lakh and having presumptive income from business and profession.
Over 33.93 lakh ITR-2 (filed by people having income from residential property) were filed till December 29.
During last year, the due date for filing ITR by individuals who do not need to get their accounts audited was August 31. However, the date has been extended till December 31 this year on account of the COVID-19 pandemic.
ITR-5 (filed by LLP and Association of Persons) filings till December 29, 2020 jumped to 7.09 lakh from 4.14 lakh filed till August 29, 2019. ITR-6 (filed by businesses) filings skyrocketed to over 3.46 lakh till December 29, 2020 as compared to 21,962 filed till August 29, 2019.
ITR-7 (filed by persons having income derived from property held under trust) filings also jumped to over 1.04 lakh till December 29, 2020 as compared to 41,963 till August 29 last year.
Earlier, for the FY 2019-20, the government had also extended the date for making various investment/ payment for claiming deduction under Chapter-VIA-B of the IT Act which includes section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations) to 31st July, 2020. Now the investment/ payment can be made upto 31st July, 2020 for claiming the deduction under these sections for FY 2019-20. In the income tax forms, Schedule DI enables taxpayers to claim exemptions on investments they made during the extended period, until June 30, 2020.
Under normal circumstances, the last date to take income tax benefits is till March 31 of the financial year. The government had also extended the last date for the issuance of Form 16 by employers to their employees. In fact, the extension has been given for all TDS ( tax deducted at source) certificates, including Form 16. The CBDT has already notified the Income Tax Return Forms for the assessment year (AY) 2020-21 and are available for e-Filing by downloading either excel or Java utility.
The Institute of Chartered Accountants of India, in its gazette notification had made the generation of UDIN from the ICAI website mandatory for every kind of certificate/tax audit report and other attests made by their members as required by various regulators. This was introduced to curb fake certifications by non-CAs misrepresenting themselves as Chartered Accountants
The income tax department will validate with the Institute of Chartered Accountants of India (ICAI) the unique document identification number (UDIN) of chartered accountants when they upload tax audit reports, the finance ministry said on Thursday.
To curb fake certifications by non-CAs misrepresenting themselves as chartered accountants, the ICAI in 2019 made generation of UDIN from the ICAI website mandatory for every kind of certificate and tax audit report and other attests made by their members as required by various regulators.
The ministry said that in line with the ongoing initiatives of the income tax department for integrating with other government agencies and bodies, income-tax e-filing portal has completed its integration with the ICAI portal for validation of UDIN generated from the ICAI portal by the chartered accountants for documents certified/attested by them.
Income-tax e-filing portal had already factored mandatory quoting of UDIN with effect from April 27, 2020, for documents certified/attested in compliance with the Income Tax Act,1961 by a chartered accountant.
“With this system level integration, UDIN provided for the audit reports/certificates submitted by the chartered accountants in the e-filing portal shall be validated online with the ICAI,” the ministry added.
It said this will help in weeding out fake or incorrect tax audit reports not duly authenticated with the ICAI.
If a chartered accountant was not able to generate UDIN before submission of audit report or certificate, the e-filing portal permits such submission, subject to the CA updating the UDIN within 5 calendar days from the date of form submission in the income tax e-filing portal.
If the UDIN for the audit report/certificate is not updated within the 15 days, such audit report and certificate uploaded shall be treated as invalid submission, the ministry added.
The Direct Tax Vivad se Vishwas Act, 2020 was enacted on March 17, 2020 to settle direct tax disputes locked up in various appellate forums.
The Ministry of Finance has extended the deadline for making a declaration under Vivad Se Vishwas Scheme till 31′ January, 2021 from 31st December, 2020.
The Ministry of Finance has extended the deadline for making a declaration under Vivad Se Vishwas Scheme till 31′ January, 2021 from 31st December, 2020.
The date for the passing of order or issuance of notice by the authorities under the Direct Taxes & Benami Acts which are required to be passed/ issued/ made by 30th March 2021 has also been extended to 31st March 2021.
The Vivad se Vishwas scheme was announced by Union Finance Minister Nirmala Sitharaman during her budget speech on February 1, 2020.
Given below are all the aspects you have to know about this amnesty scheme: Under this scheme, taxpayers whose tax demands are locked in dispute in multiple forums, can pay due to taxes by March 31, 2020, and get a complete waiver of interest and penalty.
If a taxpayer is not able to pay within the deadline, he gets a further time till June 30, but in that case, he would have to pay 10% more on the tax.
