Faceless scrutiny of income tax return.. Here is all you need to know

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Individual will be required to respond to the notice or order received through the registered account only.

The E-assessment Scheme 2019 aims to eliminate human interface, reduce corruption and bring in transparency.

The idea of faceless E-assessment was mooted in the Budget 2018 by the late Finance Minister, Arun Jaitley, who announced the proposal to introduce the new assessment scheme to replace the old assessment system of manual scrutiny and face-to-face interaction with tax authorities.

The new scheme, called the ‘E-assessment Scheme, 2019 (Scheme), was notified by CBDT on 12 September, 2019. It will be an online system, which will use artificial intelligence, machine learning and technology tools to randomly and automatically allocate cases for assessment within the Income Tax Department. It aims to eliminate human interface, reduce corruption and bring in transparency.

 

Salient features of the Scheme:

The Scheme will have dedicated E-assessment centres such as the National E-assessment Centre, Regional E-assessment Centre, assessment units, verification units, technical units and reviewer units with each centre and unit having a clearly defined role and process to follow.

# National E-assessment Centre (NEC): NEC will be a single point of contact for the taxpayer as well as for all units conducting assessment. NEC will interact with the taxpayer to obtain evidence, issue notices, receive information, issue draft assessment order, raise demand, etc, and also interact with all units for smooth conduct and completion of assessment proceedings. All communication between the NEC, the taxpayer and various units would be done online and would be digitally signed.

# Regional e-assessment Centre (REC): REC will ensure smooth conduct of E-assessment under the region of a Principal Chief Commissioner.

# Assessment units (AU): AU will perform the function of scrutinising tax returns, analysing submissions made and evidence submitted by the assessee and make requests, if any verification or technical assistance is required.

# Verification units (VU): VU will perform the function of making enquiry, cross verification, examination of records or witnesses and recording statements, as may be required for verification.

# Technical units (TU): TU will give advice on legal, accounting, forensic, information technology, valuation, transfer pricing, data analytics, management or other technical matter required for conducting assessments.

# Review units (RU): RU will review draft assessment order (DAO) to check if all material evidence, relevant points of fact and law, relevant tax case laws have been included in the DAO. It will also ensure the arithmetical accuracy of modifications proposed and perform other functions as may be required for review.

Procedure for assessment:

NEC will issue notice under section 143(2) online by uploading the digitally signed copy on the registered income tax account or by sending notice to the assessee’s registered email address or uploading the copy on a mobile app. A real time alert will be sent through SMS or the mobile app informing the same to the assessee

The assessee is required to respond within 15 days of receipt of notice.

On the issue of a notice, NEC will allocate the case to any AU through an automated allocation system. The AU will then identify issues, seek clarifications from the assessee and may request for verification or enquiry through VU or seek technical assistance through TU. Accordingly, NEC will initiate request to the respective units through an automated allocation system.

On receipt of all information, AU will prepare a DAO accepting the returned income or modifying the returned income or send the DAO to NEC for review. NEC will accordingly finalise the order or modify it or send the DAO to RU for review. Accordingly, it may send the DOA along with demand notice and penalty notice, where applicable, to the assessee or issue a showcause notice to the assessee.

In case of a showcause notice, the assessee will submit the response within the timeline specified in the notice. Considering the response, the NEC may either finalise the DAO or ask the AU to prepare a revised DAO.

On receipt of the revised DAO, the NEC will verify if any modification prejudicial to the taxpayer’s interest is proposed. Accordingly, the NEC will give an opportunity to the assessee to show cause as to why assessment should not be finalised as per the revised DAO; otherwise, NEC will finalise the assessment.

On completion of assessment, all records will be electronically transferred to the jurisdictional assessing officer (AO) only for imposition of penalty, recovery of demand, rectification of mistake, giving effect to appellate orders, submission of remand report or representation or for placing of any record before Commissioner (Appeals), Appellate Tribunal or Courts and for initiating prosecution or filing of complaint before the courts.

During the course of assessment proceedings, any unit may initiate penalty proceedings for non-compliance of any notice, direction or order and may recommend to the NEC to serve notice to the assessee.

Any appeal from the order of the NEC will be filed before the Commissioner (Appeals) having jurisdiction over the jurisdictional Assessing Officer.

During the assessment proceedings, no personal appearance will be allowed before the income-tax authority at NEC or any other units. In case personal hearing is required, to make oral submission or present the case, it shall be done only through video conferencing.

The E-assessment Scheme, 2019 is a welcome step towards standardisation and easing of assessment procedure. However, its success and ensuring that ease of doing business is achieved will depend on its careful implementation

CBDT extends the due date for filing ITRs & Tax Audit Reports from 30 th September to 31, October 2019

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The Central Board of Direct Taxes (CBDT) has decided to extend the deadline for filing of ITRs and Tax Audits Reports by a month. Given the relentless demands by Chartered Accountants (CAs) and tax consultants, the CBDT has given a breather till October 31. It will also provide some respite to smaller companies too, who are struggling with GST filings.

Last night, the CBDT tweeted: “On consideration of representations recd from across the country, CBDT has decided to extend the due date for filing of ITRs & Tax Audit Reports from 30th Sep, 2019 to 31st of Oct, 2019 in respect of persons whose accounts are required to be audited. Formal notification will follow”.

This category of ITR is to be filed by those entities that are assessed under section 44AB of the Income Tax Act such as companies, partnership firms, proprietorship among others and their accounts are to be audited before filing.

The new deadline is also required because the CBDT has been intermittently changing the background software required for filing the ITRs.

There was a change in the ITR 6 software utility. Since all tax-filing is now software-driven, the CBDT will require some time to rework the filing process due to the changes in the software.

The old belief that there would be loss in revenue of the Government, if there is a delay in filing ITRs and Tax Audit Reports is wrong as a considerable share of revenue has already got collected due to Tax Deducted at Source and Advance Tax payments.

Filing ITRs and Tax Audit Reports is primarily an administrative exercise to inform the Income Tax Department about the payable tax. By extending the deadline, there would be no revenue loss to the Government. It will give some relief to the CAs fraternity and smaller companies who are struggling with various tax compliances, he said.

 

Read the Original CBDT Notification

File revised tax returns after rectifying errors

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Most of us collate all information relating to our annual income, investments and tax deducted at source (TDS) before proceeding to file our income tax returns. However, the income tax filing process is a fairly comprehensive exercise. We might miss disclosing an income due to oversight, or claim an exemption or deduction that is not due. What are the options available to us if we make a mistake while filing returns?

We may make an error due to insufficient information or mis-match between Form 16 / Form 16 A and Form 26 AS or any other reason. Errors may also occur in our calculation. The income tax law allows us to file a revised return, correcting the omission or mistake made by us in the original return.

Filing a revised return

You can file a revised return at any time before the end of the assessment year, or before completion of the assessment, whichever is earlier.

For example, for the AY 2019-20, you can file a revised return till 31 March 2020. However, if your assessment is concluded before that date, you cannot file a revised return after completion of your assessment. An income-tax assessment is made through a notice issued by the assessing officer where your income and taxes are determined through assessment proceedings. In some situations this assessment may be completed before the end of the assessment year. If this is the case, you can no longer revise your return.

The revised return has to be filed in the same manner as an original return. While filing, a taxpayer has to choose the option: ‘Revised u/s 139(5)’. A taxpayer has to quote the acknowledgement number and date of filing of the original return while filing the revised return. The revised return substitutes the original return.

You may have filed an original return within the due date, or you may have filed after the due date. A return filed after the due date is called a ‘belated return’. You can revise both—a return filed within the due date or a belated one. The time limit for revising is the same for both as discussed above, i.e., before the end of the assessment year or before completion of assessment, whichever is earlier.

You can revise your income tax return any number of times. However, you are required to mention the acknowledgement number of the original return filed. You must note that ‘revised return’ is an opportunity for revision allowed by the income tax department. Hence, one must not misuse it and revise a return only in the case of a mistake or omission in the original return filed. If you are making errors with revisions, it’s in your interest to seek professional help for your return filing.

As is done with an original return, do remember to e-verify your ‘revised return’ as well. Your ‘revised return’ would not be valid if the same is not e-verified. You can e-verify the ‘revised return’ using an OTP (one-time password) based on Aadhaar or net banking or EVC (electronic verification code). You can also send a signed copy of the ITR V to the Centralized Processing Centre, Bengaluru, within 120 days of filing the ‘revised return’.

Missed Income Tax Return (ITR) Filing Deadline? Here Are Your Options

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Individuals having an annual income of up to Rs2.5 lakh are not required to file income tax returns, according to Income Tax department.

Missed the August 31 deadline for filing income tax return (ITR) for financial year 2018-19 (assessment year 2019-20)? Well, you don’t need to worry as you can still file a belated return. The Income Tax (I-T) department has, however, stipulated a penalty fee ranging from Rs. 5,000 to Rs. 10,000 for filing a belated income tax return, according to its website – incometaxindia.gov.in. A belated return of income is furnished under section 139(4) of the Income Tax Act. The amount of penalty payable by the assessees filing a late return increases based on the degree of delay.

Here are key things to know about belated income tax return (ITR):
1. Any person who has not furnished a return of income within the time period allowed under section 139(1) of Income Tax Act can furnish return for any previous year – at any time before the end of the relevant assessment year or before completion of the assessment, whichever is earlier, according to I-T department.

2. A belated return attracts late filing fees under section 234F of the Income Tax Act.

3. Income Tax rules state that a fine of Rs. 5,000 is applicable if an individual files ITR after due date but before December 31.

4. The penalty increases to Rs. 10,000 if the asseesee file the return next year between January 1 and March 31.

5. Those who have an annual income of Rs. 5 lakh, however, are required to pay Rs. 1,000 for filing ITR after the due date.

What are the income tax exemption limits for an individual?

There are three categories of individual taxpayers- individuals (below the age of 60 years) which includes residents as well as non-residents, resident senior citizens (60 years and above but below 80 years of age) and resident super senior citizens (above 80 years of age). Individuals having an annual income of up to Rs. 2.5 lakh are not required to file income tax returns. For senior citizens (individuals between 60 years and 80 years of age), the limit is Rs. 3 lakh, and for very senior citizens (aged above 80 years), the limit is Rs. 5 lakh, according to the taxman.

The Income Tax Department has, on its website, laid out a step-by-step guide for assessees to prepare and submit their income tax return (ITR) online.

 

Deadline to file income tax return for FY2018-19 extended to August 31

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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.

Read Original Circular

Source: Economic Times

Income tax department eyes over Rs 100 bn from ‘struck off’ firms

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The income-tax (I-T) department is estimating tax recovery of over Rs 100 billion from companies that have been struck off from records of the Registrar of Companies (RoC) last year.

The tax department is in the process of filing a petition before the National Company Law Tribunal (NCLT) for restoration of registration in as many as 50,000 such companies.

The RoCs had struck off 300,000 companies after it was found they had not filed their statutory returns. Directors of these companies have been prohibited from holding directorships in any other company.
The move follows Central Board of Direct Taxes’ (CBDT) directive to identify, process and file petition to restore these companies by August 31. The board also asked the Ministry of Corporate Affairs (MCA) not to oppose the restoration application in the tribunal, as such a move would refrain them from launching tax recovery proceedings against these firms.
“Several of these companies are restricted to operate their bank accounts and movable and immovable properties until they are restored. The restoration will compel these firms to make relevant disclosures of credentials under Companies Act, and then accordingly tax proceeding will be initiated for tax recovery,” said an I-T official.

Tax industry experts, too, believe that restoration is essential to recover taxes due from these firms.

“The tax department is contesting the strike off of so-called companies as in several cases there would be pending tax demands that cannot be recovered if the company is not active. Also, even in cases where genuine companies have been struck off, with the best intentions, the companies would not be able to pay the tax dues as all their assets including bank accounts would be non-operational,” said Amit Maheshwari, partner at Ashok Maheshwary & Associates LLP.

The I-T department is of the view that these companies abused their corporate structure by creating multi-layering during  demonetisation for cash deposits. I-T probe also reveals that many individuals have used these firms for siphoning money or converting undisclosed cash to legitimate money post the note ban.

Official data say that 35,000 companies deposited and withdrew cash worth over Rs 170 billion after the note ban, through about 60,000 bank accounts.

It was noticed that the accounts that had negligible balance on November 8, 2016, have seen significant cash deposits and withdrawal during this period.

According to people with knowledge of the matter, along with restoration, the I-T department will also start issuing notices to these firms under Section 179 of the I-T Act, which makes the company’s directors/promoters liable to pay dues on behalf of the firm, without adjudication by the court.

Further, tax recovery officers have been asked to conduct survey operations on select firms where the tax demand is high. In cases where assets or bank accounts are lying abroad, the department will seek the foreign tax authority’s assistance to recover tax claims with the provisions in the relevant treaty, said another senior official.

Sources said that in a meeting of a task force on shell companies set up by the Prime Minister’s Office, on November 30 last year, the director general of corporate affairs (DGCoA) had suggested that the tax department approach RoCs for taking up the matter of reviving these companies. It was also suggested that revenue considerations should weigh in favour of restoring them.

Apart from these companies, another set of above 200,000 firms have been sent notices and action will soon be taken against them. However, the tax department wants MCA to keep them posted before striking off any company, since there could be tax dues.

 Taxing Affair
  • I-T pursuing restoration of 50,000 struck-off companies
  • RoCs had struck off 300,000 companies, prohibited their directors from holding directorship in other firms
  • Tax industry experts believe that restoration is essential for recovery of taxes from these firms
  • Restoration will allow companies to operate bank account, assets
  • After restoration, I-T to issue notices under Section 179 of I-T Act
  • Directors/promoters would be liable to pay tax dues
  • These firms abused corporate structure to facilitate significant cash transactions post note ban

Source: Business Standard

GST annual return due date extended till 31 August 2019 for FY 2017-18

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35th GST Council Meeting Highlights

35th GST Council Meeting was held on 21 June 2019 at New Delhi, after a gap of more than three months, chaired by Union Finance Minister, Mrs Nirmala Sitharaman.

This GST Council meeting has been called at a time when the countdown to upcoming Union Budget 2019 is less than a month away. A lot of expectations piled up over months concerning various indirect tax issues will be addressed in this meeting.

Highlights of 35th GST Council Meeting

The 35th GST Council meeting concluded with consensus on the following matters

  1. GST annual return due date extended till 31 August 2019 for FY 2017-18

The due date for filing GSTR-9, GSTR-9A, and GSTR-9C for the FY 2017-18 has been extended by two months, till 31 August 2019. Official notification can be made anytime soon.

  1. Aadhaar-enabled GST Registration introduced:

In order to ease the current process of GST registration and reduce the paperwork involved, GST Council has given a go-ahead to a new system for verification of taxpayers registering themselves under GST.  Aadhaar number shall be linked to the GSTIN while generation.

  1. NAA tenure extended by two years

Tenure of National Anti-profiteering Authority (NAA) was due to end by 30 November 2019. GST Council has further extended this tenure by two years, to enable it to take up all the pending cases. Hence, the authority can take up new cases in future due to rate cut issues, indicating that the GST Council has plans for further rationalisation of GST rates.

  1. 10% penalty to apply for any delay in depositing profiteered amount

GST Council has approved a levy of 10% penalty for delay in depositing the profiteered amount by more than 30 days. This is a fair measure that would encourage timely compliance by the taxpayer.

  1. E-invoicing to start from January 2020

The new system for raising all the tax invoices on the GST portal has received in-principle approval for implementation from 1 January 2020. This applies to only B2B invoicing. By this system, no separate e-way bill will be required in case of e-invoice. Returns to be framed from these e-invoices. A phased implementation is being worked out.
Earlier, the government had fixed Rs 50 crore as the limit for the applicability of e-invoicing.

  1. E-ticketing made mandatory for multiplexes

Among other major decisions, the GST Council approved the electronic ticketing system, for multiplexes, having multi-screens. This will help curb cases of tax evasion and the use of black tickets that have been prevalent.

  1. Rate cut decision on electric vehicles, chargers & leasing thereof deferred; Committee to submit its report

The decision to cut GST rates for electric vehicles and electric chargers have been postponed to the next Council meeting. The matter has been referred to the Fitment Committee for checking the feasibility of the rate cut. At present, the GST rates for electric vehicles and electric chargers are 12% and 28% respectively.

Likewise, the valuation rules for goods and services pertaining to solar power generating systems and wind turbines will be placed before the next Fitment Committee. The suggestions made by this Committee will be placed before the next GST Council meeting.

  1. Rate cut for lottery put on hold; Matter to be referred before an Attorney General

The previous council meet had not tabled the rate cut matter for lotteries. The 35th GST Council meeting discussed the matter at length and also brought to light two pending cases on this matter before the high court and supreme court respectively. Although the courts had referred the matter back to GST Council, the Council has decided to consult the Attorney General of India.

  1. GSTAT to be GST Appellate Tribunal.

The GST council also definitively stated the Goods and Service Tax Appellate Tribunal will be the appellate authority and will adjudicate on appeals arising from central and state tax authorities’ in-house dispute resolution system. The states will decide the number of GSTAT required by them as a result of which there can be two tribunals in a single state.

  1. Other Due date extensions
Form New due date
ITC-04 for July 2017- June 2019 31 August 2019
CMP-02 for opting into the composition scheme for service providers under Notification 2/2019-CT rate 31 July 2019
  1. For non-filing of GST returns, E-way bills to be blocked

The law stated that where the GST returns in GSTR-3B/ GSTR-4 is not filed for two consecutive tax periods, e-way bill generation for such taxpayers would be disabled. This will be brought into effect from 21 August 2019, instead of the earlier notified date of 21st June 2019.