Latest changes in income tax rules

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Notification No. 34/2013, 39/2013
Changes in ITR Forms 2013
Online filling of Tax Audit Report and other forms

Latest changes in income tax rules

  1. 1. Presented by: Binay Agarwal A.C.A., C.M.A., B.Com (Hons) E-mail: f10@casunilarora.com
  2. 2. Notification No. 34/2013 dated 1st May, 2013. Rule 12 of the Income Tax Rules, 1962 amended w.e.f. 1st April, 2013 through Income Tax (3rd Amendment) Rules, 2013 notified on 1st May, 2013 vide Notification No. 34/2013. Changes brought into by the said notification may be broadly classified in three part: 1. Changes in sub-rule (1) to rule 12. 2. Changes in sub-rule (2) to rule 12. 3. Changes in sub-rule (3,4 & 5) to rule 12.
  3. 3. PART A Changes in sub-rule (1) to rule 12
  4. 4. New Forms for A.Y. 2013-14 notified  New Income Tax Return Forms SAHAJ (ITR-1), ITR-2, ITR-3, ITR-4, SUGAM (ITR 4S) and ITR-V also got notified through these amendment rules.  All these forms are available on the Income Tax E- filing website https://incometaxindiaefiling.gov.in/e- Filing/MyAccount/downloads
  5. 5. ITR – 1 SAHAJ Who can use this return form? An individual whose total income includes: 1. Income from Salary/Family Pension; and/or 2. Income from one House Property (excluding cases where loss is brought forward from previous years); and/or 3. Income from Other Sources (excluding Winning from Lottery and Income from Horse races) and does not have any loss under the head.
  6. 6. ITR – 1 SAHAJ Who cannot use this return form? An individual whose total income includes: a) Income from more than one house property; or b) Income from Winnings from lottery or Horse Races; or c) Income under the head “Capital Gains”; or d) Income from Agriculture/exempt income in excess of Rs.5000; or e) Income from Business or Profession; or f) Loss under the head ‘Income from Other Sources’; or g) Person claiming relief of foreign tax paid under section 90, 90A or 91; or h) Any resident (other than not ordinarily resident) having any asset (including financial interest in any security) located outside India or signing authority in any account located outside India.
  7. 7. ITR – 2 Who can use this return form? An individual or a HUF whose Total Income includes: a) Income from Salary/ Pension; or b) Income from House Property; or c) Income from Capital Gains; or d) Income from Other Sources (including winnings from Lottery and Income from Race Horses). Who cannot use this return form? An individual or an HUF whose total income for the Assessment Year 2013-14 includes Income from Business or Profession.
  8. 8. ITR – 3 Who can use this return form? a) An individual or a HUF who is a partner in a firm and b) Where income chargeable to income tax under the head “Profits or Gains of Business or Profession” does not include any income except the income by the way of any Interest, Salary, Bonus, Commission or Remuneration. Who cannot use this return form? An individual or an HUF whose total Income for the Assessment Year 2013-14 includes Income from Business or Profession under any Proprietorship.
  9. 9. ITR – 4 Who can use this return form? a) This Return form can be used by an individual or an HUF whose total Income for the Assessment Year 2013-14 includes Income from Business or Profession under any Proprietorship.
  10. 10. SUGAM (ITR – 4S) Who can use this return form? An individual or a HUF whose total income includes :- a) Business income computed in accordance with special provisions referred to in Section-44AD and 44AE of the act; and/or b) Income from Salary/Pension; and/or c) Income from One House Property (excluding cases where loss is brought forward from previous year); or d) Income from Other Sources (excluding winning from Lottery and Income from Horse Races).
  11. 11. SUGAM (ITR – 4S) Who cannot use this return form? An individual or a HUF whose total income includes :- a) Income from Profession as referred to in sub section (1) of section 44AA or income from an agency business or income in the nature of commission for brokerage; or b) Income from more than one House Property; or c) Income from Winnings from Lottery or Income from Race Horses; or d) Income under the head “Capital Gains”; or e) Income from Agriculture or exempt income in excess of ` 5000/-; or f) Income from Speculative Business and other special incomes; or g) Person claiming relief of foreign tax paid under section 90, 90A or 91; or h) Any resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India.
  12. 12. Important Inclusions in the new Return Forms 1. Name of the Country 2. Whether person governed by Portuguese Civil Code u/s 5A. 3. Provision made for two Email IDs. One for the assessee and other of Professional/ Intermediary. 4. In ‘SAHAJ’ & ‘SUGAM’ Forms, ‘Sec 139(9)Defective’ included under the options “Section under which Returns have been filed”. 5. Under the schedule ‘Deductions’ : a) Sec 80CCD bifurcated into two parts namely Sec 80CCD(1) and Sec 80CCD(2). b) Sec 80CCG inserted. (Rajiv Gandhi Equity Savings Scheme). c) Sec 80TTA inserted. (Deduction in respect of Interest on Deposit in Savings Account). 6. IFSC Code to be mentioned under the head ‘Bank Account Detail’. Now MICR code is not required.
  13. 13. Important Inclusions in the new Return Forms 7. A separate ‘Schedule FSI’ inserted in ITR 2,3 & 4 in which assessee is required to give ‘Country Wise’ & ‘Head Wise’ detail of Income Accruing or Arising outside India. This income is to be further bifurcated into income from countries where DTAA is not applicable. 8. Schedule of ‘Detail of Foreign Assets’ modified. a) Now Account Number is also to be given under the ‘details of Foreign Bank Account’ & under ‘Details of account in which assessee has signing authority. b) Now, details of trusts created under the law of a country outside India, in which the assessee is trustee is also to be given. 9. A new Schedule AL inserted in ITR 2,3 & 4, in which all assessee’s having Taxable Income in excess of ` 25 lakhs are required to disclose their assets and liabilities. 10. In SAHAJ & SUGAM form now the assessee has to specify, whether Income from House Property is from Self Occupied House or from Let Out House.
  14. 14. Important Inclusions in the new Return Forms 11. Date of furnishing of Audit Report is now inserted under the head ‘Audit Information’ in ITR – 4 and also information related to “whether tax payer is liable to furnish a report u/s 92E?” has been added. 12. Now, “Income from winning from lotteries, crossword puzzles, races, games, gambling, betting etc.” is to be shown separately under the head Income from Other Sources in Schedule TI (Total Income) 13. Now, “Income Chargeable to Tax at Special Rates” is also to be shown separately under the schedule TI (Total Income) 14. “Tax payable on deemed total Income u/s 115JC & Tax Credit Available u/s 115JD” is now to be shown separately under the Schedule ‘Computation of Tax Liability’ & its detailed calculation is to be given in ‘Schedule AMT & AMTC’ respectively.
  15. 15. Important Inclusions in the new Return Forms 15. Rebate on Agricultural Income is now to be shown separately under the Schedule ‘Computation of Tax Liability’ by reducing it from the taxes computed at normal & Special Rates, to arrive at tax payable on total income. 16. Deduction u/s 16 inserted in Schedule S “Detail of Income from Salary” 17. Additions and deductions in accordance with sec 28 to 44DA are now to be shown separately while computing Income from Specified Business in Schedule BP of ITR – 4. 18. In Schedule CG- Capital Gains: a) Detailed working of STCG from shares/ units where sec. 111A is applicable (STT paid) & STCG on other assets, is to be given separately for both resident and non-resident assessees. b) LTCG from sale of unlisted securities (sec. 112 (1)(c )(iii)), in case of non-resident is to be shown separately. c) Assessee claiming deduction u/s sec. 54GB are required to furnish PAN of the company in which investment is made by them.
  16. 16. Important Inclusions in the new Return Forms 19. In Schedule OS- Income from other sources assessee are now required to mention source of each & every income declared under this Head. 20. In Schedule 80IB, deduction in relation to operating & maintaining a hospital in any area other than excluded area (clause 11C) has been inserted. 21. A new Schedule 5A has been inserted, wherein assessee is required to give information regarding apportionment of income (head wise) between spouses governed by Portuguese Civil Code. 22. In ITR – 3, In schedule IF (Information regarding partnership firm)- assessee is now required to state whether the firm is liable to audit or not). 23. In Schedule EI- Detail of Exempt Income, Agricultural Income is to be shown at Gross Value from which Expenses & Brought forward losses are to be reduced to arrive at the Net Agricultural Income. Till last year only net agricultural income was required to be shown.
  17. 17. Areas not addressed by the new ITR forms 1. No provision has been made in ITR-4S Sugam for salary & interest paid to partners- separately allowable as per proviso to section 44AD. 2. In case of proprietor having more than one business- provision for providing separate financials for each of the proprietorship concern has not been made. 3. In case of non maintenance of books of accounts for assessee covered by presumptive taxation how to provide the details of S.debtors, S.creditors, Cash & Bank balance, no clarity provided. 4. In case of deceased assessee, no provision has been made to file the return with the DSC of his legal representative.
  18. 18. PART B Changes in sub-rule (2) to rule 12
  19. 19. E-filling of Audit Report is now mandatory Tax Audit Report u/s 44AB, Transfer Pricing Report u/s 92E and MAT Report u/s 115JB shall henceforth be required to be furnished electronically. Utility for the following forms is available on the Income Tax E-filing website https://incometaxindiaefiling.gov.in/e- Filing/MyAccount/downloads: Offline Mode a) Form 3CA & 3CD b) Form 3CB & 3CD c) Form 3CEB d) Form 29B Online Mode a) Form 6B b) Form 10B c) Form 10BB
  20. 20. Penalty for failure in furnishing of Tax Audit Report Section 271B: If a person fails to get his accounts audited in respect of any previous year or furnish a report of such audit as required u/s 44AB Penalty: One half % of the turnover or ` one lac fifty thousand which ever is less Section 44AB amended wef 1-7-1995 wherein words “obtain before” replaced by “furnish by”
  21. 21. Penalty for failure in furnishing of Tax Audit Report Circular No. 9 / 2006 dt 10-10-2006 The report of audit under section 44AB is not to be attached with the return. It should not be furnished separately also before or after the due date. However, an assessee should get the report of audit from an accountant under said section before the due date of the furnishing of the return and should fill out the relevant columns of these forms on the basis of such report. The assessee should retain the report with himself. It may be furnished in original during the assessment proceedings. No penalty under section 271B shall be initiated or levied for not furnishing the tax audit report on or before the due date. However, if the audit report has not been obtained before the due date, provisions of section 271B shall be attracted.
  22. 22. Steps to be followed by a tax professional 1. GO TO 'Downloads' section and select applicable Income Tax Form of the relevant Assessment Year OR Login to e-Filing application and GO TO 'Downloads'-->'Download Forms' and select applicable Income Tax Form of the relevant Assessment Year. 2. Download the excel utility of the Income Tax Form. 3. Fill the excel utility and Validate. 4. Generate an XML file and save in desired path/destination in your desktop/system. 5. LOGIN to e-Filing application and GO TO e-File --> Upload Form. 6. Select the Income Tax Form and the Assessment Year. 7. Browse and Select the XML file 8. Upload Digital Signature Certificate. 9. Click 'SUBMIT'.
  23. 23. Steps to be followed by an assessee 1. Assessee can "Add CA", using My Account menu, after login by filling the following details: a) Membership Number b) Form Name (Form 3CA, 3CB, 3CD, etc.) Note: Before this Chartered Accountant should be registered as a tax professional in https://incometaxindiaefiling.gov.in/e- Filing/Registration/RegistrationHome.html 2. After uploading of desired form by the tax professional assessee should LOGIN to e-Filing application, GO TO Worklist and accept/reject the Income Tax Form. 3. On Approval, the Form is successfully submitted with e- Filing application. No further action is required.
  24. 24. Walkthrough of the steps to be followed:
  25. 25. Step 1 Registration by Chartered Accountant as Tax Professional
  26. 26. Step 2 Details to be entered at the time of registration
  27. 27. Step 3 Addition of CA by the assessee
  28. 28. Step 4 Download of utility form
  29. 29. Step 5 Filling of utility form & validation Form 3CA & 3CD
  30. 30. Step 6 Uploading of .xml file
  31. 31. Step 7 Acceptance/ rejection by assessee from worklist
  32. 32. PART C Changes in sub-rule (3, 4 & 5) to rule 12
  33. 33. Mandatory E-Filling of the income tax return with or without DSC 1. A person other than a company and a person required to furnish the return in Form ITR-7, whose total income in the P.Y. Rs.5 Lacs. 2. An individual or HUF being a resident, having assets (including financial interest in any entity) located outside India or signing authority located outside India and required to furnish the return in Form ITR-2/ITR-3/ITR-4, as the case may be. 3. A person claiming any relief of tax u/s 90 or 90A or 91 of the act.
  34. 34. Compulsory E-Filling of the income tax return with DSC 1. An individual or HUF who are required to get their books of account get audited u/s 44AB. 2. A firm who is required to get their books of account get audited u/s 44AB. 3. A company who is required to file its return of income in Form ITR-6 All other tax payers have the option of furnish Return of Income in any of the above manner mentioned above.
  35. 35. Other important amendments - [Income Tax (fourth amendment) Rules, 2013]. Two new rules “Rule 6AAD & Rule 6AAE” has been inserted vide Income Tax (fourth amendment) Rules, 2013 containing guidelines for approval of agricultural extension project under section 35CCC & Conditions subject to which an agricultural extension project is to be notified under section 35CCC. Further two new forms “3C-O & 3CP” has been introduced: Form 3c-o: Application form for approval under sub-section (1) of section 35CCC. Form 3cp: Form for notification of agricultural extension project under sub- section (1) of section 35CCC.
  36. 36. Other important amendments - [Income Tax (fifth amendment) Rules, 2013]. TDS to be deducted on transfer of immovable properties w.e.f. 01.06.2013 & certain amendment has been made in rule 30, 31 & 31A specifying the manner in which the payment of the same is to be made and availment of credit by the deductee. Details to be provided in the challan: 1. Permanent Account No. (PAN) of Transferee(Payer/Buyer) 2. Permanent Account No. (PAN) of Transferor (Payee/Seller) 3. Category of PAN of Transferee 4. Category of PAN of Transferor 5. Full Name of the Transferee 6. Full Name of the Transferor 7. Complete Address of the Transferee 8. Complete Address of the Transferor 9. Complete Address of the Property Transferred 10. Details of amount paid/Credited 11. Tax Deposit Details

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