Jul 30, 2015

Cost inflation index for financial year 2015-16

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Cost inflation index for financial year 2015-16
The Income tax department has notified cost inflation index(CII) for the financial year 2015-16. Cost inflation index is the calculation tool with which capital gain of sale of assets is calculated. CBDT issued a notification no. 60/2015 dated 24 July 2015 about cost inflation index for financial year 2015-16. Cost inflation index for financial year 2015-16 and the previous Cost inflation index of 34 years are as follows.

S.O. 2031 (E)- In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, published in the Gazette of India, Extraordinary, vide number S.O. 709(E), dated the 20th August, 1998, namely:- 2. In the said notification, in the Table, after serial number 34 and the entries relating thereto, the following serial number and entries shall be inserted, namely:- 
Sl. No. Financial Year Cost Inflation Index
(1)           (2)                           (3)
 “35        2015-16                   1081”.

Financial Year
Cost Inflation index(CII)
2015-16
1081
2014-15
1024
2013-14
939
2012-13
852
2011-12
785
2010-11
711
2009-10
632
2008-09
582
2007-08
551
2006-07
519
2005-06
497
2004-05
480
2003-04
463
2002-03
447
2001-02
426
2000-01
406
1999-2000
389
1998-99
351
1997-98
331
1996-97
305
1995-96
281
1994-95
259
1993-94
244
1992-93
223
1991-92
199
1990-91
182
1989-90
172
1988-89
161
1987-88
150
1986-87
140
1985-86
133
1984-85
125
1983-84
116
1982-83
109
1981-82
100
 Tags-cost inflation index 2015-16,cii 2015-16 cost inflation index 2015-16,cost inflation index financial year 2015-16,cost inflation index fy 2015-16,cost inflation index ay 2015-16,cost inflation index analysis year 2016-17

Jul 7, 2015

Income tax department will send taxpayers 24 hours valid passwords

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Income tax department will send taxpayers 24 hours valid passwords
In order to end the trouble of sending paper-based acknowledgement of e-filed Income Tax Returns (ITRs), the CBDT is planning to send a one-time password (OTP) on taxpayers’ mobile phones which will be valid for 24-hours after getting verified from the Aadhaar database.

The department, a senior official said, has decided to usher these new protocols very soon as the new ITRs for the assessment year 2015-16 have recently been notified, heralding the onset of the tax filing season.

The deadline for filing ITRs is August 31.

A senior official involved in the processes told PTI that the new ITRs will capture the Aadhaar number of an individual and after doing a “back end” matching of the Aadhaar number with the mobile number and other vital personal data of the individual, an OTP will be generated and sent for validating and final submission of the return.

“The department will do the matching with the Aadhaar database where the biometrics and particulars of an individual are hosted. If the Aadhaar number and relevant details like PAN number and mobile number get kind of matched, then an OTP will be sent on the mobile which will be valid for 24 hours. So, once you have uploaded your return (ITR), there will be an icon showing validate your return and with that OTP you can do that,” the official explained.

The official said the department was currently thinking of having an OTP that will be “alive or valid” for 24 hours so that a filer has time at hand to process the return at his or her end.

“There could be an option to generate a second OTP too but that is being worked out. After putting the OTP, you then don’t need to send the ITR-V (paper acknowledgement). The problem of ITR-V will get resolved,” the official said.

The Central Board of Direct Taxes (CBDT), the apex policy making body of the tax department, has been getting a number complaints from taxpayers that despite they sending the hard copy of ITR-V by “speed or registered post” their forms were being acknowledged by the CPC as “not received” and hence the Board, for long, has been looking at options to do away with this system.

By automating the e-ITR filing with an OTP, the CBDT also wants to make this system fully “paperless”.

“The Aadhaar-based authentication will give the e-filingof ITRs a legal sanction and hence the ITR-V system can be totally disposed off. However, providing Aadhaar is not mandatory and those taxpayers who do not have or who do not mention their Aadhaar, they will have to send their ITR-V by post as usual,” the official added.

The system of Aadhaar-based authentication is being extended by the tax department to “low-risk category” of taxpayers like those in the salaried category.

As per existing rules, a person who files his or her tax return online, has to send a copy of the ITR-V to CPC within 120 days for processing of the return.

Jul 6, 2015

CBDT 32 clarification on tax compliance scheme 2015

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CBDT 32 clarification on tax compliance scheme 2015
 Clarifications on Tax Compliance for Undisclosed Foreign Income and Assets

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as ‘the Act’) has introduced a tax compliance provision under Chapter VI of the Act. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015 (hereinafter referred to as ‘the Rules’) have been notified. In regard to the scheme queries have been received from the public about the scope of the scheme and the procedure to be followed. The Board has considered the same and decided to clarify the points raised by issue of a circular in the form of questions and answers as follows.-

Question No.1: If firm has undisclosed foreign assets, can the partner file declaration in respect of such asset?

Answer: The declaration can be made by the firm which shall be signed by the person specified in sub-section (2) of section 62 of the Act. The partne cannot make a declaration in his name. However, the partner may file a declaration in respect of an undisclosed asset held by him.

Question No.2: Where  a  company  has  undisclosed  foreign  assets,  can  it  file  a declaration  under  Chapter  VI  of  the  Act?  If  yes,  then  whether immunity would be granted to Directors of the company?

Answer: Yes, the company can file a declaration under Chapter VI of the Act.The Directors of the company shall not be liable for any offence under the Income-tax Act, Wealth-tax Act, FEMA, Companies Act and the Customs  Act  in  respect  of  declaration  made  in  the  name  of  the
company.

Question No.3: Whether immunity in respect of declaration made under the scheme is provided in respect of Acts other than those mentioned in section 67 of the Act?

Answer: Section 67 provides immunity from prosecution under the five Acts viz. the Income-tax Act, Wealth-tax Act, FEMA, Companies Act and the Customs Act. It does not provide immunity from prosecution under any other Act. For example- if the undisclosed asset has been acquired out of the proceeds of sale of protected animals the person will not be eligible for immunity under the Wildlife (Protection) Act, 1972.

Question No.4: Whether  the  person  making  the  declaration  will  be  provided immunity from the Prevention of Money Laundering Act, 2002?

Answer: The  offence  under  the  PMLA  arises  while  laundering  money generated from the process or activity connected with the offences specified  in  the  schedule  to  the  PMLA. Therefore, the  primary requirement under PMLA is commission of a scheduled offence. With the enactment of the Act, the offence of wilful attempt to evade tax under section 51 of the Act has become a scheduled offence under PMLA. However, where a declaration of an asset has been duly made under section 59 of the Act the provisions of section 51 will not be applicable  in  respect  of  that  asset. Therefore,  PMLA  will  not  be applicable in respect of the scheduled offence of wilful attempt to evade tax under section 51 of the Act in respect of assets for which declaration is made under section 59 of the Act.

Question No.5: Where an undisclosed foreign asset is declared under Chapter VI of the Act and tax and penalty is paid on its fair market value then will the declarant be liable for capital gains on sale of such asset in the future?  If  yes,  then  how  will  the  capital  gains  in  such  case  be
computed?

Answer: Yes, the declarant will be liable for capital gains under the Income-tax Act on sale of such asset in future. As per the current provisions of the Income-tax Act, the capital gains is computed by deducting cost of acquisition from the sale price. However, since the asset will be taxed at its fair market value the cost of acquisition for the purpose of Capital Gains shall be the said fair market value and the period of holding shall start from the date of declaration of such asset under Chapter VI of the Act.

Question No.6: Where a notice under section 142/ 143(2)/ 148/ 153A/ 153C of the Income-tax Act has been issued to a person for an assessment year will he be ineligible from voluntary declaration under section 59 of the Act?

Answer: The person will only be ineligible from declaration of those foreign assets which have been acquired during the year for which a notice under  section  142/  143(2)/  148/  153A/  153C  is issued and  the proceeding is pending before the Assessing Officer. He is free to declare other foreign assets which have been acquired during other years for which no notice under above referred sections have been issued.

Question No.7: As  per  section  71(d)(i),  declaration  cannot  be  made  where  an undisclosed  asset  has  been  acquired  during  any  previous  year relevant to an assessment year for which a notice under section 142, 143(2), 148, 153A or 153C of the Income-tax Act has been issued. If the
notice has been issued but not served on the declarant then how will he come to know whether the notice has been issued?

Answer: The declarant will not be eligible for declaration under Chapter VI of the Act where an undisclosed asset has been acquired during any previous year relevant to any assessment year where a notice under section 142, 143(2), 148, 153A or 153C of the Income-tax Act has been issued and served on the declarant on or before 30th day of June, 2015. The declarant is required to file a declaration regarding receipt of any such notice in Form 6.

Question No. 8: Where an undisclosed foreign asset has been acquired partly during a previous year relevant to the assessment year which is pending for assessment and partly during other years not pending for assessment then whether such asset is eligible for declaration under Chapter V of the Act?

Answer: In  the  case  where  proceedings  are  pending  before  an  Assessing Officer in pursuance of a notice under section 142, 143(2), 148, 153A or 153C  of  the  Income-tax  Act  served  on  or  before  30-06-2015,  the declarant may declare the undisclosed asset under Chapter VI of the Act.  However,  while  computing  the  amount  of  declaration  the investment made in the asset during the previous year relevant to the assessment year for which such notice is issued needs to be deducted
from the fair market value of the asset for which the person shall provide  a  computation  alongwith  the  declaration.  Further,  such investment which is deducted from the fair market value shall be
assessable in the assessment of the relevant assessment year pending under the Income-tax Act and the person shall inform the Assessing Officer the investment made during the relevant year in such asset. Also to clarify, where a notice under section 142, 143(2), 148, 153A or 153C of the Income-tax Act  is issued  on  or  after  30-06-2015, the declarant shall be eligible to declare full value of asset even if such asset (or part of such asset) is acquired in the previous year relevant to the assessment year for which such notice is issued.

Question No.9: Can a declaration be made of undisclosed foreign assets which have been assessed to tax and the case is pending before an Appellate Authority?

Answer: As per section 65 of the Act, the declarant is not entitled to re-open any assessment or reassessment made under the Income-tax Act. Therefore, he is not entitled to avail the tax compliance in respect of those assets. However, he can voluntarily declare other undisclosed foreign assets which have been acquired or made from income not disclosed and consequently not assessed under the Income-tax Act.

Question No.10: Can a person against whom a search/ survey operation has been initiated file voluntary declaration under Chapter VI of the Act?

Answer: (a) The person is not eligible to make a declaration under Chapter VI if a search has been initiated and the time for issuance of notice under section 153A has not expired, even if such notice for the relevant assessment year has not been issued. In this case, however, the person is eligible to file a declaration in respect of an undisclosed foreign asset acquired in any previous year in relation to an assessment year which is prior to assessment years relevant for the purpose of notice under section 153A.
(b) In case of survey operation the person is barred from making a declaration  under  Chapter  VI  in  respect  of  an  undisclosed  asset acquired in the previous year in which the survey was conducted.
The person is, however, eligible to make a declaration in respect of an undisclosed asset acquired in any other previous year.

Question No. 11: Where a search/ survey operation was conducted and the assessment has been completed but the undisclosed foreign asset was not taxed, then whether such asset can be declared under Chapter VI of the Act?

Answer: Yes, such undisclosed asset can be declared under Chapter VI of the Act.

Question No.12: Whether a person is barred from voluntary declaration under Chapter VI of the Act if any information has been received by the Government under DTAA?

Answer: As per section 71(d)(iii), the person cannot make a declaration of an undisclosed foreign asset where the Central Government has received an information in respect of such asset under the DTAA. The person is entitled for voluntary declaration in respect of other undisclosed foreign assets for which no information has been received.

Question No.13: How would the person know that the Government has received information of an undisclosed foreign asset held by him which will make the declaration ineligible?

Answer: The person may not know that the Government has information about undisclosed foreign asset held by him if the same has not been communicated to him in any enquiry/proceeding under the Income-tax Act. After the person has filed a declaration, which is to be filed latest by 30th September, 2015, he will be issued intimation by the Principal Commissioner/Commissioner by 31th October, 2015, whether any information has been received by the Government and consequently whether he is eligible to make the payment on the declaration made. If no information has been received up to 30th June, 2015 by the Government in respect of such asset the person will be allowed a time upto 31st December, 2015 for payment of tax and penalty in respect of the declared asset.

There may be a case where person makes declaration in respect of 5 assets whereas the Government has information about only 1 asset. In such situation the person will be eligible to declare the balance 4 assets under Chapter VI of the Act. In such case the declarant, on receipt of intimation by the Principal Commissioner/Commissioner, shall revise the declaration made within 15 days of such receipt of intimation to exclude the asset which is not eligible for declaration. Tax and penalty on the eligible assets under the Act shall be payable in respect of the revised declaration by 31st  of December, 2015. In respect of the ineligible assets provisions of the Income-tax Act shall apply. (Please also see answer to question no. 15)

Question No.14: What are the consequences if no declaration under Chapter VI of the Act is made in respect of undisclosed foreign assets acquired prior to the commencement of the Act?

Answer: As per section 72(c), where any asset has been acquired prior to the commencement of the Act and no declaration under Chapter VI of the Act is made then such asset shall be deemed to have been acquired in the year in which it comes to the notice of the Assessing Officer and the provisions of the Act shall apply accordingly. India is expected to start receiving information through Automatic
Exchange of Information (AEOI) route under FATCA from USA later in the year 2015. Further, under the multilateral agreement India will start receiving information from other countries under AEOI route from 2017 onwards. As at 18th March 2015, 58 jurisdictions (including India) have committed to share information under AEOI by 2017 and 36  jurisdictions  have  committed  to  share  by  2018,  including jurisdictions  which  have  beneficial  tax  regime.  The  multilateral agreement is expected to cover all the countries in the near future. The  information  under  the  AEOI  will  include  information  of controlling persons (beneficial owners) of the asset. The possibility of
discovery of an undisclosed asset may arise at any time in the future; say  for  example,  information  of  an  immovable  property  can  be unearthed  if  any  utility  bills/property  tax  or  even  gardener’s/ caretaker’s salary has been paid through an existing or closed bank account. Therefore, if any information of an undisclosed foreign asset acquired earlier, say in the year 1975, for $ 100,000 comes to the notice of an Assessing Officer later, say in the year 2020, when its value becomes, say, $ 5 Million, the liability under the Act amounting to 120 percent of the fair market value of the asset on the valuation date may arise in the year 2020, besides prosecution and other consequences. In
this case if the valuation date is in the year 2020 the amount of tax and penalty under the Act will be $ 6 Million.

Question No.15: If a declaration of undisclosed foreign asset is made under Chapter VI of the Act and the same was found ineligible due to the reason that Government had prior information under DTAA then will the person be liable for consequences under the Act?

Answer: In respect of such assets which have been duly declared in good faith under the tax compliance but not found eligible, he shall not be hit by section 72(c) of the Act and no action lies in respect of such assets under  the  Act.  However,  such  information  may  be  used  for  the purpose of the Income-tax Act.

Question No.16: In respect of the undisclosed foreign assets referred to in answer to question No. 15 above, where the proceedings under the Income-tax Act are initiated, can the options of settlement commission etc. under the Income-tax Act be availed in respect of such assets?

Answer: All the provisions of the Income-tax Act shall be applicable in respect of those assets.

Question No.17: A person has some undisclosed foreign assets. If he declares those assets in the Income-tax Return for assessment year 2015-16 or say 2014-15 (in belated return) then should he need to declare those assets in the voluntary tax compliance under Chapter VI of the Act?

Answer: As per the Act, the undisclosed foreign asset means an asset which is unaccounted/ the source of investment in such asset is not fully explainable. Since an asset reported in Schedule FA does not form part of computation of total income in the Income-tax Return and consequently does not get taxed, mere reporting of a foreign asset in Schedule  FA  of  the  Return  does  not  mean  that  the  source  of investment in the asset has been explained. The foreign asset is liable to be taxed under the Act (whether reported in the return or not) if the source of investment in such asset is unexplained. Therefore, declaration should be made under Chapter VI of the Act in respect of all those  foreign  assets  which  are  unaccounted/  the  source  of investment in such asset is not fully explainable.

Question No.18: A person holds certain foreign assets which are fully explained and acquired out of tax paid income. However, he has not reported these assets in Schedule FA of the Income-tax Return in the past. Should he declare such assets under Chapter VI of the Act?

Answer: Since,  these  assets  are  fully  explained  they  are  not  treated  as undisclosed foreign assets and should not be declared under Chapter VI of the Act. However, if these assets are not reported in Schedule FA of the Income-tax Return for assessment year 2016-17 (relating to previous year  2015-16)  or  any  subsequent  assessment  year  by  a person, being a resident (other than not ordinarily resident), then he shall be liable for penalty of Rs. 10 lakhs under section 43 of the Act.
The penalty is, however, not applicable in respect of an asset being one or more foreign bank accounts having an aggregate balance not exceeding an amount equivalent to Rs. 5 lakhs at any time during the previous year.

Question No.19: A person has a foreign bank account in which undisclosed income has been deposited over several years. He has spent the money in the account over these years and now it has a balance of only $500. Does he need to pay tax on this $500 under the declaration?

Answer: Section 59 of the Act provides for declaration of an undisclosed asset and not income. In this case the Bank account is an undisclosed asset which may be declared. Tax on undisclosed asset is required to be paid on its fair market value. In case of a bank account the fair market value is the sum of all the deposits made in the account computed in accordance with Rule 3(1)(e). Therefore, tax and penalty needs to be paid on such fair market value and not on the balance as on date.


Question No. 20:    A person held a foreign bank account for a limited period between 1994-95 and 1997-98 which was unexplained. Since such account was closed in 1997-98 does he need to declare the same under Chapter VI of the Act?

Answer: Section 59 of the Act provides that the declaration may be made of any undisclosed foreign asset which has been acquired from income which has not been charged to tax under the Income-tax Act. Since the investment in the bank account was unexplained and was from untaxed income the same may be declared under Chapter VI of the Act. The consequences of non-declaration may arise under the Act at any time in the future when the information of such account comes to the notice of the Assessing Officer.

Question No.21: A person inherited a house property in 2003-04 from his father who is no more. Such property was acquired from unexplained sources of investment. The property was sold by the person in 2011-12. Does he need to declare such property under Chapter VI of the Act and if yes
then, what will be the fair market value of such property for the purpose of declaration?

Answer: Since the property was from unexplained sources of investment the same may be declared under Chapter VI of the Act. However, the declaration in this case needs be made by the person who inherited the property in the capacity of legal representative of his father. The fair market value of the property in his case shall be higher of its cost of acquisition and the sale price as per Rule 3(2) of the Rules.

Question No.22: A person acquired a house property in a foreign country during the year 2000-01 from unexplained sources of income. The property was sold in 2007-08 and the proceeds were deposited in a foreign bank account. Does he need to declare both the assets under Chapter VI of
the Act and pay tax on both the assets?

Answer: The declaration may be made in respect of both the house property and the bank account at their fair market value. The fair market value of the house property shall be higher of its cost and the sale price, less amount deposited in bank account. If the cost price of the house property is higher the declarant will be required  to pay tax and penalty on (cost price – sale price) of the house. If the sale price of the house property is higher the fair market value of the house property shall be nil as full amount was deposited in the bank account. The fair market value of the bank account shall be as determined under Rule 3(1)(e) and tax and penalty shall be paid on this amount. (Please also refer to the illustration under Rule 3(3) for computation of fair market value.)

Further, it is advisable to declare all the undisclosed foreign assets even if the fair market value as computed in accordance with Rule 3 comes to nil. This may avoid initiation of any inquiry under the Act in the future in case such asset comes to the notice of the Assessing Officer.

Question No.23: A person is a non-resident. However, he was a resident of India earlier and had acquired foreign assets out of income chargeable to tax in India which was not declared in the return of income or no return was filed in respect of that income. Can that person file a declaration under Chapter VI of the Act?

Answer: Section 59 provides that a declaration may be made by any person of an undisclosed foreign asset acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to assessment year 2016-17. Since the person was a resident in the year in which he had acquired foreign assets (which were undisclosed) out of income chargeable to tax in India, he is eligible to file a declaration under section 59 in respect of those assets under Chapter VI of the Act.


Question No.24: A person is a resident now. However, he was a non-resident earlier when he had acquired foreign assets (which he continues to hold now) out of income which was not chargeable to tax in India. Does the person need to file a declaration in respect of those assets under Chapter VI of the Act?

Answer: No. Those assets do not fall under the definition of undisclosed assets under the Act.

Question No. 25:    If a person has 3 undisclosed foreign assets and declares only 2 of those under Chapter VI of the Act, then will he get immunity from the Act in respect of the 2 assets declared?

Answer: It is expected that one should declare all his undisclosed foreign assets. However, in such a case the person will get immunity under the provisions of the Act in respect of the two assets declared under Chapter VI of the Act and no immunity will be available in respect of the third asset which is not declared.

Question No. 26:    A resident earned income outside India which has been deposited in his foreign bank account. The income was charged to tax in the foreign country when it was earned but the same was not declared in the return of income in India and consequently not taxed in India. Does he need to disclose such income under Chapter VI of the Act? Will he get credit of foreign tax paid?

Answer: Declaration under Chapter VI is to be made of an undisclosed foreign asset. In this case, the person being a resident of India, the foreign bank account needs to be declared under Chapter VI as it is an undisclosed asset and acquired from income chargeable to tax in India. The fair market value of the bank account shall be determined as per Rule 3(1)(e). No credit of foreign taxes paid shall be allowable in India as section 84 of the Act does not provide for application of sections 90(1)(a)/90(1)(b)/ 90A(1)(a)/ 90A(1)(b) of the Income-tax Act (relating to credit of foreign tax paid) to the Act. Further, section 73 of the  Act  does  not  allow  agreement  with  foreign  country  for  the purpose of granting relief in respect of tax chargeable under the Act.

Question No. 27:    Can a person declare under Chapter VI his undisclosed foreign assets which have been acquired from money earned through corruption?

Answer: No. As per section 71(b) of the Act, Chapter VI shall not apply, inter- alia, in relation to prosecution of any offence punishable under the Prevention of Corruption Act, 1988. Therefore, declaration of such asset  cannot  be  made  under  Chapter  VI.  However,  if  such  a declaration  is  made  and  in  an  event  it  is  found  that  the  asset represented money earned through corruption it would amount to misrepresentation of facts and the declaration shall be void under section 68 of the Act. If a declaration is held as void, the provisions of the Act shall apply in respect of such asset as they apply in relation toany other undisclosed foreign asset.

Question No. 28:    If a foreign asset has been acquired partly out of undisclosed income chargeable to tax and partly out of disclosed income/exempt income (tax paid income) then whether that foreign asset will be treated as undisclosed? Whether declaration under Chapter VI needs to be made in respect of such asset? If yes, what amount should be disclosed?

Answer: As per section 5 of the Act, in computing the value of an undisclosed foreign asset any income which has been assessed to tax under the Income-tax Act from which that asset is acquired shall be reduced from the value of the undisclosed foreign asset. Only part of the investment is such foreign asset is undisclosed (unexplained) hence declaration of such foreign asset may be made under Chapter VI of the Act. The amount of declaration shall be the fair market value of such asset as on 1st July, 2015 as reduced by the amount computed in accordance with section 5 of the Act.

Question No. 29:    Whether for the purpose of declaration, the undisclosed foreign asset should be held by the declarant on the date of declaration?

Answer: No, there is no such requirement. The declaration may be made if the foreign asset was acquired out of undisclosed income even if the same has been disposed off and is not held by the declarant on the date of declaration.

Question No. 30: Whether at the time of declaration under Chapter VI, will the Principal Commissioner/Commissioner do any enquiry in respect of the declaration made?

Answer: After  the  declaration  is  made  the  Principal  Commissioner/ Commissioner  will  enquire  whether  any  information  has  been received by the competent authority in respect of the asset declared. Apart from this no other enquiry will be conducted by him at the time of declaration.


Question No. 31:    A  person  is  a  beneficiary  in  a  foreign  asset.  Is  he  eligible  for declaration under section 59 of the Act?

Answer: As far as ownership is concerned, as per section 2(11) of the Act “undisclosed asset located outside India” means an asset held by the person in his name or in respect of which he is a beneficial owner. The definition  of “beneficial  owner”  and “beneficiary”  is provided  in Explanation 4 and Explanation 5 to section 139(1) of the Income-tax Act, respectively (which is at variance with the determination of beneficial ownership provided under Rule 9(3) of the PMLA (Maintenance of
Records)  Rules,  2005).  Therefore,  for  the  purpose  of  the  Act “beneficial owner” in respect of an asset means an individual who has provided, directly or indirectly, consideration for the asset for the
immediate or future benefit, direct or indirect, of himself or any other person.  Further,  “beneficiary” in  respect  of  an  asset  means  an individual who derives benefit from the asset during the previous
year and the consideration for such asset has been provided by any person other than such beneficiary. Therefore, as per the Act the beneficial owner is eligible for declaration under section 59 of the Act. There may be a case where a person is listed as a beneficiary in a foreign asset, however, if he has provided consideration for the asset, directly  or  indirectly, he  will  be  covered under  the  definition  of beneficial owner for the purposes of the Act.

Question No. 32:    A person was employed in a foreign country where he acquired or made an asset out of income earned in that country. Whether such asset is required to be declared under Chapter VI of the Act?

Answer: If the person, while he was a non-resident in India, acquired or made a foreign asset out of income which is not chargeable to tax in India, such asset shall not be an undisclosed asset under the Act. However, if income was accrued or received in India while he was non-resident, such income is chargeable to tax in India. If such income was not disclosed in the return of income and the foreign asset was acquired  from  such  income  then  the  asset  becomes  undisclosed foreign asset and the person may declare such asset under Chapter VI of the Act.

IT refunds will come direct in bank accounts

11:00 AM 0
IT refunds will come direct in bank accounts
In a step that would bring delight to taxpayers, the Income Tax department has put in motion a new plan which will ensure that any refund on tax paid is safely deposited in their personal bank account as soon as it is processed and released.

The department is also planning to fully adopt and use banking services to end the current system of sending I-T refunds over the value of Rs 50,000 via cheques through the postal department.
CBDT Chairperson Anita Kapur, during a recent interaction with the media, said the plan is being worked out on priority and is aimed at bringing an end to taxpayers’ grievances regarding this particular service.

She said that Central Board of Direct Taxes (CBDT) got in touch with banks and their regulator, Reserve Bank of India (RBI), after it found that the problem of wrong refunds or no refunds at all was continuing unabated.

RBI, Kapur said, told them that in the e-environment, when a refund is sent directly to a taxpayer’s bank account, the existing protocols are such that banks do not match the name to the account number.

“They only look at the account number and to whichever account number the cheque is issued, the (refund) will get credited there.

“We have a large number of instances where people quote wrong account numbers and, if we were to send refunds to those account numbers, and the banking system does not match the account number with the name, then the chances of taxpayers being further aggrieved are much larger,” the CBDT boss said.

Kapur added that after analysing the problem, CBDT, the apex policy-making body of I-T department, thought of bringing about some changes.

“Now, we are trying to work out a system that when a taxpayer gives his account number and if we can do some kind of prior matching with the bank… that is one step we are going ahead and if we get the comfort-level that the bank account number and the name of the taxpayer matches, we should be able to push all the (refunds) automatically to the bank account rather than sending them through speed-post, which is the current practice,” she said.
Kapur said the department’s aim is to ensure that the cost of compliance for a taxpayer vis-a-vis his or her tax liabilities becomes as low as possible and that grievances are handled and resolved on priority by the I-T department.

“We have put grievance redressal on our priority accelerator; all taxpayer grievances must get redressed within the timelines that we currently have. We try and redress grievances within 60 days of filing and, if there is some complicated issue, then it will take some time.

“But the general norm should be 60 days and all grievances get redressed,” she said.

The CBDT Chairperson said that Prime Minister Narendra Modi had some time back held a review in this regard following which she had written to her field offices to ensure that the message of facilitating the convenience of taxpayers percolated through the ranks.

“After that (PM’s review), I had written to my officers again that please understand that for a small taxpayer, if the credit is not given for certain taxes or there is some other issue, then his or her problem is a universal problem because he or she faces the department for only their own case. So, we have to be sensitive to their concerns and try and get all the grievances resolved,” she said.

Jul 5, 2015

Live tracking of UTR no. for RTGS/NEFT

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Live tracking of UTR no. for RTGS/NEFT
RTGS and NEFT are the popular mode of payment now a days. It enables to pay or receive the sum very fast and cheaper too. So RTGS and NEFT almost replaced the old form of payment like cheque and demand draft. It completes the transaction in very short time like 5 minutes to 2 hours and very cheap as charges of RTGS and NEFT are 5-56 rupees.

The main problem is tracking the NEFT and RTGS as only UTR no. generates when RTGS or NEft is done. Bank in which the amount is coming does not entertain the UTR no. as may be there is no system with them to track.

We generate a system with which you can guess the UTR no. which the party give to you is correct or not.

You just need to enter the UTR no. in parts and all the information will be provided to you online.Simply check below.

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Income tax department urge taxpayers to early file e-return

1:21 PM 1
Income tax  department urge taxpayers to early file e-return
The Finance Ministry today asked taxpayers to file their Income Tax returns for 2015-16 early to avoid the rush towards the last date of August 31.

The tax department, yesterday, made fully operational its e-filing website for taxpayers to file their I-T returns for assessment year 2015-16.

“Taxpayers are requested to e-file their returns early to avoid the rush closer to the last date of filing,” a finance ministry statement said as electronic filing of Income Tax Returns (ITR) commenced.
The tax department has released the software for preparing the Income Tax Return forms — ITR 1-Sahaj, ITR 2, 2A and 4S-Sugam for Assessment Year 2015-16.

The Income Tax department had on June 22 notified the new set of ITR forms, including a three-page simplified one, for taxpayers to file their returns for assessment year 2015-16.

“The e-filing of these return forms has been enabled on the e-filing website- http://incometaxindiaefiling.gov.in,” the statement added.

ITR 1-Sahaj, 2 and 2A can be used by individual or HUF whose income does not include income from business. ITR 4S – Sugam can be used by an individual or HUF whose income includes business income assessable on presumptive basis.

The new form ITR 2A has been introduced this time and is for individuals or HUFs who do not have capital gains, income from business/profession or foreign asset/foreign income.

The statement suggested taxpayers to use the return preparation software available free of cost under the ‘Downloads’ section on the home page of the I-T department’s website.

“The use of departmental software will ensure preparation of error-free returns thereby avoiding any need for future rectification due to data validation mistakes,” the statement added.

The facility for pre-filling of information for these return forms is available in the software for preparing the return forms.

“When the taxpayer exercises this option and fills in his PAN, then personal information and information on taxes paid and TDS will be auto-filled in the form,” it said.

In the new ITR form assessees would now have to declare only the “total number of savings and current bank accounts” held by them “at any time during the previous year (excluding dormant accounts).”

The form also has space to fill up the IFSC code of the bank and in an additional feature, tax filers have been given an option to indicate their bank accounts in which they would want their refund credited.

Also, a person who had travelled abroad in the previous year will be required to provide only the Passport Number.

The I-T department, in the new ITRs, has also sought the Aadhaar number of filers and has also given options for providing two email ids to it.

The department has also provided for an additional four-page schedule to this simplified form for those who wish to file anymore details, applicable in a case-to-case basis.

The new ITRs have replaced the 14-page form that were notified earlier this year, triggering a major controversy with individuals, industrialists and MPs saying tax filing would become cumbersome as those forms had sought details including foreign trips and bank accounts details.

The I-T department then came out with a new form on May 31, which was notified on June 22.
Following this, the last date of filing ITRs by individuals was extended from July 31 to August 31.

Jul 4, 2015

Income tax last and limited time compliance for undisclosed foreign assets

1:08 PM 0
Income tax last and limited time compliance for undisclosed foreign assets
THE BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND ASSETS) AND IMPOSITION OF TAX ACT, 2015 (referred to here as ‘the Act’) as passed by the Parliament received the assent of the President on the 26th of May 2015. The Act contains provisions to deal with the menace of black money stashed away abroad. It, inter alia, levies tax on undisclosed assets held abroad by a person who is a resident in India at the rate of 30 percent of the value of such assets, provides for a penalty equal to 90 percent of the value of such asset, and also provides for rigorous imprisonment of three to ten years for wilful attempt to evade tax in relation to a undisclosed foreign income or asset.

2. Considering the stringent nature of the provisions of the new law, Chapter VI of the Act, comprising sections 59 to 72, provides for a one-time compliance opportunity for a limited period to persons who have any foreign assets which have hitherto not been disclosed for the purposes of Income-tax. This circular explains the substance of the provisions of the compliance window provided for in the said Chapter VI of the Act.

Scope of compliance window
3. A declaration under the aforesaid chapter can be made in respect of undisclosed foreign assets of a person who is a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act.

4. A declaration under the aforesaid Chapter may be made in respect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year 2016-17 for which he had, either failed to furnish a return under section 139 of the Income-tax Act, or failed to disclose such income in a return furnished before the date of commencement of the Act, or such income had escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise.

Rate of tax and penalty
5. The person making a declaration under the provisions of the chapter would be liable to pay tax at the rate of 30 percent of the value of such undisclosed asset. In addition, he would also be liable to pay penalty at the rate of 100% of such tax (i.e., a further 30% of the value of the asset as on the date of commencement of the Act). Therefore, the declarant would be liable to pay a total of 60 percent of the value of the undisclosed asset declared by him. This special rate of tax and penalty specified in the compliance provisions will override any rate or rates specified under the provisions of the Income-tax Act or the annual Finance Acts.

Time limits for declaration and making payment
6. A declaration under the Act can be made anytime on or after the date of commencement of the Act but before a date to be notified by the Central Government. As regards the commencement of the Act, section 1 provides that the Act shall come into force on the 1st of April, 2016. However, section 3 which specifies the charge of tax, lays down that tax shall be charged for every assessment year commencing on or after the 1st day of April, 2016. Hence, under the Act, tax is also chargeable for assessment year 2016-17 for which the relevant previous year is 2015-16. In exercise of its power to remove difficulties under section 86 of the Act, the Central Government by an order has clarified that the Act shall come in to force on 1st July, 2015. Accordingly, the compliance provisions under 
Chapter VI shall also come into force with effect from the date of commencement of the Act i.e. 1st of July, 2015.

7. The Central Government has further notified 30th September, 2015 as the last date for making the declaration before the designated Principal Commissioner or Commissioner of Income Tax (PCIT/CIT) and 31st December, 2015 as the last date by which the tax and penalty mentioned in para 5 above shall be paid. Accordingly, a declaration under Chapter VI in Form 6 as prescribed in the Rules may be made at any time before 30.09.2015. After such declaration has been furnished, the designated Principal CIT/ CIT will issue an intimation in the proforma annexed to the Circular to the declarant by 31.10.15 whether any information in respect of the declared asset had been received by the Competent Authority on or before 30th June 2015, under an agreement entered into by the Central Government under section 90 or 90A of the Income-tax Act. Where any such information had been
received, the declarant shall file a revised declaration in Form 6 excluding such asset. The declarant shall not be liable for any consequences under the Act in respect of, any asset which has been duly declared but has been found ineligible for declaration as the Central Government had prior information on such asset. However, such information may be used under the provisions of the Income-tax Act. The revised declaration shall be filed within 15 days of receipt of intimation from the designated Principal Commissioner /Commissioner i.e. if a declarant has received the intimation on 10th October 2015, he can file a revised declaration on or before 25th October, 2015. However, in all cases, the declarant is required to pay the requisite tax and penalty on the assets eligible for declaration latest by 31.12.2015. After the intimation of payment by the declarant, the Principal CIT/CIT will issue an acknowledgement in Form 7 of the accepted declaration within 15 days of such
intimation of payment by the declarant.

Form for declaration
8. As per the Act, declaration under the chapter is to be made in such form and shall be verified in such manner as may be prescribed. The form prescribed for this purpose is Form 6 which has been duly notified. The table below mentions the persons who are authorized to sign the said form:
S.no.
Status of the declarant
Declaration to be signed by
1
Individual
Individual; where individual is absent from India, person authorized by him; where the individual is mentally incapacitated, his guardian or other person competent to act on his behalf
2
HUF
Karta; where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of the HUF
3
Company
Managing Director; where for any unavoidable reason the managing director is not able to sign or there is no managing director, by any director
4
Firm
Managing partner; where for any unavoidable reason the managing partner is not able to sign the declaration, or where there is no managing partner, by any partner, not being a minor
5
Any other association
Any member of the association or the principal officer
6
Any other person
That person or by some other person competent to act on his behalf.


The declaration may be filed with the Commissioner of Income-tax, Delhi. The declaration may also be filed online on the e-filing website of the Income Tax Department using the digital signature of the declarant.

Declaration not eligible in certain cases
9. As per the provisions of section 71 of the Act no declaration under the compliance window can be made in respect of any undisclosed foreign asset which has been acquired from income chargeable to tax under the Income-tax Act for assessment year 2015-16 or any earlier assessment year in the following cases—

(i) where a notice under section 142 or section 143(2) or section 148 or section 153A or section 153C of the Income-tax Act has been issued in respect of such assessment year and the proceeding is pending before the Assessing Officer. For the purposes of declaration under section 59 it is clarified that the person will not be eligible under the compliance window if any notice referred above has been served  upon the person on or before 30th June 2015 i.e. before the date of commencement of
this Act. In the form of declaration (Form 6) the declarant will verify that no such notice has been received by him on or before 30th June 2015.

(ii) where a search has been conducted under section 132 or requisition has been made under section 132A or a survey has been carried out under section 133A of the Income-tax Act in a previous year and the time for issuance of a notice under section 143 (2) or section 153A or section 153C for the relevant assessment year has not expired. In the form of declaration (Form 6) the declarant will also verify that these facts do not prevail in his case.

(iii) where any information has been received by the competent authority under an agreement entered into by the Central Government under section 90 or section 90A of the Income-tax Act in respect of such undisclosed asset. For the purposes of declaration under section 59 it is clarified that the person will not be eligible under the compliance window if any information referred above has been received by the competent authority on or before 30th June 2015 i.e. before the date of commencement of this Act.

A person in respect of whom proceedings for prosecution of any offence punishable under Chapter IX (offences relating to public servants) or Chapter XVII (offences against property) of the Indian Penal Code or under the Unlawful Activities (Prevention) Act or the Prevention of Corruption Act are pending shall not be eligible to make declaration under Chapter VI.

Circumstances where declaration shall be invalid
10. In the following situations, a declaration shall be void and shall be deemed never to
have been made:-

(a) If the declarant fails to pay the entire amount of tax and penalty within the specified date, i.e., 31.12.2015;

(b) Where the declaration has been made by misrepresentation or suppression of facts or information.

Where the declaration is held to be void for any of the above reasons, it shall be deemed never to have been made and all the provisions of the Act, including penalties and prosecutions, shall apply accordingly.

Any tax or penalty paid in pursuance of the declaration shall, however, not be refundable under any circumstances.

Effect of valid declaration
11. Where a valid declaration as detailed above has been made, the following consequences will follow:

(a) The amount of undisclosed investment in the asset declared shall not be included in the total income of the declarant under the Income-tax Act for any assessment year;

(b) The contents of the declaration shall not be admissible in evidence against the declarant in any penalty or prosecution proceedings under the Income-tax Act, the Wealth Tax Act, the Foreign Exchange Management Act, the Companies Act or the Customs Act;

(c) The value of asset declared in the declaration shall not be chargeable to Wealth Tax for any assessment year or years.

(d) Declaration of undisclosed foreign asset will not affect the finality of completed assessments. The declarant will not be entitled to claim re-assessment of any earlier year or revision of any order or any benefit or set off or relief in any appeal or proceedings under the Act or under Income-tax Act in respect of declared undisclosed asset located outside India or any tax paid thereon.
Download Declaration form