Jan 31, 2017

CBDT Launches Operation Clean Money Ask Explanation to 18 Lakhs for Cash Deposit

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Income Tax Department (ITD) has initiated Operation Clean Money, today. Initial phase of the operation involves e-verification of large cash deposits made during 9th November to 30th December 2016. Data analytics has been used for comparing the demonetisation data with information in ITD databases. In the first batch, around 18 lakh persons have been identified in whose case, cash transactions do not appear to be in line with the tax payer’s profile.

ITD has enabled online verification of these transactions to reduce compliance cost for the taxpayers while optimising its resources. The information in respect of these cases is being made available in the e-filing window of the PAN holder (after log in) at the portal https://incometaxindiaefiling.gov.in. The PAN holder can view the information using the link “Cash Transactions 2016” under “Compliance” section of the portal. The taxpayer will be able to submit online explanation without any need to visit Income Tax office.

Email and SMS will also be sent to the taxpayers for submitting online response on the efiling portal. Taxpayers who are not yet registered on the e-filing portal (at https://incometaxindiaefiling.gov.in) should register by clicking on the ‘Register Yourself’ link. Registered taxpayers should verify and update their email address and mobile number on the efiling portal to receive electronic communication.

A detailed user guide and quick reference guide is available on the portal to assist the taxpayer in submitting online response. In case of any difficulty in submitting on line response, help desk at 1800 4250 0025 may be contacted.
CBDT Launches Operation Clean Money Ask Explanation to 18 Lakhs for Cash Deposit

Data analytics will be used to select cases for verification, based on approved risk criteria. If the case is selected for verification, request for additional information and its response will also be communicated electronically. The information on the online portal will be dynamic getting updated on receipt of new information, response and data analytics.

The response of taxpayer will be assessed against available information. In case explanation of source of cash is found justified, the verification will be closed without any need to visit Income Tax Office. The verification will also be closed if the cash deposit is declared under Pradhan Mantri Garib Kalyan Yojna (PMGKY).

The taxpayers covered in this phase should submit their response on the portal within 10 days in order to avoid any notice from the ITD and enforcement actions under the Income-tax Act as also other applicable laws.

 (Meenakshi J Goswami)
 Commissioner of Income Tax
 (Media and Technical Policy)
 Official Spokesperson, CBDT.

Expectations by Salary Class in Union Budget 2017

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Reintroduction of Standard Deduction
Till financial year 2004-05, a standard deduction to the extent of Rs. 30,000/- was available against salary income. It was withdrawn from assessment year 2006-07.

There are various expenses that the employees incur during the course of employment for which there is no deduction available to them. Salaried employees are not allowed deduction of any expenses incurred during the course of the employment.

Provisions similar to the standard deduction should be reintroduced. If Government does not want to give this benefit to all, a cap of total salary of Rs. 10 Lacs can be put for availing this.

2. Limit of Medical Reimbursements
Under section 17(2)(v) of the Act, reimbursement of medical expenses to employee is, chargeable to tax if total amount of medical reimbursements is exceeding Rs. 15,000/- in a year. This limit of Rs. 15,000/- is introduced in the year 1999.

Now after 17 years, this exempted amount is same in spite of the double digit inflation. During this period of last 17 years, cost of medical treatments increased in minimum 3-4 fold but this amount of this exemption is intact.

In our view, this amount of exemption should be minimum for Rs. 50,000/- per year.

3. Tax Slabs need to be revised
For financial year 2016-17, basic limit for not charging of tax if total income is less than Rs. 2.50 Lacs, An additional rebate to the extent of Rs. 5,000/- in tax under section 87A is available if total income does not exceed Rs. 5 Lacs.

After demonetization and proposed GST era, Tax slabs need to be revised. Minimum Rs. 4 Lacs should be tax free.
Expectations by Salary Class in Union Budget 2017

4. Interest on Housing Loan
As per provisions of section 24 of the Act, in case of self-occupied house property, there is a deduction of interest on loan taken for such property is available, maximum up to Rs. 2 Lacs for a year.

In metropolitan cities like Mumbai, Bengaluru, Chennai, etc. cost of apartments are very high. If someone think about independent house, value may go double as compare to price of apartment. In general, if someone buys 2/3 BHK apartment in such cities, minimum cost is not less than Rs. 1 Crore. If ratio of borrowed money and own sources is 3:1 than loan amount would be Rs. 75 Lacs. Yearly interest cost for such loans will be minimum Rs. 6 Lacs.

In aforesaid situation, existing limit of Rs. 2 Lacs is too small. In view of current market scenario and for growth of real estate industry, this limit of Rs. 2 Lacs should be increased to Rs. 4 Lacs.

5. Children Education Allowance
In year 1997, an exemption was provided for children education of Rs. 100/- per month per child for maximum for 2 children. This small amount is nowhere serve the purpose of this allowance. In today's era, what is worth of Rs. 100/-? Nothing.

People having income from salary, have expressed their views that either this exemption should remove or increase the limit to minimum Rs. 2,000/- per month per child.

6. Hostel Allowance for Children
Again in the year 1997, this provision was introduced that if any child of employee is studying and residing in hostel, then to the extent of Rs. 300/- per month per child is exempt under section 10(14(ii) read with Rule 2BB. This is available to maximum 2 children.

After 20 years, value of this Rs. 300/- stands no value at all. In the time of high cost of living specially at metropolitan cities, this childish amount of Rs. 300/- is not at all laudable or favorable allowance.

Expected from Government, either this exemption shall go away or it should be minimum Rs. 3,000/- per child per month.

7. House Rent Allowance – Add the name of cities in metropolitan's umbrella
As of now, only four cities are covered under the definition of metropolitan cities, i.e., Mumbai, Delhi, Kolkata and Chennai. Purpose of this definition is getting higher benefits under the heading of House Rent Allowance (HRA), i.e. 50% instead of general rate of 40%.

Presently, rental charges for housing in cities like Bengaluru or Hyderabad is more than Delhi or Kolkata. Geographical areas of many cities in country has increased in many folds and accordingly rental charges also increased.

In our view, there is urgent need of inclusion of many other cities in this category like, Bengaluru, Hyderabad, Pune, Ahmedabad, Jaipur, Noida, Gurgaon, etc.

Conclusion
There are many other areas where salary class is eying for some amendment or relief. We tried to high light main areas as mentioned above, where immediate attention required.

In case of other class of taxpayers like business or profession, somehow they can avail more benefits rather than the category of which we mentioned above. A salaried person pays income tax each month. No other category of tax payer - company or self-employed or businessman - is required to pay advance tax each month.

Round the circle views are expressed that rate of service tax is going to increase to 18% in upcoming budget, in line with the proposed rate in GST. In consequence, ordinary man mainly salary class people will suffer more due to increased rate of service tax. At least Government should compensate to tax payers under this category by way of some relief through aforesaid provisions in Direct Taxes.

Jan 30, 2017

RBI Restore Cash Withdrawl Limit from Current Account and ATMs

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Reserve Bank of India removed all limits on cash withdrawl from current account, cash credit account and overdraft account with immediate effect wheras on ATMs the limit will be removed from February 1. RBI issued note on 30 January 2017 regarding removal of limit of cash withdraw. Full note is as under.

Please refer to our circular DCM (Plg) No.1226/10.27.00/2016-17 dated November 08, 2016 placing limits on Cash withdrawals from bank accounts and ATMs in the wake of withdrawal of Legal Tender Character of Specified Bank Notes (SBN) and subsequent circulars DCM (Plg) Nos.1256, 1274, 1317, 1437, 2142 and 2559 dated November 11, 14, 21, 28, December 30, 2016 and January 16, 2017 respectively, providing for relief and relaxations therefrom.

2. On a review of the pace of remonitisation, it has been decided to partially restore status quo ante as under:

Limits placed vide the circulars cited above on cash withdrawals from Current accounts/ Cash credit accounts/ Overdraft accounts stand withdrawn with immediate effect.

The limits on Savings Bank accounts will continue for the present and are under consideration for withdrawal in the near future.

Limits vide the circulars cited above placed on cash withdrawals from ATMs stand withdrawn from February 01, 2017. However, banks may, at their discretion, have their own operating limits as was the case before November 8, 2016, subject to 2 (ii) above.

3. Further, banks are urged to encourage their constituents to sustain the movement towards digitisation of payments and switching over of payments from cash mode to non-cash mode.
RBI Restore Cash Withdrawl Limit from Current Account and ATMs

4. Please acknowledge receipt.
Yours faithfully,
(P Vijaya Kumar)
Chief General Manager

Jan 25, 2017

TDS u/s 192 on salary Corrigendum of Circular 1/2017

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CBDT issued corrigendum of circular no. 1/2017 dated 2 January 2017. There are few changes in the rule which may read as follows.

OLD
Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property [Section 24(b)]:

Acquisition or construction of the house  On or after 01.04.1999       Rs. 150000 (Upto AY 2014-15)
                                                                                                               Rs. 200000 (w,e,f AY 2015-16)

The acquisition or construction of the house should be completed within3 years from the end of the FY in which the capital was borrowed. Hence, it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.

NEW
The acquisition or construction of the house should be completed within 5 years from the end of the FY in which the capital was borrowed. Hence, it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.

2- 
OLD
 TABLE: Dates of filing Quarterly Statements E-TDS Return 24Q
Return for Quarter ending
Due date for Government Offices
Due date for Other Deductors
30 June
31 July
15 July
30 September
31 October
15 October
31 December
31 January
15 January
31 March
15 May
15 May

New
Return for Quarter ending
Due date
30 June
31 July of the financial year
31 September
31 October of the financial year
31 December
31 January of the financial year
31 March
31 May of the financial year immediately following the financial year in which the deduction is made.

TDS u/s 192 on salary Corrigendum of Circular 1/2017 

3-
OLD
 Deductions is respect of rents paid (Section 80GG):
Section 80GG allows the employee to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :-

(a) the employee has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act;

(b) the employee files the declaration in Form No.10BA. (Annexure X)
(c) The employee does not own:
(i) any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or
performs duties of his office or carries on his business or profession; or

(ii) at any other place, any residential accommodation which is in the occupation of the employee, the
value of which is to be determined under section 23(2)(a) or section 23(4)(a), as the case may be.

(d) He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income. The deduction shall be equal to 25% of total income or Rs. 2,000/- per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG.

NEW
 Deductions is respect of rents paid (Section 80GG):
Section 80GG allows the employee to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :-

(a) the employee has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act;

(b) the employee files the declaration in Form No.10BA. (Annexure X)
(c) The employee does not own:
(i) any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or
performs duties of his office or carries on his business or profession; or

(ii) at any other place, any residential accommodation which is in the occupation of the employee, the
value of which is to be determined under section 23(2)(a) or section 23(4)(a), as the case may be.

(d) He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income. The deduction shall be equal to 25% of total income or Rs. 5,000/- per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG.

Jan 22, 2017

How to Best Use of Section 80C Deduction of Income Tax

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You can avail tax benefits under various sections of the Income-Tax Act. But the most common, and also most popular, are the deductions available under Section 80C of the I-T Act, which are allowed for making investments in certain specified instruments.

In fact, several investments, expenses and payments are allowed to be claimed under Section 80C, which sometimes become the only investment option for a lot of taxpayers. Maximum deduction, however, cannot exceed Rs 1,50,000.

Here we are taking a look at some of the specified instruments for 80C deductions and how to make the best use of it:

Eligible Investments
1. PPF: You can open a PPF account and claim deduction on the deposits made. A maximum of Rs 1,50,000 is allowed to be invested in one financial year, while the minimum investment required each year is Rs 500. Interest is compounded annually and is reset quarterly. Interest on PPF account is fully tax free. “The PPF account matures after 15 years. Receipts on maturity or withdrawals are tax free. You can also open a PPF account for your spouse or child and claim a tax deduction in your tax return for deposits made. For a HUF, it can be in the name of any member of the family,” says Archit Gupta, CEO & Founder, ClearTax.in.

2. National Savings Certificate: National Savings Certificates or NSCs are eligible for deduction in the year they are purchased. These can be bought from a designated Post Office. Their term is for 5 years and interest earned is compounded annually. Deposits qualify for tax rebate under Sec. 80C of the I-T Act. Interest is also eligible for deduction under Section 80C during the term of the NSCs (except the last year).

3. Sukanya Samridhi Account: A maximum of Rs 1,50,000 can be deposited in the Sukanya Samridhi Account for a girl child. Interest rate is compounded annually. This interest is fully exempt from tax. A minimum of Rs 1,000 must be deposited in a year. Receipts on maturity from the account are tax free.

4. ELSS: ELSS or Equity Linked Savings Scheme is a type of mutual fund investment. Investments made in ELSS funds during the financial year are eligible for deduction under Section 80C. These funds have a 3-year lock in period.

5. ULIPS or Unit Linked Insurance Plan: ULIPS sold with life insurance are also eligible for deduction under Section 80C. Includes contribution to Unit Linked Insurance Plan of LIC Mutual Fund, e.g. Dhanraksha 1989 and contribution to other Unit Linked Insurance Plan of UTI.

6. Five-Year Fixed Deposits: Most banks offer tax-saving fixed deposits that provide tax benefits on the amount deposited in them. These deposits come with a mandatory lock in period of 5 years and can have a maturity period ranging from 5 years to 10 years. The limit of investment in these deposits is determined by the bank and can range from Rs. 1 lakh to Rs. 1.5 lakh in a year. It needs to be noted that not all FD investments are eligible. Only the ones made in tax-saving FDs are.

7. EPF or Employee’s share of PF Contribution: Employee contribution to EPF is also eligible for deduction under Section 80C. 12% of your basic + DA is deducted by the employer and deposited as your contribution in Employee’s Provident Fund Scheme or Recognized Provident Fund.

8. Sum deposited in Five-Year Deposit Scheme in Post Office.

9. Amount deposited under Senior Citizens Saving Scheme.

10. Subscription to any notified securities/notified deposits scheme. e.g. NSS

11. Contribution to notified Pension Fund set up by Mutual Fund or UTI.

12. Sum paid as subscription to Home Loan Account Scheme of the National Housing Bank or contribution to any notified deposit scheme/pension fund set up by National Housing Bank.

13. Subscription to deposit scheme of a public sector, company engaged in providing housing finance (public deposit scheme of HUDCO).

14. Contribution to notified annuity Plan of LIC (e.g. Jeevan Dhara and Jeevan Akshay) or Units of UTI / notified Mutual Funds.

15. Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.

16. Subscription to any notified bonds of NABARD (National Bank for Agriculture and Rural Development).
How to Best Use of Section 80C Deduction of Income Tax

Eligible Expenses
1. Life Insurance Premium: All life insurance premium payments, include those paid for Unit Linked Insurance Plans, are also eligible for tax benefits under section 80C. Even if your policy covers other family members, you can claim the tax benefits for the premiums paid. The limit for claiming these benefits is Rs. 1.5 lakh. This means that if you make no other investments but pay Rs. 2 lakh towards a life insurance policy, then Rs. 1.5 lakh out of it will be eligible for tax benefits. This benefit will only apply if the premium is paid by you, not if your wife or husband or parents pay the premium.

2. Children’s Tuition Fee: Tuition fees paid to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children (including payments for play school, pre nursery and nursery).

3. Principal Repayments on Loan for purchase of House Property: Principal repayment of loan taken for buying or constructing a residential house property is also eligible for tax benefits. “Deduction is also allowed for stamp duty, registration fees and other expenses of transfer of such property to the taxpayer. However, if the property is transferred or sold before the expiry of 5 years from the end of the financial year in which its possession was taken, the total deduction allowed for various years shall be taxed in that year,” says Gupta.

4. Sum paid for securing Deferred Annuity: Sum paid under non-commutable deferred annuity for an individual on the life of the taxpayer, spouse or any child is allowed for deduction. Also allowed on sum deducted from salary payable to Govt. servant for securing deferred annuity for self-spouse or child. Payment is limited to 20% of salary.

Making the best use of Section 80C
It is clear, thus, that there are various specified instruments available in the market today for 80C deductions and it is up to you to make the best use of it.

One of the best ways to save tax and make full use of the Rs. 1.5-lakh limit on Section 80C, however, is to own a home loan. You are allowed to claim tax deductions up to Rs. 1.5 lakh under 80C. Not just that, you’re allowed further deductions of Rs. 2 lakh under Section 24B. “Then, there’s an additional deduction up to Rs. 50,000 for first-time home owners who have a home loan under Rs. 35 lakh for a piece of property worth less than Rs. 50 lakh. Hence, in terms of the pure volume of tax that a home loan can save for you, there’s nothing like a home loan,” says Adhil Shetty, CEO of BankBazaar.

When we’re talking purely of investing for returns, the best small savings schemes available to us are PPF (8% per annum), National Savings Certificate (8%), Sukanya Samriddhi Scheme (8.5%) and Senior Citizen’s Saving Scheme (also 8.5%). Of these, PPF and SSS enjoy a triple-exempt tax status, implying that your investment is completely tax-free.
 .
If you’re looking for market-linked returns, you should consider investing in ELSS and equity ULIPs, which invest your money in the stock market. Your ELSS investments and ULIP premiums are exempt under 80C. Since your money is being invested in equity, it is at risk. However, “long-term returns can be much higher than debt-oriented investment options. As per the CRISIL-AMFI ELSS Fund Performance Index for December 2016, the ELSS fund category has earned 3.35% in the last one year, 16.64% in three years, 17.71% in five years, and 10.61% in 10 years,” says Shetty.

You should also buy life insurance, especially if you have dependents. All premiums paid towards life insurance plans are tax exempt up to Rs. 1.5 lakh. It would be wise for investors to have life term plans and plan investments around 80C to earn higher returns than endowment insurance plans.

Jan 20, 2017

Points to Know about Super Saving Account

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FundsIndia.com, India’s leading online investment platform, has launched Super Savings Account, which is a new-age mutual fund which brings with it the advantages of a savings account.

According to the company, this offering will enable a customer to get higher returns compared to their bank savings account, without missing out on flexibility and easy withdrawal of funds.

Here are a few things you must know about the Super Savings Account:

1. What is Super Savings Account?
The Super Savings Account is a new product offered by FundsIndia, which offers customers the flexibility of a savings account with the growth of a mutual fund. This new offering will enable a customer to get higher returns compared to their bank savings account, without missing out on flexibility and easy withdrawal of funds.

2. How does it differ from normal savings account?
The Super Savings Account is the upgraded version of a regular savings account. The account also offers a free ATM + debit card, giving customers the flexibility of instant withdrawal from an ATM, shopping in partner retail outlets and online, and easy redemption. In short, it gives them the advantages of a savings account – but with the potential to earn much more.


3- The Super Savings Account invests in Reliance Money Manager Fund, which as of January 7, 2017, gave returns of 8.65% in the last one year. By ‘depositing’ funds in the Super Savings Account, account holders get the dual benefit of both saving and growing their money at the same time.
Points to Know about Super Saving Account
4. Who can open this account and how?
Any resident of India can open the Super Savings Account. To invest in the account, customers can log on to FundsIndia.com and complete their registration process. With the benefits of e-KYC and paperless transacting, the registration process just takes a few minutes.

“The Super Savings Account is ideal for customers who seek higher returns on the money lying around in their savings bank accounts, without missing out on the liquidity and flexibility that they currently enjoy. By investing in a liquid fund, the Super Savings Account offers them the best of both worlds,” says C R Chandrasekar, co-founder and CEO, FundsIndia.com.

Srikanth Meenakshi, co-founder and COO, FundsIndia.com, says, “Customers can easily sign up for the Super Savings Account and transfer funds to it from their existing bank accounts instantly. The entire process is paperless and easy, as are our other products.”

5. What are its advantages?
The Super Savings Account will help account holders earn attractive returns on idle money. This account also comes with a free debit card that gives users the flexibility to shop with compatible retail and online partners and withdraw cash from ATMs, just as they would with their bank debit cards. There are no account opening or maintenance charges, no lock-in on savings, and low-minimum balance maintenance of just Rs. 500. If the customers want to redeem money into their bank account, they can do so 24×7 with a click of a button. The amount will be sent to their bank account within a maximum time of 30 minutes. It usually takes only about 2 -3 minutes.

“The Super Savings Account will change the way Indians bank and will inculcate the habit of investing in a large segment of society,” says Chandrasekar.

6. What is the minimum and maximum investment amount?
The minimum investment amount is Rs.500, and in multiples of Re.1 thereafter. There is no maximum limit for investments.

Jan 19, 2017

Deduction u/s 16 Income from Salaries AY 2017-18-CBDT New Circular

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Entertainment Allowance [Section 16(ii)]:
A deduction is also allowed under section 16(ii) in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee, who is in receipt of a salary from the Government, a sum equal to onefifth of his salary(exclusive of any allowance, benefit or other perquisite) or five thousand rupees whichever is less. No deduction on account of entertainment allowance is available to non-government employees.

5.4.2 Tax on Employment [Section 16(iii)]:
The tax on employment (Professional Tax) within the meaning of article 276(2) of the Constitution of India, leviable by or under any law, shall also be allowed as a deduction in computing the income under the head "Salaries".
Deduction u/s 16 Income from Salaries-CBDT New Circular

It may be clarified that “Standard Deduction” from gross salary income, which was being allowed up to financial year 2004-05 is not allowable from financial year 2005-06 onwards.
Tags-income tax deduction u/s 16,deduction u/s 16,salary deduction under section 16,income tax deduction u/s 16 ay 2017-18

Jan 18, 2017

CBDT Clarification on PM Garib Kalyan Yojana 2016

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The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (hereinafter ‘the Scheme’) provides an opportunity to persons having undisclosed income in the form of cash or deposit in an account maintained with a specified entity to declare such income and pay tax, surcharge and penalty totaling in all to 49.9 per cent. of such declared income and make a mandatory deposit of not less than 25% of such income in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016.The Scheme has commenced on 17.12.2016 and shall remain open for declarations/deposit upto 31.03.2017.

Queries have been received from the stakeholders seeking further clarity on certain provisions of the Scheme. The Central Government has considered the queries and decided to clarify the same in the form of questions and answers as follows.-

Question No.1: Whether the amounts deposited in an account maintained with a bank or post office like Saving account, Current Account, Recurring Deposit Account, Fixed Deposit Account, PPF Account, Senior Citizen Saving Scheme Account, Monthly Income Scheme Account, Jan Dhan Yojana Account are eligible for being declared in the Scheme?
Answer: As per section 199C(1) of the Scheme, a person can make declaration in respect of any income in the form of deposit in an account maintained by the person with a specified entity and as per Explanation to section 199C(2) the banks and post offices come under the definition of specified entity. Hence, the undisclosed income deposited in the accounts specified above can be declared under the Scheme.

Question No.2: Whether declaration under the Scheme can be made in respect of income which is represented in the form of investment in any asset like jewellery, stock or immovable property?
Answer: No. Under the Scheme, only income represented in the form of cash or deposit in an account maintained with specified entity can be declared. The Scheme is hence not available for declaration of an income which is represented in the form of assets like jewellery, stock or immovable property.

Question No.3: In case a deposit is made by interbank transfer i.e. transfers from one account to another account, whether such deposit can be declared under the Scheme?
Answer: Yes, a declaration under the Scheme can be filed in respect of deposits made in an account maintained with a specified entity by any mode such as cash, cheque, RTGS, NEFT, or any electronic transfer system.

Question No.4: Where a notice under section 142(1)/ 143(2)/ 148/ 153A/ 153C of the Income-tax Act has been issued to a person for an assessment year, will such person be eligible for making a declaration under the Scheme?
Answer: Yes, such person is eligible to avail the Scheme subject to fulfilment of conditions specified in the Scheme.

Question No.5: Can a person against whom a search/ survey operation has been initiated, file declaration under the Scheme and whether the cash seized during search operation can be declared under the Scheme?
Answer: Yes, a person against whom a search/survey operation has been initiated is eligible to file declaration under the Scheme in respect of undisclosed income represented in the form of cash or deposit in an account maintained with specified entity.
CBDT Clarification on PM Garib Kalyan Yojana 2016

Question No.6: Whether credit of advance tax paid, tax deducted at source (TDS), tax collected at source (TCS), in respect of an income declared under the Scheme would be available?
Answer: No credit for advance tax paid, TDS or TCS shall be allowed under the Scheme.

Question No.7: Whether undisclosed income represented in the form of deposits in foreign bank account is eligible for the Scheme?
Answer: Clause (d) of section 199-O of the Scheme provides that the Scheme shall not apply in relation to any undisclosed foreign income and asset which is chargeable to tax under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Hence, undisclosed income represented in the form of deposits in foreign bank account is not eligible for the Scheme.

Question No.8: Can a person come under the Scheme with respect to deposit made in a bank account prior to the Financial Year 2016-17?
Answer: A person can avail the Scheme for any assessment year commencing on or before the 1st day of April, 2017. Hence, deposits made in bank account prior to financial year 2016-17 can also be declared under the Scheme.

Question No.9: If a person does not declare undisclosed cash deposited in an account between 01.04.2016 to 15.12.2016 under the Scheme, then whether such undisclosed deposit shall attract tax at the rate provided in the Taxation Laws (Second Amendment) Act, 2016?
Answer: The amended provisions of section 115BBE of the Income-tax Act, 1961 shall apply to A.Y.2017-18, relating to F.Y. 2016-17. Hence, undisclosed deposits between 01.04.2016 to 15.12.2016 shall also attract tax at the rate provided in the Taxation Laws (Second Amendment) Act, 2016.

Question No.10: Whether undisclosed income deposited/repaid in an Overdraft Account or Cash Credit Account or any loan account maintained with a bank is eligible for being declared under the Scheme?
Answer: Yes, the amount deposited or repaid against an overdraft account/cash credit account/any loan account maintained with a bank or any specified entity is eligible for being declared under the Scheme.

Question No.11: Whether the cash seized during a search and seizure action of the Department and deposited in Public Deposit Account is allowed to be adjusted against the payments required to be made under the Scheme?
Answer: The adjustment of cash seized by the Department and deposited in the Public Deposit Account may be allowed to be adjusted for making payment of tax, surcharge and penalty under the Scheme on the request of the person from whom the cash is seized. However, the said amount shall not be allowed to be adjusted for making deposits under the Pradhan Mantri Garib Kalyan Deposit Scheme.

Question No.12: Person ‘A’ made an advance in cash for procurement of goods (other than immovable property) or services to person ‘B'.Person ‘B’ deposits this amount in his bank account. Person ‘B’ subsequently returns this amount to person ‘A’ in cash or through digital means as the purpose for which advance was made did not materialise. Can person ‘A’ declare this amount under the Scheme? Whether penalty under section 271D or 271E shall be attracted in the case of person ‘B’?
Answer: Yes, person ‘A’ is eligible to declare the said amount under the Scheme. Since the advance was made for procurement of goods (other than immovable property) or services, no penalty under section 271D or 271E of the Act shall be attracted in respect of the said transactions.

(Dr. T.S. Mapwal)
Under Secretary to the Government of India
Tags-garib kalyan yojana 2016,pradhan mantri garib kalyan yojana 2016,clarification on garib kalyan yojana,cbdt clarification on garib kalyan yojana

CBDT Clarification on Indirect Transfer Provision under Income Tax Act

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Circular No. 41/2016 was issued on 21.12.2016 which dealt with clarification on Indirect Transfer provisions. After the issue of the aforementioned circular, representations have been received from various FPIs, FIIs, VCFs and other stakeholders. The stakeholders have presented their concerns stating that the circular does not address the issue of possible multiple taxation of the same income. The representations made by the stakeholders are currently under consideration and examination. Pending a decision in the matter the operation of the above mentioned circular is kept in abeyance for the time being.
CBDT Clarification on Indirect Transfer Provision under Income Tax Act

(Dr. Binod Kumar Sinha)
Commissioner of Income Tax
(Media & Technical Policy)
& Official Spokesperson, CBDT

Jan 14, 2017

Income Tax Deduction u/s 80DDB AY 2017-18-CBDT New Circular

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Section 80DDB allows a deduction in case of employee, who is resident in India, during the previous year, of any amount actually paid for the medical treatment of such disease or ailment as may be specified in the rules 11DD (1) for himself or a dependant. The deduction allowed is equal to the amount actually paid is in respect of the employee or his dependant or Rs. 40,000 whichever is less.

Now the deduction can be allowed on the basis of a prescription from an oncologist, a urologist, nephrologist, a haematologist, an immunologist or such other specialist, as mentioned in Rule 11DD. However, the amount of the claim shall be reduced by the amount if any received from the insurer or reimbursed by the employer. Further in case of the person against whom such claim is made is a senior citizen (60 age years or more) then the deduction upto Rs 60,000/- is allowed and in case of very senior citizen (80 age years or more) the deduction upto Rs 80,000/- is allowed.
Income Tax Deduction u/s 80DDB AY 2017-18-CBDT New Circular

For the purpose of this section, in the case of an employee, "dependant" means individual, the spouse, children, parents, brothers and sisters of the employee or any of them, dependant wholly or mainly on the employee for his support and maintenance.

Vide Notification SO No. 2791(E) dated 12.10.2015, Rules 11DD has been amended to do away with the requirement of furnishing a certificate in Form 10-I. A prescription from a specialist as specified in the Rules containing the name and age the patient, name of the disease/ailment along with the name, address, registration number & qualification of the specialist issuing the prescription would now be required.
Tags-income tax deduction for medical treatment,income tax deduction u/s 80ddb,deduction u/s 80ddb fy 2016-17,deduction u/s 80ddb ay 2017-18

Jan 13, 2017

Income Tax Deduction Allowed u/s 80C FY 2016-17-CBDT New Circular

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Deduction in respect of Life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. (section 80C)

A. Section 80C, entitles an employee to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs.1,50,000/-:

(1) Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual.

(2) Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity.

(3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary;

(4) Any contribution made :
(a) by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies;

(b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children;
[The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E) dated 3.11.05]

(c) by an employee to a Recognized Provident Fund;

(d) by an employee to an approved superannuation fund;
It may be noted that "contribution" to any Fund shall not include any sums in repayment of loan or advance;

(5) Any sum paid or deposited during the year as a subscription :-
(a) in the name of employee or a girl child of that employee including a girl child for whom the employee is the legal guardian in any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;
[The Central Government has since notified the scheme ‘Sukanya Samriddhi Account’ vide Notification GSR No. 863(E) dated 02.12.2014]

(b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf.
[The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E) dated 3.11.05and National Saving Certificate (IXth Issue) vide Notification . G.S.R. 848 (E), dated the 29th November, 2011, publishing the National Savings Certificates (IX-Issue) Rules, 2011 G.S.R. 868 (E), dated the 7th December, 2011, specifying the National Savings Certificates IX Issue as the class of Savings Certificates F No1-13/2011-NS-II r/w amendment Notification No.GSR 319(E), dated 25-4-2012 ]

(6) Any sum paid as contribution in the case of an individual, for himself, spouse or any child,
a. for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India;
b. for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to section 10(23D) and as notified by the Central Government.
[The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated 3.11.05.]
Income Tax Deduction Allowed u/s 80C FY 2016-17-CBDT New Circular

(7) Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify;
[The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E) dated 3.11.05 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006 ]

(8) Any subscription made to any units of any Mutual Fund, of section 10(23D), or from the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002 under any plan formulated in accordance with any scheme as the Central Government, may, by notification in the Official Gazette, specify in this behalf;
[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

The investments made after 1.4.2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C.

(9) Any contribution made by an individual to any pension fund set up by any Mutual Fund referred to in section 10(23D), or, by the Administrator or the specified company defined in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002, as the Central Government may, by notification in the Official Gazette, specify in this behalf;
[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

(10) Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(11) Any subscription made to any such deposit scheme, as the Central Government may, by notification in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted
either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.
[The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No.37(E), dated 11.01.2007, for the purposes of Section 80C(2)(xvi)(a)].

 (12) Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it has not been used for assessee's own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing
Board etc.

The deduction will also be allowable in respect of re-payment of loans borrowed by an assessee from the Government, or any bank or Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act.

The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall also be covered. Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out.

Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property.

Where the house property in respect of which deduction has been allowed under these provisions is transferred by the tax-payer at any time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xviii), no deduction under these provisions shall be allowed in respect of such sums paid in such previous year in which the transfer is made and the
aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly.

(13) Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.

Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, prenursery and nursery classes.

It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.

(14) Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution.

(15) Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company.

(16) Investment as a term deposit for a fixed period of not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes.
[The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28.7.2006]

(17) Subscription to such bonds issued by the National Bank for
Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf.

(18) Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004.

(19) Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.

B. Section 80C(3) & 80C(3A) states that in case of Insurance Policy other than contract for a deferred annuity the amount of any premium or other payment made is restricted to:

Policy issued before 1st April 2012                            20% of the actual capital sum assured
Policy issued on or after 1st April 2012                     10% of the actual capital sum assured


Policy issued on or after 1st April 2013 * - In cases of persons with
disability or person with severe disability as per Sec 80 U or
suffering from disease or ailment as specified in rule made under
Sec 80DDB                                                                  15% of the actual capital sum assured
*Introduced by Finance Act 2013

Actual capital sum assured in relation to a life insurance policy means the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account –

i. the value of any premium agreed to be returned, or
ii. any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy by any person.
Tags-income tax deduction u/s 80c,income tax 80c deduction,deduction u/s 80c,it deduction 80c 2016-17,income tax deduction 80c fy 2016-17,income tax deduction 80c ay 2017-18