Important Income Tax Update of July 2020

The Central Board of Direct Taxes has stated that taxpayers for this assessment year will have an amended Form 26AS. This would encompass added details on taxpayers financial transactions in various categories.

Earlier Form 26AS linked to PAN used to give information about tax deducted at source and tax collected at source and certain other information about taxes paid, refunds and TDS Evasions. However Now it will have Statement of Monetary Transactions to support the taxpayers about their major financial transactions, so that they have ready calculator to help them file the ITR.

In case you have done any high value transaction or other transactions in the last financial year that has made filing the Income Tax Return mandatory for you, but you have not filed the return? Or return of income that you have filed has discrepancies in the income disclosed than what you have actually earned? The Income Tax (I-T) Department has now almost all the information about the transactions you have made in the Financial Year (FY) 2018-19 and you can no longer flee with the ITR of discrepancies in income disclosed.

The I-T Department has the information related to your transactions from various sources such as Foreign Remittances (Form 15CC), Statement of Financial Transactions (SFT) etc. Data analytics, information related to GST, exports, imports and transactions in securities, derivatives, commodities and mutual funds are also communicated to the I-T Department. You have a chance to rectify the return before serving a Tax Notice

In order for Taxpayers to correct their discrepancies, the Central Board of Direct Taxes has begun an e-campaign. The campaign will end on July 31, 2020.

Usually, the due date for completion of filing Income Tax Return (ITR) is July 31 of the Assessment Year, however the Corona Times have interrupted the ITR filing process this year.

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Income Tax Department Amended Section 194N

The Income Tax Department has amended Section 194N relating to TDS on cash withdrawals from Banking Company, Cooperative Bank or a Post Office to discourage cash transaction and to increase tax compliances. Section 194N was inserted by the Finance Minister in Union Budget 2019 to enforce deduction of TDS @2% on cash withdrawal exceeding 1 Crore from Banking Company, Cooperative Bank or a Post Office. In the absence of PAN, TDS@20% is deducted.

The Income Tax Department has amended Section 194N to include the following:

For those accountholders who have not furnished Income Tax Returns for last three immediately preceding years, TDS will be deducted as follows:

• For cash withdrawal upto 20 Lakhs: No TDS

• For Cash withdrawal from 20 Lakhs to 1 Crore: 2% TDS

• For cash withdrawal exceeding 1 Crore: 5%

The new provision is applicable from 1st July, 2020. The limit for cash withdrawal will be taken from 1st April, 2020 for the current financial year 2020-21.

With the introduction of new proviso to Section 194N which has reduced the limit to 20 Lakhs from 1 Crore for deduction of TDS for cash withdrawal for those account holders who have not filed ITR for three financial years immediately preceding the financial year of cash withdrawal, there was lot of apprehensions that how the banking company, co-operative banks and post office will come to know that the account holders have filed ITRs or not for the last 3 financial years.

To enable them to check whether the account holder has filed Income Tax Returns for three financial years immediately preceding the financial year in which cash is withdrawn, a functionality to determine TDS rate u/s 194N has been enabled on the home page of e-Filing portal.

The process is very simple, the banks will need to put the PAN number of the account holder and valid mobile number to receive OTP, the message will pop up regarding the rate of TDS applicable and accordingly TDS will be deducted by them.

Income Tax Update for Non Verified ITR

The Central Board of Direct Taxes (CBDT) has given one time relaxation to those assessees who have not verified their Income Tax Returns for the Assessment Year 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 to verify their ITRs latest by 30th September, 2020. Such returns shall be processed by the income tax department by 31st December, 2020.

In respect of Income Tax Returns filed electronically without digital signature, such ITRs are required to be verified either through electrically/ OTP mode or by sending hard copy  of the acknowledgements to CPC, Bengaluru within 120 days from the date of uploading the returns failing which it is treated that the ITRs have not been existent(non-est).

11 Reasons Why Business Registration is Important?

1. Current bank account on firm name.

2. Billing on the firm name.

3. Trustworthy for Clients.

4. Protect brand Value.

5. Protect from government non-compliance notice.

6. Funding or loans from banks or investors.

7. Protect personal liabilities.

8. Make agreements with vendors or suppliers or tie-ups.

9. Apply for payment gateway, 10. Apply for  tenders or big projects.

11. Help in Issue certification to employees or interns.

Tax Update June 2020

Income Tax Updates June 2020

The apex body of Income Tax, The central Board of Direct Taxes (CBDT), has again given some relief to the taxpayers by extending time limits for various compliances. They are given below:

1. The time limit for filing Income Tax Returns for FY 2018-19 (AY 2019-20) has been further extended to 31st July, 2020 from earlier 30th June, 2020.

2. Due date for filing of Income Tax Returns for FY 2019-20 (AY 2020-21) has been extended to 30th November, 2020. Tax Audit Reports can be furnished by 31st October, 2020.

3. The time limit for various tax saving investments/ payments for claiming deduction under Chapter VIA-B, to name a few, PPF, LIC, NSC etc u/s 80C, Mediclaim u/s 80D, Donations u/s 80 G has been extended to 31st July, 2020

4. Self-assessment tax with liability up to Rs. 1 Lakh can be paid till 30th November 2020. However no extension has been granted to those taxpayers having tax liability of over Rs. 1 lakh and accordingly delayed payment would attract the applicable rate of interest u/s 234 A.

5. The date for making investment/ construction/ purchase for claiming roll over benefit/ deduction in respect of capital gains under sections 54 to 54GB of the IT Act has also been extended to 30th September, 2020.

6. TDS and TCS returns can now be filed till 31st July, 2020 and accordingly TDS/TCS certificate can be issued by 15th August, 2020 for the FY 2019-20. 

7. The reduced rate of interest of 9% for delayed payment of taxes shall not be applicable for the payments made after June 30, 2020.

8. The PAN Card-Aadhaar Card linking last date has been extended till 31st March, 2021.