As per N/N 30/2016, dtd 28-06-2016, a person who obtains registration as first stage dealer shall not be required to obtain registration as importer and a person registered as importer shall not be required to obtain registration as FSD. Further in Circular No. 1032/20/2016 dated 28-06-2016, CBEC has clarified that a person who conducts business both as FSD as well as importer may now have common registration but this is optional and he can have separate registrations also. Further clarified that a person who conducts business both as FSD as well as importer shall have option to file single quarterly return

Procedure for online submission of TDS return through incometaxindiaefiling.gov.in provided by CBDT vide N/N 11/2016 dated 22-06-2016

Procedure for online submission of TDS return through incometaxindiaefiling.gov.in provided by CBDT vide N/N 11/2016 dated 22-06-2016 as under:

1.       Get registered with your TAN on the site

2.       FVU file to be uploaded as zip file.

3.       Statement can be filed through DSC using DSC Management Utility or can be filed using EVC

4.       Submit TDS return by logging in through TAN. Then Go to TDS-Upload TDS. Then upload Zip file along with signature file discussed above

5.       On being uploaded the status shall be shown as “uploaded”. Uploaded file shall be accepted or rejected in 24 hours. Staus can be checked at TDS- View filed TDS. Rejection reasons shall be provided along rejected file.

Relaxation from deduction of tax at higher rate under section 206AA by inserting Rule 37BC vide Notification dated 24-06-2016

Finance Act 2016 had amended Section 206AA(7) to provide that higher rate of TDS u/s 206AA shall not apply to payments made to non residents not having PAN  subject to certain conditions

The Conditions have now been specified by incorporating Rule 37BC which provides as under:

1.       Relaxation u/s 206AA(7) to apply to  payments in the nature of interest, royalty, fees for technical services and payments on transfer of any capital asset

2.       Deductee to file following details/documents

a)      Name, Email id, Contact No.

b)      address in the country or specified territory outside India of which the deductee is a resident

c)       Tax Residency Certificate from foreign government, if the laws of that government provide for issuance of such certificate

d)      Tax Identificaton Number (TIN)of resident foreign country or if TIN is not available, Unique ID No. of resident foreign country

Relevant details also incorporated in TDS return for non residents

Time Limit for taking central excise registration by jewelers extended to 31-07-2016. Excise for March 2016 to June 2016 to be paid till 31-07-2016 [Circular 1033/21/2016 dated 01-07-2016]

Very Important Circular on Income Declaration Scheme dated 30-06-2016

1.       The information contained in the declaration shall not be shared with any other law enforcement agency. The information will also not be shared within the Income Tax Department for any investigation in respect of a valid declaration.

2.       The Scheme provides immunity under the Income-tax Act, 1961, the Wealth-tax Act, 1957 and the Benami Transactions (Prohibition) Act, 1988. Immunity from Benami Transactions (Prohibition) Act is subject to the condition that the property will be transferred to the declarant (being the person who provided the consideration for the property) latest by 30th September, 2017. However, as mentioned in response to Question No.1 above, the information contained in the declaration made under the Scheme will not be shared with any other tax or law enforcement agency.

3.       The value of the property for the purposes of declaration in such cases shall be computed as per Rule 3 of the IDS Rules even if such value is lower that the value adopted or assessed/assessable by stamp valuation authority.

4.       The value mentioned in the registered deed shall be relevant for determining the cost of acquisition and the same can be taken as the fair market value only where it is higher than the price that the property shall ordinarily fetch if sold in the open market as on 1st June, 2016.

5.       ; credit for tax deducted shall be allowed only in those cases where the related income is declared under the Scheme and the credit for the tax has not already been claimed in the return of income file for any assessment year.

6.       There is no need to indicate the source of income at all.

7.       No Investigation against the seller of the property representing undisclosed income of the buyer for which declration is made under the scheme.

8.       Declaration of past undisclosed income in the current year [i.e. AY 2017-18] amounts to false verification of return of income which shall attract prosecution under the Income-tax Act.

9.       If anyone attempts to disclose past undisclosed income in the current year[i.e. AY 2017-18], he will have to explain the source of income and substantiate the manner of earning the said income. In case of disclosure under the Scheme, there is no need to explain the source of income.

10.   Declaration of past undisclosed income in the current year cannot explain assets acquired in the past or provide any immunity in respect of the same.

11.   The Income-tax Department is in receipt of large volume of information from various sources such as registrars of property, banks, financial institutions, stock exchanges, tax deductors etc. The Department has launched a comprehensive data-mining and compliance management programme in the form of ‘Project Insight’ which will generate a large volume of reliable information about financial transactions undertaken by taxpayers and the relevant year in which the transaction was undertaken

12.   In a case the declarant earned undisclosed income of Rs. 90 lakh in previous year 2010-11. Out of the same, he acquired an immovable property in the previous year 2011-12 for Rs.50 lakh, made personal expenditure to the extent of Rs.20 lakh and balance Rs.20 lakh is left with him as cash in hand on 01.06.2016. The fair market value of the immovable property as on 01.06.2016 is Rs.80 lakh. What is the amount to be declared under the Scheme?

The declarant in this case has to declare the following: (i) Rs. 80 lakh being fair market value of the immovable property as on 01.06.2016 (ii) Rs. 20 lakh being the cash in hand as on 01.06.2016 (iii) Rs. 20 lakh being the balance of undisclosed income [Rs. 90 lakh – (Rs.50 lakh + Rs. 20 lakh)] which is not represented in the form of investment in any asset. Thus the total undisclosed income to be declared in this case will be Rs. 1.20 crore.

13.   In case the person declares the undisclosed house property at its fair market value on 01.06.2016, whether any action will be taken for bringing the annual value of the undisclosed property to tax as income from house property by deeming it to be let property as provided under section 23(4)(b) of the Income-tax Act for the earlier previous years?

No. However, where the house property was let-out during the relevant period, the actual rent received or receivable will be required to be declared under the Scheme in addition to the fair market value of the house property as on 01.06.2016.

Effective Tax Rate under Income Declaration Scheme come down to 31%?

Fnance Minister in his address to ICAI on 02-07-2016 has mentioned that effective rate of tax under the scheme is now reasonable. What is this effective rate ? As per Answer to Q.No. 5 in Circular No. 25/2016 dated 30-06-2016, no enquiry in respect of sources of payment of tax, surcharge and penalty shall be done. It means that if one has Rs. 145 as undisclosed Income, he shall make declaration of undisclosed Income for Rs. 100, pay tax of Rs. 45 there on out of his undisclosed Income. No enquiry regarding where abouts of Rs. 45 paid as tax etc shall be done by the department. It means against total undisclosed Income of Rs. 145/-, I have paid a tax of Rs. 45. Hence effective tax rate is 45/145 *100= 31%. Before this clarification if  I had to make full declaration of say Rs 145 and out of so disclosed Rs. 145 , I had to pay tax @ 45% i.e. Rs. 145 x 45%= Rs. 65.25. The above view has been fortified in yesterday’ webcast of ICAI also.

Rule for tax credit of foreign taxes

Rule for tax credit of foreign taxes. Rule 128 inserted vide Notification dated 27-06-2016

1.       Rule is applicable to resident assesses only.

2.       Credit to be allowed for foreign taxes.

3.       Credit of only those foreign taxes are allowed which are paid in country with which India has DTAA or TIEA.

4.       Credit of Foreign taxes to be allowed only if they have been paid whether  by way of tax deduction or otherwise

5.       Credit to be allowed by converting foreign tax into Indian Currency  at TT buying rate on last day of month immediately preceeding the month in which tax has been paid or deducted.

6.       Credit shall be allowed to the extent of Income corresponding to tax is offered to tax in India

7.       Where income on which foreign taxes are paid is reflected in multiple years, credit of taxes shall be allowed proportionately.

8.       Credit of foreign taxes can be adjusted against tax , surcharge and cess payable under the Act

9.       Credit of foreign taxes can not be adjusted against interest, fee or penalty.

10.   Where the levy of foreign tax is disputed by the assessee, no credit of foreign taxes to be allowed

a)      Where dispute is finally setteled, credit of foreign tax can be allowed if With in six months from the end of month in which dispute is finally settled:

b)      Assessee furnishes evidence of settlement of dispute and

c)       Assessee also furnishes evidence that liability for payment of foreign taxes has been discharged by him  and

d)      Assessee furnishes an undertaking that no refund directly or indirectly has been claimed or shall be claimed in respect of such amount

11.   Credit of tax to be computed by aggregating taxes paid for each source of income from a particular country.

12.   Credit shall be allowed at lower of the tax payable under the Act and foreign tax

13.   Where foreign tax paid is more than payable under DTAA or tax relief, then excess shall be ignored.

14.   Where income of resident assessee is computed under special provisions u/s 115JB or S.115JC, credit of foreign tax shall be allowed against MAT /AMT as it allowable against tax payable under  normal provisions.

15.   Following document to be furnished for availing credit of foreign taxes:

a)      Statement in F. 67 specifying detail of income from foreign country and foreign taxes claimed

b)      Certificate from tax authority of foreign country specifying the nature of income and tax deducted/paid  OR  Such certificate from deductor or Self Signed Certificate [In case of self signed certificate , the certificate to accompany an acknowledgement of online payment or bank counter foil or challan for payment of tax, where payment has been made the assessee  and proof of tax deduction]

16.   Documents/Certificate regarding foreign taxes to be furnished before due date of furnishing of return u/s 139(1).

Clarifications Issued on Income Declaration Scheme vide Circular No. 24/2016 dated 27-06-2016

Further Clarifications Issued on Income Declaration Scheme vide Circular No. 24/2016 dated 27-06-2016

1.       In case of part payment of tax, surcharge and penalty, entire declaration shall fail.

2.       In case of amalgamation or conversion into some other entity, the declaration to be made by amalgamated entity or converted entity because amalgamating or converting entities are no longer in existence.

3.       The scheme is applicable to residents as well as non residents.

4.       Undisclosed Income of older assessment years like asstt year 2001-02 shall also get taxed in the year of issue of notice u/s 148/153A/153C

5.       For search conducted in April 2016 but notice u/s 153A not issued till 31-05-2016, the scheme is not applicable and hence not eligible to make declaration

6.       Pr Commissioner / Commissioner may require valuation report before issuing acknowledgement and in such case it will be compulsory to file valuation report.

7.       It is necessary to furnish PAN

8.       The years for which proceedings are pending before settlement commission, the scheme can not be availed.

9.       Cases where letter are issued u/s 133(6) and no notice u/s 148 or section 142 is issued , declaration can be filed.

10.   Cases letter issued by  Non filer Monitoring System but no no notice u/s 148 or section 142 is issued , declaration can be filed.

11.   Cases where summons are issued u/s 131(1A) but no no notice u/s 148 or section 142 is issued , declaration can be filed.

12.   Where notices have been issued u/s 142, 143(2) and 148 but not received till 31-05-2016, the declaration shall be valid if there is no misrepresentation or suppression of facts. On issue of certificate by Pr CIT/CIT in Form 4 the proceedings u/s 142,143(2), 148 shall stand abated.