“How would you treat a car given to employees for their use under GST (goods and services tax)?” a tax head of a car company asked me.
‘Why should it be such a big problem?’ I wondered. Until I realised the nuances of such a transaction.
Is the car capitalised in the books of the company? Is it registered in the company’s or employee‘s name?
As per the company’s HR policy, is the employee allowed personal use of the car? If yes, is there any way to identify that personal use? Are there different entitlements, different models or variants of cars specified for each level in the organisational hierarchy? And many more queries.
Very often, we believe the employer-employee relationship to be beyond the purview of indirect tax. The company, we figure, is only a juridical person and operates through the acts of its employees.
So, the employee and the company should not be treated as different persons to charge tax on every transaction between them. But some of the entries in the GST law tend to defy this logic.
Schedule 3 of the Central GST (CGST) Act 2017 deals with activities or transactions that shall not be treated as supply. One entry specifies “services provided by an employee to the employer in the course of or in relation to his employment”.
So, the consideration paid by an employer to the employee — i.e., salary paid for rendering services in the course of employment — would not be taxable under GST.
But what all can be treated as services in the context of employment? Will components covered in the cost-to-company (CTC) of an employee — house rent allowance, dearness allowance, etc — not attract GST, since this would be pure consideration to an employee for his employment? Also, what would be the treatment of, say, club fees reimbursed over and above the CTC?
If an employee of an IT company acts as a DJ at an office party and gets paid for the service, would it not be services rendered in the course of his employment? Would the same be treated as a service liable to GST?
The GST law complicates the employer-employee relationship further by way of Entry 2 in Schedule 1 of the CGST Act, “Supply of goods/services made without a consideration between related persons, when made in the course or furtherance of business, would be taxable.”
Further, the law deems the employer and employee to be related persons. So, even if there is no consideration for the goods/services provided to an employee, the supply could still attract tax. Would this mean that laptops provided to employees would get covered, as these are provided in the furtherance of business? Well, they shouldn’t. Why? Because there must exist an element of ‘supply’ in the transaction.
Supply mostly occurs when someone loses possession or ownership or both. Barring exceptions, typically this test holds good. When a laptop is given to an employee, he gets its possession, which he retains till he is in employment. But would that qualify as a supply? If it does, then even the workstation allotted to the employee must qualify as one.
This makes the scenario absurd. However, all things are not as black and white. If we take the example of free coffee from a vending machine provided to an employee, the answer may not be so simple.
Another twist in the tale is that the proviso to Entry 2 in Schedule 2 excludes from the definition of ‘supply’ gifts up to Rs 50,000 provided to an employee in a financial year. Hence, gifts above Rs 50,000 would be liable to GST and a company would be required to keep a record of gifts provided to each employee.
But would showing appreciation in the form of cash rewards or vouchers — as opposed to a gold coin, for instance — be considered as a gift? Or would it be considered for services of employment provided by the employee?
The employee and employer relationship revolves around many such examples. It is the play of words like ‘in furtherance of’, ‘in relation to’ and ‘in the course of ‘ that makes the difference. So, it is necessary to understand each transaction and view it under the lens of the GST law.
Sometimes it may be prudent to tweak the HR policies and CTC structures, so as to make the compliance under GST simpler. Who said tax managers and tax consultants would lose relevance under GST?
The writer is partner, indirect tax, KPMG India
E-filing income tax return: How individuals can upload any ITR using excel utility
There are two ways to file income tax return online. One is to download the applicable I-T form from the income tax website, fill the form offline, save it, generate an xml file and then upload it. Another way of doing it is to enter the relevant data directly in an online form and submit it.
However, the latter method is available only for ITR 1 and ITR 4 and not for forms for other categories of individual taxpayers.
This e-filing method can be used to file any ITR applicable to individuals whereas e-filing totally online method is available as an alternative only for filing ITR 1 and ITR 4.
Following are the steps to e-file your income tax return using the upload method.
1. Visit website – http://www.incometaxefiling.gov.in
2. Download the ITR form applicable to you depending on the types of income you have received in the financial year for which the return is to be filed. The form is available in two alternative software formats-excel and java. The ITR forms are available under the “Downloads” tab given on the website for the relevant year. You can download whichever software you are comfortable in using.
3. Prepare the return by filling all the relevant information in the form which is available in two alternative software formats-excel and java. Tip: The cells with text in red colour have to be filled mandatorily and data has to be entered in green coloured cells by the taxpayer. While filling up the sheets some white background cells automatically pick up data as they are system calculated based on data entered by you in other cells. Also, while filling the form, click the validate button once (after filling the sheet) to ensure all the relevant sections have been filled.
4. Some excel functions have to be enabled before filing up the ITR form in excel format. The side buttons i.e. validate and other buttons of the excel file will work only if ‘Macros’ and ‘ActiveX’ function of the Excel workbook is enabled. The Macros can be enabled by visiting File > Excel options > Trust Centre > Trust Centre Settings > Macro Settings > Enable All Macro > Click ‘OK’ button twice to save this setting. The ‘ActiveX settings’ is also enabled in the similar fashion like macros in the Trust Centre settings.
Click here for a step by step guide on how to prepare the ITR for FY 2016-17
5. The ITR form will have multiple sheets – some relate to general information and computation of tax whereas others relate to different types of income and tax rebates. Open each sheet and fill the ones that are applicable to you depending on the types of income you have earned in the year for which the return is being filed. The general information sheet will have to be filled in all cases. Most of the fields (with white colour background) in the tax computation sheet get filled automatically once you fill the income sheets relating to those fields.
6. After you have entered all the information in the different worksheets (which are applicable to you) of excel file, save the sheet and then click ‘Generate XML’ button to generate xml version of your return. It is advisable to open the XML file generated and check that all the information filled in the form by you is showing correctly.
7. Now visit the e-filing website again to upload and file the return. If you are a first time user or filing your returns for the first time then click on ‘New Registration’ and register yourself by providing the relevant information. One should make sure that email ID and mobile number is correctly mentioned while registering. This is because the I-T department sends all communication to you on your email. If you have already registered yourself then click on the ‘Registered user’.
8. Enter your user ID i.e. your PAN, password, Date of birth and enter ‘Captcha’ to sign in.
9. Click on ‘e-file’ tab and select the ‘Upload Return’ option.
10. After clicking the ‘Upload Return’ option, the website will direct you to page where you will be required to enter few details while uploading your ITR for the relevant year. Enter details required: the relevant assessment year, ITR form name, digital signature. PAN detail will be pre-filled.
11. Attach the ITR XML file using the browse button. (The same file which you have generated after filling the required information in excel/java utility software.)
12. Click on ‘digital signature certificate’ yes, if you are using this option. While using a digital signature, one should ensure that the signature is registered with the e-filing website.
13. If you are using ‘digital signature’ option and click on the ‘Submit’ button, after all the information is entered, then the website will ask you to upload the pre-registered signature. Once the signature is uploaded successfully, the process of submitting ITR online is completed. The acknowledgement receipt will be sent to your email id. You’re not required to send the signed physical copy.
14. If you are not using digital signature then you will be required to verify your return using any of the options provided by the income tax department. Process of uploading return in xml format is the same as described above. Once the return is successfully uploaded in the XML format, go to ‘My Account’ tab and click ‘e-filed returns’ option. Here the website will show you the status of all the returns uploaded and filed (old and new) by you along with the status (processed, uploaded or pending for e-verification).
15. Once the return is uploaded, a person is required to verify his return using electronic verification code, Aadhaar OTP or by sending the signed acknowledgement copy (ITR-V) to CPC, Bengaluru.
16. If you wish to e-verify your return then go to ‘My account’ tab and select ‘e-verify’ option. A person can e-verify his return by using either Aadhaar OTP option or electronic verification code option.
17. Once the verification process is chosen and completed then the process of filing ITR completes. The I-T department will then process your verified returns and sent you an email confirmation stating the same.
How to calculate capital gains
Capital gains arise whenever a capital asset is transferred (by way of sale or otherwise) by the assessee. They are further classified into two: short-term capital gains (STCG) and long-term capital gains (LTCG) on the basis of asset’s holding period
A standard format has been provided under the Income tax Act, 1961 for calculating LTCG and STCG (see below):
If the assessee can try and understand the meaning of each term in the above format, he can easily compute his own capital gains.
UNDERSTANDING EACH TERM
Sale value: It is the value received or receivable on the capital asset sale. In the case of a property, if the actual sale price is less than the stamp duty value (SDV) of the property, then the SDV is taken as the sale value. In the case of equity shares or mutual fund (MF) units, the gross selling price (excluding the brokerage charges and securities transaction tax or STT is considered as the sale value.
Cost of acquisition: It is the purchase price of the asset which has been sold. The brokerage charges paid to buy the asset have to be included in the purchase price.
In case the sold asset was acquired as a gift, then the cost of acquisition will be the same as the cost of acquisition in the hands of the person who gifted the said asset. Make sure that the holding period starts from the date when the said asset was purchased by the person who gifted it.
Cost of improvement: It is the money spent on major repairs or modifications of the asset. A whitewash, however, will not be counted as a cost of improvement, whereas money spent on major modifications, like constructing a floor or an additional room, will qualify as cost of improvement.
Also, the money paid by the landlord to the tenant to get the house vacated can be taken as cost of improvement.
Expenditure in connection with transfer/sale: It includes brokerage charges, registry charges or other expenses made on the asset sale. In equity shares and units of equity oriented mutual funds where STT is charged on sale transaction, the STT charges can’t be deducted while computing capital gains.
Indexation: The concept of indexation is applicable in the case of LTCG only. Indexation is done to incorporate the time value of money (adjusting the inflation factor) while computing the gains so as to make the computation just and fair. Indexation is done by using Cost Inflation Index (CII). The rules for applying indexation on capital gains computed in FY 17-18 have changed, however, while computing indexed capital gains for FY-16-17, the rules provided in below mentioned link would continue to apply.
For FY 17-18, the indexation procedure remains same, however, the Cost Inflation index table has changed because the base year has been shifted from 1.4.1981 to 1.4.2001.
Click here to learn how to apply indexation in case of LTCG
Holding period: It is calculated as the number of days or months for which the asset is/was held by the assessee. The period starts from the date on which the asset was acquired by the assessee and ends on the date immediately preceding the date of transfer of the asset.
In other words, the date on which the asset is transferred is not to be included when computing the holding period. This time period classifies the nature of gains as short-term or long-term.
The table below shows the minimum period of holding which would classify a capital asset as long-term(applicable for FY 16-17).
However, the period of holding for some asset classes would change for when calculating capital gains for FY 17-18
Other points to note
In case the transfer price of the capital asset is less than the price at which it was acquired, then the resultant amount would be termed as “loss under the head capital gains”, and depending on the holding period, it would be long-term capital loss (LTCL) or short-term capital loss (STCL).
Finally, add all LTCG arising from transfer of different capital assets and do the same for all STCG, LTCL and STCL too.
Please note that the following items are not considered as capital assets and any profit or loss on their sale is not subject to capital gains:
* Stock in trade or raw materials held for the purpose of business or profession.
*Items kept for personal use like television, air conditioner, furniture, etc.
*Rural agricultural land.
*Gold deposit bonds notified by the government.
*Silver utensils, only if they are kept as a personal use item, like thalis, katoris, etc.
Click here for a step by step guide on how to prepare the ITR for FY 2016-17
Paying Rs 50,000 rent per month? Better cut 5% TDS
Rents in metros are sky-high and it’s likely that many tenants will have to meet with the obligations of withholding tax, depositing it with the government and also filing the relevant documentation.
The silver lining is that compliance formalities have been made easier for individuals who are tenants. The Central Board of Direct Taxes (CBDT) issued on June 8 a notification relating to some compliance requirements.
The dos and the don’ts are explained below.
Do not revise your rent agreement
According to tax experts, revising your tax agreement to get out of your TDS obligations is not a sound idea. Let’s use an illustrative case study: Sharon has been staying as a tenant in a 2BHK flat in the upscale area of Bandstand, Bandra, for the past eight months.
Out of the blue, her landlady asked her whether she wanted to revise the three-year lease agreement and split up the monthly rental of Rs 85,000 into Rs 40,000 as rent and the balance of Rs 45,000 as furniture hire. Sharon learnt that some other tenants in the same vicinity were asking for such a split to avoid their TDS obligations.
“Revising an agreement mid-way is bound to catch the wrong attention of the tax authorities and should not be undertaken. Only if an individual is entering into a new agreement and is actually paying for furniture hire could the drawing up of two separate agreements be considered. Besides, the charges for furniture hire need to be realistic,” cautions Amarpal S Chadha, partner (people advisory services) at EY India.
Ameet Patel, tax partner at CA firm Manohar Chowdhry & Associates, says, “There have been instances where people trying to wriggle out of their TDS responsibilities resort to various devices, such as splitting up of the rent agreement. This is clearly done with a view to violate the law and I would never advise anyone to take such a step. Further, several pitfalls are involved. First, there should be actual assets that have been rented out to justify the payment towards furniture hire. Second, the agreement should bring out a list of such assets. Third, the payments towards such assets should be reasonable and justified. Obviously, it would be difficult to prove that payment towards furniture hire of Rs 45,000 is reasonable if the rent for the flat itself is just Rs 40,000. The TDS authorities would definitely take a strong view of such an arrangement and take action against the tenant who has paid rent without deducting tax at source.”
Chadha adds, “Tenants should also keep in mind that non-compliance entails penalties. Non-deduction of tax results in a levy of interest at 1% per month, it is 1.5% per month for non-payment after deduction. Further, non-filing of required statement would attract penal fee of Rs 200 per day for the period of delay.”
Comply with TDS norms
The government has provided for some compliance-related concessions. Tenants who are individuals and have to meet TDS obligations are absolved from obtaining a Tax Deduction Account Number (TAN). Further, the tax is not to be deducted each month, but merely once a year.
“The tax is required to be deducted at the time of credit or payment (whichever is earlier) of the rent, in the last month of the financial year, or the last month of tenancy if the flat is to be vacated during the year. Since individuals would not be maintaining books of accounts, the tax would typically be deducted at the time of payment,” says Chadha.
To continue with our illustration: As the rent paid by Sharon is Rs 85,000 per month for the period June 1, 2017 (being the date the new provision comes into force) up to March 31, 2018 (which is the last month in the financial year 2017-18), the total rent works out to Rs 8.50 lakh. The TDS at 5% is Rs 42,500. Sharon will have to deduct this amount from her March rental payment and pay the balance of Rs 42,500 to her landlady.
If the landlady doesn’t have a permanent account number (PAN), this means a higher tax of 20% is to be withheld. However, in such cases, the deduction is not to exceed the amount of rent payable for the last month of the financial year or the last month of tenancy, as the case may be.
The tax deducted is required to be paid within 30 days from the end of the month in which the deduction was made. It can be remitted electronically to the RBI or SBI or any authorised bank and form 26QC (which serves as a challan-cum-TDS) is to be filed electronically through the NSDL portal.
The same web portal also provides form 16C, which needs to be downloaded and issued to the landlady. This needs to be done within 15 days from the due date of filing form no 26QC.
Both form 26QC and 16C typically call for details such as the name, address, PAN, contact details of the tenant and the landlady. The period of tenancy, the amount of rent and details of TDS are also required.
It must be noted that if the rent is being paid to a non-resident, then section 194-IB doesn’t apply. Section 195 relates to withholding of tax on payments made to non-residents and the applicable tax rates would apply.
(This article was originally published in The Times of India)
Which ITR form to fill for FY 2016-17 and tips on how to fill it
The Central Board of Direct Taxes (CBDT) notified tax return forms for the Financial Year (FY) 2016-17 on March 31, 2017.
The government also mandated quoting of Aadhaar number/ Aadhaar enrolment number while filing the tax return if the same is filed on or after July 1, 2017.
As per a recent notification dated May 11, 2017, relief from obtaining Aadhaar has been provided to below taxpayers:
* Taxpayer residing in the states of Assam, Jammu and Kashmir and Meghalaya;
* A Non-resident taxpayer as per Income-tax Act, 1961;
* A taxpayer of the age of eighty years or more at any time during the previous year;
* A taxpayer who is not a citizen of India.
1. Below is a brief synopsis of the tax return forms applicable to an individual taxpayer for filing income tax return for the FY 2016-17:
It is very important to file the correct tax return form, as filing of incorrect tax return form may make the tax return defective.
Below is a table to help you pick the right form
Applicability of the different ITR forms
* For ITR-1 Form, only the income which is eligible to be reported in ITR-1 can be clubbed with the income of the taxpayer.
For example, if spouse of the individual taxpayer has income only from other sources which needs to be clubbed, Form ITR-1 can be used to report such income. However, if the spouse has earned income from capital gains, then the individual taxpayer will have to file ITR-2.
2. Major changes from last year:
A separate column has been inserted in all forms to disclose aggregate cash deposited in excess of INR 2 lakh during the demonetisation period i.e. 9 November 2016 to 30 December 2016.
A. ITR-1 form
* The form has been simplified and reduced to one pager;
* ‘Asset and Liability’ schedule has been done away with in ITR-1 form since it is required to be filled only when the total income of the taxpayer is more than INR 50 lakh.
B. ITR-2 form
* Old ITR-2, 2A and 3 have been merged into the new form ITR-2;
* ‘Asset and Liability’ schedule (applicable to individuals having total income more than INR 50 lakh) now requires reporting of additional information with respect to bank balance (including deposits) as on 31 March 2017, description and address of immovable assets, cost of shares and securities as on 31 March 2017, insurance policies, loans and advances given, interest held in assets of a firm or association of persons (AOP) as a partner or member etc.;
* ‘Schedule IF (i.e. information regarding partnership firms in which the taxpayer is a partner) has been inserted to report details of the partnership firm in case the taxpayer is a partner in one;
*’Schedule BP (i.e. details of income from firms in which the taxpayer is a partner)’ has been inserted to report details of income in the nature of salary, bonus, commission or remuneration received from partnership firms;
* Under the ‘Schedule OS (i.e. Other Sources)’, additional information is sought with respect to cash credits, unexplained investments, unexplained money, unexplained expenditure, amount borrowed or repaid on hundi, dividend income from Indian companies in excess of INR 10 lakh, royalty income from patents etc.
C. ITR-3 form
* Under the ‘Schedule OS’, additional information is sought with respect to cash credits, unexplained investments, unexplained money, unexplained expenditure, amount borrowed or repaid on hundi, dividend income from Indian companies in excess of INR 10 lakh, royalty income from patents etc.
3. General guidance on filling and submitting the tax return forms:
* The name filled in the ITR form should be as per the Permanent Account Number (PAN) card;
*The taxpayer should ensure that e-mail address, phone number and postal address are correctly stated in the tax return since the same are used by Income-tax Department for future correspondence with the taxpayer. Quoting of PIN code is mandatory;
* Quote Aadhaar/ Aadhaar enrolment number (if applicable) if filing the tax return after 30 June 2017;
* ITR-1 form can be filed in paper form only by:
a) An individual of the age of 80 years or more at any time during the financial year for which the return is being filed ; or
b) An individual or HUF whose income does not exceed INR 5 lakh and no refund is claimed in the return of income.
* In case the return is filed in paper form, no document (including TDS certificate) should be attached to the return;
* While filling ITR-1 in paper form, ITR-V should be duly filled;
*All other return forms have to be filed electronically;
* Check Form 26AS for income and taxes reported by the deductor so that there is no mismatch with the income and credit of taxes claimed in the tax return vis-à-vis Form 26AS;
* Ensure that outstanding taxes are paid before filing the tax return and use correct challan to avoid mismatch;
*Report all bank accounts held in India at any time during FY 2016-17 provided they have been operated in last three years. This includes reporting of joint accounts in which the taxpayer is the primary holder;
* Bank balance (including deposits) and cash in hand as on 31 March needs to be reported in ‘Asset and Liability’ schedule. While a common man may not know exact amount of cash held physically on 31 March 2017, it should be ensured that the amount declared in the tax return can be reasonably justified in case of scrutiny by the Income-tax Department;
* Foreign Asset schedule requires reporting of assets held outside India at any time during the relevant year only by a taxpayer qualifying as Resident and Ordinarily Resident of India. Since the Black Money Act 2015 imposes a stringent penalty of INR 10 lakh for non-disclosure of foreign assets and income, it is recommended to take help from a subject matter expert to avoid non-compliance in terms of type of asset to be reported and the value at which the asset should be reported;
* As per the CBDT notification on foreign tax credit rules, a resident taxpayer claiming credit of taxes paid outside India on doubly taxed income should file Form 67 along with specified certificate or statement on or before the due date of filing the tax return. The manner to file Form 67 and certificate or statement is yet to be prescribed by the CBDT;
* Reporting and disclosure requirement in ITR-3 form has been enhanced to ensure compliance by the taxpayers. However, a layman may not have complete details of requisite information sought in the tax return form and hence seeking help of a tax expert may be advisable;
* Taxpayers should ensure that the tax returns they file are verified, either manually or electronically, within 120 days of filing to avoid annulment of the tax return;
* In case the taxpayer wishes to manually verify the ITR-V form by sending a signed hard copy to CPC Bangalore, he should ensure that ITR-V is printed on A4 size paper and signed with blue ink only before sending to CPC Bangalore;
* ITR-V can be e-verified by generating electronic verification code using Aadhaar, net banking, bank account number, demat account or registered e-mail address and mobile number etc. of the taxpayer;
* Instructions for filling the tax return forms issued by CBDT and annexed to the relevant ITR form should be referred to before filing the tax return.
Disclaimer : The facts and opinions written in this column are those of the author and do not reflect the views of economictimes.com
Click here for a step by step guide on how to prepare the ITR for FY 2016-17
How to prepare and file ITR completely online
Using this method, a person can fill the form online by entering the relevant information and finally submit it online as well.
This step by step guide will help you do the same.
1. Visit the e-filing website: https://incometaxindiaefiling.gov.in/
2. If you are a first time user or filing your returns for the first time then click on the ‘New Registration’ tab and register yourself by providing relevant details and creating your profile and password. While creating your user ID, you must ensure that you have an active e-mail id and mobile number and it is mentioned correctly.
It is important as communication by the department will be sent on this. Registration will be completed by clicking activation link sent via email and providing one-time password (OTP) received on the mobile. Click on the ‘Registered user’ if you have already registered yourself on the website. For any assistance, one can click on ‘Customer care tab’ to get the helpline number and call the customer care centre.
3. Next click on login tab and enter the required details: your user ID i.e. your PAN, password, date of birth (mentioned on the PAN card) and captcha code. Click on log-in button at the bottom to sign in.
4. After signing in, your account dashboard will open up as shown in the picture below. Click on the ‘e-file’ tab and select the ‘Prepare and submit ITR online’ option.
5. Next, select the relevant form and assessment year for which the return has to be filed. Here taxpayer can pick his address either from the PAN database, from previously filed return or fill in new address. The department here asks you whether you want to digitally sign your return. If selected ‘Yes’, you are required to upload your signature which needs to be pre-registered at the income tax website.
6. Click on the ‘Submit’ button and the website will redirect you to the page for filling the form selected by you. Before starting to fill the ITR form, one should read the ‘General Instructions’ given at the start of the form to know do’s and don’ts.
Click here for a step by step guide on how to prepare the ITR for FY 2016-17
7. After that you will be asked to fill in required information in different tabs i.e. General information, Income details, Tax details and taxes paid in the ITR form. One should ensure that the Tax payable shown in the online form matches your calculations.
8. Before making a final submission, it is advisable to save the data entered and recheck it to avoid any mistakes. Once ‘Preview and Submit’ button is clicked, your form will appear allowing you a preview of your ITR form before final submission is made.
9. Once the ‘Submit’ button is clicked, your ITR will be uploaded and you will be asked to verify your return using any of the options available.
10. If you have already registered your digital signature, you will be asked to upload the same while submitting your ITR at the final step. Once it is uploaded and submission has been made, process of ITR filing is completed and no further verification is needed. You will not be required to send acknowledgement/ITR V in physical to CPC, Bengaluru.
11. However, if you do not have/haven’t uploaded the digital signature while filing the return, then you can verify your return either electronically using Aadhaar OTP or Electronic Verification Code method or by sending a signed print out of the ITR V to CPC, Bengaluru within 120 days from the date of e-filing.
12. An Acknowledgement/ ITR V will be simultaneously sent to you on your registered email ID once your return is successfully uploaded. This acknowledgement will also show up in your account on the e-filing website from where you can download it if required.
13. The department will process your ITR once you verify it. After your ITR is processed, you will be intimated about the same via mail and sms on your registered mobile number.
Tax queries: NRI in Germany has to pay dual tax on India income
My son works in Germany and he has an NRI status. His NRE deposits are exempted from tax in India i.e.no TDS is deducted. My query is whether the income from deposits in India is taxable in Germany and what are the slabs wherein the income of the assessee falls .-M K Khurana
I understand that your son is resident of Germany for tax purpose. As per the Article 11 of the double taxation avoidance agreement (DTAA) between India and Germany, the interest income earned in India by a resident of Germany is taxable in both the countries viz. in Germany in accordance with the tax laws prevailing in Germany and in India @10%. Further, as per the Article 23 of the said DTAA, the credit in respect of taxes paid in India on the interest income shall be allowed against the taxes payable in Germany. You are advised to approach a tax professional in Germany to get the details about taxation of individuals and slab rates prevailing in Germany.
I am a retired person. While in service, I used to receive medical assistance from my company by way of reimbursement of expenses incurred for treatment for self and wife and the amount so paid up to Rs 15,000 was not being charged to income tax. Since retirement, however, my company pays a lump sum amount as medical allowance at the beginning of each year. For some years into retirement, I used to spend hardly any amount from the allowance towards treatment as both of us enjoyed good health and as such till recently I did not bother to claim any exemption on expenses incurred for treatment.Since the past year, our medical bills have skyrocketed due to some major health issues. I would like to know whether I can claim income tax exemption on up to Rs 15,000 towards expenses actually incurred by us from the total medical allowance received from the company, and if so under what section of the Income tax Act. -S K Kini
Under section 15 of the Income Tax Act, 1961 the salary is chargeable to tax which includes the allowances and the perquisites as defined us 17(2). The medical allowance received by you is fully taxable as salary. Clause (v) of the first proviso to section 17(2) excludes from the definition of perquisite, any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family, provided that such sum does not exceed Rs 15,000 in the previous year. In your case, the medical allowance is given to you by your ex-employer. The term “employer“ and “former employer“ have been stated separately in Section 15. Section 17(2) refers to only employer. Therefore, the exemption specified in proviso to Section 17(2) may not be available to you.
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How to file ITR for FY 2016-17 and all the links you need
Although the last date to file for individuals is July 31, it helps to start work on your income tax return now so that one is not rushed at the last minute.
Here are all the links you need to help you e-file your tax return on your own and also a step by step guide on how to do it.
The income tax department through its website https://incometaxindiaefiling.gov.in/ has provided an easy to use platform for users to pay taxes, file ITRs, cross-check TDS through TRACES, download forms, claim refunds, check status of dues, refunds, challans etc.
However, a technologically-challenged tax-payer may find it difficult to use these services. Below are quick links for: Registering for e-filing, viewing your form 26AS, Income tax calculator, e-payment of taxes, checking your dues, e-filing the income tax return (ITR), downloading ITR forms and other relevant forms, checking refund status, rectification of return, e-verification of return etc.
STEPS IN FILING YOUR INCOME TAX RETURN
1. Collect TDS certificates, capital gains statements
Collect all the required documents such as your TDS certificates, which have to be mandatorily in TRACES format, from all deductors. You can also collect your, capital gains statement from mutual funds for redemption of units, if any, done, in the financial year 2016-17 etc.
However, it is not mandatory to obtain these capital gains statements from your MFs. Most MFs provide it as an additional service for the redemption of units you held in their schemes in a particular FY. You can calculate your capital gains yourself or cross check the calculations sent by your MFs also.
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In case of digitally signed TDS certificates ensure that there is a check mark on the digital signature indicating it has been verified. Non-verified certificates will have a question mark over the digital signature.
Cross check the TDS figure on the certificate with that shown as deducted from your income e.g. TDS figure on salary slip with the figure on the TDS certificate. Check whether deductor has deducted and deposited the tax with the government. TDS certificates are in Form 16 for salaried employees and Form 16A for other deductors.
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2. Download and check Form 26AS
Download your tax credit statement (Form 26AS) from TRACES and cross-check the amount of tax deducted with that mentioned in TDS certificates. You should be getting certificates for all TDS reflecting in your Form26AS and all the TDS from your income should reflect in Form26AS.
You need to log into your e-filing account on the income tax e-filing website to download your Form26AS. You can also download it via net-banking wherever the bank provides for this.
Click here to know how to read Form 26AS
3. Get Form 26AS errors, if any, set right
In case of any difference in the TDS amount shown in Form 26AS and TDS certificates, take up the matter with the deductor (employer, or others, as the case may be) and request for rectification. It is advisable to keep track of all the TDS deducted during the financial year so as to avoid any discrepancies at return filing time.
Click here to know all about Form 16 and Form 26AS
4. Compute total income for the financial year
Now compute your total income for the relevant financial year by adding income under all 5 heads and claiming all the relevant deductions, rebates and setting off the current year and brought forward losses. Make sure that you don’t miss any income in computing your total income which is chargeable to tax.
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5. Compute your tax liability
Compute your tax liability by applying the tax rates in force for the financial year for which you are calculating the tax as per the income slabs your income falls in. Most filers would be filing tax return for the financial year 2016-17 therefore the tax rates and corresponding income slabs for this FY would be applicable.
Click here for the latest income tax slabs and rates
6. Calculate final tax payable
Next, compute your final tax dues payable or refund of taxes. This is done by deducting the taxes that you have already paid for the year by way of – TDS, TCS, and Advance Tax from the tax liability computed above and adding interest payable under sections 234A, 234B, 234C, if any. Finally pay the final tax dues, if any.
Tax can be paid physically via cheque or online using challan ITNS 280. Income tax payments made after 15th March of the financial year for which return is to be filed are called payment of self-assessment tax. The same should get reflected in your Form 26AS within 2-3 working days from the date of payment which you should cross check.
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7. File income tax return after all taxes are paid
(a) Return filing deadline
Once you have paid your taxes, file the return. The deadline for filing individual tax returns ( except for those whose accounts are required to be audited as per section 44AB or those who are required to furnish the Transfer pricing report) is normally July 31 of the year immediately after the financial year for which the return is being filed.
(b) Electronic return compulsory for certain categories
The return has to be filed electronically by every assessee except (i) if the assessee is an individual of age 80 years or more during the financial year for which the return is being filed and (ii) An Individual or HUF whose income doesn’t exceed Rs 5 lakh and no refund is claimed.
(c) Log-in to income tax e-filing website
To start filing the return, one has to login to income tax department’s e-filing website with User ID, Password, Date of Birth and enter the Captcha Code. Once you login, you will see different tabs like “dashboard”, “my Account” etc.
8.New users to register first
In case of new user – Register yourself with income tax site first. You need to choose your status (individual, chartered accountant, tax deductor etc.) and fill in your basic details like address, DOB, PAN to get registered. Only then you can login to e-filing.
9. Choose the applicable form
After signing in, choose the form applicable to you for the purpose of filing return. Income tax department this year has made some changes in the ITR forms to make them simpler. Also, they have rationalized the ITR forms such as ITR-2, ITR-2A and ITR-3 have been rationalized as ITR -2.
Click here to know the form applicable to you
10. Filing online
In case Form ITR-1 or ITR-4 is applicable to you, then you can simply file your return online without any need to download the blank ITR forms and then upload the filled ones.
Click here for e-filing online procedure
11. Aadhaar to be filled in ITRs
Remember to keep Aadhaar number handy while filing returns this year as it has become mandatory to mention the same in the ITR forms from July 1.
Click here for how to link PAN with Aadhaar
12. Download forms
In case of other forms like ITR-2, ITR-3 and, you need to download the relevant form from the website (either in excel utility or Java utility).
13. Fill form and upload return
Once you have downloaded the relevant form, you need to fill in your personal details, income details and other details required in the form. After filling the form completely, the same is to be uploaded to the website and the return will be filed.
Click here for procedure to e-file return by uploading
14. E-filed return not valid without verification
E-filing of return (whether directly or after uploading the ITR-forms) is not valid without verification of the return so filed. Return once e-filed has to be verified by the user.
15. Verification of ITR
Verification of return can be done by any one of two modes i.e. e- verifications of ITR and Physical verification of ITR.
E-verification methods include: (i)) Making use of Internet Banking, (ii) or by using the OTP sent on your mobile number after you have linked your Aadhaar with your account on the e-filing portal of the Income tax department or by generating the EVC. (iii) Another method for verification of your ITR is through bank account-based validation system if you don’t have Aadhaar number or internet banking facility. (iv) Bank account-based validation
On the other hand, ITR can be verified physically as well. An acknowledgement or ITR-V is generated by the e-filing website immediately after you file/upload your return. To verify your return physically, you need to take a print-out of this acknowledgement, check and sign it and send it to the address mentioned on this acknowledgement.
Click here to see all methods to verify your ITR
16. E-verification acknowledgement
Once you have received the acknowledgement of your e-verification, filing of your return is complete. You should receive an email confirming that your ITR-V has been received by the IT department i.e. your return stands verified. The email will be sent to the email you have registered in your e-filing account on the income tax department’s e-filing website.
17. IT department will process return after verification
After receiving the ITR-V, either through e-verification or physical, the Income tax department will process your return to ensure that all the details filed by you are correct as per the Income Tax Act and also cross check the details filed by you with other data available with it.
Once processed, the I-T department communicates the same. In case any discrepancies are found, they may ask you to explain further or correct the mistakes made while filing the original ITR.
Jurisdiction-free Income Tax assessment of taxpayers on the anvil
Officials said the Central Board of Direct Taxes (CBDT), that frames policy for the tax department, has constituted a special team of officers to prepare modalities for this path- breaking initiative and abolish the age-old prevalent system of a taxpayer being assessed in a specific circle of the city or town where he or she is based.
“This first-of-its-kind initiative will totally change the relationship and dealing between an assessee and his Assessing Officer (AO). The income tax returns, scrutiny cases and all other I-T related correspondence of a taxpayer will go to a officer chosen randomly by the database system who is working in any I-T office of the country,” a senior official privy to the development said.
For example, the Income Tax Return (ITR) and scrutiny case papers of a taxpayer living in Delhi could be assessed by an AO based in say Mumbai or Kochi and likewise, the official said.
All the AOs will be given a stipulated number of cases to dispose and cases of high-value assessees can similarly be sent to an AO in a different city and this work can be aided by his counterpart based in the local region for objective and informed assessment.
Once implemented, the official said, the new system of assessment will remove virtually all human interface between the taxpayer and the tax officer and this will not only ensure transparency but also ease complaints of taxpayers regarding harassment or corrupt practices at the hands of the AO.
Another officer working in the Finance Ministry said the new system will require an amendment in the Income Tax Act, 1961 and is expected to be ushered in from the next financial year.
A pilot project will also be run to identify possible issues and the final go-ahead will be obtained from the Finance Ministry, the official said.
“In the first instance, we will initiate the system of conducting limited scrutiny cases via the ‘e-proceeding’ system that had been notified recently under the ambitious Internet-based paperless communication system of tax dealings,” the official said.
PTI in April had first reported that all the Income Tax Department proceedings will henceforth be conducted online .
The CBDT had issued a notification in this regard on April 3 and had said that a new link or window called ‘e- proceeding’ will be soon be hosted on the e-filing website of the department–https://incometaxindiaefiling.gov.in– used currently by taxpayers to file ITRs.
The CBDT notification had said that the new procedure of e-communication is “applicable to all proceedings under the Income Tax Act, 1961 under this notification as enabled from time to time”.
The new regime of e-communication will, however, be voluntary and a taxpayer can take a call on whether to conduct his dealing with the taxman over the e-system or through the existing procedure of manual submissions of documents by visiting the tax office.
Once a taxpayer registers on the web portal, he or she will get a confirmation SMS and email on their registered mobile number and email ID, indicating success.
The functionality to conduct e-proceeding will be available for all types of notice, questionnaire, letter issued under various sections of the I-T Act, the CBDT had said.
The new e-proceeding procedure, the CBDT had said, is a part of e-governance initiative to facilitate a simple way of communication between the I-T department and the taxpayer, through electronic means, without the necessity of the taxpayer to visit the I-T office.
I-T’s just a click away; Tax scrutiny reply set to get easier
Instead of having to make the rounds of the tax department with sheaf of papers in response to notices received, tax payers can soon upload them on the department’s e-filing portal sitting in comfort of one’s own premises.
The Income Tax Department will very soon launch on its e-filing website a facility for uploading of information sought through scrutiny notices, a senior government official told PTI.
“This is part of our focus to reduce human interface and make the department more taxpayer friendly,” he said. “The facility to e-file the documents to scrutiny notices is being done to reduce interface between the assessing officer and the taxpayer.”
Also, the tax department plans to start soon an SMS facility to communicate with taxpayers about any scrutiny notice sent to them.
“We will send SMS on the registered mobile number informing them to go to their account in the e-filing portal to see the new notice,” the official said.
Once the facility is started, tax payers will get an SMS alert of a new notice or information being raised by the tax department. The assessee can then log on to the efiling portal and upload the documents that have been sought.
Currently, the department sends SMSes for informing tax payers, especially the salaried class, about the tax deducted at source (TDS). Also, such alerts are sent on filing of tax returns and their acceptance.
As many as 3.65 crore individuals filed tax returns in assessment year 2014-15, while only 1 per cent of these are picked up for scrutiny. There are over 29 crore persons holding permanent account number (PAN).
Also to avoid discretion to assessing officer, a computer-based programme picks up cases for scrutiny based on the risk parameters identified by the I-T department.
The Income Tax Department had earlier said that all tax related proceedings between the assessee and the taxman from the new fiscal will be conducted online. A new link called ‘e-proceeding’ has already been launched on the e-filing portal through which assessees reply to notice, questionnaire, or letter issued under various sections of the I-T Act.
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Recent Messages (1)
12 hours ago
Yes, please make the tax laws as vague,complicated and ambiguous as possible so that there is the widest scope for corruption,evasion and embezzlement. In Australia there are only 2 rates 0% and 10%. Arun Jaitley’s argument was that BMWs and Chappals cannot be taxed at the same rate. Apparently Australians don’t use Chappals, they use BMWs even to go to the bathroom. The dolt!!!