Introduction
1.1 Schedule VI to the Companies Act, 1956 (‘the Act’) provides the manner in which every company registered under the Act shall prepare its Balance Sheet, Statement of Profit and Loss and notes thereto. In the light of various economic and regulatory reforms that have taken place for companies over the last several years, there was a need for enhancing the disclosure requirements under the Old Schedule VI to the Act and harmonizing and synchronizing them with Accounting Standards. Accordingly, the Ministry of Corporate Affairs (MCA) has issued a revised form of Schedule VI on February 28, 2011.
1.2 The relevant notifications along with the Revised Schedule VI to the Act are given in Annexure A. As per the relevant notifications, the Schedule applies to all companies for the financial statements to be prepared for the financial year commencing on or after April 1, 2011.
1.3 The requirements of the Revised Schedule VI however, do not apply to companies as referred to in the proviso to Section 211 (1) and Section 211 (2) of the Act, i.e., any insurance or banking company, or any company engaged in the generation or supply of electricity or to any other class of company for which a form of Balance Sheet and Profit and Loss account has been specified in or under any other Act governing such class of company.
2.Objective and Scope
2.1. The objective of this Guidance Note is to provide guidance in the preparation and presentation of Financial Statements of companies on various aspects of the Revised Schedule VI. However, it does not provide guidance on disclosure requirements under Accounting Standards, other pronouncements of the Institute of Chartered Accountants of India (ICAI), other statutes, etc.
2.2. In preparing this Guidance Note, reference has been drawn to the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended), other Accounting Standards issued by the ICAI (yet to be notified under the Act) and various other pronouncements of the ICAI. The primary focus of the Guidance Note has been to lay down broad guidelines to deal with practical issues that may arise in the implementation of the Revised Schedule VI. However, the Guidance provided herein should not be taken as exhaustive.
2.3.As per the clarification issued by ICAI regarding the authority attached to the Documents Issued by ICAI, “‘Guidance Notes’ are primarily designed to provide guidance to members on matters which may arise in the course of their professional work and on which they may desire assistance in resolving issues which may pose difficulty. Guidance Notes are recommendatory in nature. A member should ordinarily follow recommendations in a guidance note relating to an auditing matter except where he is satisfied that in the circumstances of the case, it may not be necessary to do so. Similarly, while discharging his attest function, a member should examine whether the recommendations in a guidance note relating to an accounting matter have been followed or not. If the same have not been followed, the member should consider whether keeping in view the circumstances of the case, a disclosure in his report is necessary.”
3.Applicability
3.1. As per the Government Notification no. F.No.2/6/2008-C.L-V dated 30- 3-2011, the Revised Schedule VI is applicable for the Balance Sheet and Profit and Loss Account to be prepared for the financial year commencing on or after April 1, 2011.
3.2. Early adoption of the Revised Schedule VI is not permitted since Schedule VI is a statutory format.
3.3. The Revised Schedule VI requires that except in the case of the first financial statements laid before the company after incorporation, the corresponding amounts for the immediately preceding period are to be disclosed in the financial statements including the notes to accounts. Accordingly, comparative information will have to be presented starting from the first year of application of the Revised Schedule VI. Thus for the financial statements prepared for the year 2011-12 (1st April 2011 to 31st March 2012), comparative amounts need to be given for the financial year 2010-11.
3.4. ICAI had earlier issued the Statement on the Amendments to Schedule VI to the Companies Act, 1956 in March 1976 (as amended). Wherever guidance provided in this publication is different from the guidance in the aforesaid Statement, this Guidance Note will prevail.
3.5. Applicability of the Revised Schedule VI format to interim financial statements prepared by companies in the first year of application of the Schedule:
Relevant paragraphs of AS-25 Interim Financial Reporting are quoted below:
“10. If an enterprise prepares and presents a complete set of financial statements in its interim financial report, the form and content of those statements should conform to the requirements as applicable to annual complete set of financial statements.
11. If an enterprise prepares and presents a set of condensed financial statements in its interim financial report, those condensed statements should include, at a minimum, each of the headings and sub-headings that were included in its most recent annual financial statements and the selected explanatory notes as required by this Statement. Additional line items or notes should be included if their omission would make the condensed interim financial statements misleading.”
3.6. Accordingly, if a company is presenting condensed interim financial statements, its format should conform to that used in the company’s most recent annual financial statements, i.e., the Old Schedule VI. However, if it presents a complete set of financial statements, it should use the Revised Schedule VI, i.e., the new format applicable to annual financial statements.
3.7. The format of Balance Sheet currently prescribed under Clause 41 to the Listing Agreement based on the Old Schedule VI is inconsistent with the format of Balance Sheet in the Revised Schedule VI. Till Clause 41 is revised, this issue to be addressed by companies as explained below :
3.7.1. Clauses 41(I)(ea) and 41(I)(eaa) to the Listing Agreement regarding presentation of Balance Sheet items in half-yearly and annual audit results, respectively states as under:
“(ea) As a part of its audited or unaudited financial results for the half-year, the company shall also submit by way of a note, a statement of assets and liabilities as at the end of the half-year.
(eaa) However, when a company opts to submit un-audited financial results for the last quarter of the financial year, it shall, submit a statement of assets and liabilities as at the end of the financial year only along with the audited financial results for the entire financial year, as soon as they are approved by the Board.”
3.7.2. Further, Clause 41(V)(h) regarding format of Balance Sheet items states as under:
“(h) Disclosure of balance sheet items as per items (ea) shall be in the format specified in Annexure IX drawn from Schedule VI of the Companies Act, or its equivalent formats in other statutes, as applicable.”
Based on the above:
Sheet items, in case of half-yearly results of a company, it has prescribed a specific format for the purpose. Hence, till the time a new format is prescribed by the Securities and Exchange Board of India (SEBI) under Clause 41, companies will have to continue to present their half-yearly Balance Sheet based on the format currently specified by the SEBI.
(Dear Reader if you want full text of the above guidance note and other information please mail to tvenkatappaiah@andhracements.com)
Saturday, 24 September 2011
Friday, 8 April 2011
THINGS TO KEEP IN MIND WHILE FILING INCOME TAX RETURNS
Filing tax returns is an annual mandate that tax payers have to comply with, the last date for which is in sight i.e. July 31st, 2011. In a haste to meet the deadline, make sure you do not miss key elements that can cause trouble later.
Critical information should be cross verified
No income tax return will be accepted without the PAN and incorrect PAN can result in a fine being levied. Communication address should be correctly stated as all notices or other communication from the IT department will be sent to the provided address. Also make sure that the MICR code is correct if you want an electronic refund and also ensure that bank account details are correctly stated for hassle free refunds.
Safe keep all relevant documents for future use
The IT department has done away with enclosing documents while filing returns i.e. proof of tax, statement showing computation of taxable income etc. Not having to produce it at the time of filing returns doesn’t meet that you can put away the documents carelessly. In case of scrutiny, the tax authorities may need supporting documents for verifying the claims made in the return.
Disclose exempt income and investments made
Income such as dividends from mutual funds and long-term capital gains on listed securities, are exempt from tax. Even though the tax laws do not require you to pay tax on the same, the law requires you to report these in your tax return.
Investments above a prescribed limit have also to be disclosed as per IT laws. They include
Mutual fund investment in excess of Rs. 2 lakh
Cash deposits in excess of Rs. 10 lakh
Credit card payment in excess of Rs. 2 lakh
Bond investment in excess of Rs. 5 lakh
Property bought or sold in excess of Rs. 30 lakh
Report income from a previous employer
Employers deduct TDS from the employee’s salary. While computing the TDS, employers generally provide the basic exemption deduction to the employee. If at the time of changing the job, the employee has not informed the new employer, it could lead to a situation where the TDS cut by the new employee would be low, as he may be taking in to consideration the full deduction amount while calculating tax. Thus you may have tax liability at the time of filing returns. Not disclosing income from the previous employer may result in an income tax notice as it will be spotted when the TDS data is being reconciled.
Revision of Income
If the IT return has been filed before the due date i.e. 31st July, tax payers are entitled to submit a revised return in case of any error or omission therein. However, revision is not permitted if the return is filed beyond the due date.
Precautions taken at the time of filing returns will prevent hassles later. To make sure you file your returns before the 31st, start the process now- Procrastination is the thief of time!
Read more: Things to keep in mind when you file tax returns | SIMPLE TAX INDIA-TDS RATE INCOME TAX RATE
Critical information should be cross verified
No income tax return will be accepted without the PAN and incorrect PAN can result in a fine being levied. Communication address should be correctly stated as all notices or other communication from the IT department will be sent to the provided address. Also make sure that the MICR code is correct if you want an electronic refund and also ensure that bank account details are correctly stated for hassle free refunds.
Safe keep all relevant documents for future use
The IT department has done away with enclosing documents while filing returns i.e. proof of tax, statement showing computation of taxable income etc. Not having to produce it at the time of filing returns doesn’t meet that you can put away the documents carelessly. In case of scrutiny, the tax authorities may need supporting documents for verifying the claims made in the return.
Disclose exempt income and investments made
Income such as dividends from mutual funds and long-term capital gains on listed securities, are exempt from tax. Even though the tax laws do not require you to pay tax on the same, the law requires you to report these in your tax return.
Investments above a prescribed limit have also to be disclosed as per IT laws. They include
Mutual fund investment in excess of Rs. 2 lakh
Cash deposits in excess of Rs. 10 lakh
Credit card payment in excess of Rs. 2 lakh
Bond investment in excess of Rs. 5 lakh
Property bought or sold in excess of Rs. 30 lakh
Report income from a previous employer
Employers deduct TDS from the employee’s salary. While computing the TDS, employers generally provide the basic exemption deduction to the employee. If at the time of changing the job, the employee has not informed the new employer, it could lead to a situation where the TDS cut by the new employee would be low, as he may be taking in to consideration the full deduction amount while calculating tax. Thus you may have tax liability at the time of filing returns. Not disclosing income from the previous employer may result in an income tax notice as it will be spotted when the TDS data is being reconciled.
Revision of Income
If the IT return has been filed before the due date i.e. 31st July, tax payers are entitled to submit a revised return in case of any error or omission therein. However, revision is not permitted if the return is filed beyond the due date.
Precautions taken at the time of filing returns will prevent hassles later. To make sure you file your returns before the 31st, start the process now- Procrastination is the thief of time!
Read more: Things to keep in mind when you file tax returns | SIMPLE TAX INDIA-TDS RATE INCOME TAX RATE
Friday, 1 April 2011
Issue refunds fast says Finance Ministry to Income Tax department
Concerned over high interest outgo on tax refund claims, the finance ministry has asked the income tax department to speed up the processing of such claims for the current financial year.
The slow processing of tax refund claims has always been a bugbear for the government and taxpayers alike. The backlog has risen steadily over the years. In 2005-06 there were 5.7 lakh refund claims, which has shot up to 19.4 lakh in 2009-10.
The finance ministry has asked income tax department to take the help of the Institute of Chartered Accountants of India (ICAI) -the regulatory and governing body of CAs -to clear up long-pending claims.
“The income tax department has raised concerns over the delay in processing the refund cases and the authorities have been asked to expedite the exercise,“ a government official, who refused to be identified said.
The government wants to finish the process by March 31. The Comptroller and Auditor General of India had said in its report that the government has refunded R57,101 crore in 200910, which includes an interest amount of about R12,951 crore -nearly 30%. In 2008-09, the amount of actual refunds saw a decline while interest payments increased, reflecting the delay in clearing claims. The CAG report also revealed that the pendency rate for tax refund claims has gone up to 40.4% in 2009-10 from 22.5% in 2005-06.
“We will work closely with the government in clearing income tax refunds and the exercise would get priority,“ said G Ramaswamy, president, ICAI.
In India, the average time taken for processing income tax refund claims is about 10 months. Any taxpayer, who has paid income tax in excess of the amount due in a given year, is eligible for a refund.
The slow processing of tax refund claims has always been a bugbear for the government and taxpayers alike. The backlog has risen steadily over the years. In 2005-06 there were 5.7 lakh refund claims, which has shot up to 19.4 lakh in 2009-10.
The finance ministry has asked income tax department to take the help of the Institute of Chartered Accountants of India (ICAI) -the regulatory and governing body of CAs -to clear up long-pending claims.
“The income tax department has raised concerns over the delay in processing the refund cases and the authorities have been asked to expedite the exercise,“ a government official, who refused to be identified said.
The government wants to finish the process by March 31. The Comptroller and Auditor General of India had said in its report that the government has refunded R57,101 crore in 200910, which includes an interest amount of about R12,951 crore -nearly 30%. In 2008-09, the amount of actual refunds saw a decline while interest payments increased, reflecting the delay in clearing claims. The CAG report also revealed that the pendency rate for tax refund claims has gone up to 40.4% in 2009-10 from 22.5% in 2005-06.
“We will work closely with the government in clearing income tax refunds and the exercise would get priority,“ said G Ramaswamy, president, ICAI.
In India, the average time taken for processing income tax refund claims is about 10 months. Any taxpayer, who has paid income tax in excess of the amount due in a given year, is eligible for a refund.
Monthly Provident Fund statement w.e.f 2012-13
the Employees Provident Fund Organisation , or EPFO, has decided to give monthly updates of contributions instead of an annual statement.
The EPFO expects this will bring instances of defaults by employers to the notice of workers, who, in turn, will put pressure to demand their dues.
The EPFO, which manages retirement savings of more that 5 crore workers, has been computerising its offices across the country and will be in a position to provide monthly information from the next fiscal.
At present, subscribers only get a small slip at the end of the fiscal with just the opening and closing balance and have no idea about how the amount has grown through the year.
"Often subscribers do not calculate what the total amount should be and do not notice even if contributions have not been made in particular months," Central Provident Fund Commissioner Samirendra Chatterjee told ET. Once monthly data is available, omissions can be easily identified, he added.
The default amount identified by the EPFO through periodic inspection of random establishments in 2009-10 was about 166.12 crore. The EPFO expects more complaints about defaulting employers once the monthly statements are made available to employees.
Defaults have been highest for establishments in Tamil Nadu followed by Andhra Pradesh, Bihar, Karnataka and Kerala.
"Every subscriber is expected to have a detailed statement from 2012-13," Chatterjee said.
Both employers and employees are mandated to contribute 12% of basic pay to the fund every month. The entire contribution to the fund is usually made by employers who deduct the employees share from their pay and add it their own contribution.
About 20,000 crore to 30,000 crore is added to the corpus every year.
The EPFO expects this will bring instances of defaults by employers to the notice of workers, who, in turn, will put pressure to demand their dues.
The EPFO, which manages retirement savings of more that 5 crore workers, has been computerising its offices across the country and will be in a position to provide monthly information from the next fiscal.
At present, subscribers only get a small slip at the end of the fiscal with just the opening and closing balance and have no idea about how the amount has grown through the year.
"Often subscribers do not calculate what the total amount should be and do not notice even if contributions have not been made in particular months," Central Provident Fund Commissioner Samirendra Chatterjee told ET. Once monthly data is available, omissions can be easily identified, he added.
The default amount identified by the EPFO through periodic inspection of random establishments in 2009-10 was about 166.12 crore. The EPFO expects more complaints about defaulting employers once the monthly statements are made available to employees.
Defaults have been highest for establishments in Tamil Nadu followed by Andhra Pradesh, Bihar, Karnataka and Kerala.
"Every subscriber is expected to have a detailed statement from 2012-13," Chatterjee said.
Both employers and employees are mandated to contribute 12% of basic pay to the fund every month. The entire contribution to the fund is usually made by employers who deduct the employees share from their pay and add it their own contribution.
About 20,000 crore to 30,000 crore is added to the corpus every year.
Friday, 18 March 2011
LAST MINUTE TAX PLANNING? SOME USEFUL HINTS
Do you find yourself in a situation where there are just a bunch of days ahead for the deadline of submission of tax documents? Here is a quick guide to help you sort out your finances last minute!
1. Target full utilisation of Section 80 C: Maximum deduction available is to the tune of Rs. 100,000. Assess your income to arrive at the amount you need to invest in this section. The investment avenues include; Public Provident Fund (PPF) up to Rs. 70,000, National Saving Certificate (NSC), Life Insurance or ULIP premium, tuition fees paid for children’s education
(2 children max), Equity linked savings schemes (ELSS), Post office saving deposit (POSD) and five year fixed deposits with banks among others. For individuals in the higher income bracket, section 80 C which is the most popular one may not be sufficient to reduce overall tax liability. Here is where the other sections will play a key role in reducing tax outflow.
2. Interest on home loan: Individuals intending to buy a house should consider opting for a home loan. Interest payments up to Rs 150,000 pa are eligible for deduction under Section 24
3. House Rent Allowance (HRA): You can take advantage of this if you are renting an accommodation. There are set guidelines determining the amount deductible. Please note that the rent agreement / rent receipts need to be submitted
4. Health Insurance Premium: Annual deduction of Rs. 15,000 is permissible for self, spouse and dependent children. Also and additional Rs. 15,000 is allowed for parents
5. Medical reimbursement: Medical treatment expenses up to Rs. 15,000 can be claimed annually as deduction from salary u/s 17(2). Actual bills need to be produced
6. Donation to Charitable institutions: Subject to the stated limits, donations to specified funds/institutions are eligible for tax benefits under Section 80G. Receipt needs to be produced.
7. Interest paid on educational loans: Deduction can be claimed on interest paid on educational loans taken for higher education of you, your spouse and children under section (u/s) 80 E. There is no limit on the amount of deduction you can claim. However, the loan should be taken for a graduate or post-graduate program in engineering, medicine or management or a post-graduate course in the pure or applied sciencesPoints to remember1. Section 80 C allows deduction of tuition fees spent on children's education
2. If you want to pay rent to your parents or relatives (kindly note this arrangement cannot be done with your spouse), you will need to treat them as landlords and request the owner of the house to declare it in his/her personal income tax return
3. The maturity proceeds of life insurance policies are not taxable
4. Conveyance allowance up to maximum of Rs. 800 can be claimed per month as deduction from salary u/s 10(14)
5. Long term capital gains on listed shares/securities are not taxable
6. Capital gains on sale of house property can be avoided by purchasing another house property within two years after or one year before date of sale
7. Stamp duty charges and registration charges paid while purchasing new house is eligible for tax deduction under Section 80 C
The first step in the direction of tax saving is to assess your tax liability. So start the process so that you can then decide on what all to opt for to save maximum taxes.
Tax incentives are given to encourage savings/ investments. Savings form part of your overall financial plan which in effect means tax planning is a subset of financial planning. Your financial plan will set objectives for you based on your aspirations, your life style, your age group, size of family etc. The question you need to ask yourself is, "Did you adhere to your financial plan while investing in an instrument for tax saving purposes?" Well if your answer to that is "yes", then you’re moving in the direction of attaining your financial goals. If not, it's time for you to take corrective action. The damage may have been done for the past year but the forthcoming is an opportunity for you to plan well. Remember, procrastination is the thief of time. So if you postpone it now, this year will be no different from the last one.
1. Target full utilisation of Section 80 C: Maximum deduction available is to the tune of Rs. 100,000. Assess your income to arrive at the amount you need to invest in this section. The investment avenues include; Public Provident Fund (PPF) up to Rs. 70,000, National Saving Certificate (NSC), Life Insurance or ULIP premium, tuition fees paid for children’s education
(2 children max), Equity linked savings schemes (ELSS), Post office saving deposit (POSD) and five year fixed deposits with banks among others. For individuals in the higher income bracket, section 80 C which is the most popular one may not be sufficient to reduce overall tax liability. Here is where the other sections will play a key role in reducing tax outflow.
2. Interest on home loan: Individuals intending to buy a house should consider opting for a home loan. Interest payments up to Rs 150,000 pa are eligible for deduction under Section 24
3. House Rent Allowance (HRA): You can take advantage of this if you are renting an accommodation. There are set guidelines determining the amount deductible. Please note that the rent agreement / rent receipts need to be submitted
4. Health Insurance Premium: Annual deduction of Rs. 15,000 is permissible for self, spouse and dependent children. Also and additional Rs. 15,000 is allowed for parents
5. Medical reimbursement: Medical treatment expenses up to Rs. 15,000 can be claimed annually as deduction from salary u/s 17(2). Actual bills need to be produced
6. Donation to Charitable institutions: Subject to the stated limits, donations to specified funds/institutions are eligible for tax benefits under Section 80G. Receipt needs to be produced.
7. Interest paid on educational loans: Deduction can be claimed on interest paid on educational loans taken for higher education of you, your spouse and children under section (u/s) 80 E. There is no limit on the amount of deduction you can claim. However, the loan should be taken for a graduate or post-graduate program in engineering, medicine or management or a post-graduate course in the pure or applied sciencesPoints to remember1. Section 80 C allows deduction of tuition fees spent on children's education
2. If you want to pay rent to your parents or relatives (kindly note this arrangement cannot be done with your spouse), you will need to treat them as landlords and request the owner of the house to declare it in his/her personal income tax return
3. The maturity proceeds of life insurance policies are not taxable
4. Conveyance allowance up to maximum of Rs. 800 can be claimed per month as deduction from salary u/s 10(14)
5. Long term capital gains on listed shares/securities are not taxable
6. Capital gains on sale of house property can be avoided by purchasing another house property within two years after or one year before date of sale
7. Stamp duty charges and registration charges paid while purchasing new house is eligible for tax deduction under Section 80 C
The first step in the direction of tax saving is to assess your tax liability. So start the process so that you can then decide on what all to opt for to save maximum taxes.
Tax incentives are given to encourage savings/ investments. Savings form part of your overall financial plan which in effect means tax planning is a subset of financial planning. Your financial plan will set objectives for you based on your aspirations, your life style, your age group, size of family etc. The question you need to ask yourself is, "Did you adhere to your financial plan while investing in an instrument for tax saving purposes?" Well if your answer to that is "yes", then you’re moving in the direction of attaining your financial goals. If not, it's time for you to take corrective action. The damage may have been done for the past year but the forthcoming is an opportunity for you to plan well. Remember, procrastination is the thief of time. So if you postpone it now, this year will be no different from the last one.
Tuesday, 18 January 2011
HOUSE RENT ALLOWANCE - SOME USEFUL INFO
Organizations in India follow different methods for arriving at the House Rent Allowance (HRA) exemption, while calculating income tax on employee salary. Each method produces a different exemption amount. This begs the question, “which is the correct method?” Payroll managers have different opinions on how the exemption should be calculated. Let us examine the methods used for the HRA exemption calculation, and see which method goes well with the letters and spirit of Section 10(13A) of the Income Tax Act, 1961.
As per the Indian income tax law, the HRA exemption should be calculated as the least of the following.
1. Rent paid in excess of 10% of basic salary.
2. Actual HRA received by the employee.
3. Forty percent of basic salary, if the location of the residence is in a non-metro city/town or 50% of basic salary, if the location of the residence is in a metro city.
From the above “least of three” rule, it is clear that HRA exemption amount is determined by a number of factors — Basic pay, location of the residence, rent paid by the employee, and the HRA paid to the employee.So far, so good. The “least of three” rule looks easy to understand and implement. However, the same rule can be applied in different ways to create different methods of HRA exemption calculation.
Let us assume that an employee, who lives in a metro city, takes home a monthly Basic pay of Rs 50,000, monthly HRA of Rs 25,000, and pays a monthly rent of Rs 25,000. As long as everything remains constant throughout the year, there is no complication. The problem starts once any of the factors changes. Let us assume that the employee has a loss of pay for a month and half, say from August 1 to September 15, but the employee pays full rent in the months of August and September. Let us look at the different methods of calculating the exemption.
Method 1 – Annualized HRA exemption calculationOrganizations using this method calculate HRA exemption by determining the values of the different factors (Basic pay etc.) for the year and applying the “least of three” rule.a. Basic pay for the year = Rs 50,000 x 10.5 months (on account of loss of pay) = Rs 525,000.b. HRA paid to the employee = Rs 25,000 x 10.5 months (on account of loss of pay) = Rs 262,500.c. Rent paid by the employee for the year = Rs 25,000 x 12 = Rs 300,000.HRA exemption calculation1. Rent paid in excess of 10% of Basic salary = Rs 300,000 – Rs 52,500 = Rs 247,500.2. Actual HRA received by the employee = Rs 262,500.3. Fifty percent of Basic salary (since the location of the residence is in a metro city) = Rs 262,500.The HRA exemption for the year is the least of the above, which is Rs 247,500.
Method 2 – Monthly HRA exemption calculationOrganizations using this method calculate HRA exemption each month, and add the monthly HRA exemption values to arrive at the exemption for the year.1. Monthly HRA exemption amount — after applying the “least of three” rule for each month — from April to July and from October to March = Rs 20,000 per month.2. Monthly HRA exemption amount — after applying the “least of three” rule — for August = Rs 0.3. Monthly HRA exemption amount — after applying the “least of three” rule — for September = Rs 12,500.The total of HRA exemption amounts across all months = Rs 212,500 for the year.
Method 3 – HRA exemption calculation for each period of input changeAs per this logic, whenever any of the input parameters (Basic pay, Rent paid, HRA, and Metro or Non-metro) changes for an employee during a year, the HRA exemption is calculated. In other words, the year is divided into as many periods as dictated by changes in any of the input parameters, and HRA exemption is calculated for each of the periods.
Finally, the HRA exemption amounts for the different periods are aggregated to arrive at the HRA exemption amount for the year.
With regard to the illustration presented earlier, the year is divided into 3 periods, as follows.Period 1: From April 1 to July 31 – when there is no change to any of the input factors.Period 2: From August 1 to September 15 – when Basic pay and HRA change (became zero) on account of loss of pay.Period 3: From September 16 to March 31 – when there is no change to any of the input factors.HRA exemption calculationHRA exemption for period 1– from April 1 to July 31 = Rs 80,000.HRA exemption for period 2 — from August 1 to September 15 = Rs 0.HRA exemption for period 3 — from September 16 to March 31 = Rs 130,000.The total of HRA exemption amounts across all periods = Rs 210,000 for the year.The 3 methods yield different annual HRA exemption amounts – Rs 247,500, Rs 212,500, and Rs 210,000.
Which is the correct method?This is an important question to answer. Depending on the method an organization uses, the tax liability for the employee would be higher or lower, and in turn the government’s receipt from tax on salary income would be higher or lower.
The above illustrations present HRA exemption calculation in the event of changes in Basic salary and/or HRA. In the event of Basic salary or HRA not changing, but the rent amount changing or the location of the residence changing (say, from metro to non-metro), there will still be differences in HRA exemption calculation across the 3 methods.
While there is no explicit instruction from the income tax department as to which method should be used, we believe the “period” method (Method 3, described above) goes well with the provisions of Section 10(13A) of the Income Tax Act.
Friday, 29 October 2010
IRDA suspends sale of Universal Life policies
The Insurance Regulatory and Development Authority (Irda) has suspended sale of universal life policies (ULPs), which were being promoted as an alternative to unit-linked insurance plans, from October 23.
Sales have been suspended until the final guidelines for ULPs are issued. Irda said it had received several complaints on the sale practices of the insurers regarding ULP. “After examining the complaints, the authority is satisfied that the universal life products need a better regulatory framework for protecting policyholders’ interests,” Irda said.
In a draft issued late evening, the regulator defined the Variable Insurance Product, widely known as universal life policies, as life insurance products that provide death and maturity benefits equivalent to the balance in the savings account.
Under this policy, the regulator has proposed to cap the expenses at 25 per cent in the first year and at 5 per cent from second year onwards. Insurance company sources said the commission to agents may also be capped below 5 per cent.
DRAFT PROPOSALS
* Expenses capped at 25% 1st year onwards, 5% from 2nd year
* Agent commission may fall below 5%
* Single premium products under ULPs to be banned
* Minimum policy term to be 5 years
* Lock-in of 3 years
* No top-up premium, riders allowed
* To follow investment norms under traditional policies
Moreover, single-premium products under ULPs will not be allowed.
Like unit-linked insurance plans, the minimum policy term will be five years, with a minimum life cover of 10 times for those below 45 years of age. Above 45, the life cover will be seven times. The lock-in under the draft is kept at three years. Also, insurers will not be allowed to collect top-up premium or offer riders with ULPs.
Like unit-linked insurance plans, the minimum policy term will be five years, with a minimum life cover of 10 times for those below 45 years of age. Above 45, the life cover will be seven times. The lock-in under the draft is kept at three years. Also, insurers will not be allowed to collect top-up premium or offer riders with ULPs.
Insurance companies like Reliance Life and Max New York Life have launched these products as a combination of Ulips and traditional plans. Now, they have to follow the investment norms of traditional policies. Under this product, however, the policyholder will have the flexibility to change the policy term as well as the minimum sum assured.
Insurers will have to show the premium separately as risk premium, expense, commission and savings components.
Also, the draft has proposed that the policyholder will have 12 months to revive the policy from the date of first unpaid premium, while the life cover will cease.
Similarly, the benefit paid on death and maturity will be comparable to Ulips. The balance in the savings account will be paid at the time of maturity. On death, the sum assured chosen by the policyholder, along with the balance in the savings account will be paid.
Irda Chairman J Hari Narayan had said ULPs were the next focus area for the regulator as they wanted only fair products to be sold. Last week, insurance companies expressed their concern over capping of charges in ULPs, as agents did not push products with lower fees.
INTEREST ON DELAYED PAYMENT OF GRATUITY..says Madurai Bench of Madra HC...
An employee becomes eligible for gratuity on the termination of his employment after he has rendered continuous service for not less than five years, according to Section 4(1) of the Payment of Gratuity Act, 1972. He is also entitled for interest on the gratuity in terms of Section 7(3) and 7(3A).
Making these clear, the Madurai Bench of the Madras High Court directed the Arumuganeri Salt Workers Co-operative Production and Sale Society Ltd, Thoothukkudi district, to pay the amount to its worker, Mr A. Rajan, within 30 days from date of receipt of a copy of this order without further driving him to any other forum.
Mr Justice K. Chandru, hearing a writ petition from the Society challenging the order dated January 27, 2009 of the Appellate Authority under the Act, Madurai (R-2), directing it to make interest payment if gratuity was not paid within 30 days from the date of his order, noted that from the beginning, it was the stand of the petitioner Society that R-1 (Mr A. Rajan) was not eligible for gratuity. If Sections 7(3) and 7(3A) were read together, then there was no difficulty in understanding the eligibility for receiving interest.In the present case, the Appellate Authority had correctly construed the legal provisions and there was no case made out to interfere with the interpretation placed by the Authority. The petitioner contended that payment of interest would arise only when there was delayed payment, and in this case, there was no delay since they had paid gratuity as ordered by R-2, and hence the question of payment of interest would not arise.This Court was unable to accept the said statement, since the entire controversy was with regard to the legal provision. Reading Section 4(1) of the Act it would be clear that the date relevant for determination of interest was the date on which gratuity became payable, which in the present case was when R-1 resigned his job on 1-6-2003. When R-1 issued notice for payment of gratuity, petitioner employer did not honour the notice. On the contrary, it was only when R-1 instituted a claim before the Controlling Authority, the petitioner contended about the irregular nature of his employment and his alleged disqualification from receiving gratuity. In the light of these, the writ petition stood dismissed, the Judge held.
Making these clear, the Madurai Bench of the Madras High Court directed the Arumuganeri Salt Workers Co-operative Production and Sale Society Ltd, Thoothukkudi district, to pay the amount to its worker, Mr A. Rajan, within 30 days from date of receipt of a copy of this order without further driving him to any other forum.
Mr Justice K. Chandru, hearing a writ petition from the Society challenging the order dated January 27, 2009 of the Appellate Authority under the Act, Madurai (R-2), directing it to make interest payment if gratuity was not paid within 30 days from the date of his order, noted that from the beginning, it was the stand of the petitioner Society that R-1 (Mr A. Rajan) was not eligible for gratuity. If Sections 7(3) and 7(3A) were read together, then there was no difficulty in understanding the eligibility for receiving interest.In the present case, the Appellate Authority had correctly construed the legal provisions and there was no case made out to interfere with the interpretation placed by the Authority. The petitioner contended that payment of interest would arise only when there was delayed payment, and in this case, there was no delay since they had paid gratuity as ordered by R-2, and hence the question of payment of interest would not arise.This Court was unable to accept the said statement, since the entire controversy was with regard to the legal provision. Reading Section 4(1) of the Act it would be clear that the date relevant for determination of interest was the date on which gratuity became payable, which in the present case was when R-1 resigned his job on 1-6-2003. When R-1 issued notice for payment of gratuity, petitioner employer did not honour the notice. On the contrary, it was only when R-1 instituted a claim before the Controlling Authority, the petitioner contended about the irregular nature of his employment and his alleged disqualification from receiving gratuity. In the light of these, the writ petition stood dismissed, the Judge held.
PAYMENT EXCEEDING 20000 40(A)3 EXCEPTIONS RULE 6DD
Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction.However if payment is being made for plying, hiring or leasing goods carriages then Limit for these section is Rs 35000/-,instead Of 20000/-
Section 40A(3)(b) also provides for deeming a payment as profits and gains of business or profession if the expenditure is incurred in a particular year but the payment is made in any subsequent year in a sum exceeding Rs. 20,000/- otherwise than by an account payee cheque or by an account payee bank draft.
Section 40A(3) is an anti tax-evasion measure. By requiring payments to be made by an account payee instrument, it is possible to verify the genuineness of the transaction thereby mitigating the risk of evasion.Person are splitting a particular high value payment to a person into several cash payments, each below Rs.20,000/-. This splitting is also resorted to for payments made in the course of a single day.Courts have also held that the statutory limit in section 40A(3) applies to payment made to a party at one time and not to the aggregate of the payments made to a party in the course of the day as recorded in the cash book.According to the judicial opinion, the words used are ‘in a sum’, i.e., single sum.Therefore, irrespective of any number of transactions, where the amount does not exceed the prescribed amount in each transaction,the rigours of section 40A(3) will not apply.
To overcome the splitting of payments (AS GIVEN IN POINT NO 3)to the same person made during a day as referred above and to increase the efficacy of the provision, an amendment was made through Finance act 2008 and after 01.04.2008, where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, the disallowance of such expenditure shall be made under the proposed sub-section (3) of section 40A or the payment shall be deemed to be the profits and gains of business or profession under the proposed sub-section (3A) of section 40A,as the case may be. EXAMPLE :To illustrate with an example, let us assume a taxpayer has incurred an expenditure of Rs 40,000/-. The taxpayer makes separate payments of Rs 15,000/-, Rs 16,000/- and Rs 9,000/- all by cash, to the person concerned in a single day. The aggregate amount of payment made to a person in a day, in this case, is Rs 40,000/-. Since, the aggregate payment by cash exceeds Rs 20,000/-,Rs. 40,000/- will not be allowed as a deduction in computing the total income of the taxpayer in accordance with the proposed amendment.EXCEPTION TO ABOVE PROVISION:The provisions of this section are subject to exceptions as provided in Rule 6DD of the Income-tax Rules, 1962.
Payment to Specified payee Rule 6DD(a)- Where the payment is made to
Section 40A(3)(b) also provides for deeming a payment as profits and gains of business or profession if the expenditure is incurred in a particular year but the payment is made in any subsequent year in a sum exceeding Rs. 20,000/- otherwise than by an account payee cheque or by an account payee bank draft.
Section 40A(3) is an anti tax-evasion measure. By requiring payments to be made by an account payee instrument, it is possible to verify the genuineness of the transaction thereby mitigating the risk of evasion.Person are splitting a particular high value payment to a person into several cash payments, each below Rs.20,000/-. This splitting is also resorted to for payments made in the course of a single day.Courts have also held that the statutory limit in section 40A(3) applies to payment made to a party at one time and not to the aggregate of the payments made to a party in the course of the day as recorded in the cash book.According to the judicial opinion, the words used are ‘in a sum’, i.e., single sum.Therefore, irrespective of any number of transactions, where the amount does not exceed the prescribed amount in each transaction,the rigours of section 40A(3) will not apply.
To overcome the splitting of payments (AS GIVEN IN POINT NO 3)to the same person made during a day as referred above and to increase the efficacy of the provision, an amendment was made through Finance act 2008 and after 01.04.2008, where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, the disallowance of such expenditure shall be made under the proposed sub-section (3) of section 40A or the payment shall be deemed to be the profits and gains of business or profession under the proposed sub-section (3A) of section 40A,as the case may be. EXAMPLE :To illustrate with an example, let us assume a taxpayer has incurred an expenditure of Rs 40,000/-. The taxpayer makes separate payments of Rs 15,000/-, Rs 16,000/- and Rs 9,000/- all by cash, to the person concerned in a single day. The aggregate amount of payment made to a person in a day, in this case, is Rs 40,000/-. Since, the aggregate payment by cash exceeds Rs 20,000/-,Rs. 40,000/- will not be allowed as a deduction in computing the total income of the taxpayer in accordance with the proposed amendment.EXCEPTION TO ABOVE PROVISION:The provisions of this section are subject to exceptions as provided in Rule 6DD of the Income-tax Rules, 1962.
Payment to Specified payee Rule 6DD(a)- Where the payment is made to
(i) Reserve Bank of India or any banking company as defined in section 5(c) of Banking Regulation Act, 1949;
(ii) State Bank of India or any subsidiary bank as defined in section 2 of SBI (Subsidiary Banks) Act, 1959;
(iii) any co-operative bank or land mortgage bank;
(iv) any primary agricultural credit society or any primary credit society as defined under section 56 of the Banking Regulation Act, 1949;
(v) Life Insurance Corporation of India.
Payment to Government Rule 6DD(b)- Where payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender.
Payment by certain modesRule 6DD(c) - Where the payment is made by
(i) any letter of credit arrangements through a bank;
(ii) a mail or telegraphic transfer through a bank;
(iii) a book adjustment from any account in a bank to any other account in that or any other bank;
(iv) a bill of exchange made payable only to a bank;
(v) the use of electronic clearing system through a bank account;
(vi) a credit card;
(vii) a debit card.
Note: “Bank” means any bank, banking company or society referred to in #(i) to (iv) of rule 6DD(a) and includes any bank [not being a banking company as defined in section 5(c) of the Banking Regulation Act, 1949], whether incorporated or not, which is established outside India.
Adjustment in books Rule 6DD(d)- Where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee.
Purchase of certain productsRule 6DD(e):Where the payment is made for the purchase of -
(i) agricultural or forest produce; or
(ii) the produce of animal husbandry (including livestock, meat, hides and skins)***** or dairy or poultry farming; or
(iii) fish or fish products; or
(iv) the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products.
Cottage industry Rule 6DD(f)- Where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products.
No bank service Rule 6DD(g) - Where the payment is made in a village or town, which on the date of such payment is not served by any bank,to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town.
Note: “Bank” means any bank, banking company or society referred to in #(i) to (iv) of rule 6DD(a) and includes any bank [not being a banking company as defined in section 5(c) of the Banking Regulation Act, 1949], whether incorporated or not, which is established outside India.
Terminal benefit to employee - Rule 6DD(h) Where any payment is made to an employee of the assessee or the heir of any such employee, on or in connection with the retirement, retrenchment, resignation, discharge or death of such employee, on account of gratuity, retrenchment compensation or similar terminal benefit and the aggregate of such sums payable to the employee or his heir does not exceed Rs. 50,000.
Temporary posting of employee - Rule 6DD(i) Where the payment is made by an assessee by way of salary to his employee after deducting the income-tax from salary as per section 192, and when such employee
(i) is temporarily posted for a continuous period of 15 days or more in a place other than his normal place of duty or on a ship; and
(ii) does not maintain any account in any bank at such place or ship.
Bank closed - Rule 6DD(j) Where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike.
Payment to agent Rule 6DD(k)- Where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person.
Foreign currency Rule 6DD(l)- Where the payment is made by an authorised dealer or a money changer against purchase of foreign currency or travellers cheques in the normal course of his business. Note: “Authorised dealer” or “money changer” means a person authorised as an authorised dealer or a money changer to deal in foreign currency or foreign exchange under any law for the time being in force
Exemption from disallowance is not available
on payment for purchase of livestock, meat,hides and skins from a person who is not proved to be the producer of these goods and is only a trader, broker or any other middleman, by whatever name called [Circular No. 4/ 2006, dated 29-3-2006 (14 CAPJ 201)]
Any person, by whatever name called, who buys animals from the farmers, slaughters them and then sells the raw meat carcasses to the meat processing factories or to the traders/retail outlets is considered as producer of livestock and meat.
Exemption is available subject to furnishing of
(i) declaration from person receiving payment that he is a producer of meat;
(ii) confirmation that payment, otherwise than by account payee cheque/draft, was made on his insistence; and
(iii) a further confirmation from a veterinary doctor certifying that person specified in the certificate is a producer of meat and that slaughtering was done under his supervision [Circular No. 8/2006, dated 6-10-2006 (16 CAPJ 381)].
on payment for purchase of livestock, meat,hides and skins from a person who is not proved to be the producer of these goods and is only a trader, broker or any other middleman, by whatever name called [Circular No. 4/ 2006, dated 29-3-2006 (14 CAPJ 201)]
Any person, by whatever name called, who buys animals from the farmers, slaughters them and then sells the raw meat carcasses to the meat processing factories or to the traders/retail outlets is considered as producer of livestock and meat.
Exemption is available subject to furnishing of
(i) declaration from person receiving payment that he is a producer of meat;
(ii) confirmation that payment, otherwise than by account payee cheque/draft, was made on his insistence; and
(iii) a further confirmation from a veterinary doctor certifying that person specified in the certificate is a producer of meat and that slaughtering was done under his supervision [Circular No. 8/2006, dated 6-10-2006 (16 CAPJ 381)].
CLARIFICATION REGARDING THE MEANING OF THE EXPRESSION 'FISH OR FISH PRODUCTS' USED IN SUB-CLAUSE (iii) OF CLAUSE (f) OF RULE 6DD OF THE INCOME-TAX RULES, 1962
CIRCULAR NO. 10/2008, DATED 05-12-2008
Representations have been received from various quarters regarding problems being faced by the seafood exporters mainly on account of provisions of Section 40A (3) of the Income-tax Act, 1961.2. Disallowance of expenditure under the provisions of sub-section (3) of Section 40A of the I.T. Act, 1961 is made in the computation of income in a case where a payment or aggregate of payments exceeding twenty thousand rupees is made to a person in a day, otherwise than by an account payee cheque drawn on a bank or an account payee bank draft. However, payment otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft exceeding twenty thousand rupees does not attract the aforesaid disallowance in certain circumstances as prescribed under rule 6DD of the Income-tax Rules, 1962. Such exceptions, inter-alia, refer to payment made to the producer for the purchase of ‘fish or fish products' under sub-clause (iii) of clause (e) of rule 6DD. [Clause (f) of rule 6DD prior to coming into effect of the I.T. (Eighth Amendment) Rules, 2007 w.e.f. A.Y. 2008-09].3. The following clarifications are, therefore, being issued for proper implementation of rule 6DD of the Income-tax Rules, 1962:—(i) The expression ‘fish or fish products' used in rule 6DD(e)(iii) would include 'other marine products such as shrimp, prawn, cuttlefish, squid, crab, lobster etc.'.(ii) The 'producers' of ‘fish or fish products' for the purpose of rule 6DD(e) of I.T. Rules, 1962 would include, besides the fishermen, any headman of fishermen, who sorts the catch of fish brought by fishermen from the sea, at the sea shore itself and then sells the fish or fish products to traders, exporters etc.4. It is further clarified that the above exception will not be available on the payment for the purchase of fish or fish products from a person who is not proved to be a 'producer' of these goods and is only a trader, broker or any other middleman, by whatever name called.
Friday, 1 October 2010
Status of Challans in a TDS/TCS statement
What are the different statuses of a challan in the TDS/TCS statement?
The following are the various statuses of challans in a TDS/TCS statement:
Booked: Challan / transfer voucher detail in the statement matches with corresponding details received from banks / PAO.
Match Pending: Corresponding challan details not received from the bank.
Match Failed (Challan): TAN and/or amount relating to a challan in the statement do not match with the corresponding details received from banks.
Match Failed (Transfer Voucher): Amount relating to a transfer voucher does not match with corresponding details received from PAO.
Provisionally Booked: In case of Government deductors where TDS/TCS statement is received by TIN and mode of payment of TDS/TCS is through book entry (transfer voucher) and e-TBAF details from PAO is not received by TIN.
What is the significance if the status of challan is ‘Booked’?
If the challan is in Booked status, credit of tax deducted will be reflected in the annual tax statement (Form 26AS) of all the underlying deductees with a valid PAN.
Correction in challan details is not allowed once a challan is booked. Correction can be made on underlying deductee records of a booked challan.
What should I do if the status of challan is Match pending?
A challan is in Match pending status as the CIN is not present in the payment information provided by the Bank. As a result the credit of tax deducted will not be reflected in the Form 26AS of corresponding deductees with valid PAN.
The possible cause could be due to error in quoting CIN details (Challan serial no., BSR code and challan tender date) either in the TDS statement or in the details provided by the Bank. Error in TDS statement can be rectified by filing a correction statement, where as error. What should I do if the status of challan is in status ‘Match failed’?
A challan is in Match failed status as the TAN/challan amount in the statement does not match the details provided by the Bank. As a result the credit of tax deducted will not be reflected in Form 26AS of corresponding deductees with valid PAN.
The possible cause could be error in quoting challan amount. The same can be rectified by filing a correction statement.
The following are the various statuses of challans in a TDS/TCS statement:
Booked: Challan / transfer voucher detail in the statement matches with corresponding details received from banks / PAO.
Match Pending: Corresponding challan details not received from the bank.
Match Failed (Challan): TAN and/or amount relating to a challan in the statement do not match with the corresponding details received from banks.
Match Failed (Transfer Voucher): Amount relating to a transfer voucher does not match with corresponding details received from PAO.
Provisionally Booked: In case of Government deductors where TDS/TCS statement is received by TIN and mode of payment of TDS/TCS is through book entry (transfer voucher) and e-TBAF details from PAO is not received by TIN.
What is the significance if the status of challan is ‘Booked’?
If the challan is in Booked status, credit of tax deducted will be reflected in the annual tax statement (Form 26AS) of all the underlying deductees with a valid PAN.
Correction in challan details is not allowed once a challan is booked. Correction can be made on underlying deductee records of a booked challan.
What should I do if the status of challan is Match pending?
A challan is in Match pending status as the CIN is not present in the payment information provided by the Bank. As a result the credit of tax deducted will not be reflected in the Form 26AS of corresponding deductees with valid PAN.
The possible cause could be due to error in quoting CIN details (Challan serial no., BSR code and challan tender date) either in the TDS statement or in the details provided by the Bank. Error in TDS statement can be rectified by filing a correction statement, where as error. What should I do if the status of challan is in status ‘Match failed’?
A challan is in Match failed status as the TAN/challan amount in the statement does not match the details provided by the Bank. As a result the credit of tax deducted will not be reflected in Form 26AS of corresponding deductees with valid PAN.
The possible cause could be error in quoting challan amount. The same can be rectified by filing a correction statement.
Correction in ETDS statement at multiple times FAQs (Freequently Asked Questions)
How many times can I furnish a correction TDS/TCS statement?
A correction TDS/TCS statement can be furnished multiple times to incorporate changes in the regular TDS/TCS statement whereas a regular TDS/TCS statement will be accepted at the TIN central system only once. What are the important points to be kept in mind while preparing correction statement more than once on the same regular statement?
You have to kept in mind, the following points while preparing correction statement more than once on the same regular statement:
The TDS/TCS statement on which correction is to be prepared should be updated with details as per all previous corrections.
Modifications/addition/deletion in correction statements accepted at the TIN central system only should be considered. The first correction filed by me contains three types of correction (three PRNs) and one of the types of correction has got rejected at the TIN central system. What should I do?
The steps as under should be followed:
You have to update modifications as per the accepted corrections in the TDS statement.
Identify the record for which correction was rejected earlier by its sequence no. and fields for identification
Correct the said record.
Correction statement should contain updated values as well as value of identification field as per regular statement. Which provisional receipt number should I quote while preparing correction statement more than once on the same regular statement?
There are two fields for Provisional receipt number (PRN) in a correction statement as under: a. Original Provisional receipt number – PRN of the regular statement should be mentioned in this field.b. Previous Provisional receipt number – PRN of the last accepted correction statement should be mentioned in this field. In case the value in this field is incorrectly mentioned, the statement will get rejected at TIN central system for the reason: “Either Previous Provisional Receipt No. provided is incorrect or combination of Original Provisional Receipt No. and Previous Provisional Receipt No. is not in sequence”ExampleSingle batch correction statement – Only one type of correction in the filea. You have filed a regular statement having PRN 010010200083255 and subsequently filed a single batch correction statement having PRN 010010300074112. While preparing correction statement, you have to mention PRN 010010200083255 in the field original PRN and the PRN 010010300074112 in the field Previous PRN.Multiple batch correction statement – different types of correction in a single fileb. You have filed a regular statement having PRN 010010200083255 and subsequently filed a multi batch correction statement having three batches and corresponding PRNs as 010010300074112, 010010300074123 and 010010300074134. While preparing the correction statement, you have you have to mention PRN 010010200083255 in the field original PRN and check the status of all the three PRNs of correction statement
If all the three PRNs are accepted at the TIN central system, you may mention any of the three PRNs in the field previous PRN
If any of the three PRNs is rejected, then you should mention the PRN which has been accepted at the TIN central system in the field Previous PRN
If all the three PRNs are rejected, then you must mention the PRN of the regular statement, i.e. 010010200083255 in the field Previous PRN. How many times can I update PAN of a deductee/transacting party?
Structurally valid PAN of a deductee in the regular statement can be updated to another structurally valid PAN only once. When does a statement get ‘Partially Accepted’?
A correction statement containing updates in PAN of deductee/employee may get Partially Accepted. This is possible when the PAN in the any of the records being updated by you in the correction statement is invalid, i.e. PAN not present in PAN Master Database. In such a scenario, the said record gets rejected resulting in partial acceptance of the statement. What should I do if the status of correction statement filed by me is ‘Partially accepted’?
In case correction statement is in status ‘Partially accepted’, you have follow steps as under:
You have to update modifications as per the accepted records in the TDS statement.
Identify the deductee/salary record which has got rejected due to invalid PAN.
Rectify the incorrect PAN
Correction statement should contain value of identification keys as per regular statement along with the updated values. What could be the cause of rejection of TDS/TCS statement for the reason “Total Deposit amount of deductees is more than Challan amount actually deposited in bank”?The total tax deposited amount as per challan should be greater than or equal to the total tax deposited amount as per deductee details, else a regular TDS/TCS statement will not get validated through FVU. If you file a correction statement for adding deductee records under a particular challan, the total tax deposited as per challan in regular statement should be greater than or equal to the total tax deposited in deductee details as per regular as well as correction statement. Note: Amount in the fields Interest and others in the challan is not considered in the total tax deposited as per challan.
A correction TDS/TCS statement can be furnished multiple times to incorporate changes in the regular TDS/TCS statement whereas a regular TDS/TCS statement will be accepted at the TIN central system only once. What are the important points to be kept in mind while preparing correction statement more than once on the same regular statement?
You have to kept in mind, the following points while preparing correction statement more than once on the same regular statement:
The TDS/TCS statement on which correction is to be prepared should be updated with details as per all previous corrections.
Modifications/addition/deletion in correction statements accepted at the TIN central system only should be considered. The first correction filed by me contains three types of correction (three PRNs) and one of the types of correction has got rejected at the TIN central system. What should I do?
The steps as under should be followed:
You have to update modifications as per the accepted corrections in the TDS statement.
Identify the record for which correction was rejected earlier by its sequence no. and fields for identification
Correct the said record.
Correction statement should contain updated values as well as value of identification field as per regular statement. Which provisional receipt number should I quote while preparing correction statement more than once on the same regular statement?
There are two fields for Provisional receipt number (PRN) in a correction statement as under: a. Original Provisional receipt number – PRN of the regular statement should be mentioned in this field.b. Previous Provisional receipt number – PRN of the last accepted correction statement should be mentioned in this field. In case the value in this field is incorrectly mentioned, the statement will get rejected at TIN central system for the reason: “Either Previous Provisional Receipt No. provided is incorrect or combination of Original Provisional Receipt No. and Previous Provisional Receipt No. is not in sequence”ExampleSingle batch correction statement – Only one type of correction in the filea. You have filed a regular statement having PRN 010010200083255 and subsequently filed a single batch correction statement having PRN 010010300074112. While preparing correction statement, you have to mention PRN 010010200083255 in the field original PRN and the PRN 010010300074112 in the field Previous PRN.Multiple batch correction statement – different types of correction in a single fileb. You have filed a regular statement having PRN 010010200083255 and subsequently filed a multi batch correction statement having three batches and corresponding PRNs as 010010300074112, 010010300074123 and 010010300074134. While preparing the correction statement, you have you have to mention PRN 010010200083255 in the field original PRN and check the status of all the three PRNs of correction statement
If all the three PRNs are accepted at the TIN central system, you may mention any of the three PRNs in the field previous PRN
If any of the three PRNs is rejected, then you should mention the PRN which has been accepted at the TIN central system in the field Previous PRN
If all the three PRNs are rejected, then you must mention the PRN of the regular statement, i.e. 010010200083255 in the field Previous PRN. How many times can I update PAN of a deductee/transacting party?
Structurally valid PAN of a deductee in the regular statement can be updated to another structurally valid PAN only once. When does a statement get ‘Partially Accepted’?
A correction statement containing updates in PAN of deductee/employee may get Partially Accepted. This is possible when the PAN in the any of the records being updated by you in the correction statement is invalid, i.e. PAN not present in PAN Master Database. In such a scenario, the said record gets rejected resulting in partial acceptance of the statement. What should I do if the status of correction statement filed by me is ‘Partially accepted’?
In case correction statement is in status ‘Partially accepted’, you have follow steps as under:
You have to update modifications as per the accepted records in the TDS statement.
Identify the deductee/salary record which has got rejected due to invalid PAN.
Rectify the incorrect PAN
Correction statement should contain value of identification keys as per regular statement along with the updated values. What could be the cause of rejection of TDS/TCS statement for the reason “Total Deposit amount of deductees is more than Challan amount actually deposited in bank”?The total tax deposited amount as per challan should be greater than or equal to the total tax deposited amount as per deductee details, else a regular TDS/TCS statement will not get validated through FVU. If you file a correction statement for adding deductee records under a particular challan, the total tax deposited as per challan in regular statement should be greater than or equal to the total tax deposited in deductee details as per regular as well as correction statement. Note: Amount in the fields Interest and others in the challan is not considered in the total tax deposited as per challan.
Unique Identification Numbers Bill
The Cabinet today approved the proposal for introducing the National Identification Authority of India Bill, 2010 in Parliament.
The Bill proposes to constitute a statutory authority to be called the National Identification Authority of India and lay down the powers and functions of the Authority, the framework for issuing UID numbers (aadhaar numbers), major penalties and other related matters through an Act of Parliament.
This will involve an expenditure of ` 3023.01 crore which includes project components for issue of UID numbers (called aadhaar numbers) by March 2011, and recurring establishment costs for the entire project phase of five years ending March 2014.
The UID project is primarily aimed at ensuing inclusive growth by providing a form of identity to those who do not have any identity. It seeks to provide aadhaar numbers to the marginalised sections of society and thus would strengthen equity. Apart from providing identity, the aadhaar number will enable better delivery of services and effective governance.
The Bill seeks to establish the National Identification Authority of India for the purpose of issuing aadhaar numbers to individuals residing in India and to certain other classes of individuals, the manner of authentication of such individuals and other related and incidental
The Bill seeks to establish the National Identification Authority of India for the purpose of issuing aadhaar numbers to individuals residing in India and to certain other classes of individuals, the manner of authentication of such individuals and other related and incidental
matters.
What is UID(unique Identity Numbers)?
Nandan Nilekani, who heads the National Authority for Unique Identity of India aims at provide unique number to all Indians but not smart cards.
Nandan Nilekani said the unique ID number will not substitute other existing numbers a person may have which includes PAN, passport number, ration number. Rather, it will be an additional, unique number to be cited along with existing numbers for different purposes.
This ID cards will help to weed out duplicate cards that are widespread today (notably in BPL ration cards), and, may be, benami bank accounts and property deeds.
Nilekani team will make available a unique ID database to all ministries and other partners, who can then integrate their databases (covering passports, ration cards, job cards, PAN cards) with the unique ID database.
Participation in credit cards is entirely voluntary. This will also be the case with the unique ID scheme. Citizens will not be obliged to get a number. But those that don’t will find it very inconvenient, they will not have access to facilities that require you to cite your ID number.
Notification Income tax Due date extended to 15.10.2010
F.No. 225/72/2010-ITA.IIGovernment of IndiaMinistry of
FinanceDepartment of RevenueCentral Board of Direct Taxes
Dated : September 27, 2010
Order under Section 119 of the Income Tax Act, 1961
On consideration of the reports of disturbance of general life caused due to floods and heavy rains, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the due date of filing of returns of income for the Assessment Year 2010-11 from 30.09.2010 to 15th October 2010. Accordingly the due date for Tax Audit report u/s. 44AB of the Income Tax Act is also extended to 15th October, 2010.
(Ajay Goyal)Director (ITA. II)
PROBLEM IN REGISTRATION OF DIGITAL SIGNATURE IN e-FILING
Income Tax Department issued few Clarification and suggestion regarding filling of Income tax Return by Corporate tax payers and other assessees with digital Signature.
It is observed that Corporate users are registering the DSC and immediately trying to upload the I-T Return. This will throw up an Error like "Your DSC is not registered". Therefore, it is requested that whenever the new DSC is being registered or DSC is being updated, the user should first log out and then login again for the registration or updation to take effect, and then only upload the I-T return.
Requirement of encrypted PAN on DSC for non-resident signatories of foreign companies has been relaxed. The signatory may register with a non-PAN based DSC from the CCA, India and use the same DSC while uploading the return. This facility is available ONLY for all foreign companies under the jurisdiction of respective International Taxation wards or circles of the Income Tax Department. Foreign companies still facing any difficulty may send a email to efiling@incometaxindia.gov.in or efiling.administrator@incometaxindia.gov.in giving their name, PAN and jurisdiction.
Monday, 23 August 2010
Receipt number to be quoted in Form 16/16A
Receipt number to be quoted in Form 16/16A will be generated by TIN. Receipt number will be generated for the quarterly TDS/TCS statements pertaining to FY 2010-11 and onwards uploaded to TIN. Receipt number generated will be of eight digits (alphabets) and will be applicable only for statements pertaining to FY 2010-11 and onwards. Eight digit receipt number can be obtained by viewing the status of the quarterly TDS/TCS statement at under Quarterly Statement Status feature available at TIN website (http://www.tin-nsdl.com)./
Receipt number provided by TIN is in addition to the provisional receipt number provided on acceptance/upload of quarterly TDS/TCS statement. Provisional receipt number will be referred as Token no for the statements pertaining to FY 2010-11 and onwards.
to check your receipt number go to tin-nsdl website and check quarterly statement status and the you will found the 8 digit receipt number as shown in picture below:
to check your receipt number go to tin-nsdl website and check quarterly statement status and the you will found the 8 digit receipt number as shown in picture below:
Wednesday, 18 August 2010
HOW TO TYPE RUPEE SYMBOL FROM KEYBOARD
The Indian Govt has just Announced the Symbol for Rupee currency and It will take almost one year to implement the same in all over the world as there are many regulatory requirement involved in implementation .However I have found a trick from the net by which you can start using the Rupee symbol from now .It is very easy to use the trick .Trick is developed by Foradian Technologies .steps To Install the Rupee symbol.How to use ?
1. Download the above attached font Rupee.ttf or the new version Rupee_Foradian.ttf
2. Install the font. (It is easy. Just copy the font and paste it in "Fonts" folder in control panel)
3. Start using it. :) download the Rupee Firadian.ttf
How to type the Rupee symbol ?
Rupee symbol mapped the grave acent symbol - ` (the key just above "tab" button in your keyboard) with the new Rupee symbol. Just select "Rupee" font from the drop down list of your fonts in your application and press the key just above your tab button. It will display our new rupee symbol. Try it.
Limitations The "Rupee.ttf" font is necessary to view the currency symbol. So as long as the new symbol is not encoded in to unicode font by default, we cant use the symbol universally.means if you type the symbol in your letter and send to other person but the receiver has not installed the font then he can not see the rupee symbol
Limitations The "Rupee.ttf" font is necessary to view the currency symbol. So as long as the new symbol is not encoded in to unicode font by default, we cant use the symbol universally.means if you type the symbol in your letter and send to other person but the receiver has not installed the font then he can not see the rupee symbol
TDS defaults!!!! Consequences.
1. Failure to deduct the whole or part of the Tax at source (non-deduction, short deduction or delay in deduction) and Failure to deposit whole or part of the TDS (non-deposit, short deposit or late deposit) and/or
2. Failure to apply for TAN within the prescribed time limit or failure to quote TAN on allotment as required under section 203A.
3. Failure to furnish, in due time, TDS returns or TDS certificates or to deliver or cause to be delivered a copy of declaration in form no. 15H/15G/27C/copy of quarterly statement.
4. Failure to mention the PAN of the deductee in all quarterly statements as well as in all certificates furnished.
5. Consequences of DefaultsThe following chart indicates the nature of default and its consequences which range from penal interest, penalty to prosecution:
Note: Interest Rate u/s 201(1A) has been amended wef 01.07.2010 .Now 1% PM or part thereof interest is applicable where tds is deductible but has not been deducted and 1.5% per month is applicable where tds has been deducted but has not been deposited with in due time.In addition to the above, there are other consequences in certain cases, as enumerated below; Disallowance of specified expenditure (while computing the income of the deductor) if TDS is not deducted from the payment. (Section 40a(ia)).
Where the tax has not been paid after its deduction it shall be charge on the asset of the defaulter to recover the amount of TDS. (section 201(2)).
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Friday, 13 August 2010
SAMPLE REPLY FOR INTIMATION U/S 143(1) RECEIVED FROM CENTRALISED PROCESSING CENTER
For those who have received demand notice from Income-tax department in connection with Income-tax return for the A.Y. 2009-10 [F.Y. 2008-09].
Applicable to those Assessees who have filed their Income-tax Return Online in Form No. ITR-2.
Known Reason for Demand that have come to our notice are as mentioned below:
Reason 1: TDS Mismatch TDS Credit claimed in the Income-tax Return has not been considered by the Income-tax Department. There are various possibilities for this query: Viz. You might have quoted wrong PAN number to your employer Correct PAN number was given to your employer in the mid of the year, which was not updated by your employer in their TDS return that they filed with the Income-tax Department via NSDL. Your employer did not quote the TDS details like Bank Code, like Bank Code, Challan Number etc. properly in their TDS return.
Reason 2: Wrong data in Income-tax Return Wrong data in Income-tax Return (Difference in total Income as per ITR-V and notice of demand) While filing the return you had entered correct details & your tax was also calculated properly and the same details are reflecting on your ITR-V. But due to some mistake the amounts in ITR-V and your Income-tax return differs and therefore the demand.
REMEDIAL ACTION FOR THE ABOVE REASONS
TDS Mismatch
Check the Tax Credit claimed in the Income-tax Return and Credit actually allowed by the Income-tax Department. If you want to cross check your Tax Credit then make an application with TIN Facilitation Centre (TIN FC) for Form No. 26AS (your tax credit statement issued by Government via NSDL). List of TINFC is available on http://tin.nsdl.com. Cross Check TDS details considered by you and that mentioned in the Intimation letter received by the Income-tax Department.
Take photocopy of all the TDS Certificate on which you have relied and submit the copy of the same along with a covering letter (enclosed) to the concerned Income-tax Assessing Officer.
Wrong data in Income-tax Return
Compare your ITR – V and Demand Notice and find the head of Income in which there is a difference
Make a Rectification Application by writing a letter to the concerned Income-tax officer who has raised the demand requesting him to correct the mistake (Sample Letter enclosed). Do remember to give all relevant documents viz. Form 16, ITR-V, Bank statements etc for the corresponding year.
Please Note: This advice is of a general nature only, is not intended to be complete or definitive. It is not a substitute for professional and expert advice, and may not be appropriate or sufficient for your particular case. You should obtain professional advice before taking any action in relation to any matter referred in this letter to address your particular situation.
SAMPLE REPLY
(IN REPLY TO THE INTIMATION U/S 143(1) RECEIVED FROM CENTRALISED PROCESSING CENTER)
Date: _______
(IN REPLY TO THE INTIMATION U/S 143(1) RECEIVED FROM CENTRALISED PROCESSING CENTER)
Date: _______
From:
To
Income-tax Officer (CPC)
Post Bag 1 Electronic City Post Office
Bangalore - 560100
Post Bag 1 Electronic City Post Office
Bangalore - 560100
Sir,
Re: Your notice of demand for the A.Y. 2009-10 Communication Reference number: CPC/0910/_________________________ PAN: __________________- request regarding.
Sub: Request to check the details at your end due to difference in Total Income / Deduction and Tax thereon considered by you and reported by me.
I am in receipt of Demand Notice for Rs. ____________ for the A.Y. 2009-10. In this connection I would like to mention that there appears to be some error in Income considered by you and as reported by me in my Income-tax Return.
The Total income for the said year is Rs. ____________ (which is clearly reflected in my Income-tax Acknowledgement ITR-V) and the total Income considered by you is Rs. _____________.
There seem to be an apparent error in the in the demand raised by your good self. May I therefore request you to kindly rectify the mistake and till then I further request your good self to keep the said demand in abeyance. The income reported by me can be easily verified from ITRV attached herewith.
I once again confirm that I have reported all the Income chargeable to tax during the said year and no Income has remained to be offered for taxation.
I hope that you will take an early and necessary step to rectify the same.
In the ending, I request you to kindly let me know, if I can provide you with any other details for verification and necessary rectification.
I once again confirm that I have reported all the Income chargeable to tax during the said year and no Income has remained to be offered for taxation.
I hope that you will take an early and necessary step to rectify the same.
In the ending, I request you to kindly let me know, if I can provide you with any other details for verification and necessary rectification.
Thanking you,
Yours faithfully,
(NAME)
Selection for Scrutiny - Certain guide lines
Guide Lines for selection of cases for Scrutiny During 2010-11
1. Selection of cases for scrutiny during the financial year 2010-11 will be done primarily through CASS this year. Manual Selection for scrutiny this year will be limited only to a few cases listed below
2. List of cases selected during each month in accordance with selection criteria mentioned below shall be submitted by the Assessing officers to their respective Range heads by the 15th of the following month and also displayed on the notice Board of their offices .
3. These guidelines are meant only for the use of officers of the Income Tax Department .These are not to be disclosed even if a request is made under Right to Information Act, In view of the decision of the Central Information Commission in the case of Shri Kamal Vs Director (ITA-II),CBDT(order no CIC/AT/2007/00617 dated 21.02.2008)
Selection criteria Applicable to all return at all stations
a) Value of International transaction as defined in 92B exceeds 15 Crore.
b) Cases involving addition in an earlier assessment year in excess of Rs 10 lacs on a substantial and recurring question of law or fact which is confirmed in appeal or is pending before on appellate authority.
c) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs 10 Lakh or more.
d) Assessment in survey cases for the financial year in which survey was carried out. This criteria will not apply if all of the following conditions are fulfilled:
i. There are no impounded books or documents.
ii.There is no retraction of disclosure, if any, made during
1. Selection of cases for scrutiny during the financial year 2010-11 will be done primarily through CASS this year. Manual Selection for scrutiny this year will be limited only to a few cases listed below
2. List of cases selected during each month in accordance with selection criteria mentioned below shall be submitted by the Assessing officers to their respective Range heads by the 15th of the following month and also displayed on the notice Board of their offices .
3. These guidelines are meant only for the use of officers of the Income Tax Department .These are not to be disclosed even if a request is made under Right to Information Act, In view of the decision of the Central Information Commission in the case of Shri Kamal Vs Director (ITA-II),CBDT(order no CIC/AT/2007/00617 dated 21.02.2008)
Selection criteria Applicable to all return at all stations
a) Value of International transaction as defined in 92B exceeds 15 Crore.
b) Cases involving addition in an earlier assessment year in excess of Rs 10 lacs on a substantial and recurring question of law or fact which is confirmed in appeal or is pending before on appellate authority.
c) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs 10 Lakh or more.
d) Assessment in survey cases for the financial year in which survey was carried out. This criteria will not apply if all of the following conditions are fulfilled:
i. There are no impounded books or documents.
ii.There is no retraction of disclosure, if any, made during
the survey.
iii. Declared income, excluding any disclosure made during the survey, is not less than the declared income of the preceding year.
e) Assessment in search & Seizure cases to be made under section 158B, 158BC, 158BD, 153A, 153C & 143(3) of the IT Act.
f) Assessment Initiated under section 147/148 of the IT Act.
g) Assessing officer may select any return for scrutiny after recording he reason and obtaining approval of the CCIT/DGIT. The cases under this category should be selected if, there are compelling reasons and the case is not selected through CASS. These cases should be watched by CCIT/CIT in respect of the quality of assessment.
(F.NO.225/93/2009/ITA.II)
iii. Declared income, excluding any disclosure made during the survey, is not less than the declared income of the preceding year.
e) Assessment in search & Seizure cases to be made under section 158B, 158BC, 158BD, 153A, 153C & 143(3) of the IT Act.
f) Assessment Initiated under section 147/148 of the IT Act.
g) Assessing officer may select any return for scrutiny after recording he reason and obtaining approval of the CCIT/DGIT. The cases under this category should be selected if, there are compelling reasons and the case is not selected through CASS. These cases should be watched by CCIT/CIT in respect of the quality of assessment.
(F.NO.225/93/2009/ITA.II)
Tuesday, 10 August 2010
Miss the Tax Deadlines: Don’t Worry You can file the Income tax return till March, 2011
Miss the Tax Deadlines: Don’t Worry You can file the Income tax return till March, 2011
Tax returns are a primary issue for every individual and every individual who is liable to pay tax on income must file their return for the financial year 2009-10 before 31st July, 2010. However, the date has been extended to 4th August, 2010 on the ground of few technical hitches that are being currently faced by the department and the people for e-filing; the problem of poor weather conditions in some places has also added a cause for the extension. The extension was declared by the Central Board of Direct Taxes (CBDT) in a contemporary press conference. The announcement has relieved many tax payers who were unable to file return on time and have an opportunity to rectify their mistakes, but still if one is unable to file his return on time, he has an option to pay his returns till March 2011 provided he complies with certain conditions and pays penalties.
Belated Tax Return:
If an assessee fails to submit the return of income-
Within the time allowed under section 139(1), or
Within the time specified in the notice issued under section 142 (1),
He may submit a return (known as belated return) after the expiry of the said period. But the furnishing must be before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. So, in our case one can easily file his return n belated basis by March 2011, but penalty in such a case needs to be paid.
Consequences:
Tax returns are a primary issue for every individual and every individual who is liable to pay tax on income must file their return for the financial year 2009-10 before 31st July, 2010. However, the date has been extended to 4th August, 2010 on the ground of few technical hitches that are being currently faced by the department and the people for e-filing; the problem of poor weather conditions in some places has also added a cause for the extension. The extension was declared by the Central Board of Direct Taxes (CBDT) in a contemporary press conference. The announcement has relieved many tax payers who were unable to file return on time and have an opportunity to rectify their mistakes, but still if one is unable to file his return on time, he has an option to pay his returns till March 2011 provided he complies with certain conditions and pays penalties.
Belated Tax Return:
If an assessee fails to submit the return of income-
Within the time allowed under section 139(1), or
Within the time specified in the notice issued under section 142 (1),
He may submit a return (known as belated return) after the expiry of the said period. But the furnishing must be before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. So, in our case one can easily file his return n belated basis by March 2011, but penalty in such a case needs to be paid.
Consequences:
Even if filling of belated return is permitted by the Income Tax Act, the following shall be applicable:
If the return is not furnished on or before the due date as specified under section 139 (1), interest under section 234A will be charged.
If belated return is submitted after the end of the relevant assessment year, penalty of Rs. 5, 000 under section 271F will be imposed.
In case of submission of belated return certain losses cannot be carried forward for set off.
Deduction under section 10A, 10B, 80-IA, 80-IAB, 80-IB and 80-IC will not be available if belated return is submitted.
Revised returns: When an assessee files his returns timely but later on discovers some mistakes in the return filed, he submits a revised return to the Department. The assessee may furnish the revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever is earlier.
Defective returns: If the assessing officer considers the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him the opportunity to rectify the defect within 15 days from the date of such intimation or within such period as the Assessing Officer may allow on an application made by the assessee.
Thus, from the above explanation me can make a clear judgment that one can file a return of his current year in the next year provided he pays penalty and complies with the requirements but it shall be remembered that once belated return is filed the option for a revised return is closed and the assessee must ensure that his belated return is true and posts a fair view.
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