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Income Tax

Instant PAN Through Aadhaar Based e-KYC

by Sanjeev Archak Sanjeev Archak No Comments

The Income Tax Department has launched a new facility of availing instant Permanent Account Number (PAN) for applicants with a valid Aadhaar. This is a massive improvement over the current process where an individual has to wait for 14 days for the PAN to arrive post filling the application.  Plus, one had to pay Rs 93 for delivery to his/her chosen postal address. This new Instant PAN facility is free of cost.

 Procedure for availing PAN:

  1. To apply for PAN, please visit the e-Filing website of Income-tax department.(Url: www.incometaxindiaefiling.gov.in)
  2. Click the link- ‘Instant PAN through Aadhaar’.
  3. Click the link- ‘Get New PAN’.
  4. Fill in your Aadhaar in the space provided, enter captcha and confirm.
  5. The applicant will receive an OTP on the registered Aadhaar mobile number; submit this OTP in the text box on the webpage.
  6. After submission, an acknowledgement number will be generated. Please keep this acknowledgment number for future reference.
  7. On successful completion, a message will be sent to the applicant’s registered mobile number and e-mail id (if registered in UIDAI & authenticated by OTP). This message specifies the acknowledgement number.

How to Download PAN:

  1. To download PAN, please go to the e-Filing website of Income-tax department. (Url: www.incometaxindiaefiling.gov.in)
  2. Click the link- ‘Instant PAN through Aadhaar’.
  3. Click the link- ‘Check Status of PAN’.
  4. Submit the Aadhaar number in the space provided, then submit the OTP sent to the Aadhaar registered mobile number.
  5. Check the status of application- whether PAN is allotted or not.
  6. If PAN is allotted, click on the download link to get a copy of the e-PAN pdf

Format of e-PAN:

The e-PAN also contains enhanced QR code having demographic (Name, DOB) as well as biometric
(scanned photo and signatures) information of the PAN holders which can be accessed and used for
PAN verification purposes in off-line mode. Sample of e-PAN

 

 

Setting up Your Accounts-Part 1

by Sanjeev Archak Sanjeev Archak 1 Comment

When you are starting your business handling accounting and compliance can be daunting. There are a few  common mistakes that early stage businesses commit; of course with the right advice you can avoid these pitfalls. Part 1 of this blog looks at setting up your accounting system.

Open a Bank Account

It is best to open a current account for your business. This current account must be used to deposit all your sales income & paying all the business expenses. Of course there is a wide choice of banks to choose from, here are some factors to be kept in mind while choosing a bank account:

Bank charges: look at how much the bank charges for NEFT/RTGS, ATM Withdrawals, foreign currency receipts and payments, forex rates etc.

Minimum balance requirements: check the minimum balance requirements in the account. Also ease of operating the net banking must  be checked.

Mobile banking: choose a bank which offers mobile banking. This will save you a lot of time.

Separate Your Finances

There needs to be separation between yourself and the business. The individual and the business are not necessarily the same. How this works will depend on your legal structure:

For Sole Traders/Owners: if you’re a self-employed sole trader then your business and personal money are one and the same, legally speaking. But to manage your accounts, it’s still essential to have two separate bank accounts and to keep detailed financial records.

For Companies: a company is a legal person separate from its shareholders & directors. Companies are required to have bank accounts in company’s name.

Accounting for business and personal money separately allows you to have the best possible overview of how the business is faring – and is vital for tax purposes.

Keeping Tax Records

One can never escape taxes, as a business you will have to pay tax. It is a legal requirement, under GST & Income Tax Law, to have books of accounts. How much tax you have to pay depends on your legal structure. So as a business you must:

Know your tax liabilities: which depends on the legal structure of your business. Tax rates are different for companies & individuals.

Digitise your records: Income Tax Law requires you to maintain records for a minimum of seven years. Similar requirements are there in the Companies Act as well. So it is prudent to digitize your records.

Pay Taxes on Time: by paying taxes on time you will avoid payment of penalty. Let our experts at Integra Books help you with taxes.

Choose Cloud Accounting Software

Put your accounting on the cloud. A good cloud accounting software has the following features:

Ease of Use

Automation

Integration with other Apps

Zoho Books is a cloud accounting software which ticks these requirements. Zoho Books integrates with a whole range of Zoho Apps and will put your entire business on the cloud.

You can read a related blog here. Stay tuned for Part 2.

Income Tax Assessments

by Sanjeev Archak Sanjeev Archak No Comments

In our previous blog, we examined the new income tax assessment structure. In this post, we shall look at the various types of income tax assessments conducted by the department.The department selects cases for assessment based on certain parameters. The parameters for FY 18-19 has been published  by the department on 05.09.2019.

Under the Income-tax Law, there are four major  tax assessments:

1.Summary Assessment

A summary assessment is done by the department without human interface. The Central Board of Direct Taxes has set up a Centralized Processing Cell to do summary assessment. A return filed by the tax payer is verified with the information already available with the department.

For instance, the TDS credit claimed by the tax payer is checked with the credit in Form 26AS. Any mismatch is informed to the tax payer by an intimation. The tax payer is given time to respond to the intimation. A summary assessment can be made can be made within a period of one year from the end of the financial year in which the return of income is filed.  Any intimation issued beyond this time limit will be invalid.

2. Regular  Assessment

This is a detailed assessment and is also  called  as scrutiny assessment. At this stage a detailed scrutiny of the return of income is carried out  to confirm the correctness and genuineness of various claims, deductions, etc., made by the taxpayer in the return of income. The tax payer is required to produce books of accounts and any other record the income tax officer requires to be produced.

The objective of scrutiny assessment is to confirm that the taxpayer has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner. To conduct a regular assessment a notice has to be issued by the Officer to the tax payer. Such notice cannot be issued  after the expiry of 6 months from the end of the financial year, in which return is filed.

3.Best judgment assessment

A best judgement assessment is carried out in the following cases:

  1. If the taxpayer fails to comply with all the terms of a notice
  2. If the taxpayer fails to file the return required within the due date
  3. If the taxpayer fails to comply with the Special Audit requirements
  4. If the taxpayers fails to produce documents required by the tax office

As per the Income Tax Act, a best judge assessment has to be carried out within 12 months from the end of the assessment year in which the income was first assessable.

4. Income Escaping Assessment

This assessment is carried out if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any previous years. The objective of carrying out this assessment is to bring under the tax net any income which has escaped assessment in original assessment.

This assessment is carried out in the following scenarios:

  1. tax payer has taxable income and has not filed the returns
  2. tax payer is found to have understated his income or over stated his expenses
  3. tax payer has not filed a report for his international transactions
  4. tax payer has assets outside India

A notice has to be issued to the tax payer before commencing this assessment. Such a notice has to be issued within a period of  4 years years from the end of the relevant assessment year.

If you have received a notice from the Income Tax Department, please get in touch with experts at Integra Books.

Income Tax E-Assessment Scheme 2019

by Sanjeev Archak Sanjeev Archak No Comments

The Finance Minister in her Budget speech had announced the formation of  National E-Assessment Centre (NeAC) to handle all  Income Tax assessments. Consequently, the NeAC has been launched from 08th October 2019. In this post we shall examine the structure of E-Assessment Scheme 2019.

What is an Income Tax Assessment?

Every taxpayer has to furnish the details of his income to the Income-tax Department. The tax department examines the return of income for correctness.The process of examination is called as Assessment.

Income Tax assessment follows a chronology of:

1.Issue of notice by the Tax Department

2.Replies by the tax payer

3.Final orders by the tax officer.

This process requires the tax payer to appear before the Tax Officer and make submissions. This causes multiple challenges for the tax payer viz:

1.Keeping track of physical notices

2.Appearing before tax officer on the given date

3.Time taken for completing the assessment

Most importantly, there is a lot of scope for malpractice. 

Why is there a need for faceless E-Assessment? 

  1. NeAC  will eliminate human interface between Assessing Officer and Tax Payer
  2. There will be ease of compliance for taxpayers
  3. Quality of assessment, transparency will increase
  4. Cases of assessments will be disposed faster 

In other words,assessment’s will be  in electronic mode with no human interaction.All notice’s will now be issued electronically by a Central cell. The notices from the income tax department will now contain a Unique Identification Number.  This Central Cell will be the  point of contact between taxpayer and the tax department.

E-Assessment Structure

E-Assessment

 

Functions of National E-Assessment Centre (NeAC)

The NeAC will:

1.Send all notices/communication electronically

2.Assign cases to regional assessment centre through automated allocation system

3.Allocate cases to verification unit, technical unit through automated allocation system

4.Select draft assessment orders for review 

5.Providing opportunity to taxpayer before finalizing

6.Finalize assessment orders

7.Transfer all electronic records to jurisdictional AO for post assessment work

The National Centre will be located in New Delhi with 8 Regional Assessment Centre located at Delhi,Mumbai,Chennai, Kolkata, Ahmedabad,Pune,Bangalore and Hyderabad.

Consequently, assessments will not be done by jurisdictional tax officers. Hence, assessments will be allotted to tax officers by an automated system. For example,a tax return filed by a resident of Bengaluru will be assessed by a tax officer who may be located in any part of the country. 

Meanwhile tax payers will receive notices on their registered emails as well as on registered accounts on the web portal. Further,SMS’s will also be sent on their registered mobile number, specifying the issues for which their cases have been selected for scrutiny.

The replies to the notices can be prepared at ease by the tax payers sent by email to the National e-Assessment Centre or uploaded on the income tax portal. Above all,a tax payer  will not be required to appear before NeAC. The tax payers will be given an opportunity for a personal hearing via video conferencing.

Final Thoughts 

This is another significant reform initiated by Government after reduction in corporate tax rates . This reform is expected to bring relief to tax payers. 

In conclusion, hope this reform promotes the Ease of Doing Business in India. 

Trade Advances Not To Be Deemed As Dividends

by Sanjeev Archak Sanjeev Archak No Comments

SECTION 2(22) OF THE INCOME-TAX ACT, 1961 – DEEMED DIVIDEND – CBDT’S CLARIFICATIONS ON SETTLED VIEW OF SECTION 2(22)(e) OF SAID ACT ON TRADE ADVANCES/COMMERCIAL TRANSACTIONS

CIRCULAR NO.19/2017 [F.NO.279/MISC./140/2015/ITJ], DATED 12-6-2017

Section 2(22) clause (e) of the Income-tax Act, 1961) (the Act) provides that “dividend” includes any payment by a company, not being a company in which the public are substantially interested, of any sum by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits holding not less than ten percent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern) or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits.

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Filing of Income Tax Returns for Financial Year 2016-17

by Sanjeev Archak Sanjeev Archak 2 Comments

Yes! It’s time to file your income tax return for the Financial Year 2016-2017. Who should file income tax returns? What is the due date for filing returns? How to claim a refund of TDS deducted? Which tax form is applicable to you? Should a salaried person file income tax returns?

These are the questions which have to be sorted without delay. Here are some snap answers:

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Changes in Salary Return Form 24Q

by Sanjeev Archak Sanjeev Archak No Comments

The Income Tax Department by way of its Notification No. 30/2016 dated April 29th, 2016 had introduced a new section 192(2D) of the Income-tax Act, (‘the IT Act’) wherein the employer responsible for making the payment of salary was obliged to collect the necessary proof or evidence in Form 12BB to allow any claim for any deduction and/or tax saving investments.

In the Income-tax Rules, 1962, after rule 26B, the following rule was inserted namely:-

“26C. Furnishing of evidence of claims by employee for deduction of tax under section 192.- (1) The assessee shall furnish to the person responsible for making payment under sub-section (1) of section 192, the evidence or the particulars of the claims referred to in sub-rule (2), in Form No.12BB for the purpose of estimating his income or computing the tax deduction at source. Read more

5 Ways To Save Tax For Salaried Employees in FY 2017-2018

by Sanjeev Archak Sanjeev Archak No Comments

The Union Budget for the Financial Year 2017 – 2018 proposed some new income tax rates and deductions that have been applicable and in effect since 1st April 2017.

Finance Minister Arun Jaitley brought cheers of joy and relief to the individual taxpayers when he reduced the income rate by half to 5 percent for the people having the income taxable between 2.5 lakhs to 5 lakhs compared to the 10 percent that was applicable before. An additional surcharge of 10% has been added to the 30 percent tax amount for individuals having the taxable income Rs. 50 lakh and Rs. 1 crore.

Even though the income tax exemption limit for the primary income remains at 2.5 lakhs, the Income Tax Act provides many tax exemptions that can be leveraged for the further reduction of your tax liabilities. Here the new income tax slabs for the general category (Up to 60 years of age) as per the Budget 2017. Read more