Hirani & Co, Advocates and Tax Planners

Income Tax Due Date Extension: Due date for filing belated/revised Income Tax Return for FY 23-24 (AY 2024-25) for resident individuals is extended from 31st Dec 2024 to 15th Jan 2025.

Union Budget 2023 - Analysis of the relevant Income Tax Proposals

1. Increase in Turnover limits of presumptive taxation schemes for professionals (from 50 lakhs to 75 lakhs) and small businesses (from 2 Crores to 3 Crores) subject to conditions:

Section 44ADA For Professionals – This is a welcome change, particularly for professionals since the turnover limit for opting into the presumptive taxation scheme was 50 Lakhs of gross earnings since past many years. Under this scheme, professionals are not required to furnish books of accounts or get them audited at the time of filing returns if the net profit declared is at least 50% of the gross receipts. The limit for opting for this scheme is now increased from 50 lakhs to 75 lakhs of gross earnings in a financial year. However, this increased limit is available subject to the condition that the cash receipts earned should not be more than 5% of the gross earnings for the financial year. If the cash earnings are more than 5% of the gross earnings / receipts, then the original limit of 50 lakhs will apply. Also, if non-account payee cheques are received, such cheques will be considered as cash earnings.

Section 44AD For Small Businesses – Similar to the above, the turnover for opting into the presumptive taxation scheme for small businesses is increased from 2 Crores to 3 Crores of gross turnover of business, subject to the condition that the cash turnover earned should not be more than 5% of the gross turnover for the financial year. If the cash earnings are more than 5% of the gross turnover, then the original limit of 2 Crores will apply. Also, if non-account payee cheques are received, such cheques will be considered as cash earnings.

2. Tax Exemption till 3 lakhs and Reduced Slab Rates but only for New Taxation Regime:

Section 115BAC – The New Taxation Regime was introduced a couple of years back, wherein the concessional tax rates were given and Income tax slabs for taxation were lowered compared to the old regular scheme of taxation. This New Taxation Regime does not allow for Deductions for any investments made such as LIC, PPF, Education Expenses, Principal and Interest deductions for home loans, Tax Saving Funds, Mediclaim, etc. Thus, taxpayers can choose between Old Regime of Taxation with deductions or New Taxation Regime without deductions for each year before filing Return, depending on whichever is more beneficial in terms of tax payments.

No changes whatsoever are made to the Old Taxation Regime and the basic exemption limit remains 2.5 Lakhs. However, the basic exemption limit in the New Taxation Regime is increased from 2.5 Lakhs to 3 Lakhs.

Following are the reduced Slab Rates of Taxation if opting for the New Taxation Regime:

1. Upto Rs.3,00,000 Nil
2. From Rs.3,00,001 to Rs.6,00,000 5 per cent.
3. From Rs.6,00,001 to Rs.9,00,000 10 per cent.
4. From Rs.9,00,001 to Rs.12,00,000 15 per cent.
5. From Rs.12,00,001 to Rs.15,00,000 20 per cent.
6. Above Rs.15,00,000 30 per cent.

As compared to above, following are the Slab Rates of Taxation if continuing to opt for Old Taxation Regime:

1. Upto Rs.2,50,000 Nil
2. From Rs.2,50,001 to Rs.5,00,000 5 per cent.
3. From Rs.5,00,001 to Rs.10,00,000 20 per cent.
4. Above Rs.10,00,000 30 per cent.

In both tax regimes, the basic exemption limit remains 3 lakhs for Senior Citizens (60 years and above) and 5 Lakhs for Super Senior Citizens (80 years and above).

3. Tax Rebate increased from 5 Lakhs to 7 Lakhs income but for New Taxation Regime only:

At present, there is a tax rebate available for net income earned of 5 lakhs. Thus, there is no tax payable under both Old or New Taxation Regimes if net income is 5 Lakhs or less. This tax rebate is now extended to a total income of 7 Lakhs, provided the taxpayer opts for the New Taxation Regime only. The said Tax Rebate limit will continue to be 5 Lakhs for the Old Taxation Regime.

Going forward, the government intends to make the New Taxation Regime as the default Income Tax Regime.

4. Tax Exemption for Re-investment in Residential House Property restricted to 10 Crores:

Sections 54 & 54F – Long Term Capital Gains Tax can be avoided if proceeds from Sale of Residential / Commercial Assets are re-invested in a Residential House Property subject to certain conditions. Until now, there was no restriction on the amount that could be re-invested in the new residential house for claiming tax benefit.

However, it is proposed that if the cost of the new residential property exceeds 10 Crores, the amount exceeding 10 Crores will not be considered for availing the re-investment benefits under Income Tax. In other words, the tax benefit for re-investing in a new residential house will be restricted to 10 Crores and the Balance Long Term Capital Gains from sale of old asset will be taxable.

5. Other important personal tax proposals:

- Instead of the various existing Income Tax Returns for different incomes earned, a Common Income Tax Return will role out for ease of Income Tax Return filings;
- 100 joint commissioners to be appointed to expedite small pending cases and appeals;
- Standard Deduction from Salary is increased from 50000/- to 52500/- for Salary Income above 5 Lakhs. Further, this deduction will also be available in the New Taxation Regime;
- Leave Encashment for State and Central Govt Employees at the time of retirement was totally tax exempt. However, only 3 lakhs (subject to conditions) for Non Govt Employees was exempt. This limit for tax exemption is now proposed to be raised to 25 Lakhs for Non – Govt Employees;
- Surcharge on the Tax payable amount for total income of 5 Crores and above is reduced from 37% to 25%, bringing it on par with Surcharge on total income between 2-5 Crores. Thus, highest effective tax rate reduced from 42.7% to 39%. This deduction in Surcharge is only available in the New Taxation Regime; and
- TDS on Employee Provident Fund (EPF) withdrawals where PAN Number is not available is reduced from 30% to 20%. If PAN Number is available, the TDS is deducted at 10% if withdrawal exceeds 50000/-. This TDS is deducted if Provident Fund money is withdrawn within 5 years of opening the EPF account and not otherwise.

Thanks & Regards,
Romil Hirani
Hirani & Co (Advocates & Tax Consultants)

Union Budget 2022 - Analysis of the relevant Income Tax Proposals for personal taxation:

1. Filing of Updated Income Tax returns within 2 years:
Section 139 (8A) - A new provision to file updated Income Tax return along with payment of relevant ‘Additional Income Tax’ (explained in next point) is proposed in order to rectify any irregularities or mistakes in the return filed. Such updated return can be filed within 2 years from the end of the relevant Assessment Year. However, such an updated return cannot be filed if there is an increase in refund or reduction in the tax liability that is already paid while filing the original return. Further, the updated return cannot be filed to claim loss under any head of income. The updated return can be filed even if the tax payer has missed filing the original return for the relevant Assessment Year. The tax payer is not eligible to file updated return if search, survey or any proceedings including scrutiny assessment for that relevant year is already initiated or completed by the Income tax department. Only one updated return can be filed.

2. Additional Income Tax for updated Tax Return:
Apart from the actual tax liability payable at the time of filing updated tax return along with the relevant surcharge, cess, interest and late fee, following additional tax is payable:
- 25% of the aggregate income tax and interest payable if the updated return is filed within 1 year from end of relevant assessment year; and
- 50% of the aggregate income tax and interest payable if the updated return is filed after 1 year but before 2 years from the end of relevant assessment year.

3. Taxation of Virtual Digital Assets (Crypto currencies and digital block chain assets including NFT):
Section 115BBH - Transfer (sale) of such virtual digital assets will be taxed at a fixed tax rate of 30%. No deductions apart from the actual cost of acquisition will be allowed from the same in order to calculate the gains / profits on the sale of such digital assets. Further, TDS @ 1% is proposed to be deducted on the sale of virtual digital assets. The losses made on sale of virtual digital assets cannot be set off against any other incomes and such loss cannot be carried forward to future years for set off. Gift of virtual digital assets will be taxable in the hands of the recipient.

4. Rationalisation of Surcharge on sale of Long Term Assets: Surcharge on the income from sale of certain long term assets such as on equity shares and equity oriented mutual funds which are liable to STT was capped at 15%. However, the surcharge on incomes from any other long terms assets including on sale of property was 25% of the tax amount on income between 2cr and 5 cr and 37% of the tax amount on income above 5 cr. It is proposed to remove the enhanced surcharge rates of 25% and 37% and cap the surcharge on sale of any long term assets at 15%.

5. Other important personal tax proposals:
- Brought forward losses cannot be set off against any undisclosed income which is realised during search and seizure operations by the Income tax department;
- No appeal cases from Income Tax department if any matter on identical question of law is pending before High Courts or Supreme Court;
- Health and Education Cess not allowed as business expenditure; and
- No changes in Income Tax slabs or rates.

Thanks & Regards,
Romil Hirani
Hirani & Co (Advocates & Tax Consultants)

📣 The much awaited Extension of Income Tax Returns for FY 20-21 (AY 21-22) is here:
- The due date for filing Income Tax Returns (non-audited) is extended from 30th Sep 2021 to 31st Dec 2021;
- The date for filing Tax Audit report is extended from 31st Oct 21 to 15th Jan 2022;
- The date of filing Income Tax Returns (audit cases) is extended from 30th Nov 2021 to 15th Feb 2022; and
- For those Returns filed beyond the above due dates (belated) or for revision of Returns filed for AY 21-22, the due date is extended from 31st Jan 2022 to 31st Mar 2022 . This means no Returns for AY 21-22 (FY 20-21) can be filed beyond 31st Mar 2022.

📣 It is to be noted that although the Income tax return filing dates are extended, interest U/s 234A is chargeable for every month from 31st July 2021 (original due date) in case the net tax liability is in excess of INR 1 Lakh

The circular issued in this regard is enclosed.

Wishing all a Happy Ganesh Chaturthi!
Thanks and Regards
Romil Hirani
Hirani & Co.

The new Income tax website is still facing issues due to which filing of Income Tax Returns for AY 21-22 (FY 20-21) is difficult at this time. We will update our clients once Return filing resumes and all updated Return Forms are made available online.

Hoping that the glitches faced for various online services on the Income Tax Web portal are resolved soon!

Thanks and Regards,
Romil Hirani
Hirani & Co.

Memorandum on the problems being faced in relation to New Income Tax Portal - Income Tax The District Taxation Bar Association (Direct Taxes), Ludhiana has written a Memorandum to FM Nirmala Sitharaman wherein, they have highlighted 22 problems that are being faced by them and the taxpayers at large, on the New Income Tax Portal.

📣 Extension of Income Tax Returns for FY 20-21 (AY 21-22):

- The due date for filing Income Tax Returns (non-audited) is extended from 31st July 2021 to 30th Sep 2021;
- The date for filing Tax Audit report is extended from 30th Sep 21 to 31st Oct 21;
- The date of filing Income Tax Returns (audit cases) is extended from 31st Oct 21 to 30th Nov 21; and
- For those Returns filed beyond the above due dates (belated) or for revision of Returns filed for AY 21-22, the due date is extended from 31st Dec 21 to 31st Jan 22. This means no Returns for AY 21-22 (FY 20-21) can be filed beyond 31st Jan 22 (unless dates are further extended).

📣 The TDS Return due dates for Q4 of FY 20-21 (Jan 21-Mar21) have also been extended:
Non - Salary TDS: Due Date extended from 31st May 21 to 30th June 21; and
Salary TDS: Due date extended from 15th June 21 to 15th July 21
Thus, the above extensions may have an impact on the updation of TDS credits in Form 26AS for Q4 of FY 20-21 (AY 21-22)

📣 For those who missed filing Income Tax Returns (belated returns) or those who did not get a chance to revise Income Tax Returns for FY 19-20 (AY 20-21), can file such Returns on or before 31st May 21.

The circular issued in this regard:
https://www.incometaxindia.gov.in/communications/circular/circular_9_2021.pdf

Thanks and Regards
Romil Hirani
Hirani & Co.

www.incometaxindia.gov.in

Analysis of the relevant provisions of Union Budget 2021 Income Tax Proposals:
1. No Tax Returns but new TDS deduction for Senior Citizens of the age of 75 years and above:
An individual resident of India, who is of the age of 75 years or more, earning only pension and interest income will no longer be required to file Income Tax Returns. However, a new TDS Section – 194P is introduced which will enable the banks to calculate the tax to be deducted from the pension income and interest income earned (in the same account in which pension is earned). The individual will be required to provide a declaration stating his income and deductions under Chapter VII-A (PPF, LIC, Mediclaim, etc) for the respective year to the banks for this purpose. However, it is unclear as to whether such individuals who earn interest income from other sources and have no pension income will be covered under these new provisions;
2. Belated And Revised Income Tax returns to be filed on or before 31st December:
Belated Income tax Returns (filed after 31st July with late fees) or Revised Returns could be filed until the end of the relevant Assessment year, i.e. on or before 31st March. From 1.4.2021, i.e AY 2021-22, the last date for filing belated and revised returns will be 31st December and not 31st March;
3. Tax Audit limit increased: Tax Audit limit is increased from INR 5cr to 10 cr, provided 95% of the turnover is earned as well as expenses are made by sources other than cash. This limit of INR 10 crores is only applicable for business income and the Audit limit continues to be INR 50 lakhs for professionals;
4. Reduction in limitation for Re-opening of old cases: The time limit for Re-opening of old cases to be reduced to 3 years from the earlier 6 years. Only where there is evidence of concealment of Income of Rs. 50 lakhs or more – re-opening can be made upto 10 years & only with approval of Pr.Chief CIT;
5. Faceless ITAT Appeals: After faceless assessment and faceless appeals, now cases before Income Tax tribunals will also be heard by way of electronic media only;
6. TDS and Advance Tax on Dividends: Dividend earned on shares and MF will be exempt from TDS. Further, Advance Tax Liability on dividend income will arise only after declaration of payment of dividend. This is similar to Capital Gains where Advance Tax liability arises only when the asset is sold;
7. Pre-filled Returns: Apart from Salary and TDS details, the returns available on the Income Tax website will now come pre-filled with details of Capital Gains and dividends earned;
8. Higher Rate of TDS for Non – Filers of Income Tax Returns: If Income Tax return is not filed for two consecutive years and if the TDS / TCS as per Form 26AS in each of those two years is more than 50000/-, then TDS deduction at the time of earning the relevant incomes liable to TDS will be twice the rate of the normal rate of TDS or 5000/- (whichever is more). These provisions will come into force from 1st July 2021 and are not applicable to non-residents;
9. Duration for completion of Scrutiny Assessment reduced: As opposed to 12 months, now the Scrutiny Assessments are to be completed within 9 months from the end of the relevant Assessment Year to which the Scrutiny relates;
10. Taxability of Interest on Provident Funds: From 1.4.2022, i.e. AY 22-23, if any contribution made to Provident Fund exceeds INR 2.5 lakhs per annum after 1.4.2021, then the interest attributable to the same will not be considered exempt in terms of Section 10(11);
11. Receipts from Unit Linked Insurance Policies (ULIP) taxable in certain cases:
ULIP is a life insurance policy which has components of both insurance and investment in the markets. From 1.4.2021, i.e. AY 2021-22 onwards, the receipts from ULIP will be made taxable if the premium paid in any year exceeds INR 2.5 Lakhs. The proceeds will be taxable as Capital Gains as per the relevant mechanism for calculation of such gains.

Thanks & Regards,
Romil Hirani
Hirani & Co (Advocates & Tax Consultants)

📣Income Tax Return Filing Due Dates Extended for AY 2020-21 (FY 19-20)!

- Due Date for furnishing Income Tax Returns for all tax payers (other than tax audit cases) extended from 31st December 2020 to 10th January 2021;

- Due Date for furnishing Income Tax Returns for tax payers (where tax audit is applicable) extended from 31st January 2021 to 15th February 2021. This due date is also applicable to Partners of a Firm that comes under the purview of tax audits. The Tax Audit Report Due Date stands extended from 31st December 2020 to 15th January 2021.

Thanks & Regards,
Romil Hirani
Hirani & Co.,
Advocates & Tax Planners

📣Income Tax Return Filing Due Dates Extended for AY 2020-21 (FY 19-20)!

- Due Date for furnishing Income Tax Returns for all tax payers (other than tax audit cases) extended from 30th November 2020 to 31st December 2020;

- Due Date for furnishing Income Tax Returns for tax payers (where tax audit is applicable) extended from 30th November 2020 to 31st January 2021. This due date is also applicable to Partners of a Firm that comes under the purview of tax audits. The Tax Audit Report Due Date stands extended from 31st October 2020 to 31st December 2020.

- The Due Date for payment of Self Assessment Tax for AY 2020-21 is also extended to 31st January 2021 (for liability upto 1 Lakh). In other cases, it is extended to 31st December 2020

More details - https://pib.gov.in/PressReleasePage.aspx?PRID=1667281

📣 The Due Date for GST Annual Return and Reconciliation Statement for FY 2018-19 extended from 31st October 2020 to 31st December 2020.

Thanks & Regards,
Romil Hirani
Hirani & Co.,
Advocates & Tax Planners

Extension of due date of furnishing of Income Tax Returns and Audit Reports In view of the challenges faced by taxpayers in meeting the statutory and regulatory compliances due

Income Tax Return filing due date for FY 2019-20 (AY 2020-21) is extended to 30th November 2020!

The original due dates for filing Income Tax Returns were 31st July 2020 (for individuals, HUF & non audit tax assessees) and 31st October 2020 (for audit cases, firms and companies). Also, the due date for tax audit is extended from 30th September 2020 to 31st October 2020.

The TDS & TCS rates are reduced by 25% for non salaried payments, i.e. for contract, professional fees, interest, rent, dividend, commission and brokerage. The reduced rates are applicable till 31st March 2021.

In addition to that the date of making payments without interest and penalty under Vivad se Vishwas scheme has been extended to December 31, 2020.

Read more at:
https://economictimes.indiatimes.com/wealth/tax/income-tax-return-for-fy-2019-20-deadline-extended-to-nov-30-2020/articleshow/75717585.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Thanks and Regards.
Hirani & Co (Advocates & Tax Planners)

Income tax return filing deadline for FY 2019-20 extended to Nov 30, 2020 As per the announcement, "Due date for all income-tax return for FY 2019-20 will be extended from July 31 2020 and 31 Ocotber 31, 2020 to November 30, 2020 and tax audit from Sept ember 30, 2020 to 31st October 2020."

Relaxation on new Income Tax Residency Rules for Non Residents - The new residency rules applicable from 1.4.2020 require non residents (earning more than INR 15 Lakhs of taxable income in India) to stay in India for less than 120 days in order to maintain their 'non-resident' status. The said rules are relaxed due to the current pandemic situation and the resultant lockdown in the country.

The number of days in India for such non resident individuals will be calculated only once international flights resume normalcy. Thus, current period of stay in India will be excluded for the purpose of calculating 'non-resident' status.

https://timesofindia.indiatimes.com/business/india-business/nris-get-tax-relief-on-prolonged-stay-in-india/articleshow/75638984.cms

Regards
Hirani & Co.
(Advocates & Tax Consultants)

NRIs get tax relief on prolonged stay in India - Times of India India Business News: The finance ministry on Friday announced relief to those who have been facing difficulty with the status of their residency in India under section 6 o

Direct Tax Proposals 2020 - A Note Clarifying the Changes:

1] New Taxation Regime Vs Old - In most cases, it will be advisable to continue opting for the old regime if the tax payer has investments in tax saving instruments such as PPF,PF, LIC, ELSS, Education Exps of children, mediclaim, home loans, HRA claims, etc.

Further, tax free interest incomes such as PPF Interest, tax free Interest from NRE savings and FD accounts earned by Non Residents, etc will have to be added to taxable income in the new regime and this could increase the tax burden substantially. Set off of losses wil also not be available in the new tax regime.

The lower tax rate of the new scheme could be beneficial for those without substantial tax saving investments as mentioned above. Though most deductions and exemptions wont be available, deduction for Section 80CCD(2) - Deduction upto 50000/- for investing in National Pension Scheme (NPS) will be available in the new tax regime;

2] New Tax Regime for Business Income of Individual or HUF - The new tax regime is available to those having business income, however, once the option for new regime is exercised, it will have to be continued for subsequent years as well.

The option can be withdrawn only once by a business owner. Once withdrawn, the business owner cannot opt for the new regime again, except when the business is closed, in which case the individual / HUF can opt for new regime again;

3] New Tax Regime for Individual or HUF without business income - An individual or HUF not having any business income can decide whether or not to opt for the new tax regime for every financial year;

4] Taxability of Dividends - The INR 10 lakh exemption from paying taxes on dividend earnings and paying 10% over that threshold limit will no longer be applicable (irrespective of old or new tax regime). Dividend earned from domestic companies will be taxable in the hands of share / unit holders at applicable slab rates. Plus, there will be a TDS @ 10% on dividends above 5000/- in a year;

5] Due Dates of Filing Returns - The due dates remain the same, i.e. 31 July for all returns without audit. The due date for filing Audited Returns is proposed to be shifted from 30th September to 31st October. This new due date will also be made applicable for the working partners of firms which are liable to tax audit. It is to be noted that the due date for filing the 'Audit Reports' remains the same, i.e. 30th September;

6] Tax Collection At Source (TCS) under Liberalised Remittance Scheme (LRS) - Indian Residents are allowed to make foreign remittances for self / maintenance of family members, etc upto a limit of 2,50,000 USD per year. While that continues, any remittances made over INR 7 Lakhs will attract a TCS @ 5% (with PAN / Aadhaar Number) and 10% (without PAN / Aadhaar Number). This means, in order to recover this TCS, the person in whose favour the remittance is made will be required to file Income Tax return (assuming such person does not have any taxable income in India);

7] Changes in Residency Rules - The number of days of stay outside India in order to maintain Non Resident status is proposed to increase from 182 days to 245 days (120 days in India).

Further, if the non resident does not have a resident visa of another country, then such an individual will be considered deemed resident of India and the income earned outside will be made taxable in India. However, it is now clarified by CBDT that income earned outside India by such 'deemed resident' as per the new provisions will not be taxed in India unless it is derived from an Indian business or profession. The clarification is attached. This amendment will take effect from 1.4.2021 and will accordingly apply from AY 2021-22 onwards.

Furthermore, in order to prove 'resident but not ordinary resident status', the individual has to now prove non residency in 7 out of 10 preceeding previous years;

8] Cost of Acquisition for Assets acquired prior to 1.4.2001 - If the residential or commercial property is purchased before 1.4.2001, the existing provisions provide for taking the Fair Market Value (FMV) as on 1.4.2001 as the cost of acquisition of the property. This FMV, calculated by an authorised valuer will now have to be restricted to the 'Stamp Duty Value' as per the ready reckoner rates as on 1.4.2001. This could result in lower 'cost of acquistion' for the purpose of calculation of Capital Gains;

9] Limit of 10% for difference between actual consideration and Stamp Duty Value (where actual consideration is less) - As per existing provisions, if the actual consideration received on sale of immoveable property is less than the Stamp Duty value, there are tax implications on both buyer and seller. However, there was no tax if the difference between Actual Consideration received and Stamp Duty Value was less than 5%. This is now proposed to be increased to 10%, providing a bit more flexibility when the actual consideration received is less than Stamp Duty Value;

10] Taxability of ESOPs for elegible start-ups - The equity shares of a company purchased by its employees at a lower rate than the prevailing fair market value (FMV) of the shares is taxed as a perquisite in Form 16, i.e. the difference between the discounted price and FMV is taxed. It is now proposed that the tax on this perquisite be paid at a later stage, i.e. expiry of 48 months from end of relevant assessment year in which the ESOP is exercised / sale of the ESOP by employee / date on which employee leaves the company (earliest of the 3 events). This new provisions is only for certain eligible start ups;

11] No Stay of Demand unless 20% demand paid - It will now be compulsory to pay 20% of the disputed demand, including interest, penalties, etc before filing an application of Stay of Demand before the tribunal. Thus, there will be no discretionary power to reduce the pre-deposit amount before filing an appeal before the appellate authorities. Moreover, the stay cannot be granted for more than 365 days.

The above is as per our interpretation of the Finance Bill 2020. There could be issues requiring more clarity and we request our clients to let us know of the same for the purpose of further discussions in this regard.

Thanks and Regards
Romil Hirani
Hirani & Co.