TAX DUE DATE- JUNE 2019

S. No	Due Date	Related to	Compliance to be made
1	07.06.2019	TDS/TCS (Income Tax)	Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of May  2019 Deposit TDS from Salaries deducted during the month of May  2019 Deposit TCS for collections made under section 206C including sale of scrap during the month of May  2019, if any
2	11.06.2019	GSTR 1	Filing of GSTR-1 of May 2019
3	15.06.2019	Income tax	Payment of Advance tax for the Corporate assesses –Amount not less than 15% of advance tax.
4	20.06.2019	GST 3B	Payment of GST and filing of return for the Month of May 2019
5	30.06.2019	Equalisation levy annual return	Filing of equalisation levy annual return for 18-19

EXPECTATIONS OF TAXPAYER FROM FISCAL BUDGET 2019 V.2

Before every budget the taxpayer expects shortfall in their tax payments and accordingly recommend for the same.  However we feel there is  urgent need to improve the tax administration which help to reduce the tax terrorism  in the country.  Given below few pain-points of tax payers from Income tax department (ITD) and suggestions before the  government.

SN	Issue	Recommendation
1	For delay in filing Income tax return & E TDS return by tax payer there is mandatory fine. Also there is big list of penalty for any small error done by tax payer.  However no  such fine or penalty is applicable on ITD for any delay or mistake.	The ITD should be penallised for any delay or mistake.  This will bring equal justice in the law.
2	Tax payer receive 6% interest on any refund but require to pay more than 12% interest for any payment	The rate of interest should be same for all cases.  This will reduce discrimination in the law.
3	To match the tax collection target, ITD makes bogus additions and create fake demand and immediately collect 20% tax payment from tax payer.  This creates hardship among all the taxpayer.	The process of providing 100% stay on tax demand should be provided.  This will reduce the process of bogus addition.
4	There is a misuse of Prosecution provisions in the law .  Wherever there is a question of law, the ITD presume same as fraudulent and invoke penalty and prosecution.  Further ITD also given targets to initiate prosecution which again causing  hardship among all the taxpayer	The use of prosecution provisions should be use only when men’s rea confirmed by Court.
5	The appellate authorities fear to take decisions in the favour of tax payer resulting to accumulation of all issues before High Court.	Necessary directions to be given to appellate authority  to dispose the case in favour of tax payer when there is  question of law and not decided by HC and SC.
6	At present for a taxpayer there are multiple tax officer like PAN AO, TDS AO, TPO, Int. Tax officer and CPC Officer.	The taxpayer should only have one tax officer.
7	At present there are multiple tax portal like Incometaxindia.gov.in, Traces, reporting, tin-nsdl.com.  further  this portal are not user friendly.	There should be one user friendly portal for all need.
8	Other that ITR-1 all the Income tax forms are complex  resulting in errors.	All ITD forms should be such simple that can be filled by any layman.
9	Now a days grievances raised in E Nirvana and CPGRAM were closed without providing any resolution to the tax payer.	There should be a next level of escalation in the case tax payer not satisfied with the closure of his grievance.
10	The ITD AO cannot do anything in case there is a error done by CPC.  Further its very not possible to get any help from CPC which is a faceless department.	The ITD AO should be provided all access in case there is any error done by  CPC.

The above recommendations also applicable for GST wherever applicable.

TDS on Internet

Payment for utilization of bandwidth charges was royalty and TDS was required to be deducted under section 195 and on failure to deduct TDS, the disallowance under section 40(a)(i) was rightly made.

Statement of Financial Transaction (SFT) – Filing Nil statement is mandatory or optional ?

Under Section 285BA of the Income Tax requires specified reporting persons to furnish statement of financial transaction. Rule 114E of the Income Tax Rules, 1962 specifies that the statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in Form No. 61A. SFT has to be filed onlinein Form No. 61A with digital signature on or before 31st of May, immediately following the financial year in which the transaction is registered or recorded.  

General Updates

 
1 Cross Border Updates
a China releases the corporate income tax treatment on perpetual bonds
  China’s Ministry of Finance (MOF) and State Taxation Administration (STA) jointly released MOF/STA PN [2019] No. 64 (PN 64)1 to clarify the corporate income tax (CIT) treatment on perpetual bonds. PN 64 becomes retroactively effective on 1 January 2019

FAQ on Section 195.

Tax Deducted at Source (TDS) is the first way of collection of any taxes. Under Income tax also TDS is the very important tax collection method. TDS under income tax varies based on the nature of transaction and payment by different sections, such as section.194A, 194B, 194C, 194I etc. Out of different TDS sections, section 195 is the very important section which covers the TDS on Non resident payments. Under globalisation scenario the business boundaries are not restricted with one country; it spread over all over the world. Accordingly tax laws are also differing. In our country the TDS on Non resident under section 195 is the unique section to identify the tax rates and deductions on our business transaction with non resident day to day basis. In this article I would like to discuss about the Frequently Asked Questions (FAQ) on TDS on Non resident payments under section 195 of Income tax act.

Q.1 What is the meaning of Non resident?

Ans : To decide the residential status of person under income tax, we need to check the basic and additional conditions and other criteria prescribed under section.6 of the Income tax act, 1961. Only Non resident covered under this section, Resident but not ordinary resident ( RNOR) not covered this section.

Q.2 Who is the Payer under section.195?

Ans: Under section.195 all the payers are covered irrespective of their status like Individual, HUF, and Firm & Corporate etc. So all the payers are responsible to deduct TDS under this section if they are making payment to non resident as per prescribed conditions.

Q.3 Who is the payee under section 195?

Ans: Under this section all the payees are covered whether Individual or Corporate or any other status. So making payment to non resident, not being company or to a foreign company covered under payee if they meet the non resident status under section.6 of the Income tax act.

Q.4 Which payments & expenses are covered under sec.195?

Ans:  As per this section any interest (not being interest referred to in section 194LB or section 194LC or section 194LD) or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries”).

So following payment not required TDS deduction under this section

a. Interest referred under sections.195LB/LC/LD

b. Salary payment

c.  Dividend payment u/s.115-O

Above payments are exclude under this section from TDS deduction and all other payments are covered under this section. But payment against import is not comes under purview of TDS.

Q.5 What about the Salary & Dividend payment to Non resident?

Ans: Section.195 specifically excludes Salary and dividend payment, Salary payment to non resident covered u/s.192 not under section.195.  Dividend not taxable in the hands of recipient since the dividend distribution tax paid by the declaring company.

Q.6 When to deduct the TDS?

Ans: TDS has to be deducted at the time of credit or payment whichever is earlier. Crediting which means even crediting in suspense account or any other name called considered as deemed to be credited, accordingly the TDS will apply.

Q.7 What is the threshold limit for deduction of TDS?

Ans: Under this section, there is no threshold limit is prescribed, TDS need to be deducted the entire amount without any threshold limit.

Q.8. What is the TDS rate as per section.195?

Ans: Relevant rate in force as per chapter XVIIB.  Incase payee not having valid PAN, then TDS rate  as per rate prescribed chapter XVIIB or 20% whichever is higher will apply. While calculating TDS rates we need to consider the provisions under Double Taxation Avoidance Agreement (DTAA) for the relevant country if any. In case payee fulfilling all the conditions as prescribed in the DTAA then rates as per DTAA will apply. Generally rates under DTAA will be lower than normal TDS rates.

Q.9 What will be the exchange rate for TDS on non resident?

Ans: Exchange rate of Reserve Bank of India ( RBI) on the day which TDS required to be deducted has to be considered

Q. 10 What is DTAA?

Ans: Double Taxation Avoidance Agreement (DTAA) is the agreement between two countries with an objective to avoid taxation on same income in both countries. Presently India has the comprehensive DTAAs with more than 80 countries.

Q.11 What is the conditions & procedure to avail DTAA benefit by NR?

Ans: The Non Resident Deductee has to submit the following documents with deductor to avail the TDS rates as per DTAA

a.      Tax Residency Certificate (TRC)

b.      PAN card copy

c.       Self  declaration

d.     Passport copy & Visa copy (if any)

The above documents need to submit with deductor annual basis every year.

Q.12 What is Tax residency certificate and how & where to get that?

Ans: Tax Residency certificate (TRC) is the certificate duly verified and issued by the Government of the country of which NR claims to be a resident for the purpose of tax.  The TRC certificate can be obtained from the Government or Tax authorities of the particular country of NR.

Q.13  What are the details should contains in TRC?

Ans: A TRC should contain the following details

a.      Name of the assessee

b.      Status of the assessee (Individual, Firm, Company Etc.)

c.       Nationality

d.     Country

e.      Assessee Tax Identification or Unique Identification number of the relevant Country

f.        Residential status for the purpose of tax

g.      Validity Period of the certificate

h.      Address of the applicant

Q. 14 What is the procedure to deduct the TDS u/s.195?

Ans: Remitter as per section.195(6) & rule 37BB need to obtain the form 15CB from a Chartered Accountant while remitting the payment to non resident and need to file the form 15CA ( undertaking by remitter)  in online in the income tax website through their PAN login. After online preparation of form 15CA need to take print out and sign and submit along with form 15CB to their banker/AD to remit the payment. For every remittance, remitter need to above procedure to remit the payment.

Q.15 What details are required to obtain form 15CB certificate from a CA?

Ans: The following details need to be produced with CA for getting form 15 CB

Ø  Agreement and Invoices;

Ø  Payment details

Ø  Correspondences

Ø  Technical Advice – prove bonafides

Ø  Proof of services being rendered in case of Group Company transactions

Ø  E-mails etc regarding pricing in case of Group Company transactions

Ø  Remitting bank details

Ø  Rate of conversion of foreign currency

.16  Whether Non resident eligible for getting Nil deduction certificate?

Ans: Yes.  As per section.195 (3) & Rule 29B, a non resident can make the application to income tax department if he fulfils the following conditions

a.      Assessee has been regularly assessed to tax and has filed all returns of income due as on date of filling of application

b.      Not in default in respect of any tax, interest, penalty or any other sum

c.       Not subject to penalty u/s.271(1)(iii)

d.     Carrying on business in India continuously for at least 5 years and the value of the fixed assets in India exceeds Rs.50 Lakhs

Q.17  What is the validity of the certificate issued for Nil deduction?

Ans: Nil deduction certificate issued under section.195 (3) shall remain in force till the expiary of the certificate or cancel by the A. O whichever is earlier.

Q.18 Whether reimbursement of actual expenses covered u/s.195?

Ans: Since there is no income element in the reimbursement of expenses actually incurred by a non resident or foreign company not covered u/s.195. However the nature of transactions and payments depends upon the situation because different contradictory citations are available to justify for both the applicability and non applicability.

Q.19 What is the status of TDS deducted if after deduction the contract or work is cancelled?

Ans: There is cases that after making advance payment to Non resident or making partial payment to non resident the contract or work is cancelled by both parties. Such as case if any TDS deduction made while making payments, the same can be claimed from the department CIRCULAR NO. 7/2007 DATED 23-10-2007

Q.20 What will be the consequences of non complying of section.195?

Ans: following will be the consequences for non compliance of section 195

a. Disallowance of the particular expenses u/s.40a(i) if the TDS not at all deducted

b. If the TDS is deducted but not paid within time lime then interest @ 1.50 per month or part of the month from the date of deduction to date of deposit (Sec.201 (1A)

c. If the TDS deducted and not paid – Penalty equivalent to the TDS amount  Sec.221

d. TDS deducted short – Penalty equivalent to difference between actual deductible and deducted amount Sec.271C .

Rates for tax deduction at source: AY 2020-21



Rates for tax deduction at source

How to File NIL FATCA Return

As you all are aware that filing of FATCA and CRS for calendar year 2018 is near. Due date for filing of FATCA/CRS return is May 31, 2019. Even when there is no reportable transactions under FATCA/CRS, nil return is mandatory. Government has changed the process of filing of these returns last year and introduced new “Reporting Portal” for filing of these returns. Many people finding it difficult to how to file nil return. So, I have prepared below steps to help in filing of nil returns.

Legal Analysis of section 14A

There have been various controversies surrounding the interpretation and application of Section 14A of the Income-tax Act, 1961 (‘Act’), which have been subject to extensive litigation. The most recurrent and significant issue being that of recording of satisfaction by the Assessing Officer (‘AO’) as to the incorrectness of claim made by an assessee. Recently, there have been various judicial decisions rendered by the High Court(s) and the Supreme Court, whereby much needed clarity has evolved regarding such controversies.

Home Loan Tax Benefits

Acquiring a home loan can assist you to save tax as per the provisions of the Income Tax Act 1961. With every passing year, the home loan tax benefit increases to provide the borrower with a relief.

A home loan can turn out to be an expensive affair if not planned efficiently. But, with the various income tax benefit on the home loan, there are still opportunities left for the borrower to enjoy their new home as well as save money year on year. Discussed below are the home loan tax benefit 2018 – 2019 assessment year that provides income tax benefit on home loan interest rates, benefits for first-time owners, and so on.   

Pre-Validate Your Bank Account to receive Income Tax Refund

From March 2019 onwards, income tax refunds will only be credited to bank accounts that are pre-validated in the e-filing portal. Only pre-validated accounts can be used in the income-tax return while e-filing.

Effective from 1st March 2019, the income tax refunds will be credited only to bank accounts (savings/current/cash/OD) which are linked to PAN. If your PAN is not yet linked with your bank account, you must provide the details of the same to your bank branch to get an Income Tax refund.

If your bank is integrated with the e-filing portal, pre-validation can be done directly through EVC (Electronic Verification Code) and net-banking route.

On the other hand, if your bank account is not integrated with the e-filing portal, then the income tax department will validate the bank account itself from the details filled up by you.   

GST & Technical Glitches.

1. GST regime has witnessed a surge in the writ petitions filed before various High Courts. The writ litigation aimed at redressal of technical glitches is propelled by taxpayers wary of losing transitional credit in view of the deadlines for filing of FORM GST TRAN-1 and FORM GST TRAN-2 1. Though "technical glitch" is a novel term for indirect taxation, the meaning and scope of "technical glitch" has been liberally interpreted in a plethora of decisions which should set the tone for disposal of applications pending before the IT Grievance Redressal Committee (ITGRC).

20+ Steps To Deliver Tax Nirvana To Citizens And Foreign Investors

– Mind set of tax officials in the field must be changed from tax collection to tax service;

– Introduce Accountability provision under the tax laws as per the recommendation of Dr. Raja Chelliah Committee;

Taxability Of Bogus Share Capital U/s 68

Introduction

The most effective and lethal weapon used by the Income-tax Department (‘Department’) against evasive tactics used by the assessees, to convert their unaccounted money in accounted one, is section 68 of the Income-tax Act, 1961 (‘Act’).

AS all  are well aware, the GST law, insofar as it concerns the Realty Sector, has been virtually re-written with effect from 1-4-2019 and that, the levy of GST at the lower rates without the benefit of ITC is compulsory for projects which commence on or after 1-4-2019 and that, in respect of 'ongoing projects', the Developer has the option to continue with the old scheme wherein, ITC is allowed. Hence, the new scheme would, by and large, boil down to the interpretation of the definitions of an 'ongoing project' and 'a project which commences on or after 1-4-2019'.

In terms of Notification No. 3/2019-CT(Rate) dated 29-3-2019, an 'ongoing project' is defined as under:

(xx)   the term "ongoing project" shall mean a project which meets all the following conditions, namely- 

(a)   commencement certificate in respect of the project, where required to be issued by the competent authority, has been issued on or before 31st March, 2019, and it is certified by any of the following that construction of the project has started on or before 31st March, 2019:-

(i)   an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or 

(ii)   a chartered engineer registered with the Institution of Engineers (India); or 

(iii)   a licensed surveyor of the respective local body of the city or town or village or development or planning authority.

(b)   where commencement certificate in respect of the project, is not required to be issued by the competent authority, it is certified by any of the authorities specified in sub- clause (a) above that construction of the project has started on or before the 31st March, 2019;

(c)   completion certificate has not been issued or first occupation of the project has not taken place on or before the 31st March, 2019;

(d)   apartments being constructed under the project have been,  partly or wholly, booked on or before the 31st March, 2019.

Explanation.- For the purpose of sub- clause (a) and (b) above, construction of a project shall be considered to have started on or before the 31st March, 2019, if the earthwork for site preparation for the project has been completed and excavation for foundation has started on or before the 31st March, 2019.

(xxi)   "commencement certificate" means the commencement certificate or the building permit or the construction permit, by whatever name called issued by the competent authority to allow or permit the promoter to begin development works on an immovable property, as per the sanctioned plan; 

(xxviii)   "project which commences on or after 1st April, 2019" shall mean a project other than an ongoing project;

Now, look at the definition of a project which commences on or after 1-4-2019, as per this Notification.

(xxviii)   "project which commences on or after 1st April, 2019" shall mean a project other than an ongoing project.

In terms of the above definitions, any project which does not fulfil the definition of an 'ongoing project' would, by default, get treated as a 'project which commences on or after 1-4-2019' thereby forcing the Developer to go for the new scheme.

Can life be as simple as that?

Take the case of the requirement to obtain a commencement certificate from the competent authority. This requirement is virtually absent in many parts of the country and is prevalent in some cities like Bengaluru wherein the commencement certificate is required to be obtained from the Brugat Bengaluru Mahanagara Palike, popularly known as BBMP. Any Developer would say that, he would need to go through a big and laborious process to obtain the Commencement Certificate from the BBMP and in many cases this certificate is obtained at the time when the construction is almost over.

Many Developers have launched residential projects in respect of which, significant construction activity has already been completed and these projects could have been launched several months ago and these Developers could have signed up many flat buyers. Prior to 1-4-2019, Developers were collecting GST @ 12% on the total value of the project and life was fine. Since obtaining the commencement certificate was not a pre-requisite, most of these Developers did not even bother to apply to the BBMP for obtaining these commencement certificates.

Suddenly, on April Fools' Day this year, all of these otherwise running projects without commencement certificates, would cease to be treated as 'ongoing projects' and by default, would get classified as projects commencing on or after 1-4-2019. Many Developers have signed agreements with flat buyers on the basis of the erstwhile GST regime, on the basis of the GST rate of 12% with ITC and they suddenly find that, they are forced to shift to the new regime of charging GST @ 5% without ITC, in respect of these otherwise running projects. Where is the logic of treating these projects that have been running for several months, as new projects commencing on or after 1-4-2019, only on the basis of the technicality of these projects not having obtained the Commencement Certificate on or before 31-3-2019? Does this requirement not discriminate a Developer who is located in a place where the practice of obtaining a commencement certificate from the competent authority as compared to a Developer who is fortunate enough to be engaged in construction of a project in a city or town where, there is no such requirement?

Taking this discussion forward… while bringing such an important substantive requirement wherein, not obtaining the commencement certificate prior to 1-4-2019 could result in the project being classified as a new project commencing on or after 1-4-2019, shouldn't the Government have given time to Developers to apply for and get these commencement certificates, wherever it is necessary? Or, shouldn't the Government have issued Notification No.3/2019-CTR well in advance, so that, Developers could have applied for and obtained these commencement certificates. The Government, sadly enough, seems to be oblivious of the ground realities related to the obtaining of the commencement certificates and the simple fact that these certificates are more of a procedural requirement and do not reflect the actual quantum of work that could have been completed in a running project.

There is another issue that would need discussion. As per the definition of an 'ongoing project', the Completion Certificate, or the 'OC' as it is popularly referred to, should not have been obtained on or before 31-3-2019. Here again, the Government seems not to have appreciated the fact that, even after obtaining the OC, there could be installments that would continue to fall due from the flat buyers and in many cases, some amount of work such as painting, etc. could be done after the date of the OC. With these projects wherein OC has been obtained before 1-4-2019, would these projects be required to be classified as 'new projects commencing on or after 1-4-2019', wherein, the Developer would necessarily need to charge GST at the rate of 5%? Can anything be more unreasonable and illogical to treat a project in respect of which OC has been obtained on or before 31-3-2019, as a new project commencing on or after 1-4-2019?

One would request the government machinery, who seem to blissfully unaware of the ground realities, while drafting these draconian Notifications, to apply their minds to these scenarios and come out with clarifications, before May 10, 2019 so that, the Developers can accordingly exercise their options vis-à-vis their running projects.

Before parting…

A clarification to the effect that, running projects as of March 31, 2019 which fulfil the other requirements except for obtaining the commencement certificate would still be treated as an 'ongoing project' would be of great help to the Realty Sector. A further clarification to the effect that, the balance installments falling due after the OC date, in respect of running projects where OC has been obtained prior to 1-4-2019, shall continue to be covered by the old scheme would also be hugely welcome. Since, the option to shift to the new scheme for ongoing projects has to be exercised and the requisite Form IV has to be filed on or before May 10, 2019, an urgent clarification would hugely benefit this ailing Realty Sector.