Thinks to Be Kept in Mind While Filing ITR of Individual in India- By CS Annu Sharma

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Dear Folks

Hope You all are Doing well during this Pandemic!

In this write up I am sharing with you all, Pre-Requisites of Filing Income Tax Return of an Individual Specifically for financial year 2019-2020. All taxpayers must be ready with their Interest Certificates, Form-16 and other essential documents but there are still few important points which skipped by an Individual if he/she himself filing the return.

We should be careful while filing our ITR Not Just because of taxation or penal provision there could be other proceedings as well, this year the original due date was July 31, however, it was extended by govt. due to nationwide issue of COVID-19.

Let’s just bright up your screen and begin with your checklist for the Income tax Return ITR for financial year.

• One is liable to file ITR even if no tax dues:
   

Once you start earning, being a responsible citizen, one must file their Income tax return.

 Generally, a taxpayer believes that he isn’t liable to file tax return since there is no tax liability pending during the financial year. It should be kept in mind that ITR has to be filed irrespective of the fact whether the tax is required to be paid or not. Generally, in case of individuals what triggers the liability for filing of ITR is the fact that the gross total income of the assessee is more than the maximum exemption limit.

 

• Different Categories of Individual Taxpayers: 

There are three different categories of taxpayers in India as per there age and financial status.

 

1.      Individuals who are below the age of 60 years, including residents as well as non-residents

2.      Resident senior citizens who are 60 years and above but below 80 years of age

3.      Resident super senior citizens who are above 80 years of age.

 

• Most Important -You Must have Correct set of Information and documents.

 

1	PAN of Individual.
2	Aadhar of Individual
3	Mobile Number and Email
4	TDS Certificates (if any)
5	FORM-16 (if any)
6	Bank Statements (Interest Part Mainly)
7	Proof of Investment in 80C, 80CC, 80CCD (if any)
8	Document Regarding Medical Insurance (if any)
9	Loan Documents (if any)
10	Investment Statement of SIP, Derivatives, Commodities etc. (if any)
11	Rent Receipts (if any)
12	Proof relating to other sources of income (if any)

 

 

• Choice of Income Tax Form as per the Income sources.
   
  Since there are multiple Forms of return notified by the tax authorities. Out of these, ITR 1 to 4  are applicable to individuals/HUFs, while ITR 5 is for Partnership Firms and LLP, ITR 6 is for Companies other than those claiming exemptions (See Rule 12) and ITR 7 is for  [For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D (Please see rule 12 of the Income-tax Rules).  Therefore, correct form needs to be filled in.
   
  The ITR Form and corresponding incomes are listed below:
   

ITR 1 – Salary Income, House Property Income and Income from Other Sources (Interest income, Winnings from lottery etc.)

ITR 2 – Salary Income, House Property Income (more than one House Property), Capital Gain Income, Income from Other Sources, Agricultural income upto Rs .5000

ITR 3 – Salary Income, House Property Income (more than one House Property), Capital Gain Income, Income from Other Sources, Proprietorship Business Income, Professional income, Partnership income and agricultural income more than Rs.5000

ITR 4 S- Individuals opted for the presumptive income scheme as per Section 44AD, Section 44 ADA and Section 44AE of the income tax act.

 

A Pro Tip:  ITR-1 cannot be filed by a taxpayer who is a Director in a company or who has held investments in unlisted equity shares at any time during the financial year. Such taxpayers will have to use ITR-2 or ITR-3 form for FY2020.

 

 

 

• Determination of residential status:
   

What is to be included in total income of assessee is greatly influenced by his residential status in India. Total Income of an assessee cannot be computed unless his residential status is determined as per provisions of the Income Tax Act.

 

The residential status of each person shall be determined separately as per the set of rules prescribed for the relevant category of person. For example, residential status of an individual is determined based on his number of days of stay in India.

 

• Check TDS and TCS information by downloading Form 26AS:
   

Now, the ITRs are linked with the Form 26AS, resulting prefilled information in the ITRs relating to form 26AS. But for a safer side it is advisable to cross verify the information as reflecting in Form 26AS with that of the information in the ITRs. Before filing the return every assessee should verify the credits in the 26AS form in order to ensure that the return filed is free from error.

A Pro Tip: if you are claiming a refund, make sure that the bank details provided are accurate so that you receive your refund smoothly. Also, you have to report all bank account details held by you except dormant accounts (accounts which are inactive for the past three years).

 

• Benefits to file ITR on time:
   

File your return on time without errors to avoid penalty up to Rs.10,000 under section 234F.

If you don’t file the return on or before the due date, the rate of 1% will be charged every month, or part of the month, on the amount of tax remaining unpaid as per section 234A.

Carrying forward of the losses is not allowed if you don’t file the return on or before the due date. You will be deprived of carrying forward your losses for set off against your income in the next years.

 

 

A Pro Tip: Every individual shall keep a safe custody of all the documents relating to the deductions claimed to avoid further inconvenience during the proceedings. Such documents include the deductions claimed under Section 80C, Section 80D etc.

 

• E-verification of Income tax return -ITR:

Make sure that the return is e verified within 120 days. You can also send the signed acknowledgement to the income tax CPC office if you are not able to e verify the same. Your return won’t be processed unless you e verify. The return filed but not e-verified will be treated as an invalid return.

 

As a Concluding note of this write up -Review your income tax return, having incorrect information in your filing will slow down the receipt of your tax refund. Check all numbers and do double calculations, as these are the most common mistakes of tax filers. Ensure your figures tally without any discrepancies.

20 FAQ’s On Recent Amendment in Indian Stamp Act, 1899.

Dear Professionals

Hope You all are doing well !

In this write-up I have simplify the recent amendment in Indian Stamp Act, 1899 by Finance Act, 2019 with effect from July, 1, 2020.

Before this amendment there were diversification of stamp duty rates across all states in India on instrument of transaction in stock exchange and depositories which leads to jurisdictional disputes and multiple incidence of duty whereas after this amendment Rationalized Collection Mechanism of Stamp Duty across India with respect to Securities Market Instruments.

The relevant Stamp Rules, 2019, were notified on December 10, 2019. The revised Act has come into effect from July 1, 2020. Under the revised Act, CCIL (Clearing Corporation of India Ltd) has been appointed as collecting agent for foreign exchange, interest rate and credit derivative transactions which are reported to it.

Let us understand the recent amendments by way of questions and suitable answers for better understanding.

1. The amended provisions of the Stamp Act and Rules made thereunder will come into force from which date?

Answer: Obvious question but still have its own importance, the amended provisions of the Indian Stamp Act, 1899 introduce through Finance Act, 2019 and Rules made thereunder shall come into force i.e. 1st July 2020.

1. Motive behind amendments in the Indian Stamp Act, 1899?

Answer: The amendments, having been related to securities market transactions, brought uniformity among various jurisdictions and avoid excess payment as stamp duty.

Of course, I expect this to develop equity markets and equity culture which hardly touches the tip of ice burg of huge investment markets. Balanced regional development will be an offshoot.

 

1. What all instruments are covered under amended Stamp Act and the Rules made thereunder?

Answer: (Exactly from the website but with slight modification for better understanding)

Each security is charged with a duty as specified in Schedule I of the amended Stamp Act. Securities are defined to include all those instruments specified in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956;

a “derivative” as defined in clause (a) of Section 45U of the Reserve Bank of India Act, 1934;

a certificate of deposit, commercial usance bill, commercial paper and such other debt instrument of original or initial maturity up to one year as the Reserve Bank of India may specify from time to time; the repo on corporate bonds;and any other instrument declared by the Central Government, by notification in the Official Gazette, to be securities for the purposes of this Act.

In a nutshell, a derivative, a certificate of deposit, usance bills, commercial paper as used by companies, and repo on corporate bonds.

 

1. What are the key advantages of amendments in the Indian Stamp Act, 1899?

Answer: Benefits can be narrated as under:

The ease of doing business has been improved.

Uniformity and affordability have made my transactions cost-effective and I really do not worry about the financial aspect of this. Less cost of collection and upward growth in productivity are not unexpected developments and easily discernible.

1. What is the basic framework being created through the amendments to the Indian Stamp Act, 1899?

Answer: Now, the states will collect stamp duty on security market instruments in one place and by only one agency. The Stock Exchange or Clearing Corporations authorized by the Stock Exchange or by the Depositories are the chosen ones, for smooth compliance.

 Like, if HDFC Bank who handles my depository account would collect the stamp duty and debit it to my account. A suitable mechanism to share the stamp duty from the state of domicile has also been worked out.

1. Whether stamp duty is applicable on units of Mutual Fund?

Answer: Of course, the provisions of Stamp Act enforce stamp duty on units of Mutual Fund, Hence the same is covered as well.

1. Whether stamp duty is applicable on the bonus issue of shares?

 Answer:  In case of a bonus issue, there is no consideration which means bonus shares are issued free to existing shareholders. Unfortunately, during the last two decades, many well earning companies though accumulated huge reserves, hardly care to issue bonus shares denying its investors of the income from their investments.

1. Who will be responsible to collect the Stamp Duty on behalf of the State Government?

Answer: The Stock Exchange or Clearing Corporation authorized or Depositories (authorized collecting agents).

Further, the Clearing Corporation of India Limited (CCIL) and the Registrars to Issue and / or Share Transfer Agents have also been instructed to act as collecting agents, getting pivotal roles of reliability.

1. What is the manner of collection of stamp duty under the new system?

Answer: For all exchange-based secondary market transactions in securities, Stock Exchanges shall collect the stamp duty;

•and for off-market transactions (which are made for consideration as disclosed by trading parties) and the initial issue of securities happening in demat form, Depositories shall collect the stamp duty.

In short, both stock exchange and depositories would collect stamp duty.

 

  1. What are the stamp duty rates being implemented through the Amended Indian Stamp Act?

Answer: The web gives stamp duty for 11 items of transactions but I would give only a few items and you can refer the original for clarification.

Stamp Duty Rates w.e.f. 1st July 2020

INSTRUMENT	STAMP DUTY
Issue of Debenture	0.005%
Transfer and Re-issue of debenture	0.0001%.
Issue of security other than debenture	0.005%
Derivatives––
(i) Futures (Equity and Commodity)	0.002%
(ii) Options (Equity and Commodity)	0.003%
(iii) Currency and Interest Rate Derivatives	0.0001%
Government Securities	0%
Repo on Corporate Bonds	0.00001%

 

1. What would be the fees for the collecting agent?

Answer: The collecting agent may deduct 0.2 percent of the stamp-duty collected on behalf of the State Government towards facilitation charges before transferring the same to such State Government.

For an individual, it may look small but history records a crook who got fraudulent stamp papers issued and a fraud of value of Rs 700 crores was unearthed. India with billions of turnover of security transactions, state governments would earn substantially.

1. When and how will the stamp duty be transferred to each State?

Answer: The collecting agents shall within three weeks of the end of each month and in accordance with the Rules made in this behalf by the Central Government, transfer the stamp-duty collected to the State Government where the residence of the buyer is located.

The collecting agent shall transfer the collected stamp-duty in the account of concerned State Government with the Reserve Bank of India or any scheduled commercial bank, as informed to the collecting agent by the Reserve Bank of India or the concerned State Government.

1. How the State Government will communicate regarding stamp duty matter?

Answer: The State Government shall appoint a nodal officer for all official communications with the principal officers (appointed representatives of collecting agents) for the purposes of collection of stamp-duty in accordance with stamp duty Rules.

Since the collection of huge sums of commission as stamp duty is involved, I only anticipate quick action by the state government concerned.

1. What if collecting agents fails to transfer the duty to the State Government within the time period specified in the Stamp Act and Rules made thereunder?

Answer: The collecting agents would have to transfer the funds within 3 weeks of collection or face a fine of not less than one lakh rupees, but which may extend up to one per cent of the collection or transfer so defaulted.

1. How will the state governments be informed of the stamp duty collected and is there any information system developed for the quicker transmission of information in this regard?

Answer: The collecting agent will have to submit a monthly statement of details of collection including the defaulter’s list within seven days of succeeding month and a yearly statement within the end of 30th June of succeeding year failing which a fine of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less will be levied. The state government is to provide an online facility for unloading the information on time.

1. Who will collect the Stamp duty in case of Mutual Fund and AIF transactions (sale, transfer, and issue of units in Demat mode) through recognized Stock Exchange or Depository?

Answer: As clear from the Act that in case of Mutual Fund and AIF transactions (sale, transfer and issue of units in Demat mode) through recognized Stock Exchange or Depository as defined under SCRA, 1956 and Depositories Act, 1996 respectively, the respective Stock Exchange/authorized Clearing Corporation or a Depository is already empowered to collect stamp duty as per Amended Indian Stamp Act and Rules made thereunder.

1. On transfer of units of Mutual Funds and AIFs held in physical form, stamp duty is to be collected from the transferor. As these transfers happen outside the purview of RTAs what will be the process of collection and remittance of stamp duty?

Answer:  Stamp duty has to be collected and remitted only by collecting agents (RTA for physical units and Depositories for Demat units). Where Mutual Fund and AIF units are issued in physical form, stamp duty has to be collected and remitted by RTA.

1. How stamp duty is calculated in case of issuance of Mutual fund Units?

Answer: Stamp duty is imposed on the value of units excluding other charges like service charge, AMC fee, GST, etc. If the units are issued for Rs 1 crore, stamp duty works out to be Rs 500.

1. Whether stamp duty is applicable on redemption of Mutual Fund units ?

Answer: Redemption is not liable to duty as it is neither a transfer nor an issue nor a sale.

1. What will be the amount of security on transfer of shares in Demat Form?

Answer: Before the notification of provisions of Part 1 of Chapter IV of the Finance Act, transfer of securities in demat was not subject to any stamp duty. The Finance Act, seeks to end the relaxations given to such transfer and has provided for levy and collection of stamp duty on transfer of securities in demat or electronic form. The said amendment seeks to end the biggest benefit available on dematerialization of any security.

Hello-  I am Annu Sharma a Company Secretary by Profession and a Writer by Passion, I do research, reading and vetting, I help businesses to be compliance ready,  Featuring on Tax Guru and  Compliance Calender LLP I To know more about me Just Google CS Annu Sharma

 

 

6 Skyrocket Tips to start your CS Practice-By CS Annu Sharma

As already mentioned in the Tagline that you cannot afford to miss this write up if you are planning to be a Practising Professional. Many of us from a fraternity of Company Secretary are struggling today to get even a single client to begin their career as a Practicing Company Secretary but few may succeed and most of them loose hope. In this write up, I am going to share with you all today each and every single probability to get the client and start their career as a Practicing Company Secretary from now onwards only.

All you need a Laptop & a printer cum scanner along with a boosting internet connection.

Let’s Just begin with 6 quick tips to begin your career as a Company Secretary in Practice (PCS).

1. LinkedIn: Yes, you read absolutely correct that LinkedIn can bring you client, almost 90 % of budding professional has LinkedIn profile but how many of us use it effectively – Answers may be YES or NO but trust me folks you can do this with LinkedIn. All you need to do to have a LinkedIn account it’s very easy to set up by Gmail.
    
   Create a healthy profile will good skill set, key areas, achievements and an effective bio, try to connect with majority of the professionals over their like advocates, Cost Accountants, Chartered Accountants, and People with the designation of Directors, CFO, CEO etc. As more as you as you build up your professional network with these appropriate profiles you can start pitching by getting this wonderful platform of professionals.
    
   Specially for Women it is much safer that other social media platforms because you will get genuine professionals there.
    
2. Google Maps: The best way to transform your virtual office into a Physically present office use google location setup and add a Location set up at your home with a name of services you are providing like GST Registration, Company Registration, Digital Signature etc. and further add description of your services and name of your Firm.
    
   This idea will work wonder when a Businessman nearby you search over internet for any particular service, he will get your location and though you are nearby, he can reach you out through Phone or email to get his services done. Make developments in that location by adding Photos of work, Check-in, reviews etc. for boosting trust of your client.
    
3. Guidance from Mentors: For few of you this point might be useless as per your opinion but it really works when you follow the guidance of your mentors who are best in industry or in their field. The time you people make up your mind to take guidance from senior practicing regarding build up your career as a Practising Professional make sure your mind completely open up to the advice you will take from them because it is really true that experience matters.
    
4. Blog Writing: These days blog writing is all about name and fame but this is an authentic way to market yourself and start pitching clients in genuine way. All you need to do is just reading and reading and reading. It might sound boring for many of you but seriously it going to work my friends in the beginning.
    
   If you are not familiar with the Blog writing, you just need to choose your favorite Section from the act and over internet read at least 5 articles on the same now you are loaded with the content and art of writing pick up your WordPad and start writing you own unique content about that topic or section.
    
   Gradually your write ups will improve and post them on prominent blogging websites you know or the websites you visit most, trust me by writing these problem-solving articles you can easily pitch the right client.
    
    
5. Data Collection: By Data collection here I mean data collection of Non-Compliance Company in your city; this is procedure by which you can approach a Director or Promoter director for the assignment. Here what you need to do is just search Limited or Pvt Limited companies nearby your area and with the help of MCA fetch the emails and send emails to those companies informing about their non filing and letting them know how their issue can be resolved.
    
   To get the email of Directors easily you just need to pre-fill the DIN of director in e-form INC 3 from there you can easily fetch data, but friends don’t forget to mention your mobile number in the email to get the direct call of your client.
    
6. Unique are of Expertise: While beginning your career as a Company Secretary in Practice don’t chase over only on Companies Act as there is very high level of competition in market for the same instead of this choose your different specialization in the matter to grow fast in the industry like MSME, RERA, PF, ESI, Labour Laws, Competition Act, IBC etc. This pro tip really works if you follow deliberately.
    
   This last Skyrocket idea was guided by mentor to me during my internship but folks follow your unique style by adding aforementioned quick tips to grow your career as Practising Company Secretary (PCS).
    
   In a Nutshell, Try-Try Until you Succeed, don’t feel dejected if you lost one opportunity or you couldn’t pitch a single client yet. It will happen and It will definitely happen soon till the time be happy be healthy and keep shining.