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Due Date for Tax Audit and Income Tax Returns Extended

In view of the challenges faced by taxpayers in meeting the statutory and regulatory compliances due to the outbreak of COVID-19, the Government brought the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (‘the Ordinance’) on 31st March, 2020 which, inter alia, extended various time limits. The Ordinance has since been replaced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act.

The Government issued a Notification on 24thJune, 2020 under the Ordinance which, inter alia, extended the  due date for all Income Tax Returns for the FY 2019-20 (AY 2020-21) to 30th November, 2020. Hence, the returns of income which were required to be filed by 31st July, 2020 and 31st October, 2020 are required to be filed by 30th November, 2020. Consequently, the date for furnishing various audit reports including tax audit report under the Income-tax Act, 1961 (the Act) has also been extended to 31st October, 2020.

In order to provide more time to taxpayers for furnishing of Income Tax Returns, it has been decided to further extend the due date for furnishing of Income-Tax Returns as under:

(A)       The due date for furnishing of Income Tax Returns for the taxpayers (including their partners) who are required to get their accounts audited [for whom the due date (i.e. before the extension by the said notification) as per the Act is 31st October, 2020] has been extended to 31st January, 2021.

(B)   The due date for furnishing of Income Tax Returns for the taxpayers who are required to furnish report in respect of international/specified domestic transactions [for whom the due date (i.e. before the extension by the said notification) as per the Act is 30th November, 2020] has been extended to 31st January, 2021.

(C)      The due date for furnishing of Income Tax Returns for the other taxpayers [for whom the due date (i.e. before the extension by the said notification) as per the Act was 31st July, 2020] has been extended to 31st December, 2020.

Consequently, the date for furnishing of various audit reports under the Act including tax audit report and report in respect of international/specified domestic transaction has also been extended to 31st December, 2020.

Further, in order to provide relief to small and middle class taxpayers, the said notification dated 24th June, 2020 had also extended the due date for payment of self-assessment tax for the taxpayers whose self-assessment tax liability is up to Rs. 1 lakh. Accordingly, the due date for payment of self-assessment tax for the taxpayers who are not required to get their accounts audited was extended from 31st July, 2020 to 30th November, 2020 and for the auditable cases, this due date was extended from 31st October, 2020 to 30th November, 2020.

In order to provide relief for the second time to small and middle class taxpayers in the matter of payment of self-assessment tax, the due date for payment of self-assessment tax date is hereby again being extended. Accordingly, the due date for payment of self-assessment tax for taxpayers whose self-assessment tax liability is up to Rs. 1 lakh has been extended to 31st January, 2021 for the taxpayers mentioned in para 3(A) and para 3(B) and to 31st December, 2020 for the taxpayers mentioned in para 3(C).

The necessary notification in this regard shall be issued in due course.

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Tax Collected at Source on sale of goods applicable from 1st Oct 2020 (New Section 206C(1H)

Tax Collected at source (TCS) is Income Tax which is required to be collected by the seller (Collector) from the Buyer.

Analysis of New Section 206C(1H) 

1. The Government of India has introduced a new Section 206C(1H) with regards to Tax Collection at Source‘. Applicable to everyone having turnover of Rs. 10 crores in last financial year.

2. Every seller who has received any amount as sale consideration above Rs. 50 lakhs from buyer has to collect additional 0.10% [Relaxed rate for FY 2020-21 – 0.075%] of bill amount, collect PAN and pay as TCS every month.

3.TCS to be levied on Sales that is in excess of Rs 50 Lakhs post 01-10-2020.

4. TCS Shall be collected at the time of receipt of sales consideration, hence liable to be collected in the month in which amount is received. Further TCS collected during a month needs to be deposited within 7 days of next month.

 

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5 mistakes to avoid while filing Income tax return

Here are common mistakes which should be avoided while filing ITR:

1. Filing ITR Without Using All Sources of Income

While computing the ITR, it is required to take into account all sources of income whether from the previous or current employment or income from investments and file it under the appropriate ITR form.

2.Choosing The Wrong ITR Form

There are different forms prescribed for different types of taxpayers. For example, ITR-1 is applicable only for resident individuals having income up to Rs 50 lakh and only for those having income from salary, one house property.

3.No Declaration Of Income From Capital Gains On Sale Of Assets

In case the taxpayer makes investments to claim capital gains exemption, the details of the investment and capital gains exemption should be given.

4.Non-Verification Of TDS Details With Form 26AS

The form 26AS carries a summary of TDS and tax payments on the income such as salary, interest, or sale of immovable property.

Before filing, one should verify the TDS and tax payments with form 26AS.

5. Not Filing ITR

It is mandatory to file ITR even if the gross total income is less than the basic exemption limit, if an individual has deposited more than Rs 1 crore in current bank account(s) during the financial year or spend more than Rs 2 lakh in foreign travel on self or any other person or if the electricity bill paid during the year exceeds Rs 1 lakh.

It is mandatory to file ITR for the resident individuals if they are holding assets outside India or have interest in any asset outside India or are authorized signatories for bank accounts located outside India.

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Income tax department changes Form 26AS from this assessment year

The new Form 26AS or ‘Annual Information Statement’ will have comprehensive information on taxes paid, details income tax proceedings, the status of income tax demand & refund along with details purchase of shares or property etc.

Form 26AS is an annual consolidated tax statement.

New improved Form 26AS which would carry some additional details on taxpayer’s financial transactions as specified Statement of Financial Transactions (SFTs) in various categories.

This New improved Form 26AS to help the taxpayers remind all her/his major financial transactions so that taxpayer has a ready reckoner to enable tax-payer while filing the ITR.

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5 Most Important Pointers To Know before Investment in Tax-Saving Fixed Deposits

1.   As per the Income Tax Law, Only individuals and HUFs are allowed to invest in tax-saving fixed deposits. If investment made in name of a minor, the deposits account can be held jointly with a 18+ individual.

2. A maximum of Rs. 1.5 lakh tax deduction allowed under Section 80C of the Income Tax Act. 

3. Tax- saving FDs come with a lock-in of 5 years with no premature withdrawal or advance facility against the FD scheme.

4. In case the Tax- saving FDs is held jointly, the tax deductions shall be available only to the first account holder.

5. Interest earned on Tax- saving FDs is taxable so attracts TDS. For reducing TDS implication, the investor needs to submit Form 15G or 15H.


 

 

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NRO deposits Income (Interest) is taxable in the hands of Non-Residents Indian

Non-resident Indians can remit or transfer up to $1 million from an NRO (Non-Resident Ordinary ) to NRE (Non-Residential External) account by producing necessary documents. Remittance or transfer beyond $1 million can possible with prior special permission from RBI.

Under the Indian income tax law, any sum exceeding 50,000 received without consideration from any person is taxable in the hands of the recipient subject to specified exceptions. However, gifts from specified relatives are not chargeable to Income tax. So there will no  Income tax implications in India on the transfer of funds from father’s account to Son’s NRO account and then to Son’s NRE account.

However, Interest income earned from  NRO account will be taxable. Deduction under Section 80TTA of Income Tax act 1961 is available on interest income up to 10,000 earned on savings account by an individual who is not a senior citizen.

Interest income from NRE accounts is exempt from tax in India if person qualify as a “person resident outside India” under the exchange control law or if Person are permitted by the Reserve Bank of India (RBI) to maintain such an account.


 

 

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Save Income Tax to Complete these tasks before June 30

#1. file Income-Tax return for FY19.

The last day for filing ITR for FY19  was July 31, 2019.  But Person can still file belated ITR till the end of the assessment year.

The assessment year 2019 ended on March 31,2019. however, the deadline for the same was extended till June 30, 2020. SO You can file return to avail benefits

#2. Invest a minimum sum in savings schemes

The taxpayer is required to invest in Public Provident Fund (PPF) or Sukanya Samriddhi Yojana (SMY) till the end of a financial year to get Income tax deductions. The last deadline to invest in Public Provident Fund (PPF) or Sukanya Samriddhi Yojana (SMY) also extended to June 30, 2020. due to coronavirus pandemic. 

#3. Link Aadhar with PAN card

PAN card can be deactivated if Aadhar No. not linked by June 30, 2020.

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Income Tax Deductions under Chapter VI A of Income Tax Act: Know how much tax YOU can saved

The Chapter VI A of Income Tax Act contains the following sections:

80C: Deduction in respect of life insurance premium, deferred annuity, contributions to provident fund (PF), subscription to certain equity shares or debentures, etc. The deduction limit is Rs 1.5 lakh together with section 80CCC and section 80CCD(1).

80CCC: Deduction in respect of contribution to certain pension funds. The deduction limit is Rs 1.5 lakh together with section 80C and section 80CCD(1).

80CCD(1): Deduction in respect of contribution to pension scheme of Central Government – in the case of an employee, 10 per cent of salary (Basic+DA) and in any other case, 20 per cent of his/her gross total income in a FY will be tax free. Overall limit is Rs 1.5 lakh together with 80C and 80CCC.

80CCD(1B): Deduction up to Rs 50,000 in respect of contribution to pension scheme of Central Government (NPS).

80CCD(2): Deduction in respect of contribution to pension scheme of Central Government by employer. Tax benefit is given on 14 per cent contribution by the employer, where such contribution is made by the Central Government and where contribution is made by any other employer, tax benefit is given on 10 per cent.

80D: Deduction in respect of Health Insurance premium. Premium paid up to Rs 25,000 is eligible for deduction for individuals, other than senior citizens. For senior citizens, the limit is Rs 50,000 and overall limit u/s 80D is Rs 1 lakh.

80DD: Deduction in respect of maintenance including medical treatment of a dependent who is a person with disability. The maximum deduction limit under this section is Rs 75,000.

80DDB: Deduction in respect of expenditure up to Rs 40,000 on medical treatment of specified disease from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed.

80E: Deduction in respect of interest on loan taken for higher education without any upper limit.

80EE: Deduction in respect of interest up to Rs 50,000 on loan taken for residential house property.

80EEA: Deduction in respect of interest up to Rs 1.5 lakh on loan taken for certain house property (on affordable housing).

80EEB: Deduction in respect of interest up to Rs 1.5 lakh on loan taken for purchase of electric vehicle.

80G: Donations to certain funds, charitable institutions, etc. Depending on the nature of the donee, the limit varies from 100 per cent of total donation, 50 per cent of total donation or 50 per cent of donation with a cap of 10 per cent of gross income.

80GG: Deductions in respect of rent paid by non-salaried individuals who don’t get HRA benefits. Deduction limit is Rs 5,000 per month or 25 per cent of total income in a year, whichever is less.

80GGA: Full deductions in respect of certain donations for scientific research or rural development.

80GGC: Full deductions in respect of donations to Political Party, provided such donations are non-cash donations.

80TTA: Deductions in respect of interest on savings bank accounts up to Rs 10,000 in case of assessees other than Resident senior citizens.

80TTB: Deductions in respect of interest on deposits up to Rs 50,000 in case of Resident senior citizens.

80U: Deduction in case of a person with disability. Depending on type and extent of disability maximum deduction allowed under this section is Rs 1.25 lakh.

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Senior citizens can get tax benefit of up to ₹50,000 for medical expenditure without Health Insurance

Q.1) I am 70 years old and I bought a hearing aid for 70,000 during financial year. I am not having any health insurance. Am I eligible for a deduction of 50,000 under Section 80D of the Income-tax Act?

Answer:-
Budget 2018 has amended Section 80D of the Income Tax Act which allows deduction for medical expenditure incurred on senior citizens.

As a senior citizen, if you made any payments towards medical expenditure, through any mode other than cash, a deduction of up to 50,000 annually is available under Section 80D, as you do not have any health insurance.

However, as medical expenditure has not been expressly defined, admission of these payments towards this deduction would be a fact-specific evaluation.

 

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Top 5 mistakes that you must avoid while filing your INCOME TAX RETURN

While filing Income Tax Return, Top 5 mistakes that you must avoid

#1. Selecting the wrong ITR Form

Each ITR form differs based on the nature of income. Since Income Tax Return are revised every year, it may so happen that you no longer have to file the same ITR they filed last year based on the changes.

#2 Not Disclosing All Sources Of Income

This is a mistake mostly salaried individuals do. You need to disclose all sources of income apart from salary while filing returns. Sources other than your salary include income from bank savings, rental income from house property if any, capital gains income, etc.

#3 Mismatch in Form 26AS Details and Other TDS certificates

It is advisable to keep all your TDS certificates like Form 16, Interest certificates from the bank (Form 16 A),  TDS certificate on sale of property ( Form 16 B) together and check whether correct TDS has been deducted against your PAN, with the entries in your Form 26AS. 

#4 Not Claiming deductions correctly

It is possible that you may have not been able to submit tax saving investment proofs to the employer and hence the details were not recorded in your Form 16. However, even if investments were not declared to the employer, tax relief can still be claimed while filing income tax returns. Keep the details of investments as supporting documents so that these deductions can be claimed.

#5. Not filing ITR on Time

late filing of Income-tax Return not only attract a penalty, but also loss of certain benefits.
Income Tax filing should not be a last-minute assignment and the necessary documents and TDS forms should be collected well in advance. 

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