CBDT extends due date for filing return of income

CBDT extends due date for filing return of income from 31-07-16 to 05-08-16 in case of taxpayers who were liable to file ITR by such date.

Arm's Length Price-AY 2016-17

CBDT Notification on Determination of Arm's Length Price for AY 2016-17 u/s 92C (Transfer Pricing)

The CBDT has notified that where variation between ALP determined u/s 92C does not exceed 1% of the wholesale price (3% otherwise) of international or specified domestic transactions, then actual transaction price shall be taken as ALP for AY 2016-17, i.e. tolerance limits of price variation for transfer pricing purposes, as under:

CBDT Notification No. 57/2016 dt. 14 July 2016

In exercise of the powers conferred by the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961 (43 of 1961), read with proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962, the Central Government hereby notifies that where the variation between the arm's length price determined under section 92C and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the later in respect of wholesale trading and three percent of the later in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm's length price for Assessment Year 2016-2017.

Explanation

For the purposes of this notification, "wholesale trading" means an international transaction or specified domestic transaction of trading in goods, which fulfills the following conditions, namely:-

(i) purchase cost of finished goods is eighty percent. or more of the total cost pertaining to such trading activities; and

(ii) average monthly closing inventory of such goods is ten percent. or less of sales pertaining to such trading activities.

IT NOTICES

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 21st

July, 2016.

Press Release

Sub : Income Tax Department to issue 7 lakh letters seeking Information in respect of

High Value Transactions

Under the Annual Information Returns (AIR), various types of high-value transactions

were being reported to the Income Tax Department. These include reporting of cash

deposits of Rs.10,00,000 or more in a saving bank account, sale/purchase of immovable

property valued at Rs. 30,00,000 or more, etc. Many of these transactions do not have

PAN linked to it. The Department has details of about 90 lakh such transactions for the

period 2009-10 to 2016-17. The Income Tax Department has with the help of in-house

computer techniques, grouped such non-PAN transactions and identified 7 lakh high-risk

clusters having around 14 lakh non-PAN transactions which are being scrutinized by the

Income Tax Department closely.

The Department will be issuing letters to the parties of these transactions requesting

them to provide their PAN number against these transactions. For the convenience of the

parties to whom these letters are addressed, a new functionality on e-filing portal has been

developed wherein they can own up transactions and provide structured response

electronically. The parties can log-in to their e-filing website and by quoting a Unique

Transaction Sequence Number provided in the letter sent to them, can link their transaction

with their PAN easily. They will also be able to give a response to this letter electronically

by choosing the option of either owning up the transaction or denying the transaction as

their own. The responses received from such parties online will be examined by the

Department. The Department will initiate further necessary action in those cases where no

replies are received.

The members of public who receive such letters are requested to kindly cooperate in

the matter. They may use the Departmental helpline to ask questions, as far as possible,

instead of making direct contact with any officials of the Income Tax Department. Members

of public are advised not to entertain any claims from unscrupulous elements who may offer

their help in complying with such communication by falsely representing themselves to be

the agents of Income Tax department in the matter.

(Meenakshi J Goswami)

Commissioner of Income Tax

(Media and Technical Policy)

Official Spokesperson, CBDT

Stipend exempt?

If the Stipend granted is for furthering education or gaining knowledge , same can be claimed exempt u/s 10[16] of the I T act . In this regard the decision of the KarnatakaHigh Courtin A. Ratnakarv. Addl. CIT [1981] 128 ITR527can be applied.This was also followedby Tribunal in case of Income-tax Officer v. Dr. G.N. Ramachandran[1 ITD902]

CBDT Notification on Determination of Arm’s Length Price

CBDT Notification on Determination of Arm’s Length Price for AY 2016-17 u/s 92C (Transfer Pricing)

The CBDT has notified that where variation between ALP determined u/s 92C does not exceed 1% of the wholesale price (3% otherwise) of international or specified domestic transactions, then actual transaction price shall be taken as ALP for AY 2016-17, i.e. tolerance limits of price variation for transfer pricing purposes, as under:

CBDT Notification No. 57/2016 dt. 14 July 2016

In exercise of the powers conferred by the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961 (43 of 1961), read with proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962, the Central Government hereby notifies that where the variation between the arm’s length price determined under section 92C and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the later in respect of wholesale trading and three percent of the later in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price for Assessment Year 2016-2017.

Explanation :

For the purposes of this notification, “wholesale trading” means an international transaction or specified domestic transaction of trading in goods, which fulfills the following conditions, namely:-

(i) purchase cost of finished goods is eighty percent. or more of the total cost pertaining to such trading activities; and

(ii) average monthly closing inventory of such goods is ten percent. or less of sales pertaining to such trading activities.

IDS in instalments

CBDT Press Release dated 14-7-2016 on IDS
 
The Income Declaration Scheme 2016 - Relaxation of time schedule for making payments under the Scheme
 
During the course of meetings and seminars held in different parts of the country, various stakeholders have expressed concern that the time period available under the Scheme up to 30th November, 2016 for making payment of tax, surcharge and penalty is very short, especially where funds in liquid form are not readily available with the declarants. It has also been mentioned that for making payment by 30.11.2016, the declarants may have to opt for distress sale of the assets.
 
Taking into consideration the practical difficulties of the stakeholders, the Government has decided to revise the time schedule for making payments under the Scheme as under:
 
(i) a minimum amount of 25% of the tax, surcharge and penalty to be paid by 30.11.2016;
(ii) a further amount of 25% of the tax, surcharge and penalty to be paid by 31.3.2017; and
(iii) the balance amount to be paid on or before 30.9.2017.
 
A Notification to this effect shall be issued shortly.

Income Tax manual /Compulsory scrutiny criteria F.Y. 2016-2017

Instruction No. 4/2016
Government of India
Ministry of Finance
Department of Revenue (CBDT)
North-Block, New Delhi

Date: 13th of July, 2016

To

All Pr. Chief-Commissioners of Income-tax/Chief-Commissioners of Income-tax

All Pr. Directors-General of Income-tax/Directors-General of Income-tax

Sir/Madam

Subject: Compulsory manual selection of cases for scrutiny during the Financial Year 2016-2017- regd:-

1. In supersession of earlier Instructions on the above subject, the Board hereby lays down the following procedure and criteria for manual selection of returns/cases for compulsory scrutiny during the financial-year 2016-2017:-

(i) Cases involving addition on a substantial and recurring question of law or fact in earlier assessment year(s), in excess of Rs. 25 lakhs in metro charges at Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, while for other charges, quantum of such addition should exceed Rs. 10 lakhs (for transfer pricing cases, quantum of such addition should exceed Rs. 10 crore) and where:

a. such an addition in assessment has become final as no further appeal was/has been filed; or

b. such an addition has been confirmed at any stage of appellate process in favour of revenue and assessee has not filed further appeal; or

c. such an addition has been confirmed at 1st appeal stage in favour of revenue or subsequently and further appeal of assessee is pending before any Authority in the appellate process.

(ii) All assessments pertaining to Survey under section 133A of the Act excluding those cases where books of accounts, documents etc. were not impounded and returned income (excluding any disclosure made during the Survey) is not less than returned income of preceding assessment year. However, where assessee retracts the disclosure made during the Survey, such cases will not be covered by this exclusion.

(iii) Assessments in search and seizure cases to be made under section(s) 158B, 158BC, 158BD, 153A & 153C read with section 143(3) of the Act and also for the returns filed for the assessment year relevant to the previous year in which authorization for search and seizure was executed u/s 132 or 132A of the Act.

(iv) Return filed in response to notice under section 148 of the Act.

(v) Cases where registration u/s 12AA of the IT Act has not been granted or has been cancelled by the CIT/DIT concerned, yet the assessee has been found to be claiming tax-exemption under section 11 of the Act. However, where such orders of the CIT/DIT have been reversed/set-aside in appellate proceedings, those cases will not be selected under this clause.

(vi) Cases of entities, being ‘scientific research association’ or ‘university, college or other institution’, having approval under section(s) 35(1)(ii)/35(1)(iii) of the Act.

(vii) Cases in respect of which specific and verifiable information pointing out tax-evasion is given by any Government Department/Authority. However, before selecting a case for scrutiny under this criterion, Assessing Officer shall be required to take prior administrative approval from the concerned jurisdictional Pr. CIT/Pr.DIT/CIT.

2. Computer Aided Scrutiny Selection (CASS): Cases are also being selected under CASS-2016 on the basis of broad based selection filters. List of such cases has been/is being separately intimated by the Pr.DGIT(Systems) to the jurisdictional authorities concerned.

3. As a taxpayer friendly measure, to reduce the departmental interface with the assessee and reduce the compliance burden of tax payers in scrutiny assessment proceedings, the scheme of Assessment through e-mail is being extended to all scrutiny cases including the cases selected under above parameters in seven cities of Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai. However, assessees in these seven cities can exercise the option of not being scrutinized under the e-mail based paperless assessment proceedings after informing the Assessing Officer concerned in writing in the beginning or subsequently during the course of assessment proceedings. Further, in cases which require submission of voluminous documents and it is not practicable to submit the scanned copies thereof through e-mail, in such instances; the Assessing Officer may decide to receive such documents in physical form after recording reasons for the same.

4. It is reiterated that the targets for completion of scrutiny assessments and strategy of framing quality assessments as contained in Central Action Plan document for Financial-Year 2016-2017 have to be complied with and it must be ensured that all scrutiny assessment orders including the cases selected under the manual criterion are completed through the AST system software only. It should be the endeavour of the Assessing Officers and his supervisory authorities to ensure that scrutiny assessment cases are disposed in a well planned manner without dragging the assessment proceedings till the last date of limitation. Further, Pr. CCsIT/CCIT(Central)/Pr. CCIT(International tax)/CCIT(Exemption)/DsGIT should evolve a suitable monitoring mechanism in their respective charges in order to ensure quality of assessments being framed during the financial year. In this regard, by 31st January, 2017, such authorities shall send a report to the respective Zonal Member with a copy to Member (IT) containing details of at least 25 quality assessment orders from their respective charges. It may further be the endeavour that cases selected for publication in ‘Let us Share’ are picked up only from the quality assessments as reported.

5. These instructions may be brought to the notice of all concerned for necessary compliance.

6. Hindi version to follow.

(Rohit Garg)

Deputy-Secretary to the Government of India

CBDT: Debunks 31% IDS tax rate theory, fourth set of FAQs to follow

Jul 14,2016
CBDT sets at rest controversy over 31% effective tax rate under IDS; Addressing queries received from stakeholders on whether the payment under IDS can be made out of undisclosed income without including the same in the income declared, thereby whittling down the effective tax rate to 31%, CBDT clarifies that the scheme in "no way intends to modify or alter the rate of tax."

http://www.taxsutra.com/news/15904/CBDT%3A_Debunks_31%25_IDS_tax_rate_theory%2C_fourth_set_of_FAQs_to_follow

CBDT CLARIFICATION ON TCS PROVISION

The CBDT vide Circular No. 23/2016 dt. 24 June 2016 has clarified on FAQs of stakeholders reg. scope of the provisions and the procedure to be followed in case of the amended provisions of Section 206C of the Income Tax Act, as under:

CBDT Circular No. 23/2016 dt. 24 June 2016

In order to curb the cash economy, Finance Act 2016 has amended section 206C of the Income-tax Act to provide that the seller shall collect tax at the rate of one per cent from the purchaser on sale in cash of certain goods or provision of services exceeding two lakh rupees. Subsequent to the amendment, a number of representations were received from various stakeholders with regard to the scope of the provisions and the procedure to be followed in case of the amended provisions of Section 206C of the Act. The Board, after examining the representations of the stakeholders, issued FAQs vide circular.No.22/2016 dated 8th June, 2016. The Board has further decided to clarify the issue as regards applicability of the provisions relating to levy of TCS where the sale consideration received is partly in cash and partly in cheque by issue of an addendum to the above circular in the form of question and answer as under:

Question 1: Whether tax collection at source under section 206C(1D) at the rate of 1% will apply in cases where the sale consideration received is partly in cash and partly in cheque and the cash receipt is less than two lakh rupees.

Answer : No. Tax collection at source will not be levied if the cash receipt does not exceed two lakh rupees even if the sale consideration exceeds two lakh rupees.

Illustration: Goods worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.4 lakhs has been received in cheque and Rs.1 lakh has been received in cash. As the cash receipt does not exceed Rs.2 lakh, no tax is required to be collected at source as per section 206C (1D).

Question 2: Whether tax collection at source under section 206C (1D) will apply only to cash component or in respect of whole of sales consideration.

Answer: Under section 206C (1D), the tax is required to be collected at source on cash component of the sales consideration and not on the whole of sales consideration.

Illustration: Goods worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.2 lakhs has been received in cheque and Rs.3 lakh has been received in cash. Tax is required to be collected under section 206C (1 D) only on cash receipt of Rs.3 lakhs and not on the whole of sales consideration of Rs.5 lakh.

The Income Tax Central Action Plan 2016-17 talks of blocking of PAN

The Income Tax Central Action Plan 2016-17 talks of blocking of PAN. The important highlights of the suggestions are as under:

1. Pan Blocking shall be after due notice
PAN to be block after due notice to the tax defaulters.

2. PAN blocking shall deprive defaulters from filing their income tax returns
PAN of tax defaulters shall be be blocked in the system, in a such a way that these defaulters would not be allowed to file their Return of Income.

3. PAN blocking to deprive defaulters benefit of carry forward of losses
Blocking of PAN would mean that defaulters cannot avail the benefit of carry forward of Business Loss and Losses under other heads where filing of Return of Income u/s. 139(1) is mandatory.

4. Blocked PAN to be shared with CIBIL
List of such Blocked PANs can be shared with credit rating agency like CIBIL & Banks, so that these defaulters are not sanctioned any loans or overdraft facility by Public Sector Banks, as the same would become NPAs.

5. Withdraw of facility like LPG etc.
Ministry of Finance can be suggested to withdraw facility like LPG Subsidy etc. which are directly credited in to the Bank A/cs, for the said defaulters i.e. Disincentive to be a tax defaulter.

6. Blocking registration of immovable properties
List of blocked PANs can be circulated to Registrar of Properties with a request for not allowing any registration of immovable properties

CBDT notifies tax exemption on investments above fair market rate for startups

*CBDT notifies tax exemption on investments above fair market rate for startups*

In a major incentive, startups can now issue shares to investors at higher than fair value without worrying about tax consequences.

In a major incentive, startups can now issue shares to investors at higher than fair value without worrying about tax consequences. 

The Central Board of Direct Taxes (CBDT) has notified the much awaited tax exemption on investments above fair market rate for startups. 

"The exemption provided to startups from the 'rigour' of section 56(2)(viib) of Income Tax Act has been long awaited," Amit Maheshwari, Partner Ashok Maheshwaryand Associates LLP, said. 

The effect of the CBDT's notification is that in case a startup gets investment from resident angel investors, family offices or funds which were not registered as venture capital funds, it will not be taxed even if the investment is made in excess to the fair value. 

"It has been a long standing industry demand to abolish this Angel tax," Maheshwari said. 

A startup is a company in which the public are not "substantially interested" and conforms to certain conditions as prescribed by the Department of Industrial Policy and Promotion (DIPP) in February this year. 

Under Indian tax law, if an Indian company receives share subscription amount from an Indian resident which exceeds the fair value of shares, then the excess amount is taxed as income of the Indian company, said Rajesh H Gandhi, Partner, Deloitte Haskins and Sells LLP. 

"The notification now exempts startups from this rigorous provision. This is a welcome relaxation and would ensure that startups can issue shares to investors at higher than fair value without worrying about any tax consequences," Gandhi said. 

A similar exemption already exists for Venture Capital Funds (VCFs). 

Maheshwari said this Angel tax still poses threat to earlier investments which could be perceived as being overvalued in light of the declining valuations globally and in India. 

Last week, the DIPP has launched a portal and mobile app through which startups can gather all latest updates on various notifications, circulars issued by various departments and different funding agencies. 

In January, Prime Minister Narendra Modihad unveiled a slew of incentives to boost startup businesses, offering them a tax holiday and inspector raj-free regime for three years, capital gains tax exemption and Rs 10,000 crore corpus to fund them.

Source: ET

Simplified Procedure-Form 15G-H

Simplification of Procedure for Form No. 15G & 15H — CBDT Clarifications

The CBDT vide Notification No. 9/2016 dt. 7th June, 2016 has clarified about the due date for quarterly uploading of 15G/H declarations by payers on e-filing portal & the manner for dealing with Form 15G/15H received by payer during the period from 1.10.2015 to 31.3.2016, as under:

The existing provisions of section 197A of the Income-tax Act, 1961('the Act') inter alia provide that tax shall not be deducted, if the recipient of certain payment on which tax is deductible furnishes to the payer a self-declaration in Form No.15G/15H in accordance with provisions of the said section. The manner of filing such declarations and the particulars have been laid down in Rule 29C of the Income-tax Rules, 1962 (`the Rules') w.e.f 1.10.2015 vide Notification No.76/2015 dated 29.09.2015.

2. As per sub-rule (7) and (8) of rule 29C of the Rules notified vide aforesaid notification, the Principal Director General of Income-tax (Systems) is required to specify the procedures, formats and standards for the purposes of furnishing and verification of the declaration and allotment of unique identification number. In pursuance of the same, Principal Director General of Income-tax (Systems) has issued Notification No. 4/2015 dated 1st December, 2015 to notify the procedure, formats and standards.

3. Representations have been received for clarification on the following issues:

(a) Due date for quarterly uploading of 15G/H declarations by payers on e-filing portal,

(b) The manner for dealing with Form 15G/15H received by payer during the period from 1.10.2015 to 31.3.2016.

4. In this regard, it is hereby specified that:

a) The due date for quarterly furnishing of 15G/15H declarations received by the payer from 1.4.2016 onwards shall be as given below:

SI. No	Date of ending of the quarter of the financial year	Due Date
1.	30th  June	15th  July of the financial year
2.	30th  September	15th  October of the financial year
3.	31st  December	15th  January of the financial year
4.	31st March	30th  April of   the   financial  year immediately following the financial year in which declaration is made.

(b) The payer shall furnish 15G/15H declarations received during the period from 1.10.2015 to 31.3.2016 on e-filing portal (http://incometaxindiaefiling.gov.in) in the  given format on or before 30^th June, 2016.

Separate date for furnishing 15G/15H

Separate date for furnishing 15G/15H announced by CBDT vide Notification dated 09-06-2016

Earlier, TDS return for June was required to be filed by 31st July, for Sep by 31st October, for December by 31st January, for March by 31st May as per N/N 30/2012 dtd. 29-04-2016.

No separate date was prescribed for 15G/15H.However now, separate dates for uploading 15G/15H have been provided vide Notification dated 09-06-2016.

Due Date for QE 30 June shall be 15th July, for 30th Sep shall be 15th October, for 31st December shall be 15th January and for 31st March it shall be 30th April

It means for first three quarters 15G/15H to be filed 16 days ahead of due date for TDS return and for last quarter a month ahead for TDS return, thus maintaining a time distance between the TDS return and 15G/15H so that information regarding 15G/15H may be timely submitted in TDS return.

Amended Rule 8D for computation of disallowance u/s 14A

CBDT notifies amended Rule 8D for computation of disallowance u/s 14A, clarifies that amount of disallowance as computed under Rule 8D shall not exceed total expenditure claimed by the assessee; Deletes sub-clause (ii) in Rule 8D(2) which dealt with computation of expenditure towards interest (not directly attributable to any particular income/ receipt) as per the prescribed formula; Increases the rate to be applied on annual average value of investments from 0.5% to 1%; Amended Rule shall come into force on the date of its publication in the Official Gazette: CBDT

Cost inflation index for F.Y.2016-17 will be 1125

Cost inflation index for F.Y.2016-17 will be 1125.

Notification No. 42/2016 dt 2 June 2016

Income Tax Provisions Applicable from 1st June 2016

Income Tax Provisions Applicable from 1^st June 2016

(i)         Amendment relating to Advance Tax (The change is effective from financial year 2016-17 onwards)

The schedule for payment of Advance Tax by an Individual and other non-corporate assessee has been amended w.e.f.  1^st June 2016 as under:

Due Date of Installment	Amount Payable
On or before 15th June	15% of Advance Tax
On or before 15th September	45% of Advance Tax
On or before 15th December	75% of Advance Tax
On or before 15th March	100% of Advance Tax

Earlier, there was no requirement of paying advance tax in respect of assessees’ who opted for non maintenance of books of accounts and declared profit @8% of gross receipts subject to a maximum of Rs. 1 crore which limit has been enhanced to Rs. 2 crores w.e.f. financial year 2016-17.

In case of such assesses’ (whose businesses are eligible for applying tax @8% on gross receipt) under section 44AD of the Act are also now required to pay 100% of the tax due on such income before 15^th March, from financial year 2016-17 onwards.

(ii)           Amendments relating to TDS and TCS

(a)          Increase in threshold limit of deduction of tax at source on various payments mentioned in the relevant sections of the Act

Section	Threshold Limit upto 31st May 2016 (Rs.)	Threshold Limit from 1st June 2016 (Rs.)
192A Payment of accumulated balance due to an employee by the trustees of the Employees Provident Fund Scheme , 1952	30,000	50,000
194BB Winnings from Horse Race	5,000	10,000
194C Payments to Contractors	Aggregate annual limit of  75000	Aggregate annual limit of  100000
194LA Payment of Compensation on acquisition of certain Immovable Property	2,00,000	2,50,000
194D Insurance commission	20,000	15000
194G Commission on sale of lottery tickets	1,000	15000
194H Commission or brokerage	5,000	15000

(b)  Revision in rates of deduction of tax at source on various payments mentioned in the relevant sections of the Act :-

Section	TDS Rates  up to 31st May 2016 TDS (%)	TDS  Rate w.e.f.  1st June 2016 (%)
194DA Payment in respect of Life Insurance Policy	2%	1%
194EE Payments in respect of NSS Deposits	20%	10%
194D Insurance commission	10%	5%
194G Commission on sale of lottery tickets	10%	5%
194H Commission or brokerage	10%	5%

(c)          Regarding : TCS on sale of Vehicles; Goods or services  :-

The following modifications have been made in the scheme of tax collection at source given under section 206C (with effect from 1^st June , 2016) –

Sub-section (1F) has been inserted.

This sub-section provides that every person (being a seller who receives any amount as consideration for sale of motor vehicle of value exceeding Rs. 10,00,000 shall collect the tax at the rate of 1 per cent of sale consideration .

This will be applicable whether payment is made by the purchaser in cash or by the issue of a cheque or draft or by any other mode.

Under the existing provisions of sub-section (1D) , seller of bullion (exceeding Rs. 2 lakhs) or jewellery (exceeding Rs. 5 lakhs)  is required to collect tax at source, if the consideration (or any part of it) is received in cash. In such case, tax was required to be collected at the rate of 1 per cent of sale consideration.

New provision

The requirement of collection of tax at source @ 1% from the buyer of goods or services exceeding Rs. 2 lacs has become effective from 1^st June, 2016 in case the transaction of purchase of goods or provision of services exceeds Rs. 2 lacs in part or fully is received in cash in case of a single invoice

To illustrate in case a purchase of Rs. 2,50,000/- is made through a single invoice and the buyer pays Rs. 1,50,000/- by cheque and Rs. 1 lac in cash the provision would be attracted and the seller would have to collect 1% of Rs. 2,50,000/-. 

However, provisions of sub-section (1D) will not be applicable in the following 2 cases –

(a)    No tax shall be collected at source on any amount on which tax has been deducted by the payer as applicable.

(b)    Provision of sub-section (1D) will not apply in relation to sale of any goods (other than bullion or jewellery) or service to such classes of buyer who fulfill such conditions, as may be prescribed (As yet no condition has been prescribed).

(iii)             Expenses incurred by the assessee towards specified services to be covered under section 40(a)(ib) [W.e.f. 1-6-2016]

A new levy @ 6% (referred to as Equalization  levy) has been made applicable to payment of online advertisements, provision for digital advertising space or any other facility or service for the purpose of online advertisements or any other notified services to a non-resident (who does not have a Permanent Establishment (PE) in India) provided to:

(a)         a resident in India  or

(b)         a non-resident having a Permanent Establishment (PE) in India

Equalization levy is to be deducted by the payer from the amount paid/ payable to the non-resident service provider.

Any consideration paid or payable (to non-resident for a specified service on which equalization levy is applicable) will be disallowed from June 1, 2016 (i.e. this assessment year 2017-18) in the following cases –

(a)   Equalization levy is deductible but such levy has not been deducted.

(b)  Equalization levy is deductible (and it is so deducted) but it is not deposited [on or before the due date of submission of return of income under section 139(1).

If, however, equalization levy is deducted / deposited in a subsequent year, the aforesaid consideration shall be allowed as a deduction in computing the income of the previous year in which such levy has been paid.

(iv)      Enabling of Filing of Form 15G/15H for rental payments [Section 197A]  [1-6- 2016

At present form 15G can be filled up by a resident assessee requesting for non-deduction of tax at source from certain payments made to him if his income is below the tax exemption limit, similarly, form 15H can be submitted by senior citizen ( above 60 years of age and very senior citizen above 80 years of age). The scope of income that can be included in the above forms is as under:

(i)              Amount received from withdrawal from Employees Provident Fund Scheme

(ii)            Dividend Income

(iii)          Interest other than Interest on Securities

(iv)          Sum received from Life Insurance Policy

(v)            Sum received from National Savings Scheme

(vi)           Rental income has also been allowed to be included in the declarations.

(v)        Relief to a non-resident for furnishing PAN [Section 206AA]

Section 206AA, inter alia, provides that any person (who is entitled to receive any sum on which tax is deductible at source) shall furnish his PAN to the deductor, failing which tax shall be deducted at the rate mentioned in the relevant provision or at the rate of 20 per cent, whichever is higher.

Amendment - Which effect from June 1, 2016, sub-section (7) of the said section has been substituted to provide that above provisions shall not apply to a non-resident / foreign company (who does not have PAN) subject to such condition as may be prescribed (as yet not prescribed).

(vi)      Amendment to section 133C

Section 133C empowers the prescribed income-tax authority to issue notice calling for information and documents for the purpose of verification of information in its possession. This section has been amended (with effect from June 1, 2016) to further provide that the information and documents so obtained by the prescribed income-tax authority may be scrutinized and the outcome of such scrutiny may be made available to the Assessing Officer for further necessary action, if any.

Other amendments not covered in detail effective from 1^st June 2016 which would be communicated in a separate mail which are being mentioned here under for the sake of information and are as under:-

(vii)        Income Declaration Scheme 2016 - This scheme will be effective from 1 June 2016 (already notified)

In case you have any income to declare you may discuss the same with us . The tax involved is 45% of the amount proposed to be declared and the eligibility for declaration is subject to certain specified conditions.

(viii)      The Direct Tax Dispute Resolution Scheme, 2016

In case you have any appeal proceedings pending before the Commissioner of Income Tax (Appeals) and the issue involved is not entirely in your favour you may decide to opt for said scheme.