Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

No disallowance u/s 40a(ia) if there is a shortfall in deduction or if deduction is done in wrong section

Conditions laid down under Section 40(a) (ia ) requires addition  to the income if
–       tax is deductible at source and
–       such tax has not been deducted.
If both the conditions are satisfied then such payment can be disallowed under Section 40(a)(ia ).
Provisions of Section 40(a)(ia) have two limbs,
  1. Assessee has to deduct tax and
  2. Where after deducting tax, the assessee has to pay into Government Account.
There is nothing in the said section to treat the assessee as defaulter where there is a shortfall in deduction.
The Section 40(a) (ia) refers only to the duty to deduct tax and pay it to the Government Treasury.
 If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under any of the TDS provisions, assessee can be declared to be an assessee-in-default under Section 201 and no disallowance can be made by invoking the provisions of Section 40(a )(ia)
INCOME TAX OFFICER vs. PREMIER MEDICAL SUPPLIES & STORES
ITAT, KOLKATA BENCH
Mahavir Singh, JM & C. D. Rao, AM.
ITA No. 1061/Kol/2010, 1062/Kol/2010 & C.O. No.86/Kol/2010, C.O. No.87/Kol/2010
28th October, 2011
(2012) 31 CCH 0269 KolTrib
(2012) 53 SOT 0263
Legislation Referred to
Section 40(a)(ia), 194H, 192, 291, 139
Case pertains to
Asst. Year 2006-07
Decision in favour of:
Assessee
Business Expenditure—Commission—Tax deduction at source—Disallowance u/s. 40(a)(ia)—Assessee company paid commission to its directors on the basis of net profit determined and was shown as liability in Balance Sheet—Assessee claimed deduction on payment of these commission being part of salary in terms of Articles of Association of Company and deducted TDS under s. 192—AO while framing assessment made a disallowance of this expenditure by applying the provision of s. 40(a)(ia) for not deducting TDS on commission as per provisions of s. 194H—CIT(A) deleted the addition made by the AO—Held, in the case of DCIT vs. S. K. Tekriwal in ITA No.1135/Kol/2010 dated 21.10.2011case, it was held that the conditions laid down under s. 40(a)(ia) are to be satisfied only then such payment can be disallowed under s. 40(a)(ia) but where tax is deducted by the assessee, even under bonafide wrong impression, under wrong provisions of TDS, the provisions of s. 40(a)(ia) cannot be invoked—Therefore, following the judgment in S.K. Tekriwal’s case, order of CIT(A) is confirmed—Appeals of the revenue are dismissed and Cross Objection of the assessee is also dismissed as infructuous
It is held that:
In view of the legal proposition discussed in the case law of DCIT vs. S. K. Tekriwal in ITA No.1135/Kol/2010 dated 21.10.2011, of this Tribunal, the court confirms the order of CIT(A) and the two appeals of revenue are dismissed. Since, the court has dismissed revenue’s appeal, the Cross Objections of the assessee being supportive to the order of CIT(A) needs no adjudication and dismiss as infructuous.
Short overview:
Conditions laid down under s. 40(a)(ia) for making addition is that tax is deductible at source and such tax has not been deducted, if both the conditions are satisfied then such payment can be disallowed under s. 40(a)(ia) but where tax is deducted by the assessee, even under bonafide wrong impression, under wrong provisions of TDS, the provisions of s. 40(a)(ia) cannot be invoked.
In favour of:
Assessee
Case referred to
Ran Prasad vs. CIT 86 ITR122
Gestetner Duplicators Pvt. Ltd. vs. CIT 117 ITR 1
DCIT vs. S. K. Tekriwal in ITA No.1135/Kol/2010 dated 21.10.2011
DCIT vs. M/s Chandabhoy & Jassobhoy dated 08.07.2011
Counsel appeared:
Ravi Tulsiyan for the Revenue.: M. Bhattacharya for the Assessee
ORDER
{JUDGMENT}PER BENCH
  1. These appeals by revenue and Cross Objections by assessee are arising out of orders of CIT(A)-XII, Kolkata in appeal Nos.416/CIT(A)-XII/Cir-11/09-10/Kol and 691/CIT(A)- XII/Ward-11 (4)/09-10/Kol dated 25.03.2010. Assessment for Assessment Year 2006-07 was framed by DCIT, Circle-11, Kolkata dated 30.10.2008 and assessment for Assessment Year 2007-08 was framed by ITO, Ward-11(4), Kolkata dated 30.11.2009 u/s. 143(3) of the Income Tax Act, 1961(hereinafter referred to as “the Act”). For the sake of brevity and clarity, we dispose of both these appeals and cross objections by this consolidated order.
  2. The only issue in these appeals of revenue and Cross Objections of assessee is against the order of CIT(A) in reversing the action of Assessing Officer in making the disallowance of commission payment by invoking the provisions of section 40(a)(ia) of the Act as the assessee has not deducted tax in terms of provisions of section 194H of the Act . The revenue has raised following common ground in both the years:
“On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition made u/s. 40(a)(ia) of the I. T. Act for violation of sec. 194H of the I. T. Act.”
  1. We have heard rival submissions and have gone through the facts and circumstances of the case. Brief facts are that the assessee is a distributor of pharmaceuticals products of M/s. Unichem Laboratories and UCB India Ltd., filed its returns of income on the basis of audited accounts. In these assessment years, the assessee company paid commission to its directors on the basis of net profit determined. Assessee claimed that the commission paid to directors was part of salary in terms of Articles of Association of Company. The assessee company’s net profit was determined on completion of accounts and commission was payable to directors, which was calculated as per accounts. The assessee company debited this commission in P&L Account and was shown as liability in Balance Sheet. The assessee treated this commission as part of salary and deducted TDS u/s. 192 of the Act at the time of payment of the same to directors in both the years. The assessee made TDS u/s. 192 of the Act but Assessing Officer while framing assessment made a disallowance of this expenditure by applying the provision of section 40(a)(ia) of the Act as according to him assessee has not deducted TDS on commission as per provisions of section 194H of the Act. Hence, he made disallowance by invoking the provisions of section 40(a)(ia) of the Act. Aggrieved, assessee preferred appeal before CIT(A). CIT(A) deleted the addition by treating the commission paid to directors as part of salary and held that the assessee has rightly applied the provisions of section 192 of the Act for deducting TDS under the head salary. The CIT(A) while deciding the issue has relied on the case of Hon’ble Apex Court in the case of Ran Prasad V, CIT ( ) 86 ITR122 and also Gestetner Duplicators Pvt. Ltd. Vs. CIT 117 ITR 1.
  2. Before us, the Ld. Sr. DR argued that Assessing Officer in para 3(a) and 3(b) of assessment order clearly stated that under provisions of section 291 of Companies Act, where directors who only direct the affairs of the company and not in service or employment of the company in the capacity of either Secretary or Manager or Accountant or otherwise, shall not be treated as employee of the company. He also argued that provisions have been made in the articles of Association for fees for the directors for attending Board Meetings. The right to fees for sitting in Board meetings makes the directors indisputably distinct and separate from employees. He also argued that nowhere in the Articles of Association, there is any clause in respect of employer-employee relationship which evidences the existence of an employer employee relationship. Therefore, payments made to the Managing Director/Directors are not the same as salary paid to employees and hence, according to him assessee was thus liable to deduct tax at source under the provision of section 194H of the Act. The company has failed to deduct tax accordingly. On the other hand, the Ld. Counsel Shri Ravi Tulsiyan heavily relied on the decision of ITAT, Kolkata “C” Bench in the case of Jahangir Biri Factory (P) Ltd. Vs. DCIT, ITA No. 1173/Kol/2008, A.Y 2005-06 and stated that the Tribunal has held that the commission paid to directors as per terms of employment for the work done in their capacity as whole-time directors is to be treated as incentive in addition to salary, etc. and did not come within the purview of commission and brokerage as defined in section 194H or fee for professional or technical services as defined in s. 194J and therefore, same cannot be disallowed under s. 40(a)(ia) of the Act.
  3. After hearing the rival submissions, we find that, admittedly, the assessee has deducted tax u/s. 192 of the Act under the head salary and this fact has not been denied by revenue. Revenue’s contention is that this particular payment i.e. commission paid to directors was not part of salary and it is only commission, reason being there was no employer employee relationship between company and directors and further no contractual relationship existed there. Without going into this controversy, even though the issue is covered in favour of the assessee, we are of the view that the assessee has deducted tax in both years u/s. 192 of the Act under the head salary and in view of this, this issue is covered in favour of assessee by the decision of this Tribunal “B” Bench of Kolkata in the case of DCIT Vs. S. K. Tekriwal in ITA No.1135/Kol/2010 dated 21.10.2011, wherein it held as under:
  4. From the order of CIT(A), we find that CIT(A) has gone into the controversy of assessee falling under the head ‘sub contractor’ or falling under the head ‘rent’, the expenses made under the head ‘machinery hire charges’. It is also a fact that the assessee has deducted TDS u/s. 194C(2) of the Act and covered itself under the head ‘sub contractor’. We find that CIT(A) after verifying records and explanation submitted by assessee reached to a conclusion that payments are in the nature of contract payments made to sub contractors. On merits, we are in agreement with the findings of CIT(A) and even revenue before us could not controvert the same. Another facet of this issue is that once the assessee has deducted TDS u/s. 194C(2) of the Act, whether disallowance can be made by invoking the provisions of section 40a(ia) of the Act. The relevant provision reads as under:“40a(ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under chapter XVII-B and such tax has not been deducted or after deduction has not been paid on or before the due date specified in subsection (1) of section 139:”
    In this provision it is provided that where in respect of any sum, as referred in this section, tax has not been deducted or after deduction has not been paid on or before the due date specified in sub-section (1) of section 139 of the Act, such sum shall be disallowed as a deduction while computing the income of the assessee for the previous year relevant to AY under consideration. But in the present case before us, the assessee has deducted tax, although u/s. 194C(2) of the Act and it is not a case of non-deduction of tax or no deduction of tax as is the import of section 40a(ia) of the Act. Even otherwise if it is considered that this particular sum falls under section 194I of the Act, it may be considered as tax deducted at a lower rate and it cannot be considered a case of non- deduction or no deduction. Similar view is taken by ‘C’ Bench of Mumbai ITAT in ITA No. 20/Mum/2010 in the case of DCIT v M/s Chandabhoy & Jassobhoy dated 08.07.2011, wherein it is held that there is no dispute with reference to the deduction of tax u/s 192 of the Act with the fact that the alleged consultants, in their individual assessments declared these payments as salary payments and accepted by revenue as it is. Further, it is held that the assessee had deducted tax u/s. 192 of the Act as against the allegation of revenue that the provisions of section 194J of the Act would be attracted as these consultants are in the capacity of professionals. The Bench held that the provisions of section 40(a)(ia) of the Act will not apply as the said provision can be invoked only in the event of non-deduction of tax but not for lesser deduction of tax. In that case the assessee has deducted tax u/s. 192 of the Act as against section 194J of the Act as against the claim of revenue.
  5. In the present case before us the assessee has deducted tax u/s. 194C(2) of the Act being payments made to sub-contractors and it is not a case of non-deduction of tax or no deduction of tax as is the import of section 40a(ia) of the Act. But the revenue’s contention is that the payments are in the nature of machinery hire charges falling under the head ‘rent’ and the previous provisions of section 194I of the Act are applicable. According to revenue, the assessee has deducted tax @ 1% u/s. 194C(2) of the Act as against the actual deduction to be made at 10% u/s. 194I of the Act, thereby lesser deduction of tax. The revenue has made out a case of lesser deduction of tax and that also under different head and accordingly disallowed the payments proportionately by invoking the provisions of section 40(a)(ia) of the Act. The Ld. CIT, DR also argued that there is no word like failure used in section 40(a)(ia) of the Act and it referred to only non-deduction of tax and disallowance of such payments. According to him, it does not refer to genuineness of the payment or otherwise but addition u/s. 40(a)(ia) can be made even though payments are genuine but tax is not deducted as required u/s. 40(a)(ia) of the Act. We are of the view that the conditions laid down u/s. 40(a)(ia) of the Act for making addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied then such payment can be disallowed u/s. 40(a)(ia) of the Act but where tax is deducted by the assessee, even under bonafide wrong impression, under wrong provisions of TDS, the provisions of section 40(a)(ia) of the Act cannot be invoked. Here in the present case before us, the assessee has deducted tax u/s. 194C(2) of the Act and not u/s. 194I of the Act and there is no allegation that this TDS is not deposited with the Government account. We are of the view that the provisions of section 40(a)(ia) of the Act has two limbs, one is where, inter alia, assessee has to deduct tax and the second where after deducting tax, inter alia, the assessee has to pay into Government Account. There is nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction. With regard to the shortfall, it cannot be assumed that there is a default as the deduction is not as required by or under the Act, but the facts is that this expression, ‘on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction has not been paid on or before the due date specified in sub-section (1) of section 139’. This section 40(a)(ia) of the Act refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s. 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act.” 
  6. After going through the facts and circumstances of the case, legal proposition discussed in the case law of S. K. Tekriwal (supra) of this Tribunal, we confirm the order of CIT(A) and these two appeals of revenue are dismissed. Since, we have dismissed revenue’s appeal, the Cross Objections of the assessee being supportive to the order of CIT(A) needs no adjudication and dismiss as infructuous.
  7. In the result, both appeals of revenue and Cross Objections of assessee are dismissed.
  8. Order pronounced in open court on 28.10.2011 (Refer:https://thetaxtalk.com/2020/01/15/landmark-judgment-no-disallowance-u-s-40aia-if-there-is-a-shortfall-in-deduction-or-if-deduction-is-done-in-wrong-section/)
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Time limit of UDIN generation -15 days from 1st Jan., 2020 - (31-12-2019)


Time limit of UDIN generation -15 days from 1st Jan., 2020
Members may kindly note that as per the Council decision taken at its 386th Meeting held on 18th and 19th September, 2019 on one-time relaxation of 30 days for generating UDIN on Certificates / Reports / Documents signed between 20th August, 2019 to 31st December, 2019 will lapse on 31st Dec., 2019.

Accordingly, from 1st Jan., 2020 onwards, Members will be required to generate UDIN within 15 days only, for all Certificates / Reports / Documents signed on or after 1st Jan., 2020.

For any clarification, please write us at udin@icai.in.


Convenor                                                                                                          Deputy Convenor
UDIN Monitoring Group                                                                                  UDIN Monitoring Group
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Prosecution proceeding by Income Tax Department increased by 184% CBDT


SHARP INCREASE IN PROSECUTION OF TAX EVADERS BY INCOME-TAX DEPARTMENT

CBDT PRESS RELEASE, DATED 12-1-2018

The Income Tax Department has accorded the highest priority to tackle the menace of black money. With this objective in mind, the Department has initiated criminal prosecution. Proceedings in a large number of cases of tax offenders and evaders.

Prosecutions have been initiated for various offences including wilful attempt to evade tax or payment of any tax; wilful failure in filing returns of income; false statement in verification and failure to deposit the tax deducted/collected at source or inordinate delay in doing so, among other defaults.


During FY 2017-18(upto the end of November, 2017), the Department filed Prosecution complaints for various offences in 2225 cases compared to 784 for the corresponding period in the immediately preceding year, marking an increase of 184%. The number of complaints compounded by the Department during the current FY (upto the end of November, 2017) stands at 1052 as against 575 in the corresponding period of the immediately preceding year, registering a rise of 83%. Compounding of offences is do when the defaulter admits to its offence and pays the compounding fee as per stipulate conditions.

Due to the decisive and focused action taken by the Department against tax evaders, the number of defaulters convicted by the courts has also registered a sharp increase during the current fiscal. 48 persons were convicted for various offences during the current year(upto the end of November, 2017) as compared to 13 convictions for the corresponding period in the immediately preceding year, marking an increase of 269%.

A few illustrative cases are highlighted.

i. A Dehradun Court convicted one defaulter for holding undisclosed foreign bank account and sentenced him to two years of imprisonment for wilful attempt to evade tax and to two years for false statement in verification alongwith monetary penalty for each default respectively.

ii. The Court of CJM, Jalandhar convicted a cloth trader with 2 years rigorous imprisonment for trying to cheat the Department. By fabricating affidavits and gift deeds, in connivance with his advocate and witness. With the motive of evading tax. The Court, while awarding the sentence to the trader. Also simultaneously awarded one year’s imprisonment to the advocate notarizing the forged affidavit and also to the witness for aiding and abetting the serious offence.


iii. In Bengaluru, the MD of a company engage in infrastructure projects. Was find guilty of non-deposit of TDS of over Rs. 60 lakh(within the prescribed time), and was sentence to rigorous imprisonment of three months along with imposition of fine. Similarly, a Mohali resident was hold guilty of non-deposit of TDS within prescribe time. And sentence to one year jail along with fine.

iv. In another case of Hyderabad, the Director of an infrastructure company was sentence. To rigorous imprisonment of six months and fine for willful attempt to evade tax. She was simultaneously sentenc to rigorous imprisonment for six months along with fine for false statement in verification.

v. The Economic Offences Court at Ernakulam sentenced an individual to rigorous imprisonment of three months for selling property. To evade payment of taxes of about Rs. 76 lakh despite issuance of the tax recovery certificate by the Tax Recovery Officer.vi. In yet another case reported from Agra, the Special CJM convicted one defaulter with imprisonment of one year & six months for wilful attempt to evade tax and for false statement in verification respectively alongwith fine.

The Income Tax Department is commit to carry forward the drive against tax evasion. And action against tax evaders will continue in all earnest in the remaining part of the current Financial Year.
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Delayed payment of PF/ESIC Contribution & its deduction in the hands of the employer

There are lot many taxpayers who are subject to similar disallowance not only in AY 2017-18 but also in earlier and subsequent assessment years. CPC, Bengaluru is also processing the return by making disallowance of ESIC/PF in respect of employee’s share of contribution if the amount is deposited after the due date of deposit permissible under the relevant PF/ESIC Act. Let us first check the provision of Income Tax Act – 1961 on the issue and then we can discuss the available recourse for it.
  1. Under section 2(24)(x), any sum received by employer from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the ESIC Act, 1948  or any other fund for the welfare of such employees is considered as “Income” in the hands of the employer. However, deduction in respect of such amount is admissible u/s 36(1)(va) if such amount is deposited within due date under the relevant ESIC/PF Act.
    In short, amount deducted by employer as employee’s share of PF/ESIC etc is first treated as income in the hands of the employer and then deduction is given to the employer u/s 36(1)(va) if the amount is deposited within due date prescribed under those Act. Coming to your specific query, if there is a delay in payment of employee’s share of PF/ESIC etc then said sum is clearly disallowable u/s 36(1)(va).
  2. However, there is another provision, section 43B which allows the deduction towards some expenditure on actual payment basis. Clause (b) to Section 43B provides for deduction towards payment of PF/ESIC etc contribution if the payment is done before the due date of filing Income Tax Return (ITR). Question arises, whether deduction u/s 43B shall be available even in respect of payment of “employee’s share of PF/ESIC” covered u/s 36(1)(va) also or it is available in respect of “Employer’s share” alone?
  3. CBDT has issued Circular No. 22/2015 dated 17.12.2015 wherein it has clarified that,
    a] Deduction u/s 43B is permissible towards “Employer’s share of contribution” if it is deposited by the employer before the due date of filing the income tax return (i.e., even if it is deposited after the due date specified under PF/ESIC Act)
    b] Deduction u/s 43B is not permissible towards “Employee’s share of contribution” if it is deposited by the employer after the due date specified under PF/ESIC Act even though the deposit is done before the due date of filing ITR.
  4. In my opinion, above circular appears to be against the legislative intent for the following reasons.
    a] Clause (b) to section 43B refers to “any sum payable by the assessee….”. It doesn’t distinguish between employer contribution vis a vis employee contribution. In my view, Section 43B applies to both ‘contributions’ i.e. employers’ and employees’.
    b] Section 43B have an overriding effect over other provisions of the Act as it starts with a non-obstante clause and overrides all other provisions of the Act [including section 36(1)(va)]. The validity of deduction has been upheld in the following cases as well:
  5. iSagun Foundry Private Limited vs. CIT (2017) 291 CTR 557 (All)
  6. iiCIT Vs Ghatge Patil Transports Ltd., (2014) 368 ITR 749 (Bombay)
  7. iii.  CIT Vs Hemla Embroidery Mills (P.) Ltd (P&H).
    1. CIT Vs Udaipur Dugdh Utpadak Sahakari Sangh Ltd., (2014) 366 ITR 163 (Raj)
    2. CIT Vs Rai Agro Industries Ltd., (2011) 334 ITR 122
    3. CIT Vs Sabri Enterprises, (2008) 298 ITR 141 (Kar).
    Remedy:
    Whether it is a disallowance in scrutiny assessment or by CPC, taxpayer have no other options but to file an appeal with the Commissioner of Income Tax (Appeal) for seeking relief u/s 43B.
    Suggestion:
    Availability of above deduction u/s 43B is rightly upheld by various courts. Circular No. 22/2015 has caused in hardship in numerous cases as CPC processing is system driven which is mechanically disallowing the claim without considering the judicial pronouncements of allowing deduction u/s 43B. For ease of business, the said Circular should be withdrawn by the CBDT immediately as it is not in accordance with the basic provision of taxation which provides for allowance of all business expenditure & taxation of real income. Refer:-https://thetaxtalk.com/2020/01/13/delayed-payment-of-pf-esic-contribution-its-deduction-in-the-hands-of-the-employer/
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Tax Department Eases Eligibility Rules On ITR Forms 1 And 4

Easing restrictions imposed on taxpayers a week ago, the Central Board of Direct Taxes (CBDT) on Thursday said that it will allow joint owners of single house property to file income tax returns (ITR) using simple Form-1 (Sahaj) or Form-4 (Sugam).
Earlier this month on 3 January, the tax department had issued new forms for financial year 2019-20 (assessment year 2020-21) wherein it had debarred individual taxpayers owning house property in joint ownership and those who paid Rs 1 lakh in electricity bills in a year or incurred Rs 2 lakh expense on foreign travel from filing their annual income return using the simple return forms.
"After the notification, concerns have been raised that the changes are likely to cause hardship in the case of individual taxpayers," the CBDT's statement said.
According to the statement, the issue was examined and "it has been decided to allow a person, who jointly owns a single house property, to file his/her return of income in ITR-1 or ITR-4 Form, as may be applicable, if he/she meets the other conditions".
"It has also been decided to allow a person, who is required to file return due to fulfilment of one or more conditions specified in the seventh proviso to section 139 (1) of the Act, to file his/her return in ITR-1 Form," it added.
Unlike the usual practice to release ITR forms at the start of the new assessment year (in April), in line with ITR filing season, the CBDT notified forms for the assessment year 2020-21 (income earning year April 1, 2019 to March 31, 2020) on 3 January.
The notification released earlier this month made two major changes:
  • an individual taxpayer cannot file return either in ITR-1 or ITR4 if he is a joint-owner in house property.
  • ITR-1 form is not valid for those individuals who have deposited more than Rs 1 crore in bank account or have incurred Rs 2 lakh or Rs 1 lakh on foreign travel or electricity respectively.
These taxpayers were notified to use different forms, which would have been notified in due course.
The tax department said that CBDT to ensure that the e-filing utility for filing of return for assessment year (AY) 2020-21 is available as on 1 April 2020, ITR forms 1 and 4 were notified in January.
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Electronic payment mandatory for businesses over Rs 50 crore from November 1: CBDT

The government has also prohibited banks and payment system providers from imposing any charge on transactions through electronic modes of payments


Government has asked businesses with turnover exceeding Rs 50 crore to mandatorily provide electronic modes of payment from November 1. To this end, a new provision, namely Section 269SU, has been inserted in the Income-tax Act, said Central Board of Direct Taxes in a statement on Friday.
The CBDT further said that another provision, Section 10A, has been added to Payment and Settlement Systems Act. The provision prohibits banks and payment system providers from imposing any charge on transactions through electronic modes of payments specified in Section 269SU of the Income-tax Act.
These new provisions will come into effect from November 1, 2019, the CBDT said. The Centre has invited applications from banks and system providers to include their payment systems under the list of prescribed modes of digital transaction under Section 269SU.
In her Budget speech earlier this year, Finance Minister Nirmala Sitharaman had proposed to add a section to the Income-tax Act directing business with an annual turnover over Rs 50 crore to provide low-cost electronic modes of payments. These include systems like BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, NEFT and RTGS.
For ensuring compliance, a suitable penalty provision is also proposed to be inserted in the Act, the Finance Minister had said. In line with this, the Finance (No 2) Act 2019 prescribes a penalty of Rs 5,000 for every day that an eligible entity fails to comply with Section 269SU.
Refer:www.businesstoday.in
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Corporate Affairs Ministry asks disqualified directors to ensure compliance or face action


The registrar of companies (RoCs) is in the process of identifying and flagging directors who have been disqualified for non-filing of financial statement or annual return for three continuous years starting from 2015-16.

The corporate affairs ministry has asked disqualified directors to file their pending statutory returns and ensure compliance or else face regulatory action. As part of larger crackdown on companies suspected to be shell entities, the ministry had disqualified many individuals from holding directorship till compliance with regulatory requirements is fulfilled.

The registrar of companies (RoCs) is in the process of identifying and flagging directors who have been disqualified for non-filing of financial statement or annual return for three continuous years starting from 2015-16.

All the defaulting directors are cautioned to file their pending statutory returns and do necessary compliance as per provisions of the law or that action would be initiated, according to a communication posted on the ministry's website.

"The director identification numbers (DINs) of such directors are not allowed to be used for filing any e-forms on MCA21 portal," it added.

Statutory filings under the Companies Act are submitted to the ministry through the MCA21 portal.

Lakhs of companies have been deregistered in recent years and a significant number of directors of have been disqualified.

Sandeep Jhunjhunwala, director at Nangia Andersen LLP, said the ministry has cautioned such directors to complete required statutory compliances or face the wrath of the law.

"This is definitely aimed at instilling a culture of compliance, increasing investors' confidence and most significantly, tightening the noose on defaulting directors.

"Rulings from various high courts against a spate of writ petitions filed earlier, had made clear than Sec 164(2)(a) disqualification would apply for disqualifying the directors of the company, if it fails to file annual returns for three financial years, beginning April 1, 2014," he noted.
Refer:www.moneycontrol.com/
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Rs 95,380 cr Gross GST Revenue collected in October

The gross GST revenue collected in the month of October, 2019 is ₹ 95,380 crore of which CGST is ₹ 17,582 crore, SGST is ₹ 23,674 crore, IGST is ₹ 46,517 crore (including ₹ 21,446 crores collected on imports) and Cess is ₹ 7,607 crore (including ₹ 774 crores collected on imports). The total number of GSTR 3B Returns filed for the month of September up to 31st October, 2019 is 73.83 lakh.

The government has settled ₹ 20,642 crores to CGST and ₹ 13,971 crore to SGST from IGST as regular settlement. The total revenue earned by Central Government and the State Governments after regular settlement in the month of October, 2019 is ₹ 38,224 crores for CGST and ₹ 37,645 crores for the SGST.

The revenue during October, 2019 is declined by 5.29% in comparison to the revenue during October, 2018. However, during April-October, 2019 vis-à-vis 2018, the domestic component has shown 6.74% growth while the GST on imports has shown negative growth and the total collection has grown by 3.38%.

The chart shows trends in revenue during the current year.

Read more at: https://www.taxscan.in
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₹ 91,916 cr Total Gross GST Revenue collected in the month of September, 2019, says Finance Ministry

The total gross GST revenue collected in the month of September, 2019 is ₹ 91,916 crore of which CGST is ₹ 16,630 crore, SGST is ₹ 22,598 crore, IGST is ₹ 45,069 crore (including ₹ 22,097 crores collected on imports) and Cess is ₹7,620 crores (including ₹ 728 crores collected on imports). The total number of GSTR 3B Returns filed for the month of August up to 30th September, 2019 is 75.94lakh.

he government has settled ₹ 21,131 crores to CGST and ₹ 15,121 crores to SGST from IGST as regular settlement. The total revenue earned by Central Government and the State Governments after regular settlement in the month of September 2019 is ₹ 37,761 crores for CGST and ₹ 37,719 crores for the SGST.

The revenue during September, 2019 is declined by 2.67% in comparison to the revenue during September, 2018. During April-September, 2019 vis-à-vis 2018, the domestic component has grown by 7.82% while the GST on imports has shown negative growth and the total collection has grown by 4.90%.

Read more at: https://www.taxscan.in/%e2%82%b9-91916-cr-total-gross-gst-revenue-collected-month-september-2019-finance-ministry/38305/
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DIN System of CBDT launched; About 17500 Communications with DIN Generated on First day

The Documentation Identification Number ( DIN ) system of Central Board of Direct Taxes (CBDT) has come into existence from today with the generation of about 17,500 communications with DIN on the very first day. This path-breaking DIN system has been created as per the direction of Finance Minister Ms. Nirmala Sitharaman and from now onwards every CBDT communication will have to have a documentation identification number.

Revenue Secretary Dr Ajay Bhushan Pandey said, “From today, any communication from Income Tax Department without a computer-generated DIN, be it a notice, letter, order and summon or any other correspondence, would be treated as invalid and shall be non est in law or deemed to be as if it has never been issued. The DIN system would ensure greater accountability and transparency in tax administration.”

“Now from today onwards, all such communications with DIN would be verifiable on the e-filing portal and no communication would be issued manually without DIN except only if it is in the specified exceptional circumstances”, said Dr. Pandey.

It would be pertinent to mention here that while specifying such exceptional circumstances the CBDT Circular related to DIN dated 14.08.2019 says that whenever any such manual communication would be issued, it would be necessarily required to specify reason of issuing such a communication without DIN along with the date of obtaining written approval of the Chief Commissioner/Director General of Income Tax in a particular format. Any communication which is not in conformity of with the prescribed guidelines shall be treated as invalid and non est in law.

The CBDT has specified that any communication issued manually under exceptional circumstances would have to be uploaded and regularised on the system portal within 15 days of its issuance.

The CBDT has also stated that all pending assessment proceedings, where notices were earlier issued manually, prior to the DIN related Circular dated 14.08.2019 coming into existence, all such cases would be identified and notices so sent would be uploaded on ITBA by the end of this month, i.e., by 31st Oct 2019.

This is in pursuance of the directions by the Hon’ble Prime Minister in which he has asked the Department of Revenue to come up with specific measures to ensure that the honest taxpayers are not harassed and served better. It may be noted that earlier there have been some instances where it was not possible to maintain the audit trail of the manually issued communication which in some cases caused inconvenience to taxpayers sometime. However, with the present system of attaching a DIN to every notice or communication of CBDT would result in better services to taxpayers without any possible harassment.

Read more at: https://www.taxscan.in/din-system-cbdt-launched-17500-communications-din-generated-first-day/38310/
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