Others
New criteria for identifying New Assessees :-
With a view to bring larger number of persons in the tax net, now any person who satisfies even one of the following six indicators is required to file a tax return: -
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^TopIs the Specified Floor Area Different for Different Cities?
Yes. Floor area of the immovable property for urban agglomeration of different cities has been specified. Complete details and specification(s) of some cities are given in the table on the next page.
| Used for residential purposes (other than huts & kutcha dwellings) | Used for Commercial purposes | ||
| Sr. No. | City | (sq.ft) | (sq.ft) |
| 1 | 2 | 3 | 4 |
| (i) | Delhi | 600 | 100 |
| (ii) | Mumbai | 600 | 100 |
| (iii) | Chennai | 1000 | 125 |
| (iv) | Calcutta | 1000 | 125 |
| (v) | Bangalore | 800 | 125 |
| (vi) | Hyderabad | 1100 | 125 |
| (vii) | Ahmedabad | 800 | 125 |
| (viii) | Chandigarh | 1100 | 175 |
| (ix) | Vadodara | 1100 | 175 |
| (x) | Trivandrum | 1100 | 175 |
| (xi) | Bhopal | 1100 | 175 |
| (xii) | Visakhapatnam | 1100 | 175 |
| (xiii) | Lucknow | 1100 | 175 |
| (xiv) | Jamshedpur | 1100 | 175 |
| (XV) | Nagpur | 1100 | 125 |
| (xvi) | Ahmednagar | 1500 | 225 |
| (xvi) | Alleppey | 1500 | 225 |
| (xviii) | Amritsar | 1100 | 175 |
| (xix) | Asansol | 1100 | 175 |
| (XX) | Bhubaneshwar | 1100 | 175 |
| (xxi) | Ghaziabad | 600 | 100 |
| (xxii) | Imphal | 1500 | 225 |
| (xxiii) | Kharagpur | 1500 | 225 |
| (xxiv) | Mysore | 1100 | 175 |
| (xxv) | Noida | 600 | 100 |
| (xxvi) | Ranchi | 1100 | 175 |
| (xxvii) | Salem | 1100 | 175 |
| (xxviii) | Shillong | 1500 | 225 |
| (xxix) | Vellore | 1500 | 225 |
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Has the one-by-six scheme been
extended to more cities?
Yes, the one by six scheme has been extended from 133 cities to 4) 989 cites now.
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Is there any exemption for senior-citizens?
Yes. If an individual, aged 65 years or more, not earning income from business or profession, will not be required to file a return under this scheme, if he has a telephone connection or immovable property in his name. But, if they fulfil any of the other four criteria, then they have to file their return under this scheme.
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Are there any special exemptions for travel to neighbouring countries?
Yes. Travel to any foreign country shall not include travel to the neighbouring countries and places of pilgrimage viz. Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka as notified by Central Board of Direct Taxes in the Official Gazette on 20th August, 1998 through Notification No. 10676. Mecca has also been so notified.
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Is there any penalty for non-filing of return under this scheme?
Yes. In case the return of income is not furnished, although required on the basis of above indicators, the assessee could be fined Rs.5000.
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Rebate of Income Tax How is the rebate of Income Tax calculated?
A tax rebate @ 20% of the specified payments is allowable u/s 88 of I.T. Act. From A.Y.2001-02 the maximum limit of rebate is Rs. 16,000. For authors, artists & sportsmen, it is 25%, but the limit is Rs. 17,500.
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Yes, the one by six scheme has been extended from 133 cities to 4) 989 cites now.
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Is there any exemption for senior-citizens?
Yes. If an individual, aged 65 years or more, not earning income from business or profession, will not be required to file a return under this scheme, if he has a telephone connection or immovable property in his name. But, if they fulfil any of the other four criteria, then they have to file their return under this scheme.
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Are there any special exemptions for travel to neighbouring countries?
Yes. Travel to any foreign country shall not include travel to the neighbouring countries and places of pilgrimage viz. Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka as notified by Central Board of Direct Taxes in the Official Gazette on 20th August, 1998 through Notification No. 10676. Mecca has also been so notified.
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Is there any penalty for non-filing of return under this scheme?
Yes. In case the return of income is not furnished, although required on the basis of above indicators, the assessee could be fined Rs.5000.
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Rebate of Income Tax How is the rebate of Income Tax calculated?
A tax rebate @ 20% of the specified payments is allowable u/s 88 of I.T. Act. From A.Y.2001-02 the maximum limit of rebate is Rs. 16,000. For authors, artists & sportsmen, it is 25%, but the limit is Rs. 17,500.
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Who can claim Rebate u/s 88?
An individual or an H.U.F. can claim this rebate. ON WHICH PAYMENTS IS TAX REBATE AVAILABLE?
It is available on the following payments:-
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What is the fee for filing appeal(s)?
The fee for filing appeals by the assessees is given below:-
Particulars Fee for filing the appeal before CIT(A) Fee for filing the appeal before ITAT
Assessed total income Rs. 250 Rs.500
Rs. 1 lakh or less
Assessed total income Rs. 500 Rs.1500
is more than 1 lakh but not more
than 2 lakhs
Appeals involving total Rs. 1000 1% of the assessed income subject to a max of Rs.10000
income more than 2 lakhs
Appeals under other Rs. 250 Rs.1000
Direct taxes
Miscellaneous Nil Rs.50
applications under sec.254(2)
Stay petitions Nil Rs.500
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Jurisdiction of civil courts barred
In view of the elaborate appellate system provided under Direct Tax Laws, the Jurisdiction of Civil Courts is barred. No suit under the Direct Tax Laws can be filed in any Civil Court.
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Refunds: how to get them fast
If any person proves to the Assessing Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable tinder the I. T. Act, 1961 for that year, then he is entitled to a refund of the excess amount.
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Who is entitled to claim a refund?
Primarily the person who paid tax or on whose behalf the tax is treated as paid by him or on whose behalf such tax has been paid, is entitled to claim the refund. But where the income of one person is included under any provision of this Act in the total income of any other person the latter alone is entitled to a refund in respect of such income.
Also, where through death, incapacity, insolvency, liquidation or other cause, a person is unable to claim or receive any refund due to him, his legal representative or the trustee or guardian or receiver, as the case may be, is entitled to claim or receive such refund for the benefit of such person or his estate.
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Is there form of claiming a refund and what is the limitation for such a claim?
Yes. Every claim for refund is to be made in Form No.30 and normally no such claim is to be allowed, unless it is made within the period of one year from the last day of such assessment year.
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Can a refund be claimed even beyond the period of one year?
Yes. The CBDT through its order dated 12.10.93 [F.No. 225/208/93-ITA (A-II)] allowed belated refund claims in cases where the refund arises.
The situations when refunds can be claimed are: -
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Has a claim also to be made before the assessing officer in case of a refund arising on appeal?
No. Where as a result of any order passed in appeal or other proceeding under the I. T. Act, 1961 a refund of any amount becomes due to the assessee, the Assessing Officer is to refund the amount to the assessee without his having to make any claim in that behalf..
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Are there any exceptions to this procedure?
Yes, in case the assessment is set aside or cancelled and an order of fresh assessment is directed to be made in appeal, the refund, if any, becomes due only after the fresh assessment order is passed..
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If the assesment is annulled, has the Tax paid even on returned Income to be refunded?
No. If the assessment is annulled, the refund becomes due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee..
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An individual or an H.U.F. can claim this rebate. ON WHICH PAYMENTS IS TAX REBATE AVAILABLE?
It is available on the following payments:-
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Is there a special Rebate of
Income Tax avaliable to persons who have attained the age of 65 years?.
Yes. Now, w.e.f. A.Y. 2001-02, an individual who is of the age of 65 years or more at any time during the previous year, would be entitled to a rebate U/S 88B from the amount of Income-tax chargeable on his total income equal to hundred per cent of such income-tax or an amount of Rs. 15,000, whichever is less.
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Is there a special Tax Rebate for lady assessees below the age of 65 years?
Yes. A new section 88C has been introduced w.e.f. 1.4.01 applicable from the A.Y.2001-02. Now a lady assessee would be entitled to a rebate from the amount of Income-tax chargeable on her total income equal to hundred per cent of such income-tax or an amount of Rs. 5,000, whichever is less, before allowing any rebate / relief under Chapter-VIII of the IT Act, 1961.
To claim this rebate the lady has to be resident in India in the year in which the rebate is claimed.
If a lady crosses age 65 years during the financial year, would benefit of sec. 88b be available to her?
Yes. She has to be below the age of 65 years, at any time during the previous year.
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Is it true that a special rebate of Income Tax, on subscription to shares and debentures, is available to Tax payers?
Yes. effective from A.Y. 97-98 and subsequent years, a tax rebate of a sum equal to twenty per cent is available, of the amounts invested in debentures of and equity shares in a public company engaged in development, of infrastructure sector, including power, telecommunication etc.
The following are the salient features of these provisions:-
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Has a special rebate been given for low paid salaried employees?
Yes. With a view to provide greater incentive for the marginal savings,. with effect from 1st April, 2002, ie. in relation to the assessment year 2002-2003 and subsequent years, in the case of a taxpayer having a gross salary income which does not exceed rupees one lakh (before allowing deduction under section 16 ) and which is not less than 90% of his gross total income from all sources, the amount of rebate on savings would be 30% instead of normal rebate of 20%.
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What are the precautions to be taken when allowing Rebate(s) under chapter-viii?
Firstly, rebate(s) are allowed from the amount of Income- tax computed before allowing such rebate(s).Secondly, the rebate(s) should not exceed the amount of income-tax computed before allowing such rebate(s).
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In case Tax Rebate is allowed in an assessment year, can it be withdrawn in a subsequent assessment year?
Yes. The tax rebate once allowed can be withdrawn subsequently in the following cases:-
In above cases, the aggregate amount of the deductions/rebate so
allowed shall be deemed to be tax payable for the A.Y. in which the contract
of insurance is terminated/ceased or the property is sold or the amount is
received back, as the case may be.
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Can you claim Tax Rebate in respect of long term capital gains?
No. As per section 112(3) tax rebate u/s. 88 cannot be claimed in respect of tax on long term capital gains. However, senior citizens are entitled to tax rebate u/s. 88B even in respect of tax on long term capital gains provided their Gross Total Income, including Long Term Capital Gains, does not exceed Rs. 1,20,000.
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Is tax rebate allowable even if lic premium is in excess of 10% of sum assured?
Now, w.e.f. 1996-97 and subsequent years, rebate of premium paid on LIC policies will still be available even when the premium paid is in excess of 10% of the actual sum assured.However, if the policy is surrendered within two years of the date of insurance the amount of rebate allowed earlier, would be treated as income tax payable in the year of such surrender.
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What should be the source of such payment or deposit?
The source must be income chargeable to tax during the relevant previous year [ Para 7.4 of circular No. 15/2001 F.No.275/192/2001 - IT(B)] dated 12.12.2001
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What is the duty of the DDO before allowing claims of Tax Rebates?
The DDO Officer is duty bound to be satisfied about the actual deposits/ payments made by the employees, by calling for such information as they deem necessary before allowing the rebate(s). In case the DDO is not satisfied about the genuineness of the employee's claim regarding any deposit/payment made by the employee, he should not allow the same, and the employee would be free to claim the rebate on such claims by filing his return of income and furnishing the necessary proof etc.before the Assessing Officer.
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New procedure of assessment in brief:-
Previously, there was a procedure for processing the return, making prima facie adjustments and raising additional tax, wherever necessary and sending intimation to the assessee in all cases. With effect from June 1, 1999, section 143 has been amended to provide that if any tax or interest is found due on the basis of return filed under section 139 or in response to a notice under section 142(1), after adjustment of any tax deducted at source, any advance tax paid, any tax paid on self assessment and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of 142 (2), an intimation is now sent to the assessee specifying the sum so payable, and such intimation is deemed to be a notice of demand.
If any refund is due on the basis of such return, it is granted to the assessee.
Now the new provisos provide that the acknowledgement of the return is deemed to be the intimation under 143(1) where either no sum is payable or no refund is due.
Now the law is that except for issuing intimations where any sum is payable by the assessee or refund is due to him, the acknowledgement is deemed to be an intimation and the final proof of assessment in cases where notices u/s 143(2) .have not been issued.
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In a case where the assessee has paid the full tax and interest on the basis of income returned by him will the assessee be given an assessment order?
No. The acknowledgement receipt for filing the Income Tax Return would itself be the proof of completion of all proceedings under the Act, in case no notice is received by the assessee indicating that his case has been selected for scrutiny.
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What would be the status of the returns filed prior to 1st june 1999 and which were pending on that date?
The law stands amended w.e.f 1.6.99, so the amended provisions will apply not only in respect of all returns filed on or after 1st June, 1999 but also will apply to all such returns filed prior to 1st June, 1999 and which were pending processing as on that date.
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What happens in a case where tax or interest is found to be due on the basis of Income declared?
In such cases intimation is sent to the assessee requiring him to pay the amount of tax or interest due from him.
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In a case where a Refund is due will the assessee get the assessment order?
In such cases the Assessing Officer will grant the refund to the assessee along with the intimation u/s 143(1).
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What is the present position of Rectification of mistake in an intimation sent to an assessee?
What is the present position of Rectification of mistake in an intimation sent to an assessee?
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Penalties & prosecutions
Penalties
Under the new scheme of taxation, the thrust on penalties has been greatly reduced and the emphasis has been shifted to recovering penal interest for defaults. Very briefly, some of the provisions for imposing penalties in the case of salary tax payers are given herein below :-
^TopYes. Now, w.e.f. A.Y. 2001-02, an individual who is of the age of 65 years or more at any time during the previous year, would be entitled to a rebate U/S 88B from the amount of Income-tax chargeable on his total income equal to hundred per cent of such income-tax or an amount of Rs. 15,000, whichever is less.
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Is there a special Tax Rebate for lady assessees below the age of 65 years?
Yes. A new section 88C has been introduced w.e.f. 1.4.01 applicable from the A.Y.2001-02. Now a lady assessee would be entitled to a rebate from the amount of Income-tax chargeable on her total income equal to hundred per cent of such income-tax or an amount of Rs. 5,000, whichever is less, before allowing any rebate / relief under Chapter-VIII of the IT Act, 1961.
To claim this rebate the lady has to be resident in India in the year in which the rebate is claimed.
If a lady crosses age 65 years during the financial year, would benefit of sec. 88b be available to her?
Yes. She has to be below the age of 65 years, at any time during the previous year.
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Is it true that a special rebate of Income Tax, on subscription to shares and debentures, is available to Tax payers?
Yes. effective from A.Y. 97-98 and subsequent years, a tax rebate of a sum equal to twenty per cent is available, of the amounts invested in debentures of and equity shares in a public company engaged in development, of infrastructure sector, including power, telecommunication etc.
The following are the salient features of these provisions:-
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Has a special rebate been given for low paid salaried employees?
Yes. With a view to provide greater incentive for the marginal savings,. with effect from 1st April, 2002, ie. in relation to the assessment year 2002-2003 and subsequent years, in the case of a taxpayer having a gross salary income which does not exceed rupees one lakh (before allowing deduction under section 16 ) and which is not less than 90% of his gross total income from all sources, the amount of rebate on savings would be 30% instead of normal rebate of 20%.
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What are the precautions to be taken when allowing Rebate(s) under chapter-viii?
Firstly, rebate(s) are allowed from the amount of Income- tax computed before allowing such rebate(s).Secondly, the rebate(s) should not exceed the amount of income-tax computed before allowing such rebate(s).
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In case Tax Rebate is allowed in an assessment year, can it be withdrawn in a subsequent assessment year?
Yes. The tax rebate once allowed can be withdrawn subsequently in the following cases:-
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Can you claim Tax Rebate in respect of long term capital gains?
No. As per section 112(3) tax rebate u/s. 88 cannot be claimed in respect of tax on long term capital gains. However, senior citizens are entitled to tax rebate u/s. 88B even in respect of tax on long term capital gains provided their Gross Total Income, including Long Term Capital Gains, does not exceed Rs. 1,20,000.
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Is tax rebate allowable even if lic premium is in excess of 10% of sum assured?
Now, w.e.f. 1996-97 and subsequent years, rebate of premium paid on LIC policies will still be available even when the premium paid is in excess of 10% of the actual sum assured.However, if the policy is surrendered within two years of the date of insurance the amount of rebate allowed earlier, would be treated as income tax payable in the year of such surrender.
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What should be the source of such payment or deposit?
The source must be income chargeable to tax during the relevant previous year [ Para 7.4 of circular No. 15/2001 F.No.275/192/2001 - IT(B)] dated 12.12.2001
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What is the duty of the DDO before allowing claims of Tax Rebates?
The DDO Officer is duty bound to be satisfied about the actual deposits/ payments made by the employees, by calling for such information as they deem necessary before allowing the rebate(s). In case the DDO is not satisfied about the genuineness of the employee's claim regarding any deposit/payment made by the employee, he should not allow the same, and the employee would be free to claim the rebate on such claims by filing his return of income and furnishing the necessary proof etc.before the Assessing Officer.
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New procedure of assessment in brief:-
Previously, there was a procedure for processing the return, making prima facie adjustments and raising additional tax, wherever necessary and sending intimation to the assessee in all cases. With effect from June 1, 1999, section 143 has been amended to provide that if any tax or interest is found due on the basis of return filed under section 139 or in response to a notice under section 142(1), after adjustment of any tax deducted at source, any advance tax paid, any tax paid on self assessment and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of 142 (2), an intimation is now sent to the assessee specifying the sum so payable, and such intimation is deemed to be a notice of demand.
If any refund is due on the basis of such return, it is granted to the assessee.
Now the new provisos provide that the acknowledgement of the return is deemed to be the intimation under 143(1) where either no sum is payable or no refund is due.
Now the law is that except for issuing intimations where any sum is payable by the assessee or refund is due to him, the acknowledgement is deemed to be an intimation and the final proof of assessment in cases where notices u/s 143(2) .have not been issued.
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In a case where the assessee has paid the full tax and interest on the basis of income returned by him will the assessee be given an assessment order?
No. The acknowledgement receipt for filing the Income Tax Return would itself be the proof of completion of all proceedings under the Act, in case no notice is received by the assessee indicating that his case has been selected for scrutiny.
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What would be the status of the returns filed prior to 1st june 1999 and which were pending on that date?
The law stands amended w.e.f 1.6.99, so the amended provisions will apply not only in respect of all returns filed on or after 1st June, 1999 but also will apply to all such returns filed prior to 1st June, 1999 and which were pending processing as on that date.
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What happens in a case where tax or interest is found to be due on the basis of Income declared?
In such cases intimation is sent to the assessee requiring him to pay the amount of tax or interest due from him.
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In a case where a Refund is due will the assessee get the assessment order?
In such cases the Assessing Officer will grant the refund to the assessee along with the intimation u/s 143(1).
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What is the present position of Rectification of mistake in an intimation sent to an assessee?
What is the present position of Rectification of mistake in an intimation sent to an assessee?
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Penalties & prosecutions
Penalties
Under the new scheme of taxation, the thrust on penalties has been greatly reduced and the emphasis has been shifted to recovering penal interest for defaults. Very briefly, some of the provisions for imposing penalties in the case of salary tax payers are given herein below :-
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If an assessee does not file
his return of Income, is any penalty imposable upon him?
Yes. Penalty of Rs. 5000 is imposable for non-filing of return which is to be filed under one-by-six scheme. In other cases, the penally for late filing is Rs.5,000. Interest is also chargeable for non-filing or late filing.It is seen that a large number of persons having salary income which are subject to TDS do not file their return. Now, as loss from house property is be allowed to be adjusted against salary income at the source itself, so, T.D.S. will not be deducted on the amount of loss so adjusted. Therefore, filing of returns is absolutely necessary to check the correctness of such claims. So, w.e.f. 1-4-99 i.e. from A.Y. 1999-2000, a penalty of Rs.1000 for not filing of return by due date was imposable. Now this is Rs. 5,000 w.e.f. A.Y. 2001-02. No penalty was provided for failure to file return of income from A.Y. 1989-90 to A.Y. 1998-99. But the penal provisions have been found to be necessary to ensure that persons having taxable income file their returns of income.
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Prescribing maximum penalty for defaults committed with reference to sections 197a and 203:-
Penalty under sub-section (2) of section 272A is imposable for failure to deliver in due time a copy of the declaration under section 197A or for failure by the person deducting tax to furnish a certificate of deduction to the person to whom such payment is made or credit given within the prescribed period. These defaults are continuous in nature and attracted penalty at the rate of Rs. 100-200 per day without any maximum limit. This maximum limit shall now, w.e.f. 1-4-99, not exceed the amount of tax deductible or collectible, as the case may be.
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Prosecutions :-
Apart from the penalties mentioned above, wilful attempt to evade taxes, wilful failure to furnish returns of income and making a false statement in any verification are punishable offences for which prosecution(s) can be launched under IT Act, 1961 and / or under the Indian Penal Code.
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Appeals and Revisions
Tax authorities under Direct Tax Laws have powers to make tax payers comply with their obligations under Tax Acts and to investigate those who do not. Exercise of such powers and discretion by tax authorities may generate adverse situations for the taxpayer which may need to be agitated in an appeal..
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Rectification of an order by an Income Tax authority
In case of obvious or prima facie mistakes, the taxpayer can approach the concerned authority for RECTIFICATION of the order. Such mistakes may be as to facts as well as of law.
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Is there a time limit for disposal of application for Rectification u/s 154?
Yes. With effect from 1.6.01, sub-section (8) in section 154 provides that where an application for amendment under this sub-section is made by an assessee on or after 1.6.01 to an income-tax authority referred to in the said section, the authority shall pass an order within six months from the end of the month in which the application is received by it, either making the amendment or refusing to allow the claim.
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Revision Petition before the commissioner
The tax payer can also approach the Commissioner of Income-tax for REVISION of the orders of the authorities administratively subordinate to him where the assessee does not file appeal against the order. The Commissioner shall within a period of 1 year from the end of the financial year in which the application is made for revision decide the said application.
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Is there a fee for filing revision application before the commissioner of Income Tax?
Sub-section (5) of the said section provides that a fee of twenty-five rupees shall accompany every application by an assessee for revision under this section. Now, from 1st June, 2001 every application by an assessee for revision under this section shall be accompanied by a fee Rs. 500.
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First appeal to commissioner (appeals)
Any assessee aggrieved by the intimation sent to him or by the order of assessment, penalty of rectification made by an Assessing Officer can file first appeal before Commissioner (Appeals) within 30 days from the date of receipt of the relevant order.
There is a prescribed form for filing the appeal which is Form No. 35. The grounds of appeal and the statement of facts are also required to be filed along with it.
The appeal is admitted for hearing only if at the time of filing of appeal the tax due on income returned has been paid.
In cases where the appellate authority wants to admit additional evidence, an opportunity to examine that is given by the authority to the A.O. The CIT(Appeals) has also powers of enhancing the assessed income or penalty. He can also remand a case to an Assessing Officer to enquire and furnish a report on specified matters.
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Has there been any change in powers of the commissioner (appeals)?
Yes. Under the existing provision contained in subsection (1) of section 251 of the Income-tax Act, in an appeal filed before a CIT (Appeals) against an order of assessment, the CIT(Appeals) may confirm, reduce, enhance or annul the assessment, or he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment in accordance with the directions given by him, after making such further enquiry as may be necessary.
With a view to help bringing about an early finalisation to the assessment and to avoid prolonging the process of litigation, section 251 now provides that, in an appeal filed before the CIT(Appeals) against an order of assessment, the CIT(Appeals) shall not set aside the assessment or refer the case back to the Assessing Officer for making fresh assessment. This will be applicable to appellate orders passed by CIT(Appeals) on or after 1.6.2001.
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Second appeal to appellate tribunal
An assessee aggrieved by the orders of the CIT(Appeals) or by the orders of revision or rectification prejudicial to him made by Commissioner of Income-tax, can file further appeal to the Appellate Tribunal.
The appeal is to be filed in Form No. 36 within 60 days from the date of receiving the relevant order.
The Assessing Officer, not satisfied with the order of the first Appellate Authority, may also file an appeal with the Tribunal. No fee is required to be paid. .
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Stay granted by appellate tribunal for recovery of demand is operative for what period? \
Under the existing provision of section 254, an advisory time-limit of four years has been prescribed for disposed of appeals by the Tribunal. However, in many cases, a Stay granted by the Tribunal on recovery of demand till the disposal of appeal, makes the demand irrecoverable for several months or even years.
Therefore, with effect from 1st June, 2001, where in an appeal filed by the assessee, the Appellate Tribunal passes an order granting stay, the Tribunal shall hear and decide such appeal within a period of one hundred and eighty days from the date of passing such stay order, failing which the stay granted shall stand vacated on the expiry of the aforesaid period. The amendment will apply w.e.f. 1.6.01.
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Appeal to the high court
Now, w. e. f. 1-10-98, an appeal can be filed within 120 days, against the orders of the Tribunal directly to the High Court if the High Court is satisfied that the case involves a substantial question of law. The memorandum of appeals shall precisely state the substantial question of law involving the appeal and where the appeal is made by the assessee, such appeal shall be accompanied by a fee of Rs. 10,000. Where the High Court is satisfied that a substantial question of law is involved in any case, it may formulate that question. The appeals shall be heard on the question so formulated. The High Court may, determine any issue necessary for disposal of appeal which has not been determined by the Tribunal.
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Reference & appeal to hon'ble supreme court
Where there is a conflict in the decision(s) of High Court in respect of any particular question of law, the Tribunal may draw up a statement of case and refer it, direct to the Hon'ble Supreme Court for its opinion.
The assessee has also a right to appeal, if he is not satisfied with the decision given by the High Court on a question referred to it. He may then file an appeal before the Hon’ble Supreme Court against the judgement of the High Court. Such appeal can only be filed before the Hon'ble Supreme Court if the High Court certifies it to be a fit case for appeal. The application before High Court for certificate of fitness is to be filed within 60 days.
Where the High Court refuses to grant such a certificate, the assessee can under Article 136 of the constitution file a Special Leave Petition before the Hon'ble Supreme Court. If the SLP, is granted, the Hon'ble Supreme Court will hear and decide the appeal on merits.
Yes. Penalty of Rs. 5000 is imposable for non-filing of return which is to be filed under one-by-six scheme. In other cases, the penally for late filing is Rs.5,000. Interest is also chargeable for non-filing or late filing.It is seen that a large number of persons having salary income which are subject to TDS do not file their return. Now, as loss from house property is be allowed to be adjusted against salary income at the source itself, so, T.D.S. will not be deducted on the amount of loss so adjusted. Therefore, filing of returns is absolutely necessary to check the correctness of such claims. So, w.e.f. 1-4-99 i.e. from A.Y. 1999-2000, a penalty of Rs.1000 for not filing of return by due date was imposable. Now this is Rs. 5,000 w.e.f. A.Y. 2001-02. No penalty was provided for failure to file return of income from A.Y. 1989-90 to A.Y. 1998-99. But the penal provisions have been found to be necessary to ensure that persons having taxable income file their returns of income.
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Prescribing maximum penalty for defaults committed with reference to sections 197a and 203:-
Penalty under sub-section (2) of section 272A is imposable for failure to deliver in due time a copy of the declaration under section 197A or for failure by the person deducting tax to furnish a certificate of deduction to the person to whom such payment is made or credit given within the prescribed period. These defaults are continuous in nature and attracted penalty at the rate of Rs. 100-200 per day without any maximum limit. This maximum limit shall now, w.e.f. 1-4-99, not exceed the amount of tax deductible or collectible, as the case may be.
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Prosecutions :-
Apart from the penalties mentioned above, wilful attempt to evade taxes, wilful failure to furnish returns of income and making a false statement in any verification are punishable offences for which prosecution(s) can be launched under IT Act, 1961 and / or under the Indian Penal Code.
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Appeals and Revisions
Tax authorities under Direct Tax Laws have powers to make tax payers comply with their obligations under Tax Acts and to investigate those who do not. Exercise of such powers and discretion by tax authorities may generate adverse situations for the taxpayer which may need to be agitated in an appeal..
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Rectification of an order by an Income Tax authority
In case of obvious or prima facie mistakes, the taxpayer can approach the concerned authority for RECTIFICATION of the order. Such mistakes may be as to facts as well as of law.
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Is there a time limit for disposal of application for Rectification u/s 154?
Yes. With effect from 1.6.01, sub-section (8) in section 154 provides that where an application for amendment under this sub-section is made by an assessee on or after 1.6.01 to an income-tax authority referred to in the said section, the authority shall pass an order within six months from the end of the month in which the application is received by it, either making the amendment or refusing to allow the claim.
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Revision Petition before the commissioner
The tax payer can also approach the Commissioner of Income-tax for REVISION of the orders of the authorities administratively subordinate to him where the assessee does not file appeal against the order. The Commissioner shall within a period of 1 year from the end of the financial year in which the application is made for revision decide the said application.
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Is there a fee for filing revision application before the commissioner of Income Tax?
Sub-section (5) of the said section provides that a fee of twenty-five rupees shall accompany every application by an assessee for revision under this section. Now, from 1st June, 2001 every application by an assessee for revision under this section shall be accompanied by a fee Rs. 500.
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First appeal to commissioner (appeals)
Any assessee aggrieved by the intimation sent to him or by the order of assessment, penalty of rectification made by an Assessing Officer can file first appeal before Commissioner (Appeals) within 30 days from the date of receipt of the relevant order.
There is a prescribed form for filing the appeal which is Form No. 35. The grounds of appeal and the statement of facts are also required to be filed along with it.
The appeal is admitted for hearing only if at the time of filing of appeal the tax due on income returned has been paid.
In cases where the appellate authority wants to admit additional evidence, an opportunity to examine that is given by the authority to the A.O. The CIT(Appeals) has also powers of enhancing the assessed income or penalty. He can also remand a case to an Assessing Officer to enquire and furnish a report on specified matters.
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Has there been any change in powers of the commissioner (appeals)?
Yes. Under the existing provision contained in subsection (1) of section 251 of the Income-tax Act, in an appeal filed before a CIT (Appeals) against an order of assessment, the CIT(Appeals) may confirm, reduce, enhance or annul the assessment, or he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment in accordance with the directions given by him, after making such further enquiry as may be necessary.
With a view to help bringing about an early finalisation to the assessment and to avoid prolonging the process of litigation, section 251 now provides that, in an appeal filed before the CIT(Appeals) against an order of assessment, the CIT(Appeals) shall not set aside the assessment or refer the case back to the Assessing Officer for making fresh assessment. This will be applicable to appellate orders passed by CIT(Appeals) on or after 1.6.2001.
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Second appeal to appellate tribunal
An assessee aggrieved by the orders of the CIT(Appeals) or by the orders of revision or rectification prejudicial to him made by Commissioner of Income-tax, can file further appeal to the Appellate Tribunal.
The appeal is to be filed in Form No. 36 within 60 days from the date of receiving the relevant order.
The Assessing Officer, not satisfied with the order of the first Appellate Authority, may also file an appeal with the Tribunal. No fee is required to be paid. .
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Stay granted by appellate tribunal for recovery of demand is operative for what period? \
Under the existing provision of section 254, an advisory time-limit of four years has been prescribed for disposed of appeals by the Tribunal. However, in many cases, a Stay granted by the Tribunal on recovery of demand till the disposal of appeal, makes the demand irrecoverable for several months or even years.
Therefore, with effect from 1st June, 2001, where in an appeal filed by the assessee, the Appellate Tribunal passes an order granting stay, the Tribunal shall hear and decide such appeal within a period of one hundred and eighty days from the date of passing such stay order, failing which the stay granted shall stand vacated on the expiry of the aforesaid period. The amendment will apply w.e.f. 1.6.01.
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Appeal to the high court
Now, w. e. f. 1-10-98, an appeal can be filed within 120 days, against the orders of the Tribunal directly to the High Court if the High Court is satisfied that the case involves a substantial question of law. The memorandum of appeals shall precisely state the substantial question of law involving the appeal and where the appeal is made by the assessee, such appeal shall be accompanied by a fee of Rs. 10,000. Where the High Court is satisfied that a substantial question of law is involved in any case, it may formulate that question. The appeals shall be heard on the question so formulated. The High Court may, determine any issue necessary for disposal of appeal which has not been determined by the Tribunal.
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Reference & appeal to hon'ble supreme court
Where there is a conflict in the decision(s) of High Court in respect of any particular question of law, the Tribunal may draw up a statement of case and refer it, direct to the Hon'ble Supreme Court for its opinion.
The assessee has also a right to appeal, if he is not satisfied with the decision given by the High Court on a question referred to it. He may then file an appeal before the Hon’ble Supreme Court against the judgement of the High Court. Such appeal can only be filed before the Hon'ble Supreme Court if the High Court certifies it to be a fit case for appeal. The application before High Court for certificate of fitness is to be filed within 60 days.
Where the High Court refuses to grant such a certificate, the assessee can under Article 136 of the constitution file a Special Leave Petition before the Hon'ble Supreme Court. If the SLP, is granted, the Hon'ble Supreme Court will hear and decide the appeal on merits.
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What is the fee for filing appeal(s)?
The fee for filing appeals by the assessees is given below:-
Particulars Fee for filing the appeal before CIT(A) Fee for filing the appeal before ITAT
Assessed total income Rs. 250 Rs.500
Rs. 1 lakh or less
Assessed total income Rs. 500 Rs.1500
is more than 1 lakh but not more
than 2 lakhs
Appeals involving total Rs. 1000 1% of the assessed income subject to a max of Rs.10000
income more than 2 lakhs
Appeals under other Rs. 250 Rs.1000
Direct taxes
Miscellaneous Nil Rs.50
applications under sec.254(2)
Stay petitions Nil Rs.500
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Jurisdiction of civil courts barred
In view of the elaborate appellate system provided under Direct Tax Laws, the Jurisdiction of Civil Courts is barred. No suit under the Direct Tax Laws can be filed in any Civil Court.
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Refunds: how to get them fast
If any person proves to the Assessing Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable tinder the I. T. Act, 1961 for that year, then he is entitled to a refund of the excess amount.
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Who is entitled to claim a refund?
Primarily the person who paid tax or on whose behalf the tax is treated as paid by him or on whose behalf such tax has been paid, is entitled to claim the refund. But where the income of one person is included under any provision of this Act in the total income of any other person the latter alone is entitled to a refund in respect of such income.
Also, where through death, incapacity, insolvency, liquidation or other cause, a person is unable to claim or receive any refund due to him, his legal representative or the trustee or guardian or receiver, as the case may be, is entitled to claim or receive such refund for the benefit of such person or his estate.
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Is there form of claiming a refund and what is the limitation for such a claim?
Yes. Every claim for refund is to be made in Form No.30 and normally no such claim is to be allowed, unless it is made within the period of one year from the last day of such assessment year.
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Can a refund be claimed even beyond the period of one year?
Yes. The CBDT through its order dated 12.10.93 [F.No. 225/208/93-ITA (A-II)] allowed belated refund claims in cases where the refund arises.
The situations when refunds can be claimed are: -
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Has a claim also to be made before the assessing officer in case of a refund arising on appeal?
No. Where as a result of any order passed in appeal or other proceeding under the I. T. Act, 1961 a refund of any amount becomes due to the assessee, the Assessing Officer is to refund the amount to the assessee without his having to make any claim in that behalf..
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Are there any exceptions to this procedure?
Yes, in case the assessment is set aside or cancelled and an order of fresh assessment is directed to be made in appeal, the refund, if any, becomes due only after the fresh assessment order is passed..
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If the assesment is annulled, has the Tax paid even on returned Income to be refunded?
No. If the assessment is annulled, the refund becomes due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee..
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Do the authorities have powers
to withhold issue of a refund?
No. Under the existing provisions of section 241 of the Income-tax Act, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner, withhold the refund of any amount due to the assessee till such time as the Chief Commissioner or comissioner determines, under the circumstances specified in the said section if the grant of refund Is likely adversely affect the interests of revenue.
Now, as a measure of rationalisation, with effect from 1st june, 2001, the said section stands omitted so as to Withdraw the powers conferred upon the Assessing Officers to withhold the refund.
But in such cases, the Central Government pays interest at the rate of three-fourth percent per month or part thereof, on the amount of refund ultimately determined to be due as a result of the appeal or further proceeding for the period commencing after the expiry of three months from the end of the month in which the order withholding the refund is passed, to the date the refund is granted. .
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Is interest to be paid on a delayed refund?
Yes. Under the existing provisions of the Income-tax Act, interest is payable to the assessee at the rate of 1% for every month or part of a month or 12% per annum, with effect from 1st June, 2001 the aforesaid rate of interest is reduced from one per cent to three-fourth per cent for every month or part of a month and from 12% to 9% per annum, as the case may be.
However, if the delay in granting the refund is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him is excluded from the period for which interest is payable.
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Can the assessing officer set off refunds due to the assessee against tax demands remaining payable by the assessee?
Yes. Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing Officer, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the proposed adjustment.
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Is the assessing officer bound to accept a TDS certificate issued by the central government showing book adjustments?
Yes, but only where such TDS certificate indicate that credit has been effected to the Income Tax Department by book adjustment and the date of such adjustment is given therein. In such cases, the Assessing Officers may not insist on details like challan numbers, dates of payment into Government Account etc., but they are, in any case, expected to satisfy themselves regarding the genuineness of the certificates produced before them [CBDT Circular No. 747 dated 27.12.1961.
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Where non-residents are deputed to work in India and Taxes are borne by the employer, if any refund becomes due to the employee after he has already left India and has no bank account in India by the time the assessment orders are passed, can the refund can be issued to the employer?
Yes, as the tax has been borne by the employer, C.B.D.T. Circular No.707 dated 11.7.1995.
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Can excess TDS Be refunded by the tax deducting authority itself?
Yes. There is a specific procedure laid down for refund of payments made by the tax deducting authority in excess of taxes deducted at source, vide CBDT Circular No. 285 dated 21.10.1980.
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Some important tax provisions
TDS on winnings from game shows
Under the existing provisions of section 194B of the Income-tax Act, tax is required to be deducted at source at the rates in force in respect of income by way of winnings from any lottery or crossword puzzle.
With effect from 1st June, 2001, provisions of section 194B will be applicable also to any income by way of winnings from card game and other game of any sort.
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Tax reduced on winnings from lottery, crossword puzzle, etc.
Under the existing provisions of clause (i) of section 115BB, any income by way of winnings from any lottery or crossword puzzle or race including horse race (not being income from the activity of owning and maintaining race horses) or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, is chargeable to tax at the rate of 40%.
As a measure of rationalisation, with effect from 1st April, 2002, ie. in relation to the assessment year 2002-2003 and subsequent years, the rate of tax on such winnings has been reduced from forty per cent, to thirty per cent. It is also clarified that "lottery" shall include winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever under any scheme or arrangement by whatever name called. It is further clarified that the "card game and other game of any sort" shall include any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game.
No. Under the existing provisions of section 241 of the Income-tax Act, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner, withhold the refund of any amount due to the assessee till such time as the Chief Commissioner or comissioner determines, under the circumstances specified in the said section if the grant of refund Is likely adversely affect the interests of revenue.
Now, as a measure of rationalisation, with effect from 1st june, 2001, the said section stands omitted so as to Withdraw the powers conferred upon the Assessing Officers to withhold the refund.
But in such cases, the Central Government pays interest at the rate of three-fourth percent per month or part thereof, on the amount of refund ultimately determined to be due as a result of the appeal or further proceeding for the period commencing after the expiry of three months from the end of the month in which the order withholding the refund is passed, to the date the refund is granted. .
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Is interest to be paid on a delayed refund?
Yes. Under the existing provisions of the Income-tax Act, interest is payable to the assessee at the rate of 1% for every month or part of a month or 12% per annum, with effect from 1st June, 2001 the aforesaid rate of interest is reduced from one per cent to three-fourth per cent for every month or part of a month and from 12% to 9% per annum, as the case may be.
However, if the delay in granting the refund is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him is excluded from the period for which interest is payable.
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Can the assessing officer set off refunds due to the assessee against tax demands remaining payable by the assessee?
Yes. Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing Officer, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the proposed adjustment.
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Is the assessing officer bound to accept a TDS certificate issued by the central government showing book adjustments?
Yes, but only where such TDS certificate indicate that credit has been effected to the Income Tax Department by book adjustment and the date of such adjustment is given therein. In such cases, the Assessing Officers may not insist on details like challan numbers, dates of payment into Government Account etc., but they are, in any case, expected to satisfy themselves regarding the genuineness of the certificates produced before them [CBDT Circular No. 747 dated 27.12.1961.
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Where non-residents are deputed to work in India and Taxes are borne by the employer, if any refund becomes due to the employee after he has already left India and has no bank account in India by the time the assessment orders are passed, can the refund can be issued to the employer?
Yes, as the tax has been borne by the employer, C.B.D.T. Circular No.707 dated 11.7.1995.
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Can excess TDS Be refunded by the tax deducting authority itself?
Yes. There is a specific procedure laid down for refund of payments made by the tax deducting authority in excess of taxes deducted at source, vide CBDT Circular No. 285 dated 21.10.1980.
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Some important tax provisions
TDS on winnings from game shows
Under the existing provisions of section 194B of the Income-tax Act, tax is required to be deducted at source at the rates in force in respect of income by way of winnings from any lottery or crossword puzzle.
With effect from 1st June, 2001, provisions of section 194B will be applicable also to any income by way of winnings from card game and other game of any sort.
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Tax reduced on winnings from lottery, crossword puzzle, etc.
Under the existing provisions of clause (i) of section 115BB, any income by way of winnings from any lottery or crossword puzzle or race including horse race (not being income from the activity of owning and maintaining race horses) or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, is chargeable to tax at the rate of 40%.
As a measure of rationalisation, with effect from 1st April, 2002, ie. in relation to the assessment year 2002-2003 and subsequent years, the rate of tax on such winnings has been reduced from forty per cent, to thirty per cent. It is also clarified that "lottery" shall include winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever under any scheme or arrangement by whatever name called. It is further clarified that the "card game and other game of any sort" shall include any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game.
Collection of short
TDS from payer of income
Under the existing provisions of section 201(i) of the Income-tax Act, the payer of the income is deemed to be an assessee in default in respect of the tax if he does not deduct or after deducting fails to pay the tax.
Sub-section (1A) provides that such person shall also be liable to pay simple interest at the prescribed rate on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid. Now it has been clarified that the provisions of subsections (1) and (1A) shall apply whether such person fails to deduct the whole or any part of the tax. This amendment will take effect retrospectively from 1.4.62.
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Modification of provisions relating to tax deduction on at source on interest income
Under the easting provisions of section 194A of the Income-tax Act, no tax is required to be deducted at source $n income by way of interest other than interest on securities where the aggregate amounts of such income credited or paid or likely to be credited or paid during the financial year does not exceed Rs. 10,000 in respect of time deposit with a branch of bank or deposit with a branch of housing finance company and Rs.5,000 in other cases. With effect from 1st June, 2001, the above monetary limits have been revised to Rs.2,500 in all cases.
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Facility for filing of TDS returns on computer diskettes
Section 506 provides furnishing of Prescribed returns for tax deduction at source. The returns of deduction contained voluminous data particularly in cases of large organisations. Preparing these returns and then processing it for checking its correctness requires substantial manual effort. The amendment provides for filing of these returns on magnetic media, floppies, diskettes etc. as may be specified by the Board. The Information in such return shall also be admitted in evidence in any proceedings
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Enlarging the scope of credit for tax deduction at source
Hitherto, credit for tax deducted at source was given to each co-owner in cases of jointly owned security(s) or share(s) in a company in the same proportion in which the interest on such security or dividend on such share is assessable income of each of such owners. The scope of the aforesaid provision has now been enlarged so as to cover other situations also in which income which is subjected to deduction of tax at source is assessable in the hands of two or more persons .For this purpose ,effective from 1st April,1997 credit for tax deducted at source shall be allowed in cases of income derived from any jointly owned property, jointly owned deposits, jointly owned units, apart from jointly owned security(s) or share(s) in a company.
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Exemption of income received in respect of units of UTI and mutual funds not to include income arising on transfer of such units.
The Finance Act, 1999 amended clause (33) of section 10 so as to provide that any income by way of income received in respect of units from the Unit Trust of India and units of a mutual fund specified in section 10(23D) shall not be included while computing the total income. The provisions of sub-clause (ii) and (iii) of clause (33) of section 10 were being interpreted in a manner so as to claim exemption also in respect of capital gains arising on the sale of the units of UTR or mutual funds by the unit holders in the secondary market by treating the same as income received in respect of units of UTI or mutual funds. Section 10(33) now stands amended to clarify that exemption shall not apply to any income arising from the transfer of the units of UTI or mutual funds by the unit- holders to persons other than UTI or any such Mutual Fund. This amendment takes effect retrospectively with effect from 1st April, 2000 and accordingly, applys in relation to the A.Y.2000-2001 and there after.
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Time-limits for issue of refunds, reassessment and re-opening of assessments reduced
A period of two years for sending an intimation alongwith refund or demand notice, if any, to the assessee is provided for in section 143(1). In view of the computer aids now available in the Department, with effect from 1st June, 2001, the second proviso to sub-section (1) of section 143 has been amended to provide that such intimation shall be sent within one year from the end of the financial year in which the return of income is made. The time-limit of two years, however, will continue to apply in respect of returns already filed for the assessment year 1999- 2000.
Under the existing provision, a notice under section 148 for assessment, reassessment or recomputation of income of any year can be issued within a period of four, seven or ten years from the end of the relevant assessment year, depending on whether an assessment was made earlier for the relevant year, and the amount of income escaping assessment.
In order to provide certainty of finalisation of assessment within a smaller period, with effect from 1st June, 2001, the notice under section 148 can be issued only within four years from the end of the relevant assessment year, or within six years from the end of the relevant assessment year in cases where the amount of income chargeable to tax which has escaped assessment amounts to, or is likely to amount to rupees one lakh or more for that year. Similar amendments have been made in sections 17 and 17A of Wealth-tax Act, 1957.
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Higher tax rates for specified hufs abolished
W,e.f. 1.4.97 there is no distinction in the tax rates (applicable to specified Hindu Undivided Families (i.e.) those with one or more members having independent [total income exceeding the minimum taxable limit) and unspecified HUFs. The tax rates for individuals now apply to all HUFs.
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Tax incentives u/s. 80jjaa for encouraging employment
The existing provisions of the Income-tax Act provide various fiscal concessions to spur growth of business and industry. The country is faced with problems relating to lack of employment opportunities. In order to encourage the employers to further generate more employment opportunities, a new Section, i.e. 80JJAA w. e. f, 1-4-99, i.e., for A.Y. 1999-2000 and subsequent years, provides an incentive in the form of a special deduction against business profits of a company. The deduction would be over and above the expenditure on wages or salary, which is otherwise allowable as business expenditure to the company. The deduction allowable shall be thirty percent of the aggregate wages or salary paid to the new workers provided the following conditions are satisfied:-
The term 'worker' has the same meaning as 'workman' as defined in
the Industrial Workers Disputes Act.
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Tax incentives to promote housing
Deduction was being allowed in computing the taxable income, in respect of profits derived from approved housing projects where the assessee commences development and construction of housing project on or after the 1st April , 1998 and completes the same before the 31st March, 2001.
Now, w. e. f. 1st April, 2001 i. e. for A. Y.2001-02 and subsequent year(s), the deduction will also be allowed for housing projects which are approved by 31.3.2001 and are completed before 31.3.2003.
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Advisory time limit for the appellate tribunal to decide appeals extended to the departmental appeals
Now, w. e. f. 1st June, 2000 the Appellate Tribunal, where it is possible, may also hear and decide Departmental Appeals with in a period of 4 year(s) from the end of the Financial Year in which the Appeal is filed.
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Amendment of the term "assets" in the Wealth Tax Act, commercial properties not used by a Tax payer for business, office or factory would be chargeable to wealth tax
The term 'assets', on which tax is to be levied, is defined in clause (ea) of section 2. This definition includes any guest house and any residential house (including a farm house situated within 25kms. of the local limits of any municipality) for levy of tax, except the exclusions made in items (1) and (2) of sub-clause (i) of this clause.
As residential houses have been taken as assets, there was no reason why commercial properties, other than those used by the assessee, wholly and exclusively in his business or profession, should also not be taken as assets. Therefore, with effect from A.Y. 1997-98 onwards, commercial buildings which are not used by the assessee in his business or profession, other than the business of letting out of properties will be taxed.
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Exemptions from wealth-tax
The law for A.Y. 1998-99 and previous years provided for exemption of one house or part of house in computing the taxable wealth of the assessee. The amended section now provides that in addition to the house or part of house, a plot of land not exceeding five hundred sq. metres in area, belonging to the individual or a Hindu Undivided Family, would also be exempt.
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What happens if taxpayer has one house and one plot, are both exempt?
No. Where the exemption is availed of for one house, or part of a house, no further exemption can be availed of for a plot of land. The new law will benefit those who are not owning a house but are only owning an open plot.
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Is wealth tax levied on rented residential properties?
Wealth-tax is not levied on productive assets. So, w.e.f. 1-4-1999 i.e. for A.Y, 1999-2000 and subsequent years, wealth-tax would also not be levied on such residential properties that have been let-out for a period of a minimum of three hundred days in a year.
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Is a residential house allotted to an employee taxable under wealth tax act?
Any house which is meant exclusively for residential purposes and is allotted by a company to an employee having a gross annual salary of less than Rs.5 lakhs is not taxable.
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Any house which is meant exclusively for residential purposes and is allotted by a company to an employee having a gross annual salary of less than Rs.5 lakhs is not taxable.
Any house for residential and commercial purposes which forms part of stock-in-trade is now exempt from Wealth Tax from A.Y. 1999-2000 and subsequent years. Limit of holding as such has also now been eliminated.
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IS A HOUSE USED FOR BUSINESS PURPOSES TAXABLE?
No. Any house, occupied by an assessee, for the purpose of any business or profession carried on by him, is exempt.
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What about commercial complexes?
Any property in the nature of commercial establishments or complexes is exempt w. e. f. 1-4-99, i.e. for A.Y. 1999-2000 and subsequent years.
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Is land held as stock-in-trade also exempt? Yes. Land held as stock-in-trade for a period of seven years from the date of its acquisition by him is also exempt.
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Are farm houses also exempt from wealth tax?
Yes. They are also exempt from Wealth Tax
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Yes. They are also exempt from Wealth Tax
No. The definition of Agriculture Income has been clarified and now w. e. f. 1st April, 2001 i.e. for A. Y. 2001-02 and subsequent year(s) any income from such building or land arising from the use of the building or land for any purpose other than agriculture, shall not been included in the definition of Agriculture Income. For example, if a person has income from using such building or land for purposes such as letting it out for residential purposes or for the purposes of any business or profession, then, such income shall not be treated as Agricultural Income.
Repeal of the gift tax act
After 1st October 1998, no Gift Tax shall be levied on any gift made on or after that date.
Under the existing provisions of section 201(i) of the Income-tax Act, the payer of the income is deemed to be an assessee in default in respect of the tax if he does not deduct or after deducting fails to pay the tax.
Sub-section (1A) provides that such person shall also be liable to pay simple interest at the prescribed rate on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid. Now it has been clarified that the provisions of subsections (1) and (1A) shall apply whether such person fails to deduct the whole or any part of the tax. This amendment will take effect retrospectively from 1.4.62.
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Modification of provisions relating to tax deduction on at source on interest income
Under the easting provisions of section 194A of the Income-tax Act, no tax is required to be deducted at source $n income by way of interest other than interest on securities where the aggregate amounts of such income credited or paid or likely to be credited or paid during the financial year does not exceed Rs. 10,000 in respect of time deposit with a branch of bank or deposit with a branch of housing finance company and Rs.5,000 in other cases. With effect from 1st June, 2001, the above monetary limits have been revised to Rs.2,500 in all cases.
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Facility for filing of TDS returns on computer diskettes
Section 506 provides furnishing of Prescribed returns for tax deduction at source. The returns of deduction contained voluminous data particularly in cases of large organisations. Preparing these returns and then processing it for checking its correctness requires substantial manual effort. The amendment provides for filing of these returns on magnetic media, floppies, diskettes etc. as may be specified by the Board. The Information in such return shall also be admitted in evidence in any proceedings
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Enlarging the scope of credit for tax deduction at source
Hitherto, credit for tax deducted at source was given to each co-owner in cases of jointly owned security(s) or share(s) in a company in the same proportion in which the interest on such security or dividend on such share is assessable income of each of such owners. The scope of the aforesaid provision has now been enlarged so as to cover other situations also in which income which is subjected to deduction of tax at source is assessable in the hands of two or more persons .For this purpose ,effective from 1st April,1997 credit for tax deducted at source shall be allowed in cases of income derived from any jointly owned property, jointly owned deposits, jointly owned units, apart from jointly owned security(s) or share(s) in a company.
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Exemption of income received in respect of units of UTI and mutual funds not to include income arising on transfer of such units.
The Finance Act, 1999 amended clause (33) of section 10 so as to provide that any income by way of income received in respect of units from the Unit Trust of India and units of a mutual fund specified in section 10(23D) shall not be included while computing the total income. The provisions of sub-clause (ii) and (iii) of clause (33) of section 10 were being interpreted in a manner so as to claim exemption also in respect of capital gains arising on the sale of the units of UTR or mutual funds by the unit holders in the secondary market by treating the same as income received in respect of units of UTI or mutual funds. Section 10(33) now stands amended to clarify that exemption shall not apply to any income arising from the transfer of the units of UTI or mutual funds by the unit- holders to persons other than UTI or any such Mutual Fund. This amendment takes effect retrospectively with effect from 1st April, 2000 and accordingly, applys in relation to the A.Y.2000-2001 and there after.
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Time-limits for issue of refunds, reassessment and re-opening of assessments reduced
A period of two years for sending an intimation alongwith refund or demand notice, if any, to the assessee is provided for in section 143(1). In view of the computer aids now available in the Department, with effect from 1st June, 2001, the second proviso to sub-section (1) of section 143 has been amended to provide that such intimation shall be sent within one year from the end of the financial year in which the return of income is made. The time-limit of two years, however, will continue to apply in respect of returns already filed for the assessment year 1999- 2000.
Under the existing provision, a notice under section 148 for assessment, reassessment or recomputation of income of any year can be issued within a period of four, seven or ten years from the end of the relevant assessment year, depending on whether an assessment was made earlier for the relevant year, and the amount of income escaping assessment.
In order to provide certainty of finalisation of assessment within a smaller period, with effect from 1st June, 2001, the notice under section 148 can be issued only within four years from the end of the relevant assessment year, or within six years from the end of the relevant assessment year in cases where the amount of income chargeable to tax which has escaped assessment amounts to, or is likely to amount to rupees one lakh or more for that year. Similar amendments have been made in sections 17 and 17A of Wealth-tax Act, 1957.
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Higher tax rates for specified hufs abolished
W,e.f. 1.4.97 there is no distinction in the tax rates (applicable to specified Hindu Undivided Families (i.e.) those with one or more members having independent [total income exceeding the minimum taxable limit) and unspecified HUFs. The tax rates for individuals now apply to all HUFs.
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Tax incentives u/s. 80jjaa for encouraging employment
The existing provisions of the Income-tax Act provide various fiscal concessions to spur growth of business and industry. The country is faced with problems relating to lack of employment opportunities. In order to encourage the employers to further generate more employment opportunities, a new Section, i.e. 80JJAA w. e. f, 1-4-99, i.e., for A.Y. 1999-2000 and subsequent years, provides an incentive in the form of a special deduction against business profits of a company. The deduction would be over and above the expenditure on wages or salary, which is otherwise allowable as business expenditure to the company. The deduction allowable shall be thirty percent of the aggregate wages or salary paid to the new workers provided the following conditions are satisfied:-
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Tax incentives to promote housing
Deduction was being allowed in computing the taxable income, in respect of profits derived from approved housing projects where the assessee commences development and construction of housing project on or after the 1st April , 1998 and completes the same before the 31st March, 2001.
Now, w. e. f. 1st April, 2001 i. e. for A. Y.2001-02 and subsequent year(s), the deduction will also be allowed for housing projects which are approved by 31.3.2001 and are completed before 31.3.2003.
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Advisory time limit for the appellate tribunal to decide appeals extended to the departmental appeals
Now, w. e. f. 1st June, 2000 the Appellate Tribunal, where it is possible, may also hear and decide Departmental Appeals with in a period of 4 year(s) from the end of the Financial Year in which the Appeal is filed.
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Amendment of the term "assets" in the Wealth Tax Act, commercial properties not used by a Tax payer for business, office or factory would be chargeable to wealth tax
The term 'assets', on which tax is to be levied, is defined in clause (ea) of section 2. This definition includes any guest house and any residential house (including a farm house situated within 25kms. of the local limits of any municipality) for levy of tax, except the exclusions made in items (1) and (2) of sub-clause (i) of this clause.
As residential houses have been taken as assets, there was no reason why commercial properties, other than those used by the assessee, wholly and exclusively in his business or profession, should also not be taken as assets. Therefore, with effect from A.Y. 1997-98 onwards, commercial buildings which are not used by the assessee in his business or profession, other than the business of letting out of properties will be taxed.
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Exemptions from wealth-tax
The law for A.Y. 1998-99 and previous years provided for exemption of one house or part of house in computing the taxable wealth of the assessee. The amended section now provides that in addition to the house or part of house, a plot of land not exceeding five hundred sq. metres in area, belonging to the individual or a Hindu Undivided Family, would also be exempt.
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What happens if taxpayer has one house and one plot, are both exempt?
No. Where the exemption is availed of for one house, or part of a house, no further exemption can be availed of for a plot of land. The new law will benefit those who are not owning a house but are only owning an open plot.
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Is wealth tax levied on rented residential properties?
Wealth-tax is not levied on productive assets. So, w.e.f. 1-4-1999 i.e. for A.Y, 1999-2000 and subsequent years, wealth-tax would also not be levied on such residential properties that have been let-out for a period of a minimum of three hundred days in a year.
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Is a residential house allotted to an employee taxable under wealth tax act?
Any house which is meant exclusively for residential purposes and is allotted by a company to an employee having a gross annual salary of less than Rs.5 lakhs is not taxable.
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Any house which is meant exclusively for residential purposes and is allotted by a company to an employee having a gross annual salary of less than Rs.5 lakhs is not taxable.
Any house for residential and commercial purposes which forms part of stock-in-trade is now exempt from Wealth Tax from A.Y. 1999-2000 and subsequent years. Limit of holding as such has also now been eliminated.
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IS A HOUSE USED FOR BUSINESS PURPOSES TAXABLE?
No. Any house, occupied by an assessee, for the purpose of any business or profession carried on by him, is exempt.
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What about commercial complexes?
Any property in the nature of commercial establishments or complexes is exempt w. e. f. 1-4-99, i.e. for A.Y. 1999-2000 and subsequent years.
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Is land held as stock-in-trade also exempt? Yes. Land held as stock-in-trade for a period of seven years from the date of its acquisition by him is also exempt.
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Are farm houses also exempt from wealth tax?
Yes. They are also exempt from Wealth Tax
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Yes. They are also exempt from Wealth Tax
No. The definition of Agriculture Income has been clarified and now w. e. f. 1st April, 2001 i.e. for A. Y. 2001-02 and subsequent year(s) any income from such building or land arising from the use of the building or land for any purpose other than agriculture, shall not been included in the definition of Agriculture Income. For example, if a person has income from using such building or land for purposes such as letting it out for residential purposes or for the purposes of any business or profession, then, such income shall not be treated as Agricultural Income.
Repeal of the gift tax act
After 1st October 1998, no Gift Tax shall be levied on any gift made on or after that date.
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©2008 Appuonline.com