NOTIFICATIONS
SECTION 35(1)(ii) OF THE INCOME-TAX ACT, 1961 - SCIENTIFIC RESEARCH EXPENDITURE - APPROVED SCIENTIFIC ASSOCIATIONS/INSTITUTIONS: The organization ONGC Energy Centre Trust Indra Chowk New Delhi (PAN:- AAAT02299M) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 from Assessment year 2015-2016 onwards in the category of 'Scientific Research Association', subject to the following conditions: (i) The sole objective of the approved 'Scientific Research Association' shall be to undertake scientific research; (ii) The approved organization shall carry out scientific research by itself; (iii) The approved organization shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited and furnish the report to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income. (iv) The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research in social science and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.
Further the Central Government shall withdraw the approval if the approved organization: (a) fails to maintain separate books of account referred to in sub-paragraph (iii) of paragraph 1; or (b) fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or (c) fails to furnish its statement of the donations received and sums applied for scientific research referred to in sub-paragraph (iv) of paragraph 1; or (d) ceases to carry on its research activities or its research activities are not found to be genuine; or (e) ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5D of the said Rules.
(NOTIFICATION NO.28/2016 [F.NO.203/14/2015/ITA-II], DATED 26-4-2016)
INCOME-TAX (TENTH AMENDMENT) RULES, 2016 – RE - PRESCRIBED AUTHORITY FOR EXPENDITURE ON SCIETIFIC RESEARCH - AMENDMENT IN RULE 6, FORM NO. 3CK AND FORM NO. 3CM; SUBSTITUTION OF FORM 3CL AND INSERTION OF FORM NO. 3CLA : The Central Board of Direct Taxes made the rules further to amend the Income-tax Rules, 1962 , which may be called the Income-tax (10th Amendment) Rules, 2016 and come into force on the 1st day of July, 2016.
In the Income-tax Rules, 1962 in rule 6, for the purpose of prescribed authority, for expenditure on scientific research, amendments have been made and certain clauses have been substituted as regards furnishing of report in electronic format and in relation to the approval of in-house research and development facility in Part A of Form No. 3CL; quantifying the expenditure incurred on in-house research and development facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the Act in Part B; Form No.3CL; The report in Form No.3CL referred to in clause (b) shall now be furnished electronically by the prescribed authority to the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over such company within one hundred and twenty days of the grant of the approval, in a case referred to in sub-clause (i) of clause (b) etc.
In Form No.3CK, Annexure-I regarding Information to be furnished separately in respect of each research and development facility approved by prescribed authority under section 35(2AB) of the Act and Annexure-II regarding Details of expenditure incurred on the research and development facility centre approved by the prescribed authority under section 35 (2AB) of the Act have been inserted.
Also FORM NO. 3CL under rule 6 the Report to be submitted by the prescribed authority to the Income-tax Authority specified under section 35(2AB)of the Income-tax Act, 1961 : andFORM No.3CL under rule 6 about “Report from an accountant to be furnished under sub-section (2AB) of section 35 of the Act relating to in-house scientific research and development facility have been inserted/substituted
(NOTIFICATION NO. SO 1580(E)[NO.29/2016(F.NO.142/19/2015-TPL)], Dt. 28-4-2016)
INCOME-TAX (ELEVENTH AMENDMENT) RULES, 2016 - TDS RELATED - AMENDMENT IN RULES 30, 31A, 37CA, FORM 24G, 24Q, 26Q & 27Q AND INSERTION OF RULE 26C & FORM 12BA: The Central Board of Direct Taxes made the rules further to amend the Income-tax Rules, 1962, which may be called the Income-tax (11th Amendment) Rules, 2016 andshall come into force from the 1st day of June, 2016.
In the Income-tax Rules, 1962 after rule 26B, the following rule is inserted, namely : Furnishing of evidence of claims by employee for deduction of tax under section 192.—(1) The assessee shall furnish to the person responsible for making payment under sub-section (1) of section 192, the evidence or the particulars of the claims referred to in sub-rule (2), in Form No.12BB for the purpose of estimating his income or computing the tax deduction at source. The assessee shall now would be required to furnish the evidence or the particulars specified in the Table as inserted now in the said rules; in rule 31A, for Statement of deduction of tax under section 200 sub-rule is substituted. In rule 37CA regarding time and mode of payment to government account of the tax collected at source changes have been made.
Insertions have been made in FORM NO. 12BB under rule 26c as regardthe Statement showing particulars of claims by an employee for deduction of tax under section 192
(NOTIFICATION NO. SO 1587(E) [NO. 30/2016(F.NO.142/29/2015-TPL)], Dt. 29-4-2016)
SECTION 206C OF THE INCOME-TAX ACT, 1961 - PROFITS AND GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC LIQUOR, FOREST PRODUCE, SCRAP, ETC. - PROCEDURE FOR ONLINE SUBMISSION OF STATEMENT OF DEDUCTION OF TAX UNDER SECTION 200(3) AND STATEMENT OF COLLECTION OF TAX UNDER PROVISO TO SECTION 206C(3): The provisions relating to the statement of deduction of tax under sub-section (3) of section 200 and the statement of collection of tax under proviso to sub-section (3) of section 206C of the Income-tax Act, are prescribed under Rule 31A and Rule 31AA of the Income-tax Rules, respectively. As per sub-rule (5) of rule 31A and sub-rule (5) of rule 31AA of the Rules, the Director General of Income-tax (Systems) specifies the procedures, formats and standards for the purposes of furnishing and verification of the statements and shall be responsible for the day to day administration in relation to furnishing and verification of the statements in the manner so specified. Accordingly, the Principal Director General of Income-tax (Systems) laid down the procedures of registration in the e-filing portal, the manner of the preparation of the statements and submission of the statements as detailed in the said instructions. The deductors /collectors will have the option of online filing of e-TDS/TCS returns through e-filing portal or submission at TIN Facilitation Centres. Procedure for filing e-TDS/TCS statement online through e-filing portal about Registration, Preparation and Submission.
(NOTIFICATION NO.6/2016 DATED 4-5-2016 )
SECTION 197A OF THE INCOME-TAX ACT, 1961 - DEDUCTION AT SOURCE - NO DEDUCTION TO BE MADE IN CERTAIN CASES - PROCEDURE FOR SUBMISSION OF DECLARATION BY A PERSON CLAIMING RECEIPT OF CERTAIN INCOMES WITHOUT DEDUCTION OF TAX IN FORM 15G/15H : As per sub-rule (1) of rule 29C (Declaration by person claiming receipt of certain incomes without deduction of tax) of the Income-tax Rules, a declaration under sub-section (1) or under sub-section (1A) of section 197A shall be in Form No. 15G and declaration under sub-section (1C) of section 197A shall be in Form No. 15H. Further as per sub-rule (3) of rule 29C, the person responsible for paying any income of the nature referred to in sub-section (1) or sub-section (1A) or sub-section (1C) of section 197A, shall allot a unique identification number to each declaration received by him in Form No.15G and Form No.15H respectively during every quarter of the financial year in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (7) of rule 29C.
As per sub-rule (4) of rule 29C, the person referred to in sub-rule (3) herein shall furnish the particulars of declaration received by him during any quarter of the financial year along with the unique identification number allotted by him under sub-rule (3) in the statement of deduction of tax of the said quarter in accordance with the provisions of clause (vii) of sub-rule (4) of rule 31A.
As per sub-rule (7) of rule 29C, the Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the declaration, allotment of unique identification number and furnishing or making available the declaration to the income tax authority and shall be responsible for the day-to-day administration in relation to the furnishing of the particulars of declaration in accordance with the provisions of sub-rule (4) of rule 29C.Accordingly the Principal Director General of Income-tax (Systems) hereby laid down the procedures for Registration, Preparation and Submission.
(NOTIFICATION NO.7/2016DATED 4-5-2016)
SECTION 195 OF THE INCOME-TAX ACT, 1961 - DEDUCTION AT SOURCE - OTHER SUMS - PROCEDURE FOR SUBMISSION OF FORM 15CC BY AN AUTHORISED DEALER IN RESPECT OF REMITTANCES UNDER SECTION 195(6) : Under sub-section (6) of section 195 of the Income-tax Act, person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, is required to furnish the information relating to payment of such sum, in such form and manner, as may be prescribed.
As per sub-rule (7) of rule 37BB of the Income-tax Rules, 1962, the authorised dealers are required to furnish a quarterly statement for each quarter of the financial year in Form No.15CC to the Principal Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) electronically under digital signature within fifteen days from the end of the quarter of the financial year to which such statement relates in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8).
The Principal Director General of Income-tax (Systems) laid down the procedure for submission of Form 15CC as regards Generation of ITDREIN, Submission of details of authorised person and Submission of Form 15CC.
(NOTIFICATION NO.8/2016 DATED 4-5-2016)
SECTION 183, READ WITH SECTIONS 187 AND 190 OF THE FINANCE ACT, 2016 - UNDISCLOSED INCOME - DECLARATION OF - NOTIFIED DATE FOR SPECIFIED SECTIONS OF FINANCE ACT, 2016: The Central Government appointed (i) the 30th day of September, 2016 as the date on or before which a person may make a declaration under sub-section (1) of section 183; (ii) the 30th day of November, 2016 as the date on or before which the tax and surcharge is payable under section 184, and the penalty is payable under section 185 in respect of the undisclosed income; and (iii) the 30th day of September, 2017 as the date on or before which the benamidar shall transfer to the declarant, being the person who provides the consideration for such asset, or his legal representative.
(NOTIFICATION NO.SO 1830(E) NO.32/2016 (F.NO.142/8/2016-TPL), Dt. 19-5-2016)
SECTION 199 OF THE FINANCE ACT, 2016 - POWER TO MAKE RULES - INCOME DECLARATION SCHEME RULES, 2016 : The Central Board of Direct Taxes, subject to the control of the Central Government hereby made the rules for carrying out the provisions of Chapter IX of the said Act relating to the Income Declaration Scheme, 2016 whichmay be called the Income Declaration Scheme Rules, 2016 and shall come into force on the 1st day of June, 2016.
The rules contain importantDefinitions rules for Determination of Fair market value and Declaration of income or income in the form of investment in any asset.
It also provide FORM OF DECLARATION UNDER SECTION 183 OF THE FINANCE ACT, 2016,IN RESPECT OF THE INCOME DECLARATION SCHEME, 2016 - THE INCOME DECLARATION SCHEME RULES, 2016 Form 1 as per rule 4(1);
ACKNOWLEDGEMENT OF DECLARATION UNDER SECTION 183 OF THE FINANCE ACT, 2016 IN RESPECT OF THE INCOME DECLARATION SCHEME, 2016 - THE INCOME DECLARATION SCHEME RULES, 2016 - Form 2 as per rule 4(3);
INTIMATION OF PAYMENT UNDER SUB-SECTION (1) OF SECTION 187 OF THE FINANCE ACT, 2016 IN RESPECT OF THE INCOME DECLARATION SCHEME, 2016 - THE INCOME DECLARATION SCHEME RULES, 2016 - Form 3 as per rule 4(4);
CERTIFICATE OF DECLARATION UNDER SECTION 183 OF THE FINANCE ACT, 2016 IN RESPECT OF THE INCOME DECLARATION SCHEME, 2016 - THE INCOME DECLARATION SCHEME RULES, 2016 - Form 4 as rule 4(5).
(NOTIFICATION NO.SO 1831(E) [NO.33/2016 (F.NO.142/8/2016-TPL), Dt 19-5-2016)
CIRCULARS
SECTION 45, READ WITH SECTION 28(i), OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS, CHARGEABLE AS - CONSISTENCY IN TAXABILITY OF INCOME/LOSS ARISING FROM TRANSFER OF UNLISTED SHARES: Regarding characterisation of income from transactions in listed shares and securities, Central Board of Direct Taxes ('CBDT') had issued a clarificatory Circular no. 6/2016 dated 29th February, 2016, wherein with a view to reduce litigation and maintain consistency in approach in assessments, it was instructed that income arising from transfer of listed shares and securities, which are held for more than twelve months would be taxed under the head 'Capital Gain' unless the taxpayer itself treats these as its stock- in-trade and transfer thereof as its business income. It was further stated that in other situations, the issue was to be decided on the basis of existing Circulars issued by the CBDT on this subject.
Similarly, for determining the tax-treatment of income arising from transfer of unlisted shares for which no formal market exists for trading, a need has been felt to have a consistent view in assessments pertaining to such income. It has, accordingly, been decided that the income arising from transfer of unlisted shares would be considered under the head 'Capital Gain', irrespective of period of holding, with a view to avoid disputes/litigation and to maintain uniform approach.
It is, however, clarified that the above would not be necessarily applied in the situations where: i. the genuineness of transactions in unlisted shares itself is questionable; or ii. the transfer of unlisted shares is related to an issue pertaining to lifting of corporate veil; or iii. the transfer of unlisted shares is made along with the control and management of underlying business and the Assessing Officer would take appropriate view in such situations.
(LETTER F.NO.225/12/2016/ITA.II, DATED 2-5-2016)
SECTION 9A OF THE INCOME-TAX ACT, 1961, READ WITH RULE 10VA OF THE INCOME-TAX RULES, 1962 - CERTAIN ACTIVITIES NOT TO CONSTITUTE BUSINESS CONNECTION IN INDIA - NOTIFIED COMMITTEE FOR PURPOSES OF RULE 10VA(4): The Central Board of Direct Taxes hereby notified the following Committee for the purposes of the said sub-rule: I. Chief Commissioner of Income Tax (International Taxation), West Zone, Mumbai (Chairperson of Committee) II. Commissioner of Income Tax (International Taxation)-1, Mumbai III; andCommissioner of Income Tax (Transfer Pricing)-1 Mumbai
(ORDER [F.NO. 173/237/2016-ITA-I], DATED 6-5-2016)
SECTION 139 OF THE INCOME-TAX ACT, 1961 - RETURN OF INCOME - VERTIFICATION OF TAX RETURNS FOR ASSESSMENT YEARS 2009-10, 2010-11, 2011-12, 2012-13, 2013-14 AND 2014-15 THROUGH EVC WHICH ARE PENDING DUE TO NON-FILING OF ITR-V FORM AND PROCESSING OF SUCH RETURNS: Under the earlier system of e-filing, in tax-returns which were to be filed electronically without a digital signature, taxpayer had to take printout of ITR-V Form and send it to Centralised Processing Centre ('CPC'), Bengaluru within 120 days of transmitting the data electronically. In view of difficulties being faced by the taxpayers in the process, from time to time, relaxation for filing the ITR-V for various Assessment Years was granted so that process of filing the return could be completed. In law, consequences of non-filing the ITR-V within the time allowed is significant as such a return is/can be declared Non-est in law and thereafter, all the consequences for Non-Filing a tax return, as specified in the Act follow.
However, inspite of granting relaxation of time for submitting ITR-V Form on various occasions, as mentioned in para above, it has been noticed that a large number of such electronically filed returns still remain pending with the Income-tax Department for want of receipt of a valid ITR-V Form at CPC, Bengaluru from the taxpayers concerned.
The matter has been examined by CBDT. Therefore, in order to regularize the aforesaid returns which have either become Non-est or have remained pending due to non-filing/non-receipt of respective ITR-V Form, the Central Board of Direct Taxes ('CBDT'), in exercise of powers under section 119(2)(a) of the Act, in case of returns for Assessment Years 2009-10, 2010-11, 2011-12, 2012-2013, 2013-2014 and 2014-2015 which were uploaded electronically by the taxpayer within the time allowed under section 139 of the Act and which have remained incomplete due to non-submission of ITR-V Form for verification, hereby permits verification of such returns also through EVC. Such verification process must be completed by 31.08.2016. As an alternative to EVC, the taxpayer is allowed to send a duly signed copy of ITR-V to the CPC, Bengaluru by this date by speed post. In such cases, CBDT also relaxes the time-frame for issuing the intimation as provided in second proviso to sub-section (1) of section 143 of the Act and directs that such returns shall be processed by 30.11.2016 and intimation of processing of such returns shall be sent to the taxpayer concerned as per the laid down procedure. In refund cases, while determining the interest, provision of section 244A(2) of the Act would apply.
In situations where the taxpayer concerned had submitted the ITR-V Form after the permitted time which was earlier being treated as Non-est/declared Non-est and evidence of same is available with the Department, the same shall be treated as valid compliance of this order and dealt with accordingly. However, this relaxation shall not apply in those cases, where during the intervening period; Department has already taken recourse to any other measure as specified in the Act for ensuring filing of tax return by the taxpayer concerned after declaring the return as Non-est.
It has further beenclarified that this is the final opportunity being provided to the taxpayers to regularize their pending income-tax returns pertaining to the Assessment Year's 2009-2010 till 2014-2015 which were filed as per provisions of section 139 of the Act but were declared Non-est/have remained pending for verification just for want of receipt of a valid ITR-V Form at CPC, Bengaluru. In case the taxpayer concerned does not get his return regularized by furnishing a valid verification (either EVC or ITR-V) till 31.08.2016, necessary consequences as provided in law for non-filing the return may follow. In this regard, Principal DGIT(Systems) shall take all necessary measures to duly inform the taxpayers which are proposed to be covered vide this order to complete the verification process within the time being allowed. The taxpayer concerned may also ascertain whether ITR-V has been received in the CPC, Bengaluru or not by logging on the website of Income-tax Department-http:/incometaxefiling.gov.in/e-Filing/Services/ITR-V Receipt Status.html by entering PAN No. and Assessment Year or e-Filing Acknowledgement Number. Alternatively, status of ITR-V could also be ascertained at the above Website under 'Click to view Returns/Forms' after logging in with registered e-Filing account. In case ITR-V has not been received within the prescribed time, status will not be displayed and further steps would be required to be taken as mentioned above.
(CIRCULAR NO.13/2016 [F.NO.225/46/2016-ITA.II], DATED 9-5-2016)
SECTION 90 OF THE INCOME-TAX ACT, 1961 - DOUBLE TAXATION AGREEMENT - EXCHANGE OF INFORMATION REQUESTS TO BRITISH VIRGIN ISLANDS (BVI) : British Virgin Islands (BVI) is one of the most important jurisdictions for India from the point of Exchange of Information (EOI) relationship. Over the past few years, India has sent several EOI requests to BVI under the India-BVI Tax Information Exchange Agreement (TIEA). A lot of requests are likely to be made to the BVI in near future in view of the investigations being carried out in the Panama Papers. Even though the EOI Cell of India has been making continuous efforts to improve the efficiency and efficacy of the information exchange process with BVI, a large number of deficiencies are being observed in the EOI requests sent by field officers.
In order to achieve better outcomes from requests for information made to the BVI, the following directions have been given to the field officers while making EOI requests:-
Procedure for incorporating a company in the BVI: Any person who wishes to form a registered company in BVI must do so through a licensed Registration Agent (RA). The agent is required (amongst other things) to obtain client due diligence (CDD also sometimes referred to as "know your client" or KYC) to comply with the regulations. There are more than 100 registered agents in BVI who provide company management business services like formation of companies, providing registered agent and registered offices, providing directors or officers and nominee shareholder licenses. The Financial Service Commission of BVI grants licenses to these RA to carry out these services for BVI companies as well as for companies incorporated or registered in a jurisdiction outside the Virgin Islands. One of the most popular service providers is Portcullis Group which has operations in BVI, Singapore, Cayman Islands, Hong Kong, Mauritius etc. The concerned BVI entity of the group is Portcullis Trust Net (BVI) Limited. Another service provider is Fidelity Corporate Services. As stated above, there are more than 100 such service providers. The RA must properly identify and know the client and the beneficial owner(s) of the new company as per the requirement of law and the conditions of the Company Management License. Therefore, before the RA proceed with a new incorporation for any first-time client, they need to receive a few documents, such as, certified copy of passport, proof of address, etc., that identify and characterize the clients. Upon receipt of the due diligence information and payment of requisite fees, RA prepares and files the Memorandum and Articles of Association and other mandatory documents required to register a BVI Business Company. The initial company formation paperwork is prepared and signed on client's behalf by the RA and there is no need for the client to sign any incorporation documents for a Business Company. In order to comply with the minimum domestic presence requirements in the BVI, RA provides a Registered Address and Registered Agent service for the client's new company. Field officers may keep the above procedure in mind while making a request for information relating to a BVI company.
Shareholding of BVI Companies: Companies in BVI are not required to state their authorized capital. They need to simply state the number of shares they will issue but not the monetary value of the capital. Thus, a company may issue its shares at a "market value", or at a value that its first owners deem fit, depending on the capitalization requirements of the company. Thus, a company with the same 50,000 shares may raise substantially different amounts of capital from its would-be shareholders, depending on its capitalization needs and plans of the shareholders. Consequently, there are no requirements to have any amount of paid-up capital, or to pay it in by a certain deadline. The details of shareholders of the company are not publically available. The law in BVI only requires that the shareholder information (Register of Shareholders) must be kept on file with the Registered Agent, where it is confidential and accessible only by the members of the company. However, the law also allows for the shareholder information to be filed with the Registry of Companies as an option - if the shareholders so want. A very important feature to keep confidentiality about shareholding is "keeping shares registered in the name of nominee and not in the name of actual owner". For example, Indian resident X having a company ABC in the BVI can make person Y and Z as the shareholders of the company ABC. Person Y and Z can either be individual or corporate entity. There are few companies who provide these types of shareholders services. Some subsidiary companies of Portcullis Trust Net (BVI) Limited which provide shareholding and directorship services are Execorp Limited, Shrecorp Limited etc. In such cases, there may an agreement/correspondence between actual owner/beneficial owner and nominee shareholders. Therefore, while making an EOI request, it may be essential to seek information about beneficial ownerships with underlying documents.
Directors of BVI Companies: In the BVI, Business Companies need to have a minimum of one director, either a private individual or a corporate entity, which may be resident of BVI or any other jurisdiction. If director is not a resident in BVI, the BVI authorities may not be in a position to provide information of the director. Therefore, in such situation field authorities should make separate EOI request to the country where the director is resident.
Identification of the BVI Entity: Any EOI Request sent to BVI is first matched by the BVI authorities with their existing database and the company number is obtained. Thereafter, request for obtaining information is made either to the company concerned or any other authority believed to be in possession of the information sought. BVI authorities can proceed with the EOI request only when they are able to identify the company from their database. Therefore, it is necessary that the name of the company as well as the company number should be correctly identified in the EOI proforma. Further, name of the BVI entity must also be carefully written in the EOI Request to avoid any spelling errors. In response to many EOI Requests, the BVI authorities have stated that the BVI entity mentioned in the EOI request was not found in their database and they have sought additional information about the company, such as company number. Field officers should, while making the EOI request as well as when clarification is sought, provide all the available information so as to enable the BVI authorities to properly identify the company in question.
Requirement for Refrainment from Notification: In the Proforma for sending EOI Request, there is Row Number 8 in which the option "Request to refrain from notifying the taxpayer involved" has to be filled up. It has been observed that in many cases field officers exercise this option and tick "Yes" without giving detailed justification for the same. Under the laws of certain countries/jurisdictions, the taxpayer or the holder of the information has certain rights including a right to be informed or notified that a request for information concerning him has been made by another country/jurisdiction. However, in certain exceptional cases, the requesting country/jurisdiction can make a request that the taxpayer/holder of information may not be so notified. If a request to refrain from notifying the taxpayer(s) concerned is made, the reasons for the same must be clearly explained in the request. Such reasons could be that the information is of a very urgent nature and the process of prior notification to the taxpayer will delay supply of information or the prior notification is likely to undermine the success of the investigation being conducted. A request to refrain from notifying the taxpayer should not be made in a routine manner and such request should be made only if it is essential and can be justified on the basis of documentary evidences. The reason that the taxpayer concerned is likely to file an appeal against the supply of information would generally not be a valid reason for making such a request. Field officers must also keep in mind that this option should not be exercised while seeking information that is not likely to be in possession of the BVI tax authorities, but instead is likely to be available only with the taxpayer. In such a situation, if the request to refrain from notifying the taxpayer is made, then the BVI authorities may not be able to approach the taxpayer to obtain the requested information. It may also be noted that information like details of bank account, immovable property etc. are generally not readily available with tax authorities. Therefore, this option should only be exercised only in exceptional cases.
Demonstrating "Foreseeable Relevance": Under the TIEA between India and the BVI, the Competent Authorities are obliged to exchange information which is foreseeably relevant for administration and enforcement of the domestic laws concerning taxes. The standard of "foreseeable relevance" requires that the requesting State provides an explanation as to how the information requested would be relevant for the tax affairs of the taxpayer concerned relating to investigation, assessment or collection of taxes. The standard provides that the Contracting States are not at liberty to engage in "fishing expeditions" or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer. It is, therefore, essential that while making the initial EOI request all the relevant facts and background of the case are clearly brought out and the relevance of information for the purposes of administration and enforcement of Indian tax laws is spelt out in sufficient detail. These details should be provided in Form A/Row 12 relating to "relevant background". This will help the BVI authorities to provide the information requested, prevent legal challenges to proceedings in accessing information, if any, and will, therefore, obviate the need for further clarifications sought from the Indian authorities by BVI.
Large number of questions in the request: It has been observed that large numbers of questions which are vague and not foreseeably relevant are being asked in our EOI requests. Even in some cases, there are more than 40 questions in the EOI request. Field authorities are advised that a more focused approach may be considered while formulating an EOI request. Further, request for voluminous information should be avoided as it may become counterproductive on account of the following reasons:
· The request may be considered as having been made in a casual and perfunctory manner and may not receive adequate attention by the BVI authorities.
· In a request with a long list of questions, information which is more critical may be missed out by BVI and therefore the useful information may not be received by us.
· Though BVI authorities may genuinely want to provide assistance, they may not be able to do so as they would need to collect the requested information from various sources, which they may not be able to do in a timely manner.
In cases where investigation is at a preliminary stage and not much of detail is available, it is suggested that the initial EOI request may ask for only limited information relating to ownership and incorporation, financial accounts maintained, bank accounts maintained in BVI and outside BVI including KYC details, details of immovable/movable property held, etc. It may be noted that, if in a case any additional information is required, the same may always be requested through additional EOI requests.
Clarifications sought by BVI:A large number of EOI requests are pending with the BVI and one of the main reasons for delay in receipt of information from BVI is that the clarifications sought by BVI are not provided in a timely manner. Such delays are viewed unfavourably by the BVI Competent Authority. Also, in such cases, requests are sometimes treated as "closed" by the BVI Competent Authority for want of clarifications, depriving us of the valuable information which would have been useful for investigation/assessment. Therefore, whenever a clarification is sought by the BVI authorities, the same must be provided within 15 days of receipt of clarification as specified in Manual on Exchange of Information. It is the responsibility of the Range/Unit Heads to ensure that the clarifications sought by the foreign Competent Authority are provided within specified time. The Pr.CsIT/Pr.DsIT may review the position in this regard from time to time, particularly in respect of pending BVI cases, and issue necessary directions to the Range/Unit Heads to ensure that the clarifications sought are provided in a timely manner.
Feedback in BVI cases: It is also relevant to know how the information received from BVI (there are many such cases) has been actually utilized by the field authorities. In many cases, BVI has provided crucial ownership information including beneficial ownership information. However, field authorities have not yet provided the feedback to the EOI Cell on the utility of the information received as prescribed in the Manual on Exchange of Information. Analysis of the data on utilization of information may be useful in understanding the modus operandi of tax evasion as well as deciding the most efficient and effective course of action to tackle tax evasion through BVI and other jurisdictions. Therefore, Pr.CsIT/Pr.DsIT may review the position in this regard from time to time and issue necessary directions to the Range/Unit Heads to ensure that the prescribed feedback is provided in a timely manner.
5. In view of the above, CBDTdirected to allthe Pr.CsIT/Pr.DsIT(Inv):
i. To take due care while signing the proforma for EOI request to BVI and ensure that all essential elements and facts have been clearly brought out in the request;
ii. To ensure that all requests to the BVI are made in accordance with the guidance provided in the Manual on Exchange of Information as well as paragraph 2 above;
iii. To review all cases where requests have been made to the BVI authorities and provide clarifications pending, if any, to the FT&TR division latest by 31.05.2016;
iv. To review cases where information/part information has been received from the BVI and provide initial/final feedback as per proforma prescribed in the manual latest by 30.06.2016.
(LETTER F.NO.500/12/2013-FT&TR-III, DATED 12-5-2016)
SECTION 285BA OF THE INCOME-TAX ACT, 1961 - STATEMENT OF FINANCIAL TRANSACTION OR REPORTABLE ACCOUNT, OBLIGATION TO FURNISH - DIGITAL REPORTING OF FORM NO.60 : Vide Notification No.95, dated 30th December, 2015, rules 114B, 114C and 114D of the Income-tax Rules, 1962 ( the Rules) were amended and have come into force from the 1st day of January, 2016. The amended rules inter-alia provide for furnishing of a statement in Form No.61, containing particulars of declaration made in Form No.60, through online transmission of data electronically. The statement in Form No.61 is to be provided by every person referred to in clause (b) to (k) of sub-rule (1) of rule 114C and in sub- rule (2) of Rule 114C, and who is required to get his accounts audited under section 44AB of the Income-tax Act, 1961. Sub-rule (2) of rule 114D mandates that online statement in Form No.61 should be furnished by:
a) 31st October of that year, where the declarations are received by the 30th September; and
b) 30th April of the financial year immediately following the financial year in which the form is received, where the declarations are received by the 31st March.
It has been brought to the notice of the Central Board of Direct Taxes (the Board) by various stakeholders that hardship is being faced in complying with online submission of statement in Form No.61, containing particulars of declaration made in Form No.60.
In view of the above, the board decided that filling of all the fields in Form No.60 shall be considered to be mandatory in respect of transactions entered on or after 1.04.2016. It is also decided that online reporting of declarations in Form No. 61 for quarter ending March, 2016 may be done along with report for quarter ending September, 2016.
(CIRCULAR NO.14/2016 [F.NO.370149/68/2016-TPL], DATED 18-5-2016)
SECTION 32 OF THE INCOME-TAX ACT, 1961 - DEPRECIATION - ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(iia) FOR ASSESSEES ENGAGED IN BUSINESS OF MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING: An assessee, engaged in the business of manufacture or production of an article or thing, is eligible to claim additional depreciation under clause (iia) of sub-section (1) of section 32 of the Income-tax Act, in addition to the depreciation allowance under sub-section (1) of section 32 of the Act. Whether or not an assessee engaged in printing or printing and publishing is eligible for grant of additional depreciation under clause (iia) of sub-section (1) of section 32 of the Act, has been a contentious issue. In other words, whether printing or printing and publishing amounts to manufacture or production of article or thing has been contested in legal forums.
The Hon'ble Kerala High Court in the case of Mathrubhoomi Printing & Publishing Co. vide its judgment dated 16.2.2015 in ITA No 23 of 2015 relied upon the Hon'ble Delhi High Court judgment dated 31.5.2013 in ITA No 49 of 1996 in the case of Delhi Press Patra Prakashan Ltd.1 and held that printing and publishing activity is a manufacturing activity and therefore, assessee is eligible for grant of additional depreciation u/s 32(1)(iia).
The Board has accepted the position that printing or printing and publishing amounts to manufacture or production of article or thing. The judgments of Hon'ble Delhi and Kerala High Courts on this issue have been accepted. Thus the issue relating to grant of deprecation u/s 32(1) (iia) has not been further contested, though the Delhi High Court judgment has been contested on other issues. It is, therefore, a settled position that the business of printing or printing and publishing amounts to manufacture or production of an article or thing and is accordingly eligible for additional depreciation u/s 32(1)(iia) of the Act. Henceforth, appeals may not be filed on this ground by officers of the Department and those already filed, in Courts/Tribunals may be withdrawn/not pressed upon.
(CIRCULAR NO.15/2015 [F.NO.279/MISC/140/2015/ITJ], DATED 19-5-2016)
SECTION 181 OF THE FINANCE ACT, 2016 - INCOME DECLARATION SCHEME, 2016 - EXPLANATORY NOTES ON PROVISIONS OF SAID SCHEME : The Income Declaration Scheme, 2016 is contained in the Finance Act, 2016, which received the assent of the President on the 14th of May 2016.
2. The Scheme provides an opportunity to persons who have paid not full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty totaling in all to forty-five per cent of such undisclosed income declared.
Scope of the Scheme
3. A declaration under the aforesaid Scheme may be made in respect of any income or income in the form of investment in any asset located in India and acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year 2017-18 for which the declarant had, either failed to furnish a return under section 139 of the Income-tax Act, or failed to disclose such income in a return furnished before the date of commencement of the Scheme, or such income had escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise. Where the income chargeable to tax is declared in the form of investment in any asset, the fair market value of such asset as on 1st June, 2016 computed in accordance with Rule 3 of the Income Declaration Scheme Rules, 2016 shall be deemed to be the undisclosed income.
Rate of tax, surcharge and penalty
4. The person making a declaration under the Scheme would be liable to pay tax at the rate of 30 percent of the value of such undisclosed income as increased by surcharge at the rate of 25 percent of such tax. In addition, he would also be liable to pay penalty at the rate of 25 percent of such tax. Therefore, the declarant would be liable to pay a total of 45 percent of the value of the undisclosed income declared by him. This special rate of tax, surcharge and penalty specified in the Scheme will override any rate or rates specified under the provisions of the Income-tax Act or the annual Finance Acts.
Time limits for declaration and making payment
5. A declaration under the Scheme can be made anytime on or after 1st June, 2016 but before a date to be notified by the Central Government. The Central Government has further notified 30th September, 2016 as the last date for making a declaration under the Scheme and 30th November, 2016 as the last date by which the tax, surcharge and penalty mentioned in para 4 above shall be paid. Accordingly, a declaration under the Scheme in Form 1 as prescribed in the Rules may be made at any time before 30.09.2016. After such declaration has been furnished, the jurisdictional Principal CIT/ CIT will issue an acknowledgment in Form-2 to the declarant within 15 days from the end of the month in which the declaration under Form-1 is made. The declarant shall not be liable for any adverse consequences under the Scheme in respect of, any income which has been duly declared but has been found ineligible for declaration. However, such information may be used under the provisions of the Income-tax Act. The declarant shall furnish proof of payment made in respect of tax, surcharge and penalty to the jurisdictional Principal CIT/CIT in Form-3 after which the said authority shall issue a certificate in Form-4 of the accepted declaration within 15 days of submission of proof of payment by the declarant.
Form for declaration
6. As per the Scheme, declaration is to be made in such form and shall be verified in such manner as may be prescribed. The form prescribed for this purpose is Form 1 which has been duly notified. The table below mentions the persons who are authorized to sign the said form:
Sl.
Status of the declarant
Declaration to be signed by
1.
Individual
Individual; where individual is absent from India, person authorized by him; where the individual is mentally incapacitated, his guardian or other person competent to act on his behalf.
2.
HUF
Karta; where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of the HUF
3.
Company
Managing Director; where for any unavoidable reason the managing director is not able to sign or there is no managing director, by any director.
4.
Firm
Managing partner; where for any unavoidable reason the managing partner is not able to sign the declaration, or where there is no managing partner, by any partner, not being a minor.
5.
Any other association
Any member of the association or the principal officer.
6.
Any other person
That person or by some other person competent to act on his behalf.
The declaration may be filed online on the e-filing website of the Income-tax Department using the digital signature of the declarant or through electronic verification code or in paper form before the jurisdictional Principal CIT/CIT.
Declaration not eligible in certain cases
7. As per the provisions of the Scheme, no declaration can be made in respect of any undisclosed income chargeable to tax under the Income-tax Act for assessment year 2016-17 or any earlier assessment year in the following cases—
(i)
where a notice under section 142 or section 143(2) or section 148 or section 153A or section 153C of the Income-tax Act has been issued in respect of such assessment year and the proceeding is pending before the Assessing Officer. For the purposes of declaration under the Scheme, it is clarified that the person will not be eligible under the Scheme if any notice referred above has been served upon the person on or before 31st May, 2016 i.e. before the date of commencement of this Scheme.
In the form of declaration (Form 1) the declarant will verify that no such notice has been received by him on or before 31st May, 2016.
(ii)
where a search has been conducted under section 132 or requisition has been made under section 132A or a survey has been carried out under section 133A of the Income-tax Act in a previous year and the time for issuance of a notice under section 143 (2) or section 153A or section 153C for the relevant assessment year has not expired. In the form of declaration (Form 1) the declarant will also verify that these facts do not prevail in his case.
(iii)
cases covered under the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015.
A person in respect of whom proceedings for prosecution of any offence punishable under Chapter IX (offences relating to public servants) or Chapter XVII (offences against property) of the Indian Penal Code or under the Unlawful Activities (Prevention) Act or the Narcotic Drugs and Psychotropic Substances Act or the Prevention of Corruption Act are pending shall not be eligible to make declaration under the Scheme.
A person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act or a person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, subject to the conditions specified in the Scheme, shall also not be eligible for making a declaration under the Scheme.
Circumstances where declaration shall be invalid
8. In the following situations, a declaration shall be void and shall be deemed never to have been made:—
(a)
If the declarant fails to pay the entire amount of tax, surcharge and penalty within the specified date, i.e., 30.11.2016;
(b)
Where the declaration has been made by misrepresentation or suppression of facts or information.
Where the declaration is held to be void for any of the above reasons, it shall be deemed never to have been made and all the provisions of the Income-tax Act, including penalties and prosecutions, shall apply accordingly.
Any tax, surcharge or penalty paid in pursuance of the declaration shall, however, not be refundable under any circumstances.
Effect of valid declaration
9. Where a valid declaration as detailed above has been made, the following consequences will follow:
a) The amount of undisclosed income declared shall not be included in the total income of the declarant under the Income-tax Act for any assessment year;
b) The contents of the declaration shall not be admissible in evidence against the declarant in any penalty or prosecution proceedings under the Income-tax Act and the Wealth Tax Act;
c) Immunity from the Benami Transactions (Prohibition) Act, 1988 shall be available in respect of the assets disclosed in the declarations subject to the condition that the benamidar shall transfer to the declarant or his legal representative the asset in respect of which the declaration of undisclosed income is made on or before 30th September, 2017;
d) The value of asset declared in the declaration shall not be chargeable to Wealth-tax for any assessment year or years.
e) Declaration of undisclosed income will not affect the finality of completed assessments. The declarant will not be entitled to claim re-assessment of any earlier year or revision of any order or any benefit or set off or relief in any appeal or proceedings under the Income-tax Act in respect of declared undisclosed income or any tax, surcharge or penalty paid thereon.
(CIRCULAR NO.16 OF 2016 [F.NO.370142/8/2016-TPL], DATED 20-5-2016)
SECTION 181 OF THE FINANCE ACT, 2016 - INCOME DECLARATION SCHEME, 2016 - CLARIFICATION THEREON : The Income Declaration Scheme, 2016 (hereinafter referred to as 'the Scheme') incorporated as Chapter IX of the Finance Act, 2016 provides an opportunity to persons who have not paid full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty totaling in all the 45% of such undisclosed income declared. The Income Declaration Scheme Rules, 2016 (hereinafter referred to as 'the Rules') have been notified. In regard to the scheme queries have been received from the public about the scope of the scheme and the procedure to be followed. The Board has considered the same and decided to clarify the points raised by issue of a circular in the form of questions and answers as follows.—
Question No.1:
Where an undisclosed income in the form of investment in asset is declared under the Scheme and tax, surcharge and penalty is paid on the fair market value of the asset as on 01.06.2016, then will the declarant be liable for capital gains on sale of such asset in the future? If yes, then how will the capital gains in such case be computed?
Answer:
Yes, the declarant will be liable for capital gains under the Income-tax Act on sale of such asset in future. As per the current provisions of the Income-tax Act, the capital gains is computed by deducting cost of acquisition from the sale price. However, since the asset will be taxed at its fair market value the cost of acquisition for the purpose of Capital Gains shall be the fair market value as on 01.06.2016 and the period of holding shall start from the said date (i.e. the date of determination of fair market value for the purposes of the Scheme).
Question No.2:
Where a notice under section 142(1)/ 143(2)/ 148/ 153A/ 153C of the Income-tax Act has been issued to a person for an assessment year will he be ineligible from making a declaration under the Scheme?
Answer:
The person will only be ineligible from declaration for those assessment years for which a notice under section 142(1)/143(2)/148/153A/153C is issued and the proceeding is pending before the Assessing Officer. He is free to declare undisclosed income for other years for which no notice under above referred sections has been issued.
Question No.3:
As per the Scheme, declaration cannot be made where an undisclosed asset has been acquired during any previous year relevant to an assessment year for which a notice under section 142, 143(2), 148, 153A or 153C of the Income-tax Act has been issued. If the notice has been issued but not served on the declarant then how will he come to know whether the notice has been issued?
Answer:
The declarant will not be eligible for declaration under the Scheme where the undisclosed income relates to the assessment year where a notice under section 142, 143(2), 148, 153A or 153C of the Income-tax Act has been issued and served on the declarant on or before 31st day of May, 2016. The declarant is required to file a declaration regarding receipt of any such notice in Form-1.
Question No.4:
In a case where the undisclosed income is represented in the form of investment in asset and such asset is partly from income that has been assessed to tax earlier, then what shall be the method of computation of undisclosed income represented by such undisclosed asset for the purposes of the Scheme?
Answer:
As per sub-rule (2) of rule 3 of the Income Declaration Scheme Rules, 2016, where investment in any asset is partly from an income which has been assessed to tax, the undisclosed income represented in form of such asset will be the fair market value of the asset determined in accordance with sub-rule (1) of rule 3 as reduced by an amount which bears to the value of the asset as on the 1.6.2016, the same proportion as the assessed income bears to the total cost of the asset. This is illustrated by an example as under:
Investment in acquisition of asset in previous year 2013-14 is of Rs.500 out of which Rs.200 relates to income assessed to tax in A.Y. 2012-13 and Rs.300 is from undisclosed income pertaining to previous year 2013-14. The fair market value of the asset as on 01.06.2016 is Rs.1500. The undisclosed income represented by this asset under the scheme shall be:
1500 Minus (1500X200)/500 = Rs 900
Question No.5:
Can a declaration be made of undisclosed income which has been assessed to tax and the case is pending before an Appellate Authority?
Answer:
As per section 189 of the Finance Act, 2016, the declarant is not entitled to re-open any assessment or reassessment made under the Income-tax Act. Therefore, he is not entitled to avail the tax compliance in respect of such income. However, he can declare other undisclosed income for the said assessment year which has not been assessed under the Income-tax Act.
Question No.6:
Can a person against whom a search/ survey operation has been initiated file declaration under the Scheme?
Answer:
(a) The person is not eligible to make a declaration under the Scheme if a search has been initiated and the time for issuance of notice under section 153A has not expired, even if such notice for the relevant assessment year has not been issued. In this case, however, the person is eligible to file a declaration in respect of an undisclosed income in relation to an assessment year which is prior to assessment years relevant for the purpose of notice under section 153A.
(b) In case of survey operation the person is barred from making a declaration under the Scheme in respect of an undisclosed income in which the survey was conducted. The person is, however, eligible to make a declaration in respect of an undisclosed income of any other previous year.
Question No. 7:
Where a search/ survey operation was conducted and the assessment has been completed but certain income was neither disclosed nor assessed, then whether such unassessed income can be declared under the Scheme?
Answer:
Yes, such undisclosed income can be declared under the Scheme.
Question No.8:
What are the consequences if no declaration under the Scheme is made in respect of undisclosed income prior to the commencement of the Scheme?
Answer:
As per section 197(c) of the Finance Act, 2016, where any income has accrued or arisen or received or any asset has been acquired out of such income prior to the commencement of the Scheme and no declaration is made under the Scheme, then such income shall be deemed to have been accrued, arisen or received or the value of the asset acquired out of such income shall be deemed to have been acquired in the year in which a notice under section 142/143(2)/148/153A/153C is issued by the Assessing Officer and the provisions of the Income-tax Act shall apply accordingly.
Question No.9:
If a declaration of undisclosed income is made under the Scheme and the same was found ineligible due to the reasons listed in section 196 of the Finance Act, 2016, then will the person be liable for consequences under section 197(c) of the Finance Act, 2016?
Answer:
In respect of such undisclosed income which has been duly declared in good faith but not found eligible, then such income shall not be hit by section 197(c) of the Finance Act, 2016. However, such undisclosed income may be assessed under the normal provisions of the Income-tax Act, 1961.
Question No.10:
If a person declares only a part of his undisclosed income under the Scheme, then will he get immunity under the Scheme in respect of the part income declared?
Answer:
It is expected that one should declare all his undisclosed income. However, in such a case the person will get immunity as per the provisions of the Scheme in respect of the undisclosed income declared under the Scheme and no immunity will be available in respect of the undisclosed income which is not declared.
Question No.11:
Can a person declare under the Scheme his undisclosed income which has been acquired from money earned through corruption?
Answer:
No. As per section 196(b) of the Finance Act, 2016, the Scheme shall not apply, inter-alia, in relation to prosecution of any offence punishable under the Prevention of Corruption Act, 1988. Therefore, declaration of such undisclosed income cannot be made under the Scheme. However, if such a declaration is made and in an event it is found that the income represented money earned through corruption it would amount to misrepresentation of facts and the declaration shall be void under section 193 of the Finance Act, 2016. If a declaration is held as void, the provisions of the Income-tax Act shall apply in respect of such income as they apply in relation to any other undisclosed income.
Question No.12:
Whether at the time of declaration under the Scheme, will the Principal Commissioner/Commissioner do any enquiry in respect of the declaration made?
Answer:
After the declaration is made the Principal Commissioner/ Commissioner will enquire whether any proceeding under section 142(1)/143(2)/148/153A/153C is pending for the assessment year for which declaration has been made. Apart from this no other enquiry will be conducted by him at the time of declaration.
Question No.13:
Will the declarations made under the Scheme be kept confidential?
Answer:
The Scheme incorporates the provisions of section 138 of the Income-tax Act relating to disclosure of information in respect of assessees. Therefore, the information in respect of declaration made is confidential as in the case of return of income filed by assessees.
Question No.14:
Is it necessary to file a valuation report of an undisclosed income represented in the form of investment in asset along with the declaration under the Scheme?
Answer:
It is not mandatory to file the valuation report of the undisclosed income represented in the form of investment in asset along with the declaration. However, the declarant should have the valuation report. While e-filing the declaration on the departmental website a facility for uploading the documents will be available.
(CIRCULAR NO.17/2016 (F.NO.142/8/2016-TPL], DATED 20-5-2016)
SECTION 197A OF THE INCOME-TAX ACT - DEDUCTION OF TAX AT SOURCE - NO DEDUCTION TO BE MADE IN CERTAIN CASES - RELAXATION FOR FURNISHING OF UID IN CASE OF FORM 15G/15H FOR CERTAIN QUARTERS : The existing provisions of section 197A of the Income-tax Act inter alia provide that tax shall not be deducted, if the recipient of certain payment on which tax is deductible furnishes to the payer a self-declaration in Form No.15G/15H in accordance with provisions of the said section. The manner of filing such declarations and the particulars have been laid down in rule 29C of the Income-tax Rules, 1962 ('the Rules').
The amended rule 29C which comes into effect from 1st October, 2015 in addition to paper filing, also provides for online filing of self- declaration for non-deduction of tax under section 197A of the Act. In this regard, Notification No.76/2015 dated 29.09.2015 has been issued for E-enablement & simplification of procedure for filing self-declaration (Form No.l5G/15H) and furnishing of such declaration to the Income-tax Department. Further, as per sub-rules (7) and (8) of rule 29C of the Rules notified vide aforesaid notification, the Pr. DGIT (Systems) is required to specify the procedures, formats and standards for the purposes of furnishing and verification of the declaration and allotment of unique identification number. In pursuance of the same, Pr. DGIT (Systems) has issued Notification No. 4/2015 dated 1st December, 2015 to notify the procedure, formats and standards.
Sub-rule (3) of rule 29C provides for allotment of Unique identification number to each declaration received in Form 15G/15G by the deductor. Further, sub-rule (5) of rule 29C provides that the payer shall also furnish unique identification number along with the details of the transactions covered under Form 15G/15H in quarterly TDS statements in accordance with the provisions of clause (vii) of sub-rule (4) of rule 31A irrespective of the fact that no tax has been deducted in the said quarter. Due to operational constraints, the Form 15G/15H and the details thereof could not be included in the quarterly statement for the quarter ending 31-12-2015 and 31-3-2016 respectively.
Taking into account the concerns of the stakeholders, the Central Board of Direct Taxes, relaxed the condition of furnishing of Unique identification number allotted by the deductor for the quarter ending 31.12.2015 and 31-3-2016 in the quarterly statement of deduction of tax in accordance with sub-rule (5) of rule 29C.
(CIRCULAR NO.18/2016 [F.NO.142/32/2015-TPL], DATED 23-5-2016)
SECTION 9 OF THE INCOME-TAX ACT, 1961 - INCOME DEEMED TO ACCRUE OR ARISE IN INDIA - MANNER OF DETERMINATION OF FAIR MARKET VALUE AND REPORTING REQUIREMENT FOR INDIAN CONCERN - INDIRECT TRANSFER PROVISIONS - DRAFT RULES : Under section 9 of the Income-tax Act, 1961 (the Act), income arising from indirect transfer of assets situated in India is deemed to accrue or arise in India. The provisions of section 9(1)(i) of the Act provides that if any share or interest in a foreign company or entity derives its value substantially from the assets located in India, then such share or interest is deemed to be situated in India. Thereby, any income arising from transfer of such share or interest is deemed to accrue or arise in India. The share or interest is said to derive it value substantially from assets located in India, if fair market value (FMV) of assets located in India comprise at least 50% of the FMV of total assets of the company or entity. The computation of FMV of Indian and global assets is to be in the prescribed manner.
Further, section 285A of the Act mandates reporting requirement on the Indian concern through or in which the foreign company or entity holds the assets in India. The information to be furnished and its manner is also required to be prescribed. Therefore, the manner of computation of FMV of assets of the foreign company or entity and the reporting requirement by the Indian concern are proposed to be provided through the amendments of the Income-tax Rules, 1962. The draft rules and forms, on which comments and suggestion of stakeholders and general public on the draft rules and forms as above may be sent electronically by 29th May, 2016 at the email address, ustpl1@nic.in in this regard, are as under:
11UB : Fair market value of assets in certain cases
(1) The fair market value of assets (tangible and intangible) as on the specified date, held directly or indirectly by a company or an entity registered or incorporated outside India (hereafter referred to as "foreign company or entity"), for the purposes of clause (i) of sub-section (1) of section 9, shall be computed in accordance with the provisions of this rule.
(2) Where the asset is the share of an Indian company listed on a recognized stock exchange not being the case referred to in sub-rule (2), the fair market value of the share shall be the observable price of such share on the stock exchange: Provided that where the share is held as part of the shareholding which confers, directly or indirectly, any right of management or control in relation to the aforesaid company, the fair market value of the share shall be determined in accordance with the following formula, namely :—
Fair market value = (A+B) /C
Where,
A= the market capitalisation of the company on the basis of observable price of its shares quoted on the recognised stock exchange; B= the book value of liabilities of the company as on the specified date; C= the total number of outstanding shares:
Provided further that where, on the specified date the share is listed on more than one recognized stock exchange, the observable price of the share shall be computed with reference to the recognised stock exchange which records the highest volume of trading in the share during the period which is considered for determining the price.
(3) Where the asset is the share of an Indian company not listed on a recognized stock exchange on the specified date, the fair market value shall be the fair market value on such date as determined by a merchant banker or an accountant in accordance with any internationally accepted pricing methodology for valuation of shares on arm's length basis and increased by the liability, if any, considered in such determination.
(4) Where the asset is an interest in a partnership firm or in a limited liability partnership or an association of person, the fair market value shall be the proportional enterprise value on the specified date of such firm or limited liability partnership or association of person, as determined by a merchant banker or an accountant in accordance with any internationally accepted valuation methodology as increased by the liability, if any, considered in such determination.
(5) The fair market value of the assets other than those referred to in sub-rules (2), (3) and (4) shall be estimated to be the price it would fetch if sold in the open market on the specified date as determined by a report from a merchant banker or an accountant as increased by the liability, if any, considered in such estimation.
(6) The fair market value of all the assets of the foreign company or the entity shall be determined in the following manner, namely:—
(i) Where the transfer of share of, or interest in, the foreign company or entity is between persons who are not associated persons and the consideration for transfer of share or interest is determined on the basis of a report prepared by an accountant or merchant banker of international repute, then the fair market value of all the assets of the foreign company or the entity shall be the value determined in such report as increased by the aggregate amount of liabilities, if any, that have been reduced for computing the value of assets for determination of such consideration;
(ii) In any other case, —
(a) Where, as on the specified date, the share of the foreign company or entity is listed on a stock exchange, the fair market value of all the assets owned by the foreign company or entity shall be determined in accordance with the following formula, namely:—
Fair market value of all assets = A+B
Where,
A = Market capitalization of the foreign company or entity computed on the basis of the observable price of the share on the stock exchange where the share of the foreign company or the entity is listed; B = book value of the liabilities of the company or the entity as on the specified date:
Provided that where, as on the specified date, the share is listed on more than one stock exchange, the observable price in the aforesaid formula shall be in respect of the stock exchange which records the highest volume of trading in the share during the period which is considered for determining the price.
(b) Where, as on the specified date, the share in the foreign company or entity is not listed on a stock exchange the value of all the assets owned by the foreign company or entity shall be determined in accordance with the following formula:
Fair market value of all assets = A+B
Where,
A = fair market value of the foreign company or the entity and its subsidiaries on a consolidated basis as determined by a merchant banker or an accountant as per the most appropriate internationally accepted valuation methodology; B = book value of liabilities of the company or the entity as on the specified date.
(7) The rate of exchange for the calculation in foreign currency, of the value of assets located in India and expressed in rupees shall be the telegraphic transfer buying rate of such currency as on the specified date.
Explanation : For the purposes of this rule and rule 11UC, —
(i) "telegraphic transfer buying rate" shall have the meaning as assigned to it in the Explanation to rule 26;
(ii) "observable price" in respect of a share quoted on a stock exchange is the higher of the following:—
(a) the average of the weekly high and low of the closing prices of the shares quoted on the said exchange during the six months period preceding the specified date; or
(b) the average of the weekly high and low of the closing price of the shares quoted on the said exchange during the two weeks preceding the specified date;
(iii) "book value of the liabilities" means the value of liabilities as shown in the balance-sheet of the company or the entity as the case may be, excluding the paid-up capital in respect of equity shares/members' interest.
(iv) "specified date" shall have the meaning as assigned to it in clause (d) of Explanation 6 to clause (i) of sub-section (1) of section 9;
(v) the terms "accountant", "merchant banker" and "recognised stock exchange" shall have the meaning as assigned to them in rule 11U;
(vi) "balance sheet",—
(a) in relation to an Indian company, means the balance-sheet of such company (including the notes annexed thereto and forming part of the accounts) as drawn up on the specified date which has been audited by the auditor of the company appointed under the laws relating to companies in force and where the balance-sheet on the specified date is not drawn up, the balance-sheet (including the notes annexed thereto and forming part of the accounts) drawn up as on a date immediately preceding the specified date which has been approved and adopted in the annual general meeting of the shareholders of the company;
(b) in any other case, means the balance-sheet of the company or entity (including the notes annexed thereto and forming part of the accounts) as drawn up on the specified date or as drawn up on a date immediately preceding the specified date and which has been submitted to the relevant authority outside India under the laws in force of the country in which the foreign company or the entity is incorporated or established.
11UC : Determination of Income attributable to assets in India
(1) The income from transfer outside India of a share of, or interest in, a company or entity referred to in clause (i) of sub-section (1) of section 9, attributable to assets located in India, shall be determined in accordance with the following formula, namely: —
A ×
Where
A = Income from the transfer of the share of, or interest in, the company or the entity computed in accordance with provisions of the Act as if such share or interest is located in India. B = Fair Market Value of assets located in India as on specified date, from which the share or interest referred to in A derives its value substantially, computed in accordance with rule 11UB. C = Fair Market Value of all the assets of the company or entity as on specified date, computed in accordance with rule 11UB:
Provided that if the transferor of the share of, or interest in, the company or entity fails to provide the information which is necessary for the application of the aforesaid formula then whole of the income from the transfer of such share or interest shall be deemed to be attributable to the assets located in India.
(2) The transferor of the share of, or interest in, a company or entity that derives its value substantially from assets located in India, shall obtain and furnish along with the return of income a report in Form 3CT duly signed and verified by an accountant providing the basis of the apportionment in accordance with the formula and certifying that the income attributable to assets located in India has been correctly computed.
114DB. Information or documents to be furnished under section 285A.
(1) Every Indian concern referred to in section 285A shall, for the purposes of the said section, maintain and furnish the information and documents in accordance with this rule.
(2) The information shall be furnished in Form 49D electronically under digital signature to the Assessing Officer having jurisdiction over the Indian concern within a period of ninety days from the end of the financial year in which any transfer of the share of, or interest in, a company or entity incorporated outside India (hereafter referred to as "foreign company or entity") referred to in the Explanation 5 to clause (i) of sub-section (1) of section 9 has taken place:
Provided that where the transaction in respect of the share or the interest had the effect of directly or indirectly transferring the right of management or control in relation to the Indian concern, the information shall be furnished in the said form within thirty days of the transaction.
(3) The Indian concern shall maintain the following (an English translation has to be prepared if the documents originally prepared are in foreign languages) and produce the same when called upon to do so by any income-tax authority in the course of any proceeding to substantiate the information furnished under sub-rule (2), namely: —
(i) details of the immediate holding company or entity, intermediate holding company or companies or entity or entities and ultimate holding company or the entity of the Indian concern;
(ii) details of other entities in India of the group of which the Indian concern is a constituent ;
(iii) the holding structure of the shares of, or the interest in, the foreign company or entity before and after the transfer;
(iv) any transfer contract or agreement entered into in respect of the share of, or interest in, any foreign company or entity that holds any asset in India through, or in, the Indian concern;
(v) financial and accounting statements of the foreign company or the entity which directly or indirectly holds the assets in India through, or in, the Indian concern for two years prior to the date of transfer of the share or interest ;
(vi) information relating to the decision or implementation process of the overall arrangement of the transfer;
(vii) information relating to,—
(a) the business operation;
(b) personnel;
(c) finance and properties;
(d) internal and external audit or the valuation report, if any, forming basis of the consideration in respect of share, or the interest,
of the foreign company or the entity being transferred and its subsidiaries, which directly or indirectly hold the assets located in India through, or in, the Indian concern;
(viii) the asset valuation report and other supporting evidence to determine the place of location of the share or interest being transferred;
(ix) the details of payment of tax outside India, which relates to the transfer of the share or interest;
(x) the valuation report in respect of Indian assets and total assets duly certified by a merchant banker or accountant with supporting evidence;
(xi) documents which are issued in connection with the transactions under the accounting practice followed.
(4) The Principal Director General of Income-tax (Systems) or Director General Income-tax (Systems), as the case may be, shall specify the procedure for filing of Form No. 49D and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the information so furnished under this rule.
(5) The information and documents specified in sub-rule (3) shall be kept and maintained for a period of eight years from the end of relevant assessment year.
Explanation: For the purposes of this rule,—
i. "ultimate holding company or entity" means a company or the entity that has ultimate control of the Indian concern directly or indirectly and such company or entity is not itself controlled by or is subsidiary of any other company or entity;
ii. "intermediate holding company or entity" means a company or an entity that has controlling interest in another company or entity and is itself controlled by or is subsidiary of another company or entity;
iii. "immediate holding company or the entity" means the company or entity that directly maintains the controlling interest in the Indian concern'.
Form No(s) FORM NO. 3CT vide rule 11UC - for Income attributable to assets located in India under section 9 of the Income-tax Act, 1961 & FORM NO. 49D videRule 114DB - Information and documents to be furnished by an Indian concern under section 285A are also proposed to be provided
(LETTER F.NO.142/26/2015-TPL], DATED 23-5-2016)
SECTION 186, READ WITH SECTION 183, OF THE FINANCE ACT, 2016 - INCOME DECLARATION SCHEME, 2016 - MANNER OF DECLARATION - CLARIFICATION ON JURISDICTIONAL PRINCIPAL COMMISSIONER OR COMMISSIONER FOR PURPOSE OF SAID RULES INCOME DECLARATION SCHEME RULES, 2016 : Rule 4 of the Income Declaration Scheme Rules, 2016 provides that a declaration of income or income in the form of investment in any asset under section 183 shall be made in the prescribed manner to the Principal Commissioner or the Commissioner who exercises jurisdiction over the declarant. CBDT clarified that the jurisdictional Principal Commissioner or the Commissioner, as the case may be, who exercises jurisdiction under section 120 of the Income-tax Act, 1961, as notified by CBDT from time to time over such declarant, shall be the Principal Commissioner or the Commissioner as referred to in section 186 of the Income Declaration Scheme 2016 to whom declaration under section 183 of that Scheme is to be made.
(CIRCULAR NO.19/2016 [F.NO.187/10/2016.ITA.I], DATED 25-5-2016)
SECTION 139 OF THE INCOME-TAX ACT, 1961 - RETURN OF INCOME - E-FILING OF APPEALS - EXTENSION OF TIME LIMIT: Rule 45 of the Income Tax Rules, mandates compulsory e-filing of appeals before Commissioners of Income Tax (Appeals) with effect from 1-3-2016 in respect of persons who are required to furnish return of income electronically. It has come to the notice of the Central Board of Direct Taxes that in some cases the taxpayers who were required to e-file Form 35, were unable to do so due to lack of knowledge about e-filing procedure and/or technical issues in e-filing. Also, the EVC functionality for verification of e-appeals was made operational from 12-5-2016 for individuals and from 19-5-2016 for other persons. Word limit for filing grounds of appeal and mapping of jurisdiction of Commissioners of Income Tax (Appeals) were also a cause of grievance in some cases.
While the underlying issues relating to e-filing of appeals have since been addressed and resolved, in order to mitigate any inconvenience caused to the taxpayers on account of the new requirement of mandatory e-filing appeals, CBDT extended the time limit for filing of such e-appeals. E-appeals which were due to be filed by 15-5-2016 can be filed up to 15-6-2016. All e-appeals filed within this extended period would be treated as appeals filed in time. In view of the extended window for filing e-appeals, taxpayers who could not successfully e-file their appeal and had filed paper appeals are required to file an e-appeal in accordance with Rule 45 before the extended period i.e. 15-6-2016. Such e-appeals would also be treated as appeals filed within time.
(CIRCULAR NO.20/2016 [F.NO.279/MISC/M-54/2016/ITJ], DATED 26-5-2016)
SECTION 12AA OF THE INCOME-TAX ACT, 1961 - CHARITABLE OR RELIGIOUS TRUST - REGISTRATION PROCEDURE - CLARIFICATION ON CANCELLATION OF REGISTRATION UNDER SECTION 12AA IN CERTAIN CIRCUMSTANCES : Sections 11 and 12 of the Income-tax Act, exempt income of charitable trusts or institutions, if such income is applied for charitable purpose and such institution is registered under section 12AA of the Act. Section 2(15) of the Act provides definition of "charitable purpose". It includes "advancement of any other object of general public utility" provided it does not involve carrying on of any activity in the nature of trade, commerce or business etc. for financial consideration. The 2nd proviso to said section, introduced w.e.f. 1-4-2009 vide Finance Act 2010, provides that in case where the activities of any trust or institution is of the nature of advancement of any other object of general public utility and it involves carrying on of any activity in the nature of trade, commerce or business; but the aggregate value of receipts from such commercial activities does not exceed Rs. 25,00,000/- in the previous year, the purpose of such trust/institution shall be deemed as "charitable" despite it deriving consideration from such activities. However, if the aggregate value of these receipts exceeds the specified cut-off, the activity would no longer be considered as charitable and the income of the trust/institution would not be eligible for tax exemption in that year. Thus an entity, pursuing advancement of object of general public utility, could be treated as a charitable institution in one year and not a charitable institution in the other year depending on the aggregate value of receipts from commercial activities. The position remains similar when the first and second provisos of section 2(15) get substituted by the new proviso introduced w.e.f. 1-4-2016 vide Finance Act, 2015, changing the cut-off benchmark as 20% of the total receipts instead of the fixed limit of Rs.25,00,000/- as it existed earlier.
The temporary excess of receipts beyond the specified cut-off in one year may not necessarily be the outcome of alteration in the very nature of the activities of the trust or institution requiring cancellation of registration already granted to the trust or institution. Hence, section 13 of the Act has been amended vide Finance Act, 2012 by inserting a new sub-section (8) therein to provide that such organization would not get benefit of tax exemption in the particular year in which its receipts from commercial activities exceed the threshold whether or not the registration granted is cancelled. This amendment has taken effect retrospectively from 1st April, 2009 and accordingly applies in relation to the assessment year 2009-10 onwards.
In view of the aforesaid position, board clarified that it shall not be mandatory to cancel the registration already granted u/s 12AA to a charitable institution merely on the ground that the cut-off specified in the proviso to section 2(15) of the Act is exceeded in a particular year without there being any change in the nature of activities of the institution. If in any particular year, the specified cut-off is exceeded, the tax exemption would be denied to the institution in that year and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the ground(s) prescribed under the Act. With the introduction of Chapter XII-EB in the Act vide Finance Act, 2016, prescribing special provisions relating to tax on accreted income of certain trusts and institutions, cancellation of registration granted u/s 12AA may lead to a charitable institution getting hit by sub-section (3) of section 115TD and becoming liable to tax on accreted income. The cancellation of registration without justifiable reasons may, therefore, cause additional hardship to an assessee institution due to attraction of tax-liability on accreted income. The field authorities are, therefore, advised not to cancel the registration of a charitable institution granted u/s 12AA just because the proviso to section 2(15) comes into play. The process for cancellation of registration is to be initiated strictly in accordance with section 12AA(3) and 12AA(4) after carefully examining the applicability of these provisions.
(CIRCULAR NO.21/2016 [F.NO.197/17/2016-ITA-I], DATED 27-5-2016)
PRESS RELEASES
ATAL PENSION YOJANA - AMENDMENT IN EXISTING ATAL PENSION YOJANA: The Government has made following amendment in the existing Atal Pension Yojana (APY) vide Government Notification F. No. 16/1/2015 PR dated 22nd March, 2016.
Option to the spouse of the subscriber to continue contribution to APY on death of subscriber before the age of 60 years: "If the subscriber dies before the age of 60 years, his/her spouse would be given an option to continue contributing to APY account of the subscriber, which can be maintained in the spouse's name, for the renaming vesting period, till the original subscriber would have attained the age of 60 years. The spouse of the subscriber shall be entitled to receive the same pension amount as that of the subscriber until the death of the spouse".
(PRESS RELEASE, DATED 29-4-2016)
VARIOUS STEPS TAKEN BY REVENUE DEPARTMENT TO GIVE RELIEF TO SMALL TAX PAYERS AND TO SMALL BUSINESS AND PROFESSIONALS : The Revenue Department of the Ministry of Finance takes several steps for boosting-up growth and employment generation:
(a)
Lowering the Corporate tax rates to 25% for new manufacturing companies
(b)
Extending tax benefits for housing sector so as to promote construction industry
(c)
Rate of tax on royalty and fees for technical services reduced from 25% to 10%
(d)
Tax incentives for Start-up India
Similarly, it has taken various steps to give relief to the small tax payers and to the small business and professionals:
The limit of deduction that can be claimed under section 80C of Income tax Act 1961 has been enhanced from Rs. 1 lakh per annum to Rs. 2 lakh per annum, subject to the additional Rs. 50,000/- being contributed to NPS. Further, the scope of presumptive taxation regime for small businesses has been extended by increasing the turnover up to Rs. 2 crores. The presumptive taxation benefit is now available for professionals having turnover upto Rs. 50,00,000.
(PRESS RELEASE, DATED 8-5-2016)
SECTION 90 OF THE INCOME-TAX ACT, 1961 - DOUBLE TAXATION AGREEMENT - PROTOCOL FOR AMENDMENT OF CONVENTION FOR AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS BETWEEN INDIA AND MAURITIOUS : 1. The Protocol for amendment of the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains between India and Mauritius was signed by both countries in May, 2016 at Port Louis, Mauritius. The key features of the Protocol are as under:
i. Source-based taxation of capital gains on shares: With this Protocol, India gets taxation rights on capital gains arising from alienation of shares acquired on or after 1st April, 2017 in a company resident in India with effect from financial year 2017-18, while simultaneously protection to investments in shares acquired before 1st April, 2017 has also been provided. Further, in respect of such capital gains arising during the transition period from 1st April, 2017 to 31st March, 2019, the tax rate will be limited to 50% of the domestic tax rate of India, subject to the fulfillment of the conditions in the Limitation of Benefits Article. Taxation in India at full domestic tax rate will take place from financial year 2019-20 onwards.
ii. Limitation of Benefits (LOB): The benefit of 50% reduction in tax rate during the transition period from 1st April, 2017 to 31st March, 2019 shall be subject to LOB Article, whereby a resident of Mauritius (including a shell / conduit company) will not be entitled to benefits of 50% reduction in tax rate, if it fails the main purpose test and bonafide business test. A resident is deemed to be a shell/ conduit company, if its total expenditure on operations in Mauritius is less than Rs. 2,700,000 (Mauritian Rupees 1,500,000) in the immediately preceding 12 months.
iii. Source-based taxation of interest income of banks: Interest arising in India to Mauritian resident banks will be subject to withholding tax in India at the rate of 7.5% in respect of debt claims or loans made after 31st March, 2017. However, interest income of Mauritian resident banks in respect of debt-claims existing on or before 31st March, 2017 shall be exempt from tax in India.
iv. The Protocol also provides for updation of Exchange of Information Article as per international standard, provision for assistance in collection of taxes, source-based taxation of other income, amongst other changes.
2. Major impact: The Protocol will tackle the long pending issues of treaty abuse and round tripping of funds attributed to the India-Mauritius treaty, curb revenue loss, prevent double non-taxation, streamline the flow of investment and stimulate the flow of exchange of information between India and Mauritius. It will improve transparency in tax matters and will help curb tax evasion and tax avoidance. At the same time, existing investments, i.e. investments made before 1.4.2017 have been grand-fathered and will not be subject to capital gains taxation in India.
(PRESS RELEASE, DATED 10-5-2016)
INCOME DECLARATION SCHEME, 2016 - DECLARATION OF DOMESTIC BLACK MONEY FROM 1-6-2016 TO 30-9-2016: The Income Declaration Scheme, 2016 incorporated as Chapter IX of the Finance Act 2016 provides an opportunity to all persons who have not declared income correctly in earlier years to come forward and declare such undisclosed income(s). Under the Scheme, such income as declared by the eligible persons, would be taxed at the rate of 30% plus a 'Krishi Kalyan Cess’ of 25% on the taxes payable and a penalty at the rate of 25% of the taxes payable, thereby totaling to 45% of the income declared under the scheme.
The scheme shall remain in force for a period of 4 months from 1st June, 2016 to 30th September, 2016for filing of declarations and payments towards taxes, surcharge & penalty must be made latest by 30th November, 2016. Declarations can be filed online or with the jurisdictional Pr. Commissioners of Income-tax across the country.
· The scheme shall apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to Financial Year 2015-16 or earlier.
· Where the declaration is in the form of investment in assets, the Fair Market Value of such asset as on 1st June 2016 shall be deemed to be the undisclosed income under the Scheme. However, foreign assets or income to which the Black Money Act 2015 applies are not eligible for declaration under this scheme.
· Assets specified in the declaration shall be exempt from Wealth tax.
· No Scrutiny and enquiry under the Income-tax Act or the Wealth tax Act shall be undertaken in respect of such declarations.
· Immunity from prosecution under the Income-tax Act and Wealth Tax Act is also provided along with immunity from the Benami Transactions (Prohibition) Act, 1988 subject to transfer of asset to actual owner within the period specified in the Rules.
· Non-payment of total taxes, surcharge & penalty in time or declaration by misrepresentation or suppression of facts shall render the declaration void.
· The circumstances in which the Scheme shall not apply or where a person is held to be ineligible are specified in section 196 (Chapter IX) of the Finance Act, 2016.
· Non-declaration of undisclosed income under the Scheme, will render such undisclosed income liable to tax in the previous year in which it is detected by the Income tax Department. Other penal consequences will also follow accordingly.
The full text of the Scheme is available on the departmental website www.incometaxindia.gov.in
(PRESS RELEASE, DATED 14-5-2016)
FINANCE MINISTRY REVIEWS PROGRESS OF GOLD RELATED SCHEMES : A meeting under the Chairmanship Secretary, Department of Economic Affairs (DEA), Ministry of Finance was held here on Gold Monetisation Scheme (GMS) and Sovereign Bond Scheme (SBS) with the senior executives of all Public and Private Sector Banks, RBI and Bureau of Indian Standard (BIS). Deputy Governor, RBI also attended the meeting. It may be recalled that the Prime Minister Shri Narendra Modi had launched these schemes on 5th November, 2015 to review the progress of the schemes.
Under the Gold Monetisation Scheme (GMS), total gold collected under Short Term Bank Deposit (STBD) and Medium and Long Term Government Deposit (MLTGD) is 2891 kgs. There are 46 Collection and Purity Verification Centers (CPTCs), 8 Refiners and 01 Jeweler certified/accredited by the BIS. Secretary, DEA appealed to the banks to put concerted efforts to mobilize more gold under the GMS in order to achieve the Scheme's objectives. He asked the banks to increase the number of tripartite and bipartite agreements with CPTCs and refiners. He directed the Banks and Indian Bankers' Association (IBA) to rope in the eligible jewelers to act as CPTCs in the scheme especially in the areas where CPTC presence is negligible. Banks were also directed to adopt a practical approach while asking for guarantees or collaterals from the CPTCs. It was decided that IBA in association with World Gold Council will design an exhaustive media campaign which will be supported by the Government.
On the Sovereign Gold Bond Scheme, it was discussed that tradability of the Bonds will be started by the end of May and fourth tranche of the SGB will be launched soon.
(PRESS RELEASE, DATED 16-5-2016)
SECTION 90 OF THE INCOME-TAX ACT, 1961 - DOUBLE TAXATION AGREEMENT - INDIA AND SLOVENIA SIGN PROTOCOL AMENDING INDIA SLOVENIA DOUBLE TAXATION AVOIDANCE CONVENTION: India and Slovenia signed a Protocol amending the existing Convention and Protocol between the two countries for avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income on in Ljubljana. The Protocol will broaden the scope of the existing framework of exchange of tax related information which will help curb tax evasion and tax avoidance between the two countries and will also enable mutual assistance in collection of taxes.
(PRESS RELEASE, DATED 19-5-2016)
SECTION 143 OF THE INCOME-TAX ACT, 1961 - ASSESSMENT - EXTENSION OF SCHEME FOR E-ASSESSMENT: Paperless assessment/e-mail based assessment on a pilot basis was commenced in the financial year 2015-16 in non-corporate charges of five cities i.e. Ahmedabad, Bangalore, Chennai, Delhi and Mumbai. The e-mail based assessment scheme has now been extended to two more cities, namely Hyderabad and Kolkata during the current financial year. It shall now be open for all the taxpayers assessed in these seven cities, whose cases have been selected under scrutiny to opt for being scrutinized under the e-mail based paperless assessment proceedings by giving their consent. However, in case of practical difficulties in submission of scanned copies of voluminous documents through e-mail, the documents could be received by the assessing officer in physical form after recording reasons for the same.
All the taxpayers of the aforesaid seven cities, whose cases are picked up for scrutiny, may convey their consent to their respective Assessing Officers in order to avail the facility of e-mail based paperless assessment proceedings.
(PRESS RELEASE, DATED 25-5-2016)