Income Tax return Due date extended to 05.08.2016

Order under Section 119 of the Income-tax Act, 1961

NEW DELHI: The last date for filing income-tax returns has been extended to August 5. 

Tax returns for 2015-16 (assessment year 2016-17) were originally to be filed by July 31. But in view of the day-long strike at public sector banks, the deadline has been extended to August 5. 

On consideration of reports of Bank strike on 29th July, 2016 (Friday) and the 31st July, 2016 (Sunday), being a Bank-Holiday, in order to avoid any inconvenience to the taxpayers while making payment of taxes pertaining to returns of income for Assessment Year 2016-2017, which are required to be filed by 31st July, 2016 as per provisions of Section 139(1) of Income-tax Act, 1961, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income-tax Act, 1961, hereby extends the ‘due-date’ for filing such returns of Income from 31st July, 2016 to 5th August, 2016, in case of taxpayers throughout India who are liable to file their Income-tax return by the said `due-date’

For Jammu and Kashmir, the deadline will be August 31 in view of the ongoing turmoil in the state. "In view of today's bank strike and disturbance in J&K, the due date of IT return filing is being extended," Revenue Secretary Hasmukh Adhia said in a tweet on Friday.

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New norms make exit flexible for NPS investors

The Pension Fund Regulatory and Development Authority (PFRDA) has notified its guidelines for exits and withdrawals under the National Pension System (NPS). The guidelines are meant to allow a certain degree of flexibility to existing investors at the time of making an exit.

"The new guidelines make NPS a lot more flexible. They have brought in a few incremental changes which will make the NPS product better than what it was earlier," says Sumit Shukla, CEO, HDFC Pension Management.

Here are some of the major changes that have been effected:

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Partial withdrawal
NPS will now allow investors to make partial withdrawals up to 25 per cent of the contributions made. The withdrawals are permitted for higher education and marriage of children (including legally adopted child), for purchase or construction of a residential house or flat and for treatment of 13 specified illnesses such as cancer, kidney failure, etc of self, spouse, children and dependent parents.

EXIT OPTIONS

NPS investors can make partial withdrawals up to 25% of the contributions made The 25% contribution excludes contributions made by the employer Withdrawals permitted for higher education, children's marriage, purchase/ construction of house and treatment of critical illness Investors can defer annuitisation by a maximum of 3 years 100% withdrawal allowed if accumulated corpus on reaching 60 years is equal to or less than Rs 2 lakh

The 25 per cent withdrawal excludes contributions made by the employer as well as the gains made on the investment. So, if a person contributes Rs 5,000 a month, he can withdraw up to Rs 3 lakh from his total contribution of Rs 12 lakh in 20 years. Experts feel the withdrawal limit might be a bit on the lower side. "Twenty years from now, will the amount be sufficient for treating critical illness or higher education or marriage?" asks Manoj Nagpal, CEO, Outlook Asia Capital. However, Shukla believes the limit is beneficial as it will ensure a significant part of the corpus stays for retirement.

Withdrawals are permitted only after the completion of 10 years in the scheme and for a maximum of three times during the entire tenure of subscription with a five-year interval. Also, no withdrawal will be permitted in case the subscriber already owns - either individually or in the joint name - a residential house or flat other than ancestral property.

Investment after retirement
Earlier, the retirement age for corporate NPS investors was considered to be 60. According to the new norms, corporate NPS investors can exit at an age designated for retirement by their employers. This change is useful as several corporates have 58 as their retirement age.

Earlier, the NPS account automatically went into a deferred mode at the age of 60 if the lump-sum amount was not withdrawn. Under the new norms, the account is deferred only if the subscriber intimates his or her intention to do so in writing in the specified form at least 15 days before retirement. The big positive now is that in addition to the deferment, NPS investors will be able to make fresh contributions till the age of 70. Earlier, even if you deferred the account, you could not make further contributions. "Now that contributions are allowed till the age of 70, those working beyond 60 years can continue to avail of the tax benefit," says Shukla. Currently, an investment of Rs 1.5 lakh in NPS qualifies for tax deduction under section 80C. The 2015-16 Budget has also allowed an additional tax exemption of Rs 50,000 under Section 80CCD.

According to earlier norms, a minimum of 40 per cent of the corpus at age 60 had to be annuitised. The new exit norms now allow investors to defer the annuitisation by a maximum of three years. This flexibility will prove especially useful for those who have a sizeable portion of their corpus in equities. If the markets are going through a turbulent phase during the time of withdrawal, these investors can choose to postpone their annuitisation decision. This becomes even more significant in the light of the Bajpai committee recommendations, which advocate that the cap on equity investment be raised to 100 per cent from 50 per cent.

Earlier, individuals could withdraw the 60 per cent amount in lump sum or in a phased manner. While the new guidelines allow withdrawals to be deferred till 70, they do not specify whether they will be allowed in a phased manner or not. According to experts, the PFRDA will issue clarifications on the issue in the coming months.

The way ahead

Besides the exit and withdrawal notification, NPS has been undergoing changes in a few other areas as well. Recently, the account opening forms for NPS have been simplified, with the number of pages brought down to two from six. Investors opening an account through a bank need not go through a separate KYC (know your customer) if their KYC has already been done by the bank. PFRDA is also working on setting up an online platform for NPS transactions. At present, all NPS transactions are done offline and investors can only view their account online. The investment pattern itself may undergo a sea change if the recent recommendations of the Bajpai committee are accepted. The committee wants an increase in exposure to equity investment in the next six years in different phases. In the first phase, it wants the equity limit to go up to 50 per cent from the current 15 per cent in government plans and life cycle funds with equity cap at 75 per cent to be floated. Life cycle funds invest across asset classes depending on the age of the investor. The committee also wants the investment universe to be expanded to NSE 100 from the existing Nifty 50. In phase two, the equity ceiling in both government and private sector plans would be raised to 75 per cent. In phase three, it wants no ceiling on asset classes. The committee also moots investment in alternate asset classes such as real estate, commodities and infrastructure.

Exemption from annuitisation
The new guidelines allow investors to withdraw the entire accumulated amount without purchasing annuity if the corpus in the tier-I account on the date of reaching 60 years is equal to or less than Rs 2 lakh. For withdrawals before the completion of 60 years, subscribers are not required to purchase annuity provided the accumulated corpus does not exceed Rs 1 lakh. This is a positive for those with a low accumulated corpus. According to earlier norms, the subscriber had to set aside a minimum of 80 per cent of the accumulated corpus for buying annuity if the money was withdrawn before turning 60.

Once an annuity is purchased, the option of cancellation and reinvestment with another annuity service provider or in another annuity scheme shall not be allowed unless the same is done within the free-look period specified by the service provider, say the new guidelines.

(Business Standard)

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Top 5 myths around filing e-returns that might cost you heavily

E-filing of income tax returns, introduced by the IT Department in assessment year 2007-08 for individuals earning over Rs 5 lakhs per annum from the assessment year 2013-14 onwards, is a simple and easy way of filing returns but has not been popular because of the mindset of the people and misconceptions about filing tax returns online.

These misconceptions can cost you dearly and that's why they need to be clarified. We are sharing the five most common myths surrounding the process of filing of tax return online, which otherwise is extremely simple in nature: 

Myth 1: I don't need to pay tax for the interest income generated on fixed deposits as the bank already deducts the tax at source. This is a common misconception with people earning interest income on fixed deposits. It is an utter misconception as the taxpayer may be liable to pay tax on the same at a much higher tax rate. Let's take an example of an employee earning Rs 6,00,000 per annum as salary. He also earns an interest of Rs 20,000 on his fixed deposit. The bank has deducted tax at source of Rs 2,000 but he is actually liable to pay a tax amount of Rs 4,000 on the same as he comes under the 20 per cent tax bracket, whereas the bank has deducted only 10 per cent. 

Myth 2: My e-filing process is complete once I've submitted my tax return online. The e-filing process of a taxpayer isn't complete unless a signed copy of the ITR-V acknowledgement has been sent to the CPC in Bangalore within 120 days from the date on which the taxpayer filed his/her income tax return. Remember that the ITR-V copy should be sent via Speed Post or Ordinary Post only. The IT department has initiated the process of scrapping this process for all the taxpayers holding an Aadhar card. Taxpayers without an Aadhar card would be liable to send a signed copy of their ITR-V acknowledgement to the CPC in Bangalore and if one fails to do so; his/her income tax return may be considered as unfiled making the taxpayer file his/her returns once again. 

Myth 3: I don't need to disclose my previous salary amount to my current employer. This is a common problem wherein most employees avoid mentioning any details about their previous employer to their present employer. Because of this, the new employers have no details about previous salary, making them deduct tax at source as if the employee has no other source of income. That is incorrect. The employee must realise that the tax must be paid on the total amount of salary received in the previous year. When the two salaries are added together, it usually results in the employee entering into a higher tax bracket. 

Myth 4: The process of e-filing one's income tax return is not mandatory. Filing returns has been made mandatory for any taxpayer having a total income of Rs 5,00,000 or more. Total income is arrived at after deducting all the relevant deductions under chapter via one's gross total income. A taxpayer earning less than Rs 5,00,000 can also e-file their income tax returns or use the option of filing returns manually, however the same is not recommend. 

Myth 5: If I e-file my income tax return, I'll come under the scrutiny of the IT Dept. Once the process of e-filing the return is over, you receive an intimation u/s 143(1). This intimation is just a standard practice on the part of the CPC in Bangalore. A refund cannot be processed without the same. Unfortunately, sometimes even though the taxpayer has correctly disclosed all the income information in his tax return, he gets a tax demand via the intimation u/s 143(1). This is only because the department hasn't processed his case correctly and the taxpayer can correct the same by filing a rectification u/s 154. (The writer is CIO & Founder of Makemyreturns.com) 

(Business Today)

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All About e-filing for LLP

In order to carry out e-Filing on LLP you have facility to download the eform and fill it in an offline mode. Every form has the facility to pre-fill the data available in LLP system. Once the e-form is filled you would need to validate the e-form using Pre-scrutiny button. You would then have to affix the relevant digital signatures and save the form. You would need to be connected to the internet to carry out the pre-fill and pre-scrutiny functions. The step by step process is given below. The filled up e-form as per relevant instruction kit needs to be uploaded on the LLP portal. On successful upload, the Service request number would be generated and you would be directed to make payment of the statutory fees. The step by step process is given below. Once the payment has been made the status of your payment and filing status can be tracked on the LLP portal by using the ‘Track Your Payment Status’ and ‘Track Your Transaction Status’ link respectively.

Please follow the steps given below to proceed to do e-Filing:

·  Select a category to download an eForm from the LLP portal (with or without the instruction kit)

·  At any time, you can read the related instruction kit to familiarize yourself with the procedures (you can download the instruction kit with eform or view it under Help menu).

·  You have to fill the downloaded eForm.

·   You have to attach the necessary documents as attachments.

· You can use the Prefill button in eForm to populate the grayed out portion by connecting to the Internet.

·  The applicant or a representative of the applicant needs to sign the document using a digital signature.

· You need to click the Check Form button available in the eForm. System will check the mandatory fields, mandatory attachment(s) and digital signature(s).

· You need to upload the eForm for pre-scrutiny. The pre-scrutiny service is available under theServices tab or under the eForms tab by clicking the Upload eForm button. The system will verify (pre-scrutinize) the documents. In case of any inadequacies, the user will be asked to rectify the mistakes before getting the document ready for execution (signature).

· The system will calculate the fee, including late payment fees based on the due date of filing, if applicable.

· Payments will have to be made through appropriate mechanisms - electronic (credit card, Internet banking, NEFT, Pay Later) or traditional means (at the bank counter through challan).

(a) Electronic payments can be made at the Virtual Front Office (VFO) or at PFO

(b) If the user selects the traditional payment option, the system will generate 3 copies of pre-filled challan in the prescribed format. Traditional payments through cash, cheques can be done at the designated network of banks using the system generated challan. There will be five banks with estimated 200 branches authorized for accepting challan payments.

·  The payment will be exclusively confirmed for all online (Internet) payment transactions using payment gateways.

· Acceptance or rejection of any transaction will be explicitly communicated to the applicant (including facility to print a receipt for successful transactions).

·  LLP will provide a unique transaction number, the Service Request Number (SRN) which can be used by the applicant for enquiring the status pertaining to that transaction.

·  Filing will be complete only when the necessary payments are made.

·  In case of a rejection, helpful remedial tips will be provided to the applicant.

· The applicants will be provided an acknowledgement through e-mail or alternatively they can check the LLP portal.

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Gift Tax: All you want to know about Gift Tax

"The greatest gift that you can give to others is the gift of unconditional love and acceptance" - Brian Tracy. 

Having said that, let's accept that we all are equally pleased to receive worldly presents as well. And as we live in this materialistic world where gift exchanges are often in cash or kind, let us not forget about the taxman who keeps a close eye on all such transactions. 
While gifts from certain people or presents received on certain occasions are non-taxable, you will have to pay a cut to the taxman at other times. Here is what the Income Tax Act has to say on getting gifts. 

TAX-FREE PRESENTS 

Gifts received from certain specified relatives are not taxable. Here, according to the I-T Act, 'relatives' mean the spouse of the individual, siblings of self or spouse or parents, any lineal ascendant or descendant of the individual as well as the spouse and the spouses of all these persons. Also, if the gift is received by a Hindu Undivided Family (HUF), any member of the said family is regarded as a specified relative for the HUF. 

1. Gifts received on Marriage-Individuals receiving gifts on his / her marriage are not liable to pay tax on such gift whether received from relatives or non-relatives. However, the gifts received by the parents or other relatives of the individual getting married are not tax exempt. 

2. Inherited Gifts - Any gift received under a will or by way of inheritance, or in contemplation of death of the payer is not taxable in the hands of the recipient. 

3. Gifts from specified institutions: A gift received from a specified local authority would not be taxable. Similarly, a gift received from a duly registered specified trust/ institution (e.g. registered religious or charitable trust) or from any specified fund / foundation/university / hospital or medical institution (e.g. the Prime Minister's National Relief Fund, the National Foundation for Communal Harmony, etc.) is not taxable. 

THE TAXABLE PRESENTS

As per the I-T Act, cash or specified moveable property such as shares, securities, jewellery, paintings, sculptures, any work of art or immoveable property ( land, building or both) received by an individual or a HUF is considered taxable. 

1. Cash - If aggregate amount is equal to or less than Rs 50,000 then nothing is taxable. In case the value exceeds INR 50,000, the whole amount will be taxable. 

2. Immovable Property:

3. Moveable property - The taxability is same as above except fair market value (FMV) is replaced by stamp duty. The FMV is determined as per the prescribed valuation rules. 

GIFTS RECEIVED FROM EMPLOYER 

Gift, voucher or token received by an employee or member of his household on ceremonial occasion or otherwise from the employer, is not taxable provided the value thereof is less than Rs 5,000 during a financial year. The ceremonial occasion could be birthday, anniversary of employee, festivals, etc. 

If the value of such gift/ voucher/ token is Rs 5,000 or more, the full amount is treated as taxable salary in the hands of employee. Further, any gift received in cash or convertible in money (cash cheque) from employer shall be fully taxable income in the hands of the employee. 

INCOME EARNED FROM GIFTS - CLUBBING PROVISIONS 

An important point to note is that even though the gift received may not be taxed in the hands of receiving individual, in view of the abovementioned exceptions, the income subsequently earned from such gift might be taxable either in the hands of the individual gifting the item or the person receiving it. For instance, any income arising from the asset transferred by an individual to his/ her spouse other than for adequate consideration is taxable income. Such income is then clubbed in the hand .. 

The bottom line then, in the joy of giving and receiving, lies in not forgetting about the tax implications. Some caution is advised as the section on 'gifts' under the Income Tax Act is a tricky one. 

Source: ET.

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