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ITR Due date applicability for Individuals [F.Y. 2020-21]

Well, if there’s one thing that everyone was talking about the past couple of weeks, it was ITR filing. What to file, when to file, will the due dates be extended, the questions were endless. So let us shed some light on it. 

Due Dates for filing ITR

As per Section 139 of the Income Tax Act, taxpayers are required to file their ITR after the end of the Financial Year

The following are the e-filing due dates for F.Y 2020-21 i.e. for the period 01-04-2020 to 31-03-2021

For Individuals to whom Tax audit is not applicable

The original due date was  31st July 2021. However, owing to the pandemic, it was extended to 30th September 2021 and finally to 31st December 2021

For individuals to whom Tax Audit is applicable

Due Date for Tax Audit Report

The due date to submit Tax Audit Report was 30th September 2021. The same was extended twice, with the final due date being 15th January 2022 

Due date for filing ITR

This again was extended twice and the current due date is 15th February 2022

When is Tax Audit applicable?

Tax Audit is a practice where a Chartered Accountant examines and reviews books of accounts of a taxpayer and reports the required information in the Tax Audit Report.

Tax Audit will be applicable in either of the cases:

  1. When turnover exceeds INR 10 crores.
  2. If Turnover is upto INR 2 crores, then audit will be applicable if all the following conditions are met:
    i.  Incurred loss or profit is less than 6% of turnover
    ii. Total income is more than basic exemption limit
    iii. Taxpayer has opted out of presumptive taxation scheme in any of the previous 5 financial years

The following table summarizes all the relevant due dates for ITR filing 

Compliance Original due date Extended due date Final Extension
ITR filing (tax audit not applicable) 31st July 2021 30th September 2021 31st December 2021
Tax Audit Report 30th September 2021 31st October 2021 15th January 2022
ITR filing (tax audit is applicable 31st October 2021 30th November 2021 15th February 2022

Why did the e-filing due date get extended?

As we already discussed, generally the due date to file ITR (for cases without tax audit) is 31st July. However, considering the pandemic and its challenges, the government had extended the due date to 30th September 2021.

In the meantime, the government had come out with a brand new e-filing portal in June 2021. It took some time for the portal to be fully functional and stable. Taking that into consideration the difficulties faced by the taxpayers on the new portal, the due date was further extended to  31st December 2021.

Many still expected that the due date to be further extended as some taxpayers continued to face hardships on the new portal. On 31st December 2021, the government announced that the e-filing portal was fully functional and the due date for ITR filing will not be further extended.

What to do if you missed the ITR filing due date?

In case you have missed filing your ITR within the applicable due date, you can file a belated ITR till 31st March 2022.

However, if you file a belated ITR following will be applicable:

  1. Penalty for late filing u/s 234F
  2. Interest for default in filing tax return u/s 234A incase of outstanding tax liability
  3. No option to carry forward losses under the head capital gains as well as business and profession
  4. No option of opting for the New Tax Regime u/s 115 BAC

Note that if you have filed your Original Return before the due date, you can file a Revised ITR till 31st March 2022 to

i. To rectify errors or mistakes made in the original ITR

ii. To disclose income or information not reported in the original Income Tax Return

When filing a revised return, losses can be claimed. However, interest for default in filing a tax return under section 234A of the Act will be levied. 

So, there you go, we have addressed all the concerns related to ITR filing due dates. Are you yet to file your ITR? What are you waiting for? Go file it NOW!

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Tax Audit Applicability for Traders

Tax Audit has always been a matter of confusion especially when it comes to investors and trader audiences. Under a Tax audit, a practicing Chartered Accountant examines and reviews books of accounts of a taxpayer and reports the required information in the Tax Audit Report.

The auditor then submits the tax audit report to the Income Tax Department.

Let’s understand tax audit applicability in more detail:

Conditions for Tax Audit

Taxpayers having income from trading in equity intraday, equity F&O, commodity F&O, and currency F&O must report it as business income in the Income Tax Return. Since all the transactions are digital in nature, the limit for turnover to determine Tax Audit as per Section 44AB is INR 10 Cr from FY 2020-21 onwards.

Turnover exceeds INR 10 Cr

The limit of turnover as per Section 44AB is INR 10 Cr if at least 95% of the total payments and at least 95% of the total receipts are digital in nature.

If the trading turnover exceeds INR 10 Cr, Tax Audit is applicable as per Section 44AB(a) of the Income Tax Act.

Turnover is between INR 2 Cr and INR 10 Cr

When turnover is between INR 2Cr and INR 10Cr, neither Section 44AB (or any of its subsections) nor Section 44AD (presumptive taxation scheme) is applicable. Therefore, Tax Audit is not applicable irrespective of profit or loss.

Trust us, even experts don’t have any logical explanation for this loophole and clarification is awaited from the CBDT.

Turnover is upto INR 2 Cr

Tax Audit is applicable under Section 44AB(e) if all the below conditions are satisfied:

  • Incurred loss or profit is less than 6% of turnover
  • Total income is more than basic exemption limit
  • Taxpayer has opted out of presumptive taxation scheme in any of the previous 5 financial years

Tax Audit Applicability as per QUICKO

On Quicko, we recommend Tax Audit on the basis of turnover, profit/loss and total income. Since it is difficult to determine whether the taxpayer has opted out of presumptive taxation in any of the 5 previous financial years, this condition is not considered to determine the recommendation of tax audit. On basis of our experience with the tax notices issued by the Income Tax Department, we recommend the safest option for the taxpayer.

Quicko is not a CA Firm but a platform that enables taxpayers and CAs to furnish Income Tax Returns. Using algorithms that interpret the Income Tax Act, our product recommends Tax Audit. However, the final choice to opt-in/out of Tax Audit lies with the taxpayer or CA filing on behalf of the taxpayer.

Notices from Income Tax Department

There is often a misconception on when should a trader opt for tax audit.

  • Tax Audit is mandatory when turnover exceeds INR 10Cr
  • If Turnover is less than INR 2 Cr, applicabilty of section 44AB applied
    • Profit less than 6% of the turnover
    • Total income exceeds basic exemption limit.
    • Taxpayer has opted out of presumptive taxation scheme in any of the 5 previous years

In the past, the Income Tax Department has issued notices to taxpayers who had incurred losses, turnover was less than INR 2 Cr, total income was more than the basic exemption limit, and did not opt for Tax Audit. Let us take a look at one of those cases:

Turnover = 53 lacs
Profit= -4.3 lacs
Total Income > Basic Exemption Limit
The taxpayer filed the ITR without opting for Tax Audit
Tax Notice issued with the below error.

The Income Tax Department has not specified a specific business code in the case of stock traders. In general practice, the nature of business code is either adopted as 09028 – Retail Others or 13018 – Other financial intermediation services.

With the increased participation in capital markets, official clarification by the Income Tax Department around the applicability of tax audit, nature of business code, calculation of turnover, etc. would help clear the confusion around income tax compliances.

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India to introduce a New Cryptocurrency Bill?

Crypto, crypto, crypto! It looks like the news avalanche about cryptocurrencies is far from getting over.
No wonder the prices of cryptos have been so volatile in the past couple of weeks.
So why is there suddenly so much noise about crypto? Let’s find out

India’s Crypto bill

The country which has recently grabbed the most eyeballs with respect to cryptocurrency recently, is India. A new Cryptocurrency Bill will be introduced in Parliament in the ongoing session. The scope of the bill will cover the rapidly changing dynamics in the virtual currency space.

The Finance Ministry has mostly remained tight-lipped on the general architecture of the bill which has invited an array of speculations. Some say that the bill may ban all private cryptocurrencies in India, while others are much more optimistic. Many industry experts believe that this New Bill will be progressive and can propel India to the forefront of Blockchain technology.

There is also chatter about the possibility of the govt making amendments to the Income Tax Act in order to facilitate taxation of crypto gains realised in Indian and foreign crypto exchanges. We all know that taxes on crypto still remains quite ambiguous in India. However, since cryptocurrencies are legal in India, gains arising from them are subjected to taxes.

The bill is also expected to introduce an official Digital Currency regulated by the Central Bank. Minister of State for Finance, Pankaj Chaudhary believes that the introduction of a  central bank digital currency may lead to a more robust, efficient, trusted, regulated and legal tender-based payments option. He also adds that it may come with associated risks and they need to be weighed properly against the benefits.

Cryptocurrency is unregulated in India and the government does not collect any information about crypto trading. There have also been stats about the rising cases of fraud in the domain of crypto. The Enforcement Directorate is currently probing eight cases of cryptocurrency-related fraud. This has also led Govt, the RBI and the SEBI to caution people about the possible risks associated with cryptocurrency. They have also stated the fact that there is more scope to create greater awareness regarding the same.

In another news, South Korea’s decision to delay Crypto Taxation

South Korea is the second country that made it to the news for deciding to delay its plan of taxing cryptos by a year. This surely came as a relief to crypto investors in Korea and there is no denying that this decision will have an impact on global cryptocurrency prices.

Earlier, it was decided that South Korea will start taxing capital gains from the trading of cryptocurrencies from the next year i.e. 2022. Annual gains over 2.5 million from crypto trading were to be subjected to a 20% capital gains tax. However, young investors were not happy with this decision and they pushed back. It seems that the government has decided to uphold the wishes of the investors and it has, for the time being, decided to delay its decision till 2023.

So, what will India’s cryptocurrency Bill have in store for us? Only time will tell. Meanwhile, share your thoughts on cryptocurrency with us. 

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Devolution of taxes and India’s economic recovery

The Centre has decided to release INR 95,082 crore to States as tax devolution amount on 22nd November. So what does tax devolution even mean and what does this decision entail?

Let’s find out:

What is tax devolution?

Let’s start from scratch. India is a quasi-federal country. This means although we have a Centre-State structure, the centre holds more power than the states. This also translates into the economic sphere. The states are dependent on the centre for a large chunk of their financial resources. Devolution is one of the ways through which states receive money from the central government. It is basically the state’s share of taxes from the Gross Tax Revenue.

The 15th finance commission has decided that states will receive 41% from the divisible tax pool for 2021-22 to 2025-26. In other words, states will receive 41% of the Gross Tax Revenue.

Now it must be remembered that devolution of taxes is not the only way through which states receive resources from the centre. States also receive monetary support via various scheme related transfers, grants from the Finance Commission and so on.

What will this transfer mean?

So, the devolution of taxes is usually done via monthly instalments of INR 47, 541 crores. The centre has decided to release another INR 47,541 crore this month so that states have more resources in their hand. This advance payment will be adjusted in March 2022.

A meeting was called upon to discuss India’s economic growth post the pandemic and how to push it towards double digits. In this meeting between the Centre and the state representatives, many states requested the Finance Minister to increase the capital spending capacity for states.

A close collaboration between the centre and states will be instrumental in achieving the goal of double-digit growth figures. And in this mission, an increased amount of resources in the hands of the states would enable them to invest more in infrastructure and growth. This will also allow the states to invest in those sectors which were more affected than others during the pandemic for example the hospitality and tourism sector.

India’s economic recovery post-pandemic

The pandemic was a huge blow not only to the Indian economy but the global economy in general. The Indian economy witnessed a significant fall in its real GDP in 2020. However, since the ebbing of the second wave of the pandemic, India’s economy has been making a steady yet cautious recovery. In the first quarter of 2021, India witnessed a  20.1% increase in its GDP which brought the economy close to its pre-pandemic level. The covid 19 vaccination drive has been one of the major contributors to restoring the growth. And in the latter part of the year, the festive season has been a similar stimulus.

While organisations like Ficci and Ftech have forecasted a robust growth rate for the Indian economy in the near future, it is important to tread cautiously. Agricultural growth and rural demand are having a positive effect on the economy. However, the impact of the pandemic on sectors like hospitality and tourism continues to have a multiplier effect.

There is no doubt about the fact that India is surely on a steady path of recovery. However, it is important for us to take an optimistic yet judicious approach while analysing and understanding this recovery and growth.

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Decoding the Annual Information Statement(AIS)

Heard of the Annual Information Statement (AIS)? It may well replace Form 26AS in the coming future. So what is the Annual Information Statement (AIS)? And how is it going to impact taxpayers? Let’s find out.

What is the Annual Information Statement?

Up until now, Form 26AS served as a consolidated annual tax statement which included details of any TDS that might have been deducted and deposited on your behalf, Advance or Self Assessment Tax paid, as well as records of high-value transactions that you may have made.

The Annual Information Statement on the other hand includes many more categories of information like securities & mutual fund transactions, interests, dividends, foreign remittance information and more. The reported information has been processed to remove duplicate information.
It may contain any other transaction-related information that may be available with the Income Tax Department. Taxpayers will be able to download the AIS in JSON, PDF and CSV format.

Form 26AS will continue to be available on the TRACES portal until the AIS is validated and is completely operational.

What are some of the important features of the AIS?

  1. Taxpayers can submit online feedback on AIS. If the taxpayer feels that any incorrect information has crept in, they can submit that feedback online. Taxpayers can also submit the feedback offline via AIS utility.
  2.  A Simplified Taxpayer Information Summary (TIS) will also be provided to each taxpayer. This will show the a summary of a taxpayer’s incomes as per ITD. If the taxpayer changes any information on the AIS, the derived information in the TIS will get updated in real-time. With the help of TIS, taxpayers can :
    • Tally their security transactions with the broker statement.
    • Cross verify the dividends that they have received in the bank. account with what is mentioned in AIS.
    • Access information related to refund or demand for previous year’s ITR.

Why does trading data in AIS not match with Trading data in your Broker statement?

The equity data being reflected in AIS is based on inputs from agencies like depositories, property registrars, and asset management companies. This includes receipt/income from different sources such as salary, interest etc., or sale or purchase of securities such as equity shares, mutual funds, bonds, etc. Therefore, AIS shows all the financial transactions done by you that the income tax department knows about.

However, there are certain discrepancies between actual trading data and the AIS data.

Following may be the reasons for discrepancies in the AIS data and the trading data:

  • The estimated cost of acquisition for the credit is determined on the best possible available price with the reporting entity. As a result of which, data on sale/purchase of shares is showing the day’s closing prices rather than prices at which the sale/purchase was executed.
  • The estimated cost of acquisition is taken as NIL for OFF Market credits in AIS. This may affect correct valuation of gift transactions.
  • AIS Data is showing pledged shares as sale of shares.
  • AIS is showing only the total purchase & the total sales value of securities. It doesn’t show previous year holding as a result of which capital gains are mismatched.
  • Property is sold by 2 people. However, total sales may be reflected in the first PAN only.
  • Duplication of Entries may happen. Further, it may happen that the information relates to another person/year.
  • The difference in the Amount column of source wise aggregated information of one or two rupees may be occurring because of rounding off of decimals.

A facility has been provided to submit feedback online. Feedback can also be furnished by submitting multiple information in bulk. An AIS Utility has also been provided for taxpayers to view AIS and upload feedback in an offline manner. The reported value and value after feedback will be shown separately in the AIS. In case the information is modified/denied, the information source may be contacted for confirmation.

What does this mean for taxpayers? 

Taxpayers need to carefully check all the transactions reflected in the AIS and make necessary amends (if any) because this information will be vital for filing ITR.
In case of any mismatch in the TDS/TCS details displayed on Form 26AS and AIS – at present, it is recommended to follow Form 26AS available on TRACES.

How to view AIS?

Users can access the AIS by clicking the link “Annual Information Statement (AIS) under the “Services” tab of the new Income Tax Portal. 

Taxpayers need to check and verify the information shown in the AIS and make amends (if necessary) before filing ITR for the current tax season. However, if the ITR has already been filed and some information has not been included or has been wrongly included, the return may be revised to reflect the correct information. 

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