The most awaited circular No 5/2015 dated 30.03.2015- Clarification regarding the amounts received by private companies prior to 1st April, 2014

Central Action Plan for the First Quarter TDS Statement for the Asstt. Year 2016-17.

Recently CBDT has issued a letter to all CCITs about Action Plan for 1st Quarter i.e. April, 2015 to June, 2015 of the Financial Year 2015-16.  The CBDT exhibit the Interim Action Plan for theFirst Quarter of Financial Year 2015-16.  In this action Plan key result for Assessment Units (including Central Charges, Int'I Taxation, TDS and Exemptions is takes place.  The CBDT further states about International Taxation and Transfer Pricing with all dates, which are as under :

Section 80-- Deductions {Salaried people}.

The Income Tax Act provides that on determination of the gross total income of an assessee after considering income from all the heads, certain deductions therefrom may be allowed. These deductions detailed in chapter VIA of the Income Tax Act must be distinguished from the exemptions provides in Section 10 of the Act. While the former are to be reduced from the gross total income, the latter do not form part of the income at all.

The chart given below describes the deductions allowable under chapter VIA of the I.T. Act from the gross total income of the assessees having income from salaries.

SECTION	NATURE OF DEDUCTION	REMARKS
80CCC	Payment of premium for annuity plan of LIC or any other       insurer Deductionis available upto a  maximum of Rs. 1,00,000/-	The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund. The Finance Act 2015 has enhanced the ceiling of deduction under Section 80CCC from Rs.100,000 to Rs. 1,50,000 with effect from A.Y. 2016-17
80CCD	Deposit made by an employee in his pension account to the extent of 10% of his salary.	Where the Central Government makes any contribution to the pension account, deduction of such contribution to the extent of 10% of salary shall be allowed. Further, in any year where any amount is received from the pension account such amount shall be charged to tax as income of that previous year. The Finance Act, 2009 has extended benefit to any individual assesse, not being a Central Government employee.
80CCF	Subscription to long term infrastructure bonds	Subscription made by individual or HUF to the extent of Rs. 20,000 to notified long term infrastructure bonds is exempt from A.Y. 2011-12 onwards. This deduction is discontinued w.e.f. A.Y. 2013-14.
80CCG	Investment under Rajiv Gandhi Equity Savings Scheme, 2013	The deduction was 50 % of amount invested in such equity shares or ₹ 25,000, whichever is lower. The maximum Investment permissible for claiming deduction under RGESS is Rs. 50,000. The benefit is in addition to deduction available u/s Sec 80C.
80D	Payment of medical insurance      premium. Deduction is available upto Rs.15,000/ for self/ family and also upto Rs. 15,000/- for insurance in respect   of  parent/ parents of the assessee.In case of senior citizens, a deduction              upto Rs.20,000/- shall be available under this Section. Insurance premiume of senior citizen parent/ parents of the assessee also eligible for enhanced deduction of Rs. 20000/-	The premium is to be paid by any mode of payment other than cash and the insurance scheme should    be framed by the General Insurance Corporation of India & approved by the Central Govt. or Scheme framed by any other insurer and approved by the Insurance Regulatory & Development Authority. The premium should be paid in respect of health insurance of the assessee or his family members. The Finance Act 2008 has also provided deduction upto Rs. 15,000/- in respect of health insurance premium paid by the assessee towards his parent/parents. w.e.f. 01.04.2011, contributions made to the Central Government Health Scheme is also covered under this section
80DD	Deduction of Rs.40,000/ — In respect of (a) expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative. (b) Payment or deposit to specified scheme for maintenance of dependent handicapped relative. W.e.f. 01 .04.2004 the deduction under this section   has  been enhanced to Rs.50,000/- Further,  if the dependent is a person with severe disability a deduction of Rs.1,00,000/– shall be available under this sectionBudget 2015 has Further Proposed to hike the limit from A.Y. 2016-17 to  Rs. 75000 from existing Rs. 50,000/-  and for person with severe disability to Rs. 1.25 lakh from existing Rs. 1 Lakh.	The handicapped dependent should be a dependent relative suffering from a permanent disability (including blindness) or mentally retarded, as certified by a specified physician or psychiatrist.Note:A person with severe disability means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the “Persons with Disabilities (Equal opportunities, Protection of Rights and Full Participation) Act.,”
80DDB	Deduction of Rs.40,000/- in respect of medical expenditure incurred.W.e.f.     01.04.2004, deduction under this section   shall        be available to the extent of Rs.40,000/- or  the amount actually paid, whichever is less.In case of senior citizens, a deduction upto Rs.60,000/- shall be available under this Section.Budget 2015 has proposed deduction of Rs. 80000/- for seniot citizen aged 80 year or More from A.Y. 2016-17-	Expenditure must be actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10I is to be furnished by the assessee from a specialist working in a Government hospital.Budget 2015 has Proposed for the purpose of claiming deduction under the section assessee will be required to obtain a prescription from a specialist doctor instead of Certificate.
80E	Deduction in respect of payment in the previous year of interest on loan taken from a financial institution or approved charitable institution for higher studies.	This provision has been introduced to provide relief to students taking loans for higher studies. The payment of the interest thereon will be allowed as deduction over a period of upto 8 years.         Further,                by Finance Act, 2007 deduction under this section shall be available not only in respect of loan for pursuing higher education by self but also    by                spouse    or children of the assessee.W.e.f. 01.04.2010 higher education means any course of study pursued after passing the senior secondary examination or its equivalent from any recognized school, board or university.
80EE	Deduction in respect of interest on loan taken for residential house property	Vide Finance Act 2013, an individual is allowed a deduction upto a limit of Rs 1,00,000 being paid as interest on a loan taken from a Financial Institution, sanctioned during the period 01-04- 2013 to 31-03-2014 (loan not to exceed Rs 25 lakhs) for acquisition of a residential house whose value does not exceed Rs 40 lakhs. However the deduction is available if the assessee does not own any residential house property on the date of sanction of the loan.
80G	Donation to certain funds,     charitable institutions etc.	The various donations specified in Sec. 80G are          eligible    for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G
80GG	Deduction available is the least of(i) Rent paid less 10% of total incomeii. Rs.2000 per monthiii. 25% of total income	(1) Assessee          or his spouse    or minor child       should    not own        residential accommodation at the place of employment.(2) He should not be in receipt of house rent allowance.(3) He should not have a self-occupied residential premises in any other place
80TTA	Deduction in respect of interest on deposits in savings account	Section 80TTA is introduced wef A.Y. 2013-14 to provide deduction to an individual or a Hindu undivided family in respect of interest received on deposits (not being time deposits) in a savings account held with banks, cooperative banks and post office. The deduction is restricted to Rs 10,000 or actual interest whichever is lower.
80U	Deduction of Rs.50,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs.75,000/- shall be available u/s 80U.W.e.f. 01.04.2010 this limit has been raised to Rs. 1 lakh.Budget 2015 proposed to amend  section 80U  to raise  limit of deduction in respect of a person with disability from Rs. 50,000/- to Rs. 75,000 and for person with severe disability from one lakh rupees to one hundred and twenty five thousand rupees.	Certificate should be obtained on prescribed format from a notified ‘Medical authority’.
87A	Rebate Of Rs 2000 For Individuals Having Total Income Upto Rs 5 Lakh	Finance Act 2013 has provided relief in the form of rebate to individual taxpayers, resident in India, who are in lower income bracket, i. e. having total income  not exceeding Rs 5,00,000/-. The amount of rebate is Rs 2000/- or the amount of tax payable, whichever is lower. WEF A.Y. 2014-15.
80RRB	Deduction in respect of any income by way of royalty in respect of a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available as :-Rs. 3 lacs or the income received, whichever is less.	The assessee who is a patentee must be an individual resident in India. The assessee must furnish a certificate in the prescribed form duly signed by the prescribed authority alongwith the return of income.
80QQB	Deduction in respect of royalty or copyright income received in consideration for authoring any book of literary, artistic or scientific nature other than text book shall be available to the extent of Rs. 3 lacs or income received, whichever is less.	The assessee must be an individual resident in India who receives such income   in exercise of his profession. To avail of this deduction, the assessee must furnish a certificate in the prescribed form along with the return of income.
80C	This section has been introduced by the Finance Act, 2005. Broadly speaking, this section provides deduction from total income in respect of various investments/ expenditures/payments in respect of which tax rebate u/s 88 was earlier available. The total deduction under this section is limited to Rs. 1.50 lakh only. Read More-Deduction under section 80C and Tax Planning

The following investments/payments are inter alia eligible for deduction u/s 80C:-

NATURE OF INVESTMENT	REMARKS
Life Insurance PremiumRead more-Life Insurance Premium- Eligible Amount Under Section 80C	-    in case of individual, on life of assessee, assessee’s spouse and any child of assessee  –    in case of HUF, on life of any member of the HUF
Sum paid under contract for deferred annuity	in case of individual, on life of the individual, individual’s spouse and any child of the individual (however, contract should not contain an option to receive cash payment in lieu of annuity)
Sum deducted from salary payable to Govt. Servant for securing deferred annuity for self, spouse or child	Payment limited to 20% of salary.
Contribution made under Employee’s Provident Fund Scheme	—
Contribution to PPF	For individual, can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family.
Contribution by employee to a Recognised Provident Fund or an approved superannuation fund.	—
Subscription to any notified securities/notified deposits scheme.	—
Subscription to any notified savings certificates.	e.g. NSC VIII issue.
Contribution to Unit Linked Insurance Plan of LIC Mutual Fund	e.g. Dhanrakhsa 1989
Contribution to notified deposit scheme/Pension fund set up by the National Housing Bank.	—
Certain payment made by way of instalment or part payment of loan taken for purchase/ construction of residential house property.	Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.
Subscription to units of a Mutual Fund notified u/s 1 0(23D)	—
Subscription to deposit scheme of a public sector company engaged in providing housing finance.	—
Any subscription to Equity shares/ Debentures forming part of any eligible issue of capital by a Public company/ Public Financial Institution, wherein.	i) Eligible issue of capital means capital issued by a public co./ Public financial institution for utilizing the proceeds wholly & exclusively towards purposes of any business referred in Sec. 80IA(4).
Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education.	Available in respect of any two children.
Any term deposit for a fixed period of not less than five years with the scheduled bank.	This has been included in Section 80C by the Finance Act 2006.
Subscription to notified bonds issued by NABARD	This has been included in Section 80C by the Finance Act 2007 and has come into effect from 1.4.2008.
Payment made into an account under the Senior Citizens Savings Scheme Rules, 2004	This has been introduced by Finance Act, 2008 and shall come into effect from 1.4.2009.
Payment made as five year time deposit in an account under the Post Office Time Deposit Rules, 1981	This has been introduced by Finance Act, 2008 and shall come into effect from 1.4.2009.
Contribution to Sukanya Samriddhi Account Opened in the Name of Daughters – Sukanya Samriddhi Account- Tax & Other benefits	This has been introduced vide Finance Act 2014 wef A.Y. 2015-16

It may be noted that the aggregate amount of deductions under sections 80C, 80CCC and 80CCD are subject to an overall ceiling of Rs. 1.50 lakh

Digital Signature---How to sign many documents at one time with the help of Digital Signature??

The Budget 2015 mentioned the progress towards making Digital India

Also, the Hon’ble Finance Minister, Shri Arun Jaitley in the budget for the Financial Year 2015-16 have brought in the New Rule 4C in the Service Tax Rules, 1994 in relation to authentication of Invoices by Digital Signature. The New Rule provides that any Invoice, Bill or Challan may be authenticated by a Digital Signature. Further, Records may also be maintained in electronic forms.

Note: The Board may, by notification specify the conditions, safeguards and procedure to be followed by any person issuing digitally signed invoices and preserving digitally signed records.

In view of the New Rules, Let us all work towards the making of Digital India!

This will also save a lot of time, energy and resources!

About Digital Signature: Documents/Invoices requiring a handwritten Signature can also be signed digitally with the Digital Signature, just like we sign Form 16/16A’s with Digital signatures and issue it to employees/vendors and upload the Tax Returns by affixing a Digital Signature to it. Signing any document with the help of Digital Signature has the same legal acceptance as signing the same manually with handwritten signature. Section 5 of The Indian Information Technology Act, 2000 have given legal recognition to Digital Signatures. Digital Signature are now accepted at par with the handwritten Signatures and the electronic documents that have been digitally signed are treated at par with the paper based documents.

Moreover, unlike a handwritten signature, it is considered impossible to forge a Digital Signature the way a written signature might be. The purpose served using the Digital Signature is the same as handwritten signature. Instead of using a pen and paper, a Digital Signature uses Digital Keys.

What is a Digital Signature?

A Digital Signature is a technique used to validate the authenticity and the integrity of any Document with the identification of the signatory.

Where can we use this Digital Signature in practice?

Digital Signatures are currently widely used for signing Form 16/16A’s and filing Returns of Income/TDS as mentioned aforesaid. However with the initiatives and efforts taken by all of us towards a Digital India as also emphasized in the Budget, we can jointly work together for a Greener India by signing digitally a several kinds of documents; you and me can think of:

Few Examples:
Employees Monthly Salary Slips
Annual Increment Letters
Invoices to Vendors

How can we use Digital Signature?Big Companies having proper Accounting system can incorporate the system of signing their Invoices with the help of a Digital Signature at the time of generation of these Invoices by affixing the Digital Signature signing process with their Accounting Software. Many of the big companies can also issue these Invoices to the Vendor electronically with the same software.

Mid-sized and small companies who wants to sign many documents can get the TCS PDF Signer which can be used to sign many PDF’s in one go. Also with this Software, you can affix the Digital Signature at the place of your choice on the document. The procedure for signing many documents in one go is as follows:

1. Open the TCS PDF Signer:

2. Click on Settings. The following Tab would appear:

Connect your Digital Signature Token (Please note that a Class 2 Digital Signature is required for signing with this Application) and browse and select the Digital Signature in the Token Library. Browse and Select the Input Directory being the folder which contains the Documents intended to be signed. Browse and select the Output Directory wherein you wish to save your documents which are digitally signed. Now click on the ‘Save’ option. You can also click on the ‘Signature Settings’ Tab to change the settings of the signature as to the placement of the signature on the document, whether you would like to sign the first page, last page or all the pages of the document etc.

 3. After saving the Settings the following Tab would appear:

 

4. Now click on ‘Sign’, it will prompt for the Digital Signature Password. Insert the Password and click on Ok. All documents in the Input Directory will get signed and the signed documents will be available in the Output Directory

5. You can now send these documents electronically by e-mail to your Vendors/Employees/Other parties. -

Income Tax Notice under section 143(1)

When is the Income tax notice under Section 143(1) – Letter of Intimation served?
Three types of notices can be sent under section 143 (1)

1. Intimation where the notice is to be simply considered as final assessment of your returns since the CPC or assessing officer has found the return filed by you to be matching with his computation under section 143 (1).
2. A refund notice ,where Income tax refunds you for extra tax paid, then  you can look forward to the cheque.
3. Demand Notice where the officer’s computation shows shortfall in your tax payment. The notice will ask you to pay up the tax due within 30 days.

What is the time limit of sending the intimation?

The intimation is sent before the expiry of one year from the end of the assessment year in which the income was assessable. In other words, before the expiry of one year from the end of the financial year in which the return was filed.

How is the intimation sent?

These intimations are sent through email to the Email address provided in filing income tax returns online. As e-return are processed by Central Processing Centre (CPC) sender isintimations@cpc.gov.in.  For e-return hard copy will also be sent through post at the address associated with PAN number just like the non electronic filed ITRs. 

First part of the document has information on Name & Address, PAN number, ITR Type,Assessment Year, E-Filing Acknowledgement Number ,Communication Reference Number, Date of Order as shown in the image below. Date of order is that Date on which order under section 143(1) was passed by the CPC Bengaluru . Please check that the intimation is for you only.

Introduction in 143(1) document

One can contact Income Tax Helpline/Toll Free Number of CPC Bangalore Income Tax Department (Bengaluru) at 1800 -425 22291800 -425 2229 FREE or 080-22546500 for Income tax queries. Before you contact you should have Communication Reference  No (marked in image above) with you and remember your PAN card details like PAN Card number, Date of Birth

The second part of the document shows computation of income, with income reported under various categories, deductions claimed, taxable income, tax due,  tax paid  ex advance tax, self assessment tax, TDS, etc  in two columns as shown in image below:
a) As provided by taxpayer in his Income tax return is from the ITR filed by the tax-payer.
b) As computed under section 143(1) are computations by CPC .

Part of document which shows Income type (Income from Salary, Income from House Propertyetc) is shown in image below. Note: The heads of income may be different depending on ITR filed by you. For example ITR1 will not have Income from Capital Gains. Please check that Income is considered properly under appropriate head. Income under one head of income is not considered as from another head or repeated under another head of income

Computation in two columns in 143(1)

Part of document which shows Deductions claimed under various heads such as 80C, 80D etc is shown below. Please check that deductions you have claimed under 80C and other sections of chapter VI are considered. 

143(1) VIA deductions claimed

Part of document which shows the tax calculation is shown below.

143(1) tax calculation

Please check that TDS claimed, Advance Tax and Self Assessment Tax paid is reflected in the computation by CPC. CPC picks up the figures from your Form 26AS. Form 26AS  is the tax department’s statement showing income tax deposited on your behalf and can viewed on TRACES website or through netbanking. One should verify Form 26AS before filing returns. If there are mismatches in Form 26AS with respect to Form 16/Form 16A then it has to be taken up with the accounts department of your company/bank and errors need to be rectified.
Small Difference in Calculations : You may see difference between the calculations in two columns  for example total income after deductions As Computed Under Section 143(1) is 5 rupees more than the amount in Return of Income. This is due to Rounding of income and Income tax payable The income tax act suggests rounding off of income under Section 288A and the income tax payable Section 288B. This is discussed later in Rounding of Income and Tax
Scroll down and at the end of all calculations you would see two headings Net Amount Refundable and Net Amount Payable as shown in image below.(Row numbers may be different)

143(1) Net tax payable or refundable

If net amount refundable mentioned in Intimation under section 143(1) more than 100 rupees, it means that tax refund is due from income tax department to tax payer. Refunds amounts less than 100 rupees aren’t refunded. You can check refund status online. He will first receive this intimation on mail then a manual intimation along with the refund cheque will reach his address. On receiving the cheque, one can deposit the cheque .
If net amount demand mentioned in Intimation under section 143(1) is more than 100 rupees, then tax payer needs to pay tax . This will be treated as demand notice for the payment of income tax due. This Intimation letter encloses challan form to pay income tax if the due is more than Rs 100. In case of Demand, this intimation may be treated as Notice of demand u/s 156 of the Income Tax Act, 1961. Accordingly, you are requested to pay the entire Demand within 30 days of receipt of this intimation“. If tax payer thinks that

• Tax Demand is valid : he needs to pay the tax. 
• Tax Demand is wrong : then he must prove his case following  appropriate procedure. He may make an application for rectification under section 154. He may consult a qualified CA or good tax expert for further action. However,sometime return processing by CPC becomes difficult and the taxpayer may contact local income tax officer (ITO) and submit a written application for rectifying your assessment. Support it with his TDS statements, Form 26AS, intimation under section 143 (1) and notice of demand. In a plain paper he can also submit an application for Stay of Recovery. Proceedings for requesting them to hold further proceedings till rectification is made.

If net amount refundable/net amount demand  is less than Rs 100 or no difference, you can treat Intimation under section 143(1) as completion of income tax returns assessment under Income Tax Act.

Rounding off Income and Tax

Section 288A : As per section 288A of the Income Tax Act, the total income computed as per various sections of this act, shall be rounded off to the nearest Rs 10. For the purpose of rounding off, firstly any part of rupee consisting of paisa should be ignored. Thereafter, if the last digit in the total figure is 5 or greater than 5, the total amount should be increased to the next higher amount which is a multiple of Rs. 10. If the last digit in the total figure is less than 5, the total amount should be reduced to the nearest lower amount which is a multiple of Rs 10. This rounding off of income should be done only to the total income and not at the time of computation of income under the various heads. Eg: If total income is Rs. 7,83,944.50 gets reduced to 7,83,940 while if income had been 7,83,945.50 it gets rounded off to 7,83,950.
Section 288B :  Rounding off Income Tax As per Section 288B of the income tax act, the total tax computed shall be rounded off to the nearest Rs 10. The rounding off of tax would be done on the total tax payable or refundable and not to various different sub-heads of taxes like income tax, education cess, surcharge etc. Rounding off would be done in the same manner as above i.e.. firstly paisa would be ignored and thereafter if the last digit in the total figure is 5 or greater than 5, the total amount should be increased to the next higher amount which is a multiple of Rs 10. Eg: If the total tax payable of a taxpayer is Rs. 79,223.25 gets rounded to 79223 and then to 79,220, while Rs.79226.25, gets rounded off to Rs 79226 and then to Rs 79230