Fixed Deposits --TDS

If  you are in the higher tax bracket, that is 20% or 30%, make sure that you pay the additional interest before filing your tax returns.

The biggest disadvantage of FDs is that the interest earned is subject to taxation. This eats intothe returns.

Taxed as per income bracket

The interest earned on the FDs is added to the depositor's income and taxed as per income bracket. This reduces its attractiveness, especially for those in the highest tax bracket.

Pay tax even if bank cuts TDS

The bank will cut the tax at source (Tax Deducted at Source) before paying the interest, if the interest exceeds Rs 10,000 in a financial year.  But this is at the marginal rate of 10%. If you are in the higher tax bracket, that is 20% or 30%, make sure that you pay the additional interest before filing your tax returns. This is a common mistake most depositors do. It is a hassle if you receive a notice from the Income-Tax department for non payment of taxes. You will have to prove that not paying the tax was not deliberate and you may have to pay tax plus the penalty for the delay.

For ensuring that the bank has deducted TDS on your FD by checking Form 26AS. But sometimes if the bank deducts TDS but fails to submit the same to the I-T department, you may still get a notice.

If your PAN card details are not updated with the bank, the TDS will be deducted at 20%. And if you are in the 10% tax bracket, this will mean having to file for refund while filing tax returns, which can be a hassle. These are some of the things to keep in mind.

Form 15G and 15H

If your income is below the taxable limit and you have no then submit Form 15G to avoid TDS. For senior citizens whose income is below the taxable limit the form is 15H.

Reduce your TDS

You can also reduce your TDS by spreading your deposits across several banks so that the interest earned in a financial year remains less than Rs 10,000. But this will only reduce the TDS. You will still have to pay income tax as per your tax bracket.

PUNJAB VAT

This is to inform you that the Excise & Taxation Commissioner, Punjab vide Public Notice dated 30.07.2015 has extended the last date of e-filing of VAT-15 for the 1st Quarter of 2015-16 till 4th August, 2015.

Electronic Verification Code (EVC) for electronically filed Income Tax Return

F No. 1/23/CIT(OSD)/E-filing – Electronic Verification/ 2013-14 Government of India Ministry of Finance Central Board of Direct Taxes Directorate of Income Tax (Systems) Notification No. 2/2015 New Delhi, 13th of July 2015 Subject: Electronic Verification Code (EVC) for electronically filed Income Tax Return. Explanation to sub rule (3) of Rule 12 of the Income tax Rules 1962, states that for the purposes of this sub rule “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems). Further, Sub rule (4) of Rule 12 of the Income Tax Rules 1962 states that the Principal Director-General of Income-tax (Systems) or Director -General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the returns in the manners (other than the paper form) specified in column (iv) of the Table in sub -rule (3) and the report of audit or notice in the manner specified in proviso to sub -rule (2). 2 In exercise of the powers delegated by the Central Board of Direct Taxes (‘Board’) under Explanation to sub rule 3 and sub -rule 4 of Rule 12 of the Income tax Rules 1962, the Principal Director General of Income-tax (Systems) lays down the procedures, data structure and standards for Electronic Verification Code as under: : The Electronic Verification Code (EVC) would verify the identity of the person furnishing the return of income (hereinafter called ‘Verifier) and would be generated on the E -filing website https: //incometaxindiaefiling.gov.in or as otherwise indicated.The EVC can be used by a Verifier being an Individual to verify his Income Tax Return or that of an HUF of which he is the Karta in Income Tax Return Form 1, 2, 2A, 3, 4 or 4S or the Income Tax Return Form filed in ITR 5 or 7 of any person in accordance with Section 140 of the Income Tax Act 1961. The EVC generation process may vary based on the risk -category of the Assessee (the term ‘Assessee’ is as defined in Subsection (7) of Section 2 of the Income Tax Act 1961), method of accessing the E -filing website or interface with third party authenticating entity. The EVC would be unique for an Assessee PAN and will not valid for any other PAN at the time of filing of the Income Tax Return. One EVC can be used to validate one return of the Assessee irrespective of the Assessment Year or return filing type (original or revised). The EVC will be stored against the Assessee PAN along with the other verification details. The EVC will be valid for 72 hours or as otherwise specified. The Verifier can use more than one mode to obtain EVC and can generate the EVC multiple times. The notification will come into effect from the date of issue. 3 The mode and process for generation and validation of EVC and its use can be modified, deleted or added by the Principal DGIT (System)/ DGIT (System). 4 Modes of Generation of EVC Case 1: Where the EVC (Electronic Verification Code) in generated after Verifier logs in to the e -filing website https: //incometaxindiaefiling.gov.in through Net- Banking Specified banks registered with the Income Tax Department for this purpose, provide direct access to the e -filing website i.e. https: //incometaxindiaefiling.gov.in “My Account” to a Verifier through Internet Banking. The Banks will be providing such facilities to their account holders whose bank accounts have a validated PAN number (Primary Account Holder) as part of the ‘Know Your Client’ (KYC). The facility will be available on their present Internet Banking website and the Verifier will use this facility using existing internet banking user id, login password & transaction password. When the user logs in via Net -banking and seeks redirection to e –filing then he will be redirected to the E -filing website where he can generate the EVC which will be displayed and also sent to his validated Mobile number registered with https: //incometaxindiaefiling.gov.in. This EVC generated through this net –banking mode can be used to verify Assessee’s Income Tax return. Case 2: Where the EVC (Electronic Verification Code) is generated after Aadhaar authentication using Aadhaar One Time Password (Aadhaar OTP) The Aadhaar authentication framework of Unique Identification Authority of India (UIDAI) is an example of what is called ‘Federated Identity Services for Government’ – i.e. an independent agency of the Government undertakes to authenticate the identity of the citizen/person using Aadhaar for all ‘relying parties’ or verifiers. The Income Tax Department has registered with UIDAI for Aadhaar authentication service. A Verifier can provide his Aadhaar number for linking with his PAN on the e –filing website i.e. https: //incometaxindiaefiling.gov.in which will be verified on the basis of his name, date of birth and gender as per PAN database with similar data available under his Aadhaar with UIDAI. If the Aadhar authentication in this manner is successful, the Verifier’s Aadhaar will be linked to his PAN. Thereafter, an OTP will be generated by UIDAI and sent to the Verifier’s mobile number registered with UIDAI. This Aadhaar OTP will be the EVC generated under this Aadhaar Authentication and OTP mode and can be used to verify the Assessee’s Income Tax return. ‘The Aadhaar OTP as EVC will be valid for 10 minutes (or as specified by UIDAI). Case 3: Where the EVC (Electronic Verification Code) is generated using Automatic Teller Machine (ATM) of a Bank Verifier whose ATM card is linked to PAN validated bank account and the Bank is registered with the Income Tax Department for providing this service can generate an EVC through this mode. A Verifier can access the ATM of the Bank in which he/she has an account using ATM (Debit/Credit) card. After due authentication by using ATM PIN at the Bank ATM, the Verifier can select the ‘Generate EVC for Income Tax Return Filing’ option on the ATM screen (A new option that will be available at ATMs of specified banks). The Bank will communicate this request to the Income Tax Department E -Filing website which will generate the EVC and send the EVC to Assessee on the Assessee’s registered mobile number with E -Filing. EVC generated through this Bank ATM mode can be used to verify Assessee’s Income Tax return. Case 4: Where the EVC (Electronic Verification Code) is generated and sent to the Registered Email ID and Mobile Number of Assessee with E -filing Website Where the total income as per the Income Tax Return is ₹ 5 lakhs or below and there is no refund claim, the Verifier can generate an EVC on the E -filing website that will be sent to the Registered Email ID and Mobile Number of Assessee with .E-Website. This option may further be restricted to Assessees based on other risk criteria that may be determined from time to time. EVC generated through this E-filing EVC mode can be used to verify Assessee’s Income Tax return. 5 Validation of EVC EVC shall be valid for the period specified in Clauses 2 and 4 above. The EVC used to verify the Income Tax Return will be validated against the EVC stored against Assessee PAN at the time of generation and only a valid and matched EVC will be accepted. Invalid, already used or unmatched EVC shall be rejected. 6 Data Structure The EVC will be a 10 digit alpha -numeric number. (Nishi Singh) Pr. DGIT (Systems), CBDT

Important Information about Downloading of TDS Certificates For A.Y. 2015-16

Given below are some important information regarding downloading of TDS certificates. Refer to the following provisions of the Income Tax Act, 1961:

Downloading of TDS Certificates from TRACES made mandatory:
In this regard, your attention is invited to the CBDT circulars 04/2013 dated 17.04.2013, No. 03/2011 dated 13.05.2011 and No. 01/2012 dated 09.04.2012 on the Issuance of certificate for Tax Deducted at Source in Form 16/16A as per IT Rules 1962. It is now mandatory for all deductors to issue TDS certificates after generating and downloading the same from “TDS Reconciliation Analysis and Correction Enabling System” or http://www.tdscpc.gov.in (hereinafter called TRACES Portal).


TDS Certificates downloaded only from TRACES hold valid:
In view of above circulars, it may kindly be noted that the TDS Certificates downloaded only from TRACES Portal will be valid. Certificates issued in any other form or manner will not comply to the requirements referred in the Income-tax Act 1961 read with relevant Rules and Circulars issued in this behalf from time to time.


Due Date for downloading and Penalty for non-compliance:
Please be advised that under the provisions of section 203 of the Income Tax Act, 1961 read with rule 31A, Certificate of tax deducted at source is to be furnished within fifteen (15) days from the due date for furnishing the statement of tax deducted at source. Failure to comply with the provisions of the Act will attract penalty under the provisions of section 272A of the Act, a sum of one hundred rupees for every day during which the failure continues.


Assistance for downloading TDS Certificates from TRACES:
You can logon to TRACES portal http://www.tdscpc.gov.in and refer to TRACES e-Tutorialhttps://www.tdscpc.gov.in/en/download-form16a-etutorial.html to download TDS Certificates. For any further assistance, you can also write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

Error – free TDS returns

There are some important points to submit error-free TDS returns of all quarters i.e. Q-1, Q-2, Q-3 and Q-4 for Asstt. Year 2016-17, which are as under :

Deduction/ Collection of Tax at Correct Rates.

Timely Deposit of Tax Deducted at Source.

Accurate Reporting of data related to tax deductions/ collections made.

Submission of TDS Statements within the due dates.

Verification and Issuance of TDS Certificates within time.

CPC (TDS) is now sending “Intermediate Default Communication” for PAN Errors and Short Payments, which can be corrected during the interim period of a week of filing TDS Statements, before CPC (TDS) proceeds with computing Defaults for the relevant statement.

User-friendly Online Correction facility can be used for Correction of Deductees, TaggingUnmatched Challans and Payment of Fees/ Interest. (Please navigate to Defaults tab to locate Request for Correction from the drop-down menu. For any assistance, please refer to the e-tutorial available on TRACES).

Aggregated TDS Compliance Report assists the PAN of the Deductor to administer TDS Defaults for associated TANs and to take appropriate action.

The Deductor’s Dashboard provides you all necessary information to assist you in “Compliance Self-Assessment” and to take appropriate action.

Non-filing Self-declaration can be made by navigating to Statements / Payments menu and submit details under Declaration for Non-Filing of Statements.

PAN Verification and Consolidated TAN – PAN File facility on TRACES can be used for verifying the deductees.

The Conso Files and Justification Reports downloaded from TRACES help you to identify errors in submission of revised Quarterly TDS Statements.

CBDT restricts issue of Manual Refunds by Assessing Officers

DIRECTORATE OF INCOME TAX (SYSTEMS)

ARA Centre, Ground Floor, E-2, Jhandewalan Extension,

New Delhi-110055

F.No.   DGIT(S)/DIT(S)-3/AST/Manual Refunds/85/2015-16 Dated: 10/07/2015

To
All the Pro Chief Commissioner of Income-tax1 Chief Commissioner of Income Tax
All the Commissioner of Income-Tax(CO)


Sir/Madam,

Sub: Restriction on Issuance of Manual Refunds by Assessing Officers: Reg.

Kindly refer to the above subject.

2. The functionalities for passing orders u/s 143(1) (a)/ 143(3)/154/ appeal effects/ penalty exist on the system and, progressively, AOs are mostly issuing orders on the system from AY 2011-12 onwards. The CBDT has repeatedly instructed that in all cases orders must be passed on the system. This has also been stressed in the Central Action Plan for each year. Further, all charges including LTUs and Central Charges are now covered by Refund Banker scheme. However, instances continue to come to the notice of the CBDT where the Assessing Officers have issued manual refunds even in cases which have been processed on AST.

3. In certain exceptional time-barring cases the CBDT has allowed processing of Returns of Income in Online TMS. The AST Instruction No. 135 dated 20th March 2015 provides for processing of following categories of returns for AY.2013-14 in Online TMS.

• Category 1

Sr No.	Category of cases
I	PAN under migration
II	PAN is deleted in de-duplication process.
III	PAN is under de-duplication restoration.

• Category2:

S. No.	Category  of cases
I	Invalid PAN mentioned in the return
II	PAN is not available
III	Name in PAN database does not match with name in Return of Income
IV	Return with one PAN issued to two different entities OR someone filing a return quoting the PAN of original holder and this wrong return is processed first in AST/CPC/TMS, therefore the System will not allow processing of Return of originalPAN holder.
V	Any other contingency in AST not allowing the processing of such return even with valid PAN.

4. As per the aforementioned instruction, refunds can be issued via refund voucher printing facility for Online TMS Category 1 cases only. Subsequent to the issue of refunds, the information regarding processing and refund issued, if any, needs to be integrated with AST. However, for the Online TMS Category 2 cases, refund via refund voucher printing facility or integration with AST is not possible, as the correctPAN details are not available.

5. Only in cases where the initial underlying order is passed outside the system, the subsequent orders cannot be passed in the AST system and therefore in such cases refund cannot be issued through Refund Banker. As discussed in para 2 above, from AY 2011-12 onwards, most orders u/s 143(1) and subsequent orders are already on AST system.

6. It is therefore decided by the CBDT that henceforth no manual refund should be issued in a case which has been processed on AST. In cases referred to in paras 4 & 5 or in exceptional cases, manual refunds may be issued with the following safeguards:

i. It is mandatory for AO to take Approval by Range head for refunds upto Rs. 1 lakh and approval by CIT for refund above Rs. 1 lakh and record reasons as to why manual refund was necessary.

ii. Mandatory quoting of PAN, AY and Bank account number on the Cheque.

iii. No manual refund will be permitted if a prior manual refund for same PAN, AY and amount has already been encashed.

7. For control purposes, a separate ITO functionality/screen is being rolled out vide this instruction to capture important details for manual refunds (other than using print refund voucher functionality where details are already captured in the system)issued by the Assessing Officer(s). The Assessing Officer(s)are advised to mandatorily fill these details before issuance of any manual refund from the date of issue of this instruction. Range Heads are advised to ensure that the Assessing Officers duly fill all the details for such manual refunds as provided in the functionality before issuance of any such manual refund. The path of this functionality is as under:

“ITD–>AST–>Others–>Manual Refund Details”

For monitoring by supervisory officers, the data of refunds issued manually and entered by the AOs in this new screen will be matched with the data of such refunds encashed as per OLTAS database regularly to identify cases that have not been entered by AOs through MIS feature that will be launched shortly.

This process would continue till a separate functionality is developed in ITBA.

8. The CIT(COs) are requested to ensure that all the Assessing Officers are enabled under Refund Banker Scheme as per new Jurisdiction Order issued after restructuring w.e.f. 15.11.2014. It also needs to be ensured that the old jurisdictions are dis-continued immediately.

9. For any clarifications/difficulties user is advised to lodge ticket with Helpdesk for Any queries on this issue can also be addressed to Shri Ashish Abrol, AddI.DIT(S)- 3(1) (09013850443), ashishabrol@incometax.gov.in

10. This issues with the approval of Chairperson, CBDT.

Yours faithfully,
(Ramesh Krishnamurthi)
Addl. DGIT(S)-3,New Delhi

e-Verification of Income Tax Returns

CBDT vide Notification No. 2/2015 prescribes Electronic Verification Code (EVC) for electronically filed Income Tax Return as an alternative mode of verification. EVC would verify the identity of the person furnishing the return of income. More details of the Notification can be checked at the following link :-

The Manual Covers e-Verification of Income Tax Returns in following Circumstances and provides 3 to 4 Option in each such Circumstances.
1. e-Verification while uploading a return (Non – NetBanking)
2. e-Verification of an already uploaded return (Non – NetBanking)
3. e-Verification while uploading a return through NetBanking Login

1.  e-Verification while uploading a return (Non – NetBanking)

1 Upload Return – Click Submit

2 The Return is uploaded (Pending for e-Verification)

3 Four e-Verification options provided – Taxpayer can choose any one of the options provided to e-Verify the return.

• Option-1 – “I already have an EVC and I would like to Submit EVC”
• Option-2 – “I do not have an EVC and I would like to generate an EVC”
• Option-3 – “I would like to generate Aadhaar OTP to e-Verify my return”
• Option-4 – “I would like to e-Verify later! I would like to send ITR-V”

Option 1 – “I already have an EVC and I would like to Submit EVC”

Step 1: Provide the EVC in the text box – Click Submit.

Step 2: Download the Acknowledgement (No Further action required).

Option 2 – “I do not have an EVC and I would like to generate an EVC”

Two options are provided – Taxpayer can choose any one of the options if they do not have an EVC

i. Generate EVC through NetBanking.

ii. Generate EVC to registered Email Id and Mobile Number.

Generate EVC through NetBanking:

Step 1: Login to e-Filing Portal through NetBanking. Step 2: Click on e-Verify return.

Generate EVC to registered Email Id and Mobile Number:

Step 1: Enter the EVC sent to your registered Email Id ! Mobile Number and Submit to e-Verify return.

Step 2: Download the Acknowledgement (No Further action required).

Option 3 – “I would like to generate Aadhaar OTP to e-Verify my return”

Pre-requisite: Taxpayer’s PAN and Aadhaar should be linked.

If Aadhaar is not linked, click on Link Aadhaar button and link the Aadhaar.

Step 1: Enter the Aadhaar OTP sent to your Mobile Number registered with Aadhaar and Submit to e-Verify return.

Step 2: Download the Acknowledgement (No Further action required).

Option 4 – “I would like to e-Verify later! I would like to send ITR-V”

Step 1: Click on Continue -> Download ITR-V

Step 2: Submit ITR-V to CPC, Bangalore.

2.  e-Verification of an already uploaded return (Non – NetBanking)

1 Click e-Verify Return under e-file.

2 Uploaded returns (120 Days) which are yet to be e-Verified are displayed in a table.

3 Click on e-Verify (for the return already uploaded)

4 Three e-Verification options provided – Taxpayer can choose any one of the options provided to e-Verify the return.

• Option-1 – “I already have an EVC and I would like to Submit EVC”
• Option-2 – “I do not have an EVC and I would like to generate an EVC”
• Option-3 – “I would like to generate Aadhaar OTP to e-Verify my return”

Option 1 – “I already have an EVC and I would like to Submit EVC”

Step 1: Provide the EVC in the text box – Click Submit.

Step 2: Download the Acknowledgement (No Further action required).

Option 2 – “I do not have an EVC and I would like to generate an EVC”

Two options are provided – Taxpayer can choose any one of the options if they do not have an EVC

i. Generate EVC through NetBanking.

ii. Generate EVC to registered Email Id and Mobile Number.

Generate EVC through NetBanking:

Step 1: Login to e-Filing Portal through Ne Banking. Step 2: Click on e-Verify return.

Generate EVC to registered Email Id and Mobile Number:

Step 1: Enter the EVC sent to your registered Email Id / Mobile Number and Submit to e-Verify return.

Step 2: Download the Acknowledgement (No Further action required).

Option 3 – “I would like to generate Aadhaar OTP to e-Verify my return”

Pre-requisite: Taxpayer’s PAN and Aadhaar should be linked.

If Aadhaar is not linked, click on Link Aadhaar button and link the Aadhaar.

Step 1: Enter the Aadhaar OTP sent to your Mobile Number registered with Aadhaar and Submit to e-Verify return.

Step 2: Download the Acknowledgement (No Further action required).

3.  e-Verification while uploading a return through NetBanking Login

1 Login to e-Filing through NetBanking

2 Upload Return -> Click Submit

3 The Return is uploaded (Pending for e-Verification)

4 Three e-Verification options provided – Taxpayer can choose any one of the options provided to e-Verify the return.

• Option-1 – “I would like to e-Verify my return now”
• Option-2 – “I would like to generate Aadhaar OTP to e-Verify my return”
• Option-3 – “I would like to e-Verify later! I would like to send ITR-V”

Option 1 – “I would like to e-Verify my return now”

Step 1: Click on “I would like to e-Verify my return now” -> Click Continue

Step 2: Download the Acknowledgement (No Further action required).

Option 2 – “I would like to generate Aadhaar OTP to e-Verify my return”

Pre-requisite: Taxpayer’s PAN and Aadhaar should be linked.

If Aadhaar is not linked, click on Link Aadhaar button and link the Aadhaar.

Step 1: Enter the Aadhaar OTP sent to your Mobile Number registered with Aadhaar and Submit to e-Verify return.

Step 2: Download the Acknowledgement (No Further action required).

Option 3 – “I would like to e-Verify later! I would like to send ITR-V”

Step 1: Click on Continue – Download ITR-V

Step 2: Submit ITR-V to CPC, Bangalore.

Note: User who has already uploaded the return and opts to e-Verify the existing return can use the above mentioned options other than Option 3.

Income Tax on Gifts from NRIs and Relatives in India

Generally, gifts are not regarded as Income chargeable to tax. However by virtue of Section 56(2) any sum of money exceeding Rs. 50000 received without consideration by an individual or an HUF from any person is chargeable to tax as income under other sources subject to exclusions as below:

1. Receipts on occasion of marriage of the individual
2. Receipts under a will or inheritance
3. Receipts received from a relative.

Since 1/10/2009, Section 56(2) has been amended and the scope of gifts and will include even immovable properties or any other property besides sums of money under its ambit.

Gifts that are not taxable at all are those that are received from relatives. Relatives are defined by the following relationships of the individual:
Parents
Parents siblings and their spouse
Siblings
Spouse of siblings
Daughter and son
Spouse of daughter and son
Spouse
Spouse’s parents
Spouse’s siblings and their respective spouse.

Even NRIs are covered as long as they fall in the category of relatives. Therefore an individual Indian resident can receive a tax free gift from an NRI as long as he/she is that individuals relative. Any amount can be received as a gift from a relative. Also the purpose for which the gift is received from a relative is inconsequential as it is completely tax free. Thus a gift received can be used for any purpose ranging from purchasing shares to buying property to even simply keeping it with the bank.

Note on gifting on immovable properties

There is a valuation aspect involved in gifting of immovable properties:-
If the property is gifted without any consideration then if the stamp duty value exceeds Rs. 50000/-, stamp duty value will be taken
If the property is gifted for a consideration, then the actual value of the property will be taken

In case of other properties:
If gifted without consideration and fair market value exceeds 50000, then the fair market value will be taken as the final value
If gifted for a consideration and the FMV less consideration is greater than 50000, then the FMV less consideration amount will be taken as the value of the gift.

As mentioned earlier NRIs can also give gifts to resident Indians. Therefore, It is important to understand the meaning of an NRI as per the IT act.

An individual will be treated as a non resident in India in any previous year if he fulfils any of the following two conditions:
he/she is NOT in India in that year for period or periods amounting in all to 182 days or more, or
Having within the four years preceding that year NOT been in India for a period or periods amounting in all to 365 days or more, and has NOT been in India for 60 days or more in that year.