 Wednesday, 24 February 2016
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Wednesday, 24 February 2016
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Under the provisions of the Income Tax Act, tax payers are required to file their returns of income for the assessment year 1994-95 and subsequent years on or before the dates mentioned below:-
13.1.1 Delay in furnishing the return
attacts charge of interest at the rate of 1.5 percent, for every month or
part of a month for the period of dealy on the amount of tax found due on
the proceesing of return or on regular assessment (refer para 13.6) after
giving credit for advance tax and tax deducted at source. In case of
failure to file the return such interest is to be calcuted upto the date of
best judgement assessment under sec.144.
13.1.2 A
person liable to tax is required to file a return of income with the Assessing
Officer having jurisdiction over his case. The return forms for the purpose
can be obtained from any Income Tax Office or from a specified Post Office.
The assessee before filing the return is expected to compute the tax on his
returned income by way of self-assessment and if there is any additional liability
of tax, the assessee is required to pay the same. The unpaid tax if any is
recovered according to the procedure specified in the Act.
13.1.3
For the convenience of non-residents liable to Indian Income Tax,
Non -residents Circles have been created in big cities namely, Bombay, Delhi,
Calcutta, Madras, Cochin and Ahmedabad. Any person who is a non-resident and
has not yet been assessed to tax any where in India, may file his income tax
return in any of the above mentioned Non-resident Circles. However, once he
files return in any of these Circles, Jurisdiction over his case will continue
to be with circle unless it is change under orders of the appropriate authority.
Payment of Tax prior to filing of return
13.2 Advance Tax
Tax payers whose total income is likely to be chargeable to tax for the assessment year are required to pay tax in advance during the financial year (April 1 to March 31) on their estimated current income, which will be assessable to tax during the next following financial year called assessment year. The cureent income for this purpose means the total income which will be chargeable to tax in the relevant assessment year. The advance tax is payable in instalments as follows :-
| Due date of instalment | Amount payable |
| A. For companies | |
| i) On or before the 15th June | Not less than fifteen per cent of total advance tax. |
| ii) On or before the 15th Sept. |
Not less than forty five percent of total advance tax as reduced by the amount, if any, paid in the earlier instalment. |
| iii) On or before the 15th Dec. |
Not less than seventy five percent of total advance tax as reduced by the amount if any, paid in the earlier instalments. |
| iv) On or before the 15th March |
The whole amount of such advance tax as reduced by the amount or amounts, if any, paid in the earlier instalment or instalments. |
|
B. For Non-Corporate Assessees |
|
|
i) On or before the 15th Sept. |
Not less than thirty percent of such advance tax. |
|
ii) On or before the 15th Dec. |
Not less than sixty percent of such advance tax as reduced by the amount, if any, paid in the earlier instalment. |
| iii) On or before the 15th March |
The whole amount of advance tax as reduced by the amount or amounts, if any, paid in the earlier instalement or instalments. |
13.2.1 The advance tax payable is the tax on the current income minus the tax deductible at source or collectible out of any income included in the current income. The provisions for advance tax are not applicable where the tax payable for the assessment year is less than Rs. 5000/-
13.2.2 If the tax payer does not make payment of advance tax voluntarily, the assessing officer can issue a notice at any time during the financial year, but not later than the last day of February asking him to pay the advance tax in specified instalments. Such notice is ordinarily based on the assessed income of the tax payer for the latest year. The assessee in that case has an option to pay advance tax on the basis of his own estimate if he considers that his current income during the relevant accounting period would be less than the income on the basis of which advance tax has been demanded from him. The assessing officer can modify his notice of demand in certain circumstances. Similarly, the assessee can also revise his estimate any number of times and after adjusting the amount already paid, if any, pay the balance in instalments falling due after the revised estimate.
Consequence of Deferment/Short Payment
13.2.3 Default in making payment as per the instalment plan mentioned in para 13.2 attracts conequence in the form of charge of interest for deferment at the rate of 1.5% per month for 3 months on the amount of shortfall from the required percentage in the instalments due on 15th June, 15th September and 15th December. If the advance tax paid upto the last instalment, i.e. 15th March falls short of the tax payable as per the return of income, interest @ 1.5% is payable on the amount of shortfall calculated from the date.
13.2.4 In case of failure to pay the advance tax or in case of shortfall in such payment in relation to 90% of the assessed tax, a further interest at the rate of 1.5 percent per month of part of month is chargeable from First April of the assessment year to the date of processing of return or the regular assessment on the amount falling short of the assessed tax.
13.3 Deduction of Tax At Source
Person responsible for paying any income chargeable to tax under the head 'Salaries' is required to compute the tax liability in respect of such income and deduct tax at source at the time of payment. If the employee has any other income he can inform the employer in which case the employer can take that income into consideration for computing his tax liability. He will not take account of loss except loss from house property.
13.3.1 Those responsible for paying any income by way of interest on securities or any other interest are required to deduct tax at source at the prescribed rates at the time of credit of such income to the account of the payee or at the time of payment thereof by any mode. W.e.f. 01.07.1995 interest on term deposits with banks is also subject to such deduction.
13.3.2 Tax is also duductible at source in respect of following income at the rates noted against each-
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(i) Winnings from lottery or crossword puzzle (on amount exceeding Rs. 5,000/-) |
Rates in force |
|
(ii) Winning from horse race (on amount exceeding Rs. 2,500/-) |
Rates in Force |
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(iii) Payment to contractors and sub contractors (on amount exceeding Rs. 20,000/-) |
|
|
1% |
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2% to Contractors; 1% to sub-contractors |
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(iv) Insuracne Commission |
Rates in force. |
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(v) Payment to non-resident Sportsman or Sports Association |
10% |
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(vi) Payment on repayment of Deposits under N.S.S. (on amount exceeding Rs. 2,500/-) |
20% |
|
(vii)Payment on repurchse of Units |
20% |
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(viii) Commission on sale of lottery tickets |
10% |
|
(ix) Rent (on amount exceeding Rs. 1,20,000/- |
1.5% if payee is individual of HUF; 20% in other cases. |
|
(x) Fees for professional or technical services (on amount exceeding Rs. 20,000/-) |
5% |
Deduction is required to be made only if the payer is a person other than individual or HUF
In certain cases tax is to be collected at source from the buyer, by the seller at the point of sale. Such tax collection is to be made by the seller at the time of debiting the amount payable ijf the buyer to the account of the buyer or at the time of receipt such amount from the said buyer, whichever is earlier. Such of cases and the rate of collection of Tax at Source are as follows:-
| S.No. | Nature of Goods |
Percentage of collection of tax |
|
(a) |
Alcoholic liquor for human consumption (other than Indian made foreign liquor) |
15%
|
| (b) | Timber obtained under a forest lease |
15%
|
|
(c) |
Timber obtained by any mode other than under a forest lease |
5%
|
|
(d) |
Any other product not being timber |
15%
|
Where the tax deducted at source and the advance tax paid in respect of the income assessable to tax for any assessment year falls short of the tax chargeable on such income, the balance tax liability represented by the shortfall aforesaid is required to be paid by the tax payer on the basis of self assessment before he furnishes the return of his income to the assessing officer. Documentary proof of the payment of tax on self assessment has to be furnished along with the return.
13.6 Credit for Pre-assessment Taxes
Any pre-paid taxes i.e. the tax deducted or collected at source, taxes paid by way of advance tax and tax on self assessment in respect of the income of any year, is credited to the tax payer at the time of determination of tax liability by assessment or processing of return and if the amount of such pre-paid taxes exceeds the tax determined to be payable by assessment or processing the excess amount is refunded to the tax payer. Where any tax is demanded after adjustment of prepaid taxes by the assessing officer, it is payable within 30 days of the service of the demand notice, or even before, if so directed by the Assessing Officer.
13.7 Procedure for Determination of Tax liability
13.7.1 Processing of returns
Every return received in the office of the assessing officer is, processed to work out the tax and interest payable or refundable on the basis of the return. In case any tax or interest is found due, the same is intimated to the assessee for making payment. If the pre-assessment taxes are found to be in excess of the liability the excess amount is refunded.
(a) Assessments after scrutiny
After processing of returns, the assessing officer may, for the purpose of ensuring that the assessee has not understand the income, require the assessee to produce evidence to support the facts stated in the return of income. He then determines the total income by an order in writing after taking into account all relevant material produced before him by the assessee or gathered by him and work out the tax liability on such income. Procedure also exists for obtaining an advance ruling from the Authority for Advance Ruling in relation to a transaction undertaken or proposed to be undertaken by or with a non-resident (para 6.8). Advance ruling can be obained by certain notified residents even in relation to a question arising in the assessment/appeal.
(b) Best judgement assessments
If a person fails to make a return voluntarily or when ordered to do so by the assessing officer or, if he fails to comply with the directions in the matter of substantiating the return of income, the assessing officer may assess the total income to the best of his judgement on the basis of available information and enquiry made by him. Such assessments are commonly known as 'Ex-parte' assessments.
Where no return of income has been made or where after processing the return or completing the regular assessment, the assessing officer comes to hold the belief that some income has escaped assessment, he can reopen the assessments and, after going through all the process of regular assessment, complete a fresh assessment. Such reopening is, however, permissible only upto a period of ten years after the end of the assessment year.
Penalties can be levied for various defaults like:
There are provisions for prosecution for certain types of. offences such as :-
13.11 Rates of income tax (for the Assessment Year 1998-99 and 1999-2000)
Rates of income tax are as under:
i) Individual, including Hindu Undivided Family and Association of Persons
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Income slab
|
Rate for 1998-99
|
Income slab
|
Rate for and from 1999-2000 |
| First Rs.40,000 |
Nil
|
First Rs.50,000 |
Nil
|
| Rs. 40,001-60,000 |
10%
|
Rs. 50,001-60,000 |
10%
|
| Rs. 60,001-1,50,000 |
20%
|
Rs. 60,001-1,50,000 |
20%
|
| Above Rs.1,50,000 |
30%
|
Above Rs. 1,50,000 |
30%
|
There will be a surcharge @ 10% of tax for the assessment year 2000-01 and 10 and 15% for 2001-02 on specified slabs.
ii) Partnership Firm
The whole of the total income as computed under the Act is taxed at 35%. Surcharge is leviable @ 10% from assessment year 2000-01.
iii) Companies
For the purpose of corporate taxation, companies are classified as 'domestic companies' and 'foreign companies'. A domestic company means an Indian company or any other company which has made the prescribed arrangements for declaration and payment of dividends within India. A 'foreign company', means any corporate body incorporated under the law of any other country which is not a domestic company as it has not made the prescribed arrangements for declaration and payment of dividend within India.
From the assessment year 1998-99, domestic companies are taxable at 35% and foreign companies at 48%. For and from a year 2000-2001 tax on domestic companies is to be increased by a sur-charge of 10% of the tax.
In addition to tax at the rate mentioned above,
a domestic company is liable to an additional tax called tax on distributed
profits at the rate of 20% in respect of dividends, declared distributed or
paid, after 1.6.1977.
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