5 Mistakes to avoid while filing your IT Returns!

                                                                  Prof. Bajaj

And now its that month of the year, when the running around starts for IT returns filing. With the advent of technology, and the initiatives taken by Income-Tax department, hopefully we will not see long queues in the Income Tax Office, for ITR filing.

You can conveniently file your IT returns online. Additionally, for those who are still not too tech-savvy, IT Department is coming up with innovative ideas like setting up kiosks in Malls, Societies etc. You can also submit your physical IT Return forms at the kiosks in your neighbourhood. What more can you ask for?

Now only thing you need to do, is to avoid some common mistakes while filing the ITR so that it saves lot of after-effort for the IT department as well as you to correct the errors.

1. Choose the correct ITR form

With a vast array of ITR forms (ITR 1, 2, 3, 4, 4S and V), people often get confused about which form to fill up. To pick up the right form for you, refer to below list:

A] ITR 1 (Sahaj): To be filled up by individuals with salary, pension, rental income from one property, tax-free capital gains and income from interest.

B] ITR 2 : To be filled by individual and HUFs with salary, pension, rental income from more than one property, taxable capital gains, income from interest and foreign assets.

C] ITR 3: To be filled by partners in a firm with interest, salary, bonus, commission, capital gains, more than one property.

D] ITR 4: To be filled up by individuals and HUFs with income from business / profession with gross receipts more than Rs. 60 Lakhs a year. (If gross receipts are less than Rs. 60 Lakhs, but the income is less than 8% of gross receipts, still ITR 4 to be used).

E] ITR 4S (Sugam): To be filled up by individuals and HUFs with income from business / profession and gross receipts upto Rs. 60 Lakhs a year.

F] ITR V: Remember this is “V” and not 5. This is an acknowledgment form and is to be filled by all the above mentioned categories.

2. Remove all TYPOs

The young generation is pretty familiar with the word “TYPO”. Any typing mistake they make, and excuse themselves by calling it a TYPO. Sorry friends, but you can't afford to make a TYPO in your ITR. There is a low chance of you getting an error at the time of filling it. But one TYPO can delay your refund by a pretty long time. So be doubly careful while filling up your information especially like PAN, Bank Details and other info too.

3. Verify tax paid data with form 26AS

Most people are only aware about Form 16 or Form 16A that they get from their employer / bank. However, it is equally important to verify the TDS details and the advance tax paid details in Form 26AS. There could be a possibility wherein, your bank / employer have deducted your TDS but it is not credited to your PAN due to some technical errors. It could be an error that the deductor has not quoted your PAN correctly in his TDS return. Also, we might forget to mention some FD interest in our return, which would be verified with 26AS.

4. Fill up the tax saving deductions with utmost care

The tax saving investments, you have done prior to 31^st March, need to be carefully mentioned in their respective sections. It is seen that while filling up information on 80C, sometimes people also include ‘employers’ contribution the PF. Remember, it's only the ‘employee’ contribution that qualifies for 80C.

Another common mistake is that some people write the entire EMI paid on home loan in 80C or 24B. Remember to put the principle in 80C and interest in 24B.

There are some other lesser known sections like 80E (payment of education loan interest), 80G (donations to charitable organisations), 80DD (expenses on a disabled dependent) etc. If you have made payments towards any of these, make sure that you mention them in your ITR, so that you get the deduction.

5. The last step

Do not forget to attach ITR V with your physical return. Chances of missing ITR V in physical return are less, as they would not accept your physical form without ITR V.

But if you are e-filing without digital signature, do not forget to send the signed ITR V to CPC Bangalore. If your ITR V does not reach CPC Bangalore within 120 days of e-filing your return, then your return is not considered to be complete.

You will observe that the way things are moving, you can be more self-dependent for filing of your returns. Taking professional help could definitely help, but now you need not depend on someone just to ‘stand in queue’ on your behalf. Filing IT returns is in your own interest. They help you for:

a. Availing any kind of loan like home, personal or education;

b. Visa and immigration processing;

c. Income proof / net worth certification;

d. Refund claims (in case of excess taxes paid); and

e. Applying for a higher insurance cover.

(The views mentioned in the article are personal opinion of the author. The Author is Chief Investment Planner with Nidhi Investments, Mumbai.)

About Revised Schedule VI

By Naveen Chand Khulve

Ministry of Corporate Affairs has amended the schedule VI which is required to be implemented by the companies from Financial Year 2011-12 along with regrouping last year figures. Following are the changes in Revised Schedule VI.

1. Source of fund shall be replaced by Equity and Liabilities.

2. Application of funds shall be replaced by Assets.

3. Shareholding of more than 5% shares in the company as on balance sheet date need to be disclosed separately.

4. Profit and Loss account shall be replaced by Statement of Profit and Loss.

5. Statement of Profit and Loss (Dr. Balance) shall be disclosed under head Reserves and Surplus.

6. Share Application money pending allotment is not a part of Shareholders Fund now.

7. Sundry Debtors shall be replaced by Trade Receivables.

8. In case trade receivables outstanding for a period exceeding 6 months from the date they become due for payment then separate disclosure required.

9. Tangible assets under lease are required to be separately specified under each class of assets.

10. Current liabilities will not be shown as deduction from Current Assets.

11. Assets and liabilities shall be bifurcated into Current and Non Current portion.

12. Miscellaneous Expenditure as a separate head does not exists now.

Format of Balance Sheet in Revised Schedule VI

Equity and Liabilities	Note No.	Figures at end of current reporting period	Figures at end of previous reporting period
Shareholder’s Fund Capital Reserve and Surplus Money Reserved against share warrants
Share Application money pending allotment
Non Current Liabilities Long Term Borrowings Deferred Tax Liabilities (Net) Other long Term Liabilities Long Term Provisions
Current Liabilities Short Term Borrowings Trade Payables Other Current Liabilities Short Term Provisions

Format of Balance Sheet in Revised Schedule VI

Assets	Note No.	Figures at end of current reporting period	Figures at end of previous reporting period
Non Current Assets Fixed Assets · Tangible Assets · Intangible Assets · CWIP · Intangible Assets under development Non Current Investment Deferred Tax Assets (Net) Long terms loans and advances Other Non-Current Assets
Current Assets Current Investment Inventories Trade Receivables Cash and Cash Equivalents Short Term loans and advances Other Current Assets

Format of Statement of Profit and Loss

Particulars	Note No.	Figures at end of current reporting period	Figures at end of previous reporting period
Revenue from Operations Other Income Total Revenue
Expenses Cost of Material Consumed Purchases of Stock in Trade Changes in inventories of finished goods WIP and SIT
Employee Benefit expenses Finance Costs Depreciation and Amortization expenses Other expenses
Profit before exceptional and extraordinary items and tax
Extraordinary items
PBT
Tax Expenses Current Tax Deferred Tax
Profit (Loss) for the period from continuing operations
Profit (Loss) for the period from discontinuing operations
Tax expenses of discontinuing operations
Profit (Loss)  from discontinuing operations (after tax)
Profit (Loss) for the period
EPS Basic Diluted

Distinction between term Current and Non Current:-

An item is classified as current

1. If it is involved in the entity’s operating cycle

2. Is expected to be realized / settled within 12 months.

3. If it is held primary for trading

4. Is cash or cash equivalents

5. If entity does not have unconditional right to defer settlement of liability for at least 12 months after reporting period.

All other items are non current.

Must Read : Exemption from Filing ITR

Taxation on negative list of services

By: Venkat

Introduction:Finally the ministry of finance in India is moving ahead in reducing ambiguous and unnecessary litigation in the field of service tax.

Service tax is the major source of revenue to the government which is contributing nearly more than 9% (appr.) with a target in collection an amount of Rs.82,000 crore for financial year 2011 – 12. The concept of taxing of services based on negative list of services is not new, as the system already exists in many countries like United Kingdom, New Zealand, Singapore and Australia. Further implementation of this would give substantial increase in the revenues to the government.

The main reason behind implementation of the concept of taxing of services based on negative list would be increasing scope to tax on service industry and to have better tax administration and could be helping out successful implementation of GST.

Sushil kumar modi said service tax is imposed on 120 services at present and hoped that the negative list will help in further widening the tax base. He said a Parliamentary panel was examining the Constitutional amendment required to implement GST.

Concept of Negative List of Taxation

The concept is very simple to understand, Instead of taxing services individually and defining the scope of taxability under that category under positive list of services here only the term service would be defined in a specified manner and few services are listed as non taxable services. Thus an activity which can be called or included within the meaning of the term “Service” is taxable, and if the activity is not covered in the list of “non taxable” is also would be taxable.

Definition of service

In the proposed article issued for public debate and feedback thereupon the term “service” can be classified in three ways, lets understand in table format in detail

The term “Service includes

Means part of definition	Inclusion part of definition	Exclusion part of definition
A “service” means anything which does not constitute supply of goods, money or immovable property	A “Service” includes A. right to use an immovable property B. construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority C. temporary transfer or permitting the use or enjoyment of any intellectual property right D. obligation to refrain from an act, or to tolerate an act or a situation, or to do an act E. service in relation to lease or hire of goods F. right to enter any premises	A “Service” excludes a supply A.by an employee to an employer in the course of or in relation to the employment of the person B.by a constitutional authority under the Indian Constitution or a member of an Indian legislature or a local self-government in that capacity C.that amounts to manufacture of excisable goods or is chargeable as part of the value of goods to a duty in terms of the provisions of Central Excise Act, 1944

Explanation of some of the important terms in the definition “Goods”

According to the Sale of Goods Act 1930, “Goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

Where the contract includes both i.e supply of goods and service included in the contract then the principle of “dominant nature test” has to be applied for ascertaining the mind or intention of the parties in the contract to separate the rights arising out of the sale of goods as held in the land mark decision of Bharat Sanchar Nigam Ltd. Vs UOI [2006(2) STR 161 (SC) para 43].

“Immovable property”

According to the General Clauses Act, 1897 “Immovable property” shall include land, benefits arising out of land and things attached to the earth, or permanently fastened to anything attached to the earth.”

“Money”

The expression “Money” is meant to capture transactions where Indian legal tender is exchanged from one form to another.

Clarification on certain aspects in exclusion part of the definition

1. In case of immovable property things done before issuance of completion certificate would be construe as supply of service whereas things done after the completion of issuance of completion certificate can be constituted as sale

2. The word “Person" shall include any company or association or body of individuals, whether incorporated or not (section 2(42) of the General Clauses Act, 1897) and hence services by or to unincorporated associations and joint ventures will constitute a valid transaction.

3. For constituting as service the essential condition to be satisfied i.e not existing of employee and employer relationship. If the same is existing, then the same may not fall under the ambit of service tax.

4. Finally, any supply that amounts to manufacture or includable in the value of goods under Central Excise Act 1944 is also kept out of the purview of service tax.

Clarification on certain aspects in Inclusion part of the definition

A new definition of “service” can be called as revenue oriented definition as it uses the word “service means anything” so, the scope of this definition is more helpful in collecting more revenue to government.

1. Tax would be imposed on supply of services which took place between two persons for consideration and should be for economic activity.

2. Right to use immovable property is constituted as service. Hence is taxable (So by virtue of this new definition ambiguity and litigation on Renting is no more valid as Renting is clearly taxable activity )

3. Temporary transfer, permitting to use and enjoyment of any intellectual property will constitute supply of service.

4. The obligation of refrain from an act, or to tolerate an act or a situation, or to do an act will constitute as a service

5. Delivery of goods by way of hire purchase or installments is declared by the Constitution to be deemed sale of goods but services provided in relation to lease or hire of goods would be constituted as supply of service as held in case of Association of leasing & financial services companies VS UOI (2010-TOIL-87-SC-SERVICE TAX-LB)

6. Right to enter any premises would constitute as supply of service i.e fee collected by  Museums, Art galleries, Zoos, parks and gardens would be within the meaning of this inclusive definition of service

7. Supplies of electricity, power, heat, refrigeration and ventilation would not constitute as supply of service

8. Sale of SIM card with talk time, downloadable on – site software and similar supplies through internet would construe as supply of service. The same is also confirmed in case of (Idea Mobile Communication Ltd Vs CCEC, Cochin (2011-TIOL-71-SC-ST)

9. Service element in respect of Works contract, restaurants, outdoor catering would be taxable as supply of service (in this particular aspect there can be possible scope for litigation by way of interpreting what is service element in respect of the said avenues)  

Services excluded from taxation

The following are the proposed list of activities which are kept out of the purview of service tax.

Negative list	Excluding activity of service	Including activity of service
Services by government	Services provided by government without a specific charge on end user is not liable	Services are provided by government at a market rate, provided at concessional rate to compete with private agencies and services that are provided exclusively and pre – dominantly could be out of the negative list.
Services by international institutions	Services provided and received by international institutions or missions would be covered under the ambit of negative list of services under a contractual obligation
Services by financial sector	Activities relating to sale and purchase of securities and debts would be included in negative list.	However stock broking would be liable to service tax
Construction and real estate services	Services provided in relation to construction of public good dams, reservoirs and roads would be covered under negative list	Renting activity would be covered under the ambit of service tax
Services provided by health sector	Only the basic or public health services would be covered under negative list. Further, Services provided by pubic clinical establishments would be covered under negative list.	High – end medical services provided by private enterprises would be liable for service tax. Further Health checkup, weight reduction programmes and plastic surgery would be liable for service tax
Services provided by Education sector	Services provided by pre – schools and public schools would be covered under negative list	Services provided by international schools and charges recovered by them for facilitating in various field to the students would be covered under service tax
Others	1)Copyright services of original literary, dramatic, musical and artistic works. 2)Services provided by independent journalists, PTI & UNI for providing news 3)Services provided by sportspersons, as a player, coach or referee/umpire and performing artists in that capacity (excluding as brand ambassadors) 4) Religious services provided by any person. 5) Services provided by a political party recognized by Election Commission of India 6) Services provided by a trade union to its members 7) Representational services provided by an advocate to individuals 8) National or international prize/award in recognition of achievement in the field of art, literature, science, sport, economics or public life 9) Tolls except services in relation to collection of tolls 10) Betting and gambling except services in relation to promoting, marketing or organizing games of chance, including lottery services

Conclusion: The efforts of the government would be appreciated, as they are trying to streamline indirect tax basket for successful implementation of GST.

Must Read : Exemption from Filing ITR

Free Download Tax Calculator

Exemption from Filing ITR

By: Raman Aggarwal

The CBDT has exempted certain class of assesses from filing the Income Tax Return after the accomplishment of following conditions:

Ø      Assessee should be an individual.

Ø      Income of the assessee does not exceed Rs. 5 Lac.

Ø      Income is chargeable under the head Income from Salaries.

Ø      Interest income should be less than Rs.10000 from the saving bank account. 

If any individual assessee has income from interest of Fixed Deposit or Rental Income from House Property or any Income from Capital Gain or Gain from Business or Profession or any Speculation Income from share transaction, then assessee will not be eligible to claim the benefit of “Exemption from filing Income Tax Return”. 

There are some other conditions also for availing this benefit-

Ø      Assessee has reported the Permanent Account Number (PAN) to the employer.

Ø      Assessee has reported all the income & full details of deduction under section 80C to the employer and employer has deducted the TDS.

Ø      Assessee has received TDS certificate in Form No. 16 from their Employer.

Ø      Employer has deposited the TDS amount to the Central Government.

Ø      Assessee has no claim of refund of taxes.

Ø      Assessee has received Salary only from one employer and if any assessee changes their job in middle of the Financial Year, assessee has to file the return. 

If any notice u/s 142(1), 148, 153A or 153C of the Income Tax Act, 1961 has been issued for filing an Income Tax Return for the relevant assessment year then the exemption from filing Income Tax Return will not available.

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FAQ / Oltas / e-TAX Payment

What is e-payment of taxes?

This is a facility provided to the taxpayers to make income tax payments through internet, using net-banking facility.

How can I use this facility to pay income tax?

You can use the facility if -

a) You have a bank account with net-banking facility, and

b) Your bank is amongst the banks that provide the e- payment facility.

Whether it is mandatory to pay tax online?

It is mandatory for the following types of assesses to pay tax online with effect from April 1,2008.

a) All the corporate assesses.

b) All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.

Whether it is mandatory to make the TDS/TCS payment (Challan 281) online?

Yes, it is mandatory for below Assessee to make the TDS/TCS payment online

a) All the corporate assesses.

b) All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.

How do I know whether my bank provide this facility?

The list of banks providing this facility is available on NSDL-TIN website. Alternatively you may get the information from your bank.

What should I do if my bank does not have an online payment facility or is not an authorized bank for etax ?

In case your bank doesnot have an online payment facility or is not an authorized bank then you can make electronic payment of tax from the account of any other person who has an account with the authorized bank having online facility. However, the challan for making such payment must clearly indicate your Permanent Account Number (PAN).

What is the procedure for entering the required data on the screen for paying tax online?

Follow the steps as under to pay tax online:-

Step 1

a) Log on to NSDL-TIN website (www.tin-nsdl.com).

b) Click on the icon e-payment: pay taxes online.

c) Click on 'Click to pay tax online'.

d) Select the required challan.

Step 2

After selecting the required challan, you will be directed to the screen for entering the following data:

a) PAN for non-TDS payments and TAN for TDS payments.

b) Address of the taxpayer.

c) Assessment Year.

d) Major Head Code.

e) Minor Head Code.

f) Type of payment.

g) Select the bank name from the drop down provided.

In case of challan no. 280, 282 and 283 the Permanent Account Number (PAN) needs to be entered. In case of challan no. 281 Tax Deduction/Collection Account Number (TAN) needs to be entered. Please ensure that you enter PAN/TAN correctly, as this is extremely important for further processing. The system will check the validity of PAN/TAN. In case PAN/TAN is not available in the database of the Income Tax Department then you cannot proceed with the payment of tax.

Step 3

After entering all the above detail, click on PROCEED button. TIN system will display the contents you have entered along with the “Name” appearing in the ITD database with respect the PAN/TAN entered by you.

Step 4

You can now verify the details entered by you. In case you have made a mistake in data entry, click on “EDIT” to correct the same. If all the detail and name as per ITD is correct, click on “SUBMIT” button. You will be directed to the net-banking site provided by your bank.

What is the procedure after being directed to the net banking site of the bank?

TIN system will direct you to net-banking facility of your bank. You will have to log on to the net banking site of your bank using your login ID and password/PIN provided by the bank. The particulars entered by you at TIN website will be displayed again.

You will now be required to enter the amount of tax you intend to pay and also select your bank account number from where you intend to pay the tax. After verifying the correctness, you can proceed with confirming the payment.

What will happen after I confirm the payment of tax at my bank’s site?

Your bank will process the transaction online by debiting the bank account indicated by you and generate a printable acknowledgment indicating the Challan Identification Number (CIN). You can verify the status of the challan in the “Challan Status Inquiry” at NSDL-TIN website using CIN after a week, after making payment.

How can I know that I have completed tax payment using this facility?

Apart from CIN given to you, you can check your online bank statement to verify the tax payment.

Do I have to attach the acknowledgment counterfoil with my return?

No, it will be considered sufficient proof if you quote your Challan Identification Number (CIN) as mentioned in your counterfoil in your return.

What is the timing for making payment through internet?

You will have to check the net-banking webpage of your bank’s website for this information.

If I encounter any problem while making payment through internet whom should I contact?

If any problem encountered at the NSDL website while entering non-financial data then contact the TIN Call Center at 022-24994650.

If any problem encountered while entering the financial details at the net-banking webpage of your bank, then you should contact your bank for assistance.

Where should I make enquiries about my tax payments through internet?

You should contact your bank for queries about your payment transaction through internet.

Whom should I contact if the counterfoil containing the CIN is not displayed on completion of the transaction and if I want duplicate counterfoil?

Your Bank provides facility for re-generation of electronic challan counterfoil kindly check the Bank website, if not then you should contact your bank request them for duplicate challan counterfoil.

If I have misplaced my counterfoil whom do I contact?

Your Bank provides facility for re-generation of electronic challan counterfoil kindly check the Bank website; if not then you should contact your bank and request them for duplicate challan counterfoil.

After making e-payment of direct tax if status of challan is not available under Challan Status Enquiry on NSDL site, what should I do?

You can verify the status of the challan in the “Challan Status Inquiry” at NSDL-TIN website after 5 to 7 days of making e-payment. In case of non availability of the challan status kindly contact your bank.

If I encountered any error on NSDL site while making e-tax payment what should I do?

If encountered any error on e-tax website kindly contact TIN call centre at 022-24994650.

If after entering challan details in NSDL site if Bank Name is not being displayed what should I do?

The problem may be encountered because of the following

Reason 1: If Assessee enters incorrect TAN / PAN in challan data entry screen.

Reason 2: If Assessee using Internet Explorer browser then temporary internet files should be deleted by following:

A. Open Internet Explorer window.

B. Go to “Tools” Menu.

C. Select “Internet Options”.

D. Delete cookies and Delete temporary Internet files on your machine.

E. Close the current Internet Explorer windows.

F. Again go to tin-nsdl site & make e-payment.

If still above raised problem not resolved then kindly contact the TIN Call Center at 022-24994650.

Account get debited more than once for the same e-tax transaction what should I do?

If during the transaction or after completing the transaction bank site encountered any error or get disconnected before generating Taxpayer counterfoil then instead of doing the same transaction again kindly check your Account, if account is being debited then contact your bank for regeneration of taxpayer counterfoil . Please note in the above case donot make the same transaction again which result in account debited more than once for same e-tax transaction.

How secure is the transmission of data to the website for e- payment?

All transmission through NSDL-TIN website is encrypted and is with Secure Socket Layer (SSL) authentication. With respect to the banks, it depends on the security measures provided by the bank for net-banking.

How does this system of payment of taxes through internet benefit me as a taxpayer?

This system is beneficial to you as you are not required to personally visit the bank to make the payments. Payment can be made electronically at your convenience from any place where an internet facility is available e.g. your office, residence, etc. Further, you get the Challan Identification Number (CIN) online, which is required by you when you file your return. 

Suggestions to control black money

By: Ramesh

How to control black money:

1. Ensure that even petty shop people deposit their cash sales in to a bank account (account opening should be simple & easier).

2. Integrate sub registrar office, sales tax and service tax department with income tax department, there should not be any mismatch of transactions.

3. Conduct audit for sub registrar offices for material differences in the value registered for the properties in same location.

4. Fix a limit for cash sales, receipts in cash, payments in cash for revenue transactions like restrictions for loans & advances in income tax act – 269SS.

5. Abolish higher denomination currencies like 500 & 1000 rupees notes.

6. Abolish entire present  currencies and issue new currencies with chips inserted, so it can be tracked through GPS, wherever there is a bulk currency carries, transported, exchanged etc., (atleast for higher denomination notes).

7. Outsource majority of the politicians works to some good companies (companies having good corporate governance).

8. Ask politicians to submit their books of accounts to audit general of India, and Audit general can allot audit work to some chartered accountant secretly.

9. Even companies accounts can be audited in the above said manner through ICAI instead of audit general.

Why we should file the return? If salary is less than 5 Lakh

By: Abhishek Ranjan Singh

Why we should file the return? If CBDT exempts return-filing for salaried having total income upto Rs 5 Lakh.

IN MY OPINION IT IS ALWAYS BETTER TO FILE THE RETURN

Some reasons:

1.The tax department has notified that individuals with salary income below Rs 5 lakh are not required to file their tax return subject to certain conditions* being met. Though this move would benefit the new entrants to employment, for others this rule is nothing but increased confusion in deciding whether to file tax return or not.

*Conditions for exemption from filing tax return under Rs 5 lakh rule:

A. Single employer income.

B. Savings account interest up to Rs 10,000.

C. PAN should be correctly declared to the employer.

D. Employer should have deducted tax on both salary & savings account interest.

Accordingly, an individual who has income from multiple employers or FD/term deposit interest or house, wherein she/he is claiming interest deduction would need to file her/his tax return.

2. How can you declare your Saving Bank Account Interest income of year ending March to your employer before year ending to deduct the TDS. 

3.When you file your tax returns every year, you manage to create your financial record with the tax department.

This financial/tax history is positively viewed and favourably used by most agencies with whom you may need to interact, such as when you avail any kind of loan (home, personal, vehicle loan, etc), when you apply for VISA etc.

4.Proof of (financial) life.

Income tax return is essential for making any investment and goes to prove that you have a valid source of income to make such investment.

Considering the above points, filing your tax return seems to be a GOOD IDEA.

Future of Form 26AS

By: Vignesh Killur

What will FORM 26AS appear like in Future?

At Present it is a TAX CREDIT STATEMENT meaning it displays the taxes paid by us like Advance Tax, Self Assessment Tax and Particulars of TDS made by others on our behalf.

But what if it was developed into something far more than that? Please think about it.

1) What if there existed a Nexus between all Important Organisations and the IT Department?

2) What if all our chapter VI-A Deductions like 80C deductions: LIC, PPF,Tax Saver FDs, 80CCF: Infrastructure Bonds, 80D deductions like Mediclaim etc could be viewed in Form 26AS?  This would require all Organisations to perform Some Information Filing with the IT Department on Similar lines as TDS filing.

3) What if Salary Paid details like GROSS SALARY paid Profession Tax, Statutory Savings can be viewed instead of just Amount Credited and TDS?

4) What if FORM 26AS could in itself contain our Computation of total Income?

5) What if the era where we declare our own Income could be done away with and the IT Department itself determine how much tax to pay? Income from Business should be an exception because it would be impossible for them to know the profit made.

6) 26AS might be half PRE-FED and only half self declared. Where self declaration is made, adequate proof might be asked like in Case of Business, Details of Audited Report, Audited P&L Account might have to be Digitally uploaded.

7) Also if there is any minor adjustments or Corrections, an Opportunity should be given to the Assessee to make suitable corrections in Form 26AS but for every correction made, reasonable proof has to be attached.

8) This would enable the Authorities to have complete control over an individuals financials and prevent Black money and corruption.

9) As of today there is the AIR Report (Annual Information Report) which places a legal obligation on certain persons like: Banks, Mutual Funds, Sub Registrars Office, Certain Traders etc to disclose information about High Value financial transactions like:

i) A Banker is required to disclose information to the IT authorities by way of AIR Report if any customer makes a cash deposit Aggregating to more than 2 lakhs in a year

ii) A Mutual Fund is required to disclose information if any client buys or sells Mutual Funds of more than 2 lakhs

iii) A Sub Registrar is Required to file AIR about Property transactions above 30 lakhs in value.

Ever wonder why they ask for your PAN Everywhere? We are being watched.

10) Many have been brought under the purview of AIR. Bt is it really effective? I mean has anybody seen any clients information appearing in forn 26AS if he makes a cash deposit more than 2 Lakhs. I have only seen mutual fund transactions so far in AIR.

11) Likewise quoting of PAN has been made mandatory if you enter into certain transactions above certain limit like Purchase of Jewellery, Purchase or sale of shares, purchase of Motor Cars (Think twice before buying a luxury car) even buying certain bonds, taking LIC Policies, buying Real Estate etc.

12) FORM 26AS COULD GIVE INFORMATION SUCH AS HOUSE PROPERTY INCOME/LOSS, CAPITAL GAINS/LOSS MADE (Share brokers already give Gain/Loss Statements, they just have to take it one step further.

13) IS IT GOOD OR BAD? IS A QUESTION WHICH NEEDS TO BE CONTEMPLATED. THE ABOVE IS JUST MY OPINION AND FORECAST. PLEASE BE FREE TO AGREE OR DISAGREE. I INVITE COMMENTS, VIEWS AND OPINIONS.

All about Company

By: Mahesh Kumar

Steps to Register a new Company

Do you want to start an Indian Company?

To register a company, you need to first apply for a Director Identification Number (DIN) which can be done by filing eForm for acquiring the DIN. You would then need to acquire your Digital Certificate and register the same on the portal. Thereafter, you need to get the company name approved by the Ministry. Once the company name is approved , you can register the company by filing the incorporation form depending on the type of company 

Step 1 : Application For DIN

The concept of a Director Identification Number (DIN) has been introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006. As such, all the existing and intending Directors have to obtain DIN within the prescribed time-frame as notified.  You need to file e-Form DIN-1 in order to obtain DIN. To get more information about the same click Director Identification Number

Step 2 : Acquire/ Register DSC

The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance programme are required to be filed with the use of Digital Signatures by the person authorised to sign the documents. 

Acquire DSC -A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000.

Register DSC -Role check for Indian companies is to be implemented in the MCA application. Role check can be performed only after the signatories have registered their Digital signature certificates (DSC) with MCA. To know about it click Register a DSC

Step 3 : New User Registration

To file an e-Form or to avail any paid service on MCA portal, you are first required to register yourself as a user in the relevant user category, such as registered and business user. To register now click New User Registration

Step 4 : Incorporate a Company

Apply for the name of the company to be registered by filing Form1A for the same. After that depending upon the proposed company type file required incorporation forms listed below.

1. Form 1: Application or declaration for incorporation of a company.

2. Form 18: Notice of situation or change of situation of registered office.

3. Form 32: Particulars of appointment of managing director, directors, manager and secretary and the changes among them or consent of candidate to act as a managing director or director or manager or secretary of a company and/ or undertaking to take and pay for qualification shares.

Once the form has been approved by the concerned official of the Ministry, you will receive an email regarding the same and the status of the form will get changed to Approved. To know more about e-Filing process click "All About e-Filing".

Do you want to register a Part IX Company?

In order to register Part IX Company, applicant is required to file Form 1A for name availability. After approval of the same, applicant is required to file Form 37 and Form 39 along with filing e form 1, 18 and 32.

Do you want to register a Section 25 Company?

To register a section 25 company, applicant is required to file Form 1A for name availability. Once the name is approved/made available, there is a further requirement of obtaining a license for a Section 25 Company, for which Form 24 A is to be filed in order to obtain a license for such company. After obtaining license number, applicant can proceed further to incorporate a company by filing e forms 1, 18 and 32. 

Do you want to start a Foreign Company?

Any foreign company can establish its place of business in India by filling Form 44 (Documents delivered for registration by a foreign company). The eForm has to be digitally signed by authorized representative of the foreign company.

There is no need to apply and obtain DIN for Directors of a foreign company but the DSC of the authorized representative is mandatory, which again is not required to be registered on MCA Application

Change Company Information

Do you want to intimate changes among managing director, directors, manager and secretary of a company?

A company can intimate changes among managing director, directors, manager and secretary of a company by filing Form 32 with ROC within 30 days from date of such change takes place. 

Do you want to change Company Name?

1. In order to change company name, Form 1A is required to file for name approval.

2. After the name gets approved, applicant is required to file form 23 (necessary resolution for alteration of MOA and AOA) and form 1B to give effect to change in name.

Do you want to change Object Clause of MOA?

In case company wants to change its object clause, it can do so by filling passing necessary resolution and the same needs to be filed in Form 23.

Do you want to change registered office of the company?

In case company wants to change its registered office within local limits of the same city or place, intimation regarding the same has to be filed in Form 18. 

Similarly, if company wishes to shift or change its registered office outside local limits of city, town or village, Form 23 and Form 18 are required to be filed to ROC to give effect to such change. 

In case, company wants to shift the registered office from one state to another state, it needs to file following forms to give effect to such change. These forms are:

1) Form 23 

2) File petition with CLB and intimate ROC in Form 61 

3) Form 21 (Notice of the court or the company law board order)

4) Form 18 ( Notice of situation or change of situation of registered office)

If there is a change of registered office of the company within the state from the jurisdiction of one Registrar to the jurisdiction of another Registrar, Form 23, Form 1AD and Form 18 is required to file in this case. 

Do you want to increase authorized capital of the company?

A company can increase its authorized capital by filing Form 5. Similarly, subscribed capital and paid up capital of the company gets increased on filing and approval of Form 2 (Return of allotment of shares). 

Do you want to convert a Public company into a Private company?

A public company can convert itself in to a private company by filing Form 23 (Alteration of MOA and AOA) and approval of Form 1B (Application for approval of the Central Government for conversion of a public company into a private company) 

Do you want to convert a Private company into a Public company?

A Private company can convert itself in to a Public company by filing Form 23 for registration of such resolution passed by the company (Alteration of MOA and AOA) and filing of Form 62 (Prospectus as per Schedule II or Statement in lieu of prospectus as per Schedule IV)

Do you want to register a charge or make modification in registered charges (other than those related to debentures?

In case you want to register a charge or make modification in registered charges (other than those related to debentures),you need to file Form 8 for registration or for modification of a registered charge.

Do you want to register a charge or make modification in registered charges (related to debentures)?

In case you want to register a charge or make modification in registered charges (related to debentures), you need to file Form 10 for registration or modification of a registered charge.

Do you want to report repayment or satisfaction of registered charges?

In case you want to report repayment or satisfaction of registered charges, you need to file Form 17 (satisfaction of charge). This form is applicable for both the type of charges as per point 8 and 9 above.

Do you want to change information of a Foreign Company?

A foreign company can change its information by filing Form 49 and Form 52. 

Form 49 is required when there is -

1. Alteration in the charter, statute or memorandum and articles of association,

2. Alteration in Address of the registered or principal office

3. Alteration in directors and secretary of a foreign company.

Similarly, Form 52 is required to give notice in case of -

(A) Alteration in names and addresses of persons resident in India authorized to accept service on behalf of a foreign company 

(B) Alteration in the address of principal place of business in India of a foreign company 

(C) Annual accounts and list of places of business established in India by a foreign company 

(D) Cessation to have a place of business in India.

Compliance Related Filing

Do you want to do Annual e-filing?

Companies incorporated under the Companies Act 1956, are required to file the following Forms with the Registrar of Companies (ROC) every year: 

S. No.	Document	e-Form
1	Balance-Sheet	Form 23AC to be filed by all Companies
2	Profit & Loss Account	Form 23ACA to be filed by all Companies
3	Annual Return	Form 20B to be filed by Companies having share capital
4	Annual Return	Form 21A to be filed by companies without share capital
5	Compliance Certificate	Form 66 to be filed by Companies having paid up capital of Rs.10 lakh to Rs. 5 crore

How to do the Filing

Companies can do e-Filing in following ways:- 

The Company representative can upload the e-Forms on the MCA portal through the ‘Annual Filing Corner’ link (after registering oneself as a user of the portal) at his convenience from his office/ home. This is the most convenient way of e-Filing. 

The Company representative can prepare the e-Forms as per guidelines, get them digitally signed by the authorized signatory, copy them in a CD or a pen drive and visit the nearest “Registrar’s Front Office” (RFO). RFO staff will assist in uploading of e Forms on MCA portal. 

Other points to be remembered: 

1) Balance Sheet and Profit & Loss Accounts are to be filed as two separate documents with different e-Forms; 

2) Each e-Form along with the relevant attachment(s) should be less than 2.5 MB. 

3) The Balance Sheet, Profit & Loss Account and Annual Return are filed as attachments to the respective e-Forms. A scanned copy considerably increases the size of the document besides being more expensive. You are therefore, advised to convert the Text file/ Excel sheets by using the PDF converter software (PDF conversion facility is also available on the MCA portal for business users) and upload these attachments as PDF documents.

Do you want to do other compliance related filing?

Forms under other compliances are as under:-

1. Form 2 (Return of allotment)

2. Form 3 (Particulars of contract relating to shares allotted as fully or partly paid-up otherwise than in cash)

3. Form 4 (Statement of amount or rate percent of the commission payable in respect of shares or debentures and the number of shares or debentures for which persons have agreed for a commission to subscribe for absolutely or conditionally)

4. Form 4C (Return in respect of buy Back of Shares)

5. Form 22 (Statutory Report)

6. Form 23 (Registration of resolution(s) and agreement(s)

7. Form 23B (Information by Auditor to Registrar)

8. Form 25C(Return of appointment of managing director or whole time director or manager)

9. Form 62(Form for submission of documents with Registrar of Companies)

10. Form DD-B (Report by a public company)

11. Form 1(Statement of amounts credited to investor education and protection fund)

Approval Related Filing

Do you want to do HQ approval related filing?

1. Form 23AAA (Application to Central Government for modification in the matters to be stated in the company's balance sheet or profit and loss account)

2. Form 23AAB(Application for exemption from attaching the annual accounts of the subsidiary companies)

3. Form 23AAC(Application to Central Government for not providing depreciation)

4. Form 23C (Form of application to the Central Government for appointment of cost auditor)

5. Form 24AB(Form for filing application for giving loan, providing security or guarantee in connection with a loan)

6. Form 24B(Form of application to the Central Government for obtaining prior consent for holding of any office or place of profit in the company by certain persons)

7. Form 63 (Form for filing application for declaration as Nidhi Company)

8. Form 65 (Form for filing application or documents with Central Government)

9. Form (Form of application for approval for declaration of dividend out of reserves)

10. Form DD-C (Form of application for removal of disqualification of directors)

11. Form I (Form of application for approval of the Central Government for the appointment of sole selling agents by the company)

12. Form II (Form of application for approval of the Central Government for the appointment of sole buying agent by a company)

Do you want to do RD approval related filing?

1. Form 1AD (Application for confirmation by Regional Director for change of registered office of the company within the state from the jurisdiction of one Registrar to the jurisdiction of another Registrar). This is applicable only for the companies registered in the states of Maharashtra and Tamilnadu, as both these states have two RoC offices.

2. Form 24A (Form for filing application to Regional Director)

3. Form 64 (Form for filing application for opening branch(s) by a nidhi company)

Do you want to do ROC approval related filing?

1. Form 1B (Application for approval of the Central Government for change of name or conversion of a public company into a private company)

2. Form 61 (Form for filing an application with Registrar of Companies)

Close a Company

Do you want to close a Company?

A company can be closed by adopting the following ways:- 

(A) Strike off a company under Section 560 :

Section 560, of the Companies Act, 1956, deals with strike off provisions of a defunct company. Any defunct company desirous to strike off its name from the register of Registrar of company can apply in Form FTE for strike off its name from the register maintained by ROC as per Guidelines for ‘FAST TRACK EXIT MODE’ issued vide General Circular No. 36/2011 dated 7.6.2011. Similarly, ROC has also power to strike off any defunct company after satisfying himself of the need to strike off a defunct company and has reasonable cause. But before passing any order in this regard, an opportunity of being heard must be provided to the defunct company by following the due procedure u/s 560. 

(B) WINDING UP

Section 425, of Companies Act, 1956, deals with modes of winding up.

The winding up of a company may be either -

(a) By the Tribunal (also known as compulsory winding up).

(b) Voluntary winding up.

(c) Subject to the supervision of the Court.

Overview of Winding up

You can get a general picture from the following steps of winding up which are summarized below (except Voluntary winding up)

1. Firstly, issuing a written demand for debt payments to the target company.

2. Secondly, present a winding up petition to the court and the company

3. Thirdly, Court hearing for the petition

4. Fourthly, granting of winding up order by the court

5. Fifthly, meeting of creditors and other relevant parties

6. Sixthly, appointment of liquidator.

7. Seventhly, realization and distribution of company’s assets to the creditors

8. Eighthly, realize of duties for liquidator

9. Lastly, dissolution of the company.

For more details please visit Company Liquidators website (http://www.companyliquidator.gov.in/) 

Voluntary Winding up

Voluntary winding up which may be:

i) Member’s Voluntary winding up.

ii) Creditor’s Voluntary winding up.

In case of voluntary winding up, the entire process is done without court supervision. When the winding up is complete, relevant documents are filed before the court for obtaining the order of dissolution. A Voluntary winding up can be done by members or creditors. The circumstances in which company may be wound up voluntarily are: 

a) When the period fixed for the duration of the company in its articles has expired.

b) When an event on the happening of which the company is to be dissolved as per its articles happen.

c) The company resolves by special resolution at any general meeting to be voluntary winding up.

Do you want to convert the existing Company to LLP?

In case company wants to convert the existing company to LLP, it has to comply with the requirements of LLP Act, 2008 (File Form 18 under LLP Act, 2008). For details, please visit the link http://www.llp.gov.in/ available on MCA portal. After it gets approved, intimation regarding this can be given in Form 14 - LLP {Form for intimating to Registrar of Companies of conversion of the company into limited liability partnership (LLP)} with ROC.