Tuesday, March 31, 2020

Tax & Compliance Relief Announced - Covid-19

The following reliefs have been announced Indian Finance Minister, in a press conference held on 24th March 2020, to deal with the economic crash due to Coronavirus Pandemic:
1. Extension of Due Dates –

Revised Due Date
Regarding Income Tax

Income Tax Returns for FY 2018-19
30th June, 2020
Aadhaar PAN linking
30th June, 2020
Vivad se Vishwas Scheme
30th June, 2020
Issue of notice, intimation, filing of appeal, submission of income tax return and any other document or compliance matter by the tax payer including saving instruments or capital gains under Income Tax Act, Wealth Tax Act, Benami Property Act, STT Law, CTT Law, Vivaad se Vishwas Law, where the time limit was expiring in March
30th June, 2020
Regarding GST

GST returns of March, April and May
30th June, 2020
Opting of Composition Scheme
30th June, 2020

2. Interest Rates Reduction

Reduced to
Income Tax:

Payment made under Vivad se Vishwas Scheme by June 30, 2020.
10% Amount
Delayed payments of advanced tax, self-assessment tax, regular tax, made between
20th March 2020 and 30th June 2020
(No late fee/ penalty to be charged)
Delayed payments of TDS, TCS, equalization levy, STT, CTT made between
20th March 2020 and 30th June 2020
(No late fee/ penalty to be charged)

Delayed payment of GST made between 20th March 2020 and 30th June 2020 by those having turnover less than Rs. 5 crore
(No late fee/ penalty to be charged)
Delayed payment of GST made between 20th March 2020 and 30th June 2020 by those having turnover more than Rs. 5 crore
(No late fee/ penalty to be charged)

Late filing of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date

No additional Fees

3. Other Reliefs –

a. Mandatory requirement of holding meetings of the Board of the companies within prescribed interval, shall be extended by a period of 60 days till next two quarters i.e., till 30th September.

b. Applicability of Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-2021

c. If the Independent Directors of a company have not been able to hold even one meeting in the financial year 2019-20, the same shall not be viewed as a violation.

d. Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company shall not be treated as a violation.

e. Custom Clearance will serve 24 x 7.

f. Debit cardholders to withdraw cash for free from any other banks’ ATM for 3 months.

g. Waiver of minimum balance fee.

h. Reduced bank charges for digital trade transactions for all trade finance consumers.

i. Raise the threshold of default under section 4 of the IBC 2016 to Rs 1 crore (from the existing threshold of Rs 1 lakh). This will by and large prevent triggering of insolvency proceedings against MSMEs. If the current situation continues beyond 30th of April 2020, the government may consider suspending section 7, 9 and 10 of the IBC 2016 for a period of 6 months.

Friday, March 20, 2020

Demand notices, responses, replies and corrective actions

Demand Notices and their corrective actions

-          What is Demand in the terms of taxation?
The Income Tax Department (IT Department) checks the income declarations and tax paid to see if all these details match. Only then the IT Department will accept the tax return filed as per Section 143(1). If the taxes paid are found to be less than what you owe, they will issue you a demand notice.
-     Why a Taxpayer get a notice?

1.      For delay filing IT return
2.      Misreporting of LTCG for equity
3.      For TDS claimed not matched with 26AS
4.      For Non-Disclosure of income
5.      For not declaring investment made in the name of the spouse
6.      For filing defective return
7.      If you done high value transactions
8.      If your return picked up for scrutiny
9.      For setting off refunds against remaining tax payable
10. For tax evasion of earlier years


-       SECTION 139(9) : Defective income tax return
-       SECTION 142(1) : Preliminary Enquiry before an assessment
-       SECTION 143(2) : Follow up of notice under section 142(1)
-       SECTION 148 : Income escaped assessment
-       SECTION 156 : Notice of Demand
-       SECTION 245 : Refund adjusted against the tax demand

-          Possible resolution in case of tax mismatch:
a.      Credit Available in FORM 26AS but not given in the intimation order
-          Invalid TAN entered in the return
-          SAT/AT details are entered wrongly
-          No data error in TAN/SAT/AT details
-          No data error in particular entered in TDS/TCS schedule
b.      Credit not available in form 26AS
-          Mismatch of TDS/TCS amounts claimed compared to form 26AS
-          Mismatch of SAT/AT
This indicates that principal demand is already adjusted/ paid, and interest demand is the only outstanding value. For the demand against which there is "No Submit response option" available such demand is already confirmed by the Assessing Officer.

Outstanding Tax Demand Status

The Taxpayer can submit the response online to the outstanding demand by either choosing to Agree or Disagree with the demand.
Perform the following steps for Responding to the Outstanding Demand.
1.       Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
2.       Go to the ‘e-File’ menu, Click ‘Response to Outstanding Demand’.
3.       All outstanding demands will be displayed here. Click on 'View' hyperlink under 'Response' column. 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Intimation in SECTION 143(1)
The intimation of demand made by the income tax department is under section 143(1) and assessee must respond it within 30days. A copy of notice is attached below:
Reasons for Notice under Section143(1)(a)
Many taxpayers are currently receiving intimations under section 143(1)(a) due to a mismatch between Form 26AS and the ITR Form.

In most cases, there will be no change in tax calculations. The department is only asking for more information.

Circumstance under the notice of Section 143(1)

Reason/ Purpose
Action to be taken
Notice under Section 143(1)(a)

Due to discrepancy/mismatch found and there is a tax liability
If you agree - Pay the taxes & Revise the return
If you disagree - Respond on income tax portal

Respond to an Outstanding Demand

  The Taxpayer can submit the response online to the outstanding demand by either choosing to    ‘Agree’ or ‘Disagree’ with the demand.

Perform the following steps for Responding to the Outstanding Demand.
1.       Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
2.       Go to the ‘e-File’ menu and Click ‘Response to Outstanding Demand’
3.   Click the hyperlink 'Submit' located under 'Response' column (To respond for the Outstanding Demand)
4.       Choose any one of the listed responses.
-           Agree
-          Not agree
-          Disagree
-          Demand is not correct but ready for adjustments
     5.        A success message along with Transaction ID is displayed on successful submission of the response, in case of agree or partially agree for demand:   

If you disagree - Respond on income tax portal

Step1: Go to http://portal.inco metaxindiaefiling.gov.in/home and click onLogin here
Step2: Enter UserID, Password and Captcha to proceed logging in
Step3: On successfully logging in, click on the‘e-proceeding’tab
Step 4: Click on ‘Adjustment u/s 143(1)(a)’
Step5: When the e-proceeding tab opens, click on ‘Submit’ under the‘Response’tab
Step 6: This page summarizes the discrepancies due to which the notice has been issued.
        If you agree or partially agree with the department, then you must file a revised return.
        If you disagree,click on the disagree’ response andContinue’

Step7A:  When you disagree with the notice issued by  the department, you can provide a justification for the same on this page.

Step7B: If there is  any income which has been taxed in the notice but is exempt under section 10, you must select the option from the drop down list.
Step7CIf you do not find your reasons in  the options  specified,then specify it in the tab for‘any other reason’


The Dynamic Reconciliation Statement will auto populate, then click on ‘Submit’.

Above mentioned steps in a nutshell:

-         STEP 1:Ascertain the Outstanding Tax Demand
-          STEP 2: Draft a letter for cancellation of Demand
-         STEP 3: Send to Income tax department and get the Acknowledgment Number
-         STEP 4: Scan the above letter, draft grievance and prepare the attachments.
Ø While drafting Grievance for the letter NO SPECIAL CHARACTERS can be used (%,*.#,+,-,@ etc.)
Ø Attachments : one file – one name -No space and no special characters and must be upto  50MB.

-         STEP 5: Scan the Documents and upload on e-filing portal.

Notice of under Section 245

Why did Assessee receive Intimation under Section 245?

This intimation is received when you have a tax demand pending from the IT department or when you have claimed a refund from them for some other assessment year. Section 245 of the Income Tax Act empowers the assessing officer (AO) to adjust the refund (or a part of the refund) against any tax demand that is outstanding from the taxpayer. In simple words, the IT department wants to adjust the refund due against a demand due from you. This demand may pertain to an earlier assessment year.

Adjustments against Refund under section 245

-          Section 245 Notice

-          Adjustment under section 143(1) of another year

-          Adjustment against demand in Refund Vouchers

1.   Section 245 Notice

-   Generally, the response of notice of section 245 shall be filed within 15days.
-   Response to the notice must be either:
·         Agree                                                                                                                 
·         Disagree
·         Partially agree
·         Not agree but ready for adjustments

i.      If assessee agree to the notice and demand,then the assessee simply login to the portal and submit the demand and pay the amount.
ii.    If the assessee disagree then s/he will respond to the reasons for being Disagree to the Demand raised.
iii.  Partially Agree: in this case the assessee must submit the XML or may revise the return and submit it again.                      Or
The Assessee must file rectification in such a circumstance.
iv.   Not agree but ready for adjustments : In such an assessee is not Agreed with the demand raised by the department but assessee just for a way-out take such decision for not to block the entire refund with the department.

Rectification request under section 154

rectification request under section 154(1) is allowed by the Income Tax Department for correcting mistakes when there is an apparent mistake in your Income Tax Return. an error due to overlooking compulsory provisions of law.
 Order rectified under section 154.
Mistake apparent from records, and income tax department may-
-Amend any order passed under any provisions of the Income-tax Act
-Amend any intimation or deemed intimation sent under section 143(1)
- Amend any intimation sent under section 200A (1)- TDS return
- amend any intimation under section 206CB- Processing of TCS statement

Submitting the request for Rectification

The return filed by the taxpayer will be processed by Income Tax Department (ITD) and intimation will be sent to the assessee under section 143(1) based on details disclosed by the taxpayer and rules deployed at the processing centre of ITD. In case if the taxpayer wants to seek rectification of a mistake in an order or intimation, which is apparent from the record, then the taxpayer can seek ‘Rectification under Section 154’.
1.       Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
2.       Go to the ‘e-File’ menu and Click ‘Rectification’ link
3.       Choose the options of ‘Order/Intimation to be rectified’ and ‘Assessment Year’ from the dropdown list. Click ‘Continue’
4.       Select any one of the following options of ‘Request Type’ from drop down list.
5.       To ViewthesubmittedRectificationRequest :

-          Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
-          Go to the ‘My Account’ menu located at upper-left side of the page ↓ Click ‘View e-Filed Returns/Forms’
-          Select ‘Rectification Status’ from drop down list¯Click ‘Submit’

View Refund/ Demand Status

To check the refund status, follow the steps:
Step1: Login to e-Filing website with User ID, Password, Date of Birth / Date of Incorporation and Captcha.
Step2: Go to My Account and click on "Refund/Demand Status"
Step3: following details would be displayed
-          Assessment year
-          Status
-          Reasons for refund failure (if any),
-          Mode of payment is displayed


taxpayer aggrieved by various actions of Assessing Officer can appeal before Commissioner of Income Tax (Appeals). Further appeal can be preferred before the Income Tax Appellate Tribunal. On substantial question of law, further appeal can be filed before the High Court and even to the Supreme Court.

Compiled By : Abhilasha at Sandeep Ahuja & Co