ITR filing: Individual taxpayers are now required to file income tax returns electronically with an exception of super senior citizens who can file it in paper form. The deadline to file Income Tax Returns for 2018-19 is just around the corner. Filing income tax returns could be a cumbersome affair, especially if you are a first-timer. However, with a little mindfulness, the process could become less burdening. If you are one of the newly-added 1.10 crore tax filers this year then you have to keep a few things in mind. 1. Filing ITR is mandatory for all Indians as well as NRIs. If you have a total income of over Rs 2.5 lakh before permissible deductions under Sections 80C to 80U, you must file your income tax returns. Even if you do not fall in the tax net you must consider filing a ‘Nil Return’ just for the record. 2. Individual taxpayers are now required to file income tax returns electronically with an exception of super senior citizens who can file it in paper form. 3. Employees will have to give a detailed break-up of all components, including remuneration from a former employer as well as every tax-related deductions availed. 4. Details of capital gains from selling equity shares, equity mutual funds or property must also be shared. If you have sold the property then you must provide complete details of the buyer. Taxpayers with overseas earnings and foreign assets must declare the same too. 5. The Income Tax Department will now provide pre-filled ITR-1 forms. The pre-filled forms will have your salary FD interest income and TDS details. While filing, you must closely scrutinize the form. If there are any discrepancies then you’ll have the option of editing and submitting the details. 6. Keep in mind that to file the income tax returns, you must choose the correct form first. For eg., salaried persons with earnings less than Rs 50 lakh can file ITR-1. However, you cannot be the director of a company and hold shares of an unlisted company or own any foreign assets to do so. A self-employed individual will have to file ITR using the ITR-3 or ITR-4 form, depending on the type of income for the year. 7. If ITR is not filed by the July 31 deadline then the penalty for ITRs filed on or before December 31 will be Rs 5,000. It will go up to double that amount for later filings. However, if your taxable income is below Rs 5 lakh, the maximum penalty will be Rs 1,000. If the tax evaded is more than Rs 25 lakh then the punishment could be 6 months to 7 years, as mentioned by the I-T department. Want to get your own Article Published? Do send us your article at taxeffectsofficial@gmail.com or alternatively send your story to our Facebook Inbox facebook.com/taxeffects. Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal/official advice on any matter. All the instructions, references, content, or documents are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information contained in this article or for any conclusion of the information. Share It . .

Before coming on the main article, let’s understand why there is a need for invoking such provisions of section 194-IA under income tax act, 1961. There is a great need and importance of invoking such provisions in income tax so as to curb the circulation and flow of black money in India. Many Real Estate dealers cast their transactions in such a way so as to avoid taxation and most transactions are done in cash so as to hide money trail i.e. cash transactions are easy to hide but the same transactions if any routed through banking channels; then there are fewer possibilities of concealing that transactions. Moreover, there is also a provision that debars the seller to take consideration in cash exceeding 2,00,000/- INR in respect of such transaction. Now coming to the main article, let’s discuss the provisions. Language of section 194-IA as per Bare act are as follows: (1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax thereon. (2) No deduction under sub-section (1) shall be made where the consideration for the transfer of immovable property is less than 50 lakh rupees. (3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section. Explanation.— For the purposes of this section,— (a) “agricultural land” means agricultural land in India, not being a land situated in an area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2; (b) “immovable property” means any land (other than agricultural land) or any building or part of a building. The crux of the abovementioned section: 1) Applicability:- Applies to all types of person (being transferee) as defined u/s 2(31) and all resident transferor. It Applies to all types of immovable property except agricultural land. Note:  (i) The person deducting the tax is not required to obtain TAN. (ii) TDS is required to be made only if consideration exceeds 50 lakhs INR. 2) Time of deduction of tax:- Tax shall be deducted at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier. 3) Rate of TDS: Tax shall be deducted at the rate of 1%. 4) What if PAN is not furnished by the deductee: Section 206AA, as inserted with effect from 1-4-2010, provides as under: Every person whose receipts are subject to deduction of tax at source (i.e., the deductee) shall furnish his PAN to the deductor. If such person does not furnish PAN to the deductor, the deductor will deduct tax at source at higher of the following rates: (a) the rate prescribed in the Act; or (b) at the rate in force, i.e., the rate mentioned in the Finance Act; or (c) at the rate of 20%. Where the PAN provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his PAN to the deductor and above provisions shall apply accordingly. Let’s understand it by way of an example Example No. 1: Suppose there was an immovable property owned by Pushp Kumar Sahu whose market value is 5 Crores INR. The said property was sold by Pushp Kumar Sahu to Mr. Uday Kumar Sahu at a consideration of 5.5 Crores. Now there is a liability on Mr. Uday to deduct tax @ 1% of the said consideration i.e. 5,50,000/- and the same should  be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB. Note: After filing Challan cum statement 26QB, Deductor requires to issue Form 16B (TDS Certificate) to the deductee. Example No. 2: Suppose there were three brothers named Pushp, Mohit and Rishab, they are co-owners of an immovable property. They sold that property to Laxminayaran & associates (partnership firm) at a consideration of 1.45 Crores. Now the question arises that whether the Laxminarayan & associates needs to deduct TDS on such consideration. The answer is no, as the property is owned by three persons, individual consideration per person does not exceed 50 lakh INR, therefore no requirement for TDS u/s 194-IA. Reliance can be placed on the judgment passed by the Delhi Bench of the Income Tax Appellate Tribunal in case of Vinod Soni and others (Taxpayers). Article Written by – Pushp Kumar Sahu In case you also want to share your original article with us, do send us at taxeffectsofficial@gmail.com or alternatively send your story to our Facebook Inbox facebook.com/taxeffects. Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal/official advice on any matter. All the instructions, references, content, or documents are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information contained in this article or for any conclusion of the information. Share It . .

The last step in filing your income tax return (ITR) is to verify it. If you have filed your ITR but have not verified it, then the return will not be considered valid according to income tax laws. Once you have uploaded your ITR on the e-filing website, you get 120 days to verify your return. There are 6 ways to verify your income tax return. Out of these, five are electronic methods and one is a physical method. These methods can be used only if you are filing tax returns which are not required to be audited, i.e., usually ITR-1, ITR-2 and ITR-4 for FY 2018-19. However, if you are filing your tax returns which are required to be audited, then you have to verify it using the ‘Digital Signature Certificate’. Here are the six ways with which you can verify your ITR: 1. Via Aadhaar-based OTP: To verify your ITR using the Aadhaar-based one-time password (OTP), your mobile number must be linked to Aadhaar and registered as such in the Unique Identification Authority of India (UIDAI) database and your PAN must be linked with Aadhaar. Go to ‘My Account’, and click on ‘e-verify return’ and select the option, ‘I would like to generate Aadhaar OTP to e-verify my return.’ An SMS with the 6 digit OTP will be sent to your registered mobile number. Enter the OTP received in the box where it is required and click on submit. On successful submission, your ITR will be verified. One must remember that the Aadhaar based OTP is valid only for 30 minutes. If your mobile number is not linked to your Aadhaar, then there are other ways to electronically verify your ITR. 2. Generating EVC via Net-banking: You can verify your ITR if you have availed the Net banking facility of your bank account. One must remember that only select banks allow you to e-verify your ITR. Also, before logging in to your bank account, ensure that you are not already logged in on the e-filing website. Your PAN must be registered with the bank as well. To verify your ITR using Net banking facility, login to your bank account on the bank’s website. Select the e-verify option which is usually under the ‘Tax’ tab. You will be redirected to the e-filing website of the income tax department. Click on the ‘My Account’ tab and select ‘Generate EVC’ option. A 10-digit alpha-numeric code will be sent to your email and mobile number. This code is valid for 72 hours. Now, go to the ‘e-verify’ option under the ‘My Account’ tab to verify your return. Select the option ‘I have EVC already’. Enter the OTP that you have received on your mobile number registered with the bank. Click on ‘Submit’ and your ITR will be verified. 3. Generating EVC via bank account: The income tax department allows you to e-verify your return using your bank account. This facility is available for select banks. You can check if your bank offers you this facility or not by accessing the list here. To verify your ITR using your bank account, you must pre-validate it. Go to the profile settings in your e-filing account to pre-validate your bank account. Enter the required details such as your bank’s name, account number, IFSC code, and mobile number. You are required to enter your mobile number that is there is in the bank’s records. The pre-validation will be successful only if your PAN and name match with the bank account records. Once pre-validation of bank account is done, select ‘Generate EVC’ option under the ‘My Account’ tab. A code will be sent to you on your mobile number. Select ‘e-verify’ in ‘My Account’ tab and enter the code. One must remember that no change of mobile number or email as mentioned will be permissible without revalidation of the bank. This means that you cannot change the mobile number in your bank records through this exercise. The mobile number mentioned by you to validate your bank account must be the same as mentioned in the e-filing website of income tax. If you wish to update the same in bank records, you are required to make a visit to your bank branch. 4. Verifying tax-returns through Demat account: If you are a Demat account holder, you can use your Demat account to verify your ITR. This method is similar to the bank account based on ITR validation. You must pre-validate your Demat account to verify your tax return. The pre-validation process is automatic and usually takes about 1-2 hours and if there is any error then it is communicated to you via email. You can use your Demat account to generate EVC only after your details are validated by your depository. Go to ‘Generate EVC’ option and select ‘Generate EVC through Demat Account number.’ Enter the EVC received by you on your registered mobile number to successfully verify your ITR. Remember, here, too, you cannot change your mobile number or email ID without revalidating it with the depository. 5. Generating EVC through your bank ATM: The income tax department offers the facility to generate code through selected bank ATMs. This facility is available for selected banks only. Currently, only customers of six banks are allowed to avail this facility. To generate EVC, visit your bank’s ATM and swipe your ATM card. Click on the ‘Pin for Income Tax filing‘. An EVC will be sent to your registered mobile number. This EVC is valid for 72 hours. Log-in to your e-filing account on the income tax website. Go to the ‘e-verify returns’ option. Select the ITR to verify it and select the option ‘Already generated EVC through bank ATM’. Enter the EVC and your tax return will be verified. You must remember that if you have verified your ITR using any of the electronic methods mentioned above, you are not required to send ITR-V to the income tax department. 6. Sending signed ITR-V/Acknowledgement receipt: If you cannot verify your

  Budget 2019 has proposed a new Section 194M, which requires an individual or a HUF, to deduct TDS @ 5%, where they make payment exceeding Rs. 50 Lac in a year to a contractor (referred to in Section 194 C) or to a professional (referred to in Section 194 J) The proposed Section 194M reads as under : – Section 194M: (1) Any person, being an individual or a Hindu undivided family (other than those who are required to deduct income-tax as per the provisions of section 194C or section 194J) responsible for paying any sum to any resident for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract or by way of fees for professional services during the financial year, shall, at the time of credit of such sum or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to five per cent. of such sum as income -tax thereon: Provided that no such deduction under this section shall be made if such sum or, as the case may be, aggregate of such sums, credited or paid to a resident during a financial year does not exceed fifty lakh rupees. (2) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section. Explanation.– For the purposes of this section,–– (a) “contract” shall have the meaning assigned to it in clause (iii) of the Explanation to section 194C; (b) “professional services” shall have the meaning assigned to it in clause (a) of the Explanation to section 194J; (c) “work” shall have the meaning assigned to it in clause (iv) of the Explanation to section 194C. Analysis and  Key features are as under : – 1. Who should be the Payer: – Provisions are applicable to an individual or a Hindu undivided family, even though they may not be carrying on any business or profession ; It excludes an individual or a Hindu undivided family who are required to deduct TDS  under Section 194C or Section 194J, i.e, mainly those individuals or HUF who are liable to tax audit and carrying on business or profession ; 2. Who should be the Recipient: – The recipient should be a  resident. Payments to non-residents are not covered under this Section. 3. Nature of work performed: – Payment should be for carrying out any work (including the supply of labour for carrying out any work) in pursuance of a contract or by way of fees for professional services during the financial year; 4. Time of deduction of TDS: – TDS  shall be deducted at the time of credit of such sum or at the time of payment of such sum in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier ; 5. Rate of TDS under Section 194M: – TDS shall be deducted @ 5% of such sum. 6. Threshold Limit of TDS under Section 194M: – TDS shall be deducted only when such sum, or aggregate of such sums, exceeds fifty lakh rupees in a year. The memorandum, explaining the provisions of Finance (No.2) Bill, 2019, provides the following reasoning behind the insertion of Section : – At present, there is no liability on an individual or Hindu undivided family (HUF) to deduct tax at source on any payment made to a resident contractor or professional when it is for personal use. Further, if the individual or HUF is carrying on business or profession which is not subjected to an audit, there is no obligation to deduct tax at source on such payment to a resident, even if the payment is for the purpose of business or profession. Due to this exemption, the substantial amount by way of payments made by individuals or HUFs in respect of contractual work or for professional service is escaping the levy of TDS, leaving a loophole for possible tax evasion. To plug this loophole, it is proposed to insert a new section 194M in the Act to provide for levy of TDS at the rate of five percent on the sum, or the aggregate of sums, paid or credited in a year on account of contractual work or professional fees by an individual or a Hindu undivided family, not required to deduct tax at source under section 194C and 194J of the Act, if such sum, or aggregate of such sums, exceeds fifty lakh rupees in a year. However, in order to reduce the compliance burden, it is proposed that such individuals or HUFs shall be able to deposit the tax deducted using their Permanent Account Number (PAN) and shall not be required to obtain Tax deduction Account Number (TAN). This amendment will take effect from 1st September 2019. Article Written By- Rohit Kapoor Want to get your own Article Published? Do send us your article at taxeffectsofficial@gmail.com or alternatively send your story to our Facebook inbox facebook.com/taxeffects. Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal/official advice on any matter. All the instructions, references, content, or documents are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information contained in this article or for any conclusion of the information. Share It . .

An individual or HUF paying rent of more than Rs 50,000 per month is now required to deduct tax at source (TDS). The government recently introduced section 194IB in the Income-tax Act making it mandatory for a tenant to withhold taxes @ 5% on rental payments, over and above Rs. 50,000 per month and to deposit it within the prescribed time. Earlier, only individuals and HUFs who were mandatorily required to have their accounts audited as per the tax laws were required to withhold tax on rental payments on immovable property. However, with the introduction of this new section, all individuals and HUFs who are paying rent over and above Rs. 50,000 per month, would be mandatorily required to withhold tax from June 1, 2017. The general thinking among people is that this process would just add to the overall complexity in the existing tax structure. However, the good news is that the government has tried to keep the process as simple as possible. 1. TDS only once annually: For instance, the tenant is required to deduct and deposit the taxes only once in a financial year, through a challan-cum-statement (Form 26QC), unless the tenancy ends during the course of the financial year. 2. Easy accessibility of TDS certificate, challans, forms: The tenant would also be required to issue a tax withholding certificate (Form 16C) to the landlord, as a proof that taxes have been deposited in his name. Form 26QC and Form 16C are expected to be available shortly on the TIN NSDL website and the Traces website of the Income-tax department, respectively, in the coming months. 3. Tenants do not need TAN: Also, to keep it simple, lawmakers have done away with the onerous requirement to obtain a tax deduction account number (TAN) for such transactions. There are also interest and penalties prescribed for non- compliance of the newly-inserted law. Therefore, if a tenant fails to deduct tax at source he may be liable to pay interest and penalties as prescribed under the law. The government’s objective of introducing this section appears to be primarily to ensure that correct income is disclosed and both, tenant and landlord file their income tax returns to reflect true disclosures. With the quoting of the PAN for both landlord and the tenant, the Revenue Department can easily track correct disclosures of rent in tax returns. Also, such taxes are likely to get reflected in the 26AS form of the landlord for claiming credit of the TDS. Here are some common questions answered regarding TDS on rent above Rs 50,000 (as mandated under Section 194IB):  – Who are covered under this section: Individuals and HUFs whose accounts are not required to be audited under the Indian tax laws. – What do they need to do: Withhold tax/deduct tax at source from rent paid to resident landlords. – Income threshold: Rent paid in excess of Rs. 50,000 per month or part of the month. – Property covered: Commercial and residential property – Tax rate applicable: 5% – Amount on which tax needs to be withheld: Total annual rent paid to a resident landlord – Is the landlord required to provide his PAN to the tenant? Yes. In the absence of PAN or failure to provide the same, the tax shall be withheld/deducted @20%. However, the overall tax in such a scenario shall be restricted to the rent payable for the last month of the financial year or tenancy whichever is earlier. – Whether taxes need to be deducted every month: No. Tax needs to be withheld/deducted once in the financial year only. However, where the property is vacated during the year, the tax needs to be deducted on the last day of the tenancy. – Whether the tenant needs to obtain Tax deduction number: No – How can the tenant deposit the taxes?: The tenant should file a Form 26QC which is a challan-cum-statement. – When should the tax withheld be deposited?: Within 30 days from the end of the month in which the deduction was made. – Whether the tenant needs to give any proof of TDS/taxes withheld to the landlord?: Tenant needs to issue a TDS/ tax paid certificate (Form 16C) to the landlord as proof of taxes deducted. It is to be issued within 45 days from the end of the month in which the tax was deducted. – Where would the Forms (26QC and 16C) be available? • Form 26QC shall shortly be available on the TIN NSDL website of the Income-tax department in the coming months (www.tin-nsdl.com). • Form 16C shall shortly be available on the TRACES website of the Income-tax department in the coming months (www.tdscpc.gov.in). – What is the penalty for non-deduction of tax or delay in deposit of taxes withheld? • For, non-deduction of tax, the tenant may be required to pay a penalty equal to the amount of taxes not withheld. • If the tenant delays in the deposit of taxes withheld, he may be liable to pay penal interest at the rate of 1% where there is a delay in deducting and depositing the tax or 1.5% per month where tax is deducted but there is a delay in depositing the same. – Whether there is any penalty for delay in filing of Form 26QC and issuing Form 16C? • Delay in the filing of Form 26QC may attract a late fee of Rs. 200 per day. • Also, there may be consequential penalties for non-filing. • For delay in issuing Form 16C, the penalty is Rs. 100 per day. Article Written By – CA Meenu Agarwal In case you also want to share your original article with us, do send us at taxeffectsofficial@gmail.com or alternatively send your story to our Facebook Inbox facebook.com/taxeffects. Share It . .