President’s Message | May 2019
Dear Professional Friends,
I’m existed to write and share in this forum that KSCAA is trying to reach all its members across Karnataka, in this long journey it has extended its wing by conducting a first ever program for CA’s in whitefield, Bengaluru on Goods and Service Tax. More about the program in the newsletter.
In an interesting unprecedented turnout of events, bar council of Delhi has asked Big fours to refrain from providing any services that tantamount to practice of law. However, Ministry of Corporate Affairs (MCA) had constituted an expert panel which had recommended for amending the Advocate Act to allow specified legal service to CA’s. Report of the expert panel quoted “For Indian firms to evolve into global leaders in auditing, legal, consultancy, and ancillary services, it is necessary to rationalise the Advocate Act 1961 to facilitate development of Indian audit firms as well as legal firms”. Any outcome in this space of tussle between the two large professions in the era of multi-disciplinary world would hamper the future of SMP’s in a hefty way.
Representations:
On the representations front, one, we have represented before the concerned bureaucrat regarding the need for audit fees upward revision in respect of Co-operative Societies and Co-operative Banks in Karnataka. Further, one more representation was put forth in the month on the need for extention in due date for filing ROC forms 22A Active, DIR3KYC, MSME as well as BEN forms relating to significant beneficial ownership. Also, we have given valuable suggestions therein as to the unification of forms and reporting under Quasi/ Annual Form itself instead of individual forms in line with the ‘Ease of Business’. The detailed text may be found herein the newsletter later and also under the Resources tab on our webpage www.kscaa.com.
We are happy to inform you that at the backdrop of timely representation, Form22A Active and DPT3 were given reasonable time extensions. We seek you valuation suggestion points for us in future too to write to the appropriate authorities and serve you better.
New Roundup
- Recently, the Indian government has notified new tax return forms for FY2018-19 (assessment year 2019-20) applicable for individuals, corporates and other category of taxpayers. The new forms contain several additional disclosure requirements vis-a-vis the previous year’s forms. The changes take into account the amendments made by the Union Budget 2018 in the Income-tax Act, 1961. The additional information being sought in the revised tax return forms will not only facilitate automatic cross-validation of data by the tax department but is also expected to quicken the process of tax refund and assessments. All the taxpayers are mandatorily required to file their tax returns electronically except individuals over the age of 80 years who have the option of filing the tax return in paper format as well. This article focuses on some of the key points to be taken note of by individual taxpayers while filing their tax returns this year.
Identifying the suitable form and key changes
ITR-1 (SAHAJ): resident and ordinarily resident (ROR) individuals having total income of up to ?50 lakh, having income from salaries, one house property, income from other sources and agricultural income up to ?5,000. Non-residents cannot file ITR-1, irrespective of their source or quantum of income.
- The significant change in form ITR-1 is the restriction on its applicability for the following resident individuals:
- A person who is a director in any company;
- A person who has held any unlisted equity shares at any time during the year;
- A person who has claimed a deduction towards expenses incurred for earning income from ‘other sources’ other than deduction for family pension; and
- A person who is assessable for any income on which tax has been deducted at source in the hands of any other person. This would be applicable in cases where the income earned by the taxpayer’s spouse or any other person is required to be clubbed in the taxpayer’s hands and there was a tax deduction at source on such income.
ITR-2: Individuals not having income from profits and gains of business or profession (who cannot use ITR-1).
Significant changes have been brought in the new form ITR-2 which is likely to impact a wide section of taxpayers. Detailed disclosure has been introduced with respect to taxpayer’s residential status in India. Apart from specifying the status as ‘resident’, ‘resident but not-ordinary resident’ or ‘non-resident’, taxpayers are also required to select the condition based on which the residential status has been determined, ie as per the number of stay days in India in the relevant tax year and previous years.
Non-resident individuals are now required to mention their country of residence, along with their taxpayer identification number in such jurisdiction. Non-residents who are Indian citizens or person of Indian origin are also required to mention the total period of stay in India for the year and in the preceding four years.
Individuals who are directors in any company are required to provide the name of the company, its permanent account number (PAN), director identification number (DIN) and information on whether the company’s shares are listed or unlisted. Individuals holding unlisted equity shares at any time during the year are required to disclose the name of the company whose shares are held, company’s PAN, number of shares held, shares acquired/sold during the year along with their cost of acquisition/sale consideration.
The scope of reporting foreign assets has been expanded to include details of foreign depository and custodial accounts, foreign equity and debt interest held at any time during the relevant period.
There are additional disclosure requirements to specify long-term capital gains from sale of equity shares or units of equity-oriented funds. In case of capital gain from transfer of immovable property, additional details regarding the buyer and the property are required to be disclosed. In case of agriculture income, the location of agricultural land, its measurement, etc are now required to be disclosed.
ITR-3: Individuals having income from profits and gains of business or profession.
The additional disclosures discussed for form ITR-2 pertaining to residential status, directorship in companies, investment in unlisted equity shares, income from house property and other sources, foreign assets, etc. have also been incorporated in Form ITR-3.
Other changes introduced in form ITR-3 include disclosure of name and PAN of partnership firms in which the individual taxpayer was a partner during the year, details of audit under any other statutory law. The new form ITR-3 bifurcates the existing profit and loss account into trading account, manufacturing account and profit and loss account which will be applicable for taxpayers who have income from business or profession, etc. The form also seeks details of annual value of outward supplies as per the goods and services tax (GST) returns filed.
ITR-4 (SUGAM): Individuals, and firms (other than LLPs), being a resident, having total income up to ?50 lakh and having income from business and profession computed under the presumptive taxation scheme.
This form is applicable for taxpayers who have presumptive income under the tax laws. The changes introduced in the other forms have also been suitably incorporated in ITR-4. As per the new form, individual taxpayers who have presumptive income and also hold directorship in companies or hold shares of unlisted company will not be eligible to file form ITR-4. Such taxpayers will need to file form ITR-3. The new tax disclosure norms are in line with government’s resolve to bring in more transparency and increase the tax base. It is imperative that taxpayers should carefully evaluate the information required to be furnished and provide complete details to avoid any unnecessary disputes and litigation at a later stage.
Upcoming Events and programs
We are organizing Two Days Residential Leadership Program specifically targeting and addressing the concerns of Small and medium practitioners on Friday 31st May 2019 and Saturday 1st June 2019 at Kolavara Heritage Thirtahalli, Shivamogga.
KSCAA is organizing its first ever program on ‘GST Annual Return & Audit’ on 24th of May 2019 at Whitefield, Bengaluru.
Sincerely,
Raghavendra Shetty
President
