Direct Tax Updates During The Period 16.12.2019 – 15.01.2020


Direct Tax Updates During The Period 16.12.2019 – 15.01.2020

I. NOTIFICATIONS

1. Form No 10DA (under Rule 19AB) providing for Report under section 80JJAA of the Income-tax Act, 1961 substituted w.e.f. 18.12.2019 – Notification No. 104/2019, dated 18-12-2019

Where the gross total income of an assessee to whom section 44AB applies, includes any profits and gains derived from business, a deduction of an amount equal to 30% of additional employee cost incurred in the course of such business in the previous year, would be allowed under section 80JJAA for three assessment years including the assessment year relevant to the previous year in which such employment is provided. Further, section 80JJAA(2)(c) provides that deduction would be available only if the assessee furnishes alongwith the return of income the report of the accountant giving such particulars in the report as may be prescribed.

Direct Tax Updates During The Period 16.12.2019 – 15.01.2020

Vide this notification, the existing Form No. 10DA providing for Report under section 80JJAA has been substituted. For details regarding the substituted Form No. 10DA, members may refer the aforesaid notification. The said notification is applicable w.e.f. 18.12.2019.

The detailed Notification can be downloaded from the link below:

Link

2. Modes of payment for the purpose of section 269SU specified vide insertion of new Rule 119AA in the Income-tax Rules, 1962 and a related clarification – Notification No. 105/2019 & Circular No. 32/2019, dated 30-12-2019

In furtherance to the declared policy objective of the Government to encourage digital economy and move towards a less-cash economy, a new provision namely Section 269SU was inserted in the Income-tax Act, 1961, vide the Finance (No. 2) Act 2019, which provides that every person having a business turnover of more than Rs 50 Crore (“specified person”) shall mandatorily provide facilities for accepting payments through prescribed electronic modes. The said electronic modes have been prescribed vide notification no. 105/2019 dated 30.12.2019 (“prescribed electronic modes”).

In this regard, new Rule 119AA (Modes of payment for the purpose of section 269SU) has been inserted in the Income-tax Rules, 1962. Rule 119AA provides that the specified person shall provide facility for accepting payment through following electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person, namely:—

(i) Debit Card powered by RuPay;

(ii) Unified Payments Interface (UPI) (BHIM-UPI); and

(iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

Accordingly, w.e.f. 01.01.2020, the specified person must provide the facilities for accepting payment through the prescribed electronic modes. Further, Section 10A of the Payment and Settlement Systems Act 2007, inserted by the Finance Act, provides that no Bank or system provider shall impose any charge on a payer making payment, or a beneficiary receiving payment, through electronic modes prescribed under Section 269SU of the Act. Consequently, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 01.01.2020 on payment made through prescribed electronic modes.

In this connection, it may be noted that the Finance Act has also inserted section 271DB in the Act, which provides for levy of penalty of Rs 5,000 per day in case of failure by the specified person to comply with the provisions of section 269SU. In order to allow sufficient time to the specified person to install and operationalise the facility for accepting payment through the prescribed electronic modes, it is clarified by the CBDT that the penalty under section 271DB shall not be levied if the specified person installs and operationalises the facilities on or before 31.01.2020. However, if the specified person fails to do so, he shall be liable to pay a penalty of Rs 5,000 per day from 01.02.2020 under section 271DB for such failure.

The detailed Notification/Circular can be downloaded from the link below:

Link

Link

3. CBDT further extends the timeline for Linking PAN with Aadhaar from 31.12.2019 to 31.03.2020 – Notification No. 107/2019, dated 30-12-2019

Vide Notification No. 75/2019 dated 28.09.2019, the CBDT had extended the cut-off date for intimating the Aadhaar number and linking PAN with Aadhaar to 31.12.2019, unless specifically exempted.

Vide this notification, the due date for linking PAN with Aadhaar has been further extended from 31.12.2019 to 31.03.2020.

The detailed Notification can be downloaded from the link below:

Link

4. CBDT notifies ITR Form No. 1 and 4 for AY 2020-21 & thereafter grants relaxation in eligibility conditions for filing of said ITR Forms – Notification No. 01/2020, dated 03-01-2020 & Press Release, dated 09-01-2020

In order to ensure that the e-filing utility for filing of return for A.Y 2020-21 is available as on 01.04.2020, the ITR Forms ITR-1 (Sahaj) and ITR-4 (Sugam) for the A.Y 2020-21 are notified vide this notification. In the notified returns, the eligibility conditions for filing of ITR-1 & ITR-4 Forms were modified with an intent to keep these forms short and simple with bare minimum number of Schedules. Therefore, a person who owns a property in joint ownership was not made eligible to file the ITR-1 or ITR-4 Forms. For the same reason, a person who is otherwise not required to file return but is required to file return due to fulfilment of one or more conditions in the seventh proviso to section 139(1), was also not made eligible to file ITR-1 Form.

After the aforesaid notification was issued, concerns were raised that the changes are likely to cause hardship in the case of individual taxpayers. The taxpayers with jointly owned property had expressed concern that they will now need to file a detailed ITR Form instead of a simple ITR-1 and ITR-4. Similarly, persons who are required to file return as per the seventh proviso to section 139(1), and are otherwise eligible to file ITR-1, had also expressed concern that they will not be able to opt for a simpler ITR-1 Form.

The matter was examined by the CBDT and it has been decided to allow a person, who jointly owns a single house property, to file his/her return of income in ITR-1 or ITR-4 Form, as may be applicable, if he/she meets the other conditions. It has also been decided to allow a person, who is required to file return due to fulfilment of one or more conditions specified in the seventh proviso to section 139(1), to file his/her return in ITR-1 Form.
For further details, the newly notified ITR forms 1 and 4 may be referred.

The detailed Notification can be downloaded from the link below:

Link

Link

5. Amendment of rule 10DA and rule 10DB regarding furnishing of information and maintenance of documents by Constituent Entity of an international group – Notification No. 03/2020, dated 06-01-2020

Section 286 provides for furnishing of a Country-by-Country report in respect of an international group by the parent entity or alternate reporting entity, resident in India. Further, section 92D, substituted by the Finance (No.2) Act, 2019, provides for maintenance, keeping and furnishing of information and document by every person who has entered into an international transaction or specified domestic transaction and every person, being a constituent entity of an international group.

Amendments in Rule 10DA

(i) Rule 10DA now provides for maintenance and furnishing of information and document by certain person under section 92D.

(ii) There is no change in sub-rule (1) of Rule 10DA specifying the threshold and the information and documents of the international group to be kept and maintained by every person, being a constituent entity of an international group.

(iii) Sub-rules (2), (3) and (4) have been substituted w.e.f. 1.4.2020. New sub-rule (2) requires the information and document specified under rule 10DA(1) to be furnished to the Joint Commissioner referred to in rule 10DB(1), in Form No. 3CEAA on or before the due date for furnishing the return of income as specified under section 139(1).

(iv) New sub-rule (3) requires the constituent entity to furnish Part A of Form No.3CEAA even if the conditions specified under sub-rule (1) are not satisfied.

(v) New sub-rule (4) provides that where there are more than one constituent entities resident in India of an international group, Form No.3CEAA may be furnished by any one constituent entity if –

(a) the international group has designated such entity for this purpose; and

(b) the information has been conveyed in Form No.3CEAB to the Joint Commissioner referred to in Rule 10DB(1), in this behalf 30 days before the due date of furnishing Form No.3CEAA.

Amendments in Rule 10DB

(i) Sub-rules (1), (2) and (5) have been substituted. Rule 10DB(1) now provides that the income-tax authority for the purposes of section 286 shall be the Joint Commissioner as may be designated by the Director General of Income-tax (Risk Assessment).

(ii) Rule 10DB(2) now provides that the notification under section 286(1) shall be made in Form No. 3CEAC two months prior to the due date for furnishing of report as specified under section 286(2).

(iii) The proviso to section 286(4) requires furnishing of CbC report by any one constituent entity, where there are more than one constituent entity of an international group, resident in India. Such constituent entity should have been designated by the international group to furnish the report on behalf of all the constituent entities resident in India and the information should have been conveyed in writing on behalf of the group to the prescribed authority. Rule 10DB(5) now requires the information required to be conveyed in writing on behalf of the group regarding the designated constituent entity to be furnished in Form No.3CEAE.

Amended Rule 10DA shall come into force w.e.f. 01.04.2020 whereas amendments in rule 10DB is applicable w.e.f. 06.01.2020. For further details, the said notification be referred.

The detailed Notification can be downloaded from the link below:

Link

II. CIRCULARS

1. Income-tax Deduction from salaries during the Financial Year 2019-20 under section 192 of the Income-tax Act, 1961 – Circular No. 04/2020, dated 16-01-2020

This CBDT Circular contains the rates for deduction of income-tax from the payment of income chargeable under the head “Salaries” during the financial year 2019-20 and explains certain provisions of the Income-tax Act, 1961 and Income-tax Rules, 1962, including the broad scheme of TDS from Salaries, persons responsible for deducting tax at source from Salaries and their duties, computation of income under the head “Salaries” etc.

The detailed Circular can be downloaded from the link below:

Link

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