Latest Changes in AIR Reporting norms, Form 15CA-CB and E-initiative(s) of the Income Tax Department

Latest Changes in AIR Reporting norms, Form 15CA-CB and E-initiative(s) of the Income Tax Department Suresh Wadhwa, LL.B., FCA Time: 19:30 Hrs to 21:30 Hrs Monday, February 15, 2016 at East Delhi C.A. CPE Study Circle of NIRC

Topics to be covered? Latest Compliances relating to Annual Information Return(AIR) [Income Tax (22nd Amendment) Rules, 2015] Latest Changes in Form 15CA-15CB: (w.e.f April 1, 2016) [Income Tax (21st Amendment) Rules, 2015] Increasing Taxpayer `electronic interface with the Department [Recent Circulars, Press Releases- during the last 3 months] Initiatives for reducing Litigations [Recent Circulars, Press Releases- during the last 3 months]

Annual Information Return (Sec.285BA) Annual Information Return is now called Statement of Financial Transaction or Reportable Account (SFTRA) w.e.f. April 1, 2015. The concept of AIR reporting was introduced for the first time in April, 2004. Notification No. 95/2015 dt December 30, 2015 issued whereby Income-Tax (22 nd Amendment) Rules, 2015 notified. Rules 114B, 114C and 114D have already come into force from January 1, 2016 while Rule 114E shall come into force from April 1, 2016. Sec. 139A (5)(c) Sec 285BA Rule(s) 114B to 114E Form No. 60, 61 & 61A

What is New? Specified Financial Transaction Threshold? - shall not be Less than INR 50,000/- Scope of AIR coverage & thresholds enlarged. Following additional Compliances have been introduced for the Assessee(s) who are subject to the Tax Audit u/s 44AB: - Obtain a 16 Digits ITDREIN(which will be PAN (10 Digits) + 6 Numeric Digits); e.g. ABWFS5614H999999 - File Online Statement in Form No. 61 and - File Online Statement in Form No. 61A Form No. 61A Form No. 60 Form No. 61

New Form 60: Form No. 60 (declaration to be filed by an individual who does not have a PAN) and Form No. 61 (declaration to be filed by a person who has agricultural income) have been consolidated in a single Form No. 60 New Form No. 60 is now containing 24 points of reporting as compared to just 6 points earlier. Filing of a false Form No.60/ signing of a false declaration therein has been made liable to prosecution under Section 277 of the Income tax Act, 1961 and on conviction be punishable with minimum rigorous imprisonment of 3 months plus fine. On or after January 1, 2016 New Form No. 60 is required to be retained for a period of 6 years from the end of the financial year in which the transaction is undertaken. [Rule 114D(1)(ii)]. The person accepting the declaration on New Form-60 shall not accept the declaration where the amount of income other than Agricultural Income exceeds the maximum amount which is not chargeable to tax, unless PAN is applied for and column 21 of Form-60 is duly filled. Supporting documents in support of Name mentioned and Address used in New Form No. 60 shall be required to be attached alongwith with mentioning Document Identification Number.

New Form 61: Statement containing particulars of declaration received in New Form No. 60 The Specified Person [this includes Tax Audit Assessee(s)] shall furnish a statement in New Form No. 61 containing particulars of declarations received in New Form-60 to DIT (Intelligence and Criminal Investigation) through online transmission of electronic data in an XML file and obtain an acknowledgement number. New Form No. 61 shall be electronically required to be furnished twice in a financial year- Particulars In respect of all Declarations received in Form No. 60 for the period April 1 to September 30 In respect of all Declarations received in Form No. 60 for the period October 1 to March 31 Due Date October 31 April 30

Modified Form 61A: Statement of Specified Financial Transactions under section 285BA: The return in Form No. 61A shall be furnished to the DIT (I & CI) through online transmission of digitally signed electronic data. The Due Date of filing of return in Form No. 61A - on or before May 31, 20XX. [First such return shall be filed for the FY ended March, 2017- on or before May 31, 2017- Rule 114E(2)] Every reporting person shall communicate to the Pr. DGIT (Systems) the name, designation, address and telephone number of the Designated Director and the Principal Officer and obtain a registration number. Section 271FA provides for a minimum penalty of INR 100/- per day, if a person fails to furnish the SFTRA within the time prescribed. The amount of penalty shall be INR 500/- per day, if the SFTRA is not filed within the period specified by the notice issued by the AO; Section 271FAA: penalty of INR 50,000/- for furnishing inaccurate SFTRA, prescribed only for a prescribed reporting financial institution as referred to in Section 285BA(1)(k)

Sr. No. (1) Latest Updated List of transactions Where quoting PAN is mandatory effective from January 1, 2016 (All Limited Scrutiny" Assessments will be based upon these informations gathered by the Tax Department) Nature of Transaction (2) Value of Transaction (INR) for data capturing purposes (3) (Rule 114B) Mode of Payment (4) Reporting of Transaction in Return on Form No. 61A (5) (Rule 114E) 1 Sale or Purchase of a Motor Vehicle All Transactions - - 2 Opening an Account with a Bank or Co-operative Bank (Other than a Basic SB A/c and Fixed Deposit 3 Applying for Debit or Credit Card with a Bank or Co-operative Bank. All Transactions, - - All Transactions. - Payments made by any person of an amount aggregating to- - INR 1,00,000 or more in cash; or - INR 10,00,000/- or more by any mode. against bills raised in respect of one or more CREDIT CARDS issued to that person, in a FY.

Sr. No. Nature of Transaction 4 Opening a Demat Account with a DP 5 Payment to a hotel or restaurant against a bill or bills at any one time. 6 Payment in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time. 7 Payment to a Mutual Fund for purchase of MF units Value of Transaction (INR) for data capturing purposes Mode of Payment Reporting of Transaction in Return on Form No. 61A (Rule 114E) (Rule 114B) All Transactions. - - Payment in cash of an amount exceeding INR 50,000 Payment in cash of an amount exceeding INR 50,000 Amount exceeding INR 50,000 Cash - Cash Receipt from any person for sale of foreign currency aggregating to INR 10,00,000/- or more in a financial year. All Modes Receipt from any person of an amount aggregating to INR 10,00,000/- or more in a FY for buying MF units.

Sr. No. Nature of Transaction 8 Payment to a company or an institution for acquiring its debentures or bonds 9 Payment to RBI for acquiring RBI bonds. 10 Deposit with a (in a) bank or a co-operative bank Value of Transaction (INR) for data capturing purposes (Rule 114B) Amount exceeding INR 50,000 Amount exceeding INR 50,000 Deposits in cash exceeding INR 50,000 during any one day. Mode of Payment Reporting of Transaction in Return on Form No. 61A (Rule 114E) All Modes Receipt from any person of an amount aggregating to INR 10,00,000/- or more in a FY for acquiring bonds or debentures. All Modes - Cash Cash deposits or Cash Withdrawals aggregating to INR 50,00,000 or more in a FY, in or from one or more CURRENT ACCOUNT of a person. Cash deposits aggregating to INR 10,00,000/- or more in a FY, in one or more SAVINGS BANK ACCOUNT(S) of a person.

Sr. No. Nature of Transaction 11 Purchase of bank drafts/ pay orders or banker s cheques from a bank or a co-operative bank. 12 A Fixed Deposit with a Bank/ Co-operative Bank/ Post Office/ a Nidhi Company/ a NBFC 13 Payment for Traveller Cheque/ International Card/ Gift Card etc. to a Bank/ Co-operative Bank Value of Transaction (INR) for data capturing purposes (Rule 114B) Payment in cash for an amount exceeding INR 50,000 during any one day. Amount exceeding INR 50,000 OR aggregating to more than INR 5,00,000 during a financial year. Payment in cash or by way of a bank draft or pay order or banker s cheque of an amount aggregating to more than INR 50,000 in a FY. Mode of Payment Cash All Modes All Modes Reporting of Transaction in Return on Form No. 61A (Rule 114E) Payment made in Cash for purchase of bank drafts or pay orders or banker s cheque of an amount aggregating to INR 10,00,000 or more in a FY. One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to INR 10,00,000/- or more in a FY. Payments made in Cash aggregating to INR 10,00,000/- or more during the FY for purchase of pre-paid instruments.

Sr. No. Nature of Transaction 14 Payment of Life Insurance Premium 15 A contract for sale or purchase of securities, other than shares 16 Sale or purchase, by any person, of Unlisted Shares; Value of Transaction (INR) for data capturing purposes (Rule 114B) Amount aggregating to more than INR 50,000 in a FY. Amount exceeding INR 1,00,000/- per transaction. Amount exceeding INR 1,00,000/- per transaction. Mode of Payment Reporting of Transaction in Return on Form No. 61A (Rule 114E) All Modes - All Modes - All Modes Receipt from any person of an amount aggregating to INR 10,00,000/- or more in a FY for acquiring shares (including share application money). (all Companies- Listed or Unlisted); Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to INR 10,00,000/- or more in a FY. (reporting by a Listed Co.)

Sr. No Nature of Transaction 17 Sale or purchase of any immovable property. 18 Sale or purchase, by any person, of goods or services of any nature other than those specified at Sl. No. 1 to 17 above. Value of Transaction (INR) for data capturing purposes (Rule 114B) Amount exceeding INR 10,00,000/- Amount exceeding INR 2,00,000/- per transaction Mode of Payment Reporting of Transaction in Return on Form No. 61A (Rule 114E) All Modes Purchase or sale by any person of immovable property for an amount of INR 30,00,000/- or more OR valued by SVA at INR 30,00,000/- or more. All Modes Receipt of CASH PAYMENT exceeding two lakh rupees for sale, by any person, of goods or services of any nature

Instructions for aggregating the amounts for determining the Threshold amount(s) for reporting purposes in Form No. 61A: Take into account all the accounts of the same nature maintained in respect of a person during the FY; Aggregate all the transactions of the same nature recorded in respect of that person during the FY; Attribute the entire value of the transaction or the aggregated value of all the transaction(s) to all the persons, in a case of Joint Accounts; Threshold limit of INR 50 Lacs to apply separately & independently to Cash deposits and Cash withdrawals respectively in case of Cash transactions reporting of Current Account(s).

Topic-2 Latest Changes in Form 15CA-15CB

Latest Changes in Form 15CA-15CB: (w.e.f April 1, 2016): Income-tax (21st Amendment) Rules, 2015 introduced vide Notification no. 93/2015 dated December 16, 2015 to be effective from April 1, 2016. The existing Rule 37BB shall be substituted by a new Rule 37BB. No Change in the existing Format of Form 15CB- ( Chartered Accoutant`Certificate) New Return/ Statement Form prescribed for Authorized Dealers Form No.15CC for filing a Quarterly Statement with the Department relating of reporting remittances executed; The existing threshold limit of INR 250,000/- as presently mentioned in Form-15CA has been increased to INR 500,000/-. The substituted Form 15CA has now been divided into 4 Parts Part A, B, C & D as compared to the existing 2 Parts Part-A and Part-B.

Part-A Part-B 4 Parts of Form 15CA To be filled up: - If the remittance is chargeable to tax under the provisions of the Act. AND - The remittance or the aggregate of such remittance(s), does not exceed INR 5,00,000/- during the financial year. To be filled up: - If the remittance is chargeable to tax under the provisions of the Act AND - the remittance or the aggregate of such remittance(s), does not exceed INR 5,00,000/- during the financial year AND - An order u/s 195(2)/ 195(3)/ 197 of Act has been obtained from the AO.

Part-C Part-D 4 Parts of Form 15CA To be filled up: - If the remittance is chargeable to tax under the provisions of Act, AND - the remittance or the aggregate of such remittance(s), exceeds INR 5,00,000/- during the financial year AND - A certificate in Form No. 15CB from a CA has been obtained. To be filled up: - If the remittance is NOT CHARGEABLE TO TAX under the provisions of the Act other than those specifically exempted 33 categories of payments. Form No.15CC has been newly introduced for Authorized Dealer(AD) Banks- The AD shall furnish a Quarterly statement for each quarter of the financial year in Form No. 15CC to the Pr. DGIT (Systems) or to the person authorized by him, electronically with digital signature within 15 days from the end of the quarter.

Topic-3 Increasing Taxpayer `electronic interface with the Department

Increasing Taxpayer `electronic interface with the Department: CBDT Letter dt December 15, 2015: E-mail address and Office Telephone numbers Any Notice/ Letter/ Communication issued by any/ all Officers under the Department of Revenue, including CBDT to the taxpayers & members of the Public should always mention the E-mail address and Office Telephone numbers of the Officer signing such notice(s)/ Letter(s)/ Communication(s) for facilitating taxpayer `electronic interface with the department. Press Release dt December 30, 2015: Electronic filing of first appeal before CIT(Appeals) Online filing of appeal before CIT (Appeals) has been made mandatory for persons who are required to file the return of income electronically. The existing Form 35 for filing of first appeal has been substituted by New Form-35 which shall be signed digitally through DSC and shall be filed through the Assessee `profile maintained at the website of the Department. Online filing will also facilitate fixation of hearing of appeals electronically.

CBDT Notification No. 2/2016 dt February 3, 2016: Guidelines issued relating to Paperless Assessment Proceedings (e-assessments): AO shall issue notice(s) from his official email address (having domain name @INCOMETAX.GOV.IN and shall attach signed scanned PDF files of all notice(s). The assessee shall also respond from his primary registered email address with signed PDF attachment(s). The assessee is entitled to furnish a letter to the AO informing any other alternative email address of his choice. The AO shall place hard copies of all emails and supporting documents in his file for record purposes. For keeping an audit trail of all correspondence(s) exchanged between AO and Assessee a copy of all emails shall be marked to e-assessment@incometax.gov.in All emails sent or received as per this procedure shall be stored in the ITD database and its communication status shall be displayed in assessee` "My Account" on the E-filing portal. The Tax Officer shall pass the Order and email the signed scanned copy of assessment order to assessee on the completion of the assessment proceedings.

Increasing Taxpayer `electronic interface with the Department: New Rule-127 inserted: Service of notice, summons, requisition, order at the E- mail address- The Tax Department may serve any notice, summons, requisition, order and other communication as required by Section 282(1)(c) at any of the following email address(es) of the Taxpayer- -Email address available in the income-tax return furnished by the taxpayer, or -The email address available in the last income-tax return furnished by the taxpayer, or -In the case of a company, email address of the company as available on the website www.mca.gov.in, or -Any email address made available by the taxpayer to the income-tax authority.

Topic-4 Initiative for reducing Litigations

Initiative(s) for reducing Litigations Vide Circular No. 21/2015 dt December 10, 2015- The Income Tax Department shall not file appeal(s)/ SLPs in cases where the TAX EFFECT does not exceed the below mentioned monetary limits: Sr. Forum No. Monetary Limit (in INR, Lacs) 1 Before ITAT 10.00 2 Before High Court 20.00 3 Before Supreme Court 25.00 TAX EFFECT = Tax on Total Income Assessed after CIT(A)`Order minus Tax on [Total Income Assessed after CIT(A)`Order Amount of disputed issues]. This instruction will apply retrospectively to pending appeals and appeals to be filed in future in the High Court(s)/ ITAT. Pending appeals below the limits specified above may be withdrawn/ not pressed. Appeal(s) before the Supreme Court to be governed as per the relevant instruction(s), operative at the time when such appeal was filed.

Initiative(s) for reducing Litigations Press Release dt January 15, 2016: In order to accept and honor certain court decisions, the CBDT has issued 7 Circulars during the period October to December, 2015 wherein the Board has decided to accept the law pronounced by court(s) on various issues and it has accordingly advised the Department to withdraw/ not pressed upon all those issues pending in appeals before different forums on similar issues. E.g. Circular Number Issue involved? Court `decision discussed/ accepted 17/2015 dt 06/10/2015 What should be the basis for Maltibai R Kadu measuring the Distance (Bom-HC) between the Agricultural Land from the Municipality? Final Outcome of the Circular Upto AY 2013-2014, the distance between the municipal limit and the agricultural land is to be measured having regard to Shortest Road Distance. From AY 2014-2015, this distance shall be measured aerially. All pending appeals may be withdrawn by the Dept.

Initiative(s) for reducing Litigations Circular Number Issue involved? Court `decision discussed/ accepted 25/2015 dt 31/12/2015 Rational of Penalty u/s 271(1)(c) when additions made under normal provisions of the Act, but tax levied under MAT provisions, for case(s) prior to AY 2016-17 Nalwa Sons Investments Ltd. (2010) (Delhi-HC) Final Outcome of the Circular Prior to 1/4/2016, where the income tax payable on the Total Income as computed under the normal provisions of the Act is less than the tax payable on book profits u/s 115JB of the Act, then penalty u/s 271(1)(c) is not attracted with reference to the additions made under the normal provisions. No appeal may be filed on the above ground and pending appeals may be withdrawn by the Dept.

Initiative for reducing Litigations: Office Memorandum (OM) dt January 14, 2016: CBDT had directed CPC-Bangalore and its Officers that refunds up to INR 5,000/-, and refunds in cases where outstanding arrears are up to INR 5,000/- may be issued without any adjustment of outstanding arrears. CBDT had issued instructions to CPC-Bangalore and the field officers in December, 2015 to issue refunds of amounts less than INR 50,000/- expeditiously. As a result of the special drive to issue smaller refunds, 18,28,627 refunds below INR 50,000/- involving a sum of INR 1,793 crore have been issued relating to AY(s). 2013-14 to 2015-16. Office Memorandum dt January 29, 2016: (for cases not covered by above OM-14/01/2016 and notice u/s 245 has been issued for adjustments of outstanding tax demands) In cases where the tax payer has contested the demand, CPC would issue a reminder to the concerned AO, asking him to confirm or make changes with in a period of 30 days. In case, no response is received from the AO within 30 days, CPC-Bangalore would issue the refund without any adjustment. Similarly in case of demanded contested by the concerned AO, CPC would issue a reminder to the taxpayer to respond with in 30 days, else demand shall be adjusted in case of no response received from the taxpayer.

Thank You!

For any query (ies), please write/ contact: Suresh Wadhwa, LL.B., FCA Email: surewadhwa@gmail.com Office No. 7, Plot No. 1 Vinoba Puri Lajpat Nagar-2 New Delhi-110024, India Tele Nos (+91-11) 4053-7755, 4053-2926 Email: info@taxbulls.in