7 May 2013 2013mber 2012 EY Tax Alert CBDT modifies returns forms for tax year 2012-13 Executive summary Tax Alerts cover significant tax news, developments and changes in legislation that affect Indian businesses. They act as technical summaries to keep you on top of the latest tax issues. For more information, please contact your Ernst & Young advisor. This Tax Alert summarizes procedural changes made by Central Board of Direct Taxes (CBDT) vide Notification No. 34/2013/f. No.142/5/ 2013-TPL (Notification) dated 1 May 2013 to return of income (return) forms and mode of returns by different taxpayers for tax year 2012-13. The Notification extends the mandatory requirement to file return in electronic mode (e-) to following classes of taxpayers: Taxpayers having taxable income above INR 0.5 million (as against INR 1 million for tax year 2011-12) Taxpayers claiming foreign tax credit The Notification also requires taxpayers liable to tax audit or transfer pricing audit or Minimum Alternate Tax [1] (MAT) audit to e-file the respective reports independently in addition to of return of income. Procedural changes Broadly, the Notification provides certain reclassification of return form for individuals/hindu Undivided Family (HUF) depending upon the presence of and/or where taxpayer has claimed foreign tax credit and/or where taxpayer has exempt income exceeding INR 5000. The Table given below captures comparative changes in form of return and mode of return for different taxpayers for tax years 2011-12 and 2012-13: [1] Applicable only to companies
Class of taxpayers A. Individuals having salary income, house property income (not more than one owned house) 2 and income from other sources 3 Resident 4 having Exempt income > INR 5000 Form of return Tax year 2011-12 Mode of return Total income < INR 1Million Total income > INR 1 Million Form of return Tax year 2012-13 Mode of return Total income < INR 0.5Million Total income > INR 0.5 Million ITR 2 Mandatory e- ITR 2 Mandatory e- Other cases E- optional Mandatory e- E- optional Mandatory e- E- optional Mandatory e- ITR 2 Mandatory e- ITR 2 E- optional Mandatory e- E- optional Mandatory e- B. Individuals/HUF having presumptive income from small businesses Resident 5 having Exempt income > INR 5000 ITR 4 Mandatory e- ITR 4 Mandatory e- E- optional Mandatory e- E- optional Mandatory e- ITR 4 Mandatory e- ITR 4 E- optional Mandatory e- Other cases E- optional Mandatory e- E- optional Mandatory e- C. Other individuals/ HUF not subject to tax audit Resident 6 having ITR 2 or 3 or ITR 2 or 3 or Other cases ITR 2 or 3 or Mandatory e- E- optional Mandatory e- E- optional Mandatory e- Mandatory e- Mandatory e- E- optional Mandatory e- D. Other individuals/huf subject to tax audit ITR 3 or 4 as Mandatory e- of return with ITR 3 or Mandatory e- of return with digital signature as also e- of tax audit report 2 Should not have brought forward losses 3 Positive income only 4 Excludes not ordinarily residents 5 Excludes not ordinarily residents 6 Excludes not ordinarily residents
E. Firms (including LLPs 7 ) Not liable to any audit ITR 5 E- optional ITR 5 E- optional Mandatory e- ITR 5 E- optional ITR 5 Mandatory e- Liable to tax audit ITR 5 Mandatory e- of return with Liable to transfer pricing audit ITR 5 E- optional (Please refer ITR 5 Mandatory e- of return with digital signature as also e- of tax audit report ITR 5 Mandatory e- of transfer pricing audit report but e- of return is optional Mandatory e- of return and transfer pricing audit report F. Companies ITR 6 Mandatory e- of return with ITR 6 Mandatory e- of return with digital signature as also e- of tax/ transfer pricing/mat audit report G. Tax-exempt charitable organizations, political parties etc. ITR 7 Mandatory paper ITR 7 E- optional Note 1 For tax year 2011-12, taxpayers liable to tax audit were not required to furnish tax audit report while e- the return but were required to produce the same before the Tax Authority when called for. For tax year 2012-13, such taxpayers will need to independently e-file tax audit reports in addition to e- of return. For tax year 2011-12, taxpayers liable to transfer pricing audit were required to independently furnish hard copy of audit report on or before the due date to the Tax Authority in addition to of return. For tax year 2012-13, such taxpayers will need to independently e-file transfer audit reports in addition to of return. 7 Limited Liability Partnership
Other changes Disclosure of - As part of disclosure of, taxpayers who are trustees of trusts created under laws of a foreign country will need to additionally disclose particulars [8] of such trusts in the return form. Further, as part of instructions appearing below the return form, it is clarified that disclosure of any other foreign asset requires disclosure of which are in the nature of investment and not stock-in-trade or assets used for the purpose of business. Also, the requirement to disclose peak balances of financial interest in foreign entity, immovable property outside India and other has been omitted. Disclosure of assets/liabilities Following individual/huf taxpayers having taxable income exceeding INR 2.5 million will need to additionally disclose certain specified assets [9] and related liabilities: Taxpayers being partners in a firm, not carrying on any business or profession under any proprietorship and required to file return in ITR-3. The disclosure will be required if the specified assets are not captured in the Balance Sheet in the return of the firm. Comments Taxpayers will need to note the changes in the form and mode of the return for tax year 2013-14. There appears to be some ambiguity on furnishing of tax/transfer pricing/mat audit reports by the taxpayers. Currently, the e- website provides for voluntary upload (with digital signatures) of such reports by the auditors which a taxpayer can authenticate or reject. However, the rule as amended by the Notification requires electronic furnishing of the audit reports by the taxpayer itself. Mandatory e- of returns facilitates expeditious centralized processing of returns and grant of refunds to the taxpayers. Taxpayers carrying on business or profession who are required to file return in ITR-4. The disclosure will be required if the specified assets are not captured in the return under the Balance Sheet of the business/ profession. [8] Country name/code, name and address of trust, other trustees, settlor and beneficiaries [9] Land, building, financial assets (i.e. bank deposits, shares and securities, insurance policies, loans and advances, cash in hand), jewellery, bullion, archaeological collections, works of art, vehicles,yachts etc.
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