Presentation on MSME – Cash Less Economy -Relevant to Direct Taxes At by SBS EVENTS HALL CA Suresh Babu S On 02nd June, 2017 Managing Partner M/s SBS and Company LLP [email protected] 9440883366
RATES OF INCOME TAX Individual Resident Individual Resident Individual (Less than 60 years of (Age of 60 or more) (Age of 80 or more) age)/HUF/AOP/BOI/AJP) Income Rates Income Rates Income Rates Upto2,50,000 NIL Upto3,00,000 NIL Upto5,00,000 NIL Rs2,50,000 – 5% of(total Rs3,00,000 – 5% of (total Rs5,00,000 – 20% of (total Rs5,00000 income-2,50,000 Rs5,00,000 – Rs5,00000 income-3,00,000) Rs10,00,000 income-5,00,000) Rs10,00,000 Rs12,500+20%of (total income- Rs5,00,000 – Rs10,000+20%of Above 1,00,000+30%of Above 5,00,000) Rs10,00,000 (total income- Rs10,00,000 (totalincome- 10,00,000 5,00,000) 5,00,000) Rs 1,12,500+30% Above of(total income- 10,00,000 Rs 1,10,000+30% Rebate U/s 87A has been reduced 10,00,000) of(total income- to Rs. 2500/- . It is available if total 10,00,000) income of resident individual does not exceed Rs.3,50,000 2 www.sbsandco.com
Company & Firm Tax Rates Companies with Annual Turnover up to Rs.50 Crore – 25% (Earlier 30%) Firms (Partnership or LLP) – 30% Surcharge:- In case of every INDIVIDUAL or HUF or AOP or BOI or AJP having total income exceeding Rs. 50,00,000/- but not exceeding Rs. 1 Crore is liable to surcharge @10%. Surcharge @15% will apply if total income exceeds Rs. 1 Crore. 3 www.sbsandco.com
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Cash Receipts(269ST) No person shall receive an amount of Rs.2,00,000 or more, by cash a) In aggregate from a person in a day; or b) In respect of a single transaction; or c) In respect of transitions relating one event or occasion Applicable from 1 April 2017 The penalty for violation of above is to be a sum equal to the amount of such receipt. Note – 1: The provisions of Sec 269 ST are not applicable in case of Cash withdrawal from Bank. Note - 2: Hence Cash can be withdrawn from Bank without limit. 5 www.sbsandco.com
Cash Receipts(269ST) a) In aggregate from a person in a day: Mr. A sells goods worth Rs.3,00,000 to Mr. B and generates 3 different bills of Rs.1,00,000 each and accepts cash in a single day at different times then Mr. A shall be found guilty of violation of Section 269ST(a) of Income Tax Act. b) In respect of a single transaction: Mr. A sells goods worth Rs.3,00,000 to Mr. B and generates one single bill for Rs.3,00,000. He then receives cash Rs.1,50,000 on Day 1 and Rs.1,50,000 on Day 2 then Mr. A shall be found guilty of violation of Section 269ST(b) of Income Tax Act. c) In respect of transitions relating one event or occasion: Mr. A books a wedding party at a Hotel & the Hotel makes a bill of Rs.1,50,000 for Food and Rs.1,00,000 for Hall Charges and accepts cash Rs.2,50,000 from Mr. A then the hotel shall be found guilty of violation of Section 269ST(c) of Income Tax Act. Even if they are 2 different types of expense, but they are for the same wedding. 6 www.sbsandco.com
Cash Receipts(269SS) Applicable to all persons. Mode of acceptance of Loans, Deposits or Specified sum should be through account payee cheque or account payee bank draft or use of electronic clearing system through a bank account if the amount is Rs. 20,000 or more in the following cases: a) The amount or aggregate amount of such loan, deposit or specified sum; or b) The amount or aggregate amount of loan, deposit or specified sum remaining unpaid; or c) The amount specified in (a) and (b) above. Specified Sum- Any sum of money, whether advance or otherwise in relation to transfer of immovable property whether or not transfer takes place.- W E F 01-06-2015 7 www.sbsandco.com
Cash Receipts(269SS) The provisions of this Section shall not be applicable if loan, deposit or specified sum is accepted from or accepted by: The Government; Any banking company, post office savings bank or co-operative bank; Any corporation established by a Central, State or Provincial Act; Any Government Company (as defined under the Companies Act); Such other institutions as may be notified by Central Government in this behalf. Penalty: Section 271D: In the case of failure to comply with the provisions of Section 269SS, a penalty of 100% of the amount of loan, deposit or specified sum is levied. 8 www.sbsandco.com
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Limits for Expenses Paid in Cash Limits for expenses paid in cash (both capital and revenue) has been reduced from Rs.20,000 to Rs.10,000 per day in aggregate per person(Sec 40A(3)) Capital Expenses paid in cash beyond Rs.10,000 will not be allowed for Depreciation purposes(Sec 32/43(1)) Revenues Expenses paid in cash beyond Rs.10,000 will not be allowed as business expense while calculating profit Cash payment limit for LORRY FREIGHT remains same at Rs.35,000 Salary or Bonus payments exceeding Rs.10,000 have to be done by Cheque Compulsorily. 10 www.sbsandco.com
Cash Payments(269T) Mode of repayment of Loans, Deposits or Specified advance should be through account payee cheque or account payee bank draft or use of electronic clearing system through a bank account if the amount is Rs. 20,000 or more in the following cases: a) The amount of loan, deposit or specified advance, along with interest payable (if any); or b) The aggregate amount of the loans or deposits, either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits; or c) The aggregate amount of specified advances received by such person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such specified advances. 11 www.sbsandco.com
Cash Payments(269T) Exceptions: Government; Any banking company, post office savings bank or co-operative bank; Any corporation established by a Central, State or Provincial Act; Any Government Company 11 as defined in section 617 of the Companies Act, 1956 (1 of 1956); Such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette. Penalty: Section 271E: In the case of failure to comply with the provisions of Section 269T, a penalty of 100% of the amount of loan, deposit or specified advance is levied. 12 www.sbsandco.com
TCS Abolished Earlier – 1 % TCS on cash sales exceeding Rs.2 Lakhs (Rs.5 Lakhs in case of jewellery) Now – No need to collect TCS. Cash Sales exceeding Rs.2 Lakhs will Straightaway attract Penalty of Equivalent amount as previously explained. 13 www.sbsandco.com
TDS on Rent Payments Earlier: No TDS on Rent Payments by Individuals or HUFs Now: Individuals & HUFs paying Rent more than Rs.50,000 per month have to deduct TDS @ 5% 14 www.sbsandco.com
Donations – 80G Cash Donations exceeding Rs.2,000 – Not Eligible for deduction U/s 80G Bank/Digital or any mode other than cash – No limit Trusts accepting 80G donations Have To Advise their donors to give donations exceeding Rs.2,000 vide cheque / RTGS / digital modes. 15 www.sbsandco.com
Fee For Late Return Filing IT Return not filed within Due Date (31st July for Individuals & 30th September for Non- Individual Assessee’s) Up To 31st December – Rs.5,000/- After 31st December – Rs.10,000/- Note:- 1. If the total income of the person does not exceed Rs. 5 Lakhs, the fee payable under this section shall not exceed Rs. 1,000/- Note:- 2. Self-assessment tax to include the fees for delay in filing the return of income. Note:- 3. Revised return can be filed before the end of the relevant assessment year or before the completion of assessment, whichever is earlier. 16 www.sbsandco.com
Aadhaar to be linked with PAN Every person eligible to obtain Aadhar has to quote Aadhar number in IT Return. Every person who has PAN Card must intimate Aadhar number to IT Dept. failing which pan shall be deemed invalid. Aadhar – PAN cannot be linked if name doesn’t match perfectly in both the documents. New facility introduced in profile tab to link Aadhar on efiling site 17 www.sbsandco.com
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Individual or HUF is required to maintain books of accounts if income from business or profession, other than referred U/s 44AA(1), exceeds Rs. 2,50,000/- or total sales, turnover, gross receipts exceeds Rs. 25,00,000/-. 19 www.sbsandco.com
Meaning of Presumptive Taxation: NORMAL PROVISIONS Relief to small PRESUMPTIVE TAXATION tax payers Person engaged in business or To get relief to from this tedious profession are work of maintenance of Books of accounts, a small taxpayer required to maintain regular books of account and can opt for presumptive taxation under section 44AD, 44AE or get accounts audited 44ADA if their gross turnover or income Upon satisfaction of the prescribed exceeds the prescribed limit conditions 20 www.sbsandco.com
Deemed Profit for Small Business(Sec 44AD) In case of Assessee being an Individual, or an HUF or a Partnership Firm (other than LLP and Company) carrying on any business having a turnover of Rs 2 Crore or less. May not maintain any Books of Accounts. Earlier Deemed Net Profit was 8 % of Total Turnover as per section 44AD of IT Act Now Deemed net profit will be as under: Non Cash Sales (Receipts through Online Transfer, Account Payee Cheque/ Draft, NEFT, RTGS) – Deemed Net Profit shall be 6% of Total Turnover or Gross Receipts. Cash Sales – Deemed Profit shall be 8% of Total Turnover or Gross Receipts. To encourage non-cash payments through bank or digital channels. 21 www.sbsandco.com
Consequences if assessee opt 44AD Consequences if assessee opt 44AD: If an assessee opts for presumptive taxation under this section, then he is require to follow the same scheme for next 5 years If assessee failed to do so, then presumptive taxation scheme will not be available for next 5 years Presumptive taxation scheme under Sec 44AD shall not apply to the following business: person carrying on profession as referred in section 44AA(1) a person earning income in the nature of commission or brokerage or a person carrying on any agency business. 23 www.sbsandco.com
Consequences if assessee opt 44AD Any person opting for presumptive taxation scheme under section 44AD or 44ADA is liable to pay whole amount of advance tax on or before 15th March of the previous year Failure to pay the advance tax attracts interest as per section 234B & 234C Any amount paid by way of advance tax on or before 31st day of March shall also be treated as advance tax paid during the financial year. 24 www.sbsandco.com
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TRANSFER OF RESIDENTIAL PROPERTY (SEC 54) PARTICULARS SEC 54 SEC 54EC SEC 54F Exemption Claimed Individual/ HUF Any Person Individual/ HUF POH of Capital asset Long Term Long Term Long Term Eligible Specific asset A residential house Any LTC asset Any LTC asset (other than property a residential house property) provided* Type of asset should be Purchase within 1 year Within 6 months after Purchase within 1 year acquire to get the benefit before transfer or 2 years transfer. before transfer or 2 years of exemption after transfer. after transfer Construction within 3 Construction within 3 years after the date of years after the date of transfer. transfer Amount Exempted Investment in new asset Investment in new asset Capital Gain*Amount or capital gain which ever or capital gain which ever invested/ Net sale is lower is lower consideration 30 www.sbsandco.com
TRANSFER OF RESIDENTIAL PROPERTY (SEC 54) PARTICULARS SEC 54 SEC 54EC SEC 54F Exemption revoke in a If the new asset is If the new asset is a) Within one year of subsequent year transferred within 3 years transferred or it is transfer of original of its acquisition. converted in to money or asset, there shall not a loan is taken on security be purchase of other of the new asset within 3 residential house years of its acquisition. property other than new asset b) Within three years of transfer of original asset, assessee shall not constructs residential property other than new asset Exemption revoked- STCG LTCG LTCG taxable as LTCG/STCG Scheme of deposit is Yes No Yes applicable 31 www.sbsandco.com
INCOME FROM OTHER SOURCES: Gift in cash exceeding Rs.50,000/- is taxable. However there are exceptions u/s 56 of the act, where if gift is received from following persons shall not be taxable. They are Relative On occasion of marriage of individual Under will In contemplation of death of payer or donor Local Authority Trust or Institution registered U/s12AA Dividend income is exclusively chargeable under Income from other sources The cost of acquisition of immovable property received as gift and subject to tax U/S 56 will be the stamp duty value which has been taken into consideration for sec 56. 35 www.sbsandco.com
INCOME FROM OTHER SOURCES: Sec 115BB: Section 115BB covers winnings from lotteries, crossword puzzles, horse races, card games, betting, gambling and other games of this nature; The incomes under this section is chargeable to flat tax rate of 30% including Education cess The expenditure incurred while engaging in the above activities will be disallowed Deduction under Chapter VI A (i.e., From 80C to 80U) cannot be claimed under this section Adjustment of unexhausted basic exemption limit is also not permitted. 36 www.sbsandco.com
CHAPTER VI-A DEDUCTIONS 37 www.sbsandco.com
CHAPTER VI-A DEDUCTIONS (1/7) S.NO SECTION NATURE OF DEDUCTION AMOUNT ELIGIBLE FOR DEDUCTION 1. 80C Life insurance policy (10% 0f Capital sum assured),House loan principle repayment , Tuition fees (2 children), Infrastructure Bonds ,NABARD rural bonds PPF, NSC ,ULIP , Subscription to Maximum deduction equity shares or debentures ,5-year bank fixed deposits, Post office saving scheme ,Any contribution to Senior citizen saving scheme AND Sukanya Samriddhi Yojana : Documents required are available (under this Birth documents of girl child section) is Rs.1,50,000 Address proof and identity proof of guardian 3 photos of Guardian and 3 photos of the child PAN card and Aadhar card of guardian 38 www.sbsandco.com
CHAPTER VI-A DEDUCTIONS (2/7) S.NO SECTION NATURE OF DEDUCTION AMOUNT ELIGIBLE FOR DEDUCTION 2. 80CCD Contribution to pension In case of employee schemes of Central ` • 10 % 0f his salary or Government • 20 % of GTI- FA 17 In case employer • 10 % of salary of employee Additional Benefit towards Rs.50,000 (over and above all the limits) contribution to NPS. 3. 80CCE Limit on deductions u/s Rs.1,50,000 80C, 80CCC, 80CCD 39 www.sbsandco.com
CHAPTER VI-A DEDUCTIONS (3/7) S.NO SECTION NATURE OF DEDUCTION AMOUNT ELIGIBLE FOR DEDUCTION 4. 80D Any amount paid towards health insurance Rs.25,000 premia,CGHS in any made other than cash to effect or (Rs.30,000 in case keep in force insurance on health of of senior citizen) Assesse or his family (Spouse , dependent children) and Parents of the assesse In respect of medical expenditure for very senior Rs.30,000 citizens(provided no health insurance is paid). Preventive health checkup : Can be paid even in cash. Rs.5,000 (This is included in (sub limit under Sec 80D) above said limits) 40 www.sbsandco.com
CHAPTER VI-A DEDUCTIONS (4/7) S.NO SECTION NATURE OF DEDUCTION AMOUNT ELIGIBLE FOR DEDUCTION 5. 80 DD • Any expenditure for Medical, Nursing & Rehabilitation Rs.75,000 incurred on dependent suffering from permanent disability (Rs.1,25,000 in case OR Amount paid or deposited under LIC policy or any other of severe disability) insurer • Disability or Severe disability : Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities 6. 80DDB Amount paid for the medical treatment for such disease for Rs.40,000 himself or a dependant Rs.60,000(> 60 years) Rs.80,000(>80 years) 41 www.sbsandco.com
CHAPTER VI-A DEDUCTIONS (5/7) S.NO SECTION NATURE OF DEDUCTION AMOUNT ELIGIBLE FOR DEDUCTION 7. 80 E Any Interest on loan taken from Financial/Charitable Actual Institutions for Self/Spouse/Children for pursuing Higher Interest repaid Education (for a max. period of 8 years) 8. 80EE Any Interest on loan taken from any financial institution for the purpose of acquisition of a residential property. Conditions: Rs.50,000 for • Loan sanctioned during 1.04.2016 – 31.03.2017 A.Y beginning on • Amount of loan should not exceed Rs35,00,000; 1.04.2017 and • Value of house property does not exceed Rs 50,00,000 subsequent assessment • Assessee does not own any residential house property on years the date of sanction of loan. 42 www.sbsandco.com
CHAPTER VI-A DEDUCTIONS (6/7) S.NO SECTION NATURE OF DEDUCTION AMOUNT ELIGIBLE FOR DEDUCTION 9. 80 G Any amount donated towards : a) Swachh Bharat Kosh, Clean Ganga Fund , a 100 % of donation National Trust for welfare of Persons suffering b 50 % of donation from Multiple Disabilities etc. c 100% of donation with b) Jawaharlal Nehru Memorial Fund ,P.MDrought qualifying limit Relief Fund etc. d 50%of donation with qualifying limit c) For promotion of family planning , Indian Olympic Prohibition of cash donations in Association excess of two thousand rupees. d) For repair or renovation of any temple, mosque, (W.E.F A.Y. 2018-19 onwards) church, gurudwara or other place of historic or national Importance. 43 www.sbsandco.com
CHAPTER VI-A DEDUCTIONS (7/7) S.NO SECTION NATURE OF DEDUCTION AMOUNT ELIGIBLE FOR 10. 80GGC • Amount contributed to any political party or an electoral 11. 80TTA trust. However no CASH deduction shall be allowed . DEDUCTION 100 % of deduction 12. 80U Any interest on deposits (not being time deposits) in a savings account with a banking company, a co-operative society, a Post Rs.10,000 Office • Amount paid towards person suffering from disability Rs.75,000 • Disability or Severe disability : Persons with Autism, Cerebral (Rs.1,25,000 in case of severe disability) Palsy, Mental Retardation and Multiple Disabilities 44 www.sbsandco.com
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Section 285BA of IT Act, 1961 To keep a watch on high value transactions undertaken by the taxpayer, the Income-tax Law has framed the concept of statement of financial transaction or reportable account [previously called as ‘Annual Information Return (AIR)’]. With the help of the statement the tax authorities will collect information on certain prescribed high value transactions undertaken by a person during the year. There could a amendment to IT Act to provide for taxation of past unaccounted cash now deposited. (May be around 60% of the amount) 46 www.sbsandco.com
Transactions to be reported (1/4) S.No Nature and value of transaction Reporting person 1 (a) Payment made in cash for purchase of bank drafts or A banking company or a pay orders or banker's cheque of an amount aggregating cooperative bank to Rs. 10 lakh or more in a financial year. (b) Payments made in cash aggregating to Rs. 10 lakh or more during the financial year for purchase of pre-paid instruments issued by Reserve Bank of India. (c) Cash deposits or cash withdrawals (including through bearer's cheque) aggregating to Rs. 50 lakh or more in a financial year, in or from one or more current account of a person 2 Cash deposits aggregating to Rs. 10 lakh or more in a (i) A banking company or a financial year, in one or more Savings accounts of a person. cooperative bank (ii) Post Master General 3 One or more time deposits (other than a time deposit made (i) A banking company or a through renewal of another time deposit) of a person cooperative bank (ii) Post Master aggregating to Rs. 10 lakh or more in a financial year of a General (iii) Nidhi Company (iv) 47 www.sbsandco.pcoemrson. Non-banking financial company
Transactions to be reported (2/4) S.No Nature and value of transaction Class of person (reporting person) 4 Payments made by any person of an amount aggregating A banking company or a to— cooperative bank or any other (i) Rs. 1 lakh or more in cash; or company or institution issuing (ii) Rs. 10 lakh or more by any other mode, against bills credit card. raised in respect of one or more credit cards issued to that person, in a financial year 5 Receipt from any person of an amount aggregating to Rs. A company or institution issuing 10 lakh or more in a financial year for acquiring bonds or bonds or debentures. debentures issued by the company or institution (other than the amount received on account of renewal of the bond or debenture issued by that company). 6 Receipt from any person of an amount aggregating to Rs. A company issuing shares. 10 lakh or more in a financial year for acquiring shares (including share application money) issued by the company. 48 www.sbsandco.com
Transactions to be reported (3/4) S.No Nature and value of transaction Class of person (reporting person) 7 Buy back of shares from any person (other than the shares A company listed on a recognised bought in the open market) for an amount or value stock exchange purchasing its own aggregating to Rs. 10 lakh or more in a financial year. securities under section 68 of the Companies Act, 2013 8 Receipt from any person of an amount aggregating to Rs. 10 A trustee of a Mutual Fund or such lakh or more in a financial year for acquiring units of one or other person managing the affairs more schemes of a Mutual Fund (other than the amount of the Mutual Fund received on account of transfer from one scheme to another scheme of that Mutual Fund) 9 Receipt from any person for sale of foreign currency Authorised person under Foreign including any credit of such currency to foreign exchange Exchange Management Act, 1999 card or expense in such currency through a debit or credit card or through issue of travellers cheque or draft or any other instrument of an amount aggregating to Rs. 10 lakh or more during a financial year. 49 www.sbsandco.com
Transactions to be reported (4/4) S.No Nature and value of transaction Class of person (reporting person) 10 Purchase or sale by any person of immovable property for Inspector-General or Registrar or an amount of Rs. 10 lakh or more or valued by the stamp Sub-Registrar appointed under the valuation authority referred to in section 50C of the Act at Registration Act, 1908 Rs. 30 lakh or more 11 Receipt of cash payment exceeding Rs. 2 lakh for sale, by Any person who is liable for audit any person, of goods or services of any nature (other than under section 44AB of the Act. those specified at Sl. Nos. 1 to 10 of this rule, if any.) 12 Cash deposits during the period 09th November, 2016 to (i) A banking company or a co- 30th December, 2016 aggregating to— operative bank to which the (i) Rs 12,50,000 or more in one or more current account Banking Regulation Act, 1949 of a person; or (10 of 1949) applies (ii) Rs 2,50,000 or more, in one or more accounts (other (ii) Post Master General as than a current account) referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898). 50 www.sbsandco.com
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PAN Furnishing of statement of financial transaction [Rule 114E] • With effect from 1 April 2016, every person who has undertaken the specified transaction will file the statement for detail of such transaction in Form 61 annually. Form 61A shall be furnished to department on or before 31st May, immediately following the financial year in which the transaction is registered or recorded. Further, we have identified some transactions given under Rule 114E, which generally impacts the Company and person other than company who are subject to audit under section 44AB of the Act. The following class of persons is required to furnish a statement of financial transactions under Form 61A for the transactions given below (Applicable for transactions entered on or after 01 April 2016): Here is the list of transactions where quoting of PAN will be mandatory from Jan 1, 2016: 52 www.sbsandco.com
S.No NATURE OF TRANSACTION MANDATORY QUOTING OF PAN (RULE 114B) 1. Immovable property Existing requirement New requirement 2 Motor vehicle (other than two wheeler) Sale/ purchase valued at Rs.5 lakh or more i. Sale/ purchase exceeding Rs.10 lakh; ii. Properties valued by Stamp Valuation authority at amount exceeding Rs.10 lakh will also need PAN. All sales/purchases No change 3. Time deposit Time deposit exceeding Rs.50,000/- with a i. Deposits with Co-op banks, Post Office, Nidhi, banking company NBFC companies will also need PAN; ii. Deposits aggregating to more than Rs.5 lakh during the year will also need PAN 4. Deposit with Post Office Savings Bank Exceeding Rs.50,000/- Discontinued 5. Sale or purchase of securities Contract for sale/purchase of a value No change exceeding Rs.1 lakh 6. Opening an account (other than time All new accounts. i. Basic Savings Bank Deposit Account excluded (no deposit) with a banking company. PAN requirement for opening these accounts); ii. Co-operative banks also to comply 7. Installation of telephone/ cellphone All instances Discontinued connections 8. Hotel/restaurant bill(s) Exceeding Rs.25,000/- at any one time (by any Cash payment exceeding Rs.50,000/-. mode of payment) 9. Cash purchase of bank drafts/ pay Amount aggregating to Rs.50,000/- or more Exceeding Rs.50,000/- on any one day. orders/ banker's cheques during any one day 10. Cash deposit with banking company Cash aggregating to Rs.50,000/- or more Cash deposit exceeding Rs.50,000/- in a day. during any one day 53 www.sbsandco.com
S. No. NATURE OF TRANSACTION MANDATORY QUOTING OF PAN (RULE 114B) 11. Existing requirement New requirement 12. Foreign travel Cash payment in connection with foreign Cash payment in connection with foreign travel 13. 14. travel of an amount exceeding Rs.25,000/- at any or purchase of foreign currency of an amount 15. one time (including fare, payment to travel agent, exceeding Rs.50,000/- at any one time 16. 17. purchase of forex) (including fare, payment to travel agent) 18. 19. Credit card Application to banking company/ any other No change. 20. 54 company/institution for credit card Co-operative banks also to comply. Mutual fund units Payment of Rs.50,000/- or more for purchase Payment exceeding Rs.50,000/- for purchase. Shares of company Payment of Rs.50,000/- or more to a company for i. Opening a demat account; acquiring its shares ii. Purchase or sale of shares of an unlisted company for an amount exceeding Rs.1 lakh per transaction. Debentures/ bonds Payment of Rs.50,000/- or more to a company/ Payment exceeding Rs.50,000/-. institution for acquiring its debentures/ bonds RBI bonds Payment of Rs.50,000/-or more to RBI for Payment exceeding Rs.50,000/-. acquiring its bonds Life insurance premium Payment of Rs.50,000/- or more in a year as Payment exceeding Rs.50,000/- in a year. premium to an insurer Purchase of jewellery/bullion Payment of Rs.5 lakh or more at any one time or Deleted and merged with next item in this against a bill table Purchases or sales of goods or No requirement Purchase/ sale of any goods or services services exceeding Rs.2 lakh per transaction. Cash cards/ prepaid instruments No requirement Cash payment aggregating to more than issued under Payment & Settlement Rs.50,000 in a year. Act
PAN Minor: Where a person, entering into any transaction referred above, is a minor and who does not have any income chargeable to income-tax, he shall quote the permanent account number (PAN) of his father or mother or guardian, as the case may be, in the document pertaining to the said transaction. No PAN: Further, where any person who does not have a PAN and who enters into any transaction specified above, he shall make a declaration in Form 60 giving therein the particulars of such transaction. Form 15G/15H should invariably contain PAN of the declarant. Penalty for non-quoting of PAN (Section 272B) – If a person fails to comply with the requirement of quoting the PAN or furnish incorrect PAN then Assessing Officer may levy the penalty of Rs. 10,000. 55 www.sbsandco.com
Verification of PAN Any person who sells an immovable property exceeding Rs. 10L or motor vehicle of any value shall either obtain and verify the PAN of the buyer at the time of sale or shall obtain Form 60 in case buyer does not have PAN. Any person, being a person raising bills referred to at S. No. 5 (hotel or restaurant) or 6 (foreign travel) or 18 (sale of goods or services exceeding Rs. 2,00,000) of rule 114B, who, in relation to a transaction specified in the said S. No., has issued any document shall ensure after verification that permanent account number has been correctly furnished and the same shall be mentioned in such document, or as the case may be, a declaration in Form 60 has been duly furnished with complete particulars. Therefore a person who is raising invoices in the above said transactions S. No. 5 (hotel or restaurant) or 6 (foreign travel) or 18 (sale of goods or services exceeding Rs. 2,00,000) shall mention the PAN of buyer/service receiver on the invoice or document issued. 56 www.sbsandco.com
Form 60 It is a Form for declaration to be filed by an individual or a person (not being a company or firm) who does not have a permanent account number (PAN) and who enters into any transaction specified in rule 114B (mentioned in above table), It requires the estimated total income (including income of spouse, minor child etc. as per section 64 of Income-tax Act, 1961) for the financial year in which the said transaction is held, The person accepting the declaration shall not accept the declaration where the amount of income of the nature [estimated total income (other than agricultural income)] exceeds the maximum amount which is not chargeable to tax, unless PAN is applied for and its acknowledgement number is duly filled. 57 www.sbsandco.com
Form 60 Before signing the declaration, the declarant should satisfy himself that the information furnished in this form is true, correct and complete in all respects. Any person making a false statement in the declaration shall be liable to prosecution under section 277 of the Income‐tax Act, 1961 and on conviction be punishable. 1. in a case where tax sought to be evaded exceeds 25 lakh rupees, with rigorous imprisonment which shall not be less than six months but which may extend to seven years and with fine; 2. in any other case, with rigorous imprisonment which shall not be less than three months but which may extend to two years and with fine. Reporting requirements of Form 60 details received: [Rule 114D] Every person who have received Form 60 on or after 01 January 2016 in relation to transactions specified in above table, shall be required to file Form 61 to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation) through online transmission of electronic data to a server designated for this purpose and obtain an acknowledgement number and retain Form No. 60 for a period of six years from the end of the financial year in which the transaction was undertaken. 58 www.sbsandco.com
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