Publisher:GET REFUND, APPEAL AND REVISION UNDER INCOME TAX | ACADEMY TAX4WEALTH
Feb 22,2022
Refund, Appeal and Revision Under Income Tax
Refunds Under Income Tax:-
In case the assessee in an assessment year pays excess of amount than the actual taxable amount charged and if the assessee provides the necessary evidence that he has made excess payment of tax to the Assessing Officer, then he/she can claim a refund of the excess amount paid under Section 237 of the Income Tax Act, 1961. If the Assessing Officer gets satisfied regarding the excess payment made, then he can allow the assessee to claim the refund. A refund can be claimed under the following circumstances;
✅ If the tax gets deducted in the form of TDS from salary, dividend, interest on debentures, interest on securities at a rate higher than the prescribed rate on the assessee's total income.
✅ In case the advance tax paid actually more than the original tax amount payable as determined during the regular assessment.
✅ If the tax computed was higher by mistake and later it is revealed that the tax liability is reduced due to the rectification of the mistake that occurred.
✅ In the case of double taxation, the assessee is eligible to get a double taxation relief.
✅ In case the tax was calculated at a higher rate in respect of payment provided to non-residents, on the other hand later it was realized that the actually the tax must have been charged at a lower rate.
Appeals Under Income Tax:-
The first appellate authority of the Income Tax Department is the Commissioner of Income-tax (Appeals). According to Section 246A of the Income Tax Act, 1961 the order in respect of an appeal can be filed before the Commissioner of Income Tax (Appeals).
The right for appealing in respect of redressal of grievances is provided under all the prescribed acts and laws operating in India. If an assessee feels aggrieved by any order of the Assessing officer then he/she can file an application of appeal towards such orders before the Commissioner of Income Tax (Appeal) as per the provisions of the Income Tax Act, 1961.
The following are some of the orders which are eligible to file an appeal against;
✅ In case of denial of liability assessed by the assessee under the provisions of the Income Tax Act and accordingly an order will be passed against such assessee.
✅ A notice has been issued under the provisions of Section 143(1) or (1B) where the income shown has been adjusted in the income tax return.
✅ A notice has been issued under the provisions of section 200A(1) where adjustments in a filled statement have been made.
✅ An assessment order has been passed under section 143(3) excluding the order that has been passed under the guidelines of the dispute resolution panel.
✅ An assessment order has been passed under the provisions of Section144.
✅ An order has passed related to assessment or reassessment or re-calculation after the re-opening of assessment under section 147 excluding the order that has been passed under the guidelines of the dispute resolution panel.
✅ An order has been issued under the provision of Section 150.
✅ An order is passed related to search or seizure
✅ An order passed under the provisions of Section 153A or Section 158C.
✅ An order of rectification has been passed under the provisions of section 154 or section 155.
✅ An order has been passed for treatment of NRI agent taxpayer under section 163
✅ Any order passed under the provision of section 170(2) or section 170(3) in respect of taxation of a successor.
✅ An order has been passed under section 171 related to the partition of Hindu Undivided Family
✅ Not deducting TDS or Not collecting TDS
✅ Non-payment of TDS to the government
✅ The refund order has been passed under the provisions of section 237.
✅ In case the penalties are levied under the sections 221, 272A, 272AA, 272B, 272BB, 275(1A), 158B, 271, 271A, 271AAA, 271F, 271FB, 271B, 271BB, 271C, 271CA, 271D, 271E, 271AAB
✅ An order has been passed by the Joint Commissioner under the provisions of section 115VP(3) refusing to opt for the tax tonnage scheme in respect of qualifying shipping scheme.
Revisions Under Income Tax :-
The revision in the income tax orders has been provided to the Commissioner or Principal Commissioner of Income Tax. The details whereof are provided below;
Based on the directions issued by the Joint Commissioner, an assessment order can be made by Deputy Commissioner or Assessment Commissioner or Any other Income Tax Official.
Under the direction order issued by Principal Chief Commissioner or CBDT or Principal Director or Chief Commissioner or Commissioner authorized by CBDT, an order can be made exercising the powers or performance of functions of the assessing officer by the Joint Commissioner.
Errors in Passing of Orders:-
✅ When the orders are passed without conducting any necessary verification and inquiries
✅ When the orders are passed by allowing relief without any investigation of the claim
✅ The order that is not on par with any other order, directed or instructed or issued by the Income Tax Board under Section 119.
Revision of Income Tax Order and Time Limit Required:-
✅ When time is consumed for providing an opportunity to the assessee of being heard
✅ Under the aforesaid section any period during which any proceeding got stayed by an injunction order by any of the courts.
✅ The taxpayers must note that even after the expiry of 2 years the orders or revision can be passed provided there are certain circumstances that are extraordinary in nature.
Also read; Role of CBDT in Indian Taxation System
Revision Procedure of Income Tax Order:-
Some of the main powers enjoyed and aspects that have to be considered by the Commissioner or Principal Commissioner at the time of analyzing a revision of Income-tax order have been provided below;
Examination of Records:-
The Principal Commissioner or Commissioner has the authority to examine or call for an examination of records at any stage of the proceedings under the provisions of Income Tax Act, 1961 at the time of revision of income tax orders. In such a case, the Commissioner or Principal Commissioner is not required to provide a reason or explanation for doing so.
Entitled to do Revision on Parts of Other Order:-
The Principal Commissioner or Commissioner has also the authority to revise the income tax order wholly or partially which may have been ignored or not taken into consideration by the Assessing Officer.
Errors of Facts or Laws:-
The Principal Commissioner/Commissioner is not restricted to revising the errors in the income tax orders. It is to be noted that the errors can be related to facts or laws. Both of which can be rectified by the Commissioner.
The Opportunity of Being Heard:-
The assessee must be provided an opportunity of being heard before the Commissioner or Principal Commissioner before passing the revised order like any other provision of the Income Tax Act, 1961.
Subordinates Opinion Should be Valued:-
The whole income tax order or a part of it can be reviewed although the error is pointed out by a subordinate, unless and until the Commissioner or Principal Commissioner is satisfied with the review cause.
Approval from a Higher Rank Authority :-
The Principal Commissioner/Commissioner can undertake the review process of any order wholly or partially on the discretion and approval of a higher rank authority.
In case Income Tax Orders Cannot Be Revised:-
The Principal Commissioner or Commissioner in certain cases may not able to revise the income tax order that is subject to appeal. Apart from that the Commissioner or Principal Commissioner is also restricted from making reviews or orders passed by the High Court even if they find it to be erroneous.
For more information, Visit us at: https://academy.tax4wealth.com/
Publisher:A COMPLETE ANALYSIS OF SECTION 194R OF INCOME TAX | ACADEMY TAX4WEALTH
Feb 24,2022
A Complete Analysis of Section 194R of Income Tax- [Updated]
Introduction:
Section 194R of the Finance Bill 2022 has proposed to add Section 194R to the Income Tax Act, 1961. According to the memorandum with an explanation of the guidelines of the Finance Bill, the aforesaid amendment will come into force from 1 July 2022. However, the said section has been added from 1 April 2022.
The details of the applicability of the provisions and their background have been discussed in detail in the below-mentioned paragraphs.
Analysis of The Legal Provisions:
According to Clause (iv) of Section 28 of the Income Tax Act, 1961, the value of the perquisite or benefit, whether convertible into monetary terms or not, accruing from the business or by carrying on profession must be taxed as it will be considered as a business income on the part of the recipient of such benefit.
According to the proposal for Section 194R, any person who is responsible for providing to a resident any sort of perquisite or benefit, whether it may be convertible into monetary terms or not, accruing from the business or carrying on any profession, by any such resident, will, prior to providing such benefit to the such resident as the case may be, make sure that the tax deduction has been with regard to such benefit at the rate of 10% of the aggregate value of any such benefits.
Also Read; Section 194Q – Tax deduction on the purchase of goods and FAQs.
It is to be noted that, provided in such case where the benefit is wholly or partly in cash or kind as the case may be but such part cannot be considered sufficient to meet the liability of tax deduction with regard to the whole of the benefit or perquisite, the person who is responsible for providing the said benefit will, prior to providing such benefit to the such resident as the case may be, make sure that the tax has been paid with regard to such benefit or prerequisite.
Further, The provisions of this Section 194R will not be applicable in the case of the resident when the aggregate value or value of the benefit or perquisite provided or is about to be provided to a resident during a particular financial year is not more than Rs. 20,000.
Apart from that the provisions of this Section 194R are not applicable to a person who is an individual or Hindu Undivided Family (HUF), whose annual sales, annual turnover, or gross receipts are not more than Rs. 1 crore in case of income is generated through the business.
If the income is being generated from carrying on any profession then the threshold limit is Rs. 50,000 in a particular financial year immediately proceeding with the financial year in which the said benefit has been provided as the case may be.
Explanation:
Due to this aspect, this Section 194R of the Income Tax Act, 1961 and the expression provided as “person responsible for providing” means the person who is actually providing the benefit, or in case the provider is a company, the company can itself include the principal officer.
The Rationale of Section 194R of the Income Tax Act, 1961:
The Hon’ble Finance Minister in the Budget 2022 introduced the aforesaid provision stating that it has been noticed for a long period of time that as part of a business promotion strategy, there has been a tendency on the businesses to transfer the benefits to its agents and such benefits obtained by the agents are taxable on the part of the agents.
In a view to keep track of such transactions, she proposed to provide tax deduction by the persons who are providing benefits, if the value or aggregate value of benefits provided exceeds Rs. 20,000 during a particular financial year.
According to the memorandum, the explanation of the Finance Bill, the below-mentioned aspects has been provided regarding Section 194R.
According to clause (iv) of section 28 of the Act, the value of the benefit or perquisite, whether it is convertible into monetary terms or not, accruing from business or carrying on from any profession has to be charged as business income on the part of the receiver of said benefit or perquisite.
In most cases, the receiver of the benefit or prerequisite does not report the benefit that it has received in its income tax return, which can lead to furnishing incorrect and false income particulars. The aforesaid amendment will come into force from 1 July 2022.
Thus, the provided provision for tax deducted at source is being added and put in place to detect the benefits or perquisites which may largely remain unaccounted for thus, it is not taxed despite being there for specific taxation provisions as a result of its nature of accountability.
Analysis of Section 194R:
Section 194R presently will bring wide compliance challenges for the businesses as well as professionals due to the involvement of different and multiple types of benefits and perquisites that are being extended to the distributors, agents, dealers, and channel partners. It is being done with an objective to earn incentives and motivate the team for business growth. The following are some of the common examples of benefits and perquisites;
✅ Gift Card and Gift Vouchers
✅ Gold Coins under Incentive Scheme
✅ Phones
✅ Vehicles
✅ Business Asset Usage Service
✅ Travel Packages
Considering the expression of the language used in respect of Section 194R and its specific association with clause (iv) of Section 28 in the memorandum, the following aspects can be deduced;
✅ That transactions through the issuance of credit notes would not be covered in the ambit of section 194R due to the following reasons:
✅ The expression used ‘whether convertible into monetary terms or not‘ which is already provided will be subject to TDS, irrespective of the fact that the benefit is able to convert the same into monetary form wholly or partly whether it may be in cash or kind.
In this regard, the Hon’ble Supreme Court is of the opinion that Section 28(iv) of the Act will be applicable, in case the income has arisen from business or profession and benefit is received must be in some other form instead of money.
The Benefit or Perquisite Obtained from Business or Exercise of A Profession are Only Included:
It is important that the benefit or perquisite is associated with the business or profession of the receiver and only then it will be included in this section, thus there must be a relationship exists between the business and receiver of the benefit provided.
Section 28(iv) aims at providing fringe benefits that can be availed apart from the consideration earned while carrying out any business or profession or doing business. Considering the same, it can be said that when the consideration is in paid format, Section 194R is applicable.
Goods or Assets Sold at a Discounted Price May Not be Covered Under This Section:
Under the provisions of section 28(iv), it is stated that real income is taxable and not hypothetical income which can be termed as accrued on the purchase of an asset or good at a lower price than the earlier purchase price. Considering the same, the provisions of TDS must be applicable only in case there is an actual benefit or perquisite.
To Comply with The Provisions of The Aforesaid Section 194R, The Taxpayer has to Ensure the Below-Mentioned Points:
✅ The tax deductor must make sure that TDS at the rate of 10% is deducted before providing any such benefit or perquisite.
✅ The tax deductor must deposit the tax deducted on or before the 7th day of the next month to the credit of the Central Government of India. It is to be noted the due date will be 30th April in the case of the month of March with the use of TAN.
✅ The deductor must File TDS Returns quarterly in Form 26Q on or before the specified due date as mentioned in the Act.
✅ The Deductor has to issue a certificate in respect of tax deducted in Form 16A at each quarter to the deductee.
✅ TDS may not be required in case the value of benefit or perquisite provided is up to Rs. 20,000 in a particular financial year.
Clarifications Required from Government:
Based on the above-mentioned analysis of the proposed provision of Section 194R and some of the common queries raised by the taxpayers, it can be understood that for the successful implementation of Section 194R, the Government of India has to clarify so many queries raised on different issues. Some of the issues are mentioned below;
✅ The terms ‘benefits’ as well as ‘perquisites’ have not been defined separately as the said words seem to be open-ended. For the purpose of Section 194R, it must have been defined separately to provide clarity on its scope and coverage.
✅ The basis for the determination of the value or aggregate value of benefit or prerequisite has not been clearly provided in case they cannot be converted into monetary value.
✅ In the case of non-monetary perquisites or benefits, the provider has not made the liability to make sure that the tax is paid in respect of benefit or prerequisite prior to releasing the said benefit or perquisites. The proposed provision is not clear in this regard as it does not provide details of how the provider will make sure of this aspect.
✅ Most of the time, the benefit or perquisites are extended on the behest of the employer to the employee; here the question is if these transactions will also be covered under the proposed Section 194R.
Publisher:SET-OFF AND CARRY FORWARD OF LOSSES- UNDER INCOME TAX LAW | ACADEMY TAX4WEALTH
Mar 05,2022
Set-Off and Carry Forward of Losses- Under The Income Tax Law
Set-off of Losses:-
Set-off of losses refers to the adjustment of losses against the profits or income for that specific year. Losses that cannot be set off against the income of the same year can be carried forward to the subsequent years for the set off against the income of coming years. A set-off can be of two types;
• Inter-Head Set-Off
• Intra-Head Set-Off
• Intra-head Set-Off
The losses from one source of income can be set off against the source income or under the same head of income. For example, the losses of one business can be set off against the profits of another business. It is to be noted that here Business of one source and the business of another source is under the common head of income i.e. Business.
Exceptions to An Intra-Head Set-Off:-
The following are some of the exceptions to Intra-head set-off;
• Losses arising from a speculative business can only be set off against speculative profits. The adjustment of speculative business losses with income from any other business or profession cannot be made.
• Losses incurred due to owing and maintenance of horse races can be set off against the profit from business activity of owning and maintenance of horse races.
• Long term capital losses can be adjusted towards long term capital gains. However, short-term losses cannot be set off against both short-term as well as long-term capital gain.
• Losses that are incurred from specified business can be set off only against the profits earned from the specified business. Losses from any business or profession can be set off against profits from such specified business.
Inter-Head Set-Off:-
The intra-head adjustments can be set off remaining the losses towards other heads' income. For example, loss arising from the sale of house property can be set off against the income earned under the head 'Salary'.
Some of the instances of an inter-head set off of losses are provided below:
• The loss from house property can be set off against any under heads of Income
• Losses of business except speculative business can be set off against under any head of income excluding Salary
It is also to be noted that some of the losses cannot be set off against any of the income heads which are as follows;
• Specified business loss
• Speculative Business loss
• Capital Losses
• Losses arising due to owning and maintaining horse races
Carry Forward of Losses:-
After making permissible adjustments under intra-head and inter-head set off, there may be still some unadjusted losses. The aforesaid unadjusted losses can be carried forward for upcoming years of adjustment against the income of the future years. The rules regarding carrying forward are to some extent different from heads of income.
Losses from House Property:-
The following are some of the losses from house property that can be carried forward;
• The losses can be carried forward for the upcoming 8 assessment years from the assessment year in which the loss actually incurred
• Losses can be adjusted against the incomes from house property only
• Non-speculative Business (Regular Business) Loss
• It can be carried forward for the upcoming 8 assessment years from the assessment year in which the loss actually incurred
• Losses can be adjusted against the incomes from Businesses and Profession only
• Losses cannot be set off or carried forward in case of the return is not submitted within the actual due date
• It is not necessary for the continuation of business at the time of set off in an upcoming year
Speculative Business Loss:-
The following are some of the business losses which can be carried forward;
• Losses can be carried forward up to the upcoming 4 assessment years from the assessment year in which the loss actually incurred
• Losses can be set off against income from speculative business only
• Losses cannot be carried forward in case of the return is not submitted within the actual due date
Specified Business Loss under Section 35AD:-
The following are some of the Business Losses under Section 35AD of the Income Tax Act, 1961 which can be carried forward;
• Under Section 35AD, No time limit is specified to carry forward the from the specified business
• It is not essential that the business is continued at the time of set off in the upcoming years
• Losses cannot be carried forward in case the return is not submitted within the actual due date
• Under Section 35AD, Losses can be adjusted against the incomes from specified businesses under 35AD
Capital Losses:-
The following are some of the capital losses which can be carried forward;
• Losses can be carried forward for the upcoming 8 assessment years from the assessment year in which the loss is actually incurred
• Long-term capital losses can only be set off against long-term capital gains.
• Short-term capital losses can be adjusted against both short-term capital gains as well as long-term capital gains
• Losses cannot be carried forward in case the return is not submitted within the actual due date
Losses from Owning and Maintaining Race-Horses:-
The following are the terms and conditions for adjustment of losses from owning and maintaining race-horse As;
• Can be carried forward up to the next 4 assessment years from the assessment year in which the loss was incurred
• Cannot be carried forward if the return is not filed within the original due date
• Can only be set off against income from owning and maintaining race-horses only
For more information Visit us at: https://academy.tax4wealth.com/
Publisher:10 THINGS BEFORE JOINING ONLINE INCOME TAX COURSE | ACADEMY TAX4WEALTH
Apr 02,2022
10 Things to Consider Before Joining an Income Tax Course Online
Introduction:
E-learning, now a day is considered one of the greatest revolutions in the field of education. It has created a lot of scope in online teaching and has made radical changes in the education system in India. It has opened great opportunities for those who want to obtain knowledge in a specific field and learn new skills. One such course is the income tax course. Recently, people with an interest in taxation and accounting are pursuing Income Tax Certification Course to get a new set of skills.
However, before pursuing an income tax course, it is essential to consider the following 10 things:
1. One Can Learn Whatever He or She Wants To Learn:
When you made up your mind to go for an online tax course, then you must decide on the scope of such online learning as there are a large number of online tax courses and certificate programs offered online by different institutions. The professional credential is an important aspect and advantage of e-learning. Thus, it is appropriate to decide what he or she exactly looking for in the course and if he or she can learn what he or she wants to learn as online courses are provided virtually. Tax preparation is a portable profession and it can be done from anywhere across the globe.
2. A Professional Credential And Online Certificate:
It is another aspect to consider if the institution is providing an online certificate after the completion of the course as this professional credential will look great on the resume and accordingly attract clients. Thus, it is advisable to check out the best-charted tax professional course and Income tax course online with a certificate program that can be learned online. Once, you are convinced with the credential, the certificate of the income tax course online can also be displayed on the wall of the office.
3. Select The Best Course Among The Variety of Courses And Programs:
As e-learning offers a variety of courses online including income tax courses online, thus it may become difficult to choose the best one among them. For example, some income tax course providing firms may provide a list of courses related to income tax with the options of learning hours. Thus, it is advisable to select the best and most demanding income tax course online considering the different aspects of the course such as duration, fees, demand, structure, etc.
If you are looking for best income tax certification course online in delhi Click here, Top Income Tax Certification Online Courses in Delhi.
4. The Income Tax Course With Recent Amendments And Rules Under The Income-Tax Act, 1961:
The income tax courses provided online must be according to the latest amendments made in the Income Tax Act, 1961. The laws are changed frequently, thus it is important to consider if the income tax course is offered as per the recent tax amendments.
5. What is Career Advancement and professional benefits before go for Income Tax Certification Course?
Before taking up any income tax course online, it is important to consider and analyze what are the career advancement and professional benefits; one can get after pursuing such a Income tax certification course online. Ultimately, one investing time in such courses has to analyze the benefits and how they can help in career advancement.
Also, before you go for any Income Tax Certification Course you should need to know or explore about- What Course You Should do for Income Tax?
6. Consider If You Can Continue in Your Profession While Learning:
Flexibility is one of the important aspects when a person is a working professional. However, most e-learning courses provide flexibility while pursuing a course. But, it is advisable to understand if the course you opted for does not hamper the professional work case you are working professional. Thus, choose your income tax course accordingly.
7. If The Income Tax Course Online will Improve Your Technical Skills:
These days most advanced, as well as basic income tax courses, are offering the course with new computer skills as the learner must navigate the Learning Management System. Participation in such skills within the income tax courses online is generally relevant to most tax professionals. Thus, it must be considered before opting for the course.
8. The Possibility of Active Learning:
As in e-learning, physical presence is required but mentally it may be the case that you are absent. In an online environment, one must be mentally prepared to cope with the situation and progress toward the objectives of e-learning. It is advisable to create a self-paced environment for learning. Active participation in the online discussion is always helpful. Thus, one must prepare himself or herself in such a way that one can learn actively.
9. Be Prepared for Greater Self-Direction and Discipline Through Online Education:
There is a great responsibility to learn instead to be taught a particular subject. One must be prepared to get or conscious of time and schedule it as per the deadline committed before enrolling in the income tax course online. It is important to have a traditional environment for learning and it does not actually require much discipline.
10. Access to Expertise:
The e-learning platform has grown rapidly in recent years and also it has been accepted in the mainstream. The course is provided on e-learning platforms, it provides great access to expertise in various domains including income tax as well. Academy Tax4wealth provides e-learning white labling platform that helps to learn a deeper understanding of the subject matter. New techniques and formulas can also be accessed. Thus, before opting for the income tax course, it is advisable to choose the income tax course which will help to sharpen your professional experience and add decent value to your services and taxation practice. An added advantage to professional work is always a boost to career development.
Publisher:CLUBBING OF INCOME, UNDER INCOME TAX ACT, 1961 | ACADEMY TAX4WEALTH
Apr 05,2022
Learn About Clubbing of Income, Under Income Tax Act 1961
Incomes of Other Persons to Be Included in The Total Income of An Individual:
The following are the incomes that need to be included in the total Income of an Individual under Section 60 to section 64 of the Income Tax Act, 1961.
• The income from the transfer of assets in case there is no transfer [Section 60]
• Revocable Asset transfer [Section 61]
• In case the transfer is irrevocable for a certain period [Section 62]
• In case of revocable transfer [Section 63]
• Individual income including incomes of a minor child, spouse, etc. [Section 64]
• Clubbing of minor child's income [Section 64(1A)]
• Income generated from the self-acquired property that is converted into a joint family [Section 64(2)]
According to the provisions under sections 60 to 64 of the Income-tax Act, 1961, the below-mentioned cases are incomes even if they accruing to persons but for the prevention of tax evasions that are included in the total income of individual assesses.
[Section 60] of Income Tax Act: Transfer of income where there is no transfer of assets:
In case of transfer of an income by a person to another, without transferring the asset from which income arises, this income includes in the transferor’s total income, in case the transfer is revocable or not revocable and if the transfer is impacted prior or after the commencement of the Income Tax Act, 1961.
[Section 60 to 64] Incomes of Other Persons to Be Included in The Total Income of An Individual:
The aforesaid concept can be better analyzed and explained with the help of an example. For example, Mr. Singh is the owner of a house that is fetching a rent of Rs.10,000 per month and declares that the rent belongs to his relative Mr. Kapoor, but the house remains the property of Mr. Singh. In such case, the transfer of income without transferring the asset, the rental income will be included in Mr. Singh's total income for calculation of total income.
Revocable Transfer of Assets:
When the transfer is revocable for an asset from one person to another, the income derived from the transfer of asset will be included in the transferor's total income. If the transfer is not revocable for a certain period under Section 62 and Section 61 will not be applicable in such case.
According to Section 62(1), the provisions of revocable transfer are applicable for transfer by way of trust. The transfer is irrevocable during the beneficiary's lifetime. While in the case of other transfers, it is not revocable during the transferee's lifetime, provided the following conditions are fulfilled.
When The Transfer Is Made Prior to 1.4.1961, The Transfer Is Irrevocable For A Period of More Than 6 Years:
In the aforesaid cases, the income will be taxable in the transferee's hand.
These exceptions will be applied given that the transferor derived no indirect or direct advantage from any such income.
When a Transfer Is Revocable:
According to section 63 of the Income Tax Act, 1961, a transfer in respect of sections 60,61 and 62 will be deemed to be revocable only if;
Any provisions that contain the details of re-transfer that may be directly or indirectly of the whole or part of income or assets to the transferor during the beneficiary's lifetime.
OR
It provides the right to the transferor to reconsider authority directly or indirectly over the whole or part of assets or income during the beneficiary's lifetime or the transferee.
Income of An Individual to Club Income of Spouse, Minor Child:
Remuneration received from spouse concerning the other spouse having substantial interest under [Section 64(1)(ii)]. While calculating the individual's total income, there will be the inclusion of sums that are arisen directly or indirectly to the spouse in the way of salary, fees, commission, or any other remuneration form, whether it may be received in cash or kind concerning the individuals having substantial interest.
Hence, any remuneration that is derived by the spouse concerning another spouse will have a substantial interest and the same will be clubbed in the spouse's hand having substantial interest in that regard.
Any other income which is not specified in the aforesaid section is not under the scope of the section and that cannot be clubbed although it accrues to the spouse concerning the individual's substantial interest.
Where Both Wives, As well As The Husband, Have A Substantial Interest in Getting Compensation from The Concern:
In case both husband and wife have a substantial interest in the concern, and both are concerned with the receipt of remuneration, the remuneration of both will be clubbed in the hands of the spouse whose total income includes greater remuneration.
Income from Assets Transferred to The Spouse:
Under [Section 64(1)(iv)] of the Income Tax Act, 1961, In the calculation of the total income of an individual, all the incomes that are related directly or indirectly are subject to the guidelines under section 27(i) i.e., deemed owner to the spouse of individual assets transferred indirectly or directly to the spouse else for adequate consideration connected with the agreement.
Income from Assets Transferred to Any Person for The Profit of The Spouse of the Transferor:
According to [Section 64(1)(vii)] of Income Tax Act, 1961, in case of. In case of individual transfers of assets after 1st June 1973 to another person or association of person, where there is adequate consideration that the income from such assets will be added to the transferor's income to an extent that the income immediately benefits his/her spouse.
In other words, in case the asset is transferred to any other person without any such required consideration related to benefit of the individual's spouse and for some other persons, the income generated from such asset to the extent of advantage that accrues to the spouse will be added in the total income of the individual.
Income from Assets Transferred to Any Person for The Benefit of The Son's Wife:
Under [Section 64(1)(viii)] of the Income-tax Act, 1961 provides the details regarding the aforesaid aspect. In case of individual transfers of assets after 1st June 1973 to another person or association of person, where there is adequate consideration that the income from such assets will be added to the transferor's income to an extent that the income immediately benefits his/her son's wife.
Clubbing of Income of A Minor Child:
Section 64(1A) of the Income Tax Act, 1961 provides the details regarding the clubbing of a minor child's income in the total income of an individual. While calculating the total income of an individual, all incomes that accrue to his minor child must be clubbed. Thus, the minor child's income will be clubbed by either of his parents whether it may be the father or mother of the child.
It is to be noted that the minor child's income will be clubbed to any of the parents whose total income is higher. In case, the parent's marriage does not exist, the income of the minor child will be clubbed against the income of the parent who is taking custody of the child during the previous year.
It is also to be noted that any income once added to the total income of any of the parents arising in any succeeding year will not be added to the total income of the other parent, until and unless satisfied by the Assessing Officer. However, the parent is providing a chance to be heard if it is felt necessary to do.
When a minor child's income is clubbed with the income of either of the parents, such parent will be eligible to get an exemption to the extent of the child's income or Rs.1,500 whichever is less, about the minor child that has been included.
Income from Personal Property Converted to Joint Family Property:
Under Section 64(2) of the Income Tax Act, 1961, the incomes of self-acquired property that are converted into the joint family property will be clubbed to the total income of the Individual provide the below mentioned are fulfilled.
In case the individual is a member of the Hindu Undivided Family.
• He has converted his property as a property of the Hindu Undivided Family
• He has thrown the property as the family's common stock
• He has transferred his property to whole family members
Otherwise, compared to the adequate consideration, the income derived from such property will be included in the individual's total income. In simple words, when the self-acquired of an individual is converted to a joint family property without any such specified consideration, the income generated by the joint family in respect of that specified property will be included in the individual's total income, owner of the self-acquired property.
Publisher:INCOME TAX RULES FOR GENERAL PROVIDENT FUND(GPF)- 2022 | ACADEMY TAX4WEALTH
Apr 12,2022
New Income Tax Rules for General Provident Fund from April 1, 2022
New Income Tax Rule at The GPF:
The CBDT has notified that corporations want to preserve separate PF accounts. One of the accounts can be for taxable contributions, at the same time as the opposite can be for non-taxable contributions beginning 1st April 2021.
After the start of the new fiscal year 2022-23, numerous income tax norms introduced withinside the union budget 2022 have emerged as relevant now. So, it's far critical for a taxpayer to realize the new modifications in regard to the income tax rule, which has emerged as relevant now.
Taxation on Provident Fund (PF) contributions above ₹2.50 Lakh is certainly considered one among them. After the explanation of the provident fund introduced in budget 2021, in 1962 (FY22) the Central Board of Direct Taxes (CBDT) has inserted rule 9D of Income Tax Rules. Under this rule, every EPFO subscriber may have 2 PF/EPF money owed while the second account may have PF contribution beyond the edge limit.
Speaking on General Provident Fund; SEBI registered tax and funding professional Jitendra Solanki stated, "In price range 2021, the union finance minister had introduced to explanation provident fund through taxing the PF interest earned beyond ₹2.50 lakh contribution in a single economic yr.
To make sure implementation of this declaration and clean calculation of the PF interest earned through an EPFO subscriber,
CBDT inserted rule nine of Income Tax Rules, 1962 in FY2021-22. As in keeping with this rule, each EPFO subscriber may have 2 EPF or PF debts in which PF contribution beyond ₹2.50 lakh in a single economic year will be deposited in a 2nd PF or EPF account. So, interest earned in EPF/PF-1 account will be loose from any taxation even as interest earned in PF/EPF-2 account could be taxable."
What is The GPF?
General Provident Fund is a form of PPF account for all authorities personnel in India. Also, this account lets the authorities' personnel make a contribution of a sure percent of their revenue to the General Provident Fund. Hence, the full quantity gathered at some point of the employment time period is paid at retirement to the employee.
The charge of the interest of GPF is revised periodically in keeping with the authorities' regulations. However, the current rate of interest of GPF is 7.1% (i.e. January 2022 – March 2022).
Once a person subscriber applies for the General Provident Fund, they have to make a contribution cash until there may be a case of suspension. Moreover, in keeping with the authority's rules, one can actually prevent the charge to the GPF account 3 months earlier than the date of retirement.
Who all will Must Pay Tax on GPF?
According to rule 9D of Income-tax Rules, 1962, which become inserted with the aid of using the Central Board of Direct Taxes closing year, all non-authorities employees — wherein the organization is contributing — with a provident fund amounting above Rs 2. 5 lakhs can pay tax on interest income of EPF.
Similarly, all authorities’ employees — wherein the organization isn't always contributing — with a provident fund amount above the brink restriction of Rs five lakh can pay tax on the interest income of GPF.
How will The Tax on GPF be Computed?
Firstly, separate money accounts in the PF account might be maintained for FY 2021-22 onwards, for segregating the taxable and non-taxable contributions.
Here's how the authority's notification explains taxable and non-taxable contributions: -
A Non-Taxable Contribution Account will be The Mixture of –
i) Closing stability withinside the account as of the thirty-first day of March 2021
ii) Any contribution made through the man/woman withinside the account in the course of the preceding 12 months 2021-2022 and next preceding years, which isn't always included withinside the taxable contribution account
iii) Interest accumulated on (i) and (ii)
A Taxable Contribution Account will be a Mixture of :
i) Any contribution made through he/she in the preceding 12 months withinside the account in the course of the preceding 12 months 2021-2022 and next preceding years, that is in extra of the edge limit
ii) Interest Accumulated on (i)
Breaking it down, all contributions made through personnel till March 31, 2021, will be non-taxable contributions and all profits from contributions in extra of the desired threshold limits made in FY2021-22 might be taxable.
