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Sunday, 8 September 2019

What is Intimation under Section 143(1) ?

Now, today we discuss what is Intimation u/s 143(1).....?? of Income Tax & How to read or understand this section....??.

The Income Tax return file by any person which processed by Income Tax Department & after processed, Department send a communication letter which called Intimation u/s 143(1)

Its sent by Income Tax Department on your registered E-mail ID as per e-filing income tax portal, In this IT Department verify or check the Income Tax Calculation done in Income Tax Return (ITR) filed is correct or not. When Income Tax Department processed the Income Tax return, it send an Intimation u/s 143 (1) of Income Tax Act,1961 on your respective E-mail ID.

In this Income Department matches your Tax Calculation with their records Or sources of information they have, this process also include Tax, Interest calculation, internal inconsistencies, arithmetical error, tax payment made person & so many etc. Its a Prima facie evaluation by department.

When you received intimation please check your personal details like Name, PAN, Address, Date of filing return & so many are correct or not after that In this Department provides you a comparison in tabular form of your file return. In this they provide all details as you mention at the time of return filed such as Source of Income, any additional Income, Deduction, Tax liability , Tax Deducted at Source, tax relief, interest(u/s 234A, 234B, 234C), Late fees(u/s 234F if any).

In future Department finds some other source of income which you not declare, you can face income tax notice u/s 245 for additional Tax liability or notice u/s 143(3) Income scrutiny & so on. so, declare your correct Income with correct deduction claim.

Intimation which send on your E-mail ID is password protracted, password of your intimation is your pan following with Date of birth in lower case. for example aaaaa0000a15081983. 

If Department finds any mis match under any head than Tax discrepancy will be increase. for example if you declare lower Income, claimed more deduction, error while calculating Tax as compare with department than tax liability may arise, that such may be adjusted against your refund if any available.

Now a days Income Tax Department processed the return faster as compare to earlier, if Department takes more time as prescribed in Income Act than Department is liable to pay interest on your refund amount but this condition is applicable when your return signed copy reached at CPC Income Department office Bengaluru or from the date of EVC accepted.

Income Tax return must be processed within a One year as per current Income Tax laws. if in case your return not processed in such time you can file a grievance on e-filing website through your login ID.

In case of refund, department automatically credited/deposited in such Bank account as mention by you during return filed, some time person by mistake mention wrong account no. in this you can request to department for re-issue of refund with correct Bank Details through your e-filing portal login.












Sunday, 10 March 2019

Income Computation and Disclosure Standards (ICDS)

Introduction of the Topic : 

Income Computation & Disclosure Standard was formulated from January-1995. Finance Act, 1995 empowered the Central Government to notify Tax Accounting Standards vide section 145(2) of the Income-tax Act, 1961. CG Constituted a committee (2002 Committee) for formulation of Tax Accounting Standards in 2002. In December-2010, Central Government constituted Committee to study harmonization of ICAI’s Accounting Standards with the Income-tax Act & suggest Tax standards. Based on final report submitted by Committee, CG published drafts of 14 standards for public comments in October-2012. And finally in July-2016 CBDT defers the applicability of ICDS to FY 2016-17 vide its press release dated July 06, 2016 considering the recommendations by expert committee.

First time, ICDS were notified by Central Govt. by issuing notification no. 32/2015 dated 31/03/2015 (applicable for FY 2015-16 and onwards). ICDS to be applicable only for computation of ‘Profits and Gains from Business & Profession’ (‘PGBP’) and ‘Income from other sources’ in case of taxpayers following mercantile system of accounting. No separate books of account to be maintained for application of ICDS. ICDS shall apply irrespective of accounting standards adopted by the companies i.e. AS or Ind-AS, and it shall not apply for computation of MAT but shall apply for computation of AMT. ICDS shall apply to all persons (including Banks, NBFCs, Insurance Co., Power Sector) unless there are sector specific provisions in ICDS or the Act. Words and expressions used and not defined in the ICDS but defined in the Act shall have the meaning assigned to them in the Act. Items not specifically covered by any ICDS (e.g.: leases, intangible assets, etc.) will continue to be governed by relevant AS/Ind-AS and existing provisions of the Act.And finally the important point to be remembered is Non-compliance with ICDS will give power to tax officer for Best Judgment Assessment. All ICDSs are basically based Accounting Standards. 

Now coming to first ICDS i.e.Accounting Policies which is as similar to Accounting Standard 1.  
Fundamental accounting assumptions under ICDS are 1st is Going Concern It refers to the assumption that the person intends to continue his business, profession or vocation for the foreseeable future. 2nd assumption refers to the assumption that accounting policies are consistent from one period to another. And 3rd refers to the assumption that revenues and costs are recognized as they are earned or incurred and recorded in the previous year to which they relate.  ICDS 1 Does not consider the concept of ‘materiality’ & “Prudence”. This ICDS prohibits recognition of expected loss or profit unless permitted by any other ICDS. As per ICDS 1, accounting policy can be changed for any “reasonable cause”, As per clarifications reasonable cause is an existing concept and has evolved well over a period of time conferring desired flexibility to the taxpayer in deserving cases. 
Disclosure required under this ICDS is. 
1) All significant accounting policies adopted by a person shall be disclosed. 
2) Any change in the accounting policy having material effect shall be disclosed. The amount by which any item is affected shall also be disclosed to the extent ascertainable. 
3) If a change is made in the accounting policies having no material effect for the current year then the disclosure is required both in the year of adoption as well as in the first year in which it has material effect. 

Now moving to 2nd ICDS i.e. Valuation of Inventories 
This Income Computation and Disclosure Standard shall be applied for valuation of inventories, except: Shares, debentures and other financial instruments held as stock‐in‐trade which are dealt with by the Income Computation and Disclosure Standard on securities; 
In case of dissolution of a partnership firm or association of person or body of individuals, notwithstanding whether business is discontinued or not, the inventory on the date of dissolution shall be valued at the net realizable value.  
Now Cost of Inventories under this ICDS: 
Cost Comprises of all cost of purchase, cost of service, cost of conversion and other costs incurred in bringing inventories to their present location and condition.  
• Cost of Purchase: Consist of purchase price including duties and taxes, freight inwards and other expenditure directly attributable to the acquisition. Trade discounts, rebate and other similar items be deducted in determining the cost. While as per AS-2 cost of purchase are shown at net. i.e. exclusive method  
• Cost of Services: Consist of labour and other costs of personnel directly engaged in providing service including supervisory personnel and attributable overheads. While AS 2 does not deal with costs of services. 
Disclosure under this ICDS: 
Accounting policies adopted in measuring should be disclosed & Total carrying amount of inventories.

Now ICDS 3 i.e. Construction Contracts 
This Income Computation and Disclosure Standard shall be applied for: 
 Determination of income from construction contract 
  Also applies to contract for destruction or restoration of an asset and construction of surrender of services related to construction of an asset 
The Combining and Segmenting Construction Contracts under this ICDS is similar with AS-7  
Contract Revenue under ICDS 3 will be ….. 
Contract revenue and contract costs associated with the construction contract, which commenced on or after April 01, 2016 shall be recognized in accordance with the provisions of this standard. 
• Contract revenue and contract costs associated with the construction contract, which commenced on or before the 31st March , 2016 but not completed by the said date, shall be recognized on the method regularly followed by the person prior to the previous year beginning on the 1st day of April, 2016.  
Disclosure Requirements under this ICDS  
• The amount of contract revenue recognized as revenue in the period 
• The methods used to determine the stage of completion of contracts in progress 
• Amount of costs incurred and recognized profits (less recognized losses) up to the reporting date (for contracts in progress) 
• The amount of advances received (for contracts in progress) 
• The amount of retention (for contracts in progress)  

ICDS 4 i.e. Revenue Recognition deals with the basis for recognition of revenue arising in the course of ordinary activities from: 
- Sale of goods; 
- Rendering of Services; and 
- The use by others of the person’s resources yielding interest, royalties or dividends. 
• It excludes from its application revenue recognition of items that are dealt by other ICDS . 
However, it excludes the following income: 
- Construction contracts 
- Government Grants 
- Hire Purchase / Lease arrangements 
- Revenue earned by insurance companies 
- Disclosure under this ICDS is: 
In case of Sale of Goods: Revenue not recognized due to uncertainty in collection along with the nature of uncertainty to be disclosed; 
In case of Services: Method to compute the stage of completion, Amount of revenue recognized; 
Disclosures with respect to service transactions in progress at the end of the year; 
Amount of costs incurred and recognized profits (less recognized losses) up to the reporting date; 
Amount of advances received; and Amount of retentions.

ICDS 5 deals with the treatment of Tangible Fixed Assets. 
Concept of Materiality to treat an item as expense is recognized by AS, is not allowed under ICDS. 
Stand-by equipment and servicing equipment are to be capitalized under this ICDS. 
ICDS specifically excludes Other Taxes which are subsequently recoverable from the cost of an acquired tangible fixed asset. 
An Expenditure that increases the future benefits from the existing asset beyond its previously assessed standard of performance is added to the actual cost. 
Disclosure required under this ICDS is: 
Description of assets or block of assets with its rate of depreciation 
Actual Cost or Written down Value of depreciable asset should also be disclosed with any additions & deductions during the year 
Date of Put to Use, Change in rate of currency, Subsidy or grant or reimbursement received also be disclosed.

Now coming to ICDS 6 that is Effects of Changes In Foreign Exchange Rates 
The standard deals with: 
 Treatment of transactions in foreign currencies; 
 Translating the financial statements of foreign operations; 
 Treatment of foreign currency transactions in the nature of forward exchange contracts 
 Initial Recognition of foreign currency transaction shall be as per the exchange rate on the date of transaction 
 If the exchange rate does not fluctuate significantly, average rate for week or month can be considered for conversion 
 However, if rate fluctuates significantly, rate on the date of transaction to be considered 
The forward contract is entered into to establish the amount of the reporting currency required or available at the settlement date of the transaction. 
 Premium or discount on arising at the inception of forward contract shall be amortized as expense or income over the life of contract. 
 Exchange difference on contract shall be recognized in previous year in which the exchange rates change. 
Disclosure required to be given is Premium or Discount to be amortized over the period of contract. Exchange difference to recognized on the last day of previous year. 

Now ICDS 7 which Deals with the treatment of Government Grants – 
 But does not cover government assistance; 
 Conditions for recognition of Government Grants 
 Government grants not to be recognized until there is a reasonable assurance that the person shall comply with the related conditions attached; and the grants shall be received.  
Following disclosure shall be made in respect of Government grants, namely: 
 Nature and extent of Government grants recognized during the previous year; 
 Nature and extent of Government grants recognized during the previous year as income; 
 Nature and extent of Government grants not recognized during the previous year by way of deduction from the actual cost of the asset; and  Nature and extent of Government grants not recognized during the previous year as income and reasons thereof.

Income Computation and Disclosure Standard No. 8 deals with the Securities.  
 This ICDS is applicable to Stock Brokers, Traders & Non-Banking Financial Institutions. 
 It excludes Recognition of interest and dividend on securities, Securities in the business of insurance, Securities of Mutual fund, Venture capital funds, Banks and Public financial institutions. 
 This ICDS deals with securities held as stock-in-trade and not for securities held as investment. Where a security is acquired in exchange for another security, cost shall be fair value of the security acquired. Securities listed on a recognized stock exchange shall be valued at actual cost as initially recognized or net realizable value, whichever is lower. Securities not listed on a recognized stock exchange shall be valued at actual cost as initially recognized. Part-B of ICDS-VIII contains special requirements regarding securities held by schedule banks and Public Financial Institution  
The disclosure requirements under this ICDS will be   
 There are no disclosure requirements as per ICDS-VIII 

The 9th standard deals with treatment of Borrowing Cost. 
Borrowing Costs shall include 
 Commitment charges on Borrowings  Amortized amount of premium and Discounts  Finance charges in respect of assets under finance lease  Ancillary costs in connection with arrangements of borrowings. 
The standard does not deal with actual or imputed cost of owner’s equity and preference share capital. 
 Borrowing costs eligible for capitalization shall be determined in accordance with ICDS & other borrowing cost shall be dealt in accordance with provisions of The Act. 
Disclosure required under this ICDS: 
 Accounting policy adopted for borrowing costs. Amount of borrowing costs capitalized during the year. 

The last but not the least i.e. 10th ICDS deals with Provisions, Contingent Liabilities and Contingent Assets Except 
 Resulting from financial instruments  Resulting from executory contracts  Arising in insurance business from contracts with policyholders and Covered by another ICDS 
Whereas, Provision is a liability which can be measured only by using a substantial degree of estimation. 
Liability is a present obligation of the person arising from past events, the settlement of which is expected to result in an outflow from the person of resources embodying economic benefits. 
Contingent liability is A possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events. 
Contingent assets are recognized when there is a reasonable change and certainty that inflow of economic benefit will arise.

Disclosure of contingent liability  
 A brief description of the nature of the obligation; 
 The carrying amount at the beginning and end of the previous year; 
 Additional provisions made during the previous year, including increases to existing provisions;  
Disclosure of contingent ASSET 
 A brief description of the nature of the asset and related income; 
 The carrying amount of asset at the beginning and end of the previous year; 

This is the step to harmonize the accounting & tax. After showing the balance of profit & loss account show the adjustment of ICDS & then adjust the adjustments following under Income Tax Act.  
Expenditure on most post-retirement benefits like provident fund, gratuity, etc. are covered by specific provisions. There are other post-retirement benefits offered by companies like medical benefits, etc. Such benefits are covered by AS-15for which no parallel ICDS has been notified. 

Click here to Download PPT On ICDS

Thank you….
-  Tushar Gopal Agrawal 

Tuesday, 5 February 2019

CA Intermediate November, 2018 Result

On 31st January, 2019 The Institute of Chartered Accountant of India (ICAI) issued a notification of declare the CA Intermediate (Old Course & New Course) result, which examination was held in November, 2018 are expected to Declare on 8th February, 2019 may be around 6.00 p.m.

CA students check their result on following link easily,  

ICAI will publish the merit list upto 50th Rank, ICAI also provide some other facility to their students to get result faster like through E-mail, students may register their request at the website of icaiexam.icai.org from 4th February, 2019, after registering their requests, results will be providing on their E-mail ID. 

Further more facility provided by ICAI through SMS, CA students also knowing their results by SMS on the mobile, this services will be available through India Times. Students those desirous to know the result through SMS should types this are as follows :

For Old Course Intermediate Examination -
CAIPCOLD (space) XXXXXX (where XXXXXX is the six digit intermediate examination roll number of the student) for example- CAIPCOLD123456

For New Course Intermediate Examination -
CAIPCNEW (space) XXXXXX (where XXXXXX is the six digit intermediate examination roll number of the student) for example- CAIPCNEW123456

& send this message to 58888. 

Friday, 1 February 2019

Budget 2019 Key Points & Highlights

On Friday, 1st February 2019 Finance Minister CA Piyush Goyal has presented the Interim Budget, on behalf of Arun Jaitley. Its a first time in history that any CA minister has presented any Union Budget in Parliament, In this Budget NDA Government taking many good moves in favour of  Agriculture sector, Education sector, Medical & Hospitality Sector and specially for middle class to provide big relief in Income Tax. 

Government runs many Healthcare Programme like Ayushman Bharat Medical under which around 50 crore people get the treatment, reduced in the cost of medicine. In his speech they mention Economy on Track, Around 5.45 lakh rural village under sanitation coverage & Saubhagya Scheme its also benefits to people. 

In this Budget, Government try to provide additional benefit to Framers & according to that Government will provide Rs. 6,000 p.a. to farmers who holding not more than land of 2 hectares, but that amount of Rs. 6,000 paid in three equal installment of Rs 2,000, this amount directly transfer into farmer's Bank account. Farmers will get 2 % interest subvention to those are busy in pursuing animal husbandry & fisheries. Government announced some more benefits to farmers if crops are affected to due natural calamities than on crop loan 2 % interest subvention & additional 3% interest subvention if they pay the loan installment timely.

FM proposes to open 22nd AIIMS in Haryana very soon, already 21 AIIMS run in India, its massive move to provide good facility to everyone & everywhere. Government proposes to start a Mega Pension Yojna, In this scheme beneficiaries will get assured pension of Rs 3,000 per month after the age of 60 yrs but subject to condition to contribute Rs 100 per month in this scheme & same amount will be contribute by Government, this Scheme called as Pradhan Mantri Shram Yogi Mandhan. This Scheme is applicable to unorganized sector workers whose salary or income less than Rs 15,000 per month & One more benefits, Specially to workers whose monthly Salary Or Wages Rs 21,000, Bonus will be applicable to them.

In last 5 yrs under NDA Government, 6 crore Free LPG connection has been provided under the Ujjawala Scheme. To provide 60,000 crore to Manrega scheme, most successful yojana of UPA Government. Rs 1.7 lakh crore for ensure food to all under this everyone to get food on time. FM also proposes Rs 750 crore for National Kamdhenu Ayog for Cows.

In this Budget Government also focus on there Defence Sector, this time Defence Budget enhanced beyond the limit after so many years of Rs 3 lakh crore & Fiscal Deficit of Country in this year is 3.3% which will be increased in next year around 3.4%  of GDP.

Now Most Awaited announcement regarding Taxation by FM as follow :

FM proposes to increases the Tax free Gratuity limit upto Rs 30 lakh, Its means no Tax on it but it should be covered under Gratuity Act, 1972. Standard Deduction under section 16(ia) for Salaried or Pensioners to be increased from 40k to 50k, this two major changes for Salaried/Pensioner in this budget. In his speech FM said under GST, Rs 97,000 crore average monthly collection in current year. Its more than what actually government expected from taxpayer, its shows belief on the government.

Now, very Important Topic of Income Tax Slab rate, there is No Change in slab rate, old slab rate will continue as it is, but it should be clear for all taxpayer the FM proposes to Increases Income Tax Rebate under section 87A from Rs 2,500 to Rs 12,500(its a tax amount). It means upto Rs 5 lakh Taxable Income after considering all deduction there will be No Tax. Section 80IB being extended for one more year, under this all housing project those approved till end of F.Y. 2019-20 get the deduction under this section, its good initiative taken by the Government.

FM proposes No more Tax on Notional Income on House property under section 23(4), Earlier If any assesse has more than One House Property than One Property should be DLO(Deemed to be let out) & other one should be SO(Self Occupied), In that on DLO to declare Notional rent but in this budget to big relief. On Second house there will be No more Tax on DLO Property & related to House Property under section 54 Capital gain benefit limit increased up to Rs 2 crore but this limit will be available once in a Life from Investment in One residential property to Two residential property & One massive Benefit given to Builders, On unsold House as inventory in their book is to be increased from One year to Two Years to maintain in their stock.

Now, to discuss on TDS issues, No more TDS under Section 194A  interest on FD, Post Office up to Rs 40,000 p.a. earlier it was Rs 10,000 p.a. only & under Section 194I, Rent paid earlier to deduct TDS if rent more than Rs 1,80,000 p.a. but in this budget this limit increases up to Rs 2,40,000 p.a.

In this Budget Government simultaneously focus on Digital India, Due to Digitization Assessee will get Income Tax refund within 24 hrs & to reduced the Scrutiny period up to 2 yrs, but scrutiny will be done through digital way, no need to go personally.

FM said due to note ban in 2016, there is tremendous growth in taxpayer more than 1 crore New IT return file & Rs. 3 lakh crore has been recovered from Bank Loan Defaulters, this Defaulters are mainly from Corporate Sector. Under GST government proposes 2% Interest relief on loan but subject to registered under MSME.

I think entire Budget, presented in House mainly focus on Farmers & Middle Class, this budget may be change the result of Election, but overall Budget is Good one because its a only Interim Budget, final Budget will be presented after election. FM Piyush Goyal first time presented Union Budget & Last Budget Of the NDA government. If all proposes are consider it may be change the entire scenario of middle class.

Now, Every one Can download from below, Interim Budget 2019 Speech & Finance Bill 2019
Interim Budget Speech 2019 FM/CA Piyush Goyal
Finance Bill 2019