Tax

Kiran Dhawale

If your income exceeds Rs 5 lakh and you file your ITR before December 31, 2018, then you are liable to pay late filing fees of Rs 5,000. But if your income is less than Rs 5 lakh, then late filing fees is only Rs 1,000.

Jayesh Dadia,
Chartered Accountant 

 

I am employed with Company X Ltdwhichis facing severe financial crunch and has not paid salaries to its employees for almost 9 months. For the financial year 2017-18, my total salary is Rs 20 lakh, but I was paid actual salary of only Rs 5 lakh. In the return of income for assessment year 2018-19 which is due for filing before July 31, do I have to offer total annualsalary due of Rs 20 lakh or actual salary received of Rs 5 lakh?If I have to offer Rs 20 lakh, then how to pay the additional tax liability? 

"Under section 15 of the Income Tax Act, salary income is chargeable to tax, whether it is paid or not by the employer. The salary although not paid, it has accrued to you and, therefore, the salary due from employer is taxable.Therefore, when you file the return for assessment year 2018-19, you have to offer the entire salary due to you as taxable income. The additional tax payable on this incomecan be treated as TDS and you canclaim credit in the return although the employer has not paid it. Under Section 155(14) of the Income Tax Act, the officer has to give you the credit for TDS paid by the employer subsequently. The time limit is two years from the end of the assessment year. Therefore, if your employer pays TDS before March 2020, then you will get credit for TDS even though at the time of filing the return TDS credit was not available to you. 

I am an individual employed overseas since September 25, 2017. However, I have stayed more than 182 days in the financial year 2017-18. Am I a resident under the Income Tax Act and whether salary income earned abroad is taxable ? 

"Since you have not satisfied the condition of remaining outside India for more than 182 days in the financial year 2017-18, you are a resident under the Income Tax Act for this financial year. Accordingly, your foreign salary income is chargeable to tax in India. However, any taxes paid on your foreign salary income can be claimed as credit for tax in India. For your information, once you have taken up foreign employment and left India, you have become a non-resident under FEMA and under the Income Tax Act. 

I have been reading about GAAR. Can you explain me what is GAAR and how it is going to work and under what circumstances it can be invoked?

"General Anti-Avoidance Rules (GAAR) is an anti-avoidance regulation that allows the Tax Department to deny tax benefit on transactions conducted with the purpose of avoidingpayment of tax. The government has come across so many arrangements which are specifically made to avoid payment of taxes. In the absence of any regulation, the Tax Department cannot disregard, even though it is established that such arrangements are made wholly and exclusively for avoidance of tax. There areSpecific Anti Avoidance Rules (SAAR) in India but it is applicable only to specified transaction. 

With the introduction of GAAR, all transactions, which are not covered by SAAR, can be brought under GAAR, if it is established that transactions have been carried out with thesole motive of tax benefit or tax avoidance. Thus, the object of GAAR is to counteract in a known or noble form of tax avoidance or plugging loopholes that may result in tax avoidance. It is effective from assessment year 2018-19 onwards. However, GAAR is not applicable to arrangement/ transaction involving aggregate tax benefit of less than Rs 3 crore. The GAAR provision is contained in Section 95 to 102 of the Income Tax Act andthe administrative provision is contained in Section 144BA of the Income Tax Act. 

Once the Assessing Officer invokes GAAR, then the arrangement or transaction can be disregarded as if it was never entered and the Assessing Officer can tax income in the hands of the correct person by relocating income/expenses/rebate/ deduction, etc. However, the initial onus is on Tax Department to prove invocation of GAAR and, therefore, only time will tell whether GAAR can be successfully implemented or not. 

I am an individual liable to file my return of income for assessment year 2018-19 beforeJuly 31, 2018. Can you tell me what are the consequences if I don’t file my ITR before the due date? 

"From the assessment year 2018-19, a new Section has been inserted, i.e. Section 234F, in the Income Tax Act. Under this section, if your income exceeds Rs 5 lakh and you file your ITR before December 31, 2018, then you are liable to pay late filing fees of Rs 5,000. But if your income is less than Rs 5 lakh, then late filing fees is only Rs 1,000. Further, if you fail to file the ITR before March 31, 2019, i.e. before the end of the assessment year, then the late filing fees would be Rs 10,000. The other consequences of late filing of return are (i) you will be liable to pay interest @1% for every month of default; and (ii) if you have incurred loss under the heads of business or capital gain, the same will not allowed to be carried forward and, accordingly, you will not be allowed to set-off against your future income. Therefore it is advisable to file your ITR before the due date. If you discover any mistake or omission, you can subsequently revise before March 31, 2019 and will not face any consequences as mentioned above.

Rate this article:
No rating
Comments are only visible to subscribers.

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR