Tax Column

I am a senior citizen of 62 years and my wife is 58 years old. We both have earned long-term capital gain on sale of shares and old ancestors’ property. We also have regular interest income. Kindly let us know whether we are liable to pay advance tax for the financial year 2021-22 and if yes, then what is the time limit? 

Under Section 208 of the Income Tax Act, senior citizens (resident individual who is at least 60 years of age at any time during the financial year) is not liable for payment of any advance tax, if he or she does not have any income from business or profession. From your question it is very clear that you are 62 years old and having income under the head capital gains and income from other sources. Therefore, you are not liable to pay any advance tax for the financial year 2021-22. You are supposed to pay the entire tax by way of self assessment tax on or before the due date of filing the Income Tax Return i.e. before July 31, 2022. Your wife is not a senior citizen. Therefore, she is liable to pay advance tax in four instalments i.e. 15 per cent on or before June 15, 2021, 45 per cent on or before September 15, 2021, 75 per cent on or before December 15, 2021 and 100 per cent on March 15, 2022.

Can you explain the new amendments related to obtaining a tax audit report under section 44AB of the Income Tax Act?

Under Section 44AB of the Income Tax Act, every person carrying on business is required to get his accounts audited if his total sales, turnover or gross receipts in business exceeds Rs 1 crore in any previous year. To reduce the compliance burden on small and medium enterprises, the Finance Act 2020 has increased such threshold limit of turnover for a person carrying on business from Rs 1 crore to Rs 5 crore, provided cash receipts and payments made during the year do not exceed 5 per cent of the total receipts and total payments respectively. In order to incentivize non-cash transaction and to promote digital economy and to further reduce the compliance burden of small and medium enterprises, the Finance Bill 2021 has increased the threshold limit from Rs 5 crore to Rs 10 crore.

However, it has been clarified that payments or receipts, settled through non-account payee cheque or nonaccount payee bank draft, shall be deemed to be cash payment or cash receipt, respectively. Thus, any receipt or payment made through book entries shall be considered as cash payment or receipt and therefore the same shall be included while computing the 5 per cent cash transaction limit under Section 44AB of the Income Tax Act.

Therefore, if you have business turnover of less than Rs 10 crore and you have not received any payment in cash nor made any payment in cash in excess of 5 per cent of total receipt and payment, you are not liable to get your accounts audited under Section 44AB of the Income Tax Act.

Is the linking of PAN with Aadhaar mandatory and if not done what are the consequences?

As per Section 139AA of the Income Tax Act, it is mandatory for every person who is eligible to obtain Aadhaar to quote its number in the Income Tax Return as well as in the application for allotment of PAN. Further, every person who has been allotted PAN as on July 1, 2017 and who is eligible to obtain Aadhaar number shall link his PAN with Aadhaar. In case an assessee fails to do so, PAN allotted to the person shall be made inoperative after the notification’s due date. The due date for such linking has been extended on multiple occasions and as of today the extension is up to June 30, 2021. The consequences of not linking PAN with Aadhar card are as under:

✓ Levy of fees not exceeding Rs 1,000 under Section 234H of the Income Tax Act.
✓ PAN becomes inoperative after due date.
✓ As per Rule 114AAA, if the PAN has become inoperative, then the assessee shall be deemed that he has not furnished, intimated and quoted PAN wherever mandatory.
✓ Tax shall be deducted at a higher rate as per Section 206AA and as per Section 206CC of the Income Tax Act.
✓ Penalty under Section 272B of the Income Tax Act shall be levied if PAN becomes inoperative. In view of the above, it is recommended to comply with the provision of linking Aadhaar and PAN immediately.

I am an individual. My case for assessment year 2017-18 has been reopened. What should be my action plan and procedure?

You have to file the return for assessment year 2017-18 electronically. After filing the return, you can seek the reasons for reopening the assessment. You can object to the reasons of reopening. However, most likely your objections will be rejected and then your reassessment proceedings start which would be faceless assessment. You will keep getting notices on your registered email ID or on the Income Tax portal. You should reply to all the notices with documentary evidence. The entire process is faceless and there is no need for personal appearance or visit to the Income Tax Office. The process is simple. After considering your submissions and documentary evidence, the assessment will be finalised.