Latest News – Certicom Update

Certicom Updates:

1. The Goods and Services Tax (GST) department has begun to identify instances of tax evasion and frauds identifying mismatches between E-way bills and the radio frequency tags used to cross toll plazas.

GST authorities are now comparing the data given at the time of generating e-way bills for goods movement with the actual movement of vehicles captured at toll plazas and identifying revenue leakages.

GST’s Applicability to the Reverse Charge Mechanism for Service Imports

2. CBDT has notified the new rules regarding computation of short-term capital gains and written down value where depreciation on goodwill has been obtained, potentially increasing tax liabilities on firms that have undergone mergers or acquisitions in recent years. Finance Act, 2021, had amended that ‘goodwill’ will no more be regarded as an “intangible asset” and depreciation would not be available with effect from April 2020.

3. Indirect Tax Department cannot freeze Bank account of assesses if Appeal has been filed with mandatory pre-deposit. As per CBEC Circular No 984/08/2014-CX.

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4. Reserve Bank of India announced the cut-off yield for the new 10-year bond at 6.10% per annum, higher than that of the current benchmark, signalling a slight tolerance for a higher yield after months of trying to keep it at 6% or less.

When does EPF become taxable?

When does EPF become taxable?

As per current law, an employee’s own contribution to the EPF account is not taxable. However, effective from April 1, 2020, onwards, the employer’s contribution to the EPF account can become taxable if it exceeds Rs 7.5 lakh in a financial year.

Though the biggest USP of the Employees’ Provident Fund is its EEE tax status, however, there are certain instances when EPF can become taxable. Here is a look at instances when you are required to pay tax on EPF.

Full withdrawal from the EPF account is allowed if an employee has left his/her job and has not joined any other new job after two months.

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When does an EPF contribution become taxable?

According to a new regulation introduced in Budget 2020, if an employer’s total contribution to an employee’s NPS account, superannuation fund, and EPF account in a financial year exceeds Rs 7.5 lakh, the excess contribution becomes taxable in the hands of the employee.

 

GDP grows 1.6% in Q4, but contracts 7.3% in FY21

 

Case I: When your company contributes more than Rs 7.5 lakh to your NPS, superannuation fund, and EPF account in a financial year.
Assume an employer contributes Rs 1 lakh to the superannuation fund, Rs 5 lakh to the NPS, and Rs 2 lakh to the EPF account in a fiscal year. This is a total donation of Rs 8 lakh, which is Rs 50,000 more than the tax-free maximum of Rs 7.5 lakh. As a result, an employee must pay tax on the extra contribution.

Case II: When a financial year’s contribution to the EPF account exceeds Rs 7.5 lakh and no contributions to the NPS or superannuation fund are made.
Assume a worker does not have an NPS account or a superannuation fund. In a financial year, however, the employer contributes Rs 8.5 lakh to the EPF account. In this scenario, too, the extra amount will be taxable in the employee’s hands.

Form 16 has been postponed to July 15, although the deadline for self-assessment tax over Rs 1 lakh is still July 31.

Form 16 has been postponed to July 15, although the deadline for self-assessment tax over Rs 1 lakh is still July 31.

The government has delayed numerous income tax deadlines as a result of the second wave of the coronavirus, including those for filing income tax returns for FY 2020-21, issuing Form 16, and others. However, for those whose tax liability after deduction of TDS and advance tax exceeds Rs 1 lakh, the deadline for filing self-assessment tax for FY20-21 has not been extended. If a self-assessment tax of more than Rs 1 lakh is not paid by July 31, such individuals may face a penalty.

RSM India’s Founder, Dr Suresh Surana, adds, “Additionally, an extension has been granted to employees for the issuance of TDS certificates in Form 16 following the extension of the due date for filing TDS returns. The issuance of TDS certificates in non-salary instances does not currently have a corresponding extension. As a result, by June 15, 2021, banks must submit Form 16A (TDS certificate for tax deducted on interest).”

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According to a government press release issued on May 20, 2021, if an individual taxpayer’s tax dues for FY 2020-21 exceed Rs 1 lakh after deducting TDS and advance tax dues, the payment must be made on or before July 31, 2021. From August 1, 2021, until the date of filing of the ITR, criminal interest will be charged at a rate of 1% per month under section 234A of the Income-tax Act, 1961.

This is comparable to the government’s action last year, which only benefited small and medium-sized taxpayers.

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Even though the ITR filing date for people whose accounts are not required to be audited has been extended to September 30, 2021, if an individual’s tax liability for FY 2020-21 exceeds Rs1 lakh, they must pay the amount before July 31, 2021 to avoid paying penal interest.

“It has been clarified that interest under section 234A of the Act shall continue to be levied where the tax payable (after TDS/TCS, advance tax, relief under section 89, 90/ 90A/ 91, MAT credit) is more than Rs. 1 lakh,” says New Delhi-based practising chartered accountant Sachin Vasudeva.

ITR or Income Tax Return Filing Deadline for FY21 (AY 2021-22) Extended.

Deloitte India Partner Saraswathi Kasturirangan believes “The extension of the deadline for filing tax returns is a good thing. However, when the self-assessment tax owed on the return is more than Rs 1 lakh, this does not afford relief from the interest that is charged for filing the return after the initial due date.”

How to calculate self-assessment tax?

To figure out how much self-assessment tax you owe for FY 2020-21, follow these steps:

  • Step 1: Determine your entire income for the fiscal year 2020-21. This comprises wages, capital gains, rental income, interest income, dividend income, and other sources of income.

  • Step 2: To calculate your net taxable income, subtract your total income from your tax exemptions and deductions. House rent allowance, tax-saving investments under section 80C (ELSS, PPF, etc.), premium paid on your health insurance policy, and so on are examples of tax exemptions and deductions.

  • Step 3: Determine the amount of tax you owe on your net taxable income. You may determine your income tax liability using ET Wealth’s online calculator.

  • Step 4: Subtract the amount of taxes paid as TDS from your salary, interest income, and other sources from your total tax liability. Deduct the advance tax (if any) that you paid in the fiscal year 2020-21. These facts will be reflected on your Form 26AS. The deadline for filing TDS/TCS returns has been extended by the government to July 31.

When you reduce the TDS and advance tax from your overall tax liability, you’ll get the amount of self-assessment tax you’ll have to pay before filing your ITR.