Special provision for the full value of consideration in certain cases.

Special provision for the full value of consideration in certain cases.

S-50C of IT Act, 1961

Consideration received from the transfer of a capital asset, being land or building or both

At a Value less than SDV – STAMP DUTY VALUE(for the purpose of payment of stamp duty in respect of such transfer)

The STAMP DUTY VALUE (SDV) shall be deemed to be the FVC (full value of the consideration) received or accruing as a result of such transfer.

What date shall be adopted for Computing Full Value Consideration (FVC)?

Where the date of the agreement for fixing the amount of consideration
And
the date of registration for the transfer of the capital asset is not the same,

the value adopted by the stamp valuation authority on the date of agreement may be taken.

Provided that the amount of consideration, or a part thereof, has been received by way of:

  • 1. A/c payee cheque or
  • 2. A/c payee bank draft or
  • 3. Electronic clearing system through a bank account or
  • 4. Through such other electronic mode as may be prescribed,

on or before the date of the agreement for transfer.

Related Article…

[pt_view id=”064542bwhr”]

Relaxation:-

Where SDV <= 110% of Consideration (as a result of the transfer),

Actual Consideration so received shall be deemed to be the FVC

What Happens If the Seller Does Not Accept the Value Adopted by SVA?

There is a possibility that the value adopted by Stamp Valuation Authority (SVA) may not be depicting the FMV at all times or the seller himself may not be satisfied with the value adopted by Stamp Valuation Authority (SVA) based on factors known to him.

Though stamp duty is generally borne by the purchaser, the purchaser may not be very concerned with the value adopted by SVA as it will be its cost of purchase.

S-194-O Payment of certain sums by the e-commerce operator to participant 

However, it makes a huge difference to the seller as it impacts his income tax which can be substantial based on the value.

 

As it is a matter of income tax for the seller, he is allowed to question the value adopted by SVA and claim the value is more than FMV under Section 50C before the income-tax authority unless such value is already questioned before any other authority or court.

In such cases, the income tax officer is required to make a reference to the valuation officer and market value will be determined by such a valuation officer.

The valuation officer, while determining market value, has to call for records/ documents from the taxpayer if required and give the taxpayer an opportunity of being heard and passing an order in writing, stating his valuation. Any value determined by the valuation officer can also be questioned before higher authorities.

Income Tax Return: Why you shouldn’t wait for the extended due date to file ITR

Why you shouldn’t wait for the extended due date to file ITR

Due to concerns about technological issues in the new Income Tax Portal, the deadline for reporting ITR has been extended to provide relief to taxpayers in the wake of the Covid-19 outbreak.

Due to technological issues in the new Income Tax Portal, the due date for filing Income Tax Return (ITR) has been prolonged in this Assessment Year (AY 2021-22), first to September 30, 2021, and subsequently to December 31, 2021, as it was in the Covid-hit previous Assessment Year (AY 2020-21).

“The Central Government has extended the deadline for filing income tax returns for the financial year 2020-21 to provide relief to taxpayers, amid the Covid-19 pandemic, and due to concerns and technical glitches in the Income Tax website, regarding filing and verification of returns, among other things,” said Kapil Rana, Founder & Chairman, HostBooks Ltd.

Read More…

[pt_view id=”064542bwhr”]

For late filing and payment of taxes, the taxpayer must pay interest. Interest is charged under section 234A if an ITR is not filed on time.

“If the taxpayer has not paid advance tax or has paid less than 90% of the tax burden, he or she will be required to pay interest at the rate of 1% every month or part of the month from April until the date of payment of tax,” he added.

Interest on Taxes Due

“Under section 208, a person is liable to pay advance tax if his tax liability for the year is Rs 10,000 or more,” Rana added, referring to the interest on tax payable. Even if you are late in filing your ITR, it is preferable to pay the advance tax as soon as possible.

In terms of advance tax payment, an individual who is a resident of India and has income other than income from business and profession is not obligated to pay tax in advance, and hence interest under section 234B does not apply to such a person.”

“In cases where the amount of tax on total income after deduction of advance tax, TDS/TCS, any tax relief allowed u/s 89, 90, 90A & 91, and alternate minimum tax credit exceeds Rs 1 lakh, interest under section 234A will be applicable because there are no issues with tax payment and the website is working seamlessly,” he added.

Fee for being late

In addition to the interest on the tax owed, failure to pay by the due date incurs a late fee under section 234F of the Income Tax Act.

  • “If the return is submitted beyond the due date, late fines of Rs 5,000 would be charged. The cost will be Rs 1,000 if the overall income does not exceed Rs 5 lakh,” Rana explained.

  • However, if you miss a due date up until December 31 of an Assessment Year, you’ll be charged Rs 5,000, and if you miss it after that, you’ll be charged Rs 10,000.

  • So, if a taxpayer misses the extended deadline of December 31, 2021, he or she will be fined twice as much, or Rs 10,000.

Applicability of Tax Audit under section 44AB or 44AD or 44ADA

Applicability of Tax Audit under section 44AB or 44AD or 44ADA

Audit of accounts of certain persons carrying on business or profession:

Section 44AB, initially introduced by Finance Minister Shri Pranav Mukharji in the Finance Act, 1984, taking effect from April 1, 1985. There was a lot of opposition to this section at the time, from business people, professionals, and especially Tax Advocates and Tax Practitioners, because auditing books of account is required of every person carrying on business if his total sales, turnover, or gross receipts, as the case may be, in business exceeds or exceeds rupees Forty Lakhs, and for professional persons whose gross receipts exceed or exceed rupees Forty Lakhs. Many representations were made, and even writ petitions were filed in various High Courts, however, section 44AB remained unchanged, and no revisions were made until March 31, 2010.

With effect from April 1, 2011, the ceiling on gross turnover for businesses has increased to rupees sixty lakhs, and the limit for professionals has increased to rupees fifteen lakhs.

With effect from April 1, 2017, the ceiling on gross turnover for businesses has been raised to Rs. One Crore, while the maximum for professionals has been raised to Rs. Twenty-five Lakhs.

[pt_view id=”600b6f7rw5″]

With effect from April 1, 2020, i.e. the Assessment Year 2020-21 and onwards, a proviso to section 44AB(a) stipulates that in the instance of a person whose:

  • 1. The total amount received in cash during the preceding year, including sums received for sales, turnover, or gross receipts, does not exceed 5% of the amount; and

  • 2. The total of all payments made in cash during the preceding year, including payments for costs, does not exceed 5% of the amount,

Then such a person is exempt from having their accounts audited if their total sales, turnover, or gross receipts do not exceed Rs. 5 crores, as opposed to Rs. 1 crore.

Similarly, if a person’s gross profits in a profession exceed Rs. 50,00,000 in any prior year, he or she must have his or her accounts audited [Section 44AB(b)]. From the foregoing, we can deduce that the time limit for having books of accounts audited varies depending on the type of business or profession.

Assume that in the previous year, certain individuals were involved in both business and profession at the same time. Now, in the instance of an Assessee who is both a business owner and a professional, the question may arise as to what the limit is for obtaining books of accounts audited under section 44AB.

It is preferable to first discuss the boundaries set in the case of a business, and then the limits set in the case of a profession.

u/s 44AB/44AD Business Turnover:

Less than Rs. 1,00,00,000 in turnover, sales, or gross receipts Although section 44AB does not apply, he may elect to use section 44AD and declare revenue according to his books of account. This option should be chosen for the next five years. Section 44AB applies if income exceeds the maximum taxable amount.

How to maximise your tax saving by choosing the right insurance policy for yourself & family?

If your turnover, sales, or gross receipts exceed Rs. 1,00,00,000, you have the choice of opting for section 44AB or section 44AD. These provisions do not apply if total sales, turnover, or gross receipts and payments for expenditure during the previous year do not exceed 5% of total sales, turnover, or gross receipts and payments for expenditure during the preceding year, as the case may be.

Gross receipts for professionals u/s 44AB/44ADA

In reference to the assessment year 2017-18 and on thereafter, Section 44ADA provides for the computation of profit and gain on profession on a presumptive basis. In the case of an assessee who is a resident of India and who is engaged in a profession referred to in section 44AA(1) and whose total gross receipt does not exceed Rs. 50,00,000 in a previous year, a sum equal to 50% of the assessee’s total gross receipt in the previous year on account of such profession, or, as the case may be, a sum higher than aforesaid sum claiming to have been earned by the assessee.

Please keep in mind that if an assessee’s professional receipts are Rs. 60,00,000 and his total sales, turnover, or gross receipts in business are Rs. 35,00,000, he will need to have his books of accounts audited for both his profession and his business because the gross receipts from the profession exceed the Rs. 50,00,000 limit.

If, on the other hand, the professional receipts are Rs. 27,00,000 and the total sales turnover or gross receipts from the business are Rs. 95,00,000, he will not need to have his books of accounts audited under the above section because his gross professional receipts, as well as total sales, turnover, or gross receipts from the above business, are less than the prescribed limit of Rs. 1,00,00,000.

There are various types of business professions that are related to each other.

  • A doctor who does medicine while also selling pharmaceuticals;
  • An architect who creates building designs and sells construction materials.
  • A teacher who gives lessons as well as publishes and sells books.