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Rashmin Sanghvi & Associates

Chartered Accountants

220, 2nd Floor, Arun Chambers,
Tardeo Road,
Mumbai - 400 034,
Maharashtra, India.

Tel. Nos.: (+91 22) 2351 1878, 2352 5694.

Fax : (+91 22) 2351 5275.

Email : [email protected]

 
Home Articles Taxation         Share :

Budget 2016Chapter L

Chapter L. Compliance Provisions:

28. Auditing of Books of Accounts: [S. 44AB]
 

The government is committed to ease of doing business. It wants to reduce burden on small taxpayers. Therefore, threshold for auditing of books of accounts has been increased. The proposed changes are summarised in the table below:
 

Particulars

Current limit

Proposed limit

For income from business

1 crore

1 crore

For income from profession

25 lakhs

50 lakhs



29. Filing of return of Income: [S. 139]
 

To rationalise the time allowed for filing returns, completion of proceedings and realisation of revenue without undue compliance burden on the taxpayer, and to promote the culture of compliance, it is proposed to amend the following sections for filing of returns. These amendments will apply from AY 2017-18:
 

29.1 Due date of filing return: [S. 139(1)]
 

As per the current law, if total income of a person before availing deductions exceeds Rs. 2,50,000 (Rs. 3,00,000 for senior citizen of 60 years and above; Rs. 5,00,000 for very senior citizens of 80 years and above) then they are required to file the income-tax return.
 

Now it is proposed to amend this section and include exempt long-term capital gains from equity shares & equity-oriented funds on which STT is paid, for the purpose of computing limit of Rs. 2,50,000. Thus if the income including Long Term gain in listed shares and equity oriented funds exceeds Rs. 2,50,000, the person has to file a return. Even if there is no tax payable, tax return needs to be filed.
 

29.2 Belated return: [S. 139(4)]
 

As per the current law, income-tax return can be filed after the due date but before the expiry of one year from the end of the relevant assessment year; or before the completion of the assessment, whichever is earlier. Therefore, for the return to be filed by an individual for AY 2017-18, for which the due date is 31st July 2017, the last date by which a belated return can be filed would have been 31st March 2019.
 

It is proposed to reduce this time limit. Now, it is proposed that a belated return can be filed only up to the end of the relevant assessment year (i.e., 31st March, 2018 in our example above) or completion of the assessment, whichever is earlier. Therefore, assessees would only have a maximum of one year to file the tax return. If the return is not filed by then, it will mean that the tax payer has not filed the return and has concealed the income.
 

29.3 Revision of Return: [S. 139(5)]
 

As per the current law, belated returns were not allowed to be revised. It is now proposed to amend the section by allowing even belated returns also to be revised.
 

Revised return can be furnished at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. There is no change in this provision. In our example in para 29.2 above, the person can now file the return and revise the return by 31st March 2019.
 

29.4 Defective Return: [S. 139(9)(aa)]
 

As per the current law, one of reasons why a return is regarded as Defective is - the Self-Assessment Tax together with interest had not been paid in full before filing the return. Defective return if not rectified within the time limit is treated as an Invalid return. It means that no return has been filed. Assessees were delaying filing their tax returns in cases where they could not pay the self-assessment tax by the return-filing deadline.
 

It is now proposed that even if self-assessment tax has not been paid before filing the income-tax return, it shall not be regarded as defective. It will be a valid return.
 

30. Filing of income-tax return for carry forward & set off of losses of specified business: [S. 139(3)]
 

Losses from specified businesses like cold storage, hotels, warehousing, etc. are allowed to be carried forward for an indefinite period [S. 73A]. Under the current law, if the return has been filed after the due date, losses from ‘Business or Profession’, ‘Capital Gain’ and ‘Income from Other Sources’ are not allowed to be carried forward. Losses from specified businesses were allowed to be carried forward even if the return was filed after the due date.
 

It is now proposed to amend the law to provide that losses from specified businesses will be allowed to be carried forward only if return is filed before the due date.
 

31. Time limit for assessment, reassessment and re-computation: [S. 153 & S. 153B]
 

It is proposed to reduce the existing time limits for completion of various assessments as follows:
 

It is proposed to reduce the existing time limits for completion of various assessments as follows:
 

Sr. No.

Particulars

Existing time limit

Proposed time limit

1

Completion of assessment u/s 143 & 144 (Scrutiny assessment) from the end of the assessment year

2 years

21 months

2

Completion of fresh assessment in pursuance of an order of ITAT or a revision of order by CIT, setting aside or cancelling an assessment from the end of the financial year in which the order is received /passed

1 year

9 months

3

Completion of reassessment (from the end of the financial year in which the notice was served)

1 year

9 months

4

Assessment of a partner in consequence of assessment of firm (from the end of the month in which order for firm u/s 147 is passed)

No time limit at present

12 months

The period of assessment or reassessment in Sr. Nos. 1, 2 & 3 above, is to be extended by a period of 12 months in cases where reference is made to a Transfer Pricing Officer.
 

The amendment will come into effect from 1st June, 2016 and will apply to all assessments taking place post this date.