May 7, 2013 ... from other sources3. Resident4 having foreign assets. ITR 2. Mandatory e-filing.
ITR 2. Mandatory e-filing. Foreign tax credit is claimed. ITR 1-.
7 May 2013 2013mber 2012
EY Tax Alert CBDT modifies returns forms for tax year 2012-13
Executive summary Tax Alerts cover significant tax news, developments and changes in legislation that affect Indian businesses. They act as technical summaries to keep you on top of the latest tax issues. For more information, please contact your Ernst & Young advisor.
This Tax Alert summarizes procedural changes made by Central Board of Direct Taxes (CBDT) vide Notification No. 34/2013/f. No.142/5/ 2013-TPL (Notification) dated 1 May 2013 to return of income (return) forms and mode of filing returns by different taxpayers for tax year 2012-13. The Notification extends the mandatory requirement to file return in electronic mode (e-filing) to following classes of taxpayers: ► ►
Taxpayers having taxable income above INR 0.5 million (as against INR 1 million for tax year 2011-12) Taxpayers claiming foreign tax credit
The Notification also requires taxpayers liable to tax audit or transfer pricing audit or Minimum Alternate Tax[1] (MAT) audit to e-file the respective reports independently in addition to filing of return of income.
Procedural changes Broadly, the Notification provides certain reclassification of return form for individuals/Hindu Undivided Family (HUF) depending upon the presence of foreign assets and/or where taxpayer has claimed foreign tax credit and/or where taxpayer has exempt income exceeding INR 5000. The Table given below captures comparative changes in applicable form of return and mode of filing return for different taxpayers for tax years 2011-12 and 2012-13: [1]
Applicable only to companies
Class of taxpayers
Tax year 2012-13
Tax year 2011-12 Mode of filing return Form of return
A.
B.
C.
Total income > INR 1 Million
Total income < INR 0.5Million
Total income > INR 0.5 Million
Individuals having salary income, house property income (not more than one owned house)2 and income from other sources 3 Resident4 having foreign assets
ITR 2
Foreign tax credit is claimed Exempt income > INR 5000
ITR 1SAHAJ ITR 1SAHAJ
E-filing optional
Other cases
ITR 1SAHAJ
E-filing optional
Mandatory e-filing
E-filing optional
Individuals/HUF having presumptive income from small businesses Resident5 having foreign assets Foreign tax credit is claimed
ITR 4SSUGAM
E-filing optional
Exempt income > INR 5000
ITR 4SSUGAM
Other cases
ITR 4SSUGAM
ITR 4
Mandatory efiling Mandatory efiling Mandatory efiling
Mandatory e-filing
ITR 2
Mandatory e-filing
ITR 2
Mandatory e-filing
ITR 2
E-filing optional
Mandatory efiling
ITR 1SAHAJ
E-filing optional
Mandatory efiling
ITR 4
Mandatory e-filing
Mandatory efiling
ITR 4
Mandatory e-filing
E-filing optional
Mandatory efiling
ITR 4
E-filing optional
Mandatory efiling
E-filing optional
Mandatory efiling
ITR 4SSUGAM
E-filing optional
Mandatory efiling
Other individuals/ HUF not subject to tax audit Resident6 having foreign assets Foreign tax credit is claimed Other cases
D.
Total income < INR 1Million
Mode of filing return Form of return
Other individuals/HUF subject to tax audit
2 3 4 5 6
ITR 2 or 3 or 4 as applicable ITR 2 or 3 or 4 as applicable ITR 2 or 3 or 4 as applicable
ITR 3 or 4 as applicable
Should not have brought forward losses Positive income only Excludes not ordinarily residents Excludes not ordinarily residents Excludes not ordinarily residents
Mandatory e-filing
E-filing optional
Mandatory efiling
E-filing optional
Mandatory efiling
Mandatory e-filing of return with digital signature (Please refer Note 1 below the Table)
ITR 2 or 3 or 4 as applicable ITR 2 or 3 or 4 as applicable ITR 2 or 3 or 4 as applicable
ITR 3 or 4 as applicable
Mandatory e-filing
Mandatory e-filing E-filing optional
Mandatory efiling
Mandatory e-filing of return with digital signature as also e-filing of tax audit report
E.
Firms (including LLPs 7) Not liable to any audit
ITR 5
E-filing optional
ITR 5
Foreign tax credit is claimed
ITR 5
E-filing optional
ITR 5
Mandatory e-filing
Liable to tax audit
ITR 5
ITR 5
Liable to transfer pricing audit
ITR 5
Mandatory e-filing of return with digital signature (Please refer Note 1 below the Table) E-filing optional (Please refer Note 1 below the Table)
Mandatory e-filing of return with digital signature as also e-filing of tax audit report Mandatory eMandatory efiling of filing of return transfer pricing and transfer audit report but pricing audit e-filing of report return is optional
Mandatory e-filing of return with digital signature (Please refer Note 1 below the Table)
ITR 6
Mandatory e-filing of return with digital signature as also e-filing of tax/ transfer pricing/MAT audit report
ITR 7
E-filing optional
F.
Companies
ITR 6
G.
Tax-exempt charitable organizations, political parties etc.
ITR 7
Mandatory paper filing
ITR 5
E-filing optional
Mandatory efiling
Note 1 For tax year 2011-12, taxpayers liable to tax audit were not required to furnish tax audit report while e-filing the return but were required to produce the same before the Tax Authority when called for. For tax year 2012-13, such taxpayers will need to independently e-file tax audit reports in addition to e-filing of return. For tax year 2011-12, taxpayers liable to transfer pricing audit were required to independently furnish hard copy of audit report on or before the due date to the Tax Authority in addition to filing of return. For tax year 2012-13, such taxpayers will need to independently e-file transfer audit reports in addition to filing of return.
7
Limited Liability Partnership
Other changes ►
Disclosure of foreign assets- As part
of disclosure of foreign assets, taxpayers who are trustees of trusts created under laws of a foreign country will need to additionally disclose particulars [8] of such trusts in the return form. Further, as part of instructions appearing below the return form, it is clarified that disclosure of any other foreign asset requires disclosure of foreign assets which are in the nature of ‘investment’ and not stock-in-trade or assets used for the purpose of business. Also, the requirement to disclose ‘peak’ balances of financial interest in foreign entity, immovable property outside India and other foreign assets has been omitted. ►
Disclosure of assets/liabilities –
Following individual/HUF taxpayers having taxable income exceeding INR 2.5 million will need to additionally disclose certain specified assets[9] and related liabilities: Taxpayers being partners in a firm, not carrying on any business or profession under any proprietorship and required to file return in ITR-3. The disclosure will be required if the specified assets are not captured in the Balance Sheet in the return of the firm. Taxpayers carrying on business or profession who are required to file return in ITR-4. The disclosure will be required if the specified assets are not captured in the return under the Balance Sheet of the business/ profession.
[8]
Country name/code, name and address of trust, other trustees, settlor and beneficiaries [9]
Land, building, financial assets (i.e. bank deposits, shares and securities, insurance policies, loans and advances, cash in hand), jewellery, bullion, archaeological collections, works of art, vehicles,yachts etc.
Comments Taxpayers will need to note the changes in the form and mode of filing the return for tax year 2013-14. There appears to be some ambiguity on furnishing of tax/transfer pricing/MAT audit reports by the taxpayers. Currently, the e-filing website provides for voluntary upload (with digital signatures) of such reports by the auditors which a taxpayer can authenticate or reject. However, the rule as amended by the Notification requires electronic furnishing of the audit reports by the taxpayer itself. Mandatory e-filing of returns facilitates expeditious centralized processing of returns and grant of refunds to the taxpayers.
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