The Central Board of Direct Taxes (CBDT) has released a list of FAQs on Thursday to ease up income tax returns filing for those with a directorship in a foreign company and held equity shares outside India.
The revenue department also explained through FAQs that mentioning of unlisted equity shares received as a gift, will or amalgamation and also as assets will be held as ‘stock-in-trade’.
While filing for ITR, on the requirement of mentioning break-up of all payments and receipts in foreign currency throughout the year, the FAQs said, “the break-up of receipts and payments in foreign currency is required to be reported only in respect of business operations in India”.
Further FAQs explained, suppose jewellery/motor vehicle is kept as stock-in-trade business, the Assessee has to report only the aggregate values while there is no need of reporting the separate value of each asset help as stock-in-trade.
For the long term capital gains, the FAQs suggest for the tools provided in the department portal for the taxpayer’s convenience for LTCG evaluation.
“These are optional tools designed for computation of the final figures of LTCG, which is then populated in the respective items in Schedule CG,” FAQs said.
It gives an aid of computing aggregate long term gain or loss manually, which taxpayers can directly fill in the appropriate particulars.
GST has been prone to many tax evasion techniques since its commencement in India in 2017, as a well-developed system that can completely barricade the areas open to profiteering via bogus invoices for availing extra credit and truncate the tax liability is still absent.
In the recent few weeks, the Income-tax department has issued notices to the GST-registered businesses which have showcased downturn of 20% or more in annual revenue last year. Notices about the disparity in declaration between GSTR-3B (summary return) and GSTR-1 (details of outward supplies) is no rookie since the beginning of GST regime but now the department is putting earning of businesses under GST era and earning under the service and excise regime in the comparison scale.
Notices by the Income Tax department has created another problem for the GST registered businesses, seeking details and documents justifying the reasons for the decline in their sales. The department is trying to hunt and sting as many cases of tax evasion under the new indirect tax regime as it can. For this purpose, the government is considering & examining that data stock which was never available to them prior GST. Now after comparing the tax returns under two different tax regimes, the GST IT system has started buzzing the warning signals for taxpayers.
The cursor of notices has been dispatched to those businesses as well which have genuine reasons, such as economic stagnation, for the shortfall in revenue. Like in a case, a service provider who caters MNCs received a notice from IT dept but the reason behind the revenue shortage is the termination of some contracts. In another instance, the IT dept ordered the taxpayer to present input tax credit documents because a major portion of its tax liability was paid from an accumulated tax credit.
The Comptroller and Auditor General’s (CAG) recently brought attention to the fact that although the GST regime is constantly working on averting tax evasion and it has collected various data to check evasion yet there are many illegitimate techniques available with which additional credit can be claimed and tax liability can be abbreviated. He also said that the new return system shall become operative only from next year.
For the time being, total tax evasion of approx 1.2 lakh crore under GST has been estimated by the tax department. According to an official, 12,000 crore is the total tax escape which has been discovered since GST became effective before two years.
However, the experimental approach says that detection is only 10% of the actual tax dodging which is happening. The total deficit in the GST collection target set by the central government for FY19 fell is more than 60,000 crore. This has galvanised government to fix relatively ordinary budget estimate for the current fiscal at 11.89 lakh crore which implies the average monthly collection of just below lakh crore. The good news is that the initial four months of the fiscal year 2020 has witnessed collection at the required rate.
Jammu and Kashmir may now come under the premises of equalization levy. With the abolishment of Article 370 in the Parliament, e-commerce companies advertising on global social media, which were earlier immune from Google taxes on their operations in Jammu & Kashmir, will now have to furnish tax up at 6 per cent.
As per the sources, Companies such as Facebook, Google, Amazon and Flipkart, are scrutinizing the various tax implications of the Indian Governance.
One of the key professionals in the leading e-commerce firm says that they are evaluating if they will be surcharged with taxes and also if they have to re-frame their accounting strategies. Conclusions are on a distance as it will take time to settle with the government’s judgments. The scenario will be clear after their meeting with the I-T Department in J&K.
Experts say, “Equalisation Levy may possibly be practised in the region but specific amendments need to be introduced before the inauguration. Foreign e-commerce operators paying 6% equalization levy, are immune from such levy on their advertisement in Jammu and Kashmir. This may change. However, there is an urgent requirement for amendments to make the law effective in J&K”.
E-commerce businesses will remain unaffected in the scenario as Income Tax Act prevailed in J&K even in old governance.
The Income Tax Act 1961 prevailed all over the nation including Jammu and Kashmir. Hence the conditions will remain unaltered for the e-commerce businesses even after the revocation of Article 370.
The Equilisation Levy
Making its debut in 2016, equalization levy, being a form of direct tax came into existence through a chapter in the Finance Bill 2016 instead of the Income Tax Act. The probability of a non-resident to claim the credit is doubtful under its area of authority, even under the tax avoidance agreements.
In the ruling, 6% tax is imposed by the government on the gross consideration received by a non-resident via online advertisements or other related activities served to an Indian Resident or to a non-resident having a permanent business in India, except J&K. the tax is paid by the advertiser.
Income tax return filing is a scheduled process of every taxpayer and has to be filed every year. The income tax return filing is also a mandatory process to be followed for multiple reasons including financial and record maintenance while beneficial for the future loan perspective. It is to be noted that due date for filing the Income Tax Return by Assesse is 30th September 2019 for all the Audit cases and for the Non Audit cases the due date is 31st July 2019 (revised due date is 31st August 2019).
To note down it is very important for all the assessees having an income of 5 lakhs per annum (excluding senior citizens) and to claim a refund to file income tax online. While it is a significant process, it is also easy to track refunds and ITR returns online.
Let’s Come to the Step by Step Process of ITR Filing FY 2018-19:
Document organization
The taxpayers will have to obtain all the documents of monetary value i.e. income, investments, assets, bank accounts apart from government documents like Permanent Account Number (PAN) and Aadhaar number or enrolment ID. It is not necessary to attach these documents while filing ITR online but still one needs them to fill the form due to the details engraved on them.
Also, the documents like income other than salary, like capital gains, rental income and divided income will also be needed while filing the IT online and it is suggested that the taxpayers should maintain a separate file of documents for every year ITR filing.
Document Checklist For Filing ITR Online
Personal documents
PAN Card
Aadhar card or enrollment number
Details of domestic assets and liabilities
Details of foreign assets
Income-related documents
Details of exempt income earned during the year
Form 16/16A/16B to fill the details of income
Balance sheet, P&L account statement and other audit reports, wherever applicable
Bank-related documents
Bank statement
Interest statement of the year
Details of all bank accounts held during the year( IFSC code, account number, name and nature of account)
Tax-related documents
Copy of last year tax return
TDS certificate
Saving certificate or deduction
Form 26AS to cross-check TDS details
Real estate related
Buyer agreement, sale deed and investment documents to show capital gains on sale and exemption
Lease deed to show rental income
Investment and expense related
Home loan statement to claim a deduction
Proof of investment such as mutual funds accou8nt statement
Premium receipt for life insurance plans
Medical insurance premium and preventive checkup receipts, etc.
Other documents such as proof of donation
Create ITR e-filing Account
After having all the desired documents handy, one must log in to its ITR e-filing account through the income tax department’s website. The details like user ID (your PAN), password, date of birth and captcha code will be needed for logging.
However, if a taxpayer is a first-time ITR filer than he may create ITR e-filing account on the same website with few other details.
ITR Form Selection
After logging into ITR e-filing account, one must click “filing of income tax return” on the dashboard. Then select the assessment year (AY) for which the taxpayer has to file ITR. After which choose the ITR form. For the professionals and businessmen, ITR 4 is mandatory to be filed.
According to a tax expert, “ITR-1 is not applicable to non-residents and not ordinarily residents, the ITR-2 form is no longer applicable for individuals or HUF (Hindu Undivided Family) who have profits and gains from any business or profession and are required to file form ITR-3.”
In case one selects wrong ITR form, the particular form is considered to be defective so it is advisable to be cautious. Swapping of ITR forms is also not suggested as for example ITR 1 and ITR 2 are 2 different forms. In which the ITR 2 is for those having income more than 50 lakhs and having 1 or more house while ITR 1 is for those who are having less than 50 lakhs of income and a single house.
So in case, a person filed ITR 1 instead of ITR 2 than it would be considered as under-reporting of income and it would draw a certain penalty which ranges from 50 to 200 %.
Various ITR Forms and their applicability:
ITR 1 – Resident individuals who have the salary or pension income or income from one house property or income from other sources and having a total income of 50 lakhs
ITR 2 – Individuals and HUFs not having income from profits and gains of business or profession
ITR 3 – Individuals and HUFs having income from profits and gains of business or profession.
ITR 4 – Individuals with presumptive income from business and profession
ITR 5 – Anyone other than an individual, HUF, company and person filing ITR 7
ITR 6 – Companies other than those claiming exemptions under section 11
ITR 7 – Those required to furnish tax returns under sections 139(4A)/(4B)/(4C)/(4D)/(4E)/(4F)
Note: Income earned in the particular year is called a financial year, while Assessment year is the particular year in which taxpayer assess its income and file return.
Filling Out Details
The first and foremost details are Aadhar number or enrolment ID which is mandatory to file ITR return online as the system won’t allow the filing of return online without this information.
According to the expert, “ITR forms are seeking a lot of new information like the break-up of salary and house property income to be furnished in ITR-1 form instead of a single amount of income/loss, as required to be furnished earlier.”
E-verification of Returns & Uploading
The last step to file the IT return is to verify your details and upload it on the portal. 120 days window is open for getting verified your documents after uploading of the documents. One can also send a duly signed copy of ITR V to the Central Processing Center tax department by an ordinary or speed post.
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Chartered Accountancy(CA) is revered as one of the most productive and high-remunerative professional courses in India and for them here are the top 5 job portals on which they can search jobs. And because of this distant dream in their eyes, most of the students opt for commerce stream..
On the Chartered Accountancy path, success is no accident. It requires persistent efforts, hard work, studying, learning, patience, punctuality and above all perseverance of the vast number of facts and norms within a relatively short time.
However, the investments, made to make a hit in this rewarding career path, comes with infinite possibilities, ample opportunities, respect, revere, recognition and high package salary, provided you have good platform or job portal that is attuned with your proficiency and knowledge.
Thiscareer-oriented course guarantees a job but the platform that offers you tempering the heat of experience is a stair that will take you higher.
Today, we are highlighting five job portals that are exclusively invented for CAs:
#1. The CA JOBS Portal – Specialised Portal Developed by ICAI
The Institute of Chartered Accountants of India (ICAI) developed the CAJOBS portal that offers job opportunities only to the Chartered Accountants. It is an extended step by ICAI which provides the three-level CA program.
Candidates may register themselves, browse for CA jobs across various functions and apply for the one that best suits their skills and expertise. Features like job alerts, job recommendations and job tracks are embedded in the portal as well as a mobile application which is named as ICAI CA JOBS mobile app.
#2. CA Page – A Page That Displays CA Job Openings
CA Page is another leading online platform that serves job seekers with the latest job vacancies. Many financial professionals like CMA, CA and CS envision this page as an all-inclusive and most conducive job station as it comes with job alert on WhatsApp feature that keeps updating the interested jobseeker with the jobs most appropriate for them. The candidate may avail the services by downloading the CA Page mobile app.
Read Also : Career Opportunities For Chartered Accountants Under Business & Jobs
#3. CA Job Portal – One of The Most Chosen Portals
CA Job Portal is one of the most leading, known and chosen job portals among the Chartered Accountants professionals. CA Job Portal is the first recruitment website exclusively brought in for finance professionals in India.
Candidates can keep an eye on the latest job openings, apply for a suitable job very easily and hunt an appropriate PSU job over this portal. This job portal also has a mobile app to facilitate job seekers. Candidates may download the CA Job Portal mobile app and look for their dream job from anywhere at any time.
#4. CA Sansaar – Website For The Latest CA Job
CA Sansaar is a convenient and pragmatic website that notifies the latest CA job openings. Along with that, it caters CMAs, CS and other accounting & finance professionals with job vacancies. It helps job seekers search up-to-minute vacancies according to their location, experience, qualifications and salary expectations across different functions.
#5. CA Club India – Job Portal For CAs & Finance Experts
CA Club India is one of India’s largest online networks for accounting and finance experts. It provides job openings for CA professionals by displaying information about the latest finance and accounting job openings. CA Club India offers articleship opportunities and online learning resources to CA students.
In addition to the job vacancies, the platform provides the latest updates & news about CA industry.
CA portal also brings the latest due dates of return filing forms and relevant information to the audiences by constantly updating the news section and bringing latest blogs on chartered accountant profession Along with it, we also update our latest notification and news directly from official institute of chartered accountants of India responsible for complete activities for the professionals.
The last date for filing income tax return has been extended by one month from 31st July to 31st August. An individual needs to be very cautious while filing returns as any incorrect information furnished in returns may get you penalized by the tax authorities or even put you behind the bars. The Income Tax Department can impose a penalty of up to 200% on you for filling incomplete information in ITR. Most salary class people file their income tax returns on their own and this reduces the chances of errors and furnishing false information.
Interest from Banks on Savings and Fixed Deposit Account
Interest from Banks on savings and fixed deposit account is taxable if it exceeds INR 1000. However, you still should mention the interest while filing returns even the interest is less than this threshold so that it can be claimed under the Income Tax Act 80 TTA. A few people think that when TDS is deducted from FD or savings account, then they do not need to mention it in ITR. However, this is not true and it brings difference in the tax rate. Therefore, you must furnish complete details of interest while filing the returns.
Income Earned on Investment of Minor Children
An income of approx Rs 1,500 in the name of each minor child in a year is tax-exempt. However, the income above this limit needs to be combined with the income of the parent who is earning more. So do not violate the law and avoid clubbing.
Notional Income for Another Property
A notional income is a rent receivable from other than one house property. Notional rent is taxable under the Income Tax Act. Income from one house property is tax exempt, whereas if an individual possess more than one house property, he/she is liable to pay the tax on the income receivable from another property, no matter an individual is earning income from it or not. Interestingly, the government has given the right to own two houses in the interim budget.
Capital Gains from Scheme Transfer in Mutual Funds
Usually investors keep changing the schemes of mutual funds. In such a situation, while filing the income tax returns, you should give detailed information about the entire scheme of mutual funds along with the benefit you received by changing the scheme. The Income Tax Department may send you a notice under section 148 of the Income Tax Act to an individual who does not furnish such complete details.
Tax is a pivotal arm for good governance of a state or nation.
There are different types of taxes and they can all be categorized into two main groups i.e Direct tax and Indirect Tax.
A direct tax is levied on the income or profit of an individual. Income tax is an example of direct tax. Indirect tax is levied on goods and services.
Income tax due date comes every year in March ending must be followed strictly for safeguarding financial interest.
A popular example in this regard would be the GST or the VAT.
Like all taxes, accrues from Income Tax also constitute a good portion of the country/state treasury. In addition to these Income Tax also acts as a fiscal deficit stabilizers as well as minimizing impact of Global Economic Cycles.
Types of Income Tax
Income Tax is further subdivided into three more categories based on the category of payee and time of payment.
These are:
1. TDS (Tax Deducted at Source)
2. Advance Tax
3. Self-Assessment Tax
1. Tax Deducted at Source (TDS)
TDS, as it is commonly known, is collected at the income source itself. The tax is paid by a third person/corporation who/which happens to be the source of income for the taxpayer.
The other person/corporation must, however, abide by the prevalent IT laws. TDS is an ideal mechanism for the government to ensure timely Income Tax payment as well as curb tax evasion.
2. Advance Tax
Also referred to as ‘pay as you earn tax’ in contrast to the scheduled annual tax payment tax procedures, Advance Tax is paid on a Presumptive basis.
Taxpayers, Businesses, Salaried Individuals and freelancers with tax liabilities greater than Rs 10,000 for the current Financial Year are needed to pay advance tax in four installments throughout the financial year in which they earn income.
The taxpayers need to pay Advance Tax as per the following table:
Advance Taxes of Income Tax for FY 2018-19 & AY 2019-20
Due Date
Pay Advance Tax
On or Before 15th June
15%
On or Before 15th September
45%
On or Before 15th December
75%
On or Before 15th March
100%
For businesses who have opted for Presumptive Taxation Scheme 100% of advance tax is payable by 31st March.
3. Self-Assessment Tax
This is the balance or remaining tax paid by an individual or taxpayer after taking into account the TDS and Advance Tax.
What is meant by Assessment year and Financial Year?
Financial Year is the current working year in which an individual or corporation earns income. The Assessment Year is on the other hand the succeeding year in which evaluation of the previous year’s income has to be made.
Assessment Year involves:
Income Evaluation.
Paying Taxes on the evaluated income as per the rate(progressive) and time ( regular or periodical or on an occasional) notified by the IT Department.
For FY 2018-19, the AY is 2019-20.
The last date to file the tax return (ITR) for the financial year 2018-19 is 31st July 2019.
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Income Tax Returns (ITR)
ITR are forms that are mandatorily filled by individuals whose annual income greater than a pre-set threshold limit set by the Finance Department.
It details the individual’s gross income from various sources and respective tax paid by the individual taxpayer on the gross income. It also details the refund claims as per the rules set by the Finance and IT Department.
In simple terms, ITR forms are taxpayers statement detailing his/her earnings regular income (wages), interest, dividends, capital gains, or other profits, the total tax paid on earnings and the appropriate refunds to be repaid to him/her by the Government.
As per the Central Board of Direct Taxes, individual taxpayers need to file only 6 of the 9 ITR Forms.
These include:
ITR-1
ITR-2
ITR-2A
ITR-3
ITR-4
ITR-4S
The remaining three forms are to be filed by companies and firms alone:
ITR-5
ITR-6
ITR-7
Form ITR-1
Also known as the Sahaj Form, ITR-1 has to be filed by individual taxpayers alone. Individuals belonging to any of the following groups need to file ITR-1 Form.
Individuals who are Salaried or claim Pension.
Individuals whose only source of income includes a single housing property
Individuals with income sources like fixed Deposits, Investments, Shares etc
Individuals with no income sources outside India.
Individuals whose net agriculture income is less than Rs 5,000.
Income from other sources (excluding winning from lottery and income from race horses, income tax under section 115BBDA or Income of nature referred to in section 115BBE)
Form ITR-2
This form was introduced during the assessment year 2015-16 for use by Hindu Undivided Family (HUF) or any individual. The following individuals/taxpayers can file ITR-2 Form.
Those individuals eligible to file Sahaj () and
Those who claim no income source under the head “profits or gains of business or profession”.
Form ITR-3
ITR 3 Form is for use by a Hindu Undivided Family or an individual
Who is not qualified to file Sugam (ITR-4)and
claims income under the head “profits or gains of business or profession”
Form ITR-4
Also known as Sugam, ITR 4 Form is for use by HUF/ individual / Partnership Firm whose total income subsumes:
Business income evaluated in reference with special provisions mentioned in section 44AD and section 44AE of the Act for computation of business income; or
Professional income evaluated in reference to special provisions of sections 44ADA; or
Salary/ Pension; or
Income from One House Property (excluding cases where a loss is brought forward from previous years); or
Income from other sources (excluding windfalls like lotteries or horse racing)
Form ITR-5
ITR-5 is for firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals). Further, it is also meant for an artificial juridical person referred to in section 2(31)(vii), cooperative society and local authority. ITR-5 can be filed both online (under digital signature) and offline.
Form ITR-6
ITR 6 can be used by companies claiming exemption on income from property held for charitable or religious purposes under section 11.
Form ITR-7
ITR 7 Form can be used by persons as well as companies which are required to furnish return under:
section 139(4A) or
section 139(4B) or
section 139(4C) or
section 139(4D) or
section 139(4E) or
section 139(4F).
Important Income Tax Return Filing Due Dates for FY 2018-19 (AY 2019-20)
The income tax due date 2018 for both the categories of taxpayers are specified below:
Particulars AY: 2019-20
Due Date
Individuals, HUF, BOI, AOP (Income Tax Return by Assesse whose Books of Account are not required)
31st August, 2019 (Revised)
Due date of filing the Income Tax Return by businesses whose Books of Account are not required to be audited
31st August, 2019 (Revised)
Filing ITR Due Date for (Assessee who are required to furnish report under sec 92E)
30th November 2019
Due date of filing the Income Tax Return by businesses whose Books of Account require an audit
30th September 2019
Extended Due Date File Income Tax Return Form For FY 2018-19 AY 2019-20
CBDT has today announced to extend the due date for filing of Income Tax Returns (ITR) to 31st August 2019 only for taxpayers who were supposed to file their Returns by 31.07.2019. Notification by CBDT
As per the section 234F of the Income Tax Act, 1961, the late payment of return will attract late fee charges and the late filing fee is required to be paid ahead of the furnishing income tax return.
Some changes are made to the FY 2018-19 and are listed below:
-> Reduced Tax Rate
The taxpayer whose income ranges from 2.50 lakh to 5 Lakh has to pay tax at 5% instead of 10% before.
-> Rebate
In FY 2016-2017, for a taxpayer with annual earning up to Rs. 5 lakh, the allowed rebate was Rs. 5,000. Now, the residential individual will get a rebate of Rs. 2,500 with an annual income of up to Rs. 3.50 Lakh.
-> Late Fee
If the taxpayer does not file income tax return before 31st August 2018 which is the due date, then he/she has to pay a late filing fee under section 234F. This late fee is chargeable ahead of furnishing Income Tax return.
-> Limit In Donations
Previously, cash donations of up to Rs. 10,000 was permitted in terms of deduction. This limit has been reduced to Rs. 2,000 starting from FY 2018-19.
-> Section 194-IB For HUF and Individuals Paying Rent Exceeding Rs 50,000 a Month
HUF and Individuals who pay Rs. 50,000 and more in rent per month, 5% TDS will be deducted on such rent amount.
-> Cess
In order to increase the funds for education purpose, Secondary and Higher Education Cess which is 1% and Education Cess which is 2% is replaced by the Health and Education Cess which is 4% now.
-> Income from Salaries
From the salaried income, a standard deduction at a fixed price of Rs. 40,000 for reimbursement and Transport of various medical spendings will be permitted. This deduction is also exercisable to Pensioners who presently do not obtain those benefits.
Moreover, the medical reimbursement advantages in hospitalization case will be available along with the standard deduction as mentioned above.
In the Rajya Sabha, the Hon’ble Union Home Minister Sh. Amit Shah has passed a resolution to amend the Article 370 of the Indian constitution that offers ‘privileges of special autonomous status’ to the State of Jammu & Kashmir. By making amendments in Article 370, the special state right of Jammu & Kashmir has been scrapped, and it has been reorganized into two separate union territories, i.e., Jammu and Kashmir, and Ladakh.
In order to make this decision effective, a ‘Constitution (Application to Jammu & Kashmir) Order 2019’ has been passed by The Ministry of Law & Justice that specify the applicability of all the amended provisions of the Constitution of India to the State of Jammu & Kashmir. This Order has also been received by the Hon’ble President of India.
Provisions of Pre-amended Article 370
The pre-amended Article 370 of the Indian Constitution under part XXI gives ‘special autonomous status’ right to the State of Jammu and Kashmir under Temporary and Transitional Provisions.
For exact reference to the pre-amended Article 370 of the Constitution of India, the text from it has been taken and mentioned underneath to explain it:
“370. Temporary provisions with respect to the State of Jammu and Kashmir
(1) Notwithstanding anything contained in this Constitution,—
(a) the provisions of article 238 shall not apply now in relation to the state of Jammu and Kashmir;
(b) the power of Parliament to make laws for the said state shall be limited to—
(i) those matters in the Union List and the Concurrent List which, in consultation with the Government of the State, are declared by the President to correspond to matters specified in the Instrument of Accession governing the accession of the State to the Dominion of India as the matters with respect to which the Dominion Legislature may make laws for that State; and
(ii) such other matters in the said Lists as, with the concurrence of the Government of the State, the President may by order specify.”
Explanation: For the purpose of this article, the Government of the State means the person for the time being recognized by the President on the recommendation of the Legislative Assembly of the State as the Sadr-i-Riyasat (now Governor) of Jammu and Kashmir, acting on the advice of the Council of Ministers of the State for the time being in office[1][14][b]
(c) the provisions of article 1 and of this Article shall apply in relation to that State;
(d) such of the other provisions of this Constitution shall apply in relation to that State subject to such exceptions and modifications as the President may by order specify:
Provided that no such order which relates to the matters specified in the Instrument of Accession of the State referred to in paragraph (i) of sub-clause (b) shall be issued except in consultation with the Government of the State:
Provided further that no such order which relates to matters other than those referred to in the last preceding proviso shall be issued except with the concurrence of that Government.
(2) If the concurrence of the Government of the State referred to in paragraph (ii) of sub-clause (b) of clause (1) or in the second provision to sub-clause (d) of that clause be given before the Constituent Assembly for the purpose of framing the Constitution of the State is convened, it shall be placed before such Assembly for such decision as it may take thereon.
(3) Notwithstanding anything in the foregoing provisions of this article, the President may, by public notification, declare that this article shall cease to be operative or shall be operative only with such exceptions and modifications and from such date as he may specify:
Provided that the recommendation of the Constituent Assembly of the State referred to in clause (2) shall be necessary before the President issues such a notification.” Thus, the pre-amended Article 370 embodied six special provisions for the State of Jammu and Kashmir:
As per the Article 370, the State of Jammu Kashmir has been exempted from the complete applicability of Indian Constitution. The central legislative powers to the State has been limited, as per the pre-amended Article 370, in the matters related to defence, foreign affairs and communications. The other constitutional powers held by the Central government could also be extended to the State only with the concurrence of the State Government of Jammu & Kashmir. This term “concurrence” was only provisional and was upheld by the State’s constituent assembly mainly. The State’s constituent assembly had the power to limit the “concurrence” applicability. State’s constituent assembly was mainly responsible for finalizing different schemes and applying them to the State. No further extension of powers was allowed by the State. Article 370 abrogation or amendment was only possible with the recommendation of the State’s Constituent Assembly.
The Autonomy of the State of Jammu and Kashmir
Those who don’t know, the Indian Constitution has a federal structure. As per this federal structure, the subjects for Indian legislation are split into three-a ‘Union List‘, a ‘State List‘ and a ‘Concurrent List‘. The Union list has 96 different subjects, including military & foreign affairs, defence, transport systems, commercial issues like baking, taxes, and stock exchanges. These areas fall under the radar of the Union Government, and it has the authority to make legislation in all the respective areas.
Coming to the State List, it includes 66 different subjects or areas, including agriculture, prisons, certain taxes, and most industries. All such state list subjects or areas are available to the State government for making legislation.
Lastly, the Concurrent List includes areas which give authority to both the Centre and State to make legislation. These subjects or areas include bankruptcy, trade unions, criminal law, marriage, and price control. In conflict cases between the two, i.e., Centre and State, the Union legislation takes a leap. Central or Union government of India holds the “residual power” to form legislation for areas or matters, not specified in legislation. In certain cases, specific industries, ports, waterways, etc. can also be declared as “national” by the Union government; hence, they become Union subjects.
In case of State of Jammu & Kashmir, both the lists, i.e., ‘Union List’ and the ‘Concurrent List’, have been curtailed from the matters embedded in the Instrument of Accession, but later they have been added to the “concurrence” of the State Government. Although “the residual power” continued to rest with the State rather than the Union. As per the State Autonomy Committee, 94 out of 97 rules of Union list are applied to the State of J&K.
The rules or laws of the Central Bureau of Intelligence and Investigation and preventive detention do not apply to the State. In the case of “Concurrent List” applicability to the State, 24 out of 26 rules get applied to Jammu & Kashmir. In matters like marriage and divorce, contracts and torts, bankruptcy, trusts, infants & minors, property transfer, courts, family planning and charities, the State holds the sole power to draw legislation. The Election-related legislation drawing rights are also held by the State.
Is the Income Tax Act Applicable to the State of Jammu & Kashmir?
The general or laymen perception among taxpayers is that the Income Tax Act is not applicable to the State of Jammu and Kashmir as it has been granted the status of special autonomous State by virtue of Article 370.
Although this perception is not accurate. This is because section 1 of the Income Tax Act 1961 explicitly mentions the applicability of the Act to the whole of India as given below:
“Short title, extent and commencement.
(a) This Act may be called the Income-tax Act, 1961. (b) It extends to the whole of India.”
Hence, from the above provisions embedded inside the Income Tax Act, it is very clear that the provisions of this Act get automatically applied to the whole of India, including the State of Jammu & Kashmir.
It is also vital to know that the applicability of the Income Tax Act has been extended to the State through the Taxation Laws (Extension to Jammu & Kashmir) Act, 1954. This Act was formulated by the Indian Parliament on October 8, 1954. Since then, the Income Tax Act is applied to the State of Jammu & Kashmir.
Although, there is one major exception in the Income Tax Act, encoded in section 269S, which highlights that the provisions of “Chapter XXA of the Income Tax Act, 1961” regarding “Acquisition of immovable properties in certain cases of transfer to counteract evasion of tax” will not get applied to the State of J&K.
Now, after passing of President Decree through ‘The Constitution (Application to Jammu & Kashmir) Order 2019’, which allow the applicability of all provisions related to Indian Constitution in the State of J&K, the existing restriction of purchase of a non-movable property by a non-Kashmiri in the State is exhausted.
This also means that the exception given in Chapter XXA of the Income Tax Act, 1961, regarding the “acquisition of immovable properties in certain cases of transfer to counteract evasion of tax” under section 269S, will be scrapped. The taxmen will now have the power to sequestrate any immovable property that has been owned by a tax evader in the State of J&K.
CGST/IGST Act Applicability on the State of Jammu & Kashmir
Up until July 7, 2017, the laws embedded inside the erstwhile Service Tax Act, also part of the Finance Act 1994 were not applicable to the State of J&K. Similarly, the provisions of the Central Goods & Service Tax (CGST) & Integrated Goods & Service Act (IGST) were also not applied to the State.
Although, the provisions of both CGST and IGST Act, part of the GST regime, has been extended to the State of J&K w.e.f. July 8, 2017
Press Release CBIC Dated July 8, 2017
The new GST system has been rolled out in the country w.e.f. July 1, 2017. However, due to the special autonomous State provisions applied to the State of Jammu & Kashmir, extra steps were required to be taken for the applicability of the new GST regime to the region.
To adopt the new GST regime in a full-fledged manner, the State of J&K has taken first steps on July 6, 2017, when the President of India has passed the Constitution (Application to Jammu and Kashmir) Amendment Order, 2017. As a result, the One Hundred and First Amendment Act, 2016 of the Constitution of India has paved pathway for the new GST system applicability to the State.
Following this, the Jammu and Kashmir Goods and Services Tax Bill, 2017 has been passed by the state legislature on July 7, 2017, empowering the State authorities to levy State GST against intrastate supplies w.e.f. July 8, 2017.
Two ordinances, i.e., the Central Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 has also been passed by the Indian President, allowing extension of Central GST Act and the Integrated GST Act to the State of J&K.
Following all such events, “the State of Jammu and Kashmir also becomes an integral part of the new GST regime to make it a true “one nation, one tax” regime.”
Final Words:
“The Taxation Laws (Extension to Jammu & Kashmir) Act, 1954,” formulated by Indian Parliament on October 8, 1954, is the primary rooting source that extends the applicability of provisions of the Income Tax Act to the State of Jammu & Kashmir. Since then, Income Tax Act is applied to the State directly, except the provisions of Chapter XXA pertaining to “acquisition of immovable properties in certain cases of transfer to counteract evasion of tax”, by virtue of the exception embedded inside section 269S of the Income Tax Act, 1961.
Although, the decision of the central government pertaining to a constitutional amendment in Article 370, including the removal of the restriction on the purchase of immovable property by a non-Kashmiri will have a deep impact on the existing tax system. The removal of the clause concerning the purchase of immovable property by a non-Kashmiri citizen will also eliminate the advantage held by tax defaulters regarding the acquisition of immovable property in the State of Jammu & Kashmir. Now, the taxman can scrutinize the tax defaulters (both Kashmiri and Non-Kashmiri citizens) and take control over their immovable property held by them in a wrongful way. This is beneficial for improvement in the entire GST system in the long run.
The extension of provisions of the Income Tax Act to the State has been paved by the President by giving assent to the Constitution (Application to Jammu and Kashmir) Amendment Order, 2017. Two ordinances, i.e., Central Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 has also been passed by the President for the same purpose.
Similarly, the applicability of the provisions of CGST & IGST Act has been extended to the State w.e.f. July 8, 2017. These were some of the major steps taken by the State and the Union government to make GST system much stronger in the region.
Finally, the recent Constitutional Amendment in Article 370 in the Indian Constitution is likely to have far-reaching consequences and repercussions on the Country’s ‘Geo-Political environment’. However, as far as the tax system is concerned, it will have no such great impact on the Income Tax Act and the GST Act, as they are already applicable in the State of Jammu & Kashmir.
A webinar is conducted today i.e. 7th August 2019 at 4 PM IST in Hindi on the topic of GST ANX-1 and ANX-2 Offline Tool of New Return (Trial). The webinar will cover the most important topics for the query solving of the taxpayers.
ANX 1 is a latest return filing system introduced for October and will be applicable for small businessman and the government has also introduced the offline utility for it.
Some of the Topics to be Covered in the Webinar are:
Preparation of GST ANX-1
Preparation of GST ANX-1 by using Excel/CSV template
Creation of JSON File of GST ANX-1
Downloading the auto-drafted GST ANX-2 from GST Portal
Importing the Purchase Register in the Offline Tool
Use of Matching Tool in the tool
Taking actions of Accept, Reject or Pending on GST ANX-2
Also one must note that the webinar video will be available on Youtube after the live recording on the YouTube Channel of Goods and Services Tax Network.
