Now Form 26AS shows whether the PAN is active and operational.

The Income Tax Department has introduced a new update for taxpayers, where Form 26AS will now display whether your Permanent Account Number (PAN) is active and operative. This update allows taxpayers to easily check the status of their PAN through the Traces portal.

It's important to note that the deadline for linking PAN with Aadhaar has passed on June 30, 2023. 

If taxpayers have not linked their PAN with Aadhaar, their PAN will become inoperative. However, the Central Board of Direct Taxes (CBDT) has issued a clarification on this matter shortly before the deadline expired.

According to the income tax department's tweet, individuals who have paid the penalty for linking their PAN with Aadhaar and have obtained consent but have not completed the linking process by June 30, 2023, will be reviewed by the income tax department before considering their PAN inoperative.

External Confirmation - Documents to keep in record

 

Under auditing standards, external confirmations are a commonly used procedure to obtain audit evidence directly from third parties. When conducting an audit, the following documents shall be kept in relation to external confirmations

Here are the main documents:

1. Confirmation Requests: These are the letters or messages auditors send to third parties, asking them to confirm specific information or balances. 

2. Confirmation Responses: These are the written responses auditors receive from third parties. These responses confirm or dispute the information provided by the company being audited, or they may provide additional details. 

3. Follow-up Communications: Sometimes, auditors need to ask third parties for more information or clarification. These additional conversations or messages should be saved. 

4. Confirmation Tracking: Auditors keep a record of the confirmation requests they send, including dates, expected response dates, and actual response dates. 

5. Reconciliation or Analysis: Auditors may need to compare the confirmation responses with the company's records or other evidence. They document these comparisons.

6. Exceptions or Disputes: If there are any differences or disagreements between the confirmation responses and the company's records, auditors document them and investigate further.

7. Management Representations: Auditors may ask the company's management for written statements about the accuracy and completeness of the information provided to third parties for confirmation. These statements are also saved.

The specific documents may vary depending on the audit engagement and the requirements of the auditing firm or regulatory authorities.

Carry Forward of Losses: Bombay High Court's Landmark Decision on Filing Returns Beyond Due Date

 

You are all well aware that if a return is filed beyond the due date, any loss suffered by the assessee cannot be carried forward for set off in the following         years. It is important to understand that the responsibility of filing the ITR lies with the taxpayer and not with a Chartered Accountant.

Consider a scenario where an assessee files their ITR after the due date, citing that their Chartered Accountant was preoccupied with their sister's wedding. Will the loss in such a case is allowed to be carried forward though filed belatedly? Read the interesting judgment by the Bombay High Court.

The Bombay High Court recently has condoned a delay in filing a loss return by a company M/s ADCC Infocom Private Limited. The company had suffered a loss during the financial year 2019-2020 and was required to file its return within the specified due date. However, the return was filed 36 days after the due date.

However, in this case, the Bombay High Court accepted the petitioner's argument of genuine hardship and condoned the delay in filing the return.

The company cited the COVID-19 pandemic and the heavy workload of its Chartered Accountant as reasons for the delay. Additionally, the Chartered Accountant's sister's wedding, which took place on February 16, 2021, further contributed to the delay as she was occupied with the arrangements and attending to relatives.

 

So the company's loss can still be carried forward and set off against future income.

It’s an Important judgment to keep in our memory.

 

Form 15CA - 5 essential facts one must know.

The need for cross-border transactions and payments to non-residents has become increasingly common nowadays as businesses are expanding globally. Such payments may attract tax obligations, and to ensure compliance, the Indian Income Tax Department requires the submission of Form 15CA and 15CB.

In this article, we will explore the key aspects of Form 15CA in facilitating international payments.

 

1. What is Form 15CA?

Form 15CA is a declaration form mandated by Section 195 of the Indian Income Tax Act. It applies to individuals or entities making payments to non-residents or foreign companies, where the sum is subject to income tax.

2. Parts of Form 15CA:

The information required for payment to non-residents or foreign companies is divided into four parts: 

a) Part A: Applicable when the remittance or aggregate remittances during the financial year do not exceed INR 5 lakh.

b) Part B: Applicable when the remittance or aggregate remittances during the financial year exceed INR 5 lakh, and an order/certificate under Section 195(2)/(3)/197 of the Income Tax Act has been obtained.

c) Part C: Applicable when the remittance or aggregate remittances during the financial year exceed INR 5 lakh, and a certificate in Form 15CB from a Chartered Accountant has been obtained.

d) Part D: Applicable when the remittance is not chargeable to tax under the Income Tax Act.

 

3. Who needs to file Form 15CA?

As per Rule 37BB, any person responsible for making payments to non-residents or foreign companies must furnish the required information in Form 15CA. This responsibility lies with the individual or entity making the payment.

 

4. Mandatory submission of Form 15CB:

Form 15CB is not mandatory for all cases. It is an event-based form that needs to be filled only if the remittance or aggregate remittance amount exceeds INR 5 lakh during a financial year and requires a certificate from a Chartered Accountant.

  

5. Cases where Form 15CA is not required:

Form 15CA is not required for certain transactions, as specified in sub-rule (3) of Rule 37BB. These include remittances made by individuals that do not require prior approval from the Reserve Bank of India (RBI) and remittances falling under the specified purposes code defined by the RBI.

 

        By providing the necessary details before remittance, this form facilitates  transparency and accountability in cross-border transactions. As businesses continue to engage in global operations, understanding and adhering to the requirements of Form 15CA is quite important.



https://www.incometax.gov.in/iec/foportal/help/statutory-forms/popular-forms/form-15ca-faq

The extension of due date to file form CSR-2

The Ministry of Corporate Affairs (MCA) introduced the Companies (Accounts) Amendment Rules, 2022, effective from February 11, 2022. A notable change brought about by this amendment is the introduction of Form CSR-2.

This is a new reporting requirement for companies covered under Section 135 of the Companies Act, 2013, which mandates compliance with Corporate Social Responsibility (CSR) provisions.

 

Key Points:

1. Reporting Obligation: Companies covered under Section 135(1) must submit Form CSR-2 as an addendum to Form AOC-4.

2. Filing Deadline for FY 2020-21: Form CSR-2 must be filed separately on or before March 31, 2022, after submitting Form AOC-4 for the preceding financial year.

3. Filing Requirement for Subsequent Years: From FY 2021-22 onwards, Form CSR-2 should be submitted as an addendum to Form AOC-4 by the applicable due date.

However, for the FY 2022-23 Form CSR-2 shall be filed separately on or before 31^st March, 2024 after filing form AOC-4.  This is as per the Companies (Accounts) Second Amendment Rules, 2023 dated 31^st May, 2023.

 

 

 

 

 

 

Understanding the Liberalised Remittance Scheme (LRS) for Indian Residents

The Liberalised Remittance Scheme (LRS) introduced by the Reserve Bank of India (RBI) has made it easier for Indian residents to remit funds abroad for various purposes. This scheme allows individuals to send up to USD250,000 per financial year outside of India for permissible current and capital account transactions.

In this blog post, we will have an understanding of the LRS, including its eligibility criteria, permissible transactions, and important considerations.

 

Eligibility for the LRS

The LRS is available to Indian residents as defined by the Foreign Exchange Management Act (FEMA).

However, it is important to note that corporations, partnership firms, Hindu Undivided Family (HUF), trusts, and NRIs are not eligible to utilize the LRS.

 

Permissible Current Account Transactions

The LRS allows Indian residents to undertake various current account transactions, including:

1. Private visits (excluding Nepal & Bhutan): Remitting funds for personal travel abroad.

2. Gift or donation to NRIs: Sending gifts or donations, including rupee gifts, to close relatives who are NRIs.

3. Emigration: Remitting funds for the purpose of emigrating to another country.

4. Overseas business trips: Sending funds for business-related travel abroad.

5. Medical treatment abroad: Remittances for medical treatment and related expenses outside India.

6. Pursuing studies abroad: Sending funds for educational expenses incurred by individuals studying overseas.

7. Going outside India for employment: Remittances for individuals moving abroad for employment purposes.

8. Maintenance of close relatives abroad: Sending funds for the support and maintenance of close relatives residing outside India.

 

Permissible Capital Account Transactions

Under the LRS, Indian residents can engage in certain capital account transactions, which include:

 

1. Opening a foreign currency account abroad: Individuals can open and maintain foreign currency accounts with banks located outside India.

2. Purchase of foreign property: Remittances for acquiring properties located outside India.

3. Investments in overseas shares, securities, mutual funds, etc.: Investing in foreign stocks, securities, mutual funds, and similar financial instruments.

4. Extending INR loans to NRIs who are relatives: Providing loans in Indian Rupees (INR) to NRIs who are considered relatives.

Limits and Permissions

 

The LRS has a limit of USD250,000 per financial year for remittances. However, higher amounts may be remitted for emigration, medical treatment, and overseas education if required, subject to certain conditions. Any remittances exceeding the USD250,000 limit for other purposes require prior permission from the RBI.

 

Key Considerations

1. Currency Choice: Remittances under the LRS can be made in any freely convertible foreign currency.

2. Remittance Frequency: There is no restriction on the number or frequency of transactions in a financial year. However, the cumulative amount of all transactions should not exceed the current LRS limit.

3. Minors and LRS: Minors are eligible to utilize the LRS, but their natural guardian may need to sign Form A2.

4. PAN Card Requirement: Providing your Permanent Account Number (PAN) is mandatory for all LRS transactions.

 

The Liberalised Remittance Scheme (LRS) is a beneficial scheme for Indian residents to remit funds abroad for various purposes. By understanding the eligibility criteria, permissible transactions, limits, and key considerations associated with the LRS, individuals can make informed decisions and effectively utilize this scheme.

Stay updated with the latest regulations and guidelines issued by the RBI regarding the LRS to ensure compliance and smooth remittances. Consider consulting your professional to make an informed decision.