TDS :- Different Section Codes in a Single Challan & Excess Challan Amount can be adjusted in Next Year.

Friends,  CPC (TDS) team had communicated to their deductors through email on 10-09-2014 that there is no effect of Section Code mentioned in Challan and Deductor can deposit a single challan for payment of TDS deducted in a month.   There is no issue of Section Codes 94C, 94A , 94 J, 92A , 92B , 94H etc.  

Secondly excess amount of TDS can be used in the next Financial Year or adjustment of Defaults for previous years issued by Income Tax Department  etc. 

Now, there is no use to update Section Code through bank or assessing authority if  it is wrongly mentioned in challan.   The same can be corrected while submitting TDS Statement.  

Keeping in view of these important changes, every deductors should devote some time in reading the following communication of CPC (TDS) Team. 

Dear Deductor,

As per the records of the Centralized Processing Cell (TDS), it has been observed that you have used multiple challans in a month, for payment of Tax Deducted.

For Deductor's convenience, CPC(TDS) has established processing logic in the system that can accept a Single Challan for reporting of Tax Deposited in following circumstances :

• Payment of Tax Deducted under different sections of the Income Tax Act, 1961:
  
  
   • The CPC(TDS) system gives credit of TDS against different sections of the Act, even though a specific section has been quoted in the challan.
   • Example: The challan used for payment of TDS relevant to Section 192 of the Act can also be used for the purpose of reporting tax deposited under Section 194 of the Act also. 

Situation prior to Financial Year 2012-13	Consumption of Challan in TDS Statement on the basis of Section quoted in the Challan details
Situation after Financial Year 2012-13	Section quoted in Challan, at the time of depositing Tax deducted/ collected is irrelevant for the purpose of consumption in TDS Statement.

• Payment of Tax Deducted for different Assessment Years:
  
  
   • In case tax has been deposited more than the required tax deducted at source for a particular Assessment Year, the excess amount of tax can be claimed in the following quarters of the relevant year. The balance amount if any, can be carried forward to the next year for claim in the TDS statement.
   • Example: If excess payment of Tax has been made in Quarter 1 of financial year 2013-14, the same can be used for Quarter 2,3&4 of F.Y. 2013-14 as well as for Q1 to Q4 of F.Y.2014-15. The excess amount of tax paid in Q1 of F.Y.2013-14 can also be used for payment of tax default of Q1 to Q4 of F.Y.2012-13.

• Different challans used for the purpose of reporting multiple Deductees associated with different branches with same TAN:
  
  
   • The deductor may have used multiple challans for reporting multiple deductees associated with different branches, in the TDS Statement.
   • A single challan can be used for the purpose of reporting Tax Deducted for such deductees.
   • Example: If a Bank has multiple branches with same TAN, payment of Tax Deducted can be made by a single challan and all the deductees can be tagged using the same.

Based on the above information, you may use a single challan in a month towards payment of Tax Deposited. For any assistance, you can also write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

Archives (Old Procedure Click Here)

Income Tax :-Weighted deduction @150% of the expenditure incurred on skill development u/s 35CCD

Government ofIndia

Ministry of Finance

Department of Revenue

Central Board ofDirect Taxes

Press Release

Dated 18th July, 2013

Subject: Guidelines for weighted deduction @150% of the expenditure incurred on skill development under section 35CCD of the Income­tax Act,1961.

               The National Manufacturing Policy (NMP), 2011 proposed to provide  inter alia,  the  following  direct  taxes  incentives  to  promote  skill  development:

          “Weighted deduction of 150% of the expenditure (other than land or building) incurred in Public Private Partnership (PPP) projects for skill development in manufacturing sector in separate facilities in coordination with National Skill Development Corporation (NSDC).”

2.  As  a  follow  up  of  NMP,  Finance  Act,  2012  inserted  a  new  Section  35CCD  in  the  Income‐tax  Act,  1961(‘the  Act’)  which  provides  that  for  computing  business  income,  a  company  shall  be  allowed  a  weighted  deduction  of 150%  of expenses  (other  than land  or  building) incurred  on  skill  development  project  notified  by  the  Board  in  accordance  with  the  guidelines as may be prescribed.

3. The guidelines for approval of skill development project are  prescribed in new Rules 6AAF, 6AAG and 6AAH inserted in the Incometax Rules, 1962 by Notification No. S.O.2166(E) dated 15th July, 2013.  

The salient features of the guidelines are as under:

(1)A company engaged in the business of manufacturing any article or  thing (other than alcoholic spirits and tobacco products) or engaged in providing specified services, as listed under Rule 6AAH, shall be eligible  for weighted deduction of the expenditure incurred on skill development.

(2)The project should be undertaken in separate facilities in a training  institute set up by the Central or State Government or a local authority or  a training institute affiliated to National Council for Vocational Training  (NCVT) or State Council for Vocational Training (SCVT). Besides  Government training institutes, private sector training institutes affiliated  to NCVT or SCVT shall also be eligible.

(3) National Skill Development Agency (NSDA) shall be the nodal  agency to scrutinize the applications made by eligible companies in Form  No. 3CQ. The Central Board of Direct Taxes(CBDT) shall notify the skill  development project based on the recommendation of NSDA in this  regard.

(4) All expenses (not being expenditure in the nature of cost of any land  or building), incurred wholly and exclusively for undertaking a notified  skill development project shall be eligible for deduction under section  35CCD,except the expenditure which is reimbursed or reimbursable to  the company by any person, whether directly or indirectly.

(5) The company undertaking skill development projectshall be required to maintain separate books of account of the project notified under section 35CCDand getsuch books of account audited.

(6) Itisintended thatthe skill development projectshall provide training to potential employees or newly recruited employees. Skill development of existing employees of the company shall not be eligible for notification under section 35CCD, if the training of such employees commences aftersixmonths oftheirrecruitment.

(Rekha Shukla)

Commissioner ofIncome Tax

(Media&Technical Co‐or

Liability to Pay Advance Tax Installment.

All  About Regarding Advance Tax

Advance Tax Calculator

        Apart from Deduction of Tax at source while making various payments, Advance Tax is compulsory for every assessee as per  Section 210 under Indian Income-Tax act.   In case tax on assessee's estimated income of current year  comes to Rs. 10,000 or more-, Advance Tax liability arises for each and every assessee.  Earlier or before 1.04.2009, this limit was Rs. 5,000.00.  Each and Every assessee should take care in the following months regarding Payment of Advance Income Tax.

• June
• September
• December
• March
• Last day of March

To make more easy understanding regarding Advance Income Tax (Click here) to download the Advance Tax calculator. Complete Section 208, 209, 209A and  210 related to payment of Advance Tax is also given below for your ready record.

Section 208   78[Conditions of liability to pay advance tax.

208. Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is 79[ten thousand] rupees or more.]

Section 209 Computation of advance tax.

209. 80[(1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely :—

             (a)   where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year;

             (b)   where the calculation is made by the Assessing Officer for the purpose of making an order under sub-section (3) of section 210, the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year, whichever is higher, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;

              (c)   where the calculation is made by the Assessing Officer for the purpose of making an amended order under sub-section (4) of section 210, the total income declared in the return furnished by the assessee for the later previous year, or, as the case may be, the total income in respect of which the regular assessment, referred to in that sub-section has been made, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;

             (d)   the income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be deductible 81[or collectible] at source during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable.]

82[(2) Where the Finance Act of the relevant year provides that, in the case of any class of assessees, net agricultural income (as defined in that Act) shall be taken into account for the purposes of computing advance tax, then, the net agricul-tural income to be taken into account in the case of any assessee falling in that class, shall be—

             (a)   in cases 83[where the Assessing Officer makes an order under sub-section (3) or sub-section (4) of section 210],—

         (i)   if the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment forms the basis of computation of advance tax payable by him, the net agricultural income which has been taken into account for the purposes of charging income-tax for the assessment year relevant to that previous year; or

  84[(ii)   if the total income declared by the assessee for the later previous year referred to in sub-section (4) of section 210 forms the basis of computation of advance tax, the net agricultural income as returned by the assessee in the return of income for the assessment year relevant to such later previous year;]

        85[(b)   in cases where the advance tax is paid by the assessee on the basis of his estimate of his current income under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, the net agricultural income, as estimated by him, of the period which would be the previous year for the immediately following assessment year.]

(3) Where the Finance Act of the relevant year specifies any separate rate or rates for the purposes of computing advance tax in the case of every Hindu undivided family which has at least one member whose total income of the previous year exceeds the maximum amount not chargeable to income-tax in his case, then, the 86[Assessing] Officer shall, for making an order under 87[sub-section (3) or sub-section (4) of] section 210 in the case of any such Hindu undivided family, compute (subject to the provisions of section 164) the advance tax at such rate or rates—

             (a)   in a case where the total income of the latest previous year in respect of which the Hindu undivided family has been assessed by way of regular assessment forms the basis of computation of advance tax, if the total income of any member of the family for the assessment year relevant to such latest previous year exceeds the maximum amount not chargeable to income-tax in his case;

             (b)   in a case where the total income of the previous year 88[in respect of which a return of income is furnished by the Hindu undivided family under section 139 or in response to a notice under sub-section (1) of section 142] forms the basis of computation of advance tax, if the total income of any member of the family for the assessment year relevant to such previous year exceeds the maximum amount not chargeable to income-tax in his case.

Section -209A Computation and payment of advance tax by assessee.

89209A. [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. Original section was inserted by the Finance Act, 1978, w.e.f. 1-6-1978.]

Section -210 as per Indian Income Tax Act.

90[Payment of advance tax by the assessee of his own accord or in pursuance of order of Assessing Officer.

210. (1) Every person who is liable to pay advance tax under section 208 (whether or not he has been previously assessed by way of regular assessment) shall, of his own accord, pay, on or before each of the due dates specified in section 211, the appropriate percentage, specified in that section, of the advance tax on his current income, calculated in the manner laid down in section 209.

(2) A person who pays any instalment or instalments of advance tax under sub-section (1), may increase or reduce the amount of advance tax payable in the remaining instalment or instalments to accord with his estimate of his current income and the advance tax payable thereon, and make payment of the said amount in the remaining instalment or instalments accordingly.

(3) In the case of a person who has been already assessed by way of regular assessment in respect of the total income of any previous year 91[***], the Assessing Officer, if he is of opinion that such person is liable to pay advance tax, may, at any time during the financial year but not later than the last day of February, by order in writing, require such person to pay advance tax calculated in the manner laid down in section 209, and issue to such person a notice of demand under section 156 specifying the instalment or instalments in which such tax is to be paid.
(4) If, after the making of an order by the Assessing Officer under sub-section (3) and at any time before the 1st day of March, a return of income is furnished by the assessee under section 139 or in response to a notice under sub-section (1) of section 142, or a regular assessment of the assessee is made in respect of a previous year later than that referred to in sub-section (3), the Assessing Officer may make an amended order and issue to such assessee a notice of demand under section 156 requiring the assessee to pay, on or before the due date or each of the due dates specified in section 211 falling after the date of the amended order, the appropriate percentage, specified in section 211, of the advance tax computed on the basis of the total income declared in such return or in respect of which the regular assessment aforesaid has been made.

(5) A person who is served with an order of the Assessing Officer under sub-section (3) or an amended order under sub-section (4) may, if in his estimation the advance tax payable on his current income would be less than the amount of the advance tax specified in such order or amended order, send an intimation in the prescribed form92 to the Assessing Officer to that effect and pay such advance tax as accords with his estimate, calculated in the manner laid down in section 209, at the appropriate percentage thereof specified in section 211, on or before the due date or each of the due dates specified in section 211 falling after the date of such intimation.

(6) A person who is served with an order of the Assessing Officer under sub-section (3) or amended order under sub-section (4) shall, if in his estimation the advance tax payable on his current income would exceed the amount of advance tax specified in such order or amended order or intimated by him under sub-section (5), pay on or before the due date of the last instalment specified in section 211, the appropriate part or, as the case may be, the whole of such higher amount of advance tax as accords with his estimate, calculated in the manner laid down in section 209.]

Income Tax :- Notification No. 31/2012 Dated 17.8.12 regarding Section 92

SECTION 92 OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARM'S LENGTH PRICE - NOTIFIED PERCENTAGE UNDER SECOND PROVISO TO SECTION 92C(2)

NOTIFICATION NO. 31/2012 [F.NO. 500/185/2011-FTD I], DATED 17-8-2012

In exercise of the powers conferred by the second proviso to sub-section (2) of section 92C of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that where the variation between the arm's length price determined under section 92C and the price at which the international transaction has actually been undertaken does not exceed five per cent of the latter, the price at which the international transaction has actually been undertaken shall be deemed to be the arm's length price for assessment year 2012-13.

Certificate if tax either not to be deducted or to be deducted at lower rate under section 197

    The person receiving the commission or brokerage may make an application in new From 13 to be concerned Assessing Officer and obtain such certificate, as may be appropriate authorizing the person responsible for making such payment to deduct tax at nil rate or at lower rate.  The certificate will be given by the Assessing Officer if he is satisfied that it is justified to do so. 

     As per section 206AA(4) w.e.f. 01.04.2010, no certificate will be granted unless the application made under

Section Code 139 to 140A with Description

Friends,  In general it is found that there are some section codes on Income Tax papers but difficult to understand meaning of codes.   List of some important codes alongwith their description are given below :-

Section        Description of Section Code

139              Return of Income

139(1)         Submission of return of Income

139B           New Scheme to facilitate submission of return through Tax Return Preparers.

Budge2012- Clarification of "Royalty" under section 9(1)(vi)

Friends,   Consideration for use of right to use of computer software is royalty and therefore, such income is deemed to accrue or arise in India by virtue of section 9(1)(vi);

               Royalty to include and always have included consideration in respect of any right, property or information whether or not. 

• the possession or control of such right, property or information is with the payer;
• such right, property or information is used directly by the payer. 
• the location of such right, property or information is in India. 

                    

Increase in mandatory Tax Audit Limit under section 44AB

Increase in threshold for mandatory Tax Audit under section 44AB

Friends    

             In Budget 2012, The turnover limit for compulsory tax audit of accounts as well as for presumptive taxation under section 44AD is proposed to be raised frin Rs, 60 Lakhs to Rs. 1 Crore,  in the case of persons carrying on business.

               In case of persons carrying on profession the limit for gross receipts to attract compulsory tax audit is proposed to be raised from Rs. 15 Lakhs to Rs. 25 Lakhs. 

Income Tax Offices will remain open on 31.03.2012

In the interest of assessee, CBDT has ordered under section 119(1) of Income Tax Act, 1961 to all Income Tax Offices to remain open on 31.03.2012 and all the receipts counter will work as normal day on 31.03.2012.   Detailed notification Dated 30-03-2012 is given as under :-

F.No.225/138/20111IT A.II

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, the 30 th March 2012

Order under Section 119(1) of the Income tax Act, 1961. 

The Financial Year 2011-12 closes on 31-3-2012 falling on Saturday. All the Income Tax Offices through out India shall remain open on this day and the receipts counters shall also work during normal office hours. This direction is issued for administrative convenience by the Central Board of Direct Taxes in exercise of powers conferred under section 119 of the Income Tax Act, 1961. 

Special arrangements may also be made by way of opening additional receipt counters, wherever required on so" and 31 st March 2012 to facilitate the taxpayers in filing their returns of income conveniently. These instructions may be given wide publicity.

(RK. GUPTA)

Under Secretary to the Government of India.

Copy to:-

1. The Chairman (CBDT), All Members, Central Board of Direct Taxes for information.
2. All Cadre Controlling CCslT for necessary action in respect of their region.
3. The Director General of Income Tax (Admn.) Mayur Bhawan, New Delhi.
4. DGIT (Systems) for putting it on Departmental Website.
5. Shri Shishir Jha, CIT (MC) of CBDT. 

(RK. GUPTA)

Under Secretary to the Government of India.

Consequences if Deductor do not Deduct or Pay Income Tax

 Major Changes in Section 201 w.e.f. 01.07.2012

  
    Person who fails to deduct or pay on the payment to a resident shall now not be deemed to be an assessee in default in respect of such tax if such resident 

(i) has furnished his return of income under section 139; 

(ii) has taken into account such sum for computing income in such return of income; and

(iii) has paid the tax due

(iv) furnishes a Certificate from CA Interest shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.

Period of Limitation extended to 6 years from 4 years. 

Words as per Chapter-III of Income Tax Act.

In section 201 of the Income-tax Act,—

   (A) with effect from the 1st day of July, 2012,—

            (i) in sub-section (1),—

                      (a) before the proviso, the following proviso shall be inserted, namely:—

                      “Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident—-

                 (i) has furnished his return of income under section 139;

                 (ii) has taken into account such sum for computing income in such return of income; and

                (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed:”;

            (b) in the proviso, for the words “Provided that”, the words “Provided further that” shall be  substituted;

       (ii) after sub-section (1A), the following proviso shall be inserted, namely:—

        “Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum  paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso of sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.”;

  (B) in sub-section (3), in clause (ii), for the words “four years”, the words “six years” shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2010;

  (C) after sub-section (4), the following Explanation shall be inserted with effect from the 1st day of

July, 2012, namely:—

           “Explanation.—For the purposes of this section, the expression “accountant” shall have the meaning assigned to it in the Explanation to sub-section (2) of section 288.”.

TDS/TCS MAJOR CHANGES IN BUDGET 2012

Friends,  In budget 2012, the following changes have been done in TDS/TCS sections.

Section	Provision	Changes
193	Interest on Debentures	Limit increased from Rs. 2500/- to Rs. 5000/-
194E	Payments to non-resident sportsmen, sports associations, entertainer	Rate increased to 20% from 10%
194J	Fees for Professional or Technical Services	Directors Remuneration Covered
194LA	Compensation on acquisition of immovable property	Limit increased to 2 Lacs
194LLA	Transfer of immovable property other than agriculture land	Rate= 1% Limit:- Less than 50 lacs/25 lacs for specified/non specified area

Income Tax Notification No. 12/2012 dated 28.02.2012 (Section 10(46))

SECTION 10(46) OF THE INCOME-TAX ACT, 1961 - EXEMPTIONS - STATUTORY BODY/AUTHORITY/BOARD/COMMISSION - NOTIFIED BODY OR AUTHORITY - COMPETITION COMMISSION OF INDIA

NOTIFICATION NO. 12/2012 [F.NO.142/15/2011-SO (TPL)], DATED 28-2-2012

In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the Competition Commission of India, a Commission established under sub-section (1) of section 7 of the Competition Act, 2002 (Act 12 of 2003), in respect of the specified income arising to the said Commission, as follows:-

(a)  amount received in the form of Government grants;

(b)  fee received under the Competition Act, 2002; and

(c)  interest income accrued on Government grants and interest accrued on fee received under the Competition Act, 2002.

2. This Notification shall be applicable for the specified income of the Competition Commission of India for the financial year 2011-12 to financial year 2015-16.

3. The Notification shall be effective where-

(i)  the activities and the nature of the specified income of the Competition Commission of India remain unchanged throughout the financial year, and

(ii)  the Competition Commission of India files return of income in accordance with clause (g) of sub-section (4C) section 139 of the Act.

Income Tax Notification No. 11/2012 dated 28.02.2012 (Section 10(46))

SECTION 10(46) OF THE INCOME-TAX ACT, 1961 - EXEMPTIONS - STATUTORY BODY/AUTHORITY/BOARD/COMMISSION - NOTIFIED BODY OR AUTHORITY - NATIONAL SKILL DEVELOPMENT CORPORATION

NOTIFICATION NO. 11/2012 [F.NO.142/15/2011-SO (TPL)], DATED 28-2-2012

In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the National Skill Development Corporation, a body constituted by the Central Government, in respect of the specified income arising to the said Corporation , as follows:-

(a)  long-term or short-term capital gain out of investment in an organisation for skill development;

(b)  dividend and royalty from skill development venture supported or funded by National Skill Development Corporation;

(c)  interest on loans to Institutions for skill development;

(d)  interest earned on fixed deposits with banks; and

(e)  amount received in the form of Government grants.

2. This Notification shall be applicable for the specified income of the National Skill Development Corporation for the financial year 2011-12 to financial year 2015-16.

3. This notification shall be effective where-

(i)  the activities and the nature of the specified income of the National Skill Development Corporation remain unchanged throughout the financial year; and

(ii)  the National Skill Development Corporation files return of income in accordance with clause (g) of sub-section (4C) section 139 of the Act.

Who Can submit ITR-4S (Sugam) Income Tax Return Form

Friends, ITR-4S (Sugam) can be submitted for having income from presumptive business.  The assessee having the following income can only use ITR-4S (Sugam) form.   It is too much easy form in comparison with ITR-4.

कोण कोण इसे इसतेमाल  कर सकते  हे!. 

• Income from Salary/Pension
• Income from Other Sources (only interest Income or Family Pension)
• Income/Loss from Other Sources. 
• Income/Loss from House Property
• Income from Presumptive Business. (अनुमानित व्यापर से आय)

Important Related Sections as per Income Tax Act :-

²⁶ [ ²⁷ Special provision for computing profits and gains of business on presumptive basis.

44AD. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.

(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed :

Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.

(3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

(4) The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business.

(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

Explanation.—For the purposes of this section,—

          (a)  “eligible assessee” means,—

       (i)  an individual, Hindu undivided family or a partnership firm, who is a resident, but not a limited liability partnership firm as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009) ^27a ; and

      (ii)  who has not claimed deduction under any of the sections 10A, 10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C. - Deductions in respect of certain incomes” in the relevant assessment year;

          (b)  “eligible business” means,—

       (i)  any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE; and

      (ii)  whose total turnover or gross receipts in the previous year does not exceed an amount of  ²⁸ [sixty lakh rupees].]

 ²⁹ [Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages.

44AE. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee, who owns not more than ten goods carriages  ³⁰ [at any time during the previous year] and who is engaged in the business of plying, hiring or leasing such goods carriages, the income of such business chargeable to tax under the head “Profits and gains of business or profession” shall be deemed to be the aggregate of the profits and gains, from all the goods carriages owned by him in the previous year, computed in accordance with the provisions of sub-section (2).

 ³¹ [(2) For the purposes of sub-section (1), the profits and gains from each goods carriage,—

           (i)  being a heavy goods vehicle, shall be an amount equal to five thousand rupees for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher;

          (ii)  other than a heavy goods vehicle, shall be an amount equal to four thousand five hundred rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher.]

(3) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed :

 ³² [Provided that where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.]

(4) The written down value of any asset used for the purpose of the business referred to in sub-section (1) shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

(5) The provisions of sections 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded.

 ³³ [(6) Nothing contained in the foregoing provisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from the aforesaid business during the previous year relevant to the assessment year commencing on the 1st day of April, 1997 or any earlier assessment year, are lower than the profits and gains specified in sub-sections (1) and (2), and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee and determine the sum payable by the assessee on the basis of assessment made under sub-section (3) of section 143.]

 ³⁴ [(7) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-sections (1) and (2), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB.]

Explanation.—For the purposes of this section,—

          (a)  the expressions “goods carriage” ³⁵  and “heavy goods vehicle” ³⁵  shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988);

          (b)  an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on instalments and for which the whole or part of the amount payable is still due, shall be deemed to be the owner of such goods carriage.]

Special Provisions for computing Profit and Gains of Retail Business on Presumptive Basis (Section 44AD)

     ITR-4S (SUGAM)  form will be used by those assessee who are running retail business and their gross receipts or Sales does not require audit under section 44AB.   It is also important to know that if profit is less than 8% of such business, audit u/s 44AB is mandatory and Regular ITR-4 form will be filled.  In case profit greater than 8%, there is no need of compulsory audit and ITR-4S (SUGAM) form will be filled.  For filling ITR-4S (SUGAM), section 44AD is important.  Before filing ITR-4S (SUGAM), assessee should read compete Section 44AD as given below :-

44AD. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.

(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed :

Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.

(3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

(4) The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business.

(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

Explanation.—For the purposes of this section,—

• (a) “eligible assessee” means,—
        (i) an individual, Hindu undivided family or a partnership firm, who is a resident, but not a limited liability partnership firm as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009) 27a ; and
        (ii) who has not claimed deduction under any of the sections 10A, 10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C. - Deductions in respect of certain incomes” in the relevant assessment year;
• (b) “eligible business” means,—
         (i) any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE; and
      (ii) whose total turnover or gross receipts in the previous year does not exceed an amount of 28 [sixty lakh rupees].]

Computing Profits and Gains of Retail Business (Section 44AF)

Important :-  If income of assessee is less than 8% of Gross Receipts, it is mandatory to have a tax audit under 44AB and Regular ITR4 form has to be filled and ITR-4(Sugam) can not be used. 

44AF. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee engaged in retail trade in any goods or merchandise, a sum equal to five per cent of the total turnover in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession” :

Provided that nothing contained in this sub-section shall apply in respect of an assessee whose total turnover exceeds an amount of forty lakh rupees in the previous year.

(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed :

Provided that where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.

(3) The written down value of any asset used for the purpose of the business referred to in sub-section (1) shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

(4) The provisions of sections 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the total turnover or, as the case may be, the income from the said business shall be excluded.]

37 [(5) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-section (1), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB.]

38 [(6) Nothing contained in this section shall apply to any assessment year beginning on or after the 1st day of April, 2011.]