PENALTY ON LATE FILING OF INCOME TAX RETURN

Now A days all tax consultant ,business man,specially persons who have earned salary income ,are in rush to file their income tax return for financial year 2013-14 by due date i.e 31st July 2014.we are also one of them.

Due date of filing of income tax return for Assessment Year 2014-15 Financial year 2013-14 is as under

•     In case of person who are not liable to get their accounts audited is 31st July 2014 
•     In case of person who's accounts are liable to be audited under any law  and partner of such     firms and  all companies is 30.09.2014

Person earning income from following heads is covered under due date 31st July 2014 .

•     Salary ,Pension,
•     Income from other source like interest income ,
•     Income from capital gain ,
•     Income from house property and
•     Income from person owning small business and not liable to get their accounts audited are covered.

In brief all person other than those for which accounts are required to be audited is liable to file return on or before 31st July 2014 for Ay 2014-15

So in nutshell every body is trying to meet the deadline i.e.31st July 2014. we and you are also doing efforts in this direction ,but do you know

what is the penalty if some one failed to filed his return by due date.................i.e 31st July 2014?

any guesses..........

no guess ,we will tell you ,In fact there is no penalty as such for this fault ,absolutely no penalty ,do you believe ,we have said that there is no penalty on late filing of return as such.But this is the fact .

Specific penalty for late filing of return is prescribed u/s 271F which is briefed here under

   " If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139 or by the provisos to that sub-section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of five thousand rupees"

so this section says end of relevant assessment year ,for previous year 2013-14, assessment year is 2014-15 and it will ends on 31.03.2015 ,means there is no penalty for late filing of income tax return up to 31.03.2015 and after that assessing officer(AO) can impose a penalty of 5000,and that is also his (AO) power which he may or may not exercise after giving due hearing to the assessee.

Now you would like to know why people are so much worried about the due date ,the reason is that as due date has been linked with various other section of the income tax act ,so it is significant in that manner .

so we have listed few impacts of late filing of the Income tax return and issues related to due date of income tax.

Impact of late filing of Income tax return and issue related to due date(The List is not exhaustive/complete)
 
Interest u/s 234A: If there is tax due after deducting advance tax ,TDS and self assessment tax than interest will be applicable @1% per month and part thereof up to the date of filing of the return besides interest applicable u/s 234B or 234C. Means this interest is applicable only if there is any tax payable in your return .

Loss of Interest on refund:You may loose interest on refund u/s 244A as delay in filing is attributable to assessee for the period by which you have filed late return.

Audit Report:Person who are liable to get their accounts audited should get the audit report on or before the due date of filing return i.e 30.09.2014.E filing of audit report s mandatory from ay 2013-14

Revised return : Late /belated return can not be revised .This is major draw back .if you failed to file return in time then you can not revise your income tax return. Though you may apply revision u/s 154 but it has few limitation and very lengthy process.

 Some of deduction under sub sections of Section 80 are not available for late return.

• Due date of income tax return is related to TDS deposit and dis allowance u/s 40a(ia).
• Due date of Income Tax return is related to tax saving u/s 54,54B,54F and some other issues in capital gain saving account deposit scheme.

Not able to carry forward the losses under various heads:You  will not be able to carry forward following type of losses if file return after due date

•    Speculation loss
•    Business loss excluding loss due to un absorbed depreciation and capital exp on scientific research
•    Short term capital loss
•    Long term capital loss
•    Loss due to owning and mainting. of horse races

However there is no impact on following type of losses even if return is furnished after the due date

•     Loss from house property
•     Business loss on account of unabsorbed depreciation and capital expenditure on scientific research.

Though delay can be condoned as per circular 8/2001 DT 16.5.2001 on fulfilling of certain condition) so if you are falls under the ambit of the above points then you should furnish your return up to 31st July 2014 .

Person who can afford to file late return
If you have already deposited due tax or due taxes has been deducted by your employer and nothing is due or you are not claiming a Major amount as refund or  you have no losses to be carried forward then you can fill return up to the end of the assessment year i.e 31.03.2015 without any penalty.

Person who should file return on time.

If you have balance tax to be deposited or short fall of tax or Huge amount of refund due to you orYou have losses to be carried forwarded as explained above then rush to Income Tax department website to file Your Income Tax Return in Time.

NOTE: All things as explained above is to not encourage people to file voluntarily late return but only to inform taxpayers their liability so that they can take informed decision.

Source : Income Tax

Indian Investors are Good at Making Foreigners Richer

We all know the popular adage about putting one’s money where the mouth is. My experience of talking to investors and advisors in the last 6 months has taught me that we also need to put our money where our vote is!!! And by vote I don’t mean your or my individual vote – we needed to put money where our collective vote could have been!

This morning a leading national daily screams “FII inflows hit USD 5.7 bn (Rs 34,000 crs) in May” and then I see another financial daily, today as well, screaming “(Indian) Households puts two thirds of their savings in houses & gold”. Ouch!!!

Put Your Money Where Your Vote Is

Over the last 6 months we saw a lot of messaging on social media platforms like twitter and facebook about “achche din aane wale hai” in anticipation of a likely political change. There was a widespread feeling of dissatisfaction with the incumbent regime; talks of frustration with policy paralysis and resultant sluggishness in economic performance. Somewhere in September the popular Chief Minister of Gujarat, Mr. Narendra Modi was announced as Prime Ministerial candidate of the BJP and it was followed up with a 4 out of 5 states victory in state elections held in November 2013.

Sequence of events thus led to a belief; widespread again; that an industry and economy friendly (and hence market friendly) BJP had great prospects of forming a Government at the center under Mr. Modi’s leadership. The country showed a certain movement in belief and as we all know now the country voted in favour of a clear majority government after a gap of 30 years!

Now let’s look at what I mean by putting the money where the vote is. It is “we” the people who contributed to the “achche din aane wale hain” phenomenon by voting in large numbers in record turnouts. The “achche din” is yet to come but stock markets are forward looking in nature and in anticipation of the “achche din” the Nifty has already moved up 8% in May 2014 and nearly 15% since 2014 began.

But Who is Benefiting from Our Votes

But who do you think has benefited by our newfound electoral activism. And who will benefit? Unfortunately, doesn’t look like it is going to be “we” the people who engineered this.

FIIs invested Rs 34,000 crs in May alone on the back of Rs 32,000 crs already invested from Jan to April 2014. FIIs invested over Rs 1 lakh crs each in calendar years 2012 and 2013 and their total inflow (not today’s value) into India is already over USD 150 bn or Rs 9 lakh crs cumulatively since 1991. Indian Equity market has been the best performing large market globally in 2014 and also in last 10 years and it now figures in the top 10 markets by market capitalization.

While FIIs have invested the numbers stated above, in the last 5 years domestic institutions including mutual funds have sold equities consistently on the back of outflows from Indian investors. Domestic holding of Indian equity has been on a rapid decline. For instance in FY2014, Indian equity mutual funds witnessed an outflows over Rs 10,000 crs as opposed to over Rs 1 lakh crores buying from FIIs. And this has been the trend for the most part of last 5 years.

The situation was very well captured by a friend of mine when he posted this on a popular social networking site on April 17, 2014: “Sensex @ 22000 … FII inflow $13.7 b ( 82200 crs ) . FIIs , promoters (Buyback ), smart investors buying heavily ….. Indian investors withdraw $ 8.9 b….. Selling Stocks & MF . Investors are busy in “Achchhey din aanewaley hai , Hum Modiji ko laanewale Hai….. ”

????????
 

Who Contributes to Indian Companies Profits

I know that we Indians are very proud of our country and its economic prowess. Question is: Is it good enough to be just proud or should we even benefit from it?

Let me explain with couple of examples. In the last 20 years we have seen the rise of private sector banks in India, one of the most visible signs of India’s growth and economic liberalization is the new and improved banking sector. Let’s take HDFC Bank. What do we gain when such a well regarded bank grows and we can see them spread around us easily accessible everywhere?

HDFC Bank employ a lot of our youngsters giving them better standard of living and hence ability to consume and contribute to growth; we all can avail of home loans and car loans so we own potentially bigger houses and drive bigger cars. We get access to banking facilities like internet banking which enables us to buy online and pay bills faster. So we contribute to the growth but who participates in this growth? The shareholders! Isn’t it logical for consumers to want to be shareholders? Likely consumers as shareholders is generally reflected in the “non-promoter non-institutional” holding of shares of a company.

So what is this number for a widely “consumed” banking service like HDFC Bank? The number stands at about 16% of market cap as on March 31, 2014. It has fallen from 24.5% on March 31, 2008. Another about 10% we hold through our insurance and mutual fund subscriptions so the total is about 26%. And what about foreigners? They own 51% of the bank through FII holdings and issue of depository receipts (ADR/GDR holdings). So we contribute to about 100% of the consumption of their services but only participate 26% in their profits. More than half of our contribution goes towards enriching foreigners from India’s growth.

Let’s take another example – that of Hindustan Unilever Ltd. We love buying their soaps, shampoos, biscuits, ice creams, washing powders et al. We contribute 100% to the consumption of their products, but how much do we participate in their profits? Hold your breath – its 14.5% and another 4% that we hold through our insurance and mutual fund subscriptions. So here’s another example of us contributing to 100% of the consumption and growth but participating in only a meager 18.5% of the profits.

We are the Darling of Foreign Investors

Out of the entire market capitalization of the top 200 companies of India as represented by BSE 200 index, promoters own 57% and FIIs own over 21% as on March 31, 2014. We Indians – directly plus our investment in insurance and mutual funds hold just about 20%. If export oriented or international business income of these companies for a moment is assumed to be 20% of total earnings, we can say that we contribute 80% of the consumption but we participate in only 20% of the profits.

We are the darling of foreign investors – I hope you now understand why. We are very good at contributing but very bad at participating!!! We are very proud of India’s growth, we love to enrich others from India’s growth but we do not want to be rich ourselves.

About 300 years back, the East India Company came to India and forcibly took over a lot of our business. That was not fair on us but at least we have the luxury of blaming them for setting us back. But this time around who are we going to blame? Any guesses?

Let me end by telling you Equity investing has always been presented as an instrument to make larger return. The juncture where we find ourselves today, it appears to be an instrument of expressing patriotism and participating in India’s growth. Else let’s stop singing those “achche din aane wale hain” slogans because “achche din” are just going to pass us by!!!

Arcile by Aashish P Somaiyaa, MD & CEO Motilal Oswal Asset Management