Gist of Representations submitted by the Direct Taxes Committee of ICAI

As you are kindly aware that the Direct Taxes Committee is one of the most important non standing Committee's of the Institute. ICAI t...

As you are kindly aware that the Direct Taxes Committee is one of the most important non standing Committee's of the Institute. ICAI through its Direct Taxes Committee endeavours to strengthen the relationship between the tax payers and the revenue administration and for such purposes make continuous studies and analyses of the direct tax laws, rules, regulations, circulars, notifications, etc., which are enacted or issued by the Government from time to time and sends suitable memoranda containing suggestions for amendments and improvements in the respective legislations.

Please find below the gist of Representations submitted by the Direct Taxes Committee of ICAI from February, 2015 till date:

(I) Submission of suggestions on forms other than ITR

ICAI was requested to submit the suggestions on forms other than ITRs. In this regard, the Committee has submitted the suggestions in two parts:

a) Suggestions on Formats of Form Nos. 3CA/3CB/3CD

b) Suggestions on Format of other forms like Form No. 3CEB, 10CCB, 15CA etc.

The Committee had also requested to arrange to notify all the forms for AY 2015-16 at the earliest, preferably latest by 1st April, 2015.

(II) Submissions on "Income Computational and Disclosure Standards (ICDSs)”

The Central Board of Direct Taxes had constituted an Accounting Standard Committee in December 2010 to suggest standards for the purpose of notification under section 145(2) of the Act. The said Committee had submitted its final report along with draft of standards in August, 2012 which was placed in public domain for comments. On the basis of the suggestions received from the stakeholders and examination of the same by CBDT, the draft standards submitted by the Committee were revised. The draft of 12 Income Computation and Disclosure Standards were placed for comments from stakeholders and general public.

Accordingly, the ICAI has submitted its comments/suggestions on revised draft Income Computation and Disclosure Standards, which had been divided in the following two parts:

a) Part A: General submissions regarding the Final report of Accounting Standard Committee issued in August 2012 read with Draft ICDS. 

b) Part B: Detailed submission regarding each of 12 ICDS for appropriate consideration (including suggestions made earlier but not considered).

(III) Change in password on Income-tax E-filing Portal

A representation has been submitted for the measures required to be taken in the process of change of password on the lncome-tax Portal to ensure safety and to avoid misuse of the assessee's vital information.

Currently, the process of change of password on the lncome-tax E-filing Portal requires following steps:

1. Entering the user ID of the assessee.

2. Reset password gives 5 options as under:

a. Answer Secret Question

b. Upload Digital Signature Certificate

c. Acknowledgement number and Bank Account

d. Using OTP (PIN)

e. Login through your net banking account

After analysing the above mentioned options, it was observed that the option of "Acknowledgement number and Bank Account” could be misused easily by discriminating persons. Since these numbers can be collected by incriminating persons easily it poses a great threat for change of the password and subsequent misuse.

Accordingly, it was suggested that the department can opt for the similar process which it has recently opted for the change in profile of the assessee in which the profile has been updated by quoting the PIN sent on e-mail address and mobile number of the assessee. This will protect the interest not only of the assessee's but the Chartered Accountants who have the access to the password of the assessee's account and would be harassed by the authorities in pursuit of finding of the original defaulter.

(IV) Submission of Post-Budget Memorandum, 2015

As per the regular practice of ICAI, the Committee has submitted the Post-Budget Memorandum, 2015 addressing certain specific issues which are likely to arise in the implementation of the Finance Bill, 2015.

(V) Updation of e-TDS/TCS RPU (Version 4.2)

The Direct Taxes Committee has submitted a representation for Updation of e-TDS/TCS Return Preparation Utility (Version 4.2). The representation has been made to update the RPU for quarter 4 of the Financial Year 2014-15 as the available RPU for Form No. 24Q is accepting the deduction under section 80C upto an amount of Rs 1,00,000 only, although the said limit has been revised to Rs 1,50,000 vide Finance (No. 2) Act, 2014.

(VI) Suggestion for inclusion of certain details in the tax audit format utility for the AY 2015-16 and introduction of a suitable control mechanism in the IT system to adhere to the ceiling limit on tax audits

In order to monitor the number of tax audits filed by an assessee as per ICAIs guidelines and to ensure the quality of tax audit, the Committee has submitted a representation to the Income-tax department where they were requested to introduce a suitable control mechanism in the IT system to adhere to the limit on tax audits in consultation with ICAI.

With regard to the said purpose, the Committee has suggested that the following is deemed fit for inclusion in the tax audit report utility:

Date 

1. Name of the auditor …………….

Membership No.……………

Place 

2. Name of the Firm (if applicable) …………..

Firm Registration No. ……………

3. Name of the chartered accountant on whose behalf the audit has been done ………….

Membership No. .……………

(In case the member has done audit in his own name, the same is also to be mandatorily mentioned in this cell i.e. data provided in Point 1 is to be repeated here) 

The validation of the number of audits can be placed on the third sr. no. which will be mandatorily required to be filled by the tax auditor.

For the said purpose, it has been suggested that the above mentioned point should be incorporated in the tax audit format utility which will be notified soon for the AY 2015-16. With this change in utility a particular member will not be able to furnish tax audit reports beyond the prescribed ceiling recommended by ICAI. Since the present utility already provides for details of audits conducted under section 44AD/44AE/44AF, audits conducted by virtue of these sections can be mapped to be outside the purview of ceiling of tax audit as per ICAI's present guidelines. 

(VII) Inputs submitted for amendments to be made in the provisions of section 115JB (Minimum Alternate Tax) of the Income-tax Act, 1961 due to implementation of Ind AS

A meeting was held with the CBDT officials at North Block, Delhi, wherein suggestions and inputs were sought regarding the amendments to be made in the provisions of section 115JB (Minimum Alternate Tax) of Income-tax Act, 1961 with respect to companies who would be preparing their Financial Statements based on the Ind-AS. Accordingly, the Committee submitted its inputs on the same.

(VIII) Feedback on Arrear Demand Verification Portal

The IT department had informed the Committee that it had launched an Arrear Demand Verification Portal at https://incometaxindiaefiling.gov.in/ for which the department had requested ICAI to submit a feedback of Chartered Accountants in case of any technical or procedural issues being faced on the newly launched portal. Accordingly, a feedback on Arrear Demand Verification Portal was invited through mass mail from all the members. The feedback of the members, so received, were compiled and submitted to Income-tax department.

(IX) Suggestions on ITR Forms

With regard to discuss ICAI's views on the newly notified ITR forms, a meeting was held with the Hon'ble Finance Minister. The Committee submitted a representation on ITR Forms on the basis of deliberations made in the said meeting. Further, in order to simplify the Income tax return forms, a draft 'Single Direct Taxes Return Form' was also submitted.

Further, the CBDT had notified the ITR Forms for the AY 2015-16 vide Notification No. 49 dated 22.6.2015. Majority of suggestions submitted by ICAI were favorably considered and accepted by the CBDT.

(X) Exclusion of fee under section 234E in demand notices issued under section 200A upto 31.05.2015

The Finance Act,2015 has amended section 200A(1) by inserting clause (c) w.e.f. 01.06.2015 to enable computation of fee payable under section 234E of the Act at the time of processing of TDS statement under section 200A of the Act. Since section 234E was inserted after the insertion of section 200A in the Act, the provisions (prior to 01.06.2015) of section 200A of the Act does not provide for determination of fee payable under section 234E of the Act at the time of processing of TDS statements. However, members and assessees had been receiving demand notices under section 200A for the period upto 31.05.2015 with the levy of late fees under section 234E.

Due to hardship faced by the members and assesses, CBDT was requested to cancel the levy of fees under section 234E in the demand notices already issued under section 200A for the period prior to 01.06.2015.

(XI) Consequential amendment in Rule 37BB and related forms

The Finance Act, 2015 had amended sub section (6) of section 195 to provide that the person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall furnish the information relating to payment of such sum, in such form and manner, as may be prescribed. Consequent to such amendment in section 195(6), the relevant rule i.e. Rule 37BB of the Income-tax Rules, 1962 and related forms need appropriate amendment. Since the said amendment in section 195(6) is already in force (applicable w.e.f 01.06.2015), assessees filing form no 15CA and our members issuing certificate in form no 15CB are finding it difficult to comply with the new provision taking into consideration the intent of the government in making such amendment. Accordingly, the Committee submitted a representation in this regard and requested to take up the matter of making consequential amendment in Rule 37BB.

(XII) Enabling online rectification in Form 26QB (TDS on purchase of property)

The Committee was in receipt of e-mails from the members drawing attention towards the hardships being faced by the assessees on account of not being able to rectify inadvertent errors made by them in reporting a transaction relating to tax deduction under section 194-IA in Form 26QB. Accordingly, the Committee submitted a representation to devise a proper procedure / method for enabling correction/rectification of the mistake in Form no 26QB. It has been suggested to incorporate relevant options in the TRACES website so that mistakes therein can be corrected.

(XIII) Tax audit data for the Assessment years 2013-14 and 2014-15

To have a better quality control over the tax audits undertaken by a Chartered Accountant and with a view to curb the malpractice of misuse of details of Chartered Accountants in the Income-tax returns, the Committee has requested the department to provide the data relating to tax audits conducted by Chartered Accountants for the Assessment years 2013-14 and 2014-15 with detailed bifurcation.

(XIV) Submission of suggestions on 'The Black Money (undisclosed foreign income and assets) and Imposition of Tax Act, 2015'

Recently, the Parliament has enacted The Black Money (undisclosed foreign income and assets) and Imposition of Tax Act, 2015' on 26th May, 2015. With regard to the same, suggestions were sought from ICAI. Accordingly, the Committee has submitted suggestions on the same.

(XV) Representation on hardships faced by an assessee due to revision of stamp duty in the Maharashtra Stamp Act

The Maharashtra Act No.XX of 2015 has been amended and published in the "Maharashtra Government Gazette” on 24th April, 2015.

In light of the above amendment to Maharashtra Stamp Act, the Power of Attorney for representation before the tax authorities now needs to be executed on non-judicial stamp paper of Rs.500/-. It needs to be noted the fact that there has been a continuous revision in the stamping cost of the Power of Attorney. Earlier the cost was Rs.10 for each person subject to minimum of Rs.40 which was increased to Rs.100 which has now been increased to Rs.500 by making further amendments.

Thus the five- fold rise in the stamp duty for Power of Attorney's is very exorbitant when there are multiple proceedings pending before the Tax authorities and Tax Tribunal. This results in incurrence for unnecessary additional stamping cost for the Clients and results in undue financial hardship to the client/ representative. It is to be noted that ultimately this additional stamping cost is adding to the cost to be borne by the common man.

As per the view taken by Tax authorities, separate Power of Attorney is required for each assessment year for representation before Tax authorities. Further, for representation before the Tribunal, a separate Power of Attorney for the Counsel or the representative for each appeal (Assessee's appeal separately and revenue's appeal separately) pertaining to each assessment year. Further, separate Power of Attorney is required even for representation on stay petitions and also separate Power of Attorney is required for miscellaneous application (MA) for corrections of order filed before the Tribunal. The logic given by the Tribunal is that each appeal/ petition is a separate proceeding and hence separate Power of Attorney is required for representing the same.

In view of the above, the Committee has requested for the following: 

Review the revised stamping laws in the state and make necessary amendments in order to avoid unnecessary hardship to the Clients and Representatives.

Clarify whether it is possible to take a view now that general Power Of Attorney (POA) executed on stamp paper of Rs.500 is composite or common Power Of Attorney and therefore is valid representation for any number of matters pending in case of clients before the tax authorities.