Form 26AS replaced by Annual Information Statement

Amendment in Form 26AS

Sec 285BB was amended by the Finance Act 2020. By Income-tax (11th Amendment) Rules 2020 W.e.f. 01.06.2020 Rule 114-I has been inserted and Form 26AS shall now contain following information:

(i) TDS / TCS
(ii) Specified Financial Transactions

(iii) payment of taxes
(iv) demand and refund
(v) pending proceedings
(vi)completed proceedings

[Notification No. 30/2020/F. No. 370142/20/2020-TPL]

28th May, 2020

INCOME-TAX

G.S.R. 329(E).—In exercise of the powers conferred by section 285BB read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. Short title and commencement.-
(1) These rules may be called the Income-tax (11th Amendment) Rules, 2020.

(2) They shall come into force with effect from the 1^st day of June, 2020.

In the Income-tax Rules, 1962 –

(I)                 rule 31AB shall be omitted;

(II)              after rule 114H, the following rule shall be inserted, namely:- “Annual Information Statement

114-I. (1) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) or any person authorised by him shall, under section 285BB of the Income-tax Act,1961, upload in the registered account of the assessee an annual information statement in Form No. 26AS containing the information specified in column (2) of the table below, which is in his possession within three months from the end of the month in which the information is received by him:─

TABLE

Sl. No	Nature of information
(1)	(2)
(i)	Information relating to tax deducted or collected at source
(ii)	Information relating to specified financial transaction
(iii)	Information relating to payment of taxes
(iv)	Information relating to demand and refund
(v)	Information relating to pending proceedings
(vi)	Information relating to completed proceedings

Form 26AS shall be substituted by the following Form, namely:-

Form 26AS	Annual Information Statement [See rule 114-I  ]	Financial Year: XXXX-XX
		Assessment Year: XXXX-XX

                                                               Part-A

Permanent Account Number:		Aadhaar Number:
Name :
Date of Birth/Incorporation:
Mobile No. :
Email Address :
Address:

                                                                Part-B

Sl. No	Nature of information
1.	Information relating to tax deducted or collected at source
2.	Information relating to specified financial transaction
3.	Information relating to payment of taxes
4.	Information relating to demand and refund
5.	Information relating to pending proceedings
6.	Information relating to completed proceedings
7.	Any other information in relation to sub-rule (2) of rule 114-I

Compiled by :

CA IP Mukesh Mittal

B.Com., FCA, 

Insolvency Professional

Independent Director

Certified Concurrent Auditor

9215536951, 9813340495

ca.mukeshmittal@gmail.com

https://camukeshmittal.blogspot.com

DISCLAIMER: The Author has taken utmost care while drafting the article but it may occur that certain error creeps in. This article is for academic purpose and should not be treated as a professional or legal advice. The author in no case is responsible for any type of loss or damages occurred to readers of this article.

Change in definition of MSME

New Vs. Old definition of MSME

The govt. of India has changed the definition of MSME. The criteria for MSME has also been changed. Earlier the criteria was Investment in Plant and Machinery or Equipment and now the composite criteria is Investment and Annual Turnover. Earlier the criteria for manufacturing and service enterprises was different and now the criteria is same for manufacturing and service enterprises.

Below is the change in definition of MSME:

Existing MSME Classification
Manufacturing Enterprises
Micro: Investment in Plant and Machinery or Equipment < Rs. 25 Lac
Small: Investment in Plant and Machinery or Equipment < Rs. 5 Crore
Medium: Investment in Plant and Machinery or Equipment < Rs. 10 Crore

Service Enterprises
Micro: Investment in Plant and Machinery or Equipment < Rs. 10 Lac
Small: Investment in Plant and Machinery or Equipment < Rs. 2 Crore
Medium: Investment in Plant and Machinery or Equipment < Rs. 5 Crore

Revised MSME Classification
Manufacturing and Service Enterprises
Micro: Investment < Rs. 1 Crore and Turnover < Rs. 5 Crore
Small: Investment < Rs. 10 Crore and Turnover < Rs. 50 Crore
Medium: Investment < Rs. 20 Crore and Turnover < Rs. 100 Crore

Compiled by :

CA IP Mukesh Mittal

B.Com., FCA

Insolvency Professional

Independent Director

Certified Concurrent Auditor

9215536951, 9813340495

ca.mukeshmittal@gmail.com

https://camukeshmittal.blogspot.com

DISCLAIMER: The Author have taken utmost care while drafting the article but it may occur that certain error creeps in. This article is for academic purpose and should not be treated as a professional advice. The readers are advised to refer the Bare Acts and Rules before making any judgment. 

Video with Screen Share on How to register and qualify for Independent Director

Video with Screen Share on How to register and qualify for Independent Director

You tube Video Link

Video by :

CA IP Mukesh Mittal

B.Com., FCA

Insolvency Professional

Independent Director

Certified Concurrent Auditor

9215536951, 9813340495

ca.mukeshmittal@gmail.com

https://camukeshmittal.blogspot.com

Disclaimer: This Video is prepared by CA IP Mukesh Mittal and all the rights are reserved for this Video with CA IP Mukesh Mittal. This is only for personal knowledge and can not be claimed as legal opinion or any type of consultancy in this regard.

Practical Analysis of Benami Transactions Prohibition Act

Practical Analysis of Benami Act:

The original Benami Act was introduced in 1988 for prevention of black money but due to some inherent limitations of the Act it could not be implemented with full force, and therefore, an amendment was introduced in 2016 to ensure the successful enforcement of the Act.

An amendment was issued instead of a new Act because if a new Act were introduced then the transaction entered from 1988 to 2016 would get immunity as the law does not allow retrospective penalization.

The amendment in 2016 of the original Benami Act created a sudden storm in the nation bringing about a lot of curiosity in people. A lot of people are worried about the impact of the Act on their property and its possible outcomes. The aim of the Benami Transaction Act is to prohibit benami transactions. It states that any person entering into a benami transaction shall be liable for prosecution

Real estate is one of the major sectors for generation and investment of unaccounted money known as ‘black money’, in India. The Benami Act was introduced to curb black money transactions to ensure that all real estate transactions are conducted in the name of the actual owner where the consideration is paid from his known sources.

This will increase the tax revenue for the Government by stopping black money from pumping into the system and will help in bringing down corruption and unfair trade practices. Also it will increase transparency and honesty in real estate dealings.

Reason behind people enter into Benami Transaction

There can be several reasons why people enter into a benami transaction. Usually people who enter into a Benami transaction are those who have money earned from unknown sources i.e. black money. Thus, to utilise the black money, people enter into benami transactions where the transaction is made in the name of another person but the consideration is paid by the person out of his black money.

Since these people cannot show the transaction in their own names due to the usage of black money, therefore they use the names of other people or create some fictitious names for entering into such transactions known as benami transaction.

Another reason why people enter into benami transactions is that they want to hide the true ownership of the benami property from their creditors or from the banks.

Meaning of Benami

Benami literally means ‘without a name’. Therefore an asset without a legal owner or a fictitious owner is called benami. It can be a property of any kind, whether movable or immovable, acquired by way of benami transaction.

The Hon’ble Supreme Court in Bhim Singh v. Kan Singh, has explained Benami Property Transaction as:

Where a person buys a property with his own money but in the name of another person without any intention to benefit such other person, the transaction is called benami and the Property is called Benami Property.

In such cases the transferee holds the property for the benefit of the person who has contributed the purchase money, and he is the real owner.

Meaning of Benami Transaction 

The law states the following as a benami transaction:

(A) a transaction or an arrangement—

a.  where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and

b.  the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration,

(B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or

(C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership;

(D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious;

 A transaction is considered as benami transaction if any one of the following holds true,

•  Deals are in a fictitious name; or
• The owner is unaware of or denies knowledge of the ownership, or
• The person providing the consideration for the property is not traceable.

A suspected Benamidar will be served a notice on source of funds by an Initiating Officer. If the answer is not satisfactory, action will be initiated under Benami Transactions Prohibition Act, 2016.

Meaning of Benami Property

 Benami Act encompasses all kinds of properties whether movable or immovable. The definition given by the law clearly states that:

“property” means assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property;

For instance: In case of de-monetisation, if a person deposits his old currency in the account of another person with an arrangement such that, that the account holder will return the money in new currency is also a benami transaction.

Prohibition on Transfer of Benami Property

The Act prohibits resale of the benami property from the Benamidar to the real owner (or to any person acting on his behalf). Such transactions would be considered as null & void.

The Act does not prohibit the sale of a benami property to a third person. However, if the property is sold to a third party and the transaction concluded by way of registry of the sale, the department can only attach the proceeds from the sale, not the property.

Exceptions of Benami Transactions

Transactions not classified as Benami Transactions

When the property is held by—

• ·      a Karta, or a member of a Hindu undivided family, as the case may be, and the property is held for his benefit or benefit of other members in the family and the consideration for such property has been provided or paid out of the known sources of the Hindu undivided family;

• ·     any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual;

• ·     any person in the name of his brother or sister or lineal ascendant or descendant (parents or children), where the names of brother or sister or lineal ascendant or descendant and the individual appear as joint-owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual;

• ·     a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 and any other person as may be notified by the Central Government for this purpose; For eg: Trust.

Punishment for entering into a Benami Transaction

As per the provisions of act, entering into benami transactions is prohibited. Anyone who enters into any benami transaction shall be punishable with imprisonment for a term which shall not be less than 1 year and shall not exceed 7 years. In addition to this, fine of 25% of the fair market value of the property shall be payable.

In addition to it, any person who is a party to a benami transaction or has provided false information shall also be liable for prosecution for which the punishment shall not be less than 6 months up to 5 years and a fine which may extend up to 5 years and may include a fine up to 10% of the fair market value of the property.

The Act further prohibits resale of the benami property from the benamidar by the real owner and where the benamidar re-transfers the property to the beneficial owner, then the transaction for such re-transfer shall be deemed to be null & void.

Properties that are held as benami are liable to be confiscated by the Government without payment of any compensation.

How does Benami Act affect me?

Benami transactions are entered in to by people who have black money and usually invest in to real estate. Such people who have black money and enter into Benami Transactions would be very badly affected by this act as a huge penalty would be levied on them and they can also be sent to jail.

Genuine transactions where any property is acquired by way of payment from known sources of income and for their own direct benefit will not be affected. Usually people enter into genuine transactions and therefore they don’t have to worry about this.

The major impact will be on the real estate sector where there will be increased clarity with respect to the title of the property i.e. the real ownership of the property.

Compiled by :

CA IP Mukesh Mittal

B.Com., FCA

Insolvency Professional

Independent Director

Certified Concurrent Auditor

9215536951, 9813340495

ca.mukeshmittal@gmail.com

https://camukeshmittal.blogspot.com

DISCLAIMER: The Author have taken utmost care while drafting the article but it may occur that certain error creeps in. This article is for academic purpose and should not be treated as a professional advice. The readers are advised to refer the Bare Acts and Rules before making any judgment. 

How to become an Independent Director

How to become an Independent Director

Applicable section, Rule & Schedule to Independent Directors

(a) Section 149 of the Companies Act, 2013,

(b) Rule 4 & Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014

(c) Schedule-IV.

Non-applicability of Provisions related to Independent Directors – Private company, OPC, Small Companies, Wholly Owned subsidiary, Dormant Companies evenif they meet the threshold criteria.

Appointment of Independent Director– By shareholders in general meeting by passing Ordinary resolution .

Re-appointment of Independent Director– By passing Special Resolution. The re-appointment of independent director shall be on the basis of report of performance evaluation.

Status of Independent Directors in a Company – Non-executive Director

Tenure of Independent Directors in a Company – Maximum term of 5 years and maximum 2 consecutive terms thereafter a Gap of 3 years is compulsory for reappointment.

Director's Report - in the Directors’ Report a Statement shall be included by the Companies which shall declare that the ID on the Board have cleared the online proficiency self­ assessment conducted by the IICA unless they are otherwise exempted from the same.

A statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year.

the expression “proficiency” means the proficiency of the independent director as ascertained from the online proficiency self­ assessment test conducted by the IICA.

Conclusion: Independent directors perform functions that are critical to good corporate governance. It is necessary that qualified independent directors are on the boards for the development of our Companies.  This process of examination and maintenance of databank will be a single-window platform where the companies looking for independent directors can meet those willing to serve on their boards. These are progressive steps that would enhance corporate governance standards across the Boards of the Companies in India.

Inclusion in the data bank & ONLINE Examination

The new norms applicable to below Category only:-

·        Those who are already serving as “ Independent Director” in the Board of a company

·        Those professional who are intending to be appointed as “ Independent Director”

·        The companies which are required to appoint “ Independent Directors”

Shall mandatorily apply ONLINE to the institute (IICA) for inclusion of his name in the data bank of ID to be maintained by IICA.

Steps to be followed after the inclusion of name in the Online Database:

Every individual shall pass an online proficiency self-assessment test conducted by the institute within a period of one year from the date of inclusion of his name in the data bank.

PASSING MARKS:  Individual shall have to score not less than sixty percent. in aggregate to pass the examination. The Number of attempt to clear such exam is not limited.

Non-Compliance: failing to pass such test his name shall stand removed from the databank of the institute.

The name may be included for a period of: ONE YEAR or FIVE YEARS or FOR HIS LIFE-TIME.

Renewal of the Information shared at Databank:

BY: Every individual whose name has been so included in the data bank

Process of Renewal: By Filing an application for renewal to IICA

Period of Renewal : The Individual may renew his information in the databank for a further period of one year or five years or for his life-time, within a period of thirty days from the date of expiry of the period upto which the name of the individual was applied for inclusion in the data bank.

If not renewed: The name of such individual shall stand removed from the data bank of the institute:

Exemption: No application for renewal shall be filed by an individual who has paid life-time fees for inclusion of his name in the data bank.

EXEMPTION FROM THE ONLINE ASSESSMENT TEST:

Individual who has served for a period of not less than ten years as on the date of inclusion of his name in the databank as director or key managerial personnel of:

A. listed public company

B. unlisted public company having a paid-up share capital of rupees ten crore or more is not required to pass the online proficiency self-assessment test. However registration on the IICA shall remain to be compulsory for such persons also.

Condition: for the purpose of calculation of the period of ten years, any period during which an individual was acting as a director or as a key managerial personnel in two or more companies at the same time shall be counted only once.

Maintenance of Databank of Individuals who are willing and eligible to be appointed as independent directors in an online manner by the IICA on its website.

Databank to have following details:

A. DIN (Is applicable) – A person can get his name included in the databank even without having a DIN.

B. Income Tax PAN

C. the name and surname in full

D. the father’s name

E. the date of Birth

F. gender

G. the nationality

H. the occupation

I. full Address with PIN Code (present and permanent)

J. phone number

K. e-mail id

L. the educational and professional qualifications

M. experience or expertise, if any

N. any pending criminal proceedings as specified in clause (d) of sub-section (1) of section 164

O. the list of limited liability partnerships in which he is or was a designated partner along with –

i. the name of the limited liability partnership;

ii. the nature of industry; and

iii. the duration- with dates;

P. the list of companies in which he is or was director along with ­

a. the name of the company;

b. the nature of industry;

c. the nature of directorship – Executive or Non-executive or Managing Director or Independent Director or Nominee Director; and

d. duration – with date

Privacy clause: Individual may restrict his personal information to the institute, to be disclosed in the data bank.

Changes to the Information shared on Databank by the Individual: Any Changes in the information shared by the individual to the data bank shall be done by him in 30 DAYS.

Fees for the individuals: The Individuals for inclusion of their names in the data bank of independent directors are required to pay a certain amount of fees to the IICA and that fees shall again be paid at the time of renewal after the completion of the period for which the name was included except in cases of life time validity.

Fees for the Companies: The Companies willing to appoint Independent Director can access such information ONLY AFTER PAYING A REQUIRED FEES TO THE IICA.

Duties of the institute (IICA):

• The institute shall conduct an online proficiency self-assessment test covering companies law, securities law, basic accountancy, and such other areas relevant to the functioning of an individual acting as an independent director
• prepare a basic study material, online lessons, including audio­ visuals for easy reference of individuals taking the online proficiency self-assessment test
• provide an option for individuals to take advanced tests in the areas specified in clause (a) and prepare the necessary advanced study material in this respect

Note:

1. No separate fees shall be charged by the institute in respect of its above 3 duties.

2. The Details of the Name included, applications rejected and names removed shall be shared by IICA with the MCA.

3. The Course shall be structured by panel of not more than ten members nominated by the Central Government.

Compiled by :

CA IP Mukesh Mittal

B.Com., FCA

Insolvency Professional

Independent Director

Certified Concurrent Auditor

9215536951, 9813340495

ca.mukeshmittal@gmail.com

https://camukeshmittal.blogspot.com

DISCLAIMER: The Author have taken utmost care while drafting the article but it may occur that certain error creeps in. This article is for academic purpose and should not be treated as a professional advice. The readers are advised to refer the Bare Acts and Rules before making any judgment.