Should you file tax return even without taxable income?

Yes, if you are planning to apply for a loan or have rental income of more than Rs 1.8 lakh a year

With the last date for filing income tax returns (ITR) fast approaching, most tax payers are probably in the midst of doing so. But, what if your income is below the taxable limit of Rs 2.5 lakh per annum? Should you still file returns? You should, under a few circumstances. Some of these are mandatory, while some are advisable as there are benefits of filing.

The biggest benefit is that it helps when you apply for a loan in future or when you apply for a visa, say tax experts. For any home loan, vehicle loan, car loan, etc, most lenders ask for proof of tax returns of the previous three years. So, if you have just entered the work force and at Rs 20,000 a month, your annual salary is below the taxable limit of Rs 2.5 lakh, you are not required to file returns. But, it is useful to do so because you can build proof of your finances. Even if you are applying for a loan as a co-borrower, the return will serve as proof of your income. Similarly, if you are planning to travel abroad, tax returns are required while applying for a Visa.

Since 2012, any individual holding a foreign asset has to mandatorily file returns, even if there is no income from that asset, says Sanjeev Gokhale, a Mumbai-based chartered accountant. “It could be a foreign bank account, immovable property, partnership in a firm, etc. But, they may still continue to hold foreign assets. In such cases, they have to file returns,’’ he points out.

Gokhale cites the example of a client who is a retired senior citizen. She earned Rs 7 lakh interest-free income from tax-free bonds and her taxable income was only Rs 14,000. “While there was no need for her to file returns, I advised her to because it is proof that she has income, even if it is not taxable. There is a column in the ITR form where you can show your non-taxable income,’’ he adds.
A reason why you have to mandatorily file returns is to claim tax refund or set off losses. For instance, if you have suffered losses from stock market transactions and you want to carry it forward to the next year, you must file for a refund, even if your annual income is below the taxable limit, says Divakar Vijayasarathy, co-founder of Meeturpro.com, an online marketplace for tax, legal and regulatory services.

Or it could happen that despite your income being below the taxable limit, your employer has cut TDS (tax deducted at source). Or you earned some money through freelance work and the company deducted TDS at 10 per cent. But since your income is lower than the taxable limit, you are entitled for a refund. For claiming this refund, you have to file a return.

 Another case could be if you are earning rental income of more than Rs 1.8 lakh a year. In this case, the tenant has to deduct TDS. So, while you are entitled to refund, if you have no other source of income, you have to file a return to claim the refund, says Varun Advani, chief operating officer, makemyreturns.com, a registered e-return intermediary.“ITR is a way to legitimise your financial standing and maintain a healthy financial transaction,’’ says Advani.

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With the last date for filing income tax returns (ITR) fast approaching, most tax payers are probably in the midst of doing so. But, what if your income is below the taxable limit of Rs 2.5 lakh per annum? Should you still file returns? You should, under a few circumstances. Some of these are mandatory, while some are advisable as there are benefits of filing.

The biggest benefit is that it helps when you apply for a loan in future or when you apply for a visa, say tax experts. For any home loan, vehicle loan, car loan, etc, most lenders ask for proof of tax returns of the previous three years. So, if you have just entered the work force and at Rs 20,000 a month, your annual salary is below the taxable limit of Rs 2.5 lakh, you are not required to file returns. But, it is useful to do so because you can build proof of your finances. Even if you are applying for a loan as a co-borrower, the return will serve as proof of your income. Similarly, if you are planning to travel abroad, tax returns are required while applying for a Visa.

Since 2012, any individual holding a foreign asset has to mandatorily file returns, even if there is no income from that asset, says Sanjeev Gokhale, a Mumbai-based chartered accountant. “It could be a foreign bank account, immovable property, partnership in a firm, etc. But, they may still continue to hold foreign assets. In such cases, they have to file returns,’’ he points out.

Gokhale cites the example of a client who is a retired senior citizen. She earned Rs 7 lakh interest-free income from tax-free bonds and her taxable income was only Rs 14,000. “While there was no need for her to file returns, I advised her to because it is proof that she has income, even if it is not taxable. There is a column in the ITR form where you can show your non-taxable income,’’ he adds.
A reason why you have to mandatorily file returns is to claim tax refund or set off losses. For instance, if you have suffered losses from stock market transactions and you want to carry it forward to the next year, you must file for a refund, even if your annual income is below the taxable limit, says Divakar Vijayasarathy, co-founder of Meeturpro.com, an online marketplace for tax, legal and regulatory services.

Or it could happen that despite your income being below the taxable limit, your employer has cut TDS (tax deducted at source). Or you earned some money through freelance work and the company deducted TDS at 10 per cent. But since your income is lower than the taxable limit, you are entitled for a refund. For claiming this refund, you have to file a return.

 Another case could be if you are earning rental income of more than Rs 1.8 lakh a year. In this case, the tenant has to deduct TDS. So, while you are entitled to refund, if you have no other source of income, you have to file a return to claim the refund, says Varun Advani, chief operating officer, makemyreturns.com, a registered e-return intermediary.

“ITR is a way to legitimise your financial standing and maintain a healthy financial transaction,’’ says Advani.

Mistakes to avoid when filing I-T returns

Don’t forget to include interest earned on investments and also declare those exempt from tax

You open a recurring deposit in your child’s name and invest Rs 5,000 every month. If the interest earned on it is not declared while filing tax returns, the authorities can send you a notice, as it would amount to tax evasion. That’s because the interest earned by a child below 18 years is clubbed with the income of the parent.

There are several such instances when individuals don’t declare their income or assets because they do not realise these items are taxable. Another example: interest earned on the cash in your savings bank  SB account. In a financial year, if a person receives over Rs 10,000 in interest in the SB account, he needs to pay tax on it.

“Many people don’t include the interest earned on company deposits, fixed deposits, and postal saving schemes, as tax is deducted at source on these investments. However, they are supposed to declare and pay the applicable on it,” says Kuldip Kumar, partner at PwC.

Many don’t report income that is exempted from tax. Say, someone sells his or her mutual fund investment after one year of holding it or receives dividends on the stocks. In the income tax form, there’s a separate schedule for such income that is exempted from tax and individuals have to declare it.

According to the law, if a person receives a gift valued above Rs 50,000 from a non-relative, he or she needs to pay tax on it. The value of such items is clubbed with one’s income and taxed according to the slab. However, there are certain exceptions. For example, presents received in a wedding. While these need to be declared, you don’t need to pay tax.

Amit Ajmera, director – direct tax, BDO India, points out another common mistake. “These days, many taxpayers own two houses. If the second house is not let out, the owner still needs to pay tax on the rent he would have received through the property.” For this, the person needs to find the ongoing rent in the area, say from a real estate broker, and compute his tax liability accordingly.

Experts say before filing returns, the person should go through the Form 26AS, which is accessible once he logs into the income tax department’s e-filing website. Other than the tax deducted by the employer, taxpayers need to go through the other instances of TDS. In case the TDS from a bank or any other institution is not reflecting in Form 26AS, the person needs to approach them and ask for an update. “When people change jobs in the middle of the financial year, they forget to report the income earned from the former employer. Form 26AS comes handy to compute the tax,” says Ajmera.

Many salaried don’t file income tax returns if they don’t have investments or other income. Tax experts say filing of return is compulsory if your income is taxable. Once the filing is done, make sure ITR-V is duly signed and sent to the central processing centre, Bengaluru, and that the authorities have received it. If this is not done, the I-T filing is considered as invalid.

Filing returns can be tricky if you play the stock market

If losses from F&O, intra-day trades are below Rs 20,000-30,000, it’s best not to claim them and opt for ITR-2

If you are a salaried person who trades in stocks, filing income tax returns can be a tricky job. Depending on the instrument, frequency of trade and volume, you can either fill the ITR-2 form meant for the salaried with no business income or ITR-4 is for income from business and profession.

“Deciding which form to fill has always been a controversial. There have been multiple court rulings on this one. Yet, it still can be a grey area,” says Kuldip Kumar, partner-tax and regulatory services, PwC India.

Take, the case of Ajitesh Pathak, a bank employee who also trades in stocks. He has no fixed period of trading – makes investment as and when he finds a stock at an attractive price. Experts say if he has taken delivery of all the stocks, he can fill ITR-2. In this form, he can show the gains and losses he made, and in case of the latter, they can be carried forward to the next seven years to set them off against future capital gains. If the portfolio is purely delivery-based, the taxpayer has better chances of convincing the assessing officer it was for investment purpose and it’s not assessee’s business.

However, if Pathak went long or short on stocks, wherein he didn’t take the delivery, this would be classified as income from speculative business, and he will need to fill up ITR-4. This form will also allow him to claim expenses related to this business. For example, if he has a car and a computer that he has used for this, he can claim depreciation on them. All this sounds good as long as he has not made losses. If he did and want to claim them, then he will need to maintain books of accounts and get them audited by a chartered accountant. “Those who trade in futures and options (F&O), mandatorily need to file ITR-4. Income tax laws define this as income/loss from business. If the income is more than Rs 1 crore, he will also need to maintain book of accounts and get them audited.,” says Amol Mishra, head of tax at myITreturn.com.

It gets complicated if the salaried is doing both delivery and speculative trading. In such a case, the person will need to bifurcate the portfolio into ‘investments’ and ‘stock-in-trade’ (non-delivery based). The rules to carry forward the losses will, however, vary. In case of intraday, they will be treated as income from speculative trade. The losses can be carried forward only for four years and cannot be set off against non-speculative gains. Trades in derivatives are considered to be non-speculative.

Tax experts say if a salaried person does not trade regularly in F&O or intraday, and has losses below Rs 30,000, it’s best not to claim losses and fill ITR-2. The compliance cost can be high since the chartered accountant who audits the books will change at least Rs 20,000-30,000, wiping out any gains you have made. In case of small gains, the person can declare them under income from other sources. “At the end of the day, if a person’s tax rate is 30 per cent, he will end up paying the same amount of tax, no matter which form he fills,” says a tax expert.

Tax filing for professionals

Don’t be intimidated by the long form if you have a small turnover and limited clients. Here’s how to go about it

The new income tax return form, ITR-4, for professionals can be intimidating. The 30-page form, also meant for Hindu Undivided Families and those owning proprietary business, mostly tries to capture business information and goods-related information such as cess, taxes, freight on goods, cost of raw material and finished goods, and so on.

If you are a professional with a small turnover or gross receipts such as artist, photographer, interior decorator, fashion designer or a tutor, there are only a few areas you need to focus on. Here’s a brief guide to calculating your tax liability and filing returns.

Salaried & professional
If you are salaried and also work as a professional for extra income, you might also need to file ITR-4. “If a person regularly works through the year as a freelancer, along with a job, he or she would be called a professional,” says Tapati Ghose, partner at Deloitte Haskins & Sells. For example, a person employed with a software firm also regularly develops software for others. Such a taxpayer would be classified as a professional.

Amarpal Chadha, tax partner at Ernst & Young says even if a person takes up one assignment but makes significant money, say, equivalent to his salary or more, it is better to file tax as a professional to avoid later questioning by the income tax (I-T) department.

HOW TO FILE
Calculate turnover: Take a printout of your bank accounts. Check the money you have received and tally it with the receipts. Add payment received in cash. This will be your gross receipts or turnover. From this, deduct all the eligible expenses incurred to generate the income such as travelling expenses, remuneration paid to employees, consultants, freelancers, and utility and internet bills. If you travel to meet clients, have meeting, and pay for meal and entertainment expenses, these are also deductible. “The taxpayer should be able to substantiate the expenses and be able to prove their genuineness to the I-T department in case they raise a query,” warns Ghose.

Depreciation: As a professional, the department allows you to claim depreciation. But, the person needs assets in their or the business’ name. Some of these include car, office furniture, office camera, and office computer. Depending on the nature of your work, the rules specify the method of calculating depreciation on different assets.

Books of account: If the taxpayer is not organised, tax experts say before filing taxes, he or she should get the books of account in order. “Every businessperson or professional needs to maintain books of account where the income is more than Rs 1.2 lakh or the total sales/receipts are over Rs 10 lakh in any of the past three years,” says Suresh Surana, founder, RSM Astute Consulting Group.

The I-T Act specifies the various documents that professionals need to maintain. For example, people in a general profession should have a cash book, a journal, a ledger, carbon copies of bills and original bills wherever these are issued to persons.

TDS: Once the person has calculated gross receipts, deducted expenses, and claimed depreciation, he should look at the tax that his or her clients have already deducted while releasing payments. For this, you need to log into the I-T e-filing account and click on the option that takes you to Form 26AS. In case some of the TDS (tax deducted at source) is not reflecting, you will need to approach the client and ask them to update their accounts. Ernst & Young’s Chadha says at the end of the financial year, the professional should also approach the clients and ask them for a copy of Form 16A.

When you need to deduct taxes: There are times when you would also need to deduct TDS on the payment you make. If you have employees and the salary paid to them is taxable, meaning, more than Rs 2.5 lakh, then you also need to deduct taxes. If you also hire freelancers for your work and your gross receipts are more than Rs 25 lakh, you need to opt for TDS while making payments of more than Rs 20,000.

Borrowed money? If your bank account statement shows money borrowed from a friend or a family member, the money is not taxable. However, if it is waived off later, you will need to pay tax on it. Surana of RSM Astute Consulting Group says a person should maintain a document that specifies the terms and conditions of the loan, identity proofs and PAN details of both the parties. This will come handy if the I-T department raises any question on it. However, the transaction has to be via a banking channel. If you borrow by way of cash, then that amount will be questionable and if it is over Rs 20,000, there will be a penalty for having borrowed in cash.

When audit is necessary: A professional is subjected to tax audit if the total gross receipts are more than Rs 25 lakh in a financial year.

From gross receipts, deduct the expenses and depreciation. You will get the amount on which tax needs to be paid. Calculate the tax already paid via TDS, and accordingly arrive at your tax liability for the year.

Accounting method
Deloitte’s Ghose suggests that if the business is small, it’s better the person follow a cash accounting methodology rather than the mercantile/accrued system of accounts. In a cash account, the person pays tax only when he receives payments. In the accrued system, the person needs to include the money for which the bill is raised, despite not receiving the payment. If the client does not pay, he will need to write it off in the next financial year. This can be cumbersome.

Taxpayers can revise I-T returns unlimited times…

…but, the original return has to be filed in the stipulated period

There are many individuals who after filing their income tax returns have realised there was a mistake in the form or the data submitted was not correct. It could be anything – certain income was not declared, postal address or bank details were wrong, or the wrong ITR form was filled.

They need not worry.

The income tax (I-T) department allows payers to add omitted information and rectify errors if the returns were filed within the stipulated deadline. For the financial year ending 31 March, 2015, the deadline for filing returns is August 31, 2015. Interestingly, a person is allowed to amend the filing as many times he or she wishes to, but not later than 24 months from the last date of the financial year. In this case, the last date for filing ‘revised return’ will be March 31, 2017.

Vikram Ramchand, CIO & co-founder of Makemyreturns.com gives an example of his client, who works with an information technology company. The client was in the US for financial year 2013-14, where he had a 401 (k) account, which is a retirement savings plan. Last financial year (2014-15), he was based in India, and therefore filled up ITR-1. As per the current laws, if a taxpayer has foreign assets, he needs to fill up the form ITR-2. As the original returns were done in time, the client could easily revise and submit the correct details.

Ramchand also points out that there is a recent judgment that even allows taxpayers to include capital losses that can be carried forward for eight years and set off against capital gains, provided the return was filed on time.

To revise the returns, all that an individual needs is the 15-digit acknowledgement number of the original tax filing and the date on which it was done. While the revision is possible for omissions and rectification, if there was any concealment of false information that was included in the original filing, the same is not allowed and the

I-T department would levy a penalty. Whether it is treated as omission or concealment, however, will largely depend on the assessing officer. In case of latter, the officer can levy a penalty to the tune of 100 per cent to 300 per cent of the tax due.

To make the changes, you can either go online or for physical revision. However, if the original was filed online, then the person mandatorily needs to opt for the revision through the web/internet. After you log in, from the drop down menu select the option — Filing under Section 139 (5). You can make the required changes, pay any extra tax that is due, and get the acknowledgement number for the revised filing.

Amol Mishra, head of tax at myITreturn.com says that if the revised return lowers a person’s tax liability, his or her return is likely to come under scrutiny. Of course, individuals should not bother where the case is genuine. “Whatever changes one makes, the person should ensure that he has the supporting documents in case the I-T department calls the taxpayer for explanation,” adds Mishra.

Experts point out that if a person is revising the returns more than once, he will need to quote the original acknowledgement number and date of filing in all subsequent revision. For example, if a taxpayer’s original date of filing this year is August 1, for every subsequent revision, details of the tax filed on August 1 needs to be quoted. And, after filing, do remember to send the ITR-V to Bangalore CPC if your returns are not e-verified using the Aadhaar card.

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Cheats target LIC customers

 

Cheats target LIC customers

New Delhi, Jan 11, 2015, DHNS:

A A

Three men have been arrested in west Delhi for cheating on the pretext of providing a Life Insurance Corporation bonus of Rs 2.4 lakh. The gang targeted LIC and MTNL’s customers, police said on Saturday.
The accused have been identified as Keshav Kumar, 28, Gurpal Singh, 25, and Pawan Pal Singh, 26. The gang was busted after a victim named Yashpal Dhawan approached Rajouri Garden police station. Yashpal had been receiving phone calls in which the caller introduced himself as an official of LIC’s head office in Mumbai.
“The caller informed that Yashpal had won a bonus of Rs 2.4 lakh from LIC,” said Pushpender Kumar, Deputy Commissioner of Police (West). Yashpal was asked to provide his voter ID card, two photographs and a processing fees of Rs 30,000. They claimed the fee had to be paid through cheque and the amount will be refunded with the bonus.
Yashpal had been told to send the cheque through courier, but he refused and asked the caller to send an employee to collect it. On January 2, a man met Yashpal and took the cheque of State Bank of India. On the same day, Yashpal contacted LIC, but found that he had been duped.
Over Yashpal’s statement, a case of cheating was registered with Rajouri Garden police station. The police team contacted the courier company and apprehended Keshav, Gurpal and Pawan. They told police that a man named Rupinder is the mastermind of the conspiracy. Rupinder was working with Reliance Life Insurance, but was not satisfied with the job.
In April 2014, he came in contact with a man named Ram Singh, who asked him to open a call center and sell membership of his City Club and ICI Club. “Rupinder opened a call center. But nobody was willing to take the membership of the clubs,” Kumar added.
Rupinder then hatched a conspiracy to cheat people on the pretext of bonus in LIC. He involved Pawan and Gurpal to obtain a list of residents having MTNL landlines connection. They analysed that MTNL phones were mostly used by senior citizens.
They asked victims to pay money ranging from Rs 15,000 to 50,000 as processing fee which would be refunded. Pawan worked in a call centre operated to contact victims.

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INDIAN BUDGET 2014-15 – personal & corporate taxation

Personal Tax:
There are no proposal for changes in the income tax rates in Budget except change in individual income tax slabs, which is as under:
• Individual, HUF, AOPs and BOIs

FY 2013-14 TAX RATE PROPSED FY 2014-15 TAX RATE
Upto Rs .2,00,000 Nil Upto Rs .2,00,000 Nil
Rs. 2,00,000 to Rs. 2,50,000 Tax @ 10.30% Rs. 2,00,000 to Rs. 2,50,000 Nil
Rs 2,50,001 to Rs 5,00,000* Rs. 5,150 plus tax @ 10.30% Rs 2,50,001 to Rs 5,00,000* Tax @ 10.30%
Rs 5,00,001 to Rs 10,00,000** Rs. 30,900 plus tax @ 20.60% Rs 5,00,001 to Rs 10,00,000** Rs. 25,750 plus tax @ 20.60%
Rs. 10,00,000 to Rs. 1 crore Rs. 1,33,900 plus tax @ 30.90% Rs. 10,00,000 to Rs. 1 crore Rs. 1,28750 plus tax @ 30.90%
Above Rs. 1 crore Rs. 29,14,900 plus tax @33.99% Above Rs. 1 crore Rs. 29,09,750 plus tax @33.99%

* In case of a resident individual of the age of 60 years or more (senior citizen) at any time during the previous year, the basic exemption income slab of Rs. 3,00,000. The relief on overall tax would from the above be Rs. 5,150 for FY 2013-14 and Rs. 10,300 for FY 2014-15
** For resident individual of the age of 80 years or more (very senior citizen) at any time during the previous year the basic exemption income slab of Rs. 5,00,000 continues to remain the same.
Tax rates of Partnership firm and Limited Liability Partnership (LLP):
• There is no change in the existing tax rates of partnership firms and LLP.
• There is no changes in Alternate Minimum Tax on firms

Corporate taxation:
• There is no change in the tax rates and Minimum Alternate Tax (MAT) of domestic company and foreign company.
• There is no change in the rates of Dividend Distribution Tax.

Domestic Company Foreign Company
Total income FY 2013-14 FY 2014-15 FY 2013-14 FY 2014-15
-Below 1 Cr 30.90% 30.90% 41.20% 41.20%
-Between Rs. 1 Cr to Rs. 10 Cr 32.45% 32.45% 42.02% 42.02%
-Above Rs. 10 Cr 33.99% 33.99% 43.26% 43.26%

1.2. Budget proposal for personal taxation
• The personal income tax slabs is increased from Rs. 2,00,000 to Rs. 2,50,000 for an Individual (below 60 years) Hindu undivided family, association of persons, body of individuals, artificial juridical person
• The income tax slabs for senior citizen (from 60 years to 80 years) increased from Rs. 2,50,000 to Rs. 3,00,000.
• The limit for claiming deduction under section 80C is increased from Rs. 1,00,000 to Rs. 1,50,000. Correspondingly even the maximum investment in PPF is increased to Rs.1,50,000 per year.
• The limit for claiming deduction of interest on housing loan in increased from Rs. 1,50,000 to Rs. 2,00,000.
• Tax Deducted at Source (‘TDS’) @ 2% on maturity / bonus paid under Life Insurance policy, ONLY which are NOT EXEMPT under Income tax Act.

1.3. Budget proposal for business:
• Units and Unlisted Securities would be Long Term Capital Asset, if they are held for more than 3 years, instead of earlier holding period of One year.
• Deduction of 15% on acquisition and installation of new plant and machinery upto Rs. 25 Crores (till 31.03.2017) to the companies engaged in the business of manufacture or production of an arti¬cle or thing.
• The eligibility for claiming deduction under section 80-IA of the Act is extended upto 31 March 2017 in case of undertaking engage in generation of power or starts transmission or distribution by laying a network of new transmission or distribution lines or undertakes substantial renovation and modernization of existing network of transmission or distribution lines
• Two new businesses are cover under the ambit of section 35AC of the Act for claiming deduction in respect of expenditure incurred in case of laying and operating a slurry pipeline for the transpor¬tation of iron ore and setting up and operating a semiconductor wafer fabrication manufacturing unit, if such unit is notified by the Board in accordance with the prescribed guidelines.
• Concessional rate of deduction of tax @5% on overseas borrowing including External Commercial Borrowing (‘ECB’) under loan agreement, before 01.07.2017, is now also applicable for issue of ANY Long-Term Bond, which earlier was restricted to a long term infrastructure bonds.
• Advance or token received for proposed sale of any Property / Capital Asset which was forfeited was earlier not liable to tax in the year of receipt and now from this year, it will be taxable as ‘income from other sources’.
• Non-deduction or non-payment of TDS on payments made to residents as specified in section 40 (a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed. Earlier the entire amount was disallowed. Further all expenditure are covered into this section, which earlier was not covered for Salary, Director fees.
• The Eligible Transaction in respect of trading in Commodity Derivatives carried out in a Recog-nised Association and chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 shall not be considered to be a speculative transaction.
• The Explanation to section 73 so as to provide that the provision of the Explanation shall not be applicable to a company the principal business of which is the business of trading in shares.

1.3. Budget proposal for business
• The Explanation to section 73 so as to provide that the provision of the Explanation shall not be appli¬cable to a company the principal business of which is the business of trading in shares.
• It is proposed that Mutual Funds, Securitization Trusts and Venture Capital Companies or Venture Capital Funds shall file return of income if the total income in respect of which such fund, trust or company is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, as prescribed under sub-section (1) of section 139.
• It is proposed to amend the provisions of the sections 269SS and 269T so as to provide that any acceptance or repayment of any loan or deposit by use of electronic clearing system through a bank account shall not be prohibited under the said sections if the other conditions regarding the quantum etc. are satisfied.
• Alternate Minimum Tax (akin to MAT for Companies) credit of earlier years will now be available, even if the Adjusted total income is less than 20 lakhs in current year, which was not allowed earlier. This section was relevant to an individual or an HUF or an association of persons or a body of individuals.

1.4. Budget proposal non-resident/Transfer Pricing :
• Concessional rate of tax of 15 % on dividend received by an Indian company from its foreign Com-pany is proposed to be continued for AY 2015-16 and subsequent years.
• It is proposed to provide “Roll Back” mechanism for dealing with Arm’s Length Price (ALP) issues in case of Advance Pricing Agreement (APA). The “Roll Back” provisions refers to the applicability of the methodology of determination of ALP, to be applied to the International Transactions which had al¬ready been entered into in a period prior to the period covered under an APA.
• It is proposed to amend the Act to provide that any security held by Foreign Institutional Investor (FII) which has invested in such security in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 would be treated as capital asset only and income there from would be in the nature of capital gain.
• It is proposed to provide that any transfer of a capital asset, being a Government Security carrying a periodic payment of interest, made outside India through an intermediary dealing in settlement of secu¬rities, by a non-resident to another non-resident shall not be considered as transfer for the pur¬pose of charging capital gains.
• The range concept to be introduced for determination of arm’s length price under the transfer pricing regulations. It is proposed to allow use of multiple year data for comparability analysis under the trans¬fer pricing regulations.

1.5. Budget proposal –Others :
• To rationalize the provisions relating to cancellation of registration of a trust, it is proposed to amend section 12AA of the Act to provide that where a trust or an institution has been granted registration, and subsequently it is noticed that its activities are being carried out in the following manner then the Principal Commissioner or the Commissioner may cancel the registration if such trust or institution does not prove that there was a reasonable cause for the activities to be carried out in that manner.

(i) its income does not endure for the benefit of general public;

(ii) it is for benefit of any particular religious community or caste (in case it is established after commencement of the Act);

(iii) any income or property of the trust is applied for benefit of specified persons like author of trust, trustees etc.; or
(iv) its funds are invested in prohibited modes,
• Any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and hence shall not be allowed as deduction under section 37.
However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed deduction under those sections subject to fulfillment of conditions, if any, specified therein.

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