Due date of submitting Income Tax Return for Corporate Sector for the Assessment Year 2006-07?

Answer 1

Income Tax Liability

It is proposed to give basic information about Income Tax which every industrialist should know. The intention is only to give an overview, without using any technical jargon. It is obviously advisable to consult an expert, if one is not familiar with the intricacies of the law. The legal position is as applicable for financial year 2005--2006 (Assessment Year 2006-2007) unless specified otherwise. Provisions applicable for financial year 2006-07 (AY 2007-08) are also indicated at appropriate places.

Income Tax is payable by every assessee at the rates prescribed from time to time. These rates are fixed by Finance Act every year. The Finance Bill is presented at the time of presenting Budget. The relation between Finance Act and Budget is so close that often people associate budget only with taxation. Really, taxation is only one of the aspects of the Budget.

Who can be assessee ? - The assessee may be * Individual * HUF * Company * Partnership Firm * Association of Firms * Local Authority like Municipality etc. * Artificial Judicial person not falling in any of the aforesaid categories e.g. a Hindu deity.

Different sources of income - An assessee may get income from different sources e.g. * Salaries * House property income * Profits and gains of business or profession * Capital Gains * Income from other sources not falling under any of preceding heads e.g. interest on securities, lotteries, races. Income from each of these sources is first calculated. All this income is added to find out total income of the assessee. Permissible deductions are reduced and then income-tax payable is calculated at the prescribed rates.

Income from one head can be set off against loss from other head, unless specifically prohibited. In Rajasthan State Warehousing Corporation v. CIT 2000 AIR SCW 629, it was held that if income is derived from various heads, assessee is entitled to claim deduction permissible under respective head whether or not computation under each head results in taxable income. If income to assessee arises under any of the heads of income but from different items e.g. different house properties or different securities etc., and income from one or more items alone is taxable whereas income from the other item is exempt under the Act, the entire permissible expenditure in earning the income from that head is deductible. - . - If assessee carries business in various ventures, entire expenditure incurred on all ventures is deductible if all ventures constitute one business

Financial Year and Assessment Year - One very confusing aspect of Income Tax for a common man is the difference between Financial Year and Assessment Year. The Financial Year for income tax purposes (called ‘Previous Year’) is always the year ending 31st March. The ‘assessment year’ is next to the ‘Financial Year’ or ‘Previous Year’ e.g. for Financial Year (FY) 2005-06 (1st April 05 to 31st March 2006), the ‘Assessment Year’ (AY) is 2006-07. Thus, income-tax rates prescribed for Assessment Year 2006-07 are applicable in respect of income earned during financial year 2005-06.

It may be noted that an assessee can have separate accounting year for his own purposes e.g. a Company can close its accounts on any day of the year, an individual may start his year on Diwali or any other auspicious day. However, for income tax purposes, the accounts must be closed only on 31st March.

Rate of Income Tax payable

Major types of assessees and the tax payable is summarised here.

Individual - An individual may get income from salary, house rent, business, profession, interest etc. He does not have to pay income tax on dividend income at all. An individual may carry out business under some different name. However, this is only for convenience of business or trade. The income of a proprietary firm is added to his income for purpose of income tax. If a person gets salary from a partnership firm where he is a partner, the income is treated as ‘business income’ though termed as ‘salary’.

The income tax rates are as follows :

For A Y 2006-07 (FY 2005-06) for individual, HUF/AOP other than woman or senior citizen

0 - Rs 1,00,000 Nil
Rs 1,00,001 to Rs 1,50,000 10% of income above Rs. 1,0,000, plus education of 2% on income tax (total 10.2%)
Rs 1,50,001 to Rs 2,50,000 Rs 5,000 plus 20% of income above Rs 1,50,000, plus education of 2% on income tax
Rs 2,50,001 to Rs 10,00,000 Rs 25,000 plus 30% of income above Rs 2,50,000,plus education of 2% on income tax
Rs 10,00,001 and above Rs 2,50,000 plus 30% of income above Rs 10,00,000, plus 10% of income tax as surcharge plus education cess of 2% of income tax and surcharge

In case of resident senior citizen (man or woman) who is 65 years or more at any time in the year, the income upto Rs 1,85,000 is exempt. Thus, he/she gets relief of Rs 12,000 in income tax. In case of resident woman (who is less than 65 years of age), income upto Rs 1,35,000 is exempt. She gets relief of Rs 3,500 in income tax. Subsequent slabs are correspondingly reduced.

Note that no standard deduction is available for AY 2006-07.

HUF - An Hindu Undivided Family (HUF) consists of all persons lineally descended from a common male ancestor. It is assessable in respect of income derived from the joint family corpus. However, income earned by individual members of HUF in their individual and personal capacities is taxed as their personal income. Such income is not treated as income of HUF. Thus, it is possible to have an income from a proprietary firm (in individual capacity) as well as income from a business of HUF. Both are eligible for separate tax exemptions. Business of HUF can, of course, be conducted in a different name. In such case, the HUF will be proprietor of the firm in the name of which business is being conducted.

It may be noted that there is no question of ‘forming’ an HUF, as every male Hindu automatically has ‘HUF’. A Hindu male can have his own separate HUF even if his father or son has separate HUF. One HUF with only one male member is permissible. Any ‘HUF’ can have business run by head of the HUF called ‘karta’.

If an individual throws his separate property into the property of HUF, income from such converted property will be included in the total income of such individual. Hence, the HUF business should be from independent source of capital and not from the funds provided by an individual member of the HUF. Thus, if an HUF intends to conduct a business, its financial resources have to be carefully planned.

HUF should start business with loans / gifts from unrelated persons / bankers. Accounts and finances of HUF business should be kept separate. Otherwise, there is a possibility that income of HUF will be clubbed with the income of an individual.

The income of HUF is chargeable at the same rate as individual income. Thus, if an individual splits his business - partly in his individual capacity and partly in name of firm owned by HUF, considerable tax saving is possible, if done systematically and carefully.

Rate of income tax are same as those applicable to an individual.

Partnership Firm - Income of the partnership firm has to be calculated after deducting salary and interest payable to partners at prescribed rates. The tax on balance income for AY 2006-07 (BY 2005-06) is 30% plus surcharge of 10%, plus education cess of 2% on income tax and surcharge [For AY 2005-06 (FY 2004-05), rate was 35% plus surcharge 2.5% plus education cess of 2%].

The income tax rate is same as applicable to a domestic company.

Company - The tax on income for AY 2006-07 (FY 2005-06) is 30% for Indian company pus surcharge of 10% plus education cess 2%. It was 35% plus surcharge 2.5% plus education cess 2% for AY 2005-06

Dividend Distribution Tax - A domestic company paying dividend will have to pay dividend distribution tax u/s 115-O @ 12.5% plus surcharge of 10% plus education cess 2% (i.e. total 14.025%). The dividend will be tax free at the hands of assessees.

Wealth-tax - Wealth tax for individual, HUF or a company is 1% in respect of wealth over Rs 15 lakhs. One house or part of house belonging to an individual or HUF is excluded for purpose of wealth tax. The assets have to be valued as per Valuation Rules.

Gift-tax - Gift Tax has been abolished in respect of gifts made on or after 1-10-1998. However, gifts received from persons who are not relatives will be taxable.

Income from salary

Income under the head ‘salary’ comprises of remuneration in any form (including perquisites) received by an employee from employer. Thus, there should be contractual employer-employee relationship. The contract may be express, oral or implied. ‘Salary’ includes * wages * dearness allowance * Bonus * gratuity * annuity or pension * advance of salary * Fees / Commissions perquisites/ profits received from employer in addition to salary * Leave encashment while in service * Employer’s contribution to provident fund in excess of 12% of salary of employee.

In Karamchari Union v. UOI 2000 AIR SCW 806 = AIR 2000 SC 1226 = (2000) 109 Taxman 1 = 2000 LLR 897 = 243 ITR 143 (SC), it has been held that CCA (City Compensatory Allowance), DA (Dearness Allowance) and HRA (House Rent Allowance) are in nature of income forming part and parcel of salary and are taxable.

Valuation of perquisites - The employer often gives some perquisites to the employees. Value of these perquisites is added to the income of employees. The valuation of perquisites is done as follows :

* Perquisite of Rent Free Accommodation is valued according to following rules. - In case of private sector employees, value of perquisite of rent free unfurnished accommodation is taken as 10% of salary of employee, if accommodation is in city with population exceeding 4 lacs as per 1991 census. Otherwise, it will be 7.5%. In case of Government Employees, value will be ‘licence fee’ determined by Central / State Government. If some rent is recovered from the employee, the value of perquisite will be reduced to that extent. This is not applicable for accommodation in remote are like mining site, onshore oil exploration site etc.

* If temporary accommodation upto 15 days on transfer is provided, it will also be valued @ 24% of salary paid for the period or actual hotel charges, whichever is lower.

* If accommodation is furnished, in addition to above, 10% of cost of furniture (including TV, radio, refrigerator, AC etc.) will be treated as perquisite. If the furniture is hired from third party, actual hire charges less any amount recovered from employee will be the perquisite.

* If motor car is provided by employer, valuation is done depending on HP of motor car, whether chauffeur is provided and whether car is for exclusive private use or partly for official and partly for personal purposes.

* If sweeper, watchman or gardener is provided by employer, the perquisite will be valued at the actual cost to the employer.

* Some benefits like gas, electricity, water are valued at actual cost to employer. Cost of education of employee’s children is also valued at cost incurred.

* If amenities like interest free or concessional interest loan, travelling expenses for holiday to employee or his relatives, free meals, gifts over Rs 5,000 per annum, payment of credit card expenses of employees for personal expenses, club memberships etc. are provided, these will be valued at cost and treated as perquisites.

* If some movable asset is provided to employee, perquisite will be @ 10% of the actual cost of perquisite (In case of computer, depreciation @ 50% and in case of car, depreciation @ 20% is allowed to find ‘actual cost’)

* Reimbursement of medical expenses for medical treatment of employee or member of family of employee is exempt upto Rs 15,000 per year. In case of treatment in Government or approved hospital, or expenditure on medical treatment outside India, reimbursement of medical expenses is exempt without any ceiling.

* House Rent Allowance (HRA) is partly exempt as provided in the rules. It should be noted that if the employee stays in his own house or if he incurs no expenditure on house rent, the whole HRA is taxable. The rules for granting exemption from HRA are quite complicated, but broadly, these can be summarised as follows - (a) If employee does not pay any house rent, whole of HRA received is treated as perquisite. (b) If the actual amount of rent paid by him is less than 10% of salary of the employee, in that case also, whole of HRA is taxable and there is no exemption. (c) If the actual amount of rent paid by him is more than 10% of salary of the employee, the HRA received in excess of 10% of salary is exempt. In other words, HRA received to the extent of only 10% of salary is taxable and balance is exempt. However, maximum HRA that can be eligible for exemption under this clause is 50% of salary in case of accommodation in four metropolitan cities and 40% of salary in other cities.

For purpose of calculating amount exempt from HRA, the term ‘salary’ includes only basic and DA but does not include any other allowance or perquisite.

* Leave Travel Allowance to any place in India is available only two times in a block of four years. It is for self, family and upto two children. The allowance is limited to economy airfare or AC first class rail fare by shortest route. The allowance is exempt subject to amount of expenses actually incurred by the employee for such travel. The employee will have to keep account of actual expenses incurred. It appears that actual travel by air or AC is not required, but the overall ceiling on expenses is subject to limit of air fare / rail fare.

* If shares of a company are issued to employees at price lower than the price at which the shares are offered to other shareholders / public, the difference will be treated as a perquisite. If the shares are offered only to employees, difference between market price and the price at which shares are offered to the employee will be treated as perquisite. [However, in case of ESOP of listed companies, it is not treated as perquisite. Capital gains are payable only when the shares are sold].

* Club fees paid on behalf of employee, insurance premiums paid on behalf of employee, income tax paid on behalf of employee are all treated as perquisites and its cost is added to income of employee.

Certificate from employer – Employer is required to issue certificate in form 12BA, giving details of value of each perquisite provided to the employee, if the value of perquisites exceeds Rs 1.50 lakhs. If value of perquisites is less than Rs 1.50 lakhs, the relevant details should be given in From 16 itself, which every employer is required to issue to the employee.

Standard Deduction from Salary Income - No standard deduction is alloable for AY 2006=- (FY 2005-06). Earlier, employees were eligible for standard deduction.

Exemptions for salary income - Following are exempt from income tax-

* Transport allowance upto Rs 800 per month granted to an employee to meet his expenditure for the purpose of commuting between place of residence and the place of his duty (w.e.f. 1.8.1997)

* Conveyance and transport allowance granted to employee to meet cost of travel on tour are exempt. Allowance granted to meet expenditure incurred on conveyance in performance of duties of an office or employment are exempt. In LIC Officers v. LIC of India (2000) 112 Taxman 227 (Bom HC DB), it was held that conveyance allowance is exempt only if expended for meeting expenses wholly and necessarily incurred or to be incurred in performance of duties of office. Conveyance allowance at flat rate irrespective of place of residence, work and posting will not be exempt from income tax.

* Conveyance and transport allowance granted to employee to meet cost of travel on transfer are exempt. Expenses granted to meet cost of travel on transfer and cost of packing and transportation of personal effects on such transfer are exempt.

* Gratuity received under Payment of Gratuity Act is exempt upto 15 days of wages for each completed year of service or part of year in excess of six months, on the basis of wages last drawn by employee. The exemption is subject to ceiling of Rs 3.50 lakhs. Death-***- retirement Gratuity received by employees of Central Government, State Government, public sector employees and members of defence services are totally exempt without any limit.

* Voluntary retirement amount received by an employee upto Rs five lakhs is exempt. The voluntary retirement scheme should be as per Income Tax Rules.

* Payment received from approved superannuation fund is exempt.

* Leave encashment at the time of retirement is exempt upto 30 days for every year of completed service. Earned leave so encashed should not be for more than 8 months. Maximum eligible amount for exemption is Rs 1,35,360. In case of Central or State Government employees, it is fully exempt without any ceiling.

* Use of employer’s vehicle or transport provided for journey of employee from residence to his place of work and back is not treated as perquisite and its cost is not treated as income.

* Refreshments during office hours to employees and recreational facilities provided to group of employees are not treated as perquisites.

Answer 2

Usual >October 31
Extended this year > November 30
Annual return of income/wealth for the assessment year 2006-07 if the assessee is (a) corporate-assessee or (b) non-corporate assessee (whose books of account are required to be audited) or (c) working partner (of a firm whose accounts are required to be audited)

Income : Form Nos. 1, 2, 2D, 2E, or 16AA Wealth : Form BA

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Do you want annual calendar please refer to site >
http://www.taxmann.net/DirecttaxlawsPages/Directtaxlaws.aspx?pId=10
and click
"Dates with Direct Taxes"

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Edited later on
L A T E S T D E V E L O P M E N T>>>>>>>>

Returns deadline for corporates` extended

BS Reporter / New Delhi October 25, 2006



The government today extended the due date for corporates to obtain the tax audit report and furnish the return of income and fringe benefits to November 30 from October 31.

An official release said the decision to extend the due date for filing of returns had been taken following representations from some sections of tax-payers and professionals that they would not be able to complete their work by October 31.

“This is primarily because there were many holidays in October, as a result of which some of them faced certain difficulties in adapting to the new format and the new procedure for filing e-returns,” the release said.

It is compulsory for corporates to file their income and fringe benefit returns electronically this year. As on October 24, around 19,000 companies have already filed the returns.

These include Hero Honda Motors Ltd, Housing Development Finance Corporation Ltd, Tata Consultancy Services Ltd, Balmer Lawrie & Co Ltd, Morgan Stanley Investment Management Pvt Ltd, and Haldiram Marketing Pvt Ltd. A large number of small companies have also filed their returns electronically.

The due date for obtaining the tax audit report and furnishing returns of income and fringe benefits has already been extended from October 31 to December 31 for taxpayers in Gujarat.

The release said no extension would be granted beyond November 30.
Source > Business standard

Answer 3

Depending on where your tax jurisdiction is, normally the due date for submitting Tax Return is 6 months from the end of your financial year

Answer 4

The due date for filing return for Corporates has been extended by CBDT to 30th November 2006
Click on link below for details
http://www.allindiantaxes.com/it_circular_2006_main.php

Answer 5

pl.never do so,u may be traped if u try.forget 06-07,file for 09-10.