What is the effective year for amendment in section 115a of the income tax act? For non Filing of returns by a Foriegn company having income from FTS and Tax Deducted at Source. Is it AY 20-21 or it is AY 21-22? Please site with robust backup.
As per the Memorandum explaining the Finance Bill 2020, the amendment in section 115A "will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years. "
Thus, the effective year in this case is AY 2020-21.
Please see page 15 (top of the page) of the Memorandum to Finance Bill 2020, hosted at https://www.indiabudget.gov.in/doc/memo.pdf
Thanks!
Thanks: this is memo! In finance Bill the amended say: 47. In section 115A of the Income-tax Act,–– (I) in sub-section (1), in clause (a), the words, figures and letter “other than dividends referred to in section 115-O” at both the places where they occur, shall be omitted with effect from the 1st day of April, 2021; (II) in sub-section (5),–– (i) in clause (a), for the word, brackets and letter “clause (a)”, the words, brackets and letters “clause (a) or clause (b)” shall be substituted; (ii) for clause (b), the following clause shall be substituted, namely:–– “(b) the tax deductible at source under the provisions of Part B of Chapter XVII has been deducted from such income and the rate of such deduction is not less than the rate specified under clause (a) or, as the case may be, clause (b) of sub-section (1).”. So while filing return we must consider the current law? Or law of the previous year? Can you send me a snapshot of the finance Bill where it is written that it is effective from AY 20-21
Dear Sir,
The Finance Act or the Finance Bill in most cases do not specify the financial/assessment year from which an amendment shall be considered to be effective. Only the date from which the amendment is made effective is specified. In this case as well, the Finance Bill and the Finance Act simply state that the amendment shall be effective from 01.04.2020.
However, Memorandum to the Finance Bill is a very important document and is often relied upon by the courts to gauge the intention of the legislature behind introduction/amendment/deletion of any provision, in order to decide upon the controversies in relation to such provisions.
Although there are a plethora of judgements of Supreme Court, High Courts and various benches of the Tribunal relying on the Memorandum, I invite your attention to this recent judgement of the Supreme Court wherein a similar issue regarding applicability of a provision was determined by referring to the Memorandum to the Finance Bill. This judgement of Supreme Court is available at https://indiankanoon.org/doc/50533555/ (you may not read the entire judgement, simply search for the term "memorandum" and you will identify the relevant paras, specially para 36).
Further to your next query, generally the law applicable for the financial year ("previous year" as per income tax laws) is considered for determining the taxability for the income for such financial year. However, in case of procedural provisions, such as provisions regarding filing of return, amendments are often made applicable from the first day of the assessment year, but are applicable in respect of the financial year/previous year in respect of which the return will be filed in that assessment year.
Hope it would be of help.
Thanks!
Ok that’s a great insight. Now I don’t have a pan number so how can i file 3CEB and what are penal consequences of the same and who is liable for the consequences? Can you file 3CEB without IT return. What’s is the significance?
- 115A(5) (a)/(b) is applicable from A.Y. 2020-21.
- Penalty is 2% of the value of transactions. Filing of Form 3CEB is a responsibility of a person who entered into such transactions. To file Form 3CEB, you have to apply for PAN.
Assuming that you are sure that you have to file Form 3CEB for the foreign company, the penal provisions for non-filing are as under:
1. Penalty of Rs. 1,00,000 for failure to file Form 3CEB
2. Penalty equivalent to 2% of the value of international transaction for failure to report international transaction.
You will need to apply for PAN to file 3CEB.
Do we need to file a 3CEB I have a related party transaction in India? Please site me the rules.
Yes as per Sec 92
You will need to see if the transaction qualifies to be an international transaction as per section 92B of the Income Tax Act, 1961 and both the entities qualify to be "associated enterprises" ("AE") as per section 92A. If the answer to both is "yes", 3CEB needs to be filed by the Indian AE under section 92E read with rule 10E of the Income-tax Rules, 1962.
Whether the foreign AE would also be required to file form 3CEB or not, is a matter to be studied in detail, for which you may take professional assistance from a CA.
This amendment shall be applicable from AY 2020-21 and same was mentioned in Finance Bill.
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Thank you.
Why are you filing Form 3CEB?