Analysis and requirements of Form 61A - whether optional or mandatory for Persons subject to Tax Audit

Filing of Form 61A was required to be filed last year also but the penal provision has made it more important. Late filing and default in filing or filing in accurate statement attracts heavy penalties. Maximum penalties are not prescribed as per Income Tax Rules but penalty per day Rs.500/- and Rs 100/- is very high. That is why analysing and filing of Form 61A is very important. Here are salient features of Form 61 so far as nature of transactions to be covered and filing requirements as per the statute.

I. STATUTORY REQUIREMENT TO FILE FORM 61A

Section 285BA (1) of Income Tax Act 1961 requires specified reporting persons to furnish statement of Financial Transactions.  Rule 114E of Income Tax Rules, 1962 specifies that statement of financial transactions as required to be furnished under section 285BA (1) of Income Tax Act 1961 shall be furnished in Form 61A only.

II. TRANSACTIONS TO BE REPORTED IN FORM 61A

Further Rule 114E of Income Tax Rules, 1962 specifies 13 classes of transactions that are required to be reported in Form 61A pursuant to the requirements of section 285BA (1). This list of specified transactions is not hereby reproduced for the purpose of maintaining brevity

(Refer our previous article “Form 61A: Specified Financial Transactions due date 31^st May 2018, its applicability, Penalty & Procedure” published on our website on 29 May 2018).

III. ASSESSEES WHO ARE LIABLE TO TAX AUDIT U/S 44AB ARE ALSO REQUIRED TO FILE FORM 61A

a.       Earlier under Annual Information Report (AIR) Regime, tax auditees covered u/s 44AB were not required to file AIR.

b.       However, as per Rule 114E of Income Tax Rules 1962, Tax Auditees covered u/s 44AB are expressly required to file Form 61A in case they have registered a reportable transaction during the relevant FY i.e. FY 2017-18.

IV. IN DEPTH ANALYSIS OF REQUIREMENT TO FILE FORM 61A BY TAX AUDITEES COVERED U/S 44AB.

Base Rule:  As per Rule 114E, if a tax auditee covered u/s 44AB of Income Tax Act 1961 receives cash payment exceeding Rs. 2 Lakhs for sale of goods or services of any nature then, such a person shall be liable to report such transaction in Form 61A.           

AGGREGATION CASH RECEIPTS FROM A PARTY DURING THE YEAR IS IRRELEVANT

Requirement to file Form 61A shall not arise even if cash receipts in aggregate exceeding Rs. 200000/- has been recorded by a person during a FY. Cash receipts has be examined transaction wise against each invoice to see whether cash exceeding Rs. 200000/- has been recorded against a sale invoice for an amount exceeding Rs. 200000/-.

ANALYSIS: A person who is liable to tax audit u/s 44AB shall required to file Form 61A only if he has received cash exceeding Rs. 200000/- against as sale invoice for an amount exceeding Rs. 200000/-

S. No.	Nature & Particulars of Transactions	Requirement to file  Form 61A
1	Each sale bill below Rs.2 lakhs and aggregate sale during the year to a party below Rs.2 lakhs	Not Required
2	Each sale bill below Rs.2 lakhs and aggregate sale during the year to a party above Rs.2 lakhs	Not Required
3	Any of the sale bill to a party above Rs.2 lakhs but all receipts from the party are by way of cash.	Required
4	Any of the sale bill to a party above Rs.2 lakhs but all receipts from the party are through banking channel like ECS / NEFT / RTGS / Account payee crossed cheque or draft	Not Required

Note: Where any of the sale bill to a party is above Rs.2 lakhs but the receipts are mix of both cash and through banking channel then the receipts are to be appropriated sequentially to the earliest bill and in that manner the receipt of cash for bills above Rs.2 lakh is to be identified for reporting in SFT.

REQUIREMENT TO FILE FORM 61A IN CASE OF RECOVERY FROM DEBTORS OUTSTANDING AS ON 1^ST DAY OF FY

a.       In case of recovery from debtors for an amount exceeding Rs. 200000/- in cash then for the purpose of determining  requirement to file Form 61A it has to be examined whether there existed any sale invoice for an amount exceeding Rs. 200000/- in the relevant year when actual sale was made to the said debtor.

b.       If there exists any sale invoice for an amount existing Rs. 200000/-, then it has to be examined whether cash payment exceeding Rs. 200000/- has been received against this sale invoice.  Reporting requiremrent of Form 61A shall arise only if cash exceeding Rs. 200000/- has been received against a  particular invoice for an amount exceeding Rs. 200000/-

CONCLUSION:  

From the above discussion it can be concluded that reporting requirement under Form 61A shall arise only if there is a cash receipt exceeding Rs. 200000/- against a particular invoice form an amount exceeding Rs. 200000/-.

Contributed by: Mr Tanveer Alam at Sandeep Ahuja & Co

Form 61A: Specified Financial Transactions due date 31st may,2018 & its Applicability, Penalty and Procedure

Applicability of Form 61A: Only those persons who have registered or recorded the transactions as specified in Rule 114E (2) read with Section 285BA (1) are required to file Form 61A.

No Requirement to file Nil Form 61A if there are no reportable transactions.

As per Rule 114E of Income Tax Rules, following persons are required to file Form 61A :

S. No.	Reporting Person	Transactions to be Reported
1	Any person liable to audit u/s 44AB	Receipt of cash payment exceeding Rs. 2 lakhs for sale by any person of goods or services of any nature
2	A banking company including a Cooperative Bank	a. Payment in cash to a Bank for Bank Drafts/ Pay Orders/ Bankers Cheque aggregating to Rs. 10 Lakhs for more ion a Financial Year. b. Payment in cash for purchase of prepaid instruments issued by RBI aggregating to Rs. 10 Lakhs for more in a Financial Year. c. Cash deposits/ withdrawals (including a bearer cheque) aggregating to Rs. 50 Lakhs or more in a FY in one or more current accounts of a person.
3	Post Master General or Banking Company or a Cooperative Bank	Cash deposits/ withdrawals (including bearer cheque) aggregating to Rs. 10 Lakh or more in the account of a person in a Financial Year (Other than current Account)
4	Post Master General Banking Company Co Operative Bank Nidhi Bank Non Banking Finance Company	Payment in any mode (Other than through renewal) for one or more Time Deposits aggregating to Rs. 10 Lakhs more  of a person during a financial year.
5	Banking company; Co-operative bank or a  Company/institution issuing credit card	Payment made by any person of an amount aggregating to: ·         1 lakh or more in cash ·         10 lakhs or more by any mode against bill raised in respect of one or more credit cards issued to that person in an FY
6	A company issuing bonds and debentures	Receipt of Rs. 10 lakhs /or more from a person aggregating to 10 lakhs in a FY for acquiring bonds/debentures.
7	A company issuing shares	Receipt of Rs. 10 lakhs or more in aggregate in a FY for acquiring shares
8	Buy Back of securities by a co. listed on recognized stock exchange	Buy back of shares from a person for an amount aggregating to Rs. 10 lakhs or more in a FY
9	Trustee/Manager of Mutual Fund	Receipt of Rs. 10 lakhs or more in aggregate in a FY for acquiring units of mutual fund (other than acquisition by way of transfer from one fund to another)
10	Dealers of Foreign Exchange	Receipt from any person for sale of foreign exchange including any Foreign exchange card or expenses through such debit/credit card or through travelers' cheque aggregating to Rs. 10 lakhs or more during a FY
11	Inspector general /Registrar/Sub Registrar	Purchase/sale by a person of an immovable property for Rs. 30 lakhs or more or stamp duty value of which is ascertained at Rs. 30 lakhs or more u/s 50C
12	Banking Company Co-operative bank Post master general	Cash deposits during demonetization:- ·         1250000 or more in one or more current a/c of a person ·         250000 or more in one or more a/c other than current a/c of a person
13	Banking Company Co-operative Bank Post master General	Cash deposits during 1st April'16 to 9th Nov'16  in reportable accounts as determined under Point no. 12

 Penalties for Non Filing of Form 61A under section 271FA

1.      DEFAULT IN FILING FORM 61A u/s 285BA(1) : In case a person does not File Form 61A on or before the due date i.e. 31st May, 2018 then penalty @ Rs. 500 per day for the period of default.

2.      DEFAULT IN FILING FORM 61A SUBSEQUENT TO A NOTICE RECEIVED FROM DEPARTMENT U/S 285BA(5):  If after receipt of notice for non filing of  Form 61A, further default is made in filing 61A then after that, penalty @ 1000 per day shall be leviable for such further delay.

3.      Penalty of Rs. 50,000 u/s 271FAA for furnishing inaccurate particulars in Form 61A : A maximum penalty shall be levied if the person liable to file Form 61A furnishes inaccurate/untrue particulars and the original statement shall be treated as invalid.

            Whether NIL statement is required to file: Section 285BA deals with the obligation to furnish             statement of financial transaction or reportable account and Rule 114E deals with furnishing the             statement of financial transaction(SFT).

            Now the question is whether NIL statement is mandatory to file for an entity that has not entered     in any specified or reportable financial transaction in FY 17-18 but is covered under the category           of persons specified u/s 285BA read with rule 114E.

1.       Although Section 285BA read with rule 114E of Income Tax Rules, filing of NIL Form 61A is neither made mandatory explicitly nor this Section 281BA read with Rule 114E provides an express waiver from filing of NIL Form 61A in the absence of  reportable transactions.

2.       Although Nil Form 61A is not mandatory, but assessee may prefer to be on the safer side  of compliance by filing Nil Form 61A in the absence of reportable transactions. Further in order to maintain consistency in filings, assessee may prefer to file Nil Form 61A even in the absence of reportable transactions as the assessee had filed Form 61A for the last Financial Year.

3.      We however advise not to file NIL return for Form 61A as later on some transactions may be detected which were required to be reported in Form 61A but escaped notice of the assessee leading to Nil filing of Form 61A, then this may lead to a situation where hefty penalties may be levied based on inaccuracy of Form 61A filed earlier.

Procedure for Filing Form 61A

1.      CBDT has launched a separate portal for filing of Form 61A. Now every assessee has to file Form 61A  as required u/s 285BA read with Rule 114E on this separate "Reporting Portal".

2.      Principal Director General of Income-tax (Systems) hereby lays down the following procedures:

Already registered reporting person/entities on e-filing portal	New registration, Generation of Income Tax Department Reporting Entity Identification Number (ITDREIN)
1.       The registration details of already registered entity have been migrated to E-filing portal to Reporting Portal.	1. The reporting person is required to get registered with Income Tax Department by logging in to E-filing website with Log-in Id used for the purpose of filing of Income Tax return.
2. The registered user of such reporting person shall communicated his log-in credentials through registered E-mail to be used at reporting portal.	2. The reporting Person need to click Reporting Portal under 'My Account" tab at E-filing portal to access Reporting Portal at first time registration.
	3. The reporting person will be mandatorily required to fill details of form type, category and address of reporting person along with the details of Principal officer.
	4.  On successful submission, ITDREIN is generated and Principal officer will receive a confirmation mail or SMS on  his registered mobile number. Once ITDREIN is generated, it cannot be  deactivated.

Submission of form NO. 61

1. Every reporting Person is required to submit form no. 61.

2. Report Generation and Validation Utility for form 61 and Generic Submission Utility can be downloaded from the reporting Portal under "Resources Tab".

3. Using Report_Generation_Utility, It allow user to generate SFT(XML) with no financial transactions in it.

4. Fill required information in statement (Part A) and select ND (no data) from drop down field if no specified transaction in FY.

5. Save XML to desired location of the system.

6.  Prepared statement to be filed is required to be digitally signed by principal officer.

7. The prepared SFT is required to be digitally signed by and uploaded at the

    reporting portal or through Generic Submission Utility through the login credentials

   (PAN and password) of the designated director.

DELETION OF SUBMITTED REPORTS IN STATEMENT

In case, the reporting person/entity wishes to delete the inadvertently filed reports within a statement, it can choose the statement type as “Deletion Statement” and file all such reports within a single statement to be deleted with exact previously filed values against each field. The manner of filing Deletion Statement shall be similar to submission of correction statement.

CORRECTION OF SFT ALREADY FILED

1.       In case, the reporting person/entity comes to know or discovers any inaccuracy in the information provided in the statement or the defects have been communicated to the reporting person/entity through Data Quality Report (DQR) after submission of Statement, it is required to remove the defects by submitting a correction statement.

2.       The number of “Reports Requiring Correction (RRC)” will be visible against the original statement on reporting portal under the ‘Statement Pending for Correction’ tab.

3.       The user can download the DQR file from the DQR column under ‘Statements Pending for Correction’ Tab at Reporting Portal, which can then be opened on the Report Generation utility to find and fix the errors. The reporting person/entity needs to rectify all the defects till the number of “Reports Requiring Correction (RRC) becomes zero within specified time.

Compiled by Tanveer Alam and Megha Bansal at Sandeep Ahuja & Co

New ITR Forms - Changes and applicability as per Income sources or heads for Asst year 2018-19

ITR FORMS FOR AY 2018-19

Income Tax forms are forms in which the Taxpayer has to provide the details of his income and sources of such incomes and tax payable and paid on such income.

Seven types of Income Tax Forms are available for different classes of Taxpayer.

In ITR Forms, some schedules are modified and some new schedules introduced.

In  comparison to last year there are total 28 changes in ITR forms from which we have identified top 10changes.

Forms filled by different classes of Taxpayer

INDIVIDUAL AND HUF

PARTICULARS	ITR1	ITR2	ITR3	ITR4
Income from salary, pension & one  house property for Resident Individual	I	I	I	I
Income from salary, pension & one house property for Non Resident and not ordinary resident		I	I	I
Income/ loss from more than one house property		I	I
Agriculture income for more than Rs. Five thousand		I	I
Taxable income more than Rs. 50Lacs		I	I	I
Dividend Income more than Rs. Ten Lacs taxable u/s 115BBDA		I	I
If total income includes unexplained credit and investment and  taxable @ 60% u/s 68 69 69A		I	I
Income from other source excluding speculative income and lottery income	I	I	I	I
Income from other source including speculative/ lottery income		I	I	I
Income includes Gain/ loss on sale of property / investment		I	I
Income includes Interest, salary, bonus, commission or profit share  from partnership firm as partner		I
Income from business/profession			I
Income from presumptive business				I

ASSESSEE OTHER THAN INDIVIDUAL

	ITR4	ITR5	ITR6	ITR7
Firm excluding LLP opting Presumptive Income	I
Firm including LLP		I
Association of person(AOP)		I
Body of Individuals(BOI)		I
Local Authority		I
Artificial judicial person		I
Company other than companies claiming exemption under section 11			I

Changes in ITR form in respect of comparing last year forms

ITR FORMS MODIFIED	ITR FORMS LAST YEAR
New ITR form require detail calculation of income from salary and house property.	In last year it restricted to single figure only.
The new ITR 4 contains the details of 14 financial particulars of business like secured/unsecured loan, advance, fixed assets, capital accounts etc.	In old ITR 4, there are only 4 financial particulars of business i.e. Total creditor, total debtor, stock in trade and cash balance.
New ITR 4 require a taxpayer to provide the details of aggregate turnover reported by him in GST return. If any difference is found in turnover in GST return and ITR. Taxpayer can expect a notice from the department to explain mismatch in turnover.	Not applicable in old return
An individual or an HUF who is a partner in a firm, shall required to file his return in ITR 3.	Last year, the partner will required to file return in ITR 2.
New ITR forms introduced new column to report CGST, SGST, UTGST, IGST paid or refunded during the Financial Year.	Not applicable in Old return.
There are 7 number of ITR forms for AY 2018-19.	Last year, Number of ITR forms are 9.

§  New ITR 1 form has been withdrawn for a non-resident.

§  A Non-resident will file ITR in  ITR 2 or ITR 3 to file his return for AY 2018-19.

§  Existing forms ITR-2 ITR-2A and ITR-3 have been rationalized in to a single form.

§  ITR-4 and ITR-4S have been renumbered as ITR-3 and ITR-4 respectively.

Following person has an option to file his return paper form :

1.    An Individual of the age of 80 years or more at any time during the financial year.

2.    An individual and HUF whose income does not exceed 5 lakhs.

3.    An individual and HUF who has not claimed refund in the return of income.

NOTE: ITR-1, ITR-2 , ITR-3 and ITR-4 is now available on incometaxefiling site provided by CBDT on 18/05/18.

Compiled by Ms Megha Bansal CA Finalist at Sandeep Ahuja & Co