Companies, political parties to give 'other income' details in I- T returns
After asking individual taxpayers to declare their assets and liabilities in the new Income Tax Return ( ITR) forms, the finance ministry will now tell companies, firms, trusts, as well as political parties, to give more disclosures in the ITR forms to be notified soon for the 2013- 14 assessment year. For the computation of total income, in the column ' income from other sources', taxpayers will have to specify the ' other source' from which the income has come. If there are multiple sources, the break- up of incomes from each source will have to be provided. According to the existing forms, 'income from other sources' is divided into income ' from owning race horses' and ' sources other than from owning race horses'.
The government may not specify the other sources and the onus will be on taxpayers to make it clear at the time of filing returns to avoid any explanation to the tax department later. "At present some companies don't make ' other sources' clear at the time of filing returns. When additional income is later detected by the tax department, they put it in the ' other sources' category. After the introduction of new forms, taxpayers will have to attribute every income to a source," said a finance ministry official who didn't wish to be named, as the forms had gone to the law ministry for vetting. The new forms — ITR- 5 and ITR- 6 —will also require corporate taxpayers to provide their balance sheets according to the revised Schedule 6 of the Companies Act.
At present, they follow the I-T Act. ITR- 5 is used by firms, association of persons, and body of individuals, while ITR- 6 is used by companies other than those claiming exemption under Section 11 of the I- T Act. "If the balance sheet is provided under Schedule 6 of the Companies Act, there would no scope for the different interpretations that were coming up earlier. This will provide more clarity to taxpayers and bring in transparency. Details of ' other sources' will leave the tax department with more data to carry out further analysis," said Ved Jain, former president, Institute of Chartered Accountants of India. The revised Schedule 6 has laid down a new format for preparation and presentation of financial statements by Indian companies from financial year beginning April 1, 2011.
The changes were introduced to bring disclosures in financial statements, in line with international corporate financial reporting practices. In ITR- 7, filled by trusts and political parties, too, the tax department is seeking more information. Political parties will be asked to give their party registration number with the Election Commission of India in the new forms. Jain, however, said there were enough disclosures for trusts in the current law, but a lot was needed to make norms stringent for political parties for whom " no penalty was prescribed for not filing a return".
The government may not specify the other sources and the onus will be on taxpayers to make it clear at the time of filing returns to avoid any explanation to the tax department later. "At present some companies don't make ' other sources' clear at the time of filing returns. When additional income is later detected by the tax department, they put it in the ' other sources' category. After the introduction of new forms, taxpayers will have to attribute every income to a source," said a finance ministry official who didn't wish to be named, as the forms had gone to the law ministry for vetting. The new forms — ITR- 5 and ITR- 6 —will also require corporate taxpayers to provide their balance sheets according to the revised Schedule 6 of the Companies Act.
At present, they follow the I-T Act. ITR- 5 is used by firms, association of persons, and body of individuals, while ITR- 6 is used by companies other than those claiming exemption under Section 11 of the I- T Act. "If the balance sheet is provided under Schedule 6 of the Companies Act, there would no scope for the different interpretations that were coming up earlier. This will provide more clarity to taxpayers and bring in transparency. Details of ' other sources' will leave the tax department with more data to carry out further analysis," said Ved Jain, former president, Institute of Chartered Accountants of India. The revised Schedule 6 has laid down a new format for preparation and presentation of financial statements by Indian companies from financial year beginning April 1, 2011.
The changes were introduced to bring disclosures in financial statements, in line with international corporate financial reporting practices. In ITR- 7, filled by trusts and political parties, too, the tax department is seeking more information. Political parties will be asked to give their party registration number with the Election Commission of India in the new forms. Jain, however, said there were enough disclosures for trusts in the current law, but a lot was needed to make norms stringent for political parties for whom " no penalty was prescribed for not filing a return".
Regards
Prarthana Jalan
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With the introduction of new forms - ITR-5 and ITR-6 for Income Tax Return. Corporate taxpayers to provide their balance sheets according to the revised Schedule 6 of the Companies . This will stop the black money usage by these big firms .
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Johnny Depp
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