Part-5- Before Filing ITR for Assessment Year 2020-21, Know Important changes in Income Tax Act-PGBP

Now Time has come to be ready to file income Tax return for the Assessment Year 2020-21, however there are lot of changes have been made by the Government.

Some changes are more important to know because Income tax Return cannot be filed correctly if are ignorant of these.

I am just making an effort to cover such amendments/changes in a series like what would be Tax Rate for the Assessment year , changes in particular source of income i.e.salary, house property, Business or profession, capital etc.

In earlier parts, we have included 

            (1 ) Rate of Income Tax for the Assessment year 2020-21                        (Read Part -1 here)

            (2)"Exempt income" i.e. Income which do not part of Total Income  (Read Part -2 here) 

            (3) Changes in the head "Income from Salary"                                     (Read Part -3 here)

            (4) Changes in "Income from House Property"                                (Read Part-4 here ) 

Now we will cover the changes made or brought in the head "Profit or gains from Business or profession "  which are specifically applicable for the Assessment year 2020-21 :- 

Profit or gains from Business or profession

1. Assessee shall not be deemed "assessee in default' if NRI paid the tax at the time filing his ITR- Section 40(a)(i)

Finance (No. 2) Act, 2019 has inserted second proviso to section 40(a)(i) to provide that if payment is made to a non-resident without deduction of tax and the assessee is not deemed as assessee in default in terms of proviso to section 201(1), then it is deemed that the assessee has deducted and paid the tax on date of furnishing of return by non-resident. 

Similar provision was already existing under section 40(a)(ia) for payments to resident.

2.  No deduction of Interest if it is not actually paid (Section 43B)

From A.Y. 2020-21 onwards, deduction in respect of interest payable on loans taken from deposit taking non banking financial company or non- deposit taking non banking financial company having total assets of not less than five hundred crore rupees as per the last audited balance sheet, will be allowable only on actual payment basis. In other words, if such interest for a financial year remains unpaid till the due date of filing return of income under section 139(1), the same shall not be allowed as deduction in that year.

3. Presumptive Taxation u/s. 44AD

Upto AY 2019-20, an eligible assessee could declare 6% as profit rate u/s. 44AD in respect of the amount of total turnover or gross receipts which was received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account.

From AY 2020-21 onwards, an assessee can declare the same 6% profit rate even on turnover or receipts through other digitalized mode of money transmission. Notification No. 8 of 2020 dated 29/01/2020 provides for following additional electronic modes:

1. Credit Card
2. Debit Card
3. Net Banking
4. IMPS
5. UPI
6. RTGS
7. NEFT
8. BHIM Aadhar Pay.

There is a similar amendment in section 35AD, 40A(3), 43(1), 43CA, 50C, 56(2)(x) and 80JJAA, where there is a requirement of payment through banking channels, the above notified modes of payments will also meet the requirements of these sections.