Income Tax Ombudsman ?

Similar to Ombudsman for banking services, the income tax department has its own ombudsman. Ombudsman is an official appointed to investigate the complaints of taxpayers against Income Tax department. So, he acts in an independent capacity to resolve the issues raised by the tax payers.

Who can approach Ombudsman?
Any individual who has grounds alleging deficiency in the working of the Income Tax department may file a complaint with Ombudsman.

What type of grievances?
• Delay in issue of refunds including sending envelops without refund vouchers!
• Non-adherence to the principle of ‘First Come First Served’ in sending refunds
• Non acknowledgement of letters or documents sent to the department
• Lack of transparency in identifying cases for scrutiny and non communication of reasons for selecting the case for scrutiny
• Delay in disposal of rectification applications
• Delay in allotment of permanent account number (PAN)
• Non adherence to prescribed working hours by Income Tax officials
• Unwarranted rude behaviour of Income Tax officials with assessees
• Any other matter relating to violation of the administrative instructions and circulars issued by the Central Board of Direct Taxes in relation to Income-tax administration. The details are given in The Income Tax Ombudsman Guidelines 2010’

How to file the complaint?
• The complaint shall be duly signed by the complainant and his authorized representative, if any, and shall state clearly the name and address of the complainant, the name of the office and official of the Income-tax Department against whom the complaint is made, the facts giving rise to the complaint supported by documents, if any,relied on by the complainant and the relief sought from the Ombudsman.

• But before making the complaint, one should try to find the solution at department level (similar to banks, where the customer should try to find the solution at bank’s level before going to Ombudsman. Read here to know more about banking ombudsman – Can you complain against your bank for poor quality of service?)

Where to complain?
The offices of Ombudsman are located in select cities such as Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Kochi, Bhopal, Bangalore etc.

What happens after you complain?
The Ombudsman will forward your complaint to the concerned officer/authority and will try to resolve the issue through mediation. If the department fails to act within a month from the date of submitting the complaint, the ombudsman is empowered to award a token compensation (Rs.1000) for the loss suffered by the complaint and also persuade the authority to perform his duty.

Will it really works?
Yes. It works, provided you have a real problem (doubly check your records before raising a red flag). Especially, many refund cases have got sorted out through this route.

Frequently Asked Questions -FAQ

Can I complaint for not receiving or delay in receiving Income tax Refund?
If you have not received income tax refund or there is an undue delay in processing your refund claim, you can always approach income tax ombudsman. However, Before you approach the Ombudsman, you should have submitted a written complaint with your income tax officer and marking a copy to income tax authority superior to the jurisdictional assessing officer. If you feel that the complaint has not addressed to your complete satisfaction, or if the officer rejects your complaint, or if no reply is received within 30 days of writing the complaint, only then should the issue be raised to Ombudsman.

I have received an intimation under section 245 of Income tax Act 1961 where in it shows the outstanding demand of Rs. 1,60,694/- pertaining to Assessment year 2009-10. However I have paid all the tax due for the said assessment year. Can I file complaint to income tax ombudsman?

Please check intimation received u/s 245 of income tax whether demand was raised by CPC or uploaded by Jurisdictional AO (Assessing Officer). If it is processed by CPC, request for intimation u/s 143(1) after logging into income tax e-filing portal if you had not received intimation earlier to ascertain demand. Thereafter file rectification can be done online. If CPC fails to process your rectification, you can file complaint to income tax ombudsman. If it is uploaded by jurisdictional AO, write a letter seeking rectification u/s 154 of income tax officer marking a copy to income tax authority superior to the jurisdictional assessing officer with all necessary documents in support of your claim. If assessing officer fails to rectify mistake and delete demand without any valid reason within 30 days filing letter seeking rectification, you can file a complaint to income tax ombudsman.
I had filed my income tax return online for the assessment year 2014-15 on June 2014 claiming refund of Rs. 42500/-. However I have not got refund even after 4 months of filing return. Can I file a complaint to Income tax Ombudsman?
The Return filed online will be processed by Central Processing Centre (CPC), Bangalore. You have to wait CPC to process your return. Income tax department has provided the facility to tax payer to check status of processing income tax return filed online on its e-filing portal. You can check ITR processing status in “My Account” after logging into your account on income tax department efiling portal.
Is there any cost involved in filing complaints with Income Tax Ombudsman?
No. The Income Tax Ombudsman does not charge any fee for resolving assessees’ complaints.

Can I raise complaints to Ombudsman for not giving credit of TDS or advance tax legitimately claimed in the income tax return?
If your return was filed online, before raising complaint you must file a rectification request through online and wait for Central Processing Centre (CPC), Bangalore to process rectification request and thereafter send a letter to CPC asking them to give credit of TDS or advance tax as per rectification request filed online. If CPC fails to process online request, you can raise complaints to Ombudsmen. If your return was physically filed and processed by jurisdictional income tax officer, write a letter seeking rectification of mistake marking a copy to income tax authority superior to the one complained against. If your grievances remain unaddressed even after 30 days raise a complaints to Ombudsmen.

Is there any procedure or standard format for filing the complaint before the income tax Ombudsman?
No. A complainant can file a complaint with the Income Tax Ombudsman simply by writing on a plain paper. Till today no standard format has been prescribed for addressing complaint to the Ombudsman. But one must include the following details while writing the complaint
• Name, address and PAN of complainant.
• Name and designation of the official against whom the complaint is.
• Facts on which the complaint is based along with supporting documents.
• The relief sought from the Ombudsman.

How can I get Income tax Ombudsman office address?
To know your Ombudsman office address you can visit

Can I raise complaint to Ombudsman without making a written representation to the income tax authority superior to the one complained against?
No complaint to the Ombudsmen shall stand unless you have made a written representation to the income tax authority superior to the one complained against and your grievance remains unaddressed.

Is there any Time Limit for Filing Complaint with Ombudsman?
Yes. The complaint should be filed within one year from the date of unsatisfactory reply received or from the date complaint is rejected by Income Tax Official; or if no reply is received within 30 days of sending the application.

Source : Simplifiedlaws

“Black Money” for Income Tax Purpose

All payments made out of unaccounted funds, which have not borne the due tax liability, are black money transactions. Similarly, if the retailer decides to record only a part of his cash sales, he would also be generate income on which he would not pay any tax, and consequently such income would acquire the character of black money. Thus he would be in possession of disposable black money with which he would, in turn, buy goods and services in cash.

There is a thriving retail market and bustling cash economy in our country. The sheer size of it is mind boggling. When we go a shopping for groceries and other goods of daily use, we carry cash with us as most shopkeepers only accept cash payments. Even high value goods, like jewellery, watches, cameras, designer clothing, and electronic goods like computers, iPods, plasma TVs, cell phones, etc. are more often than not purchased in cash. Payments for services of plumbers, electricians, mechanics, housemaids, etc. are also made in cash. School and college fees for children are invariably paid in cash. Large payments to hotels, restaurants and travel agents may also be made in cash. Payments made in cash could be out of accounted or unaccounted funds.

We often hear a remark in the context of immovable property transactions, i.e. when we want to buy or sell a property. It usually goes thus — “How much by cheque or in Number 1 and how much by cash or in Number 2?”

Invariably, when the transaction for sale of property is between two private parties, i.e. in the secondary market, the sale consideration may partly be paid by cheque and partly by cash. This is the accepted norm and it is extremely difficult to carry out a transaction without being a party to this practice. The amount which is paid in cash, or the so called Number 2 component or the “on money”, remains unaccounted both for stamp duty purposes and income tax purposes. For the buyer, the source of the amount paid in cash cannot be questioned by anybody as it does not come on record. Since the sale deed is executed only on the amount paid by cheque, the stamp duty paid is less than what would be payable on the actual consideration. The seller also shows only the recorded price for capital gains purposes and thus evades income tax. In this manner, huge amounts of unaccounted cash or Number 2 money or black money change hands in real estate transactions and get invested in property.

Then we have the capitation fee business. It is well known that for admission to private colleges imparting technical education in the fields of medicine, engineering and management, huge amounts are paid in cash by way of capitation fee or donation by students who otherwise do not qualify for admission on merit. For admission to a private medical college, the amount to be paid is said to run into several lakhs of rupees, as we often hear. Even admission to private schools at entry level is bedevilled by the donation phenomenon. The amount paid is the unaccounted money or black money as it is paid “under the table”, without being disclosed to any authority. It is an illegal payment, barred by law. It also results in evasion of income tax both by the giver and the recipient.

Doctors, dentists and other medical practitioners running their own clinics, pathological and testing labs, imaging centres, nursing homes and private hospitals, etc. are known to charge hefty fees from the patients, and fees are almost always received in cash. If such cash receipts are not fully recorded in the books of account, black money is immediately generated as no taxis paid on such professional receipts, which are not recorded. Similarly, other professionals like consultants, advocates, chartered accountants, architects and interior decorators may not fully disclose their professional receipts for tax purposes, thereby contributing to the black money kitty.

Then we have the business segment. The manufacturers may suppress production of goods with a view to reducing their excise duty liability, which, in turn, also leads to generation of income which escapes income tax and thus acquires the character of black money. Service providers may not disclose their full turnover with a view to reducing service tax liability and thus contribute to suppression of income in the books and generation of black money. Traders, both wholesale traders and retail traders, are also not duty bound to fully record their turnover. They may keep some of their sales outside their books of account and thus generate unaccounted income. All such incomes, which are not recorded in the regular books of account and are meant to escape taxation become black money in the hands of the recipients.

Businessmen commonly resort to the modus operandi of inflating their expenses in the books of account. They often record more expenses than they have actually incurred; this helps reduce their taxable income and, in turn, the tax payable. Let’s say a person who undertakes job work for manufacturers has incurred expenditure of 15 lakh on wages paid to the skilled and semi-skilled workers; however, he chooses to record 25 lakh in the books. He will thus reduce his profit in his books of accounts by 10 lakh and would generate black money of an equivalent amount. Inflation of expenses under various heads like “salaries”, “wages”, “office expenses”, “travelling expenses”, “commission payments”, “advertisement and publicity”, “legal fees”, etc. are often adopted for reducing taxable income. In this manner, by claiming higher business expenditure, businessmen generate black incomes.

We keep hearing of the wealth stashed away in secret bank accounts in Switzerland, Mauritius, Cyprus, Bahamas, St. Kitts and other tax havens. These amounts taken out of the country to places where these cannot be detected easily, and where the taxes are almost negligible, may be the illegally earned black incomes of the corrupt and the unscrupulous.

There are incomes earned from sources such as smuggling, betting, gambling, prostitution, black marketing of goods and services, trading in protected wildlife, unauthorized sale of licenses, insider trading, etc., which, on account of their very nature, are not reported to the authorities. There are innumerable such examples where money earned from illegal transactions is not disclosed to the authorities. All such incomes from illegal sources are black incomes.

Then there are the bribes taken by corrupt officials and politicians, and the huge kickbacks from irregularly awarded contracts. Also the illegal money earned through frauds and scams or by manipulating the systems cannot obviously be brought on record. All such incomes, therefore, acquire the character of black incomes. In fact, corruption and black money are closely linked phenomena.

Black money accumulated over a period of time manifests itself in various forms like investment in properties, investment in gold and jewellery, opulent lifestyle, foreign travel, lavish expenditure on marriages and other social functions, investment in unaccounted stocks, deposits in unreported bank accounts, etc.

In reality, black money is a serious matter, not as sweet as made out in the above ditty. Its bitterness is known only when one is caught.

Various definitions of the expression black money have been attempted. defines it as “income, especially from illegal activities, not reported to the government so as to avoid paying taxes on it.” Business defines it as “unaccounted for and untaxed cash generated by dealings in a black economy, black market, or organized crime. Holders of black money try to convert it into legitimate money (clean money or white money) through money laundering.”

For income tax purposes, all such income which has been concealed and on which tax has been evaded, irrespective of the source of such income or the motive for earning such income, acquires the character of black money. Thus, all income which is not reported to the tax authorities becomes black income even though there may have been no illegality involved in earning such income.

A common perception that prevails is that only transactions in cash are black money tranactions whereas all transactions / payments / receipts by cheque cannot be treated as black money transactions. This is a misconception and needs to be dispelled. All transactions whether carried out in cash or through banking channels could be black money transactions if the amounts involved have not borne the due tax liability. The reverse is also true. Transactions made out of funds duly disclosed for income tax purposes, even if carried out in cash, cannot be treated as black money transactions. To cite an example, if a tax payer maintains a bank account in which he deposits interest receipts earned from his money lending business, the income from which has not been disclosed to the Income Tax Department, and a cheque is issued from such a bank account for making payment of LIC premium, it would be a black money transaction. On the other hand, if a trader makes payment towards LIC premium in cash out of the cash sales made by him, which are duly recorded in the books of account, it would not be a black money transaction. In this example, a payment by cheque is a black money transaction whereas a payment by cash is not. It is not the mode of payment but the source out of which the payment is made or received which determines whether it is a black money transaction or not.

Source : Income taxmanagement

How black money is converted into white money

Let’s understand the basics of black money in this article.

What is Black Money – Black money is tax evaded income. It can be earned through both legal and illegal means. The majority of the black money is the income received in cash not accounted in books and not revealed to the government for tax purposes.

How does the black money get generated?
Corruption– Mr. Blackappa, an officer in government service, demands Rs.1 lakh from Mr.Shortcut for doing a favour (say to approve the building sanction plan). Mr. Shortcut hands over Rs.1 Lakh to the officer in cash (no one takes a bribe in cheque/demand draft!). This money will not be accounted in the books of Blackappa and he won’t pay any taxes on it (it may be good to legalize bribe and collect taxes on it) Count # 1 – Rs.1,00,000 black money is generated.

Sale of property – Mr. Greedy buys a property from Mr. Cheat for a total sale value of Rs.50 Lakhs. He takes Rs.35 Lakhs in cheque/DD and the balance in cash. He pays stamp duty on Rs.35 Lakhs, and the seller pays capital gain tax considering the value as Rs.35 Lakhs. Count # 2 – Rs.15,00,000 black money is generated.

Sale of goods/services without invoice – You buy a sofa set from a furniture dealer. What is the price? The shopkeeper will tell “the price is Rs.60000 plus taxes at 14.5%”. Any discount? The answer from him will be “Yes madam, I can offer it at Rs.58,000 without the bill. If you want, I can write on a piece of paper or on a quotation” Count # 3 – Rs.58,000 black money is generated.

Accounting for fictitious expenses – A businessman tells his accountant “I can’t pay so much tax. Do something, reduce the taxes” The accountant accommodates by booking fictitious expenses. If the businessman declares a profit of Rs.15 Lakhs against the actual profit of Rs.25 Lakhs, black money of Rs.10 lakhs is created. Count # 4 – Rs.10 Lakhs black money is generated.

How is it converted?
The difficult part is converting the black money into white money without any taxes. In all the above examples, the people who have earned money in cash (black money) can’t deposit it in the bank. Right? So, they have to hoard the cash somewhere, say in a bank locker, suitcase, etc. Or they can also spend this amount in cash towards the purchase of property, white goods, etc. Let’s understand the ways of converting black money.

Showing fictitious sales – There was a movie casted by the son of a powerful politician. This movie was an utter flop. But, it ran ‘houseful’ (fictitious) in Kalpana Theatre of K G Road for a year! During those days, people were talking that the black money earned by the father is converted into white by showing the income from the movie!

The money earned through illicit means or corruption is converted with the help of businessmen by booking fictitious sales in the books of the company.
Increase the sale price of an asset – One of my clients decided to buy a property from a senior government officer for a price of Rs.42 Lakhs. But the Officer wanted him to pay Rs.60 lakhs in cheque! In turn, he wanted to return the difference amount of Rs.18 Lakhs and additional stamp duty/registration charges in cash to the buyer. Thereby the Officer converted Rs.18 Lakhs of black money to white without paying any taxes. (He reinvested the sale proceeds in another property and got the long term tax exemption!)

Hawala Route – Have you heard about hawala transactions? If not, I will tell you in simple words. Assume Mr.ABC, a politician or government officer in Bangalore has Rs.25 Lakhs in cash. Since it is black money, he can’t deposit the same in the bank. So, he identifies a hawala agent (don’t search in google, you won’t get one!). The Hawala operator takes the cash in Bangalore and through his counterpart, hands over Rs.25 Lakhs worth in dollars/pounds/dirhams in a foreign country to his/to his representative. Mr.ABC gets this money back to India as Foreign Direct Investment (FDI) or seed fund in a private company, etc. Or he may choose to invest abroad in properties / shares. Thus, he converts black money to white without paying any taxes.

Depositing in banks less than Rs.50000 – This route is taken by small time operators. They open multiple bank accounts and deposit cash upto Rs.50000 at a time. Remember, if you have to deposit over Rs.50000, you have to give PAN details to the banker. Mostly, these kind of petty transactions goes unnoticed by the income tax department and thus, black money is converted to white without paying any taxes.
Agricultural Income – Agricultural Income is exempt from Income Tax. This means the money earned from the sale of paddy, pepper or wheat is exempt from tax. So, the people who earn black money will obtain a fictitious receipt from traders in agricultural commodities as if they have sold the products. For the sake of records, these people will acquire or show the proof of ancestral property in villages!
Gifts from relatives and friends on occasions – Any amount of money received from relatives (gift) is exempt from Income Tax. Is it not an easy way to convert black money to white? Simple, show the cash received in your son’s or daughter’s birthday as gifts from relatives!

Gifts from non-relatives and friends attract income tax. But those who have huge black money can show gift and pay taxes. Still the money earned through corrupt practices can be converted into white (after paying taxes). One of the classic examples is the amount of gift declared by a former Chief Minister who paid huge taxes during that year. She declared around Rs.200 Crores as gift received from her well-wishers and paid taxes on it!

Sale of Gold and Diamonds – Well-known professionals suggest this route. Suppose, Mr.XYZ has Rs.25 Lakhs cash and gives this amount to a Jewellery shop (not all shops will do this kind of dirty job). The Jewellery shop will issue a receipt for having bought Gold/Diamond worth Rs.25 Lakhs and make payment in a cheque to Mr.XYZ. For facilitating this transaction, he will charge a fee. Thus Mr.XYZ converts his black money into white, without paying any income tax.

Avenues for spending black money in black
Investing in property – The middle-class black money earners spend/invest them in black. For example, Mr.GHK sells a house for Rs.90 Lakhs (of which, he takes Rs.30 Lakhs in Cash – black) and reinvests/buys another flat/plot by giving Rs.30 lakhs apart from white money. So, the rule is Black for Black and white for white
Spend on weddings and functions – I needn’t explain it. If you attend the weddings at Palace Grounds in Bangalore and hi-fi wedding halls, you will get to see the ‘real color’ of black money. As I understand there are people who spend 2-5 Crores for a wedding! A large sum of corrupt money is spent on social events and functions.
Buying goods/services where the identification is not mandatory – For example, white goods, building houses and its interiors, etc., are done using black money earned in cash.

School Fee and donations – You may be aware of donations! For the medical seat, over a crore of rupees to be paid as a donation in cash!

Buying gold / precious metals – Instead of accumulating cash, people will buy gold, diamond and other precious metals. People buy gold in small quantities, from different shops, in the name of all members of the family.

Elections – As per the Election Commission of India, a maximum of Rs.70 lakhs can be spent by a candidate per Lok Sabha Constituency. Do you believe that they spend only Rs.70 lakhs? I understand that each candidate spends over Rs.30 Crores per Lok Sabha Seat! From where is this kind of money available? Corrupt money is spent in elections.

Source : simplifiedlaws

Step by step GST Enrolment procedure for existing VAT dealer

Government has launched GST Portal (i.e., for the GST enrolment or registration of existing taxpayers of VAT, Service Tax and Excise for smooth transition to GST. Existing dealers have to collect provisional ID from tax officer, update their profile information and upload the required documents on the GST portal.

The goods and services act will be applicable in the country effective on the appointed date. Before this date, all the registered tax payers under Central excise, Service Tax, VAT, Entry Tax, Luxury Tax and Entertainment Tax need to enrol at the GST common portal To begin with all state VAT Department will be issuing Provisional ID and password to registered taxpayers with the VAT department. The taxpayer registered with other tax departments and not under VAT department will be shared the provisional ID at a later date. The state wise schedule for enrolment with GST is available in the link. Provisional ID received from one department is enough for merging all tax registration into GST.

GST enrolment process:
• The State VAT Department will be communicating provisional ID and password to every registered tax payer.

• In case you are a registered tax payer with state VAT department and you have not received your provisional ID and password, contact your State Vat Department.

• Once you get provisional ID and password, you need to access the GST common portal to create unique username and new password using provisional ID and password.

• Before you create user name and password for GST common portal, you need to have a valid e-mail and mobile phone number.

• After creating user ID and password login to the GST common portal

• Fill Enrolment Application and provide business details.
• Verify the auto populated details from state VAT system
• Sign the Enrolment Application electronically.
• Submit Enrolment Application with necessary attachment electronically
• Once submitted, the details will be verified by the GST systems.
• If details are satisfactory an Application Reference Number (ARN) will be issued to you in ‘migrated” status. The status of provisional ID will change to “Active” on the approved date and a provisional registration Certificate will be issued.

Electronically signing of Enrolment Application:
After verifying the Enrolment application, you need to sing the form. There are two option to electronically sign the Application, You can E-Sign or sign using Digital Signature Certificate (DSC).

You can e-sign only if Aadhaar details of the authorised signatory are provided in the authorised signatory tab of the Enrolment Application.
In case of Companies, LLP, it is mandatory to sign the form electronically using DSC.

Mandatory information and document required for GST enrollment.
Before enrolling with GST system portal, you must ensure to have the following information and documents available with you

• Provisional ID and password received from VAT authority
• Valid e-mail address
• Valid Mobile Number
• Bank Account Number
• Bank IFSC code
• Registration number of all department ie Central Excise, Service Tax, Laxury Tax etc

• Proof of constitution of business
• In case of Partnership Firm – deed of Partnership
• In case of others- Registration Certificate of Business Entity
Proof of proncipal place of Business.
Photo of Promotor, Partner, Karth of HUF
Proof of appointment of Authorosed Signatory
Photo of Authorised signatory
Opening page of Bank Passbook / Statement containing Bank Account Number, , Branch address, address of account holder and latest transaction details.
Details auto populated and migrated from State VAT system
Following details will suto populated and migrated from state VAT system which can’t be eddited

• Legal Name of Business (As per PAN)
• Legal Name of Business (AS per current Tax Act)
• PAN of the Business
• State
• Zone/District/Word

Once you verify details the enrolment application, it will be assumed that the detailes migrated from VAT system are correct and you will be registered with the same details in the GST system.

Primary Authorized Signatory:
A Primary authorized signatory is the person who is primarily responsible to perform action on the GST System Portal on behalf of taxpayer. All communication from the GST System Portal relating to taxpayer will be sent to him. For example:- in case of proprietor, the proprietor himself or any person authorized by him, in case of partnership any of the partner authorized or any person authorized, in case of Company/LLP, Society, Trust, the person who is authorized by Board or Governing Body etc. can act as Primary authorized signatory. Copy of authorization needs to be uploaded.

In case of multiple authorized signatory for single business entity, one authorized signatory should be designated as primary authorized signatory and email and mobile number of that person shall be provided at the enrolment.

In case of single authorized signatory for a business entity, he shall be assumed as primary authorized signatory for that business entity.

What is Principal Place of Business?
Principal Place of Business is the primary location within the State where a taxpayer’s business is performed. The principal place of business is generally where the business’s books of accounts and records are kept and is often where the head of the firm or at least top management is located

How does E-Sign work?
E-Sign stands for Electronic Signature. E-Sign is an online electronic signature service to facilitate an Aadhaar holder to digitally sign a document. If the Applicant opts to electronically sign using the E-Sign service, the following actions are performed:-

Taxpayer need to click on “E sign” button.
System will ask to enter Aadhaar number of Authorized signatory.

1. After validating the Aadhaar Number, the GST system Portal will send a request to UIDAI system to send a One Time Password (OTP).

2. UIDAI system will send OTP to email address and mobile number registered against Aadhaar number.

System will prompt user to enter OTP.

The user will enter the OTP and submit the document. The e-Signing process is complete.

Source : simplifiedlaws/prakash

Income Which ‘Accrues’ Or ‘Arises’ In India under IncomeTax Act.

Income can be held to accrue or arise to an assessee only when the assessee obtains a right to receive that income. No amount can be said to accrue unless it is actually due.

Accrue means “to fall as natural growth or increment, to come as an accretion or advantage” and arise means “to spring up, to come into existence” according to Oxford dictionary. It has been held that these two expressions—accrue and arise—are for all purposes synonymous. Jiwan Dass v. Commissioner of Income Tax, Lahore. [A.I.R. (1929) L4H 609].

Income accrues or arises at a place where the origin or source of growth of income is situated.

As regards salaries, income accrues or arises in India if it is earned in India.

(i) Income accrues or arises to a person, who is entitled to demand and receive the income.

(ii) Income accrues or arises at a time or date when it ripens into a debt, i.e., at that moment when assessee acquires a right to receive it.

(iii) In the case of salaried employees, the salary is earned in India if the person renders services in India. Income earned in India obviously arises in India.

(iv) In case of dealer of goods, if the purchases and sales of goods take place in India, the profits out of such sales arise in India.

(v) Profit from such transaction where goods are manufactured outside India but are sold in India will be split up into manufacturing profits and only mercantile profits, i.e., accruing from sale transaction will be income arising in India.

Source : Income taxmanagement

Income Deemed To Be Received In India under Income tax Act.

Such incomes which are not actually received by a person, but law considers them as receipt or incomes, are called incomes deemed to be received in India. The term ‘Statutory receipts’ can be easily used to cover this term. Following are the instances of incomes deemed to be received

(i) Tax deducted at source is income deemed to be received by a person even though he never receives such income (u/s 198).

(ii) Section 7 considers the following incomes as deemed to be received by an assessee

(a) Employer’s contribution to Recognised provident fund in excess of 12% of salary of employee [Section 7(i)1.
(b) Interest accrued on recognised provident fund balance in excess of 9.5% p.a. [Section 7(i)].
(c) Taxable portion of transferred balance of URPF to RPF [Section 7(u)].
(d) The contribution made, by the Central Government in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD [Section 7(iii)].

(iii) Transfer of income without transfer of assets is deemed to be the income of transferor u/s 60 and 61.

(iv) Under section 8, the dividend distributed or deemed to be distributed u/s 2(22) will be deemed to be distributed in the previous year.

(v) Income from undisclosed sources [Sections 68, 69, 69A, 69B, 69C and 69D].

Source : Income taxmanagement


The above statement aptly describes the situation when a person dies without leaving a will. In the past we have seen instances of industrialists not making a will and after their death it has led to lot of mud slinging in the public owing to fight over inheritance by relatives. Hence to avoid such a situation, it is important to make a will for a peaceful life for your survivors.

Death is certain, its time is not! Especially when it comes without a warning, then only a Will made in time can salvage the situation. Hence one should in his/ her lifetime arrange his/ her affairs in such a way so that even a sudden death causes minimum discomfort to your successors.

Hence it is important to prepare the Will without delaying it. This will ensure that your assets are distributed the way you want and not otherwise.

“Where there is a will, there is a relative, Where there isn’t s a will, there is chaos”- Anonymous

So what are the important aspects of making a Will.

Execution of a Will:

Any person who has completed 18 years of age and is of sound mind can execute a will.

However a minor for whom a guardian has been appointed by a court can execute the Will only after attaining the age of 21. People normally execute their Will when they reach their fifties. However since you can change or modify the Will as many times as you want, it is advisable to prepare your Will as soon as you acquire any property whether movable or immovable and change the same as and when the circumstances change. You should not even wait to get married to write a Will. Writing of a will ensure smooth transition for your assets in the event of this unfortunate event.

You can make more than one Will to deal with separate properties, however it is always advisable to have one will in case the properties are situated in India only. It is not necessary that the Will is executed in India only. The will can be executed anywhere in the world.

People are generally under the impression that Will is required to be made on a stamp paper, but this is not the case. The legal position is that the Will is neither required to be executed on judicial stamp paper nor any stamp duty is required to be paid for a Will. The Will can be made on a simple piece of paper. Moreover it is advisable to write the Will in very simple words without using the typical legal jargons. What is required is that your intention should be clear from plain reading of the Will.

The will is required to be attested by at least two persons, one of whom preferably should be your family doctor. This will help in case any dispute arises with regard to mental condition of the person making the will. The purpose of attestation is to obtain a confirmation from the witnesses that the testator (maker of the will) has in fact signed the Will. The witnesses are not required to know the contents of the will and the testator may not disclose the contents of the Will to the witnesses. It is not necessary that all witnesses sign at the same time. The signatures of the witnesses can be obtained at different point of time. A person who is named as executor in the will can also be a witness to the will.

A Will made by a you can be changed as many times as you want. The person making the Will called testator in legal parlance can even revoke his earlier will and makes a fresh Will.

Though the Indian Registration Act does not require mandatory registration of Will, it is advisable and in your interest to get your Will registered with the office of Registrar. Registration of your Will ensures that in case of doubt or dispute with regard to the genuineness of the Will, the same gets easily resolved if the Will is registered. Moreover in case the Will is changed later on, the fact of the Will having been registered will help the court in finding our the latest wishes of the person making the Will.

A Will can be simply registered with the office of Registrar without any special process.

The Will can be handwritten or the same may be printed but the testator should put his signature or his mark on the Will to confirm that the Will is made as per his instructions and wishes.

In you do not sign the Will in the same language in which it is made, it is necessary that the contents of the Will are explained to you by someone and the person explaining the contents should also put his signature at the bottom of the Will with a statement about the Will having been interpreted to the testator. Please note that the Will can be made in any Language. However it is preferable to make the Will in the language known to the testator to make this simple.

Operation of a Will:

The instructions or directions contained in the will come into effect only after the death of the person who has executed the Will. However in case a person dies without making a will, then all the properties of the deceased will pass on to the legal heirs as per the provisions of succession law applicable to the person dying. Hindus, Buddhists, Jains and Sikhs are governed by the Hindu Succession Act, 1956. However there are different inheritance laws for Christians and Parsis. In case of Muslims the properties pass on to the heirs as per law interpreted based on their religious texts.

While passing on the assets to persons through Will, you can also attach some obligations with such bequeath. However the value of the obligation cannot be more than the value of the asset being bequeathed. The beneficiary has to accept the bequeath with the obligation, as he cannot opt to take the property without accepting the obligation attached with it.

A person can include all the properties in the Will which he can legally transfer during his life time. Any property which is not covered under the Will shall pass as per the law of succession applicable to the deceased. However it is advisable to have a residue clause in the Will which will take care of disposal of all the properties which are not clearly mentioned or specifically included in the Will.

A minor or a lunatic can be a beneficiary under a Will. The legal guardian of the minor or lunatic will take the property on behalf of the minor or lunatic. However a minor or lunatic can not make any Will and bequeath any property belonging to him.

It is better to appoint executor the will, in case no executors are not appointed any one of the beneficiary can act as an executor.

To summarize here, you will appreciate that making a Will is not that complicated as it is made out to be. So what are you thinking? Prepare your Will now , so that your wishes are honoured even after your death.

Source : Simpletaxindia