10 December 2022
Sir, Having net income of 2lakh only why CPC created a demand with surcharge . (30%+37% surcharge + 4% Edu Cess). MMR amounts to 42.744%
My understanding is surcharge is levied from Income 50lakh and above . Could there be a glitch in the system? The demand if not paid, interest of 1% is levied per month.
How to reply to CPC in this case. Pls. give incite on this issue (AY 2021-22)
10 December 2022
Where a share of members are unknown or indeterminate [Section 167B (1)] In this case, Total Income of AOP/BOI will be Assessed at “Maximum Marginal Rate” means the rate of Income-tax including Surcharge and Education cess applicable to the highest slab of income in the case of an individual, association of persons, or body of individuals as specified in the finance act of the relevant year. For the Financial year, 2020-2021 MMR is 42.744 % (i.e. 30%+37% Surcharge+4% Education Cess). Try to understand the meaning of "Highest Slab Rate"
10 December 2022
Sir, My query is for taxable income below the threshold , in this case hardly 2lakh, should surcharge be applicable? as I understand surcharge will be applied on AOP when MMR is beyond 50lakh.
10 December 2022
Highest income tax rate is 30%+ highest surcharge is 37% (of course for 5Crs & above)... When when Maximum Marginal Rate is applied (for whatever income) it remains same i.e. 30% +37% surcharge +4% cess. So, when the Shares of Members are Indeterminate or unknown, this rate (42.74%) is applied, whatever be the income.
11 December 2022
Sir, I clearly understand your explanation. This is a small trust that income is generated from rental income only. utilized for charity, though exemption from inc. tax had not been sought for as of yet. There is no question owning shares determine or undetermine. It is one entity. It seems so unfair to levied surcharge of 42%. for meager income. As I understand also the surcharge was to tax the super rich.
11 December 2022
If it is registered co-operative society, not only surcharge will not apply, but even income tax slab rate will be very less... for details refer:: https://www.indiafilings.com/learn/meaning-formation-co-operative-societies/
11 December 2022
Sir, Thanks for the prompt response. Appreciate understanding the issue. Clearly CPC levied the surcharge as mentioned. As I said there are no shares as to monetary funds nor any profit. wharever funds from rent is utilised for donation to national causes. The working of members are voluntary. PAN got issued under AOP and it is only one entity . Is there any recourse to give reply to CPC. What can we do so that such issue does not arised in the future. Would you Sir say it is better to shut the Trust.
11 December 2022
If it is must to run the operation, get help of any local professional, who can help you to file the ITR under Trust/society, whereby such problem would not arise in future.
11 December 2022
Sir, the ITR were being filed by matured professional CA for decades with no issues. This surcharge issue happened first time for AY 2021. 2nd reminder to pay the demand had been received by me. what reply can I give to disagree on the demand that may be considered by CPC. Or there is no alternative now but pay off the demand. I find it extremely frustrating being honest. Sir I shall be extremely grateful if there is any advise or suggestion in the present case to cancel the surcharge demand.
06 January 2023
Sir, I believe the CPC software got updated to looks at the classification of PAN. If under AOP, auto calculates as per the issue mentioned. All the entries in 143 (1) match with CPC except the added levy of 37% Surcharge . The CA requested to reprocess the return CPC says there is no mistake but variance exist. Then I place a grievance as to no monetary shares in the running of the Trust for charitable purpose on the meager rental income received and declared with miniscule honorarium expense. I have no alternative but to pay since every month the surcharge not paid, 1% interest is being levied.
06 January 2023
Thanks for the response Sir . The CA is not inclined to go the appeal route. Ive notice also most CA's will file the ITR as self not giving there name and designation as the filer.
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