Circular No. 21 of 2019
Circular No. 21/2019 was issued by the Central Board of Direct Taxes on 27 August 2019. Its subject is Circular No. 21 of 2019.
This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.
Clarifies, in partial modification of the Board's earlier circular of 8 August 2019, how the directorship column in Part-A General of ITR Form 2 and ITR Form 3 is to be filled for assessment year 2019-20. A non-resident who is a director only in a foreign company that has no income received in India or accruing or arising in India answers that question in the negative and gives no details of that company. A non-resident who is a director in a domestic company as well as in such a foreign company answers in the affirmative but gives details of the domestic company alone. A resident continues to disclose directorship in every company, foreign companies included. The circular also takes up the Schedule FA question that arises where a foreign asset is acquired after the end of the foreign accounting period but before the end of the Indian previous year.
Representations were received after the return forms were notified, including one saying that non-residents are taxed only on Indian income and should not have to disclose directorship in foreign companies; the Board acted to allay those apprehensions.
Circular No. 21 of 2019
F.No. 370142/1/2019-TPL (Pt.-1)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(TPL Division)
***
Dated: 27th August, 2019
Clarifications in respect of filling-up of the ITR forms for the Assessment Year 2019-20
The Income-tax Return (ITR) forms for the Assessment Year (A.Y.) 2019-20 were
notified vide notification bearing G.S.R. 279(E) dated the 01st day of April, 2019.
Subsequently, instructions for filing ITR forms were issued and the software utility for efiling of all the ITR forms were also released. After notification of the ITR forms, various
queries were raised by the stakeholders in respect of filling-up of the ITR forms. The
queries were examined in the Board and a clarification was issued vide Circular No. 18 of
2019 dated 08.08.2019 to address the concerns raised.2. Subsequently, further representations have been received on certain issues relating
to filing of ITR Forms. Accordingly, following clarifications are issued in partial
modification of Circular No. 18 of 2019.3. In ITR Form-2 and ITR Form-3, in Part-A General, at column (h), the taxpayer is
required to state whether he was Director in a company at any time during the previous
year. In case of an affirmative answer, the taxpayer is further required to disclose
following information relating to each company in which he was a Director:-
(a) Name of Company
(b) PAN
(c) Whether its shares are listed or unlisted
(d) Director Identification Number (DIN)3.2 Representation has been received stating that non-residents are required to pay tax
only in respect of income received in India or income accruing or arising in India. Nonresidents are not required to disclose their assets outside India. Therefore, non-residents
should not be required to disclose details of directorship in foreign companies. The
disclosure requirement in ITR forms should be limited only to assets and incomes which
have a nexus with India.3.3 In this regard, it is stated that the disclosure requirement in ITR forms in respect of
directorship in a company is meant only for the purpose of reporting. The details entered
in this column are, in general, not relevant for computation of total income or tax liability
of the assessee. As such, the requirement to disclose directorship in a foreign company by
a non-resident taxpayer, does not tantamount to disclosure of any foreign source income
or foreign asset held by such taxpayer.3.4 However, to allay the apprehensions in the minds of non-resident taxpayers, it is
hereby clarified that a non-resident shall not be required to disclose details of his
directorship in a foreign company, which does not have any income received in India, or
accruing or arising in India. In other words, a non-resident taxpayer who is Director only
in a foreign company, which does not have any income received in India, or accruing or
arising in India, should answer the relevant question in the negative, whereupon he
would not be required to disclose details of such foreign company. It is further clarified
that a non-resident taxpayer, who is Director in a domestic company and also in a foreign
company, which does not have any income received in India, or accruing or arising in
India, should answer the relevant question in the affirmative, and provide details of
directorship in the domestic company only. It is also clarified that a resident taxpayer
would continue to be required to disclose details of his directorship in any company,
including foreign company, in the relevant column.4. Further, in ITR Form-2, ITR Form-3, ITR Form-5, ITR Form-6 and ITR Form-7, in
Part-B-TTI, before the verification part, a taxpayer, who is resident in India, is required to
state whether he had any time during the previous year:-
(a) held, as beneficial owner, beneficiary or otherwise, any asset (including financial
interest in any entity) located outside India; or
(b) had signing authority in any account located outside India; or
(c) had income from any source outside India?In case of an affirmative answer, the taxpayer is required to fill up the Schedule FA.
In Schedule FA, the taxpayer is required to disclose the details of foreign assets etc. held at
any time during the relevant accounting period.4.1 Representation has been received citing example of cases where the foreign assets
have been acquired after the end of "relevant accounting period" (in foreign jurisdiction)
but before the end of "previous year" (in India). In such cases, the taxpayer would have to
answer the question in Part-B-TTI in the affirmative, and consequently, would be required
to fill up the details of foreign assets etc. in Schedule FA. Since the assets were acquired
after the end of relevant accounting period, no amounts would be required to be reported
in Schedule FA. However, if the taxpayer reports Nil amount in all tables of Schedule FA,
the ITR form does not get validated.4.2 In this regard, it is hereby clarified that a taxpayer shall be required to answer the
relevant question in the affirmative, only if he has held the foreign assets etc. at any time
during the "previous year" (in India) as also at any time during the "relevant accounting
period" (in the foreign tax jurisdiction), and fill up Schedule FA accordingly.(Salil Mishra)
Director (TPL-IV)Copy to:-
1. PS to FM/ OSD to FM/ OSD to MoS(R).
2. PS to Secretary (Revenue).
3. The Chairman, Members and all other officers in CBDT of the rank of Under
Secretary and above.
4. All Pr. Chief Commissioners/ Pr. Director General of Income-tax – with a request to
circulate amongst all officers in their regions/ charges.
5. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn.)/ Pr. DG (NADT)/ Pr.
DGIT (L&R).
6. CIT (M&TP), CBDT.
7. Web manager for posting on the departmental website.
While filling ITR Form 2 or ITR Form 3 for assessment year 2019-20, and later in a defective return notice or a query about a directorship or foreign asset column left blank.
It mentions. Circular No. 18/2019, Circular No. 21/2019
Source: the Income Tax Department’s own published text — its page for this instrument.