Provision for free transport to employees is not a service

Provision of free transport facility provided to employees for business purposes cannot be regarded as 'service' because work done and wages received are independent of use or otherwise of such facility by employees and, hence, a proportion of work performed by employee does not amount to consideration

In the instant case, the assessee-builder was engaged in construction work. It provided free transport facilities/services to its employees for their transport from residence to building sites and vice versa. Department argued that it was a service and consideration received by assessee-employer was work done by employee and therefore was liable to VAT under German law.

The European Court of Justice held as under:

1) Since work to be performed and wages received are independent of use or otherwise by employees of transport facilities provided to them by their employer, it was not possible to regard a proportion of work performed as being consideration for transport services;

2) Thus, there was no consideration which had a subjective value and a direct link with service provided. Consequently, it could not be charged to service tax/ Vat - JULIUS FILLIBECK SÖHNE GMBH & CO. KG V. FINANZAMT NEUSTADT [2013] 30 taxmann.com 433 (ECJ)

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SERVICE TAX

Things to consider before taking a home loan

Many of us dreams for buying a home today. Properties prices are neutral or down as well as the rate of interest on home loan. But there are many factors to be considered before applying for a home loan or buy a home as it is a major financial issue and requires a lot of financial planning. These are some factors which must analysis before taking a big step buying a home and taking a home loan.

 Loan amount- home loan amount is based on the cost of home. It also based on ability to pay EMI, business or job, age, other loan taken and some other financial parameter. Sometimes banks may offer higher loan than the net worth. One must plan for repaying the loan before taking the loan. One should not take such amount of loan which may lead to headache and harassment for paying EMI.  

Down payment- one needs to pay the down payment amount, which is minimum amount for applying for the loan. Banks decide the down payment and it includes in the property value on which banks give the loan. Such down payment is needed to be provided by the borrower himself as soon as loan granted. So one must need to arrange such money with his sources.

Interest rates- there are two options available in the interest rates which are fixed rate and floating rate of interest. In fixed rate option, interest rate remains unchanged for the entire tenure of the loan whereas in floating rate of interest, interest rates changes as per market rates. Fixed rates are preferred where interest rates are on rise, whereas floating rates are preferred where market rates declines. One must analysis the market conditions before deciding the interest rates factors as after approval, its hard to changes the interest rate option.

Remember Reserve bank of India has abolished the prepayment penalty and no banks can ask to pay more if you are paying the loan amount early. Check the fixed interest rate vs. diminishing interest rate calculator.

Repayment period- Period is also an important factor. Home loan is available up to 20 years depending on banks to banks. One needs to decide the repayment period rationally. It all depends on the ability to pay the EMI. If loan tenure is less, one needs to pay less interest on the loan. So it is always better to take the loan for short period but one should consider about how much one can easily pat EMI.

Formula is simple, more EMI, less interest you will pay on the same loan amount. Check this EMI, Loan tenure and rate of interest calculator.

Windfall gains- if someone has got some windfall gains, some unexpected profits, one can use it on repaying the loan amount. It really can save a lot of interest amount to be paid. Banks neither can levy prepayment penalty nor any charges against it.

Penalty & charges- These are the things people ignores while taking the loan. One should compare and know about charges and penalties of late payment, Bounce the EMI and cheque bounce. Banks are generally don’t tell these items and it is negotiable as well as different bank to bank. So it’s advisable to have a look on them.

Security- in home loan, the security is itself the home for which one is taking the loan. But in some condition like under-construction, the lender may ask for another security for the loan. Other security may be any property, shares, debentures, life insurance policies, FDR. One must have a look on credit rating which is very important to obtain a good score for approval a loan. Any default on loan or even late payment may lead to disapproval of the loan. For more information about credit ratings go to this link.

Insurance- One must insure your home for taking a loan. Banks must need it or they will pay the premium themselves and charge it to you.

Income tax benefits- home loan gives a lot of tax benefit. Benefits are available on both the principal as well as interest amount. A sum of Rs. 150000 is the maximum limit for deduction on interest payable on the home loan for self-occupied property. There is an extra deduction introduced in the last budget in which an additional deduction on interest up to 1 lakh is allowed on a loan up to Rs. 25 Lakh.  There is no limit on interest on home loan in the case of let out property under section 24(d) of income tax act. There is also deduction available up to Rs. 100000 on principal loan amount paid under section 80(c) of income tax act.

In case of joint name loan, but husband and wife are eligible for tax deduction on same home loan. Like if the home loan is taken on husband and wife name, both can claim deduction of 1.5 lakh on interest on home loan.

Home saver loan- there is another concept available in the market which called home saver loan. In this loan one can deposit the additional money in the current account linked with the home loan account. The deposited amount can be withdrawn anytime and one needs to pay interest on home loan-deposit on current account.

However the interest rate is some high with the normal home loan. For more info about home saver loan click here.

Default- In case when one can't pay the loan EMI at time there are some rescue available check the link.

Tags-home loan,home loan option,home loan factors,home loan deduction,factors to consider for home loan,home loan factors to consider,things to consider for home loan

HOME LOAN , USEFULNESS

EXCEL BASED SALARY CALCULATOR FOR FIRMS

Salary calculator:- In a firm or small company where the number of employees are upto 50, there is always a need of a salary calculator which can calculate the salary of full month. Because calculating manual salary is full of waste of time as well as it requires a lot of energy. So I m presenting a excel based salary calculator for firms/company with no headache of calculating overtime or basic salary. One need to just enter the hours of work in a day and it will calculate the pay automatically.

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Prepayment charges can be set off against any other income

Taxpayers get a big relief with a decision of Mumbai bench of the income tax Appellate Tribunal. This decision is about the prepayment penalty paid to early repayment for the home loan.

In the decision, the prepayment charges can be claimed deduction from the income under the head income from house property. These charges can be claimed from any other head of income like income from salary etc.

This is a big relief to the taxpayers as many people paid a large amount as prepayment charges for the home loan and there was no rule to get the deduction from income tax.

The tribunal examined the appeal filed by Windermere properties. The Tribunal said that the interest on housing loan is deductible from income tax under the head income from house property. The appellant paid a sum of Rs. 1.56 crore as prepayment charges for a house loan to HDFC bank. The Tribunal said that these charges are live, true and direct linked with the house loan.

  

Dismissing the stand taken by the Tax department, the tribunal bench added, "It is beyond our comprehension as to how the amount paid as interest for the housing loan taken is allowable as a deduction but the amount paid as prepayment charges of the very same loan is not deductible." 

Both the direct interest and prepayment charges were held by the tribunal to fall within the definition of the term interest and allowable as a deduction from house property income. 

Reserve Bank of India had removed the prepayment charges for the house loan in June 2012-13 but a large number of income tax payer still paid prepayment charges for home loan in April and May 2012. This rule helps them to save a big money from income tax liability.

Moreover this rule is helpful to those people too who have still pending assessment for previous years.

Tags-prepayment charges,prepayment charges in income tax,prepayment charges it rule,income tax rule for prepayment charges,home loan prepayment charges, how to deduct prepayment charges in income tax,income tax deduction for prepayment charges

HOME LOAN , house rent allowance , housing loan

Mandatory e-filing of return for income above 5 lakh AY 2013-14

Income tax department issued a notification no. 34/2013 about e-filing of income tax return is mandatory for the person whose income is above 5 lakh for the assessment year 2013-14. Full notification is as under.

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

[CENTRAL BOARD OF DIRECT TAXES]

NOTIFICATION

New Delhi, the 1st day of May, 2013

Income-tax

S.O. 1111 (E).─ In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (3rd Amendment) Rules, 2013.

(2) They shall be deemed to have come into force with effect from the 1st day of April, 2013. 

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 12,─(a) in sub-rule (1),-

(A) for the figures “2012”, the figures “2013” shall be substituted;

(B) in item (a),─

(i) in sub-item (iii), after the words “income from race horses”, the words “and does not have any loss under the head” shall be inserted;

(ii) for the proviso, the following proviso shall be substituted, namely:-

“Provided that the provisions of this clause shall not apply to a person who,-

(I) is a resident, other than not ordinarily resident in India within the meaning of sub-section (6) of section 6 and has,─

(i) assets (including financial interest in any entity) located outside India; or(ii) signing authority in any account located outside India; 

(II) has claimed any relief of tax under sections 90 or 90A or deduction of tax under section 91; or

(III) has income not chargeable to tax, exceeding five thousand rupees.”;

(C) in clause (ca), for the proviso, the following proviso shall be substituted, namely:-

“Provided that the provisions of this clause shall not apply to a person who,-

(I) is a resident, other than not ordinarily resident in India within the meaning of sub-section (6) of section 6 and has,─

(i) assets (including financial interest in any entity) located outside India; or

(ii) signing authority in any account located outside India; 

(II) has claimed any relief of tax under sections 90 or 90A or deduction of tax under section 91; or

(III) has income not chargeable to tax, exceeding five thousand rupees.”;

(b) in sub-rule(2), the following proviso shall be inserted, namely:-

“Provided that where an assessee is required to furnish a report of audit under sections 44AB, 92E or 115JB of the Act, he shall furnish the same electronically.”;

(c) in sub-rule (3), in the proviso,-(A) in clause (a),─(i) for the words “an individual or a hindu undivided family”, the words “a person, other than a company and a person required to furnish the return in Form ITR-7” shall be substituted;

(ii) for the words “ten lakh rupees” the words “five lakh rupees” shall be substituted;

(iii) for the figures “2012-13”, the figures “2013-14” shall be substituted;

(B) after clause (aaa), the following clause shall be inserted, namely:-

“(aab) a person claiming any relief of tax under section 90 or 90A or deduction of tax under section 91 of the Act, shall furnish the return for assessment year 2013-14 and subsequent assessment years in the manner specified in clause (ii) or clause (iii);”

(C) in clause (b), after the words, brackets and figure “in clause (i)”, the words, brackets and figures “or clause (ii) or clause (iii)” shall be inserted.

(d) in sub-rule 4, after the words, brackets and figures “of sub-rule(3)”, the words and figures “and the report of audit in the manner specified in proviso to sub-rule (2)” shall be inserted.

(e) in sub-rule (5), for the figures “2011”, the figures “2012” shall be substituted.

3. In the said rules, in Appendix-II, for “Forms SAHAJ (ITR-1), ITR-2, ITR-3, SUGAM (ITR-4S), ITR-4 and ITR-V”, the “Forms SAHAJ (ITR-1), ITR-2, ITR-3, SUGAM (ITR-4S), ITR-4 and ITR-V” shall be substituted.

Tags-income tax return,income tax e-filing return,e-filing of income tax return,limit for e-filing return,it return e-filing limit

income tax return

Service tax voluntary compliance encouragement scheme VCES 2013

Service tax department started new scheme which is Voluntary Compliance Encouragement scheme( VCES). This scheme is for those service providers who falls into service tax liability but didn't apply for service tax number as well as do not pay service tax. Service tax department has issued a notification no. 10/2013 dated 13 May 2013 about this new VCES scheme 2013. Full notification and scheme detail are as follows.

Notification

No.10/2013 - Service Tax

New Delhi, the 13th May, 2013

G.S.R…..(E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 114 of the Finance Act, 2013 (17 of 2013), the Central Government hereby makes the following rules regarding the form and manner of declaration, form and manner of acknowledgement of declaration, manner of payment of tax dues andform and manner of issuing acknowledgement of discharge of tax dues under the Service Tax Voluntary Compliance Encouragement Scheme,2013,namely:-

1. Short title and commencement.– (1) These rules may be called the Service Tax Voluntary Compliance Encouragement Rules, 2013.

(2) They shall come into force on the date of its publication in the Gazette of India.

2. Definitions. – (1) In these rules, unless the context otherwise requires, -

(a) “Act” means the Finance Act, 2013;

(b) “Form” means the Forms annexed to these rules.

(c) “Scheme” means the Service Tax Voluntary Compliance Encouragement Scheme, 2013 as specified in the Act;

(2) Words and expressions used but not defined in these rules but defined in the Scheme shall have the meanings respectively assigned to them in the Scheme.

3. Registration. – Any person, who wishes to make a declaration under the Scheme, shall, if not already registered, take registration under rule 4 of the Service Tax Rules, 1994.

4. Form of declaration. – The declaration under sub-section (1) of section 107 of the Act, in respect of tax dues under the Scheme shall be made in Form VCES -1.

5. Form of acknowledgment of declaration. – The designated authority on receipt of declaration shall issue an acknowledgement thereof, in Form VCES -2, within a period of seven working days from the date of receipt of the declaration.

6. Payment of tax dues.– (1) The tax dues payable under the Scheme along with interest, if any, under section 107 of the Act shall be paid to the credit of the Central Government in the manner prescribed for the payment of service tax under the Service Tax Rules, 1994.(2) The CENVAT credit shall not be utilised for payment of tax dues under the Scheme.

7. Form of acknowledgement of discharge.– (1) The designated authority shall issue an acknowledgement of discharge under sub-section (7) of section 107 of theAct, in Form VCES - 3.

(2) The acknowledgement of discharge shall be issued within a period of seven working days from the date of furnishing of details of payment of tax dues in full along with interest, if any, by the declarant.

One can see VCES forms from this link

Tags-vces,voluntary compliance encouragement scheme,service tax vces,vces form,service tax form vces,

SERVICE TAX

EPF interest rate 8.5 percent approved for 2012-13

Finance Ministry of India has approved rate interest of 8.5% for 2012-13 for EPFO subscribers which are up by .25 percent, which was 8.25 percent in the previous year. This will benefit around 5 crore subscribers of Employees provident fund.

The rate of interest 8.5 percent for 2012-13 will be implemented with immediate effect as per commissioner of EPFO Mr. Anil Swarup. He also said that EPFO will settle claim at 8.5 percent and credit the interest for 2012-13.

Central board of trustee (CBT) takes the decision about rate of interest on EPFO and it decided the rate of 8.5 percent for 2012-13. Now CBT will issue a notification to the EPFO department, only after which EPFO department gives credit the interest amount to the subscribers.

 According to the rules, rate of interest on EPF should be decided before the financial year but now days it becomes a practice of delay and this time it is decided after the end of financial year.

Claims are settled on the previous year interest rates in the absence of notification about the interest rate. After only notified by CBT, subscribers can claim on differential rates.

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ppf , USEFULNESS