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Friday, January 30, 2015

New format of form 15G and 15H with auto fill facility in excel

Income tax department changed the format of form 15g and 15h. These forms are the declaration as their income is less than threshold limit and hence no TDS is deducted on the income earned.  Section 197A of income tax act says that in this case assessee can give form 15G OR 15H to the deductor.

To whom these forms should be given
The point is simple. The person or the company to whom you have given the loan like if you have given a loan and getting interest to ABC company or you have some fixed deposits in the banks, you need to issue form 15G and 15H to the respective company or bank.

Interest amount limit
The interest earned for fixed deposited in banks has the limit of 10000. It means if your interest income is less than 10000 rupees in a financial year, you needn’t to give them form 15G an 15H. In the case of loan advance, interest on loan, bonds, debenture and interest income other than bank the limit is 5000 rupees.


Difference between form 15G and 15H
Form 15G:- Form 15G are to the person who is not a senior citizen, whose age is less than 65 years( the senior citizen age is reduced to 60 from the analysis year 2012-13) and Hindu Undivided Family(HUF)
Form 15H is to be filled by senior citizen.

Auto fill 15G and 15H in excel
As per high demand, auto-fill is back with the new format of form 15G and 15H. In this excel based utility one can prepare forms 15G and 15H within seconds. One need to fill simple details like name, father's name, address, PAN number etc. and form is ready with filled. One can prepare almost 50 forms in a minutes and take print-out.

Download Autofill 15g and h excel based utility

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Dividend and income distribution tax

Section 115-O of the Income-tax Act provides that a domestic company shall be liable for payment of additional income-tax at the rate of 15 per cent. on any amount declared, distributed or paid by way of dividends to its shareholders. This tax on distributed profits is final tax in respect of the amount declared, distributed or paid as dividends and no credit in respect of it can be claimed by the company or the shareholder.

Similarly, section 115 R of the Income-tax Act provides for levy of additional income-tax in respect of income distributed by the mutual fund to its investors at the rates specified in the said section.

Prior to introduction of dividend distribution tax (DDT), the dividends were taxable in the hands of the shareholder. The gross amount of dividend representing the distributable surplus was taxable, and the tax on this amount was paid by the shareholder at the applicable rate which varied from 0 to 30%. However, after the introduction of the DDT, a lower rate of 15% was applicable but this rate was being applied on the amount paid as dividend after reduction of distribution tax by the company.

Therefore, the tax was computed by the company with reference to the net amount. Similar was the case when income was distributed by mutual funds. Due to difference in the base of the income distributed or dividend on which the distribution tax is calculated, the effective tax rate was lower than the rate provided in the respective sections.

In order to ensure that tax is levied on proper base, the amount of distributable income, and the dividends which are actually received by the unit holder of the mutual fund or shareholders of the domestic company, as the case may be were required to be grossed up for the purpose of computing the additional tax.

Accordingly, section 115-O has been amended so as to provide that for the purposes of determining the tax on distributed profits payable in accordance with the provisions of section 115-O, any amount by way of dividends referred to in subsection (1) of the said section, as reduced by the amount referred to in sub-section (1A) [referred to as net distributed profits], shall be increased to such amount as would, after reduction of the tax on such increased amount at the rate specified in sub-section (1), be equal to the net distributed profits. Thus, where the amount of dividend paid or distributed by a company is Rs. 85, then DDT under the amended provision would be calculated as follows:

Dividend amount distributed = Rs. 85
Increase by Rs. 15 [i.e. (85*0.15)/(1-0.15)]
Increased amount = Rs. 100
DDT @ 15% of Rs. 100 = Rs. 15
Tax payable u/s 115-O is Rs. 15
Dividend distributed to shareholders = Rs. 85

Similarly, section 115R has been amended to provide that for the purposes of determining the additional income-tax payable in accordance with sub-section (2) of the said section, the amount of distributed income shall be increased to such amount as would, after reduction of the additional income-tax on such increased amount at the rate specified in sub-section (2), be equal to the amount of income distributed by the Mutual Fund.

Applicability:-These amendments take effect from 1st October, 2014.

Sunday, January 25, 2015

Income tax authority can't impound any documents, cash,stock or jewellery in survey

The provisions contained in section 133A of the Income-tax Act enable the Income-tax authority to enter any premises in which business or profession is carried out for the purposes of survey. An income-tax authority acting under this section may impound and retain in his custody any books of account or documents inspected by him during the course of survey. However, prior to its amendment by the Act, the said section provided that such income-tax authority shall not retain in his custody
any such books of account or document for a period exceeding ten days (exclusive of holidays) without obtaining the approval of the Chief Commissioner or Director General therefor, as the case maybe.

An income-tax authority acting under section 133A has the powers as conferred upon it under sub-section (1) of section 131 of the Income-tax Act. With a view to align the time period and the authority for approval for retention of books of account or other documents beyond the specified time period, section 133A has been amended to provide that the income-tax authority shall not retain in his custody any such books of account or other documents for a period exceeding fifteen days
(exclusive of holidays) without obtaining the approval of the Principal Chief Commissioner or Director General or Commissioner or Director therefor, as the case may be.

Section 133A has further been amended to provide that an income-tax authority may, for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions of Chapter XVII-B or Chapter XVII-BB, as the case may be, enter any office, or a place where business or profession is carried on, within the limits of the area assigned to him, or any such place in respect of which he is authorised for the purposes of the said section by such income-tax authority who is assigned the area within which such place is situated where books of account or documents are kept. The income-tax authority may for this purpose enter an office, or a place where business or profession is carried on after sunrise and before sunset. Further, such income-tax authority may require the deductor or the collector or any other person who may at the time and place of survey be
attending to such work, ─

(i) to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place, and

(ii) to furnish such information as he may require in relation to such matter.

It has also been provided that an income-tax authority while acting under subsection (2A) of section 133A, may place marks of identification on the books of account or other documents inspected by him and take extracts and copies thereof.

He may also record the statement of any person which may be useful for, or relevant to, any proceeding under the Income-tax Act. However, while acting under said subsection (2A), the income-tax authority shall not impound and retain in his custody any books of accounts or documents inspected by him or make an inventory of any cash, stock or other valuables.

Applicability:- These amendments take effect from 1st October, 2014.

Saturday, January 24, 2015

Capital gain exemption on residential house property

Capital gains exemption in case of investment in a residential houseproperty

The provisions contained in sub-section (1) of section 54 of the Income-tax Act,before its amendment by the Act, inter alia, provided that where capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, and the assessee within a period of one year before or two years after the date of transfer, purchases, or within a period of three years after the date of transfer constructs, a residential house, then, the amount of capital gains to the extent invested in the new residential house is not chargeable to
tax under section 45 of the Income-tax Act.

The provisions contained in sub-section (1) of section 54F of the Income-tax Act, before its amendment by the Act, inter-alia, provided that where capital gains arises from transfer of a long-term capital asset, not being a residential house, and the assessee within a period of one year before or two years after the date of transfer, purchases, or within a period of three years after the date of transferconstructs, a residential house, then, the portion of capital gains in the ratio of cost of new asset to the net consideration received on transfer is not chargeable to tax.

Certain courts had interpreted that the exemption is also available if investment is made in more than one residential house. The benefit was intended for investmentm in one residential house within India. Accordingly, sub-section (1) of section 54 of the Income-tax Act has been amended to provide that the rollover relief under the said section is available if the investment is made in one residential house situated in India.

Similarly, sub-section (1) of section 54F of the Income-tax Act has been amended to provide that the exemption is available if the investment is made in one residential house situated in India.

Applicability: - These amendments take effect from 1st April, 2015 and will accordingly apply in relation to assessment year 2015-16 and subsequent assessment years.

Friday, January 23, 2015

All about Alternate Minimum Tax AMT

Alternate Minimum Tax
33.1 The provisions of section 115JC of the Income-tax Act, before its amendment by the Act, provide that where the regular income tax payable by a person, other than a company, for a previous year is less than the alternate minimum tax for such previous year, the person would be required to pay income tax at the rate of eighteen and one half per cent on its adjusted total income. The section further provides that the total income shall be increased by deductions claimed under Part C of Chapter VI-A, and under section 10AA to arrive at adjusted total income.

33.2 Under the Income-tax Act, the investment linked deductions have been provided in place of profit linked deductions. These profit linked deductions are subject to alternate minimum tax (AMT).

33.3 Accordingly, with a view to include the investment linked deduction claimed under section 35AD in computing adjusted total income for the purpose of calculating alternate minimum tax, section 115JC has been amended to provide that total income shall be increased by the deduction claimed under section 35AD for the purpose of computation of adjusted total income. The amount of depreciation allowable under section 32 shall, however, be reduced in computing the adjusted
total income.

Example:
Total income :                                                                                                     Rs. 60
Deduction claimed under Chapter VI-A :                                                  Rs. 40
Deduction claimed under section 35AD on a capital asset :               Rs. 100
Computation of adjusted total income for the purposes of AMT
Total income :                                                                                                           Rs. 60
ADDITIONS

(i) deduction under Chapter VI-A (on non-specified business) :              Rs. 40
(ii) deduction under section 35AD(on specified business)Rs. 100
LESS: depreciation under section 32                                  Rs. 15 :          Rs. 85

Adjusted total income under section 115JC                                              Rs.185

33.4 Applicability:- These amendments take effect from 1st April, 2015 and will,accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years.

34. Credit of Alternate Minimum Tax
34.1 The provisions of sub-section (1) of section 115JEE of the Income-tax Act before amendment by the Act, provided that the provisions of Chapter-XII BA shall be applicable to any person who has claimed a deduction under part C of Chapter VI-A or claimed a deduction u/s 10AA. Further the provisions of sub-section (2) of section 115JEE, before amendment by the Act, provided that the Chapter shall not be applicable to an individual, HUF, association of persons , a body of individuals
(whether incorporated or not) or an artificial juridical person if the adjusted total income does not exceed twenty lakh rupees. This has created difficulty in claim of credit of alternate minimum tax under section 115JD in an assessment year where the income is not more than twenty lakh rupees or there is no claim of any deduction under section 10AA or Chapter VI-A.

34.2 Sub-section (1) of section 115JEE has been amended to provide that Chapter XII-BA shall also be applicable to a person who has claimed any deduction under section 35AD of the Income-tax Act.

34.3 Further, with a view to enable an assessee to claim credit of alternate minimum tax paid in any earlier previous year, section 115JEE has been amended to provide that the credit for tax paid under section 115JC shall be allowed in accordance with the provisions of section 115JD, notwithstanding the conditions mentioned in sub-section (1) or (2) of section 115JEE.

34.4 Applicability: - This amendment takes effect from 1st April, 2015 and will accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years.

You can now carry 500,1000 INR notes with you visiting Nepal and Bhutan

Reserve Bank of India allowed people visiting Nepal and Bhutan to carry 500 and 1000 indian currency notes with them with a maximum of Rs. 25000. Earlier there was a ban on 500 and 1000 rupees note and people only could carry 100 or below 100 rupees notes and currency. RBI issued a circular no. 63 dated 22 January 2015 regarding this issue. Full circular is as under.

Export and Import of Indian Currency

Attention of Authorised Persons is invited to Regulation 8 of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000, in terms of which, inter-alia, a person may take or send out of India to Nepal or Bhutan and bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India for any amount in denominations up to Rs.100/-.

2. With a view to mitigating the hardship of individuals visiting from India to Nepal or Bhutan, it has now been decided that, an individual may carry to Nepal or Bhutan, currency notes of Reserve Bank of India denominations above Rs.100/-, i.e. currency notes of Rs.500/- and/or Rs.1000/- denominations, subject to a limit of Rs.25000/-.

3. Authorised Persons may bring the contents of this circular to the notice of their constituents and customers.

4. Necessary amendments to Foreign Exchange Management (Export and Import of Currency) Regulations 2000 (Notification No.FEMA.6/2000-RB dated May 3, 2000) have been notified as Foreign Exchange Management (Export & Import of Currency) (Second Amendment) Regulations, 2014 [Notification No. FEMA.331/2014-RB dated December 16, 2014] in the Official Gazette vide G.S.R. Nos.907(E) dated December 22, 2014, a copy of which is annexed.

5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Friday, January 16, 2015

Custom simplifies procedure for shipping

Custom department further simplifies doing import-export by easing the norms for shipping. Earlier Custom department eases the procedure with merging invoice and packing list. Custom department issued a circular no. 2/2015 dated 15 January 2015 regarding this issue. Full circular is as under.

1- The avoidable delays on account of non-uniform Customs procedures adopted at some ports/Customs stations not only increase transaction cost and time of clearance but also prove to be major constraints in making Indian ports international transshipment hubs. Therefore, a Committee was set up by Ministry of Shipping for simplification of shipping related Customs procedures. The Committee has made, interalia, certain recommendations for implementation by Customs:

2.  Board has examined the recommendations of the said Committee in consultation with identified Chief Commissioners of Customs. Accordingly, the following decisions have been taken to streamline the extant procedures at various ports:

(i)  It is reported that the number of hard copies of Import General Manifest (IGM) filed by shipping lines / steamer agents varies from 2 to 6 at various ports. Board, has noted that the Customs is already receiving the IGM electronically as well. The requirement of large number of hard copies of this document leads to unnecessary escalation of compliance cost. Therefore, taking into account the requirement of Customs as well the fact that an electronic version of IGM is already available, Board has decided that henceforth the number of hard copes of IGM required to be submitted by shipping lines / steamer agents at a Customs House shall be restricted to 2 (two) only.

(ii)  The port clearance requires submission of numerous documents on behalf of other agencies – Lighthouse Dues Certificate, NOC for Immigration, Port Health Certificate etc. At present, the port clearance is given on the strength of a bond and a guarantee which are given each time a vessel enters. As a measure of simplification, Board has decided to give an option to the steamer agent to (a) give a continuity bond and (b) merge the guarantee with the continuity bond.  This would reduce the number required documents from 2 (two) to 1 (one) and periodicity (of submission) would also get reduced drastically.

(iii) Reportedly, in case of transshipped cargo, shipping lines send multiple hard copies of ‘Sub Manifest Transhipment Permit’ (SMTP) to the destination ICD despite the same also being transmitted electronically. However, there may be situations warranting hard copy of the document such as when amendments have to be made. Recognizing the need for reducing number of copies of SMTP, Board has decided that only 1 (one) copy of SMTP would be sufficient and Customs at ICD should not insist on more number of hard copies of SMTP.

(iv) Currently, separate permissions are required whenever the mode of transport of transhipment containers changes from train to road or vice versa. The view is that this may be dispensed with since the carrier has already executed a bond for safe carriage of the goods to the destination port / ICD. With a view to boost inter-modal transportation of transshipped cargo and simply procedure, Board has decided that henceforth no separate permission is required from jurisdictional Customs in case of change of mode of transshipment under the Goods Imported (Conditions of Transhipment) Regulations, 1995. However, the carrier is required to intimate the change to the jurisdictional Commissioner of Customs who will ensure the bond covers both modes of transport.

3.  Chief Commissioners of Customs/Customs and Central Excise are requested to ensure that the aforementioned decisions are complied with strictly by field formations in their jurisdiction. Suitable Trade notice/ Public Notice may also be issued for guidance of trade and staff.

4.   Difficulty, faced if any, may be brought to the notice of the Board.