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Tuesday, March 31, 2015

Credit card charges you must know

The lure of a credit card is hard to resist, especially when a sales representative from a bank or a retail outlet makes a convincing pitch about you getting a ‘free’ credit card. But did you know that the credit card you are being promised is anything but free?
What sales representatives of credit cards do not tell you is that there are a host of charges that are applicable. Here are the various charges on credit card, you should know about before you agree to apply for one.

1. The annual maintenance fee
When you are told you are being given a free credit card, it probably means that the joining fee and the annual fee has been waived off for a maximum period of one year from the date of issuance, but after this initial period the annual maintenance fee is applicable to your card. This could range from Rs 1500-3000 in a year.

2. Interest costs
If you do not pay the whole of the outstanding amount within the due date stipulated by the bank each month, an interest rate on the expenses incurred on your card is charged at the rate of 3% per month. While this may not seem exorbitant to you, what sales representatives do not tell you upfront is that the monthly interest rate is annualized to arrive at an  annualized percentage rate (APR) which can be as high as 36-38%.

3. Overseas transaction cost
Your bank will also charge you for every overseas transaction you make. This is usually 3.5% of the overseas transaction and is converted to INR depending upon the exchange rate on the day you make the transaction.

4. Cash withdrawal on credit card
The transaction charges on cash withdrawal are as high as 2.5% of the cash advance. Over and above this you need to pay an interest on the cash right from day one, and this interest cost ranges from 24-46% per annum.

5. Cost for crossing card limit
Even if you cross your credit card limit by Rs 1, you bank will charge you a minimum over limit fee of Rs 500 or 2.5% of the over limit amount, whichever is higher.

6. Late payment fee
The Reserve Bank of India has recently come out with the diktat that banks must revisit the late payment charges on overdue amounts on credit cards. While this may relieve the burden of the card user by a tad, penalties are still applicable. Therefore, if you turn delinquent and do not pay your minimum amount due for more than 90 days you will be charged a late fee by your bank. For amounts between Rs 500 to Rs 20,000 the amount will be in the range of Rs 100-600 while for amounts over Rs 20,000 the amount will be in the range of Rs 700-800.

7. A duplicate statement fee
While the monthly statements are delivered free of cost to your postal address, if you request for a duplicate statement fee, your card issuer will levy a duplicate statement fee which may range between Rs 50-100.

8. Card replacement fee
If you lose your card, your bank will charge you a card replacement fee. This can be between Rs 250-300.

9. Cheque bounce or dishonour of ECS charge:
If the payment on your credit card bounces, your bank will charge you a fixed rate for the same which can be between Rs 300-350. If the bank sends a representative to pick up cheque or cash on the overdue account, another fee of Rs 100 is added to your next month’s statement.

10. Surcharges
If you purchase petrol using your credit card, a certain percentage of the transaction value is subject to either 2.5% of the transaction or flat fee of Rs 10-25 (whichever is higher) depending upon the bank. Some banks offer a waiver on the fuel surcharge but these are for certain specified bands say between Rs 400-4000. Therefore any transaction below Rs 399 or over 4000 will continue to be charged as usual.

11. Service tax
Up until now, the service tax levied on service charges was 12.36%. However, while presenting the budget for the year 2015-16, the Finance Minister Arun Jaitley announced that the service tax will be hiked to 14%. This means your credit card transactions will now become costlier as well.

Thus as you can see, the credit card you are being offered is not free at all and most of the charges you are not even told upfront. Knowing about these various fees and charges will put you in good stead and help you use your card prudently. Make sure you go through the issuer’s ‘Most Important Terms and Conditions’ (MITC) before you apply for the card. Prudent use of your credit card will also help you keep your Cibil score intact and keep your overall financial health in order.

Defected return can refiled u/s 139(4) upto 31 March 2015

Return for AY 2013-14 in certain cases where defect have been declared as invalid by CPC Bangaluru u/s 139(9) as the defect was not cured with in the time provided in notice u/s 139(9). Such taxpayer can now file a fresh return u/s 139(4) in the e filing portal for AY 2013-14 on or before 31 March 2015. The taxpayers can utilize this utility as the earliest.

Saturday, March 28, 2015

Amendment in Section 80 IB unconstitutional- Gujarat HC

Amendment made in section 80-IB(9) by adding an Explanation was not clarificatory, declaratory, curative or made "small repair" in the Act, but on the contrary takes away the accrued and vested right of the Petitioner which had matured after the judgments of ITAT. Therefore, the Explanation added by Finance (No.2) 2009 was a substantive law. Explanation added to Section 80-IB(9) by Finance Act (No.2) of 2009 is clearly unconstitutional, violative of Article 14 of the Constitution of India and is liable to be struck down

• The disputed question was as to whether the benefits of tax holiday of seven years was available on each undertaking which has now been taken away by the amendment made in section 80-IB(9) by adding on Explanation that provides that all blocks licensed under a single contract shall be treated as a single undertaking

• ITAT had found in favour of petitioner-assessee that each well/cluster of wells was a separate undertaking entitled to seven years tax holiday.

• The Revenue had challenged the decision of the ITAT before the High Court and thereafter, they have a remedy before the Apex Court.

• But, arbitrarily, the 100% tax deduction benefit could not be withdrawn by the Finance Minister or the legislature by amending Section 80-IB(9) of the Act retrospectively from an anterior date.

• The amendment in such cases where already tax benefit had accrued and vested in the assessee could not be taken away by giving retrospective amendment to Section 80-IB(9) which is nothing but a substantive provision inserted by amendment and it can only operate prospectively and not retrospectively.

• Explanation added to Section 80-IB(9) by Finance Act (No.2) of 2009 is clearly unconstitutional, violative of Article 14 of the Constitution of India and is liable to be struck down

Friday, March 27, 2015

CBDT clarification on section 9 of income tax act

CBDT has issued a circular no. 4/2015 dated 26 March 2015  clarification regarding  Explanation 5 to clause (i) of sub-section (l)  of section 9 of income tax act. Full circular is as under.

 Subject: Clarification regarding Explanation 5 to clause (i) of sub-section (l) of section 9 of Income-tax Act, l96l ('Act') - regarding

Section 9 of the Income-tax Act provides for incomes which are deemed to accrue or arise in India. Clause (i) of sub-section (1) of the said section reads as under:-

"9. (1) The following incomes shall be deemed to accrue or arise in India:-

(i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India."

2. The Finance Act,2012 inserted Explanation 5 to clause (i) of sub-section (1) of section 9. The said explanation reads as under:-

" Explanation 5.-For the removal of doubts, it is hereby clarified that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India"

3. A number of representations have been received by the Board stating that the purpose of introduction of Explanation 5 was to clarify the legislative intent regarding the taxation of income accruing or arising through transfer of a capital asset situate in India. Apprehensions have been expressed about the applicability of the Explanation to the transactions not resulting in any transfer, directly or indirectly of assets situated in India. It has been pointed out that such an extended application of the provisions of the Explanation may result in taxation of dividend income declared by a foreign company outside India. This may cause unintended double taxation and would be contrary to the generally accepted principles of source rule as well as the object and purpose of the amendment made by the Finance Act 2012.

4. The matter has been examined in the Board. The Explanatory Memorandum to the Finance Bill 2012 explains the purpose of the amendment to section 9 (l)(i) in the following words:-

"Section 9 of the Income-tax Act provides cases of income, which are deemed to accrue or arise in India. This is a legal fiction created to tax income, which may or may not arise in India and would not have been taxable but for the deeming provision created by this section, Sub-section (1)(i) provides a set of circumstances in which income accruing or arising, directly or indirectly, is taxable in India. One of the limbs of clause (i) is income accruing or arising directly or indirectly through the transfer
of a capital asset situate in India. The legislative intent of this clause is to widen the application as it covers incomes, which are accruing or arising directly or indirectly. The section codifies source rule of taxation wherein the state where the actual economic nexus of income is situated has a right to tax the income irrespective of the place of residence of the entity deriving the income. Where corporate structure ls created to route funds, the actual gain or income arises only in consequence of the
investment made in the activity to which such gains are attributable and not the mode through which such gains are realized. Internationally this principle is recognized by several countries, which provide that the source country has taxation right on the gains derived of offshore transactions where the value is attributable to the underlying assets...................

............Certain judicial pronouncements have created doubts about the scope and purpose of sections 9 and 195. Further, there are certain issues in respect of income deemed to accrue or arise where there are conflicting decisions of various judicial authorities.

Therefore, there is a need to provide clarificatory retrospective amendment to restate the legislative intent in respect of scope and applicability of section 9 and 195 and also to make other clarificatory amendments for providing certainty in law."

5. The Explanatory Memorandum clearly provides that the amendment of section 9(l) (i) was to reiterate the legislative intent in respect of taxability of gains having economic nexus with India irrespective of the mode of realisation of such gains. Thus. the amendment sought to clarify the source rule of taxation in respect of income arising from indirect transfer of assets situated in India as explicitly mentioned in the Explanatory Memorandum. Viewed in this context, Explanation 5 would be applicable in relation to deeming any income arising outside India from any transaction in respect of any share or interest in a foreign company or entity, which has the effect of transfening, directly or indirectly, the underlying assets located in lndia, as income accruing or arising in India.

6. Declaration of dividend by such a foreign company outside India does not have the effect of transfer of any underlying assets located in India. It is therefore, clarified that the dividends declared and paid by a foreign company outside India in respect of shares which derive their value substantially from assets situated in India would not be deemed to be income accruing or arising in India by virtue of the provisions of Explanation 5 to section 9
( I ) (i) of the Act.

7.-This mav be brought to the notice of all concerned for strict compliance.

Special clearing in banks on 30 and 31 March 2015

Special Clearing operations on March 30 and 31, 2015

A reference is invited to the circular issued by our Department of Government and Bank Accounts (DGBA.GAD.No.4318/42.01.029/2014-15 dated March 25, 2015) on ‘Annual Closing of Government Accounts - Transactions of Central / State Governments - Special Measures for the Current Financial Year (2014-15)’.

2. With a view to facilitate accounting of all the Government transactions for the current financial year (2014-2015) by March 31, 2015, it has been decided to conduct special clearing at all clearing houses across the country on March 30 and 31, 2015 as detailed below:

Date
Type of clearing
Presentation clearing
Return clearing
March 30, 2015
(Monday)
Normal Clearing as followed on any working Monday
In addition, a Special Clearing exclusively for Government transactions (receipts and payments) with return clearing on the same day as per the schedule indicated below.
March 31, 2015
(Tuesday)
Normal Clearing as followed on any working Tuesday
In addition, a Special Clearing exclusively for Government transactions (receipts and payments) with return clearing on the same day as per the schedule indicated below.


Schedule for various types of clearing
a. CTS grid locations (Chennai, Mumbai and New Delhi)
Special Presentation clearing on March 30 & 31, 2015***P2F session timings for the instruments presented through the Special ClearingReturn clearing for the instruments presented through the special clearing
Between 20.00 and 20.30 hoursBetween 21.00 and 21.30 hoursBetween 22.00 and 22.15
*** Under the special clearing, single session will be run for both CTS-2010 and non-CTS-2010 standard instruments together. No segregation is required.
b. Special clearing in non-MICR/ECCS clearing houses
Presentation clearingReturn clearing
One hour after the extended business hours keeping in view the operational convenience at the local centerHalf an hour/One hour after the presentation clearing keeping in view the operational convenience at the local center.

3. Participation in the outward clearing is the choice left to banks depends upon the instruments received by them towards credit-to/payment-from Government accounts. However, all member banks of the Clearing House are required to keep their inward clearing processing infrastructure open during the Special Clearing hours and maintain sufficient balance in their clearing settlement account to meet settlement obligations arising out of the Special Clearing.

4. Member banks of Clearing Houses are advised to adhere to the instructions contained in this circular as well as the instructions received from the Regional offices of Reserve Bank of India and Presidents of respective Clearing Houses.

5. Member banks are also advised to be in readiness to participate in the Centralised Payment Systems (RTGS and NEFT) on these days (March 30-31, 2015). A separate broadcast message in this regard will be issued through the respective system indicating the extended time window.
Yours faithfully
(Charulatha S Kar)
General Manager (OIC)

Thursday, March 26, 2015

New Return Preparation utility RPU version 1.0 in java platform

Tin.nsdl has launched latest RPU version 1.0 in java platform. Earlier RPU version 4.2 was the latest which have some problems of defaults value. This is in the new look and with new platform. There are some new features of new RPU 1.0 which are as under.

1-  NSDL e-TDS/TCS Return Preparation Utility in JAVA platform.

2-  Preparation of Regular TDS/TCS Statement(s) for Form 24Q, 26Q, 27Q & 27EQ pertaining to Financial Year 2007-08 onwards (for all quarters).

3-  NSDL RPU is a freely downloadable utility.

4- Incorporation of latest FVU Version 4.5 and 2.141.
Download latest RPU version 1.0
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Custom circular on Import of steel and steel products

Custom department issued a circular no. 8/2015 dated 24 March 2015 about import of steel and steel products. Full circular is as under.

Attention is invited to Steel and Steel Products (Quality Control) Order, 2012, Steel and Steel Products (Quality control) Second Order, 2012, Steel and Steel Products (Quality Control) (Amendment) Order 2014, Steel and Steel Products (Quality Control) Second  (2nd Amendment) Order, 2014  on the above subject . Reference is also drawn to Board’s instruction of even number dated 09.07.2014 regarding implementation of Steel and Steel Products (Quality Control) Order, 2012 and Steel and Steel Products (Quality Control) Second Order 2012.

2. The Steel and Steel Products (Quality Control) (Amendment) Order, 2014 and Steel and Steel Products (Quality Control) Second (2nd Amendment) Order, 2014 insert the following explanation in Steel and Steel Products (Quality Control) Order, 2012  and Steel and Steel Products (Quality Control) Second Order, 2012 respectively:

“Explanation 1.- The provisions of this Order shall apply to the products described under column (2) of the schedule covered under the relevant Indian Standard number mentioned under column (1).
 Explanation 2.- ITC (HS) Codes mentioned under column (3) are generic and indicative in nature.”

3. In this regard, Board has received representations that imports of steel products are being allowed without compliance of mandatory Indian Standards stipulated i.e. IS:2062, IS:2002, IS: 2041, IS: 277 and IS: 1786  in the Steel and Steel Products (Quality Control) Second Order, 2012.  Reportedly this is being done even after the notification of the Steel and Steel Products (Quality Control) Second (2nd Amendment) Order, 2014 with effect from 04.12.2014.

4. The Board desires that the import of Steel and Steel Products in contravention of the Steel and Steel Products (Quality Control) Order, 2012 and Steel and Steel Products (Quality Control) Second Order, 2012 as amended should not be allowed. Chief Commissioners of Customs / Customs and Central Excise are advised to suitably instruct officers and staff in their jurisdiction that provisions of the Steel and Steel Products (Quality Control) Order 2012 and Steel and Steel Products (Quality control) Second Order 2012 as amended are strictly complied with and import of sub standard and steel products in contravention of aforementioned Orders are not permitted.

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