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Monday, May 25, 2015

TRACES advice on correction of potential errors in TDS statement

As you may be aware, Centralized Processing Cell (TDS) intimates you of possible PAN Errors and Short Payment Defaults, through an Intermediate Communication, during processing of Original Quarterly TDS Statements. This change was incorporated in processing of TDS Statements, in view of feedbacks received from deductors, to avoid defaults that may arise due to inadvertent data entry errors.
The central point in the new process is identifying errors in challan/ PANs and facilitating their corrections before CPC (TDS) computes defaults in TDS statements. Following are the salient features of Intermediate Communication:

What is new?
Step 1: CPC (TDS) will first process Original TDS Statements till the stage of 26AS generation for deductees reported.

Step 2: Short Payments and PAN Errors will be identified in the preliminary check of the Original statements.

Step 3: The statements will be placed "On Hold" for further processing and an opportunity will be provided to correct potential defaults of Short Payment and PAN Error

When the statement is placed on Hold, CPC (TDS) will intimate you through following means:

e-mail at the Registered e-mail address at TRACES
SMS at Registered Mobile Number with TRACES
Message will be delivered to the Deductor's Inbox in TRACES


The above correction needs to be carried out by using Online Correction feature at TRACES after 24 hours of the receipt of the Intermediate Communication and must be availed within 7 days of receipt of such communication.

What are the advantages:
You would have preliminary information of potential Short Payments and PAN Errors, before the Original Statement is completely processed for Defaults and Intimations are generated.

Correction of above defaults using Online Correction can be submitted before final processing of statements.

Above action will facilitate avoidance of multiple Correction Statement filing later, after the defaults are identified CPC (TDS) and Intimations have been sent.

What actions to be taken:
Please take note of the Intermediate communication from CPC (TDS) and submit Online Correction for potential defaults in TDS statement within the stipulated time frame.

Only "Online Correction" facility can be used for correction of above Short Payments and PANs.

To avail the facility, you are requested to Login to TRACES and navigate to Defaults tab to locate Request for Correction from the drop-down menu. For any assistance, please refer to the e-Tutorial available on TRACES.

Please note that Digital Signature will be required to avail the benefit of complete correction features, including PAN Corrections.

PAN Verification facility on TRACES can be used for verifying the deductees. You are requested to navigate to Statement/ Payment to locate PAN Verification in the menu to download the file.

You can make use of the "Consolidated TAN - PAN File" that includes all the valid PANs attached with the respective TANs. To avail the facility, please navigate to Dashboard to locate Consolidated TAN - PAN File.

The action requires to be completed after 24 hours and within 7 days of Intermediate communication from CPC (TDS).

It is hoped that the deductors will avail of the time window to correct errors, if any. CPC (TDS) is committed to provide best possible services to you.

Saturday, May 23, 2015

Excel calculators for all financial calculations

In now a days it's necessary to calculate all the things to get a good amount of money in hands. So calculator gives us a very easy to calculate the things. But only only a hand calculator will do all the things you are looking for. There are some excel based calculators which will be very vital for the persons who like to calculate everything of their need. So look on these calculator and find out what you were looking for.

Friday, May 22, 2015

No PIN required for shopping with debit/credit card upto Rs. 2000

Reserve bank of India relax rule of additional security feature for making payment to merchant with debit or credit card. Now upto Rs. 2000 PIN doesn't require to enter. Full RBI note is as under.

Reserve Bank has issued various instructions on security of card transactions and risk mitigation measures, including directions on online alerts as well as on additional factor of authentication. These measures have significantly increased customer confidence in using cards.

2. In the recent past, Reserve Bank has received requests for waiver of requirement of the additional factor of authentication (AFA) so as to foster innovative payment products / processes as also enhance the convenience factor in certain types of card transactions. After examining the trade-off between security and convenience in card transactions, Reserve Bank had placed for public comments a draft circular outlining the relaxation in the need for AFA in case of small value card present transactions using Near Field Communication (NFC) contactless technology subject to adherence to EMV standards.

3. The comments received on the draft circular have been examined. Accordingly, it has been decided to relax the extant instructions relating to the need for AFA requirements for small value card present transactions only using contact-less cards. In this regard, it is advised that -

(1) Relaxation for AFA requirement is permitted for transactions for a maximum value of Rs 2,000/- per transaction;

(2) The limit of Rs.2000/- per transaction will be the limit set across all categories of merchants in the country where such contactless payments will be accepted;

(3) Beyond this transaction limit, the card has to be processed as a contact payment and authentication with PIN (AFA) will be mandatory;

(4) Even for transaction values below this limit, the customer may choose to make payment as a contact payment, which has to be facilitated by both issuing and acquiring banks. In other words, customers cannot be compelled to do a contactless payment;

(5) Banks are free to facilitate their customers to set lower per-transaction limits. The responsibility for authorizing the contactless payment based on such card-based limits will lie with the card issuing banks;

(6) Suitable velocity checks (i.e., how many such small value transactions will be allowed in a day / week / month) may be put in place by banks as considered appropriate; and

(7) The contactless cards should necessarily be chip cards adhering to EMV payment standard, so as to be acceptable across the existing card acceptance infrastructure which are EMV compliant based on the earlier mandate in this regard.

5. Further, in the interest of customer awareness and protection the banks are also advised:

(1) to clearly explain to customers about the technology, its use, and risks while issuing such contact less cards;

(2) to create awareness among customers to look for / identify the “contactless” logo on the card (to distinguish them from other cards) as well as the merchant location / POS terminal (to identify that contactless payments are accepted at that location);

(3) to clearly indicate to the customers that they can use the card in contactless mode (without PIN authentication) for transactions upto Rs.2000/- in locations where contactless payments are accepted and to make customers aware that they are free to use the same card as a regular chip card (with PIN authentication) at any location irrespective of transaction value;

(4) to clearly indicate the maximum liability devolving on the customer, if any, at the time of issuance of such cards along with the responsibility of the customer to report the loss of such cards to the bank; and

(5) to put in place robust mechanism for seamless reporting of lost/stolen cards, which can be accessed through multiple channels (website, phone banking, SMS, IVR etc.).

6. It may, however, be noted that the above relaxations shall not apply to: ATM transactions irrespective of transaction value; and Card Not Present transactions (CNP).

7. This directive is issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007 (Act 51 of 2007).

Draft scheme to determine ALP

Central board of direct taxes unveils draft rule to apply multi year's data and range concept to determine Arm's Length Price  of an International Transaction or Specified Domestic Transaction undertaken on or after 01.04.2014.

Section 92C of the Income Tax Act, 1961 (the “Act”) provides for computation of Arm’s Length Price (ALP) of an international transaction or specified domestic transaction.

2. The Finance Minister in his Budget speech, while introducing the Finance (No. 2) Bill 2014, had made an announcement that “range concept” for determination of ALP would be introduced in the Indian transfer pricing regime however, the arithmetic mean concept will continue to apply where the number of comparables is inadequate. Further, it was announced that use of multiple year data would be permitted for undertaking comparability analysis. Consequent to the announcement, section 92C (2) of the Act was amended by the Finance (No. 2) Act, 2015 to provide that where more than one price is determined by application of the most appropriate method, the arm’s length price in relation to an international transaction or specified domestic transaction undertaken on or after the 1st day of April, 2014 shall be computed in such manner as may be prescribed.

3. Therefore, the manner of computation of ALP is proposed to be provided through the amendment of Income-tax Rules. The proposed mechanism and conditions under which the multiple year data and ‘range’ concept would be used for determination of ALP shall be as under: -

A. Adoption of the Range Concept
i. The ‘Range’ concept shall be used only in case the method used for determination of ALP is Transactional Net Margin Method (TNMM), Resale Price Method (RPM) or Cost Plus Method (CPM).

ii. The following steps would be required to construct the range: -
a) A minimum of 9 entities are required to be selected as comparable entities of the tested party, based on the similarity of their functions, assets and risks (FAR) with that of the tested party;

b) 3-year data of these 9 entities (or more) would be considered and the weighted average of such 3-year data of each company would be used to construct the data set. In certain circumstances, data of 2 out of 3 years could also be used. Thus, the data set or series would have a minimum of 9 data points;

c) For calculating the weighted average, the numerator and denominator of the chosen Profit Level Indicator (PLI) would be aggregated for all the years for every comparable entity and the margin would be computed thereafter; and

d) The data points lying within the 40th to 60th percentile of the data set of series would constitute the range.

iii. If the transfer price of the tested party falls outside the range as constructed above, the median of the range would be taken as ALP and adjustment to transfer price shall be made. If the transfer price is within the range no adjustment shall be made. There shall not be two different data sets – one for testing and one for making adjustments.

B. Use of Multiple Year Data
i. The multiple year data would be used only in case determination of ALP is by Transactional Net Margin Method (TNMM), Resale Price Method (RPM) or Cost Plus Method (CPM);

ii. The multiple year data should comprise three years including the current year i.e. (year in which transaction has been undertaken) and its use for above mentioned methods shall be mandatory;

iii. In case of non-availability of data for 3 years for any of the following reasons: -
 Data of the current year of the comparables may not be available on the databases at the time of filing of returns of income by taxpayers;

 A comparable may fail to clear a quantitative filter in any one out of the three years; and

 A comparable may have commenced operations only in the last two years or may have closed down operations during the current year.
the use of data of two out of relevant three years shall be permitted.

iv. The data of the current year, however, can be used during the transfer pricing audit by both the taxpayer and the department if it becomes available at the time of audit.

C. Continued use of Arithmetic Mean
In cases where ‘range’ concept does not apply, the arithmetic mean concept shall continue to apply in the same manner as it applied before the amendment to section 92C (2) by the Finance (No. 2) Act 2014 alongwith benefit of tolerance range. Further, in cases where multiple year data is to be used, the same would apply whether “range” concept is used or arithmetic mean is used for determining the ALP. Therefore, in such cases the arithmetic mean of the multiple year data of comparable will be considered for computation of ALP.

4. The comments and suggestion of stakeholders and general public on the above draft scheme are invited. The comments and suggestions may be submitted by 31st May, 2015 at the email address (dirtpl1@nic.in) or by post at the following address with “Comments on draft transfer pricing rules“ written on the envelop: 

Service tax will be charged at 14% from I June 2015

Finance Minister has purposed increasing service tax rate in budget speech but not notified when it will be applicable. Department of revenue issued notification no. 15/2015 dated 19 May 2015 that new service tax rate which is 14% from the earlier 12.36% is applicable from 1 June 2015. Full notification is as under.

In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby appoints the 1st day of June, 2015 as the date on which the provisions of sub-clauses (a), (b) and (c) and item (A) of sub-clause (d) of clause (ii) of sub-paragraph (e) of paragraph 2 of the notification of the Government of India in the
Ministry of Finance (Department of Revenue), No. 05/2015 – Service Tax, dated 1st March, 2015, published in the gazette of India, Extraordinary, vide number G.S.R. 159(E), dated 1st March, 2015 shall come into force.

Saturday, May 9, 2015

Banks will issue only chip based debit or credit card from 1 September 2015

Reserve bank of India issued a advisory note to banks to issue only chip based debit or credit card with effect from 1 September 2015 and not the magnetic strip card. Full advisory note is as under.

A reference is invited to our circulars DPSS.PD.CO.No.513 / 02.14.003 / 2011-2012 dated September 22, 2011 and DPSS (CO) PD No.2377 / 02.14.003 / 2012-13 dated June 24, 2013 on security issues and risk mitigation measures related to Card Present (CP) transactions read along with circular dated February 28, 2013 on security and risk mitigation measures for electronic payment transactions wherein various timelines were indicated for accomplishment of tasks for securing card and electronic payment transactions.

2. The Reserve Bank has adopted a phased manner of implementation of security and risk mitigation measures in card transactions as evident from the instructions issued from time to time. The acceptance infrastructure is getting geared to accept EMV chip and pin cards. However, in case of card issuance, while some banks have already moved to EMV chip and pin cards issuance, a large number of banks continue to issue Magnetic stripe cards. Thus, given the level of readiness of the card acceptance infrastructure at point of sale and also the implementation of PIN@POS for debit cards, the time is appropriate to move further along the path to migrate away from magnetic stripe only cards to chip and pin cards.

3. Accordingly, banks are advised that with effect from September 01, 2015 all new cards issued – debit and credit, domestic and international – by banks shall be EMV chip and pin based cards.

4. The migration plan for existing magnetic stripe only cards will be framed in consultation with stakeholders and timeline for the same will be advised in due course.

5. These guidelines are issued under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

Thursday, May 7, 2015

Bombay high court grants stay on levy MAT on FIIs

The Bombay High Court on 5 May 2015 has granted stay to one of the Foreign Institutional Investors ('FIIs') who filed a writ petition against the demand notice issued by the Income-tax department for payment of Minimum Alternate Tax (MAT) on capital gains arising from transfer of Indian securities.

The court has stayed the tax authorities' move till the case is next heard. The next hearing would be sometime in June, 2015.

This issue arose after an amendment proposed in the Finance Bill, 2015 that MAT would not apply to FIIs in respect of capital gains arising from transactions in securities.

The amendment was restricted only to capital gains earned by FIIs which might have resulted in levy of MAT on other income.The matter was considered by the Finance Minister and, accordingly, in the Finance Bill, 2015 as passed by the Lok Sabha an amendment is proposed that the exemption from MAT shall also be available to income arising from interest, royalty or fee for technical services, provided tax payable on such income is less than 18.5%

Since the amendment was proposed to be given prospective effect, demand notices were issued by the income-tax department to recover MAT from FIIs in respect of earlier years.

Tax authorities are relying on the ruling in the case of Castleton Investment Ltd., In re [2012] 24 taxmann.com 150 (AAR – New Delhi), according to which MAT is applicable to foreign entities. Whereas contentions of the tax experts (representing FIIs) are that MAT is applicable to companies that maintain books of account under Indian law and foreign investors don't do so.

Against said move by the Dept., the writ filed by one of the FIIs has been admitted by the Bombay High Court, however,on the technical grounds that the tax officer had directly issued a final order instead of a draft order since there was a variation between the income disclosed in the return of income and income computed in assessment order.

More details on the issue are awaited.