Oct 31, 2012

DTC may bring income tax rates decrease

10:00 PM
DTC may bring income tax rates decrease

Direct tax code(DTC) will bring major income tax rate cut for the individual and HUF tax payers. DTC is proposed to present in this annual budget which will increase the tax slabs of income tax. Finance Minister said that when the final DTC will present in the parliament, the recommendation of the PSC(Parliament standing committee) will be the rule.

 According to the panel of parliamentary committee, the income tax exemption limit( under this limit, the assessee needn't to pay any income tax) will increase to 3 Lakh rupees which is now of 2 lakh rupees for the assessment year 2013-14.
10% income tax slab can be on the income range of 3 Lakh to 10 lakh rupees which is now on 2-5 Lakh rupees. 20% income tax slab is proposed by the panel is 10-20 lakh whereas the 30% of income tax on the income of above 20 lakhs.

There are also some more points in direct tax code recommend by the panel. Long term saving limit which is 1 lakh per annum is suggested to 1.5 lakh. Contribution to social security like pension scheme is suggested to 1.5 lakh. Medical insurance is suggested to 1 lakh,  medical insurance for dependent 50 thousand and professional studies and education Rs. 50000.

There are no change in the corporate tax with the DTC and the parliament panel recommendation. DTC was schedule to introduce on 1 April 2012 but now it is late and hope to introduce in this fiscal year only. DTC will take place of the old law Income tax act 1961.

Income tax rates
Current rate ay 2013-14
DTC Bill
Parliament committee recommendation
Exemption
Upto 2 lakh
Upto 2 lakh
Upto 3 lakh
10%
2-5 lakh
2-5 lakh
3-10 lakh
20%
5-10 lakh
5-10 lakh
10-20 lakh
30%
Above 10 lakh
Above 10 lakh
Above 20 lakh
Tags-income tax rate in dtc,dtc,dtc income tax rate,direct tax code,what is dtc,what is direct tax code, new income tax rate slab,income tax rate for fy 2012-13,income tax rate for ay 2013-14.

Oct 30, 2012

Amendment in capital gain scheme 2012

3:32 PM
Amendment in capital gain scheme 2012
Income tax department made the first amendment in capital gain account scheme 2012. In this amendment income tax department amended in the paragraph of 1, 2, 3, 4, 10, 13 and the forms A, C and G. Income tax department issued a notification no. 44/2012 dated 25 October 2012 about amendment in capital gain account scheme 2012. Full notification is as under.


NOTIFICATION NO. 44/2012 [F.NO. 142/21/2012-SO (TPL)], DATED 25-10-2012
In exercise of the powers conferred by sub-section (2) of section 54, sub-section (2) of section 54B, sub-section (2) of section 54D, sub-section (4) of section 54F, sub-section (2) of section 54G and sub-section (2) of section 54GB of the Income-tax Act, 1961 (43 of 1961) the Central Government hereby makes the following Scheme to amend the Capital Gains Account Scheme, 1988. namely:-

1. (1) This Scheme may be called the Capital Gains Accounts (First Amendment) Scheme, 2012.
(2) It shall come into force on the date of its publication in the Official Gazette.

2. In the Capital Gains Accounts Scheme, 1988 (hereinafter referred to as the said Scheme), in the opening paragraph, for the words, brackets, figure and letter "and sub-section (2) of section 54G", the words, brackets, figures and letters, "sub-section (2) of section 54G and sub-section (2) of section 54GB" shall be substituted.

3. In sub-paragraph (3) of paragraph 1 of the said Scheme, for the word, figure and letter "or 54G", the word, figures and letters, "54G or 54GB" shall be substituted.

4. In clause (f) of paragraph 2 of the said Scheme, for the word, figures and letter "or 54G", the figure, letter and words, "54G or an eligible company as referred to in section 54GB" shall be substituted.

5. In paragraph 3 of the said Scheme, after the words, figures and letter "or section 54G", the words, figures and letters "or section 54GB" shall be inserted.

6. In sub-paragraph (4) of paragraph 4 of the said Scheme, after the words "the depositor", the words, figures and letters "or the eligible assessee as referred to in section 54GB" shall be inserted.

7. In sub-paragraph (1) of paragraph 10 of the said Scheme, after the word, figures and letter "section 54G", the words, brackets, figures and letter "or sub-section (2) of section 54GB" shall be inserted.

8. In paragraph 13 of the said Scheme,—
(a)  in sub-paragraph (1), after the words "If a depositor", the words, figures and letter, "other than an eligible company as referred to in section 54GB" shall be inserted;

(b)  after sub-paragraph (1), the following sub-paragraph shall be inserted, namely:-
"(1A) If a depositor, being an eligible company, referred to in section 54GB, desires to close its account, then, -
  (i)  it shall make a joint application signed by the eligible assessee referred to in section 54GB;
 (ii)  the application shall be made with the approval of the Assessing Officer having jurisdiction over the eligible assessee referred to in section 54GB; and
(iii)  such application shall be made in Form G to the deposit office or as near thereto as possible,
and the deposit office shall pay the amount of balance including interest accrued, to the credit in the account of the depositor by means of crediting such amount to any bank account of the depositor."

9. In Form A to the said Scheme.
(a)  for the figures, letter and words "*54G of the Act", the figures, letters and words "*54G/*54GB of the Act" shall be substituted.
(b)  after item 7, the words, figures, letters and brackets "** Signature/Thumb impression of the eligible assessee as referred to in section 54GB of the Act [applicable in case of section 54GB only]", shall be inserted.

10. In Form C to the said Scheme, in item 2, after the word, figures and letter "section 54G", the word, figures and letter "/* section 54GB" shall be inserted.

11. In Form G to the said Scheme, -
(a)  after item 6, the words, figures, letters and brackets " ** Signature/Thumb impression of the eligible assessee as referred to in section 54GB of the Act [applicable in case of section 54GB only]", shall be inserted.

(b)  in the notes, after item 2, the following item shall be inserted, namely.-
"3. ** In case the account to be closed pertains to an eligible company as referred to in section 54GB, the form shall also be signed by the eligible assessee referred to in the said section."

RBI cuts CRR by 25 basis points and monetary policy for second quarter 2012-13

3:26 PM
RBI cuts CRR by 25 basis points and monetary policy for second quarter 2012-13
Reserve Bank of India issued the review of monetary policy of second quarter of 2012-13 and custs the cash reserve ration by 25 basis points from 4.5% to 4.25%. There is global slowdown in the economy so RBI takes the cautions steps for maintaining  of growth rate. There is no change in the repo rate, bank rate and MSF rate. Full monetary policy of Reserve bank of India can be seen by here.
Tags- monetary policy,monetary policy for 2012-13

NIOT Chennai included in approved scientific research association u/s 35 1 ii

3:16 PM
NIOT Chennai included in approved scientific research association u/s 35 1 ii
Income tax department approved National Institute of Ocean Technology, Cheenai in approved scientific research association under section 35(1)(ii) of income tax act. Income tax department issued a notification no.45/2012 dated 29 October 2012 about approving of National institute of ocean technology as approved scientific association. Full notification is as under.


NOTIFICATION NO. 45/2012 [F. NO. 203/51/2011/ITA-II], DATED 29-10-2012
It is hereby notified for general information that the organization National Institute of Ocean Technology, Chennai has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 [said Act], read with rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), from assessment year 2011-12 onwards in the category of "Scientific Research Association", engaged in research in science subject to the following conditions, namely:-

 (i)  The sums paid to the approved organization shall be utilized for scientific research;

(ii)  The approved organization shall carry out scientific research through its faculty members or its enrolled students;

(iii) The approved organization shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the Explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv) The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

2.. The Central Government shall withdraw the approval if the approved organization:-
(a)  fails to maintain separate books of account referred to in sub-paragraph (iii) of paragraph 1; or

(b)  fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or

(c)  fails to furnish its statement of the donations received and sums applied for research in social science or statistical research referred to in sub-paragraph (iv) of paragraph 1; or

(d)  ceases to carry on its research activities or its research activities are not found to be genuine; or

(e)  ceases to conform to and comply with the provisions of clause (iii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5E of the said Rules.

Oct 28, 2012

Truth behind zero interest EMI and excel calculator

10:02 PM
This is the festival time. Everybody wants to buy new products as there is also a bonus time in India, so people rush to market for purchasing. Companies more keen to attract the customers with new and special offers. One of them is 0% interest EMI or Free interest EMI.  In this scheme the loan is given on the product with no rate of interest or 0 rate of interest.

People always trap on the scheme and purchase the goods on interest free EMI. They always think they haven’t paid any interest and this is a very good scheme. But the truth behind the 0% interest scheme is just opposite. The reason of this is as follows.

There is always a cash discount on the product which is not available for buyer who avail 0% interest free option. The cash discount may be 3%-10% depends on bargaining power and product.

There is a fixed nonrefundable processing fees of loan on 0% interest scheme which may be 500-2000 depends on product to product.

In the scheme, one needs to pay 3-4 EMI initially when buying the product.

If we calculate we often pay more in interest free EMI than just taking a loan from any bank against fixed deposit or shares which will cost less than 0% interest. There is an excel based 0% EMI calculator which can prove this. The features of this calculator are as follows.

This is an excel based calculator.

All three option Cash payment, 0% interest and loan taken are given.

In all the conditions it will tell how much one pay.

Colorful presentation and available for download.

Feeds readers can download free for 2 days after that registration required.
Download calculator from here.
Tags-what is zero interest loan.zero interest loan,all about zero % interest loan

Section 154 application can be rectified e-filling error in absence of expert knowledge

5:24 PM
Section 154 application can be rectified e-filling error in absence of expert knowledge

The return of the assessee was processed under Section 143(1). As per the intimation received under Section 143(1), the income and the rate of tax were different from the return as furnished by him. The assessee immediately moved an application under Section 154 stating that as per intimation under Section 143(1), Short-term capital gain ('STCG') was taxed at normal rates instead of special rates. According to the AO, the proper remedy for assessee was filing of revised return instead of moving an application under Section 154 because the assessee had not shown STCG under Section 111A in Schedule CG of the e-return. Thus, he rejected the rectification application. The assessee couldn't succeed even before CIT(A).

On appeal, the Tribunal held in favour of assessee as under:
1) The present system of e-filing of return is totally dependent upon the usage of software;

2) The return is prepared electronically which is converted into XML file;

3) There is every possibility of entering incorrect data without having the expert knowledge of preparing an XML file;

4) XML file so created is uploaded to the official website of Income tax department;

5) Keeping in mind this system of e-filing of the returns, it is clear that assessee had claimed STCG and had shown it in e-return but the same figure did not appear under the item where the STCG is to be taxed at special rate under Section 111A of the Act;

6) However, under 'Schedule SI-income chargeable to income tax at special rates', the assessee had shown 10% tax on STCG, which clearly establishes that the assessee had shown STCG liable to be taxed at special rate of 10%.

Therefore, the appeal of the assessee was allowed and the AO was directed to rectify the intimation under Section 143(1) - SHRIKANT REAL ESTATES (P.) LTD. v. ITO [2012] 26 taxmann.com 265 (Mumbai - Trib.)
TAGS-section 154 application,application under section 154,section 154,section 154 income tax,income tax section 154,section 154 of income tax act

Oct 26, 2012

Report of committee for accounting standard in income tax

1:51 PM
Report of committee for accounting standard in income tax
Income tax department has set up a committee for accounting standard for the income from business or profession or the income from other sources. Income tax department wants which standard is suitable either cash or mercantile accounting standard  for these income. The committee has presented it's report. Income tax department issued a press release as well as full report of the committee. Full press release is as under and one can download the full report from the link given below.


Dated 26-10-2012
PRESS RELEASE
Subject: Final Report of the Committee constituted  for formulating Accounting Standards for the purposes of notification under section 145(2) of the Income-tax Act, 1961.

Section 145 (1) of the Income-tax Act, 1961 (‘the Act’) provides that the income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” shall [subject to the provisions of sub-section (2)] be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Section 145 (2) provides that the Central Government may notify Accounting Standards (‘AS’) for any class of assessees or for any class of income. 

2. The Central Board of Direct Taxes (‘CBDT’)  constituted a Committee comprising of departmental officers and professionals in December, 2010 to inter alia suggest AS for the purposes of notification under section 145 (2) of the Act.
3. The Committee submitted its first Interim Report in August 2011. A discussion paper containing the main recommendations of the Committee was issued in October, 2011 for inviting comments/suggestions from all stakeholders. 

4. The Committee has submitted its Final Report in  August, 2012. The Committee recommended that the AS notified under the Act should be made applicable only to the computation of taxable income and a taxpayer would not be required to maintain books of account on the basis of AS notified under the Act. 

The Committee examined all the 31 AS issued by the ICAI and recommended notification of AS on 14 issues under the Act and formulated drafts of AS on these issues.  The Committee has termed them as “Tax Accounting Standards” (TAS) to distinguish from the AS issued by the ICAI/notified under the Companies Act, 1956.  

5. The Final Report of the Committee (including drafts of the 14 TAS submitted by the Committee) is uploaded on the Finance Ministry website (www.finmin.nic.in) and Income-tax Department website (www.incometaxindia.gov.in) for comments from stakeholders and general public.

6. The comments and suggestions on the final report may be submitted by 26th November, 2012 at the email addresses (dirtpl3@nic.in or rkbhoot@gmail.com) or by post at the following address with “comments on  Final Report of Accounting Standards Committee” written on the envelope:

Director (Tax Policy & Legislation)-III
Central Board of Direct Taxes,
Room No.147-G,
North Block, 
New Delhi-110001
Full report can be downloaded from here
Tags-accounting standard in income tax,income tax accounting standard

Oct 25, 2012

Modified service tax return form ST-3 for April-June 2012 excel based utility

6:50 PM
Modified service tax return form ST-3 for April-June 2012 excel based utility
Modified version of service tax return form ST-3 for the quarter April 2012 to June 2012 has been released.  However this excel based utility form ST 3 will work offline and not online. It means the assessee cannot fill the st-3 form online and upload to ACES website after logging on.

The last date for filing service tax return for the quarter April-June 2012 has been extended from 25 October 2012 to 25 November 2012 with order no. 3/2012 dated 15-10-2012 (See order).

Earlier service tax return period is of 6 months which is split to 3 months for implemented the service tax negative list. Service tax department adds more and more services in service tax regime and only a few services exempted from the service tax. So in order to issue the negative list, the split is done with the period and last date is extended.

For the service tax return of period July-September 2012, service tax department will make further announcements which will be available at taxalertindia.com

For service tax return before April 2012 one can register to ACES website and upload the return with both offline and online mode.

Service Tax
Excel Utilities
Last Updated
XML Schema
Last Updated
Download ST3 Return Excel Utility
(For Filing ST-3 returns for the period upto Oct-Mar 2011)
06-04-2012
06-04-2012
Download ST3 Return Excel Utility
(For Filing ST-3 returns for the Quarter April-June 2012)
22-10-2012
22-10-2012
Tags-st-3 form,service tax form,service tax modified st-3,st-3 new,new st-3,st 3 for 1 quarter 2012.service tax return form,service tax return form st-3

Oct 24, 2012

Relaxation to trade and industry to J&K extended to 31 March 2014

12:01 PM
Relaxation to trade and industry to J&K extended to 31 March 2014
Reserve bank of India has extended the relaxation to trade and industry in the state of Jammu and Kashmir to 31 March 2014. These relaxation is mainly in the period of concessions and credit relaxations to borrowers and customers. RBI has issued a letter no. 50 dated 23 October 2012 about the relaxation extended top J&K. Full list of relaxation to the state of Jammu & Kashmir is as follows.


RELAXATION TO TRADE AND INDUSTRY IN THE STATE OF JAMMU AND KASHMIR
Please refer to our circular DBOD.No.BP.BC.97/21.04.012/2002-2003 dated 24th April 2003 extending the period of concessions/credit relaxations to borrowers/customers in Jammu and Kashmir up to 31 March 2004.

With a view to ensuring larger flow of credit to trade and industry in the State on the one hand and bringing about appropriate changes in the monitoring mechanism on the other, the position in regard to relaxations/concessions announced from time to time has since been reviewed and the following comprehensive package of concessions / relaxations is recommended for immediate implementation by banks operating in the State of Jammu and Kashmir. The concessions / credit relaxations to borrowers / customers in the State of Jammu & Kashmir will be operative for a further period of one year, i.e., up to 31st March 2005.

(i) Increased working capital facilities may be sanctioned by the bank depending on the merits of each case. For small borrowers in the unorganised sector, relaxation up to a maximum of 50% of the norms accepted for last sanction may be allowed depending on merits. Benefits of relaxed norms may be extended as realistically as possible to such borrowers. As regards changes in the level of credit on purchases, the banks may take a realistic approach for all borrowers.
 (ii) All borrowal accounts, irrespective of whether ad-hoc facilities were sanctioned in the past or not, would be subjected to review by the concerned banks within a period of three months and need based increased working capital facilities may be sanctioned to borrowers without delay.

(iii) Finance against accepted hundies (Usance bills) should be encouraged

(iv) Concessions may be given in service tariffs for remittances. The same may also be extended to collection of outstation bills/cheques.

(v) The banks may honour small Fixed Deposit Receipts, say up to Rs.10,000/- of the Kashmiri migrants at the designated branches without verifying details from the branch of origin against indemnity bond, where necessary.

(vi) The following other existing concessions indicated below may continue :-
  1. For term credits, the banks may adopt a flexible and pragmatic approach as regards debt-equity ratio, especially for small projects. Reschedulement of the repayment programme may also be allowed in deserving cases.
  2. The banks may review all irregular accounts within a time-frame of three months with a view to exploring the possibilities of regularising them through sanctioning additional working capital facilities.
  3. Period of realisation of bills purchased and advance bills for collection may be extended up to one month by Branch Managers.
  4. Liberal acceptance credit / L.C. facilities may be extended to facilitate purchases on credit. The margin for bank guarantees and inland letters of credit should not exceed 15 per cent depending on merits of each case.
  5. The facility for transfer of bank accounts/ funds maintained with their branches in the valley to some other designated/ specified branch/es outside the Valley, at the request of their customers, may be continued with necessary safeguards so that unauthorized withdrawals or transfers are not encouraged. Similarly, banks may arrange to designate specific branches outside - the Valley to receive instruments drawn on their branches in the Valley.
We shall, be glad if you will kindly ensure that suitable guidelines are issued to the branches operating in the Jammu and Kashmir on the revised package outlined above.

Other general measures and actions
3. (a) Banks may take special steps to educate and inform the managers and controllers of their branches in the State about the details of package on the one hand and corporate strategies for implementing these on the other.

(b) Also, in each district of the State, the lead bank may convene banker-customer meet, to which top district level State Government officials could also be invited.

(c) The banks in the State should make special endeavours for avoiding delays in all matters of providing banking services. Clearance of instruments, both local and outstation, should be prompt. A review of systems and procedure in vogue may also be undertaken for achieving the above objective. Necessary delegation of authorities may also be made expeditiously in this context.

(d) The power of rejection of any concession should vest in an authority above the immediate controlling tier of the concerned branch.

(e) It may be emphasised that additional fund requirements for implementing the package may be dovetailed into corporate fund deployment strategy of each bank so that higher flow of credit to the borrowers in the State could be effected within a reasonable period of time.

(f) Submission of quarterly data by branches of banks on progress made in implementing the package of concessions may be an integral part of the corpus of control returns to facilitate effective monitoring.

Implementation and Monitoring arrangements
4. (i) Special Cells for monitoring implementation of the package may be formed in all banks operating in the State at the Zonal Office level, if not already formed. The cells would also act as grievance redressal agency for the respective banks. The cells would convene quarterly meetings with credit users, which should be attended by a senior official from the corporate office.

(ii) At the State level, a committee comprising representatives of major banks, State Government, Trade and Industry would sort-out problems/ grievances against banks. The State level committee would also review the progress made in implementing the package on the basis of quarterly data. Convener, State Level Bankers' Committee, would provide secretarial support to this Committee. Review reports of the State Level Committee may be forwarded to local office of Reserve Bank of India for follow-up action.
Tags-relaxation to j&k,what facility in j&k,j&k industrial policy,j&k bankig facilities,jammu and kashmir banking facilities,banking relax to j&k.

Simplification of softex procedure for exports

11:47 AM
Simplification of softex procedure for exports
Reserve bank of India revised and simplifies the softex procedure for export of goods and services. Earlier RBI implemented in 5 centers which is now implement in all the STPIs in India. RBI issued a circular no. 47 dated 23 October 2012 about revised softex procedure for exporting of goods and services. Full circular is as under.


RBI/2012-13/260
A. P. (DIR Series) Circular No. 47
October 23, 2012
To
All Authorised Dealers in Foreign Exchange
Madam / Sir,
Export of Goods and Services –
Simplification and Revision of Softex Procedure
Attention of the Authorised Dealers is invited to Regulation 6 of the Notification No. FEMA 23/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, as amended by the Notification No.FEMA.36/2001-RB dated February 27, 2001, in terms of which designated officials of the Ministry of Information Technology, Government of India at the Software Technology Parks of India (STPIs) or at Free Trade Zones (FTZs) or Export Processing Zones (EPZs) or Special Economic Zones (SEZs), had been authorized to certify exports declared through SOFTEX Forms.

2. Considering the spurt in the volume of software exports from India in recent times, the complexity of work contracts involved, the voluminous nature of contract agreements and the duration involved in execution of each contract as well as the time-consuming process involved in the certification of SOFTEX forms, simplified and revised Softex procedure was introduced videA.P. (DIR Series) Circular No.80 dated February 15, 2012. Initially the revised procedure was applicable in STPI at Bangalore, Hyderabad, Chennai, Pune and Mumbai with effect from April 01, 2012.

3. Since the revised procedure is running successfully at the 5 designated centres, it has been decided to implement the revised procedure in all the STPIs in India with immediate effect.

4. As per the revised procedure, a software exporter, whose annual turnover is at least Rs.1000 crore or who files at least 600 SOFTEX forms annually on all India basis, will be eligible to submit a statement in excel format as detailed in our A.P. (DIR Series) Circular No.80 dated February 15, 2012.

5. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.

6. The directions contained in this circular have been issued under Section 10(4) and Section 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.
Yours faithfully,
(Rashmi Fauzdar)
Chief General Manager
Tags-softex procedure,export softex procedure,revised softex procedure

Oct 23, 2012

Banking facilities for persons resident outside India

12:53 PM
Banking facilities for persons resident outside India
Reserve bank of India has issued a circular about banking facilities to the person resident outside India.Foreign resident needs banking facilities for doing business, invest in share market etc. So RBI issued a circular no. 45 dated 22 October 2012 about what facilities to be provided to the non resident of India. Full circular is as under.


Facilities for Persons Resident outside India – FIIs
Attention of Authorised Dealers Category – I (AD Category – I) banks is invited to the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000 [Notification No. FEMA/25/RB-2000] and A.P. (DIR Series) Circular No.32 dated December 28, 2010, as amended from time to time.

2. As per the extant guidelines, only designated branches of AD Category I banks maintaining accounts of FIIs are allowed to act as market makers to FIIs for hedging their currency risk on the market value of entire investment in equity and/or debt in India as on a particular date.

3. It has now been decided to allow FIIs to approach any AD Category I bank for hedging their currency risk on the market value of entire investment in equity and/or debt in India as on a particular date subject to the following conditions:
  1. The eligibility for cover may be determined on the basis of a valuation certificate provided by the designated AD category bank along with a declaration by the FII to the effect that its global outstanding hedges plus the derivatives contracts cancelled across all AD category banks is within the market value of its investments.

  2. The FII should also provide a quarterly declaration to the custodian bank that the total amount of derivatives contract booked across AD Category banks are within the market value of its investments.

  3. The hedges taken with AD banks other than designated AD banks, have to be settled through the Special Non-Resident Rupee A/c maintained with the designated bank through RTGS/NEFT.
4. AD Category – I bank may bring the contents of this circular to the notice of their constituents and customers.

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.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager
Tags-banking facilities,nri banking facilities, non resident banking facilities,rbi circular no. 45

Oct 22, 2012

TDS on payment of provident fund

5:21 PM
TDS on payment of provident fund

TDS on Payment of Accumulated Balance Under Recognised Provident Fund and Contribution from Approved Superannuation Fund:

 The trustees of a Recognized Provident Fund, or any person authorized by the regulations of the Fund to make payment of accumulated balances due to employees, shall in cases where sub-rule(l) of Rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an employee is paid, make therefrom the deduction specified in Rule 10 of Part A of the Fourth Schedule to the Act.
The accumulated balance is treated as income chargeable under the head "Salaries"

Where any contribution made by an employer, including interest on such contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on the amount so paid shall be deducted by the trustees of the Fund to the extent provided in Rule 6 of Part B of the Fourth Schedule to the Act. TDS should be at the average rate of tax, the employee was liable to be taxed during the preceding three years or during the period, if that period is less than three years, when he was member of the fund.

The deductor shall remain liable to deduct tax on any sum paid on account of returned contributions (including interest, if any) even if a fund or part of a fund ceases to be an approved Superannuation fund.
Tags-tds on pf,tds on provident fund,tax deduction at source on pf amount

Oct 21, 2012

Section 80DDB exemption for medical treatment

7:20 PM
Section 80DDB exemption for medical treatment

Deduction in respect of medical treatment, etc. (Section 80DDB):
Section 80DDB allows a deduction in case of employee, who is resident in India, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules HDD (1) (see Annexure) for himself or a dependant. The deduction allowed is equal to the amount actually paid or Rs. 40,000 whichever is less. Further the amount paid should also be reduced by the amount received if any under insurance from an insurerer or reimbursed by an employer. In case of a senior citizen (an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year) the amount of deduction allowed is Rs. 60,000/-.

DDO must ensure that the employee furnishes a certificate in Form 10-I from a neurologist, an oncologist, a urologist, nephrologist, a haematologist, an immunologist or such other specialist, as mentioned in proviso rule 11(2) of the Rules.

For the purpose of this section in the case of an employee "dependant" means individual, the spouse, children, parents, brothers and sisters of the individual or any of them.
Tags-section 80ddb,section 80ddb exemption,income tax exemption for medical treatment,income tax section 80ddb,section 80ddb of income tax act

Oct 19, 2012

TDS deductor responsibility and duties

9:27 AM
TDS deductor responsibility and duties

 PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES:
4.1 Section 204 (i) of the Act the "persons responsible for paying" for the purpose of Section 192 means the employer himself or if the employer is a Company, the Company itself including the Principal Officer thereof. Further, as per Section 204(iv), in the case of credit, or as the case may be, if the payment is by or on behalf of Central Government or State Government, the DDO or any other person by whatever name called, responsible for crediting, or as the case may be, paying such sum is the "persons responsible for paying".

4.2 The tax determined as per para 8 should be deducted from the salary u/s 192 of the Act.

4.3. Deduction of Tax at Lower Rate:
If the jurisdictional TDS officer of the Taxpayer issues a certificate of No Deduction or Low Deduction of Tax under section 197 of the Income Tax Act, subsequent to the application filed before him in Form No 13 by the Taxpayer; then the DDO should take into account such certificate and deduct tax on the salary payable at the rates mentioned therein. (see Rule 28AA).

4.4. Deposit of Tax Deducted:
Rule 30 prescribes time and mode of payment of tax deducted at source to the account of Central Government.

4.4.1. Prescribed time of payment/deposit of TDS made to the credit of Central Government account is as under:
(a) In case of an Office of Government:
Sl. No.   Description         Time up to which to be deposited.
1              Tax deposited without Challan [Book Entry]        SAME DAY
2              Tax deposited with Challan          7TH DAY NEXT MONTH
3              Tax on perquisites opt to be deposited by the employer.              7TH DAY NEXT MONTH

(b) In any case other than an Officer of Government
Sl. No.   Description        Time up to which to be deposited.
1              Tax deductible in March                30th APRIL NEXT FINANCIAL YEAR
2              Tax deductible in any other month          7TH DAY NEXT MONTH
3              Tax on perquisites opt to be deposited by the employer               7TH DAY NEXT MONTH

However, if a DDO applies before the jurisdictional Additional/Joint Commissioner of Income Tax to permit quarterly payments of TDS under section 192, the Rule 30(3) allow for payments on quarterly basis and time given in Table below:

Sl. No.   Quarter to the financial year ended on  Date for quarterly payment
1              30th June            7th July
2              30th September               7th October
3              31st December 7th January
4              31st March          30th April next Financial Year

4.4.2 Mode of Payment of TDS

4.4.2.1 Payment by Book Entry:
In the case of an office of the Government, where tax has been paid to the credit of the Central Government without the production of a challan [Book Entry], the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person by whatever name called to whom the deductor reports the tax so deducted and who is responsible for crediting such sum to the credit of the Central Government, shall-

(a)  submit a statement in Form No. 24G within ten days from the end of the month to the agency authorized by the Director General of Income-tax (Systems) [TIN Facilitation Centres currently managed by M/s National Securities Depository Ltd.] in respect of tax deducted by the deductors and reported to him for that month; and

(b)  intimate the number (hereinafter referred to as the Book Identification Number or BIN) generated by the agency to each of the deductors in respect of whom the sum deducted has been credited. BIN consist of receipt number of Form 24G, DDO sequence number and date on which tax is deposited.
The procedure of furnishing Form 24G is detailed in Annexure IV. PAOs/DDOs should go through the FAQs therein to understand the correct process to be followed.

4.4.2.2 Payment by an Income Tax Challan:
(i)  In such a case the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it within the time specified in Table 4.4.1 above into any branch of the Reserve Bank of India or of the State Bank of India or of any authorized bank;

(ii)  In case of a company and a person (other than a company), to whom provisions of section 44AB are applicable, the amount deducted shall be electronically remitted into the Reserve Bank of India or the State Bank of India or any authorised bank accompanied by an electronic income-tax challan.
The amount shall be construed as electronically remitted to the Reserve Bank of India or to the State Bank of India or to any authorized bank, if the amount is remitted by way of:

(a)  internet banking facility of the Reserve Bank of India or of the State Bank of India or of any authorized bank; or

(b)  debit card (Notification No.41/2010, dated 31st May, 2010)

4.5 Interest, Fee, Penalty & Prosecution for Failure to Deposit Tax Deducted:
If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time as under:

4.5.1 He shall be liable to action in accordance with the provisions of section 201. Section 201(1A) lays down that such person shall be liable to pay simple interest

 (i)  at 1% for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted and

(ii)  at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.
Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of quarterly statement of TDS for respective quarter.

4.5.2 Section 271C lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax deducted, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him.

4.5.3 Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, as above, the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along fine.

4.6 Furnishing of Certificate for Tax Deducted (Section 203):
4.6.1 Section 203 requires the DDO to furnish to the employee a certificate in Form 16 detailing the amount of TDS and certain other particulars. The Act stipulates that the Form 16 should be furnished to the employee by 31st May after the end of the financial year in which the income was paid and tax deducted. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. Revised Form 16 annexed to Notification dated 31-5-2010 is enclosed. The certificate in Form 16 shall specify
(a)  Valid permanent account number (PAN) of the deductee;
(b)  Valid tax deduction and collection account number (TAN) of the deductor;
(c)  (i) Book identification number or numbers (BIN) where deposit of tax deducted is without production of challan in case of an office of the Government;

(ii) Challan identification number or numbers (CIN*) in case of payment through bank.

(d)  Receipt numbers of all the relevant quarterly statements in case the statement referred to in clause (i) is for tax deducted at source from income chargeable under the head "Salaries". The receipt number of the quarterly statement is of 8 digit.

It may be noted that under the new TDS procedure, the accuracy and availability of TAN, PAN and receipt number of TDS statement filed by the deductor will be unique identifier for granting online credit for TDS. Hence due care should be taken in filling these particulars.

Due care should be also be taken in indicating correct CIN/ BIN in TDS certificate.
If the DDO fails to issue these certificates to the person concerned, as required by section 203, he will be liable to pay, by way of penalty, under section 272A(2)(g), a sum which shall be Rs. 100/-for every day during which the failure continues.

It is, however, clarified that there is no obligation to issue the TDS certificate in case tax at source is not deductible/deducted by virtue of claims of exemptions and deductions.

4.6.2 If an assessee is employed by more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such assessee was employed with each of the employers and Part B may be issued by each of the employers or the last employer at the option of the assessee.

4.6.3 The employer may issue a duplicate certificate in Form No. 16 if the deductee has lost the original certificate so issued and makes a request for issuance of a duplicate certificate and such duplicate certificate is certified as duplicate by the deductor.

4.6.4. Authentication by Digital Signatures:
(i)  Where a certificate is to be furnished in Form No. 16, the deductor may, at his option, use digital signatures** to authenticate such certificates.

(ii)  In case of certificates issued under clause (i), the deductor shall ensure that
 (a)  the conditions prescribed in para 4.6.1 above are complied with;
 (b)  once the certificate is digitally signed, the contents of the certificates are not amenable to change; and
 (c)  the certificates have a control number and a log of such certificates is maintained by the deductor.

Challan identification number (CIN) means the number comprising the Basic Statistical Returns (BSR) Code of the Bank branch where the tax has been deposited, the date on which the tax has been deposited and challan serial number given by the bank.

  •  The digital signature is being used to authenticate most of the e-transactions on the internet as transmission of information using digital signature is failsafe. It saves time specially in organisations having large number of employees where issuance of certificate of deduction of tax with manual signature is time consuming (Circular no. 2 of 2007, dated 21-5-2007)

4.6.5. Furnishing of particulars pertaining to perquisites, etc (Section 192(2C):
4.6.5.1 As per section 192(2C), the responsibility of providing correct and complete particulars of perquisites or profits in lieu of salary given to an employee is placed on the person responsible for paying such income i.e., the person responsible for deducting tax at source. The form and manner of such particulars are prescribed in Rule 26A, Form 12BA and Form 16 of the Rules. Information relating to the nature and value of perquisites is to be provided by the employer in Form 12BA in case salary paid or payable is above Rs.2,00,000/-. In other cases, the information would have to be provided by the employer in Form 16 itself.
4.6.5.2 An employer, who has paid the tax on perquisites on behalf of the employee as per the provisions discussed in paras 3.2 and 3.3 of this circular, shall furnish to the employee concerned, a certificate to the effect that tax has been paid to the Central Government and specify the amount so paid, the rate at which tax has been paid and certain other particulars in the amended Form 16.

4.6.5.3 The obligation cast on the employer under Section 192(2C) for furnishing a statement showing the value of perquisites provided to the employee is a crucial responsibility of the employer, which is expected to be discharged in accordance with law and rules of valuation framed there under. Any false information, fabricated documentation or suppression of requisite information will entail consequences thereof provided under the law. The certificates in Forms 16 and/or Rule 12BA specified above, shall be furnished to the employee by 31st May of the financial year immediately following the financial year in which the income was paid and tax deducted. If he fails to issue these certificates to the person concerned, as required by section 192(2C), he will be liable to pay, by way of penalty, under section 272A(2)(i), a sum which shall be Rs. 100/- for every day during which the failure continues.

4.7 Mandatory Quoting of PAN and TAN:
4.7.1 Section 203A of the Act makes it obligatory for all persons responsible for deducting tax at source to obtain and quote the Tax-deduction Account No (TAN) in the challans, TDS- certificates, statements and other documents. Detailed instructions in this regard are available in this Department's Circular No.497 [F.No.275/118/87-IT(B), dated 9-10-1987]. If a person fails to comply with the provisions of section 203A, he will be liable to pay, by way of penalty, under section 272BB, a sum of ten thousand rupees. Similarly, as per Section 139A(5B), it is obligatory for persons deducting tax at source to quote PAN of the persons from whose income-tax has been deducted in the statement furnished u/s 192(2C), certificates furnished u/s 203 and all returns prepared and delivered as per the provisions of section 200(3) of the Act.
4.7.2 All tax deductors are required to file the TDS returns in Form No.24Q (for tax deducted from salaries). As the requirement of filing TDS/TCS certificates, by the employee along with the return of income, has been done away with, the lack of PAN of deductees is creating difficulties in giving credit for the tax deducted. Tax deductors and tax collectors are, therefore, advised to quote correct PAN details of all deductees in the TDS returns for salaries in Form 24Q. Taxpayers liable to TDS are also advised to furnish their correct PAN with their deductors. It may be noted that non-furnishing of PAN by the deductee (employee) to the deductor (employer) will result in deduction of TDS at higher rates u/s 206AA of the Act mentioned in para 4.8 below.

4.8 Compulsory Requirement to furnish PAN by employee (Section 206AA):
4.8.1 Section 206AA in the Act makes furnishing of PAN by the employee compulsory in case of receipt of any sum or income or amount, on which tax is deductible. If employee (deductee) fails to furnish his/her PAN to the deductor, the deductor has been made responsible to make TDS at higher of the following rates:
(i)  at the rate specified in the relevant provision of this Act; or
(ii)  at the rate or rates in force; or
(iii)  at the rate of twenty per cent.

The deductor has to determine the tax amount in all the three conditions and apply the higher rate of TDS. However, where the income of the employee computed for TDS u/s 192 is below taxable limit, no tax will be deducted. But where the income of the employee computed for TDS u/s 192 is above taxable limit, the deductor will calculate the average rate of income-tax based on rates in force as provided in sec 192. If the tax so calculated is below 20%, deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%, tax is to be deducted at the average rate. Education cess @ 2% and Secondary and Higher Education Cess @ 1% is not to be deducted, in case the TDS is deducted at 20% u/s 206AA of the Act.

4.9 Statement of deduction of tax under section 200(3) [Quarterly Statement of TDS]:
4.9.1. The person deducting the tax (employer in case of salary income), is required to file duly verified Quarterly Statements of TDS in Form 24Q for the periods [details in Table below] of each financial year, to the Director General of Income Tax (Systems), ARA centre, Jhandewalan Extn., New Delhi or TIN/facilitation Centres authorized by DGIT (System's) which is currently managed by M/s National Securities Depository Ltd. (NSDL). The requirement of filing an annual return of TDS has been done away with w.e.f. 1-4-2006. The quarterly statement for the last quarter filed in Form 24Q (as amended by Notification No. S.O.704(E), dated 12-5-2006) shall be treated as the annual return of TDS. Due dates of filing this statement quarterwise is as in the Table below.

TABLE: Dates of filing Quarterly Statements E-TDS Return 24Q
Sl. No    Return for Quarter ending           Due date for Government Offices            Due date for Other Deductors
1              30th June                                                       31st July               15th July
2              30th September                                             31st October      15th October
3              31st December                                               31st January       15th January
4              31st March                                                    15th May             15th May

4.9.2. The statements referred above may be furnished in paper form or electronically in accordance with the procedures, formats and standards specified by the Director General of Income-tax (Systems) along with the verification of the statement in Form 27 A.

4.9.3. All Returns in Form 24Q are required to be furnished in computer media except in case where the number of deductee records is less than 20. This is in accordance with the "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003" as notified vide Notification No. S.O. 974 (E), dated 26-8-2003 read with Notification No. SO 1261(E), dated 31-5-2010. Deductors have to file quarterly statements with the e-TDS Intermediary at any of the TIN Facilitation Centres, particulars of which are available at http://www.incometaxindia.gov.in and at http://tin-nsdl.com.

4.9.4 Fee for default in furnishing statements (Section 234E):
If a person fails to deliver or caused to be delivered a statement within the time prescribed in Section 200(3) in respect of tax deducted at source on or after 1-7-2012 he shall be liable to pay, by way of fee a sum of Rs. 200 for every day during which the failure continues. However, the amount of such fee shall not exceed the amount of tax which was deductible at source. This fee is mandatory in nature and to be paid before furnishing of such statement.

4.9.5 Penalty for failure in furnishing statements (section 271H):
If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) in respect of tax deducted at source on or before 30-6-2012, he shall be liable to pay, by way of penalty, a sum of Rs. 100 for every day during which the failure continues, [section 272A(2)(k)]. However, the amount of such fee shall not exceed the amount of tax which was deductible at source.

If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) in respect of tax deducted at source on or after 1-7-2012, he shall be liable to pay, by way of penalty a sum which shall not be less than Rs. 10,000/- but which may extend to Rs 1,00,000/-. However, the penalty shall not be levied if the person proves that after paying TDS with the fee and interest, if any, to the credit of Central Government, he had delivered such statement before the expiry of one year from the time prescribed for delivering the statement.

4.9.6 Penalty for furnishing incorrect information (section 271H)
If a person furnishes incorrect information in the statement in respect of tax deducted at source on or after 1-7-2012, he shall be liable to pay penalty which shall not be less than Rs. 10,000/- but which may extend to Rs. 1,00,000/-.

4.9.7. At the time of preparing statements of tax deducted, the deductor is required to mandatorily quote:
 (i)  his tax deduction and collection account number (TAN) in the statement;

(ii)  quote his permanent account number (PAN) in the statement except in the case where the deductor is an office of the Government including State Government). In case of Government deductors "PANNOTREQD" to be quoted in the e-TDS statement;

(iii)  quote the permanent account number PAN of all deductees;

(iv) furnish particulars of the tax paid to the Central Government including book identification number or challan identification number, as the case may be.

(v)  furnish particular of amounts paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax u/s 197 by the assessing officer of the payee.

4.10 TDS on Income from Pension:
In the case of pensioners who receive their pension from a nationalized bank, the instructions contained in this circular shall apply in the same manner as they apply to salary-income. The deductions from the amount of pension under section 80C on account of contribution to Life Insurance, Provident Fund, NSC etc., if the pensioner furnishes the relevant details to the banks, may be allowed. Necessary instructions in this regard were issued by the Reserve Bank of India to the State Bank of India and other nationalized Banks vide RBI's Pension Circular(Central Series) No.7/C.D.R./1992 (Ref. CO: DGBA: GA (NBS) No.60/GA.64(11 CVL)-/92), dated the 27th April, 1992, and, these instructions should be followed by all the branches of the Banks, which have been entrusted with the task of payment of pensions. Further all branches of the banks are bound u/s 203 to issue certificate of tax deducted in Form 16 to the pensioners also vide CBDT circular no. 761, dated 13-1-1998.

4.11 New Pension Scheme:
The New Pension Scheme(NPS) has become operational since 1st Jan. 2004 and is mandatory for all new recruits to the Central Government Services from 1st January, 2004. Since then it has been opened to employees of State Governments, Private Sector and Self Employed. The income received by the NPS trust is exempt. The NPS trust is exempted from the Dividend Distribution Tax and is also exempted from the Securities Transaction Tax on all purchases and sales of equities and derivatives. The NPS trust will also receive income without tax deduction at source. The above amendments are retrospectively effective from 1-4-2009 (AY 2009-10) onwards.

4.12. Matters pertaining to the TDS made in case of Non-Resident:
4.12.1 Where Non-Residents are deputed to work in India and taxes are borne by the employer, if any refund becomes due to the employee after he has already left India and has no bank account in India by the time the assessment orders are passed, the refund can be issued to the employer as the tax has been borne by it [Circular No. 707, dated 11-7-1995].

4.12.2 In respect of non-residents, the salary paid for services rendered in India shall be regarded as income earned in India. It has been specifically provided in the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India.
Tags-tds deductor,who deduct tds,tds,tds form 16,tds amount paid,tds on non resident,tds on rent,tds on pension,tds on salary,section 206aa income tax,section 206aa,section 206aa of income tax,section 206aa of income tax act.