Aug 30, 2013

TDS on professional and technical services India

11:30 PM
TDS on professional and technical services India
Fees for professional/technical services [sec. 194J:- Any person who is responsible for paying to a resident any sum by way of (i)fees for technical services or (ii)fees for professional services (iii)royalty (iv) any non-complete fees, he is required to deduct tax at source, provided such fees paid or credited to the account of payee exceeds Rs 20,000.



Normally an individual or HUF is not required to deduct tax at source. However, an individual or an HUF ,engaged in business or profession, should also deduct at source from such fees paid or credited to the account of the, provided the gross receipts or turnover from such business or profession during the financial year immediately preceding the financial year in which such fees is paid or credited to the account to the payee, exceed Rs 40lakh in case of business and Rs. 10 lakh in case of profession .However, TDS is to be made by an individual or an HUF in cases where such fees is paid by an individual or an HUF incases where such fees is paid for personal purposes.
Terms Explained: professional services means services rendered by a person in the course of caring on legal, medical, engineering, or architectural profession or accountancy or technical consultancy or interior decoration or advertising or any other profession as may be notified by the CBDT.
“Fees for technical services” means any consideration (including any lump sum consideration) for rendering of any managerial, technical or any consultancy services, but does not include any consideration (for such service) which is taxable under the head “Salaries”.
Where technical services are provided under maintenance contracts, provision of Sec.194J will apply in regard to tax deduction at source.
Condition for TDS
 The following conditions should be satisfied before any deduction of tax is made:
  1. the payee is resident in India (under sec.6)
  2. the fees is paid to the account of the payee on or after 1july 1995
  3. the fees paid to the account of the payee during the financial year exceeds Rs. 20,000.Thus where it is up to Rs. 20,000no tax is deducted. Where it exceeds Rs. 20,000, tax is deducted on the whole amount of such fees.
Scope of TDS
Payment to artist:  when an advertising agency makes payment for professional services to a film artiste such as an actor, a director a cameraman and so on, tax is deducted at the rate of 5%
Payment to a share registrar: Payment by a company to a share registrar will also be similarly be liable to tax deduction at source under Sec. 194JC
Commission Payment for Procuring orders: In respect of payment of commission to external parties for procuring orders for the company’s products, rendering of such services is not covered under Sec.194C, but may involve payment of fees for professional or technical services, in which case tax may be deductible under Sec. 194J
Commission Received by the Advertising Agency from the Media:     This would require deduction of tax at source under Sec. 194J
T technical Services under Maintenance Contract:  Payment made to a hospital for rendering medical services will attract deduction of tax at source under Sec. 194C.

Routine/normal maintenance contracts which include supply of shares will be covered under Sec. 194C.
However, where technical services are rendered, the provisions of Sec. 194J will apply in regard to tax deduction at source.
Reimbursement of Expenses.  Since Sec. 194J refers to ‘any sum paid’, reimbursement of actual expenses cannot be deducted out of the bill amount for the purposes of tax deduction at source [circular No. 715 dated 8 August 1995].
Fees paid by Foreign Companies through Regular Banking Channels not liable to TDS.  In respect of fees for professional services received from foreign companies or foreign law and accountancy firms, any fees paid through regular banking channels to any chartered accountant, advocate or solicitor who is resident in India, by non- residents who do not have any agent or business connection or permanent establishment in India may not be subjected to deduction of tax at source under Sec. 194J. However, foreign companies or foreign law and accountancy firms are required too send a quarterly statement, indicting the name and address of the persons to whom the payments are made, to the CBDT [Circular No. 726 Dated 18 October 1995].
Telephone Services are not covered: when a person decides to subscribe to a cellular telephone services in order to have the facility of being able to communicate with have others, he does not contract to receive a technical service. What he does agree is to pay for the use of the airtime for which he pays a charge. The facts that the telephone service not provider has installed sophisticated technical equipment in the exchange to ensure connectivity to its subscriber does not , on that score , make it provision of a technical service to the subscriber. The subscriber is not concerned with the complexity of the equipment installed in the exchange or the location of the base station. All that he wants is the facility of using the telephone when he wishes so and being able to get connected to the person at the number to which he desires to be connected. What he applies to cellular mobile telephone is also applicable to fixed telephone service. Neither services can be regarded as ‘technical services’ for the purpose of Sec. 194J of the act [Sky cell Communication Ltd. v. Dy. CIT [2001]25 ITR 53(Mad)].
Timings of TDS [Sec. 197]: the tax should be deducted either at the time of credit of such fees to the account of the tax payee or at the time of payment thereof, whichever is earlier .Payment of fees may be in cash or by issue of cheque or draft or by any other mode. Similarly, where any fees are credited to the account of the payee in any account whether called suspense account or by any other name, provision of tax deduction at source would apply.
Rate of TDS
Payment Timings
  1. Payment made prior to 1 June 2007
  2. Payment made on or after 1 June 2007
Income tax so deducted is increased by the amount of surcharge and Education Cess and Higher Secondary Education Cess to be charged in the relevant assessment year.
In the case of any individual, HUF, BOI or AOP, no surcharge is payable at the rate of 10% on income tax, provided the amount payable ecceeds Rs. 10 lakh. However, no surcharge is payable where the payee is a cooperative society or local authority but it is payable in case of firm and domestic company @ 10%, provided such income exceeds Rs. 1 crore.

Education Cess and Secondary Higher education cess is payable @2% and 1% respectively, on the aggregate amount of income and surcharge
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Cash payment for petrol/diesel in remote area excess of 20000 is allowed

4:02 PM 0
Cash payment for petrol/diesel in remote area excess of 20000 is allowed
IT: Where assessee made cash payment for purchase of petrol in excess of Rs. 20,000 at a petrol pump which was far away from main town, Tribunal rightly concluded that it was not feasible to make payment by way of cheque or demand draft and, therefore, impugned disallowance made under section 40A(3) was not sustainable

IT: Where due to heavy workload and pressure to complete work in time, assessee had engaged more than ten persons on contract and payments made to each person without deducting tax at source did not exceed a sum of Rs. 50,000, Tribunal was justified in deleting disallowance made by Assessing Officer under section 40(a)(ia)

IT: Where appellate authorities having noticed that sub-contractor appointed by assessee left work without completing it, recorded a finding that if there was any doubt with regard to genuineness of transactions, Assessing Officer could have made further inquiry and since same was not done, impugned disallowance made under section 40(a)(ia) was not sustainable, said finding being a finding of fact, no substantial question of law arose therefrom

Aug 29, 2013

Amendment in money laundering scheme

5:11 PM 1
Amendment in money laundering scheme
Amendment made in the money laundering act. This includes increasing the scope of Money laundering act and includes freezing in the act. There is also changes made in rule 1, rule 2, rule 8, rule 9 and rule 10 of money laundering act. The department also launched Form 1 with the notification no. 11/2013 dated 19 August 2013. Full notification and new form 1 are as under.

In exercise of the powers conferred by sub-section (1) read with clause (a), clause (m), clause (n), clause (p), clause (pp) and clause (w) of sub-section (2) of section 73 of the Prevention of Money-laundering Act, 2002 (15 of 2003), the Central Government hereby makes the following rules to amend the Prevention of Money-laundering (Forms, Search and Seizure and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005, namely:-
Short title and commencement
1. (1) These rules may be called the Prevention of Money-laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, impounding and Custody of Records and the Period of Retention) (Amendment) Rules 2013.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Prevention of Money-laundering (Forms, Search and Seizure and he Manner of Forwarding the Reasons and Material to the Adjudicating Authority, impounding and Custody of Records and the Period of Retention) Rules, 2005 hereinafter referred to as the principal rules), in the opening paragraph, after the word, rackets and letter "clause (o)", the word, brackets and letters "clause (pp)" shall be inserted.
3. In the principal rules, in rule 1, in sub-rule (1), after the words "and Seizure", the words "or Freezing" shall be inserted.
4. In the principal rules, in rule 2, in sub-rule (1),
(i) for clause (c) and clause (d), the following clause shall be substituted, namely:-
'(c) "authority" for the purposes of sub-section (2) of section 17 or sub-section (1A) of section 17 or sub-section (1) of section 18 of the Act means an officer subordinate to the Director and authorized by the Director under sub-section (1) of section 17 or the Central Government under sub-section (1) of section 18 of the Act;';
(ii) for clause (j), the following clause shall be substituted, namely :-
'(j) "material for the purpose of sub-section (1A) and sub-section (2) of section 17 of the Act" means the material in possession of the authority, referred to in clause (c) of sub-rule (1) of rule 2, after search, seizure or freezing under sub-section (1) of section 17 respectively of the Act, including a report forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974) or a complaint filed before a Magistrate or a Court by a person authorized to investigate the scheduled offence for taking cognizance of such scheduled offence; as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise submitted by an officer authorized to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being Head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorized by the Central Government, by notification, for this purpose;'
(iii) for clause (k), the following clause shall be substituted, namely :-
'(k) "material for the purposes of sub-section (2) of section 18 of the Act" means the material in possession of the authority referred to in clause (c) of sub-rule (1) of rule 2, after search and seizure under sub-section (1) of section 18 of the Act including a report forwarded to the Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974) or a complaint filed before the Magistrate or court by a person authorized to investigate the scheduled offence for taking cognizance of such scheduled offence; as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorized to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being Head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorized by the Central Government, by notification, for this purpose;'
5. In the principal rules, in rule 4,-
(i) for the existing marginal heading, the following marginal heading shall be substituted, namely:-
 "4. Procedure relating to seizure or freezing.- (1) The officer or the authority, as the case may be, freeze or seize any record or property found as a result of search of any building, place, vessel or vehicle or aircraft.";
(ii) after sub-rule (1), the following sub-rule shall be inserted, namely:-
 "(1A) Where it is not practicable to seize any record or property, the officer or the authority, as the case may be, may pass an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer or the authority making such order, and a copy of such order shall be served on the person concerned.".
6. In the principal rules, in rule 8 for the marginal heading, the following marginal heading shall be substituted, namely:—
"8. Manner of forwarding of a copy of the reasons and the material relating to search, seizure and freezing under sub-section (2) of section 17 and sub-section (1A) of section 17 of the Act and search of persons under sub-section (2) of section 18 and sub-section (2) of section 20 of the Act to the Adjudicating Authority.-".
7. In the principal rules, in rule 9, in the marginal heading, for the words "search and seizure", the words "search, seizure or freezing" shall be substituted.
8. In the principal rules, in rule 10, in the marginal heading, for the words "search and seizure", the words "search, seizure or freezing" shall be substituted.
9. In the principal rules, for FORM I, the following Forms shall be substituted, namely:-
FORM - I
[See sub-rule (1) of 3]
AUTHORISATION FOR SEARCH, SEIZURE AND FREEZING UNDER SUB-SECTION (1)
AND SUB-SECTION (1A) OF SECTION 17 OF THE ACT
Authorization Number…………..of………… [year] Dated…………………
WHEREAS I……………………………. [Director/Additional Director/Joint Director/Deputy Director], have reason to believe that
……………………………………………………………………………… [name and complete address of the person]
(i) has committed an act which constitutes money-laundering, or
(ii) is in possession of proceeds of crime involved in money-laundering, or
(iii) is in possession of records relating to money-laundering, and
certain documents including proceeds of crime and/or records relating to money laundering, which in my opinion, will be useful for or relevant to the investigation and other proceedings under the Prevention of Money-laundering Act, 2002 (15 of 2003) are secreted in the premises specified in the Schedule below.
I hereby authorize …………………………………………………………………….. [name and designation of the Authority ] to conduct the search of the premises specified in Schedule below, under sub-section (1) of section 17 of the Prevention of Money-laundering Act, 2002 (15 of 2003) and rule 3 of these Rules.
The officer so authorized to conduct search shall seize or freeze any record or property, as the case may be, which is considered relevant for the purposes of proceedings under Act as per procedure specified in rule 4 of these rules.
Given under my hand and seal on this…………………………..day of…………………………..
Two thousand…………………………..
Schedule of Premises


Aug 28, 2013

HUF can not be a partner in LLP firm

4:24 PM 0
HUF can not be a partner in LLP firm
HUF can not be a partner in Limited Liability partnership firm. Company. Ministry of corporate affairs has issued a circular no. 13/2013 dated 29 July 2013. Full circular is as under.

It has come to the notice of the Ministry that some Hindu Undivided Families (HUFs)/Kartas of such families are applying to become partner/ Designated partner (DP) in LLPs and a question has arisen whether a 'HUF' or a karta can be allowed to do so. The matter has been examined in consultation with Ministry of Law.

2. As per section 5 of LLP Act, 2008 only an individual or body corporate may be a partner in a Limited Liability Partnership. A HUF cannot be treated as a body corporate for the purposes of LLP Act, 2008. Therefore, a HUF or its karta can not become designated partner in LLP.

3. This issues with the approval of Secretary, MCA

Aug 27, 2013

Gift received on daughter item is not exempted

11:32 PM 0
Gift received on daughter item is not exempted
Gift received by assessee on occasion of his daughter's marriage won't be exempt as the word individual appearing in proviso to sub-clause (vi) of sec. 56(2) relates to marriage of assessee and not of his daughter

The High Court held as under:

1) Proviso to sec. 56(2)(vi) provides that gift received on the occasion of the marriage of an individual would be exempt from tax. There is no ambiguity in such proviso;

2) The expression "individual" appearing in proviso (b) to section 56(2)(vi) of the Act, is preceded by the word "marriage" and, therefore, relates to the marriage of the individual concerned, i.e., the assessee and not to the marriage of any other person related to him in whatsoever degree, whether as his daughter or son;

3) The expression "marriage of the individual" is unambiguous in its intent and does not admit of an interpretation, that it would include an amount received on the marriage of a daughter;

4) If the Legislature had intended that gifts received on the occasion of marriage of the assessee's children would be exempted, nothing would prevent the Legislature from adding the words "or his children", after the words "marriage of the individual";

5) Thus, in view of unambiguous legislative intent appearing in the proviso, the addition made to the appellant's income on account of gifts received on the occasion of his daughter's marriage was to be affirmed - RAJINDER MOHAN LAL V. DY.CIT (2013) 36 taxmann.com 250 (Punjab & Haryana)

Aug 26, 2013

How to Periodic withdraw from Mutual fund

4:06 PM 0
How to Periodic withdraw from Mutual fund
Under mutual fund scheme, there is an option of systematic withdrawn plan in which the investor can withdraw the periodic redemption according to pre-specified schedule. An investor can choose specified schedule as well as amount to withdraw the amount. This may be called a good option as investor can watch favourable or unfavourable market conditions for investing. These are some points to be noted for systematic withdrawn plan (SWP).

Application form
A separate application form needs to be filled by the investor. All the details including investor name, scheme, plan, option should be filled.

Date
Investor must tell the commencement date of systematic withdraws. Some mutual fund companies take a hold period between investment start date and SWP date. 

Withdraw option
There are two options available under SWP plan.
1- Fixed withdraw in which an investor tells a fixed amount to be withdraw from the investment.
2- Appreciation withdraws in which an investor can withdraw the amount to the extent of capital appreciation.

Statements of accounts
An account statement will be sent to the investor within 10 working days after first withdrawn from the mutual funds for confirming the withdraw. After that statement will be sent on regular quarterly basis.

Capital gain is applicable on SWP and will be charged on redemption.

SWP payment comes either by cheques or direct in bank accounts if registered.

First in first out formula used for redemption in SWP plan.
Tags-swp,what is swp,systematic withdrawn plan,what is systematic withdrawn plan,systematic withdrawn plan option,systematic withdrawn plan conditions,systematic withdrawn plan application form,systematic withdrawn plan mutual funds

No penalty on deductor non mentioning PAN of deductee

1:00 PM 0
No penalty on deductor non mentioning PAN of deductee
IT : No penalty on deductor of TDS for non-mention of payee’s PAN in Form 16A if payee didn’t intimate his PAN to deductor

• If payee doesn't furnish his PAN to deductor as required by section 139A(5A), deductor can't be penalized under section 139A(5B) read with section 223B(1) for not mentioning payee's PAN in TDS certificate issued to payee in Form 16A.

• Where there is nothing on record to show that contractors to whom certain amounts were paid by asssessee after deducting TDS under section 194C/194J had intimated their PANs to assessee (deductor) as required by section 139A(5A), penalty can't be imposed on assessee (deductor) under section 272B(1) for non-mention of the PANs of the contractors(payees) in Form 16A TDS certificates issued to them.

• Default by contractors (payees) in furnishing their PANs to assessee (deductor) as per the requirements of section 139A(5A) is "sufficient cause" within the meaning of section 273B for deductor's contravention of section 139A(5B) ( failing to mention PANs of payee-contractors on their TDS certificates in Form 16A issued to payee-contractors). In view of this sufficient cause, no penalty imposable.

Aug 25, 2013

Income tax department must pay interest for late refund

6:31 PM 0
Income tax department must pay interest for late refund
Central board of direct taxes issued a directive that a taxpayer should get interest on refunds unless in te case when there is assessee’s default.

The directive was triggered by an observation made by the Delhi High Court on 14 March 2013. According to the court, when the delay is not attributable to the assessee, but to the revenue department, the interest should be paid under Section 244A of the Income-Tax Act.

CBDT also clarifies that if a taxpayer denies the right of refund, the AO must take it into written explanation of the deny of interest.

Section 244A of the income tax act provides that a taxpayer is entitled to have te interest of 6% annually from the first day of April of the assessment year to the date on which the refund is granted. The refund may be either in the case of TDS deduction or advance tax. However no interest is given if the refund amount is less than 10% of tax paid.
Tags-income tax refund,income tax refund status,interest on it refunds,it refunds,interest rate of refund,income tax refunds

Custom clarification on duty exemption on Ash Handling Systems, Water Treatment Plant and Coal Transportation Facilities

10:30 AM 0
Custom clarification on duty exemption on Ash Handling Systems, Water Treatment Plant and Coal Transportation Facilities
Custom department issued a clarification on custom duty exemption on Ash Handling Systems, Water Treatment Plant and Coal Transportation Facilities. Custom department issued a circular no. 33/2013 dated 23 August 2013 regarding the clarification. Full circular is as under.

I am directed to invite your attention to notification No. 12/2012-Central Excise  (S. Nos. 337&338), dated 17-03-2012, which provides exemption to machinery, instruments, apparatus and appliances etc. required for setting up of ultra-mega/ mega power projects. Particular attention is invited to the Explanation, which clarifies that the goods required for setting up of these projects include the goods required for development of facilities such as ash disposal system including ash dyke, water intake including treatment and storage facilities and coal transportation facilities for such a project, notwithstanding the fact that such facilities are set up inside or outside the power plant’s designated boundary.

2.         In this connection, representations have been received from the trade and industry that the benefit of exemption is being denied to the afore-cited goods when they are imported for setting up of ultra-mega/ mega power projects. It has been requested that, for removal of doubts, a clarification, on the lines of excise exemption, should be issued by the Ministry that the said goods required for ultra-mega/ mega power projects are eligible for customs duty exemption.

3.         The matter has been examined by the Ministry. In Pre Budget 2011-12, representations were received from power producers that limited interpretation of the term power project as facilities inside the plant boundary only, was restrictive in nature and was limiting the scope of exemption of customs and excise duty on goods required for these facilities. It was requested that the benefit of exemption for ultra mega power projects should be extended to the development of facilities both inside and outside the power plant’s designated boundary such as ash pond, water intake, coal transportation within the scope of the term ‘project’. The matter was examined and it was decided to clarify that the benefit of exemption, available for ultra mega power projects, would be available for development of facilities such as ash disposal system including ash dyke, water intake including treatment and storage facilities and coal transportation, both inside and outside the power plant’s designated boundary. Accordingly, an Explanation was inserted at S. Nos. 91A & 91B of notification No 6/2006-CE, dated 1.3.2006 [now S. Nos. 337 and 338 of notification No. 12/2012-CE dated 17-03-2012]. 

4          The explanation clarified, without any ambiguity whatsoever, that the goods specified in paragraph 1 above and required for setting up of ultra-mega/ mega power projects would be eligible for the benefit of excise duty exemption even if the facilities are set up outside the power plant’s designated boundary. No such clarification was issued for the purpose of availing of the customs duty exemption, as it was felt that this exemption would be available to the said goods under project imports.

5.         Subsequently, representations were received, seeking clarification in respect of customs duty exemption on the said goods required for setting up of ultra-mega/ mega power projects. The issue was examined in consultation with Ministry of Power (MoP).  MoP vide letter dated 13th October, 2011 clarified that facilities such as ash disposal system including ash dyke, water intake including treatment and storage facilities and coal transport facilities are an integral part of mega power projects and therefore, customs duty should be exempted for import of these goods under the Mega Power Policy. On the basis of this, a clarification dated 29-12-2011 (copy enclosed) was issued to the Commissioner of Customs, Nhava Sheva, stating that these goods are eligible for customs duty exemption.

6.         Now, it has been brought to the notice of the Ministry that in the absence of a general clarification, the Customs authorities at certain places are demanding duty on these goods on the ground that the goods are used outside the power plant’s designated boundary. However, the foregoing would make it clear that the intention all along was to grant exemption from Customs duty on these goods.

6.1        For removal of doubts, it is clarified that the goods required for development of facilities such as ash disposal system including ash dyke, water intake including treatment and storage facilities and coal transport facilities required for ultra-mega/ mega power projects are eligible for customs duty exemption, notwithstanding the fact that such facilities are set up inside or outside the power plant’s designated boundary.

7.         Difficulties, if any, faced in the implementation of the instructions may be brought to the notice of the Ministry at an early date.
Tags-custom duty exemption,custom duty exemption on ash handling systems, custom duty exemption on water treatment plant,custom duty exemption on coal transportation facility,custom circular no. 33/2013,custom circular no. 33

Aug 24, 2013

ST 3 online version service tax return for period October 2012 to March 2013

6:57 PM 0
ST 3 online version service tax return for period October 2012 to March 2013
Service tax department issued service tax return form ST 3 online version for the return October 2012 to March 2013. Earlier service tax department issued the offline version of ST3. 

The online version of the Service Tax return (ST-3) for the period October'12 to March'13 is now available for e-filing in ACES.  Assessees whose ST 3 returns for the period October'12 to March'13 for "Banking and other Financial services" got rejected are requested to use the latest version of ST 3, either online or off-line to file their return. The last date of e-filing of ST 3 for the period October, 2012 to March, 2013 is 31st August, 2013. To avoid congestion and inconvenience on the last date assessees are advised to start e-filing the returns immediately and not to wait till the end of the month.

Download st 3 form online version
Tags-st 3,service tax return form st3,st3 online version,service tax st 3 online version

Aug 23, 2013

India signs Double tax avoidance agreement DTAA wit Uruguay

6:07 PM 0
India signs Double tax avoidance agreement DTAA wit Uruguay
Government of India sign double tax avoidance agreement with government with Uruguay. Income tax department issued a note no. 500 dated 16 August 2013 regarding this DTAA agreement. Full note is as under.

Subject:-Circulation of the published notifications of the Agreement between the Government of the Republic of India and the Government of the Oriental Republic of Uruguay for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income and on capital in the Gazette of India (extraordinary)- reg.

The Notification along with the Agreement between the Govemment of the Republic of India and the Government of the Oriental Republic of Uruguay for the avoidance of Double Taxation and the Prevention of Fiscal evasion with respect to taxes on income and on capital was published on 5'h Juty, 2013 through S.O. 20Sl(E). Notification No.53120131500113812002-FTDII, A copy of the same is enclosed for information.

2. All the provision of the said Agreement between the Govemment of the Republic of India and the Government of the Oriental Republic of Uruguay for the avoidance of Double Taxation and the Prevention of Fiscal evasion with respect to taxes on income and on capital shall be given effect to in the Union of India with effect from the l't day of April, 2014.
Tags-dtaa,double tax avoidance agreement,dtaa with uruguay,double tax avoidance agreement with uruguay

Aug 22, 2013

Fourth slab in income tax eyeing on super rich

11:30 PM 1
Fourth slab in income tax eyeing on super rich
The direct tax code has been approved in the cabinet on Thursday 22 August 2013 and proposed a fourth slab in the income tax slabs for the person having income more than 10 crores. However the first slab remains the same of Rs. 2 lakh.

This is the first time since 1996-97 that the fourth slab will also come in picture as government is settled with 3 slabs of income tax. The new slab is for super-rich whose income is above Rs. 10 crores and attracts 35% tax rate.

Government is eying on the super rich to collect as much as it can. This introduction of new slab is the part of it. Government is going to largest revise of income tax act 1961. There is also a plan to levy a wealth tax at the rate of 0.25% on the net worth over Rs. 50 crores.

Further received dividends will also attract a 10% tax on value of above rest. 1 crore.

 Foreign companies will have to pay tax if they buy into an Indian company if as a result 20% of the global assets of the new entity are located in India. The threshold was 50% as proposed in the version of the Bill in 2010.

Government also approves all the recommendation about General anti-avoidance rules and it also will be included in the direct tax code (DTC). These are a bit useful for the people who have worked or income from abroad.

Government has approved 153 recommendations out of 190 presented by PSC (Parliament standing committee). It includes all the changes made in 2011, 2012 and 2013 in the finance act. 
The code has retained the 30% tax on corporate, as proposed in DTC 2010, and agreed to by the standing committee. It has also proposed what it calls ring-fencing of losses from businesses availing investment-linked incentive.

On the issue of personal income tax slabs, the committee has suggested Rs. 3 lakh starting slab on which government points out that there will be huge loss to the revenue if the initial slab exemption will be 3 lakh. Government like to introduce fourth slab for individual, HUF and artificial judicial person at rate of 35% on the income above Rs. 10 crores.
Tags-income tax slabs,fourth slab in income tax,super rich tax in india

MOU between India and Iran

5:34 PM 0
MOU between India and Iran
Indian government has signed memorandum of understanding wit government of Iran. Income tax department issued a notification no. 64 dated 19 August 2013 regrading this MOU. Full notification is as under.

S.O. 2493(E).– In exercise of the powers conferred by clause (48) of Section 10 read with Section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the national interest, hereby notifies for the purposes of the said clause, the National Iranian Oil Company, as the foreign company and the Memorandum of Understanding entered between the Government of India in the Ministry of Petroleum and Natural Gas and the Central Bank of Iran on the 20th day of January, 2013, as the agreement subject to the condition that the said foreign company shall not engage in any activity in India , other than the receipt of income under the agreement aforesaid. 

2. This notification shall be deemed to have come into effect from the 20th day of January, 2013. 
Tags-income tax notification no. 64,mou between india and iran

Aug 21, 2013

What to do when notice comes from income tax department

11:26 PM 2
What to do when notice comes from income tax department
 Income tax notice is what everybody wants to escape. Sometimes it even comes when the assessee paid all his due tax and filled return on time and no misleading information in the returns. In such a case Mr. Amit got the notice of tax department. Some others might also find themselves in the same situation. This is expert view as what to do in this situation.
 Do not panic
A person first needs to read the notice carefully. Check all the details as Name, PAN number and other details are correct. If yes, it means the notice belongs to you.
Then know what the notice say. Sometimes notices are issued for some clarification and not the tax demand. The assessing officer sometimes issue notice asking certain information or documents related to income tax return filed by the assessee. The officer may also issue summons to the assessee in relation to return filed by some other person with whom the assessee has entered into a business transaction.
So one should check about the notice and even if there is a demand notice, there is no issue to panic. One should check about the demand and under which section of income tax act, the demand arises. Demand notice does not fully mean that you need to pay it. There is always an option of appeal.
Ignore
Some people choose to ignore as they think tax department will forget about it with the passage of time. This is not a good idea. One must respond to the notice of income tax department. An assessee need to response a demand notice within 30 days of the receipt of the notice or as mentioned in the notice, whichever is earlier. After this, the department may attach interest and penalty on the demand. Income tax department also know how to recover amount. It includes cease the bank account and other property too. 
 Appeal
You need to choose you want to do appeal against this notice or not. If you are going to appeal, you needn’t to pay the demand amount first.
For appealing, you need to write a letter to assessing officer requesting him to take hold of demand as long as to appeal. It’s assessing officer wish to accept or reject it. 
There are four levels of appeal – the Commissioner of Income Tax (Appeals), the Income Tax Appellate Tribunal, the High Court and finally the Supreme Court.
But appealing without paying the demand amount is not suggestive as in the case of losing the case, you need to pay the demand amount plus interest plus penalty. 
If you are not going to appeal, remember you need to pay the demand amount within 30 days of receipt of letter from income tax department for escaping from interest and penalty liability 
 Documents
You should make sure to have all the relevant documents for appealing against the demand notice. The documents may includes bank statement, salary slip, vouchers, computation of income, notes etc.
For appealing, you should have a strong case and valid proofs with you. Without relevant documents it also can leave you with less money. 
Tax department also can send tax demand for the earlier assessment years so one should keep records of earlier years too. As per income tax rules, an assessee is required to maintain records of 8 years. For the assessee who has an asset outside India needs to maintain records of 15 years.
Lastly, it is advisable to take advice from tax practitioners when you are shocked with demand notice as it includes a lot of money but very less knowledge about income tax laws.

Aug 20, 2013

Tax resident norms relaxed for working abroad

2:29 PM 0
Tax resident norms relaxed for working abroad
India has signed DTAA( Double tax avoidance agreement) with many countries with which the person who have the tax resident certificate from the country of working can avail the tax exemption in india. Tax resident certificate is must for claiming the tax exemption in India under DTAA scheme. 

India has so far singed DTAA with almost 80 countries under section 90 of income tax act. DTAA is the agreement between the two countries as tax will not levy twice on the same income. 

But tax resident certificate was the major issue earlier as Indian government had fixed some information must for accepting it a tax resident certificate. Whereas other countries have their own style and may not contain all information which is required by Indian government. 

So this issue blocks the individual for claiming exemption under DTAA scheme. 

In finance act 2013, government of India has retain the TRC norms , the TRC issued by the other country need not necessarily contain the prescribed details. Instead, non-residents are required to provide certain information to be prescribed. On August 1, the CBDT has prescribed the format in which such additional information needs to be provided by the taxpayer in Form 10F.

These details are similar to those required as part of the TRC under the earlier provisions, such as PAN (if allotted), nationality, tax identification number in the country of residence, etc. However, if such details are already provided in the TRC, they may not be required to be provided by the taxpayer again in Form 10F.
This flexibility granted to non-resident taxpayers to provide a TRC issued by the country of treaty residence without necessarily following a specific format and supplemented by additional details by way of a self-declaration is a welcome move.
Download Form 10F.
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Government bans import of LCD LED and Plasma TV by air travellers

1:48 PM 0
Government bans import of LCD LED and Plasma TV by air travellers
Government of India banned import of flat screen television by the air travelers in a bid to stop declining the rupee value against the US dollar. Rupee declined very much and closes below 63 against the US dollar on 20 August 2013.

Custom department issued a notification no. 84/2013 dated 19 August 2013 about banning of importing flat screen television. In flat screen television, LCD, LED and Plasma TV come as the category.

This rule will be applicable with effect from 26 August. It means any air traveler who imports this category of TVs from abroad needs to pay import duty.

Custom department has allowed air travelers to import Rs. 35000 value of goods with them. But custom has excluded this item for import.


Government has also raised import duty on gold; platinum and silver by 10% for maintain the value of rupee. Government is taking the steps to compress the import of non-essential goods. 

Aug 19, 2013

How to get an educational loan

5:37 PM 0
How to get an educational loan
Banks offer loan for education for the studies in India as well as abroad. This education loan is only available to Indian students. Repayment process starts after a year of completing the studies or within 6 months of getting a job, whichever is earlier. The education loan is available for graduation, post graduation and for professional courses.

The limit for education loan is 10 lakh for studies within India and 20 lakh for studies abroad.

What’s include in education loan
Education loan includes all the education related expenses like admission fees, monthly fees, accommodation expenses, and travel expenses, purchase of books and equipments and insurance premium for the student.

Documents required
Admission letter
KYC documents (proof of ID and address proof)
Fees structure
Income documents like bank statements
Income tax return 
All these documents with admission form

Margin money
No margin money required for a loan of Rs. 4 lakh or less. There is margin money of 5% of loan if the loan is above 4 lakh. Whereas if the loan is taken for studding abroad, margin money of 15% is required on the loan amount.

Security
No collateral security is required for the loan up to 4 Lakh. For loan 4-7.5 lakh, a third party guarantee is required of 100% of the loan. If the loan amount is above 7.5 lakh a suitable collateral security would be required.

Some points to be note
- On education loan, no loan processing fees are charged by the banks.
- Rate of interest on education loan is fixed as per respective base rate + certain add on. There is also a concession for females on interest on education loan at least 50 basis points.
- There is an income tax deduction available 

Aug 16, 2013

CBDT draft on safe habour rules

9:40 PM 1
CBDT draft on safe habour rules
Safe Harbour is a provision that provides certainty that the price of controlled transactions will not be reviewed by the tax administration, thereby reducing disputes. CBDT has framed the draft Safe Harbour Rules based on the suggestions made in Rangachary committee report.

FULL HAROUR SAFE RULE DRAFT

Latest RPU version 3.6 and FVU version 3.9 e-TDS free download

1:01 PM 0
Latest RPU version 3.6 and FVU version 3.9 e-TDS free download
Tin.nsdl has launched latest version of RPU and FVU. These software are used for preparing regular as well as corrective e-TDS/TCS quarterly statements. FVU 3.9 version will be applicable from 1 September 2013. Before you can use both fvu version 3.8 and 3.9. RPU version 3.6 is te latest version of return preparation utility. Both FVU 3.9 and RPU 3.6 have many new features with which using these software becomes easy. 

Download RPU version 3.6 

Download FVU version 3.9
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Aug 15, 2013

Interest on cash credit account calculator

11:00 PM
Cash Credit is the loan account taken by the customers from the bank. Cash credit is also called CC limit. In this account the bank gives loan to the customers and the limit amount will be credited to their account. 

For example if A company has the limit of 10 lakh rupees of CC account, the bank will be credited 10 lakh rupees in A company as soon as the limit is approved. The benefit of this account is that the interest will be charged on the withdrawal amount and not the limit amount. Interest will be charged every month and by the product basis method.

But it’s very hard to calculate the interest amount of Cash credit account as it is very complex calculation. Cash credit account is an account in which the businessman transact many entries in a day of debit and credit. So it becomes hard and complex to calculate the interest amount on Cash credit accounts


So there is a calculator for interest on Cash credit account by which one can easily calculate the interest amount foir the CC account. The features of this calculator is as follows.

1- this is an excel based calculator.

2- One need to enter number of days in the month, rate of interest, opening balance and debit and credit entries of all the month.

3- All calculations are self formulad.

4- One need to fill only yellow coloums.

5- Very easy and colorful presentation.

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Aug 14, 2013

Download latest file validation utility FVU version 3.9 e-TDS software

2:23 PM 0
Download latest file validation utility FVU version 3.9 e-TDS software
Tin.nsdl has launched latest file validation utility FVU version 3.9 e-TDS software. This software FVU 3.9 is used to prepare e-TDS/TCS quarterly statements.  FVU version 3.8 and 3.9 are applicaple up to 31 August 2013. After FVU latest version 3.9 will be mandatory from 1 September 2013. There are many new faetures of latest version of FVU 3.9 which are as follows.

 • Change in validation of quarterly TDS/TCS statements are as below:

o Book entry flag should not be provided in the challan details for nil challan\nil transfer voucher for all the financial years.

o In the salary details (Form 24Q Q4 – Annexure II), if PAN provided is invalid (i.e. PANNOTAVBL, PANAPPLIED & PANINVALID), then the flag in the column “Whether tax deducted at higher rate” mandatorily needs to be “Yes” for TDS statements pertaining to FY 2013-14 onwards.

o Mandatory to mention at deductee details “Country of Residence of the deductee” in TDS statement (Form no. 27Q only – Regular and Correction) pertaining to FY 2013-14 onwards.

Change in name of the field of as below:
o In the deductee details (Form 27Q – Annexure I), name of the field “Country to which Remittance made” has been changed to “Country of Residence of the Deductee”.

o In the deductee details (Form 24Q – Annexure I), name of the field “Taxable amount of which tax deducted” has been changed to “Amount paid/Credited”.

FVU version 3.8 and 3.9 are applicable upto August 31, 2013. Further, FVU version 3.9 would be mandatory from September 01, 2013.
Download latest FVU version 3.9 from here
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Download latest Return preparation utility 3.6 for e-TDS statements

2:14 PM 0
Download latest Return preparation utility 3.6 for e-TDS statements


Tin.nsdl has launched latest return preparation utility version 3.6 for e-tds/tcs statements. This rpu 3.6 is the latest version of TDS software. This RPU 3.6 will prepare the statements pertaining to financial year 2013-14 and onwards. This rpu version 3.6 has many new features which are as follows.

Change in name of column in quarterly TDS/TCS statement as below:

o In the deductee details (Form 27Q – Annexure I), name of the column “Country to which Remittance made” has been changed to “Country of Residence of the Deductee”.

o In the deductee details (Form 24Q – Annexure I), name of column “Taxable amount of which tax deducted” has been changed to “Amount paid/Credited”.

Mandatory to quote “Country of residence of the deductee” in Form no. 27Q. Applicable for quarterly TDS/TCS statements (regular and correction) pertaining to FY 2013-14 onwards. 

Preparation of correction statement pertaining to FY 2013-14 enabled.

Incorporation of latest FVU Version 3.9 and 2.135.
Download latest version of RPU 3.6 from here
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Things to know about PAN card changes

9:35 AM 1
PAN card is an important document now days and   requires in many different transaction. Like any investment, purchase or sale of property, shares, debit or credit card, any loan etc.  So it should be updated every time. Sometimes there is a mistake with the signature or the photo of the PAN card holder. In this case, it must be updated by applying for a revised PAN card with same PAN number with the changes.

Application can be filled online at TIN website tin.nsdl.com and click request for a new PAN card and/or changes correction in PAN data form' on the NSDL website (www.tin-nsdl.com). The holder must check the box on the left where the change/correction is required.




After submission, an acknowledgement screen will be displayed. You need to take print as well as save and sign on it. Also the applicant needs to affix two passport size photos on it.
The applicant needs to provide ID proof as well as resident proof for correction in PAN Card and change in name or address.

There is a fee of Rs. 85+service tax for change request and it can be paid through demand draft, cheque, and credit/debit card or via Net banking.


 If one loses a PAN card and is applying for a new one, all the columns in the application form must be filled without ticking any box in the left margin. A copy of an FIR must also be submitted along with the form.

The acknowledgement, payment and documents should reach NSDL within 15 days of filing the online application

Aug 13, 2013

All about interest rates on saving bank account

5:56 PM 0
All about interest rates on saving bank account
Banking becomes so much necessary now a day as almost every person in India has a saving account. This term boost when banks start issuing debit and credit cards which makes banking so much convenient.

Banks give interest on saving bank balance. Earlier it used to be very low around 4% in all the banks.   RBI had deregulated the banks and can decide how much to pay on the deposit on saving account.

So now a day’s some banks offer more rate of interest than normal 4% like inducing bank, Yes Bank and Kotak Mahindra Bank and IDBI Bank  offers 5-6% rate of interest on the deposit on saving account depending on the deposit amount as there is a slab of more than 1 lakh and less than 1 lakh. 

Saving account interest calculation
 Earlier the calculation of the saving account interest was not rational as the formula was the interest rate of 4% per annum was applied against the lowest balance available in the account between the 10th and the final day of the month. But From April 2010, the calculation system changed to daily method for giving the customers full benefit of the saving account. In this method interest is given on the daily balance. Download interest on saving account calculator in excel format from here.

De regulation result
However RBI had free the banks to decide interest rate on saving account but only some small banks did it. Major players like HDFC bank, SBI, and ICICI bank did not change the interest rate on saving account and it remains same at 4%. 

But there are no big changes in the number of saving account with the big players. This means customers are not only looking rate of interest but convenience, faith, quality of service, familiar with the bank, friendly terms also means a lot to the customers.

Income tax on interest on saving account
Interest on saving account is not subject to Tax deduction at source (TDS) like fixed deposit. But it doesn’t mean that interest on saving account is exempted to income tax. Interest on saving account is exempted up to Rs. 10000 a year and above this is subject to income tax.

Minimum balance
Minimum balance plays a big role in deciding with which bank you should have a saving account. Some banks has higher minimum balance requirement whereas some banks low. Like ICICI bank, HDFC bank and AXIS bank requires Rs. 10000 to be maintain monthly in saving account. Whereas Public sector banks like SBI only requires 1000 rupees. In both the cases, you will get debit card and cheque book with your account.

Minimum balance charges
There are big charges for non-maintaining minimum balance. This differs bank to bank. This may be 200-1000 rupees per quarter. Banks charges the minimum balance on quarterly basis and not monthly. So you need to maintain minimum balance on quarterly basis. Like if the balance is 30000 for full month of January, you can withdraw the entire amount for the next two month. Due dates are also matters as almost every bank has the different dates to calculate the minimum balance on quarterly basis.

So don’t run for extra rate of interest as there are many thin more to matter for choosing the bank for having a saving bank account with.
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