Oct 30, 2013

Stay in India would determine the residential status for going abroad for job

5:47 PM 0
Stay in India would determine the residential status for going abroad for job
Assessee needn’t be unemployed while going abroad for a job; only stay in India would determine his residential status  
 
Where status of assessee was a non-resident, fact that assessee was already employed before leaving India should not affect his residential status

Facts:

a) The assessee working in Whirlpool China filed his return of income and declared taxable income under the head 'salary'. During scrutiny assessment, he pleaded that he was out of India for 236 days and he was not liable to be taxed in India as he was non-resident during the relevant financial year;

b) The Assessing Officer did not accept the assessee's contention and made the assessment on ground that assessee was already employed in Whirlpool India prior to leaving India;

c) On appeal, the CIT(A) held that the assessee’s salary was not taxable in India. The aggrieved revenue filed the instant appeal.

The Tribunal held as in favour of assessee as under:

1) Section 6(1) read with the Explanation provides that for an individual, who has left India for employment outside India, should be treated as resident of India only if he was in India during the relevant year for 182 days or more (Anurag Chaudhary, In re (2010) 190 Taxman 296 (AAR-New Delhi));

2) A careful reading of such Explanation would show that the requirement of the Explanation is not leaving India for employment but it is leaving India for the purposes of employment outside India. For the purpose of the Explanation, an individual need not be an unemployed person who leaves India for employment outside India (British Gas India (P) Ltd. In re (2006) 155 Taxman 326 (AAR-New Delhi))

3) During the relevant financial year, the assessee's stay in India was of less than 182 days and, thus, his residential status was non-resident;

4) The assessee’s contention, that he was already employed in the Whirlpool India prior to the leaving India for working with Whirlpool China, would not affect his residential status. Therefore, the order of the CIT(A) stating that salary income of the assessee accrued and arose during his employment in China and was not taxable in India was to be upheld - ACIT V. RAJ JAIN (2013) 38 taxmann.com 133 (Delhi- Trib.)

SMS alerts charges should be use basic and not monthly basic-RBI

3:42 PM 0
The Reserve bank of India has asked the banks to charge the customers on the actual usage bank for the SMS alert instead of fixed charges per month. This will ensure the rationality of charges.

"Banks are advised to leverage the technology available with them and the telecom service providers to ensure that such (SMS) charges are levied on all customers on actual usage basis," the Reserve Bank of India said in its Second Quarter Review of Monetary Policy 2013-14.

It said fees based on actual usage are necessary to ensure reasonableness and equity in charges levied by banks. 

In March 2011, the RBI had set guidelines for banks to send online alerts to customers for all types of transactions, irrespective of the amount. However, the central bank had not issued rules on charging customers for these alerts. 

Banks started imposing SMS alerts charges around 4-5 months ago but the charges rate are different banks to bank. State bank of India also joined the race imposing Rs. 60 per month for the SMS alert. All private banks are also imposing charges for the SMS alerts on mobiles.
Tags-sms alert on mobile,bank sms alert charges,sms alert charges sbi,axis sms alert charges,icici bank sms alert charges,hdfc bank sms alert charges,

Custom imposes anti-dumping duty on paracetamol

3:07 PM 0
Custom imposes anti-dumping duty on paracetamol
Custom department has imposed anti-dumping duty on paracetamol. This is the powder of drug of which medicines are made. Anti-dumping duty is a tool with the government with which the importers need to pay additional duty for importing the specified goods. Custom department issued a notification no. 26/2013 dated 28 October 21013 regarding imposing anti-dumping duty on paracetamol.

G.S.R.       (E). – Whereas, the designated authority, vide  notification No. 14/1009/2012-DGAD, dated the 28th August, 2012, published in Part I, Section I of the Gazette of India, Extraordinary had initiated a review in the matter of continuation of anti-dumping duty on imports of paracetamol (hereinafter referred to as the subject goods) falling under tariff item 2922 29 33  of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act), originating in or exported from, People’s Republic of China (hereinafter referred to as the subject country), imposed vide notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 99/2007 dated the 3rd September, 2007  published in Part II, Section 3, Sub-section (i) of the Gazette of India, Extraordinary, vide G.S.R. No. 571 (E), dated the 3rd September, 2007.

And whereas, the Central Government had extended the anti-dumping duty on the subject goods, originating in or exported from the subject country upto and inclusive of the 2nd September, 2013 vide notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 42/2012 –Customs (ADD) dated the 19th September, 2012, published in Part II, Section 3, Sub-section (i) of the Gazette of India, Extraordinary, vide G.S.R No. 704(E), dated the 19th September, 2012.

And whereas, in the matter of review of anti-dumping duty on import of the subject goods, originating in or exported from the subject country, the designated authority vide its final findings, No. 14/1009/2012-DGAD dated the 26th August, 2013, published in Part I, Section 1, of the Gazette of India, Extraordinary, has come to the conclusion that,- 

(i)   there has been continued dumping of the subject goods from China PR and the dumping is likely to continue and increase if the anti-dumping duty is allowed to cease;

(ii)    despite the anti-dumping measures in force, the subject goods are entering the Indian market at dumped prices and both the dumping margin as well as the injury margin has remained significant, resulting in continued injury to domestic industry;

(iii) the volume of dumped import is likely to increase causing further injury to the domestic industry in the event of revocation of anti-dumping duty;
(iv)  should the present anti-dumping duties be revoked, dumping of the subject goods may in all likelihood intensify, causing further injury to the domestic industry,

and has recommended continued imposition of the anti-dumping duty against the subject goods, originating in or exported from the subject country;

Now, therefore, in exercise of the powers conferred by sub-sections (1) and (5) of section 9A of the Customs Tariff Act, read with rules 18 and 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, the Central Government, after considering the aforesaid final findings of the designated authority, hereby imposes on the subject goods, the description of which is specified in column (3) of the Table below, falling under tariff item of the First Schedule to the Customs Tariff Act as specified in the corresponding entry in column (2), the specification of which is specified in column (4) of the said Table,  originating in the countries as specified in the corresponding entry in column (5),  and exported from the countries as specified in the corresponding entry in column (6), and produced by the producers as specified in the corresponding entry in column (7), and exported by the exporters as specified in the corresponding entry in column (8), and imported into India, an anti-dumping duty at the rate equal to the amount as specified in the corresponding entry in column (9) in the currency as specified in the corresponding entry in column (11)  and as per unit of measurement as specified in the corresponding entry in column (10), of the said Table.

Tariff item
Description of goods
Country of origin
Country of export
Amount
US$/MT

2922 2933
Paracetamol  (All grades)
People’s Republic of China
People’s Republic of China
787
2922  2933
Paracetamol  (All grades)
People’s Republic of China
Any country other than People’s Republic of China
787
2922 2933
Paracetamol  (All grades)
 Any country other than People’s Republic of China
People’s Republic of China
787

2.         The anti-dumping duty imposed under this notification shall be effective for a period of five years (unless revoked, superseded or amended earlier) from the date of publication of this notification in the Official Gazette.
 
3.         The anti-dumping duty imposed under this notification shall be paid in Indian currency.
Tags-anti dumping duty,anti dumping duty on paracetamol

Oct 29, 2013

How NRIs can avoid TDS as form 15G is irrelevant

11:30 PM 0
How NRIs can avoid TDS as form 15G is irrelevant
Anil aggarwal is a NRI (Non resident Indian) living in the United states from the last 8 years. He has the interest income from India which he receives in his NRO (Non resident Ordinary) account and NRE (Non resident external) account. The interest income in NRE account is tax free but bank deducts TDS on interest income on NRO account at rate of 30%.

As per Mr. Anil Aggarwal, his total interest income is Rs. 1 lakh which is much lower than the exemption limit of income tax. Bank deducts TDS on his interest income at 30% and now he needs to file a return to claim refund in income tax.

If Mr. Anil is Indian resident, he can submit form 15G to the bank requesting not to deduct TDS as his total income less than basic exemption limit (Rs. 2 lakh).

Can he also submit Form 15G to the bank as non resident?
The answer is NO.

Form 15G and 15H
Form 15G and 15H (for senior citizen) are the forms which one can submit to the banks so that bank will not deduct TDS on interest income. Only assessee can submit these forms whose total income is less than exempted limit of income tax which is currently Rs. 2 lakhs.

But the condition is that Form 15G and 15H are only can be filed by resident Indians. In case of residents Indian, TDS threshold limit is Rs. 10000 as TDS will only be deducted if the interest income is Rs. 10000 or above.

In case of NRIs, TDS is deducted on interest income at rate of 30 %( 15% in case Tax Residency Certificate is submitted from a treaty country). There is no threshold limit on the interest income earned by NRIs as every rupee of interest attracts TDS at 30%.

What NRIs can do
Income tax law has a separate procedure if you are in the same situation as Mr. Anil. "Such persons must file an application under section 195(3) of the Income Tax Act to the jurisdictional tax officer to obtain a certificate of non-deduction or lower deduction of taxes,"

You must apply this certificate to Income tax officer in your jurisdiction and if Officer grants you the waiver, you can submit this form to the bank for non deducting TDS on interest income.


But granting waiver from income tax department is not so easy. It is all about tax officer giving grant or not. So the best way is to file income tax return and claim TDS refund.


TDS refund is only available if resident or non-resident Indian has a Permanent Account Number (PAN).
Tags-form 15g,form 15h,form 15g for nri,form 15h for nri

Deduction allowed on income from salary u/s 16 of income tax

5:52 PM 0
Deduction allowed on income from salary u/s 16 of income tax
Entertainment Allowance [Section 16(ii)]:
A deduction is also allowed under section 16(ii) in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee, who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary(exclusive of any allowance, benefit or other perquisite) or five thousand rupees whichever is less. No deduction on account of entertainment allowance is available to non-government employee.

Tax on Employment [Section 16(iii)]:
The tax on employment (Professional Tax) within the meaning of article 276(2) of the Constitution of India, leviable by or under any law, shall also be allowed as a deduction in computing the income under the head "Salaries".

It may be clarified that “Standard Deduction” from gross salary income, which was being allowed up to financial year 2004-05 is not allowable from financial year 2005-06 onwards.
Tags-section 16,section 16 of income tax,section 16 of income tax act,income tax deduction under section 16,income tax deduction u/s 16

Oct 24, 2013

How to transfer the PF account while change the job

6:13 PM 0
How to transfer the PF account while change the job
One of the important things to be taken care of when you shift jobs is the transfer of your accumulated Provident Fund (PF) amount. It is seen that in most cases, inordinate delays take place while transferring the amount, and sometimes it just does not happen. Here are a few tips which can be followed while transferring your PF when you change your job:

Track the status on the Employee Provident Fund Organization (EPFO) website: You can visit the EPFO website and track the status of your request by selecting the state of the PF office, the regional PF office where the account is maintained, the establishment code and the account number. The extension code field is normally left blank.

E-Passbook to be generated for old and new accounts: The new initiative of the EPFO enabling generation of E-Passbook will help in giving you the exact status of the PF transfer. There may be a delay in you getting your passbook, but this will be intimated to you via SMS when it is ready for download. Remember that you will not be able to download the passbook for more than one account with the same organization.

Find out where the transfer is stuck: In a PF transfer, normally the new employer, the sending PF office and the receiving PF office are involved. In some cases the sending and receiving offices will be the same. When you wished to effect the transfer, you would have submitted Form 13 to your new employer. Ask for an acknowledgement of this form submission to the receiving PF office from your new employer. You can use this to follow up with the receiving PF office. You can also consider meeting the PF officials in person, although this may not always be possible. Sometimes, your PF may have been with the old company's PF Trust. In this case, you should follow up with your old employer for the same.

Document your grievance: The EPFO has an online tool for raising grievances called the Grievance Management System. If you are unsure about the status of your PF transfer, you must raise separate grievances with both the sending PF office as well as the receiving PF office. You will be provided with a grievance number, which you must carefully preserve

Although there has not been a good track record for this online process, it is recommended that this is done as the first step. If you do not get a response to this, you can send a physical letter to the concerned PF office with details of your grievance and reference to the online grievance reference number through speed post. Do remember to inform both the new employer as well as the old employer of this process.

Use of Right to Information (RTI) Act: As the next step, you can use RTI and send an application to the Public Information Office under the concerned PF office. The application must be accompanied by a postal order for Rs. 10 favouring the respective Accounts office. As there is no fixed format for the application, you can briefly explain the background of your case as well as give references to all your previous complaints. Attach copies of such earlier correspondence, wherever possible. If there is an absence of response under this within 30 days of filing the application, you can opt for an appeal process under the RTI.

There are many employees who prefer to withdraw their PF balance when they shift jobs rather than transfer the amount. This is not recommended, as you will be losing out on the compounding benefit of the balance which has already been accumulated. However, if you choose to withdraw the amount, and find issues in this as well, you may follow the same steps as above - check with the old employer, raise a grievance online with the concerned PF office, document the grievance and then use RTI if needed.

The EPFO is taking positive steps by computerizing processes in phases and deploying facilities like E-Passbook and the Grievance Management system. However, remember that these facilities are of no use unless you personally take interest in tracking your money and getting it back. As it is your hard earned money, you must take every effort to protect and safeguard it.

Oct 23, 2013

Insurance for online fraud coming to India

11:00 PM 0
This is the time of uncertainty. We want get insured for almost all the things like life, health, vehicles, stock, property and so on. So what’s about frauds especially online fraud? There is a big rise in online frauds in recent times. So National Payments Corporation of India (NPCI) is planning to provide insurance for these kinds of transactions.

In this context, NPCI will tie up with General Insurance for providing insurance which called Request for Proposal (RFP). This insurance will cover up both domestic as well as international transactions which are done by swiping a card, PIN- based transactions on ATMs or points of sale and e- commerce transactions with two- step authentication.

There is very hard to get money back in the financial cyber-fraud as according to data, 41% of the people who lost their money with cyber-fraud didn’t get a penny returned. So this is a big thing to worry as people want to shop online and cyber-fraud is always a big threat to them.

There are many advertise issued by web like what to do and what not to do in respect of online purchasing but technology gives immense power to hackers too to have a one step ahead.

The NPCI insurance cover will be over and above any policy taken by a member- bank. The policy will cover compromised and disputed transactions carried on the National Financial Switch (which facilitates inter- bank ATM transactions) ATM Network. It will also cover disputed transactions on the NFS Network. The RFP issued by NPCI is to identify and appoint the general insurer for providing insurance cover for fraudulent transactions that result in financial loss to the customers of NFS members or sub- members; also for non- bank ATM operators.

In the case of disputed transaction with debit or credit card, the responsibility is with the customer to prove he is not at fault.  As long as he doesn’t prove, the responsibility belongs to him.

The best way to escape this is opt for debit or credit card with zero-liability features which is provided by big players like Visa and MasterCard. Rupay card will also provide this feature at the yearend as per official statement.
Tags-insurance for online fraud,insurance for cyber fraud,cyber fraud insurance

Oct 22, 2013

Section 80E deduction for interest on loan for education for asst year 2014-15

6:24 PM 1
Section 80E deduction for interest on loan for education for asst year 2014-15
Deduction in respect of interest on loan taken for higher education (Section 80E):

Section 80E allows deduction in respect of payment of interest on loan taken from any financial institution or any approved charitable institution for higher education for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or his children or the student for whom he is the legal guardian.

The deduction shall be allowed in computing the total income for the Financial year in which the employee starts paying the interest on the loan taken and immediately succeeding seven Financial years or until the Financial year in which the interest is paid in full by the employee, whichever is earlier.

For the purpose of this section -
(a) "approved charitable institution" means an institution established for charitable purposes and approved by the prescribed authority section 10(23C), or an institution referred to in section 80G(2)(a);

(b) "financial institution" means a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;

(c) "higher education” means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so;
Tags-section 80e,section 80e of income tax act,section 80e of income tax,income tax section 80e,section 80e deduction income tax,income tax deduction under section 80e,income tax deduction for interest on education,education loan deduction under section 80e

How to claim lease equalization charges as per income tax act

5:53 PM 0
How to claim lease equalization charges as per income tax act
ITAT devises formula for claiming lease equalization charges – gap of annual lease charges and depreciation as per Income-tax Act  
 
While allowing deduction on account of lease equalization charges, only difference between annual lease charge of leased assets and depreciation allowed on said leased asset under the Income-tax Act (the I-T Act) should be taken into consideration

The Tribunal held as under:

1) The concept of lease equalization charge could also be followed for the purpose of computing the total income under the I-T Act. However, the same has to be done with proper care and caution, otherwise it might result in absurdity and give misleading result;

2) In the instant case the relevant transactions were treated as finance lease transaction and, the depreciation allowed as per the rates prescribed in the I-T Act could be more than the depreciation claimed by the assessee at the rate prescribed under the Companies Act;

3) For example, the assessee might be entitled to claim depreciation at 100 per cent on the leased assets in the first year itself under the I-T Act whereas in the books of account, it might have claimed depreciation on the said leased assets under the Companies Act at the rate of 10 per cent;

4) In such a case if the annual leasing charge was equivalent to 30 per cent of the value of leased assets, the assessee would debit its profit and loss account by lease equalization charges to the extent of 20 per cent of the value of asset as per the guidance note issued by the ICAI;

5) If the lease equalization charges so debited were to be allowed as deduction while computing the total income of the assessee under the I-T Act in addition to 100 per cent depreciation already allowed, the assessee would get the deduction of 120 per cent of the value of asset in the first year itself and the very purpose of adopting the concept of lease equalization would be defeated. This would result in absurdity and give misleading results;

6) It was, therefore, necessary that while allowing deduction on account of lease equalization charges for the purpose of computing total income under the I-T Act, the difference between the annual lease charge of the leased assets and depreciation allowed on the said leased asset under the I-T Act should be taken into consideration - INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD V. DY.CIT (2013) 38 taxmann.com 40 (Mumbai - Trib.)

Custom circular about Applicable CVD on steam coal imported from Indonesia

2:04 PM 0
Custom circular about Applicable CVD on steam coal imported from Indonesia
Custom department has issued a circular no. 41/2013 dated 21 October 2013 about applicable CVD on steam coal imported from Indonesia under FTA. Full circular is as under.

Subject:  Applicable CVD on Steam Coal imported from Indonesia under FTA notification No. 46/2011-Customs-reg.  
I am directed to invite your attention to the above mentioned subject.

2.         Under notification No. 12/2012-Customs, dated 17-03-2012 (S. No. 123 of the Table), Steam Coal falling under sub-heading 27011920 attracts basic customs duty (BCD) at 2% and countervailing duty (CVD) at 2%.  Steam Coal imported from Indonesia enjoys preferential BCD @ 0% under S. No. 207 of notification No. 46/2011-Customs, dated 1st June 2011 (India-ASEAN FTA). In this connection, a doubt has been raised whether an importer, while availing of the BCD exemption @ 0% under FTA (notification No. 46/2011-Customs), can simultaneously avail of the concessional CVD @ 2% as per notification No.12/2012-Customs, or he has to pay the CVD at 6%, which is the rate of excise duty applicable on Steam Coal when Cenvat facility has not been availed of.

3.         The matter has been examined by the Ministry. Under the Free Trade Agreement (FTA), the preference / concession is extended only in respect of BCD. All other duties, including CVD are charged as applicable to similar imports from other countries. The CVD on an imported article is levied at a rate equal to the excise duty leviable on a like article, if produced or manufactured in India. However, at times, under a notification issued under section 25(1) of the Customs Act, 1962, CVD is levied at a rate which is lower than the rate of excise duty leviable on the like domestic article.

4.         In the present case, the excise duty applicable on Steam Coal is 6%, if CENVAT benefit is availed of and 1% if the CENVAT benefit is not availed of.  Normally, Steam Coal will suffer 6% CVD, as the condition of non-availment of cenvat benefit cannot be satisfied in respect of imported goods. However, in the Budget 2013-14, as a conscious policy decision, it was decided to levy 2% CVD both on steam coal and bituminous coal. This is the general applied rate of CVD on all imports of steam coal and bituminous coal regardless of the excise duty leviable on like domestic coal.  No such condition has been laid down that an importer cannot avail of this concessional CVD of 2% if he has availed of the concessional BCD on steam coal under another notification.

5.         It is therefore clarified that an importer while availing of BCD exemption on steam coal under FTA notification No. 46/2011-Cus can simultaneously avail of concessional CVD at 2% under notification No. 12/2012-Cus.

6.         Difficulties, if any, faced in the implementation of above instructions may be brought to the notice of the Ministry at an early date.
Tags-custom circular no. 41/2013,custom circular 41,custom circular 41/2013,cvd on steam coal,steam coal cvd

Oct 21, 2013

Income tax deduction under section 80C for Asst year 2014-15

5:54 PM 1
Income tax deduction under section 80C for Asst year 2014-15
Deduction in respect of Life insurance premia, deferred annuity, contributions toprovident fund, subscription to certain equity shares or debentures, etc. (section 80C).

A. Section 80C, entitles an employee to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit ofRs.1,00,000/-:


(1) Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual.

(2) Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cashpayment in lieu of the payment of the annuity;

(3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary;

(4) Any contribution made :
(a) by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies;

(b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children;

[The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E) dated 3.11.05]

(c) by an employee to a Recognized Provident Fund;

(d) by an employee to an approved superannuation fund;

It may be noted that "contribution" to any Fund shall not include any sums in repayment of loan or advance;

(5) Any subscription :-
(a) to any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf.

[The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E) dated 3.11.05and National Saving Certificate (IXth Issue) vide Notification . G.S.R. 848 (E), dated the29th November, 2011, publishing the National Savings Certificates (IX-Issue) Rules, 2011 G.S.R. 868 (E), dated the 7th December, 2011, specifying the National Savings Certificates IX Issue as the class of Savings Certificates F No1-13/2011-NS-II r/w amendent Notification No.GSR 319(E), dated 25-4-2012]

(6) AAny sum paid as contribution in the case of an individual, for himself, spouse or any child,

a. for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India;

b. for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to section 10 (23D) and as notified by the Central Government.

[The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated 3.11.05.]

(7) Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify;

[The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E) dated 3.11.05 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006 ]

(8) Any subscription made to any units of any Mutual Fund, of section 10(23D), or from the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002 under any plan formulated in accordance with any schemeas the Central Government, may, by notification in the Official Gazette, specify in this behalf;

[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

The investments made after 1.4.2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C.
(9) Any contribution made by an individual to any pension fund set up by any Mutual Fund referred to in section 10(23D), or, by the Administrator or the specified company defined in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

(10) Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(11) Any subscription made to any such deposit scheme, as the Central Government may, by notification in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.

[The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No.37(E), dated 11.01.2007, for the purposes of Section 80C(2)(xvi)(a)].

(12) Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it has not been used for assessee's own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing Board etc.

The deduction will also be allowable in respect of re-payment of loans borrowed by an assessee from the Government, or any bank or Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act.

The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall  also be covered. Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out. Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property.

Where the house property in respect of which deduction has been allowed under these provisions is transferred by the tax-payer at any time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xviii), no deduction under these provisions shall be allowed in respect of such sums paid in such previous year in which the transfer is made and the aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly.

(13) Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.

Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes.

It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.

(14) Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution.


(15) Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company.


(16) Investment as a term deposit for a fixed period of not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes.

[The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28.7.2006]

(17) Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf.

(18) Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004.

(19) Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.
B. Section 80C(3) & 80C(3A) states that in case of Insurance Policy other than contract for  a deferred annuity the amount of any premium or other payment made is restricted to:

Policy issued before 1st April 2012
20% of the actual capital sum assured
Policy issued on or after 1st April 2012
10% of the actual capital sum assured
Policy issued on or after 1st April 2013 * - In cases of
persons with disability or person with severe disability
as per Sec 80 U or suffering from disease or ailment as
specified in Sec 80DDB
15% of the actual capital sum assured
Actual capital sum assured in relation to a life insurance policy means the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account –

i. the value of any premium agreed to be returned, or

ii. any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy by any person

Oct 20, 2013

Section 80U income tax deduction with respect of disability

10:26 PM 0
Section 80U income tax deduction with respect of disability
 Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person withdisability, there shall be allowed a deduction of a sum of fifty thousand rupees. However, where such individual is a person with severe disability, a higher deduction of one lakh rupees shall be allowable.

DDOs should note that 80DD deduction is in case of the dependent of the employee whereas 80U deduction is in case of the employee himself. However under both the Sections the employee shall furnish to the DDO following:

1. A copy of the certificate issued by the medical authority as defined in Rule 11A(1) in the prescribed form as per Rule 11A(2) of the Rules. The DDO has to allow deduction only after seeing that the Certificate furnished is from the Medical Authority defined in this Rule and the same is in the form as mentioned therein.

2. Further in cases where the condition of disability is temporary and requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority as in 1 above and furnished before the DDO.


3. For the purposes of section 80DD and 80 U some of the terms defined are as under:-
(a) “Administrator” means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 200 ;

(b) “dependant” means—
(i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;

(ii) in the case of a Hindu undivided family, a member of the Hind undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has
not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year;
                                                                                                                                                                    
(c) “disability” shall have the meaning assigned to it in clause (i) of section 2 of thePersonswith Disabilities (Equal Opportunities, Protection of Rights and Full
Participation) Act, 1995 and includes “autism”, “cerebral palsy” and “multiple disability” referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act,1999;

(d) “Life Insurance Corporation” shall have the same meaning as in clause (iii) of subsection(8) of section 88;

(e) “medical authority” means the medical authority as referred to in clause (p) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or such other medical authority as may, by notification, be specified by the Central Government for certifying “autism”, “cerebral palsy”, “multiple disabilities”, “person with disability” and “severe disability” referred to in clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

(f) “person with disability” means a person as referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation)Act, 1995 or clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

(g) “person with severe disability” means—
(i) a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995; or

(ii) a person with severe disability referred to in clause (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

(h) “specified company” means a company as referred to in clause (h) of section 2 of
The Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.
Tags-section 80u of income tax,section 80u deduction,deduction u/s 80u

Section 80CCC deduction in income tax on salary

10:15 PM 0
Section 80CCC deduction in income tax on salary
Section 80CCC allows an employee deduction of an amount paid or deposited out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the Fund referred to in section 10(23AAB). However, the deduction shall exclude interest or bonus accrued or credited to the employee's account, if any and shall not exceed Rs. 1 lakh.

However, if any amount is standing to the credit of the employee in the fund referred to above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the interest or bonus accrued or credited to this account due to the reason of

(i) Surrender of annuity plan whether in whole or part
(ii) Pension received from the annuity plan

then the amount so received during the Financial Year shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax.

Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.
Tags-section 80ccc,section 80ccc of income tax,section 80ccc of income tax act,income tax section 80ccc deduction,deduction under section 80ccc

Oct 18, 2013

Leave travel concession LTC exemption rule 2B u/s 10(5) of income tax

5:38 PM 0
Leave travel concession LTC exemption rule 2B u/s 10(5) of income tax
The following are the important points, to be taken into consideration, for claiming exemption u/s 10(5) of the Act read with Rule 2B of the Rules:

1. Definition - Value of LTC received by or due to an individual from his present or previous employer, as the case may be, for himself and his family in connection with his proceeding on leave to any place in India or to any place in India after retirement or termination from/of service.

2. Number of Trips – The exemption shall be available in respect of 2 journeys performed in the block of 4 calendar years.

• Without performing any journey and incurring expenses thereon, no exemption can be claimed.

• The quantum of exemption will be subject to the following maximum limits for journeys performed on or after 01.10.1997

S no.
Journey Performed by
Exemption Limit
1
Air
Air Economy fare of the national carrier (Air India) by
the shortest route to the place of destination
2
Places connected by rai and journey performed by any mode other than by air.
First Class Air conditioned rail fare by the shortest route
to the place of destination
3
Place of origin and
destination or part
thereof not connected by
rail.
a) Where public transport system exists, first class or
deluxe class fare on such transport by the shortest route to the place of destination.
b) Where no public transport system exists, first class A/C
rail fare, for the distance of the journey by the shortest
route, as if the journey has been performed by rail

o This exemption is limited to the actual expenses incurred on the journey which in turn is strictly limited to expenses on air fare, rail fare and bus fare only. No other expenses like local conveyance, sight-seeing expense etc., shall qualify for exemption.

o Where the journey is performed in a circuitous route, the exemption is limited to what is admissible by the shortest route. Likewise, where the journey is performed in a circular form touching different places, the exemption is limited to what is admissible for the journey from the place of origin to the farthest point reached in India, by the shortest route.

• Restriction on children – The exemption will not be available to more than 2 surviving children of an individual born after 01.10.1998. This restriction shall not apply in respect of children born before 01.10.1998 and also in case of multiple births after one child. It may be noted that section 2 (15B) of the Act defines a child as includes a step child and an adopted child of the individual.

• Definition of Family – As per the provisions of the Rules, family means:
o Spouse and children of the individual.
o Parents, brothers and sisters who are wholly or mainly dependent on the individual.

• Foreign Travel – As per the provisions of the Rules, exemption is not allowable in case of travel abroad.

• Obligation of the employer –The employer has to satisfy the obligation that leave travel (fare) concession is not taxable in view of section 10(5) the employer is not only required to be satisfied about the provisions of the said clause but also to keep and preserve evidence in support thereof.

Some important points to be considered are as under:
1. It is uniform for all employees

2. Where an employee does not avail LTC, either one or on both the occasions during the block of 4 calendar years, the value of LTC first availed during the first calendar year of the immediately succeeding block shall be eligible for exemption in lieu of exemption not availed during the preceding block Only one trip can be carried forward to be availed in the immediately succeeding block.

3. Quantum of Exemption – The basic rule is that quantum of exemption will be limited to the actual expense incurred on the journey.

Any Leave encashed for the purpose of Leave travel or home travel concession is taxable.
Tags-ltc exemption,leave travel concession,leave travel allowance,ltc income tax exemption,income tax exemption on ltc

Income tax Reverse Mortgage scheme 2013

3:53 PM 0
Income tax Reverse Mortgage scheme 2013
The income tax department issued a notification no. 79/2013 dated 7 October 2013 about Reverse Mortgage amendment scheme 2013. Full notification is as under.

S.O. 3034 (E).─In exercise of the powers conferred by clause (XVI) of section 47 of the Income-tax Act, 
1961 (43 of 1961), the Central Government hereby makes the following Scheme to amend the Reverse Mortgage Scheme, 2008, namely:— 

1. (1) ThisScheme may be called the Reverse Mortgage (Amendment) Scheme, 2013. 

 (2) It shall come into force on the date of its publication in the Official Gazette. 

2. In the Reverse Mortgage Scheme, 2008, - 
(1) in paragraph (2), after clause (a), the following clause shall be inserted, namely:- 

“(ab) “annuity sourcing institution” means Life Insurance Corporation of India or any other insurer registered 
with the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of 
the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);” ; 

(2) in paragraph (3), in sub-paragraph (2), for the word, brackets and number “sub-rule (1)”, the word, brackets and number “sub-paragraph (1)” shall be substituted; 

(3) for paragraph(5), the following paragraph shall be substituted, namely:- 

(4) “5. Disbursement of loan. - The approved lending institution may disburse the loan, - 
(a) to the reverse mortgagor by any one or more of the following modes, namely:- 

 (i) periodic payments to be decided mutually between the approved lending institution and the reverse mortgagor; 

 (ii) lump-sum payment in one or more tranches, to the extent that the aggregate of the amount disbursed as lump sum payments does not exceed fifty per cent of the total loan amount sanctioned; or 

(b) in part or in full, to the annuity sourcing institution for the purposes of periodic payments by way of annuity to the reverse mortgagor.”; 

(4) for paragraph (6), the following paragraph shall be substituted, namely:- 

“6. Period of reverse mortgage loan.- The loan under reverse mortgage shall not be granted for a period exceeding,- 

(i) twenty years from the date of signing the agreement by the reverse mortgagor and the approved lending institution, 

where the loan is disbursed in accordance with clause (a) of Paragraph 5; 

(ii) the residual life time of the borrower, where the loan is disbursed in accordance with clause (b) of Paragraph 5.”. 
Tags-reverse mortgage scheme,reverse mortgage amendment scheme,reverse mortgage amendment scheme 2013,reverse mortgage scheme 2013

Oct 17, 2013

Bounced cheque fine can't be more than double

5:21 PM 0
Bounced cheque fine can't be more than double
The Honorable Supreme Court has held that courts can not impose a fine more than double the amount of cheque in the case of bounced cheques. The court said that this limit is invoidable and must be respected.

"First and foremost is the fact that the power to levy fine is circumscribed under the statute to twice the cheque amount. 

Court held that even in the case of the accused favored for non imprisonment, the fine can not be more than double. 

In a recent case, Calcutta High court ordered to pay 149500 as against the bounced cheque of Rs. 69500. In this case, the trail court has sentenced six months imprisonment with Rs. 80000 compensation. The accused approaches to Calcutta high court where imprisonment weived and guide to pay an additional 69500 Rs. as compensation.

Accused moved a mercy plea before the Supreme court that he is unable to pay the amount. Court set aside High court order and reduced the amount from 69500 to Rs. 20000. 

"The High Court has, in the case at hand, obviously overlooked the statutory limitation on its power to levy a fine," the bench said 

Oct 16, 2013

No TDS u/s 194 I on one time payment of lease premium to acquire a leashold land

5:59 PM 1
No TDS u/s 194 I on one time payment of lease premium to acquire a leashold land
Where payment of lease premium was not made on periodical basis but it was one-time payment to acquire land with right to construct a commercial complex thereon, section 194-I had no application on deposit of such lease premium

In the instant case the Mumbai Development Authority offered certain land on lease to assessee for a period of 80 years for certain consideration comprising of lease premium. The assessee paid said premium in two installments. The AO held that the assessee was liable to deduct tax at source on lease premium under section 194-I. The CIT (A) held in favour of assessee. Aggrieved revenue filed the instant appeal.

The Tribunal held in favour of assessee as under:

1) In Durga Das Khanna v. CIT (1969) 72 ITR 796 (SC), the Supreme Court held that the onus was on the Revenue to demonstrate that premium has been camouflaged as advance rent and the AO, in the instant case has not brought on record any material to indicate that the rent has been suppressed and the premium has been inflated.

2) Thus, undoubtedly premium in relation to leased land was on capital account not liable to be classified as revenue outgoing;

3) Since the payment of lease premium was not to be made on periodical basis but it was one- time payment to acquire land with right to construct a commercial complex thereon, section 194-I was not applicable

4) Therefore, the impugned sum does not constitute advance rent, but it was to be classified as capital expenditure not falling within the operative realm of section 194-I - ITO v. Indian Newspapers Society (2013) 37 taxmann.com 401 (Delhi - Trib.)

Oct 15, 2013

No TDS on FTS if service utilized for business carried abroad

9:05 PM 0
No TDS on FTS if service utilized for business carried abroad
In the instant case, two moot questions were raised before the ITAT which were as under:

A. Liability of tax deduction on overseas commission

B. Whether website development charges were deductible as revenue expenditure ?

On first issue, it held in favour of assessee as under:

1) Commission paid to non-residents for services rendered outside India does not accrue or arise in India;

2) Hence, no TDS was deductible from such commission and such commission couldn’t be disallowed under section 40(a)(i);

3) Even if services rendered by the non-resident did fall within the definition of "fees for technical services, the commission paid would not be taxable in India as clause(b) of section 9(1)(vii) would save the assessee.

On second issue, it held in favour of assessee as under:

1) Expenses incurred for upgradation of an existing website ought to be distinguished from expenses for development of a new website;

2) The former was revenue expenditure and the latter was capital expenditure, resulting in creation of an intangible asset;

3) Expenditure on upgradation of existing website was equivalent to maintenance of an existing asset. Thus, it was revenue expenditure - MAHINDRA HOLIDAYS & RESORTS INDIA LTD. V. JCIT (LTU) (2013) 38 taxmann.com 207 (Chennai - Trib.)

Oct 14, 2013

Income tax rule 3(2) on perquisite on motor car provided by employer

10:20 PM 0
Income tax rule 3(2) on perquisite on motor car provided by employer
Perquisite on Motor car provided by the Employer [ Rule 3(2)]:
(1) If an employer provides motor car facility to his employee the value of such perquisite shall be :

a) Nil, if the motor car is used by the employee wholly and exclusively in the performance of his official duties.

b) Actual expenditure incurred by the employer on the running and maintenance of motor car including remuneration to chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged from the employee for such use (in case the motor car is exclusively for private or personal purposes of the employee or any member of his household).

c) Rs. 1800/- (plus Rs. 900/-, if chauffeur is also provided) per month (in case the motor car is used partly in performance of duties and partly for private or personal purposes of the employee or any member of his household if the expenses on maintenance and running of motor car are met or reimbursed by the employer). However, the value of perquisite will be Rs. 2400/-(plus Rs. 900/-, if chauffeur is also provided) per month if the cubic capacity of engine of the motor car exceeds 1.6 litres.

d) Rs. 600/- (plus Rs. 900/-, if chauffeur is also provided) per month (In case the motor car is used partly in performance of duties and partly for private or personal purposes of the employee or any member of his household if the expenses on maintenance and running of motor car for such private or personal use are fully met by the employee). However, the value of perquisite will be Rs. 900/- (plus Rs. 900/-, if chauffeur is also provided) per month if the cubic capacity of engine of the motor car exceeds 1.6 litres.

(2) If the motor car or any other automotive conveyance is owned by the employee but the actual running and maintenance charges are met or reimbursed by the employer, the method of valuation of perquisite value is different and as below:

a) where the motor car or any other automotive conveyance is owned by the employee but actual maintenance & running expenses (including chauffeur salary, if any) are met or reimbursed by the employer, no perquisite shall not be chargeable to tax if the car is used wholly and exclusively for official purposes. However following compliances are necessary:

􀂾 The employer has maintained complete details of the journey undertaken for official purposes;

􀂾 The employer gives a certificate that the expenditure was incurred wholly for official duties.

However if the motor car is used partly for official or partly for private purposes then the amount of perquisite shall be the actual expenditure incurred by the employer as reduced by the amounts in c) & d) referred to in (1) above, as the case may be.

Normal wear and tear of the motor shall be taken at 10 % per annum of the actual cost of the
motor car.