Dec 13, 2014

Condition for claiming deduction of interest on loan against income from house properrty

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Condition for claiming deduction of interest on loan against income from house properrty
Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property [Section 24(b)]:

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-

(i) the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.

(ii) the quantum of deduction allowed as per table below:

Purpose of borrowing capital

Date of borrowing capital

Maximum Deduction allowable

Repair or renewal or reconstruction of the house

Anytime
30000.00
Acquisition or construction of the house

Before 01.04.1999

30000.00
Acquisition or construction of the house

On or after 01.04.1999

Rs. 1,50,000/-
(upto AY 2014-15)

Rs. 2,00,000/-
(w. e. f. AY 2015-16)


(a) The acquisition or construction of the house should be completed within3 years from the end of the FY in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.

(b) Further any prior period interest for the FYs upto the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs.

(c) The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

Adjustment for Excess or Shortfall of Deduction:
The provisions of Section 192(3) allow the deductor to make adjustments for any excess or shortfall in the deduction of tax already made during the financial year, in subsequent deductions for that employee within that financial year itself.

Salary Paid in Foreign Currency:
For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the “Telegraphic transfer buying rate” of such currency as on the date on which tax is required to be deducted at source ( see Rule 26).

Dec 12, 2014

TDS on salary relief when salary paid in arrears or advance

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TDS on salary relief when salary paid in arrears or advance
Relief When Salary Paid in Arrear or Advance:
3.4.1 Under section 192(2A) where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body is entitled to the relief under Section 89(1) he may furnish to the person responsible for making the payment referred to in Para (3.1), such particulars in Form No. 10E duly verified by him, and thereupon the person responsible, as aforesaid, shall compute the relief on the basis of such particulars and take the same into account in making the deduction under Para(3.1) above.

3.4.2 With effect from 1/04/2010 (AY 2010-11), no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in section 10(10C)(i) (read with Rule 2BA), a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under section 10(10C) in respect of such, or any other, assessment year.

Dec 11, 2014

TDS on salary for FY 2014-15 circular dated 10 December 2014

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TDS on salary for FY 2014-15 circular dated 10 December 2014
CBDT issued a circular no. 17/2014 dated 10 December 2014 about TDS on salary during the financial year 2014-15 u/s 192 of income tax act. Full circular is as under.

Reference is invited to Circular No.08/2013 dated 25.10.2013 whereby the rates of deduction of income-tax from the payment of income under the head "Salaries" under Section192 of the Income-tax Act, 1961 (hereinafter ‗the Act‘), during the financial year 2013-14,were intimated. The present Circular contains the rates of deduction of income-tax from thepayment of income chargeable under the head "Salaries" during the financial year 2014-15 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules).

The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax
Department- www.incometaxindia.gov.in.
2. RATES OF INCOME-TAX AS PER FINANCE (No. 2) ACT, 2014:

As per the Finance (No. 2) Act, 2014, income-tax is required to be deducted under Section 192 of
the Act from income chargeable under the head "Salaries" for the financial year 2014-15 (i.e.
Assessment Year 2015-16) at the following rates:
A:Normal rate of tax

Total Income
Rate of tax
Where the total income does not exceed Rs.
2,50,000/-.
NIL
Where the total income exceeds Rs. 2,50,000
but does not exceed Rs. 5,00,000/-.
10 per cent of the amount by which the
total income exceeds Rs. 2,50,000/-
Where the total income exceeds Rs.
5,00,000/- but does not exceed Rs. 10,00,000/-
Rs. 25,000/- plus 20 per cent of the
amount by which the total income
exceeds Rs. 5,00,000/-.
Where the total income exceeds Rs.
10,00,000/-.
Rs. 1,25,000/- plus 30 per cent of the
amount by which the total income
exceeds Rs. 10,00,000/-

B. Rates of tax for every individual, resident in India, who is of the age of sixty years or
more but less than eighty years at any time during the financial year:
Total Income
Rate of tax
Where the total income does not exceed Rs.
3,00,000/-
NIL
Where the total income exceeds Rs. 3,00,000
but does not exceed Rs. 5,00,000/-
10 per cent of the amount by which the
total income exceeds Rs. 3,00,000/-
Where the total income exceeds Rs. 5,00,000/-
but does not exceed Rs. 10,00,000/-
Rs. 20,000/- plus 20 per cent of the
amount by which the total income
exceeds Rs. 5,00,000/-.
Where the total income exceeds Rs. 10,00,000/-
Rs. 1,20,000/- plus 30 per cent of the
amount by which the total income
exceeds Rs. 10,00,000/-


C. In case of every individual being a resident in India, who is of the age of eighty years or
more at any time during the financial year:

Total Income
Rate of tax
Where the total income does not exceed Rs.
5,00,000/-
NIL
Where the total income exceeds Rs. 5,00,000
but does not exceed Rs. 10,00,000/-
20 per cent of the amount by which the
total income exceeds Rs. 5,00,000/-
Where the total income exceeds Rs. 10,00,000/-
Rs. 1,00,000/- plus 30 per cent of the
amount by which the total income
exceeds Rs. 10,00,000/-
2.2 Surcharge on Income tax:
The amount of income-tax shall be increased by a surcharge @10% of the income-tax on payments to
an individual taxpayer, if the total income of the individual exceeds Rs 1 crore during FY 2014-15
(AY 2015-16). However the amount of Surcharge shall not exceed the amount by which the
individual‘s total income exceeds Rs 1 crore and if surcharge so arrived at, exceeds such amount
(assessee‘s total income minus one crore) then it will be restricted to the amount of total income
minus Rupees one crore.

2.3.1 Education Cess on Income tax:
The amount of income-tax including the surcharge if any, shall be increased by Education Cess on
Income Tax at the rate of two percent of the income-tax.
2.3.2 Secondary and Higher Education Cess on Income-tax:
An additional education cess is chargeable at the rate of one percent of income-tax including the
surcharge if any, but not including the education cess on income-tax as in 2.3.1.
Download full circular

Dec 5, 2014

Bank is liable for ATM fraud withdrawl

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Bank is liable for ATM fraud withdrawl
There are instances of unscrupulous bank officials defrauding depositors. Here is a case of how Bank of India officials violated all banking norms, resulting in a customer’s account being wiped clean through illegal ATM withdrawals.

Bilquis Bano had opened a savings account with Bank of India’s Satna Branch in Madhya Pradesh. She had another account with the same bank where her salary used to be credited.

When Bano attempted to withdraw some cash from her account on June 22, 2009, she was informed by the bank that there was no balance in it. On checking the bank statement, she found over Rs. 4 lakh had been withdrawn from the account on several dates between April 20 and June 18, 2009. The matter was reported to the police but no one was arrested.

The bank claimed the ATMcumdebit card had been collected by Bano’s representative, while the PIN had been mailed to her on March 22, 2007. She denied having collected the card or having authorised anyone else to do so on her behalf. She also stated she had never received the PIN.

Bano filed a complaint before the District Forum to direct the bank to credit her account with the amount fraudulently withdrawn. She also sought compensation of Rs. 2.50 lakh. The bank contested, alleging Bano’s companion had covered his face with acloth while withdrawing money from the ATM, leaving a balance of only Rs. 925. The forum directed the bank to credit her account with around Rs. 4.30 lakh along with nine per cent interest and pay a compensation of Rs. 50,000.

The bank challenged this order before the Madhya Pradesh State Commission. Bano also appealed for enhancement of compensation. The State Commission found the actual amount siphoned off from the account was Rs. 4.55 lakh. The bank was ordered to credit this amount to Bano’s account but the Commission set aside the compensation of Rs. 50,000.

The bank filed a revision petition in the National Commission, which observed the crux of the dispute was whether or not the ATM card had been received by Bano or her representative.

The bank had admittedly not handed over the card to Bano but could not produce any letter from her authorising someone to collect the card on her behalf. The bank could not produce any acknowledgment to show Bano had received the card. It could not even produce the acknowledgment for receipt of the PIN which it claimed had been mailed to Bano. Hence, the Commission concluded the ATM card had been handed over by the bank to some unauthorised person, which constituted a deficiency in service.

The Commission indicted the bank for having permitted the fraud to take place due to its own negligence on two counts. First, by handing over the card to an unknown person whose identity could not be established. Second, there was no proof whatsoever of the PIN having been delivered to any person at all.

Accordingly, by an order dated November 25, 2014 Justice V K Jain dismissed the bank’s revision, holding it devoid of merit.

Limit of pre paid payment instruments has been raised to 1 Lakh

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Limit of pre paid payment instruments has been raised to 1 Lakh
Reserve Bank of India has raised the limit of pre paid payment instruments from 50000 to 100000. RBI issued a note no. 980 dated 3 December 2014 regarding this increment of limit of pre paid payment instrument. Full note is as under.

Issuance and Operation of Pre-paid Payment Instruments (PPIs) in India- Relaxations

A reference is invited to the circular issued vide RBI/2014-2015/105 DPSS.CO.PD.PPI.No. 3/02.14.006/2014-15 July 1, 2014 on the Master Circular – Policy Guidelines on Issuance and Operation of Pre-paid Payment Instruments in India.

2. Based on a comprehensive internal review and the feedback received from the entities currently authorized to issue prepaid payment instruments, it has been considered necessary to amend certain provisions of the existing guidelines/issue additional guidelines for ensuring growth of the prepaid payment industry.

3. Amendments to existing guidelines

3.1 PPIs issued with full KYC- enhanced value

Attention is invited to Para 7.1 of the aforesaid guidelines wherein it was stated that the maximum value of any pre-paid payment instruments (where specific limits have not been prescribed including the amount transferred as per paragraph 10.2) shall not exceed Rs. 50,000/-. Para 7.2 of the guidelines highlighted that the following types of semi closed pre-paid payment instruments can be issued on carrying out Customer Due Diligence as detailed below:-

upto Rs.10,000/- by accepting minimum details of the customer provided the amount outstanding at any point of time does not exceed Rs 10,000/- and the total value of reloads during any given month also does not exceed Rs 10,000/-. These can be issued only in electronic form;

from Rs.10,001/- to Rs.50,000/- by accepting any ‘officially valid document’ defined under Rule 2(d) of the PML Rules 2005, as amended from time to time. Such PPIs can be issued only in electronic form and should be non-reloadable in nature;

upto Rs.50,000/- with full KYC and can be reloadable in nature. The balance in the PPI should not exceed Rs.50,000/- at any point of time.

The limit of PPI that can be issued under Para 7.2 (iii) has now been enhanced from Rs. 50,000 to Rs.1,00,000/- The balance in the PPI should not exceed Rs. 1,00,000/- at any point of time.

3.2 Gift Cards

The maximum validity of the gift cards has been enhanced from one year to three years. Other provisions of PPI guidelines with respect to Gift Cards will continue to be applicable.

4. Additional guidelines - introduction of new categories of PPIs issued by banks

4.1 Issue of multiple PPIs by banks from fully-KYC compliant bank accounts for dependent/family members

It has been decided to introduce a new category of open system prepaid payment instrument subject to following conditions:

Such PPIs may be issued only by loading the value from fully KYC-compliant bank account of the purchasers. Beneficiary has to be a dependent/family member.

The account holders purchasing the PPIs need to provide the minimum details (such as name, address and contact details) of the intended beneficiary/ies who are his/her dependents and family members.

Only one card can be issued to one beneficiary.

The transaction and monthly limits as applicable for cash pay-out arrangements under DMT guidelines issued from time to time (currently Rs 10,000/- per transaction with a monthly ceiling of Rs 25,000/-) will be applicable for such PPIs.

The bank may put in place mechanisms to monitor and report suspicious transactions on these PPIs to Financial Intelligence Unit India (FIU IND).

The other guidelines as applicable to open system PPIs will also be applicable to these cards.

Such PPIs shall be issued only in electronic form.

4.2 Rupee denominated PPIs issued by banks for visiting foreign nationals and NRIs

Banks are permitted to issue open system rupee denominated non-reloadable (a) PPIs to NRIs and foreign nationals visiting India & (b) PPIs co-branded with exchange houses/money transmitters (approved by RBI) to NRIs and foreign nationals visiting India subject to the following conditions:

The cards can be issued by overseas branches of banks in India directly or by cobranding with the exchange houses/money transmitters upto a maximum amount of Rs.2 lakhs by loading from a KYC compliant bank account.

Such PPIs should be activated by the bank only after the traveller arrives in India.

Cash withdrawal from such PPIs will be restricted to Rs 50,000/- per month.

The cards should be issued strictly for use in India and transactions settled in INR.

The banks should ensure compliance to relevant KYC/AML/CFT requirements issued from time to time.

An individual can hold only one card at a time and the card should be non- transferable. The issuing bank has to put in place necessary arrangements to ensure the same.

These PPIs may be used only for transactions permissible under the extant foreign exchange regulations.

Transaction history have to be maintained by the banks.

The process put in place by the bank for refund of unutilised portion of the PPI amount in India has to adhere to the extant foreign exchange regulations.

Such PPIs shall be issued only in electronic form.

5. The above changes will come into effect from the date of issue of circular. The other provisions of Master Circular dated July 1, 2014 will remain unchanged.

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

Nov 27, 2014

Modified DBTL scheme for LPG Gas cylinders

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Modified DBTL scheme for LPG Gas cylinders
 The DBTL scheme was earlier launched on 1st June 2013 and finally covered 291 districts. It required the consumer to mandatorily have an Aadhaar number for availing LPG Subsidy. The government has comprehensively reviewed the scheme and after examining the difficulties faced by the consumer substantively modified the scheme prior to launch. The modified scheme is now being re-launched in 54 districts on 15.11.2014 in the 1st Phase and in the rest of the country on 1.1.2015. The modified scheme is given as under:

Options to receive LPG subsidy
Under the modified scheme, the LPG consumer can now receive subsidy in his bank account by two methods. Such a consumer will be called CTC (Cash Transfer Compliant) once he joins the scheme and is ready to receive subsidy in the bank account. The two options are:

Option I (Primary): Wherever Aadhaar number is available it will remain the medium of cash transfer. Thus, an LPG consumer who has an Aadhaar Number has to link it to the bank account number and to the LPG consumer number.

Option II (Secondary): If LPG consumer does not have an Aadhaar number, then he can directly receive subsidy in his bank account without the use of Aadhaar number. This option which has now been introduced in the modified scheme ensures that LPG subsidy is not denied to an LPG consumer on account of lack of Aadhaar number. In this option,Either consumer canPresent bank account information (bank account holder name /account number /IFSC code) to the LPG distributor for capture in LPG database OR Present LPG consumer information (17 digit LPG consumer ID) to his bank

LPG Consumers who are already CTC prior to launch on modified DBTL
Domestic LPG Consumer who had already joined the earlier DBTL scheme by linking their Aadhaar to bank and LPG database don’t need to take fresh action for receiving subsidy as the subsidy will be transferred to their bank accounts via Aadhaar based on the previous seeding. Such CTC consumers cannot exercise Option II above.

Pricing under DBTL
In the DBTL district(s), domestic LPG cylinders will be sold to CTC domestic LPG consumers at Market Determined Price (does not include subsidy) from the date of launch of the scheme.
Amount transferred to consumer 

The total cash applicable on LPG cylinder will then be transferred to the CTC consumer for each subsidized cylinder delivered (up to the cap) as per his entitlement. 

Grace Period
Non-CTC consumers will be allowed 3 months from the date of launch of DBTL to become CTC. During this period such consumers will receive their entitlement of subsidized cylinders at the then applicable subsidized retail selling price. 

Parking Period
After the grace period of 3 months, all non-CTC LPG consumers will get an additional 3 month Parking Period, during which the sale will happen at Market Determined Price for all LPG consumers..

But for non-CTC consumers the total cash on the sale made to such consumers (as per their entitlement) shall be held back with the respective OMC to be transferred to the LPG consumers’ bank account in case consumer becomes CTC anytime during the Parking Period.

In case consumer does not become CTC during this Parking Period, the parked funds will lapse and consumer shall become ineligible to receive the parked funds and sale will continue at market determined price till consumer becomes CTC.

After the expiry of the Grace Period of 3 months, and thereafter an additional Parking Period of 3 months, all non-CTC consumers will receive cylinders at marker determined price and will not be entitled to total cash until they become CTC. When non-CTC consumers become CTC beyond the parking period they will be eligible to get one time permanent advance and total cash entitlement on balance subsidized cylinders in that financial year.

Permanent Advance
A one-time Advance will be provided to every CTC consumer joining DBTL.

The Advance will be notified, from time to time and will remain fixed for a financial year.
It will remain with the consumer till the time of termination of connection, when it will be finally adjusted.

LPG consumers who were provided permanent advance on a previous scale will not be eligible for any differential payment on account of the revision in the permanent advance.

RBI make more easy to take loans for low cost home

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RBI make more easy to take loans for low cost home
Reserve bank of India make more easy to take home loans for low cost home as allowed banks to extend loans against long term infrastructure bonds. RBI issued a note dated 27 November 2014 regarding this issue. Full note is as under.

Please refer to our circular DBOD.BP.BC.No.25/08.12.014/2014-15 dated July 15, 2014 on the captioned subject. In continuation of the same, banks are advised as under:

2. In order to provide liquidity to retail investors in such bonds, it has been decided that banks can extend loans to individuals against long-term bonds issued by them under the provisions of the above-mentioned circular. Boards of the banks should lay down a policy in this regard prescribing suitable margins, purpose of the loan and other safeguards. Further, such loans should be subject to a ceiling, say, Rs.10 lakh per borrower, and tenure of loan should be within the maturity period of the bonds. It is also clarified that banks are not permitted to lend against such bonds issued by other banks.

3. Further, in the formula for ‘Eligible Credit (EC)’ as given in paragraph 7 of the above-mentioned circular dated July 15, 2014, ‘B’ (one of the two factors of EC) has been explained as Outstanding ‘standard’ loans to Infrastructure sector (project loans) and affordable housing on the date of issuance of the bonds. On a review, it has been decided that ‘B’ should be read as Outstanding ‘standard’ loans to the Infrastructure sector (project loans) and affordable housing on the date of reporting to RBI (reporting Fridays for reserve requirements and March 31 of a year for computing priority sector obligation). Other instructions in this regard remain unchanged.

Nov 24, 2014

RBI put some conditions only with banks charge minimum balance charges

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RBI put some conditions only with banks charge minimum balance charges
Reserve bank of India put some conditions on banks with only banks can charge minimum balance penalty on non maintenance of minimum balance in saving bank account. RBI issued a direction no. 47 dated 20 November 2014 regarding this issue. Full direction is as under.

 Please refer to our circular DBOD.Dir.BC.53/13.10.00/2002-03 dated December 26, 2002 on ‘Minimum Balance in Savings Bank Accounts’ advising banks to inform customers, in a transparent manner, regarding the requirement of minimum balance in savings bank account and levy of penal charges for non-maintenance of the same at the time of opening the account.

2. In this connection, a reference is invited to paragraph 30 of Part B of First Bi-monthly Monetary Policy Statement, 2014-15 announced on April 1, 2014, regarding ‘Developmental and Regulatory Policies’ proposing certain measures towards consumer protection. One of the proposals contained therein was that banks should not take undue advantage of customer difficulty or inattention. Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to Basic Savings Bank Deposit Accounts and restore the services when the balances improve to the minimum required level. A reference is also invited to the recommendations of Damodaran Committee on customer service in banks which, inter-alia, recommended that ‘banks should inform the customer immediately on the balance in the account breaching minimum balance and the applicable penal charges for not maintaining the balance by SMS/Email/letter. Further, the penal charges levied should be in proportion to the shortfall observed’.

3. The policy announcement has been reviewed after extensive consultation with banks. Consequent to these deliberations and after taking into consideration the recommendation of Damodaran Committee, it has been decided that while levying charges for non-maintenance of minimum balance in savings bank account, banks shall adhere to the additional guidelines given in Annex. The guidelines come into effect from April 1, 2015.

4. These guidelines should be brought to the notice of all customers apart from being disclosed on the bank’s website.

5. In the meantime, all banks are advised to take immediate steps to update customer information so as to facilitate sending alerts through electronic modes (SMSs/emails etc) for effective implementation of the guidelines.

Yours faithfully

(Lily Vadera)
Chief General Manager

Annex

Levy of charges for non-maintenance of minimum balance in savings bank account shall be subject to the following additional guidelines:

(i) In the event of a default in maintenance of minimum balance/average minimum balance as agreed to between the bank and customer, the bank should notify the customer clearly by SMS/ email/ letter etc. that in the event of the minimum balance not being restored in the account within a month from the date of notice, penal charges will be applicable.

(ii) In case the minimum balance is not restored within a reasonable period, which shall not be less than one month from the date of notice of shortfall, penal charges may be recovered under intimation to the account holder.

(iii) The policy on penal charges to be so levied may be decided with the approval of Board of the bank.

(iv) The penal charges should be directly proportionate to the extent of shortfall observed. In other words, the charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account. A suitable slab structure for recovery of charges may be finalized.

(v) It should be ensured that such penal charges are reasonable and not out of line with the average cost of providing the services.

(vi) It should be ensured that the balance in the savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance.

Banks will charge more for using ATM from December

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Banks will charge more for using ATM from December
Banks will charge more for ATM withdrawal or checking your balance at ATMs from 1 December 2014. The free limit is limited to 5 in own bank ATM and above   for a financial transaction may cost you over Rs 20 and a non-financial transaction will attract over Rs 8.5 as penalty. Several banks have already announced that they will charge customers for additional transactions.

As per the directive issued by the Reserve Bank of India (RBI) dated August 14 and then on October 10, 2014, with effect from November 1, 2014, the number of free transactions at your ATMs of your own bank has been limited to 5 in a month (as against unlimited free transactions till now). In case of other bank’s ATM, the number of free transactions have been brought down from five to three (in the six metros) while it has been kept at 5 for non-metros.

The six cities that RBI has identified as metros for the same are —Mumbai, New Delhi, Chennai, Kolkata, Bangalore and Hyderabad.

“Banks are advised that at least five free transactions (inclusive of financial and non financial transactions) per month should be permitted to the savings bank account customers for use of own bank ATMs at all locations,” said the RBI directive which has put a cap of Rs 20 (plus service tax) as charge for every additional transaction.

Several banks including State Bank of India, HDFC Bank, Axis Bank have already announced that they will be levying charges on ATM usage over and above the minimum permitted by the RBI, beginning December 1, 2014. ICICI Bank has, however, not yet announced the same.

The impact
If you live in one of the metros and visit your ATM once in two days to withdraw cash then you will exceed your monthly free withdrawal limit (including own and other bank ATM) by 7 times which means that you will have to pay a penalty of over Rs 140 in the month which comes to Rs 1,680 in a year.

Ways by which you can reduce your ATM visits
There are however some ways by which bank customers seek to bring down their ATM visits and thereby avoid paying the penalty on such transactions.

Most monetary transactions and a lot of non-financial transactions such as cheque book requests, credit card payments, checking your account balance or generating a mini statement can be done by logging into the net banking account and customers can avoid visiting ATMs for such purposes.

Some banks including HDFC Bank, ICICI Bank and Axis bank offer a missed call service for non-cash transactions where the customer can call a dedicated number from their registered mobile number following which an SMS is sent by the bank. Customers can use it for balance enquiries , checking mini-statements, cheque books and making account statement requests.

All that a customer needs to do is to store the toll free numbers of his/her bank and call on it. Customers can also go for more debit card transactions rather than cash transactions as it reduces the need for cash withdrawals.

Nov 21, 2014

TDS statement filed for Q1 but not filed Q2 FY 2014-15-TRACES

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TDS statement filed for Q1 but not filed Q2 FY 2014-15-TRACES
As per the records of the Centralized Processing Cell (TDS), you have filed TDS Statements for Q1, FY 2014-15, however, no TDS Statements have been filed for Quarter 2 as of November 1, 2014.

If you are not required to submit the relevant statement, you are requested to submit a declaration by taking appropriate action as suggested under "Action to be taken" in this communication. Otherwise, your urgent attention is invited to relevant CBDT Circulars and provisions of the Income Tax Act, mandating filing of TDS Statements and Issuance of TDS Certificates downloaded from TRACES.

1. Mandatory filing of TDS Statements:

Please refer to the provisions of section 200(3) of the Income Tax Act, 1961 read with Rule 31A, which reads as follows:

Every person responsible for deduction of tax under Chapter XVII-B, shall, in accordance with the provisions of sub-section (3) of section 200, deliver, or cause to be delivered, the following quarterly statements to the Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems), namely:
Statement of deduction of tax under section 192 in Form No. 24Q;
Statement of deduction of tax under sections 193 to 196D in -
Form No. 27Q in respect of the deductee who is a non-resident not being a company or a foreign company or resident 
but not ordinarily resident; and
Form No. 26Q in respect of all other deductees.
It is, therefore, advised to file the applicable TDS Statements at the earliest to comply with the above provisions.

2. Implications of Non/ Late filing of TDS Statements:

For Deductors:

In case of late filing of TDS Statements, a fee shall be levied on the deductor u/s 234E of the Act, which reads as under:

Where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.
For Tax payers:

Non/ Late filing of TDS statements results into the TDS Credit not being available to the deductees. They, therefore, will not be able to claim the credit for tax already deducted from the payments made to them. Please note that TDS Certificates will not be available until the TDS Statements are duly filed

3. Actions to be taken:

Please file the relevant TDS Statement without any further delay.
If you are not required to file the same, please submit a declaration for Non-filing on TRACES. For this purpose, you can login to TRACES, navigate to "Statements/ Payments" menu and submit details under "Declaration for Non-Filing of Statements"
Issue TDS certificates after generating and downloading the same from TRACES. TDS Certificates downloaded only from TRACES Portal will be valid.

Nov 20, 2014

Now you can deposit and withdraw money from same ATM machine

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AXIS Bank announced launch of smart terminal which can be used both to deposit and withdrawal of money like ATM. This smart terminal is self service like ATM which deposit as well as withdraw cash for the customers.

Customers can use this smart terminal without debit or credit card and the money will be deposited instantly as it accepts the money. There is no cap in depositing money in an account as far as the customer shared PAN information with the bank.


The concept of depositing money as well as withdrawing from the same machine will be very useful for the customers as they needn’t to visit branch and stand in queue. This concept is very useful for Banks too as they needn’t refill the ATM machine so often because cash deposited will be used for cash withdrawal. Moreover there will be less rush at branches.

Speaking on the occasion, Rajiv Anand, Group Executive & Head- Retail Banking, Axis Bank, said, "Axis Bank has been a pioneer in launching customer-friendly technology initiatives in the banking space. The self-service terminal is another innovative product by the bank, which will help customers carry out all financial and non-financial transactions in a convenient and hassle-free manner."

Reasons why you should not invest in Kisan Vikas Patra KVP

3:30 PM 0
Reasons why you should not invest in Kisan Vikas Patra KVP
Finance Minister Mr. Arun Jaitley re launched Kisan Vikas Patra after the discontinue it earlier. Kisan Vikas Patra gives annualized return of 8.7% and money is doubled in 100 months. This option to invest money is reintroduced to stop the public in investing in chit fund or ponzi scheme.
Investing in KVP is not a good option when you have many other options available. Some points are as under.

1-  KVP may be a good option where no banking facility is available. But where banking is available PPF may be the good scheme as rate of interest is almost the same of 8.5%  and offer tax benefits which are not applicable in KVP.

2-  Tax saving FDR with State Bank of India gives 8.75% annualized return compare to 8.7 in KVP. Fixed deposit has the maximum liquidity and you can break it anytime and get your money. However there is a cap of maximum 1 lakh rupees FDR compare to no upper limit in KVP.

3-  If we calculate it with inflation index, KVP is total loss for people come in to 30% tax bracket. KVP gives around 6 % return on investment after deducting tax and inflation is around 6-7 % now a days. So it left lesser money than you invested.

4-  KVP is mainly introduced for gold rush as people treats investing in gold and silver a safe and fruitful investment. Now a day’s gold and silver in red but if we see 5 tears horizon, gold and silver gave a great return compare to KVP.

Gold performance report
Change
Amount
Percentage %
Today
-201
-0.40
1 Month
-3033
-3.98
6 Months
-2414
-3.20
1 Year
-5964
-7.54
5 Years
20464
38.88                              
So we can see gold has given good return in 5 years tenure.

Nov 19, 2014

Features of latest relaunch of Kisan Vikas Patra

6:03 PM 0
Features of latest relaunch of Kisan Vikas Patra
Government of India has relaunched Kisan  Vikas Patra which is the small saving scheme which was discontinued earlier hoping to lure investors away from gold and fraudulent schemes by offering attractive terms. There won't be any upper limit on investments, the minimum denomination being Rs 1,000.

Investors will be able to double their money in 100 months but the government has bundled in a number of features to enhance liquidity of the instrument as the new regime looks to raise the level of financial savings that fell to 7.1 per cent of GDP in FY13 from more than 12 per cent in FY10.

There are many features of new Kisan Vikas Patra which are as under.

 1- The Kisan Vikas Patra shall be issued in denominations of Rs. 1,000/-, Rs. 5,000/-, Rs.10,000/- and Rs. 50,000/-. 

2- Money will be doubled in 100 Months in KVP certificates.

3- Purchase of Certificate.—Any number of Certificates of the denominations specified in rule 4 may be purchased. 

4- KVP can be purchased as a single holder or joint holder names.

5- A single holder type certificate may be issued to an adult for himself or on behalf of a minor or to a minor.

6- An application In Form A to be submitted in post office or bank to purchase the KVP certificate.

7- Payment can be made in cash, cheque or withdrawl form attaching pass book of saving account in the bank.

8- Certificates will be issued immediately on receiving the payment. However in the case of cheques or pay order, certificate will be issued only after realization.

9- A provisional receipt will be given if no certificate issued in any case which can be later exchanged with the certificates.

10- KVP is transferrable from post office to bank and vice versa.

11- Certificate can be transferred from one person to another in death, joint to single name, single to joint name or any court order etc.

12- No transfer shall be permitted in respect of a Certificate held by or on behalf of a minor till the minor is alive. 

13- Nomination is must in single holder account.

14- Simple interest rate will be given after maturity of certificates.

15- Duplicate certificates can be issued in case of lost certificates.

16- Maturity time is 8 years and 4 Months of KVP certificates.

17- KVP certificate investment is eligible for 80C deduction under income tax act.
Download Full government notification on Kisan Vikas patra

Custom duty drawback rates for all industries effective from 22 November 2014

4:45 PM 0
Custom duty drawback rates for all industries effective from 22 November 2014
Custom department revised all industries custom drawback duty rates. These rates are effective from 22 November 2014. Custom department issued a circular no. 13/2014 dated 18 November 2014 regarding new custom drawback duty rates. Full circular is as under.

 The Ministry has notified revised All Industry Rates (AIR) of Duty Drawback vide Notification 
No. 110/2014- Customs (N.T.), dated 17.11.2014. This notification comes into force on 22.11.2014.

2. Some of the broad aspects, from amongst the changes notified with respect to AIR of duty drawback and entries in the Schedule, are the following –

(a) As before, the drawback rates have been determined on the basis of certain broad average parameters including, inter alia, prevailing prices of inputs, input output norms, share of imports
in input consumption, the applied rates of central excise and customs duties, the factoring of incidence of service tax paid on taxable services which are used as input services in the 
manufacturing or processing of export goods, factoring incidence of duty on HSD/furnace oil, 
value of export goods, etc. 

(b) Many items already covered under the Drawback Schedule prior to incorporation of erstwhile 
DEPB items, shall see a change in the AIR. In continuation of a transitory arrangement, for the 
items incorporated in the drawback schedule from the erstwhile DEPB Scheme there is a 
reduction in the AIR.

(c) Drawback caps continue on most tariff items with AIRs above 2%. The caps have been 
revised. At rates below 2% there is cap with respect to guar gum and frozen marine products. 

(d) Further, in the case of project exports, where export product is accompanied with ARE-1 and for which no drawback cap has been prescribed in the Schedule, the Note/Condition (6) in the AIR notification now specifies a cap. It has been provided that such cases shall be declared by the exporter and the maximum amount of drawback that can be availed under the Schedule shall not exceed the amount calculated by applying the ad valorem rate of drawback to one and half times the ARE-1 value. In such cases, before Let Export Order is made, the relevant ARE-1 value (s) are to be recorded in the “Departmental Comments” field which is to be also taken into account at the subsequent stage of drawback processing.2

(e) Several entries have been rationalized by merging them at respective four digit level or under the respective residuary sub-heading ‘others’. Tariff item numbers have seen a change in many cases. 

(f) The hitherto residuary rate of 1% (composite) and 0.3% (Customs) is changed to 1% (composite) and 0.15% (Customs). Further existing residuary rates of 1.3% and 1.7%, have been increased to 1.4% and 1.9%, respectively, with some exceptions.

(g) In chapter 57, the six digit tariff item (TI) under 5705 have been changed to refer to the composition of fibre as is under other four digit tariff items. Further, all caps have been madeon the basis of per sq.mtr instead of earlier per kg (for some items) in the chapter. 

(h) Several entries have been modified /amended to address issues brought to Ministry’s notice. 
Laptop bags and shopping bags have been specifically mentioned at six digit level below TI 
4202. ‘Cami’ has been included with women’s/girl’s tops in TI 611402 and 621102; ‘three fourth 
pants’ along with ‘capris’ included in TI 610302, 610402, 620302, and 620402; and ‘leggings” included in TI 610402. An entry for ‘other jackets’ below TI 6114 and 6211 has been made. 

Mountain terrain bicycles have been specified against TI 871203. Cricket bats made from English willow (TI 9506) have been distinguished from other cricket bats.

(i) Separate entries have been created distinguishing certain export products such as cotton yarn of less than 50 counts or 50 or more counts (Chapter 52); core spun cotton yarn containing 3% or more of lycra /spandex/ elastane (TI 5205); flame retardant fabric treated with organic phosphorous compound (TI 5209); knotted/tufted woolen /fine animal hair carpets containing 15% or more by weight of silk (TI 5701, 5703); embroidery in the piece, in strips or in motifs, of flax/linen (TI 5810); cotton blankets (TI 6301); leather safety footwear with protective toe caps of composite/synthetic material (TI 6403); glass artware/handicraft made out of two or more ply glass with or without metallic fusion (TI 7020); delivery tricycles/cycle rickshaws (TI 8712); specified electrical apparatus, of aluminium (TI 8536) and parts of aluminium for specified electrical apparatus (TI 8538). 

(j) AIR has been provided to calcined kaolin packed in HDPE/ LDPE/ PP bags (TI 2507), umbrellas, etc. of Chapter 66 and artificial flowers, etc. (TI 6702). Composite rate of 7% has been provided for all agricultural machinery etc. of TI 8432.

(k) AIR has been fixed as Rs. 219.9/gm for gold jewellery /parts and Rs. 3112.5/kg for silver jewellery /articles. Guar Gum has been provided ad valorem rate (composite) of 0.75% with a cap of Rs. 1270 per MT.

(l) Note/Condition (20) in the AIR Notification specifies that “shirts” shall include “shirts with hoods”. Similarly, Note (25) specifies that “vehicles” of Chapter 87 shall comprise completely 
built unit or completely knocked down (CKD) unit or semi knocked down (SKD) unit.

3. It has been made explicit that where the claim for duty drawback is filed with reference to the rate in the AIR Schedule, an application for fixation of Brand Rate under Rule 7 of the Customs, Central 
Excise Duties and Service Tax Drawback Rules, 1995 shall not be admissible. For this, para 2 of the 
Notification and amendment to the said Rule vide Notification No.109/2014-Customs (N.T.) dated 17.11.2014 may be referred. 

4. In this context, it is also clarified that the exporters opting for claim of brand rate shall declare the 
figure “9801” as an identifier in the shipping bill under the Drawback Details on basis of which they may subsequently apply to Central Excise for determination of brand rate. The Commissioners of Central Excise shall facilitate such exporters in terms of paras 5A-5C of Instruction No. 603/01/2011-DBK dated 11.10.2013 with, interalia, the grant of provisional brand letters.

5. The Commissioners are expected to ensure that the due diligence is exercised to prevent any 
misuse. As before, it may be ensured that exporters do not avail of the refund of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods through any other mechanism while claiming AIR. Moreover, there is need for continued scrutiny for preventing any excess drawback arising from mismatch of declarations made in the Item Details and the Drawback Details in a shipping bill. Also, in case of claim of the composite (higher) rate of AIR, the processing at the time of export should specifically ensure availability of ‘Non-availment of Cenvat certificate’ etc at that stage itself.

6. It is requested to download the notifications from the Board’s website (www.cbec.gov.in) and carefully peruse them and thereby take note of all the specific changes notified. 

7. With trade facilitation in view, tenure of the Drawback Committee constituted by Central Government has been temporarily extended. Therefore, if any inconsistency or error is noticed or difficulty faced, the Board may be apprised so that the appropriate action can be initiated.

8. Suitable public notice and standing order may also be issued for guidance of the trade and officers.

Central excise clarification about availment of CENVAT credit after 6 monts

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Central excise clarification about availment of CENVAT credit after 6 monts
Central excise department issued a clarification regarding availment of CENVAT credit after 6 months with a circular no. 990/14/2014 dated 19 November 2014. Full circular is as under.

Attention is invited to the Notification of the Government of India in the Ministry of Finance, Department of Revenue No. 21/2014-CE (NT) dated 11.07.2014, vide which, inter alia, amendment was made in Rule 4(1) and 4(7) of CENVAT Credit Rules, 2004 (CCR, 2004) to prescribe that manufacturer or output service provider shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of Rule 9.

2.     Concerns have been expressed by trade that in view of above changes, the re-credit taken in following three situations may be hit by the time limit of six months prescribed:

 i.    3rd proviso to Rule 4(7) of CCR, 2004 prescribes that if the payment of value of input service and service tax payable is not made within three months of date of invoice, bill or challan, then the CENVAT Credit availed is required to be paid back by the manufacturer or service provider. Subsequently, when such payment of value of input service and service tax is made, the amount so paid back can be re-credited.

 ii.   According to Rule 3(5B) of CCR, 2004, if the value of any input or capital goods before being put to use on which CENVAT Credit has been taken, is written off or such provisions made in Books of Account, the manufacturer or service provider is required to pay an amount equal to credit so taken. However, when the inputs or capital goods are subsequently used, the amount so paid can be re-credited in the account.

 iii.   Rule 4(5)(a) of CCR, 2004 prescribes that in case inputs sent to job worker are not received back within 180 days, the manufacturer or service provider is required to pay an amount equal to credit taken on such inputs in the first instance. However, when the inputs are subsequently received back from job worker, the amount so paid can be re-credited in the account.


3.      The matter has been examined. The purpose of the amendment made by Notification No. 21/2014-CE (NT) dated 11.07.2014 is to ensure that after the issue of a document under sub-rule (1) of Rule 9, credit is taken for the first time within six months of the issue of the document. Once this condition is met, the limitation has no further application. It is, therefore, clarified that in each of the three situations described above pertaining to Rule 4(7), Rule 3(5B) or Rule 4(5) (a) of CCR, 2004, the limitation of six months would apply when the credit is taken for the first time on an eligible document. It would not apply for taking re-credit of amount reversed, after meeting the conditions prescribed in these rules

4.      Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the Board. Hindi version follows.