May 31, 2016

CBDT Notifies Rules for Direct Tax Dispute Resolution Scheme 2016

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CBDT Notifies Rules for Direct Tax Dispute Resolution Scheme 2016
CBDT notifies rules for Direct Tax Dispute Resolution Scheme 2016 and equalisation levy to come into effect from 1 June 2016. Full notification is as under.

The Direct Tax Dispute Resolution Scheme, 2016 incorporated as Chapter X of the Finance Act, 2016, shall come into force on the 1st of June, 2016 and Declarations under this Scheme may be made on or before the 31st December, 2016 in respect of tax arrears & specified tax. The relevant rules and forms in this regard have been notified vide notification no. 34 & 35 dated 26th May, 2016.

The provisions relating to imposition and collection of Equalisation Levy incorporated as Chapter VIII of the Finance Act, 2016 comes into force from the 1st of June, 2016The notification also provides for date of effectivity of equalisation levy, the statement of specified services, notice of demand and the relevant forms. . The relevant rules and forms in this regard have been notified vide Notification No.37 & 38 dated 27th May, 2016.

These notifications are available on the departmental website .

(Meenakshi J Goswami)
Commissioner of Income Tax
(Media and Technical Policy)
Official Spokesperson, CBDT

No TDS on PF Withdraw upto Rs 50000 from 1 June

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 No tax would be deducted at source for PF withdrawals of up to Rs 50,000 from June 1. 

The government has notified raising the threshold limit of PF withdrawal for deduction of tax (TDS) from existing Rs 30,000 to Rs 50,000, a senior official told PTI.

"The Finance Act, 2016 has amended section 192A of Income Tax Act, 1961 to raise the threshold limit of PF withdrawal from Rs 30,000 to Rs 50,000 for Tax Deducted at Source (TDS)," the notification stated.

The provision will come into effect from June 1, 2016, providing relief to subscribers of retirement fund body EPFO.

The government had introduced the proposal to deduct TDS on PF withdrawals in order to discourage pre-mature withdrawal and to promote long term savings.

According to existing provisions, TDS is deducted at the rate of 10 per cent provided PAN is submitted.

TDS will be deducted at the rate of 10 per cent provided PAN is submitted.

However, in case Form 15G or 15H is submitted by the member, then TDS is not deducted. These forms are to declare that their income would not be taxable after receiving payment of their PF accumulations from retirement fund body EPFO.

While Form 15H is submitted by senior citizens (above 60 years of age), Form 15G is submitted by claimants below the age of 60 years.

TDS is deducted at the maximum marginal rate of 34.608 per cent if a member fails to submit PAN or Form 15G or 15H.

However, there are certain exceptions to deduction of TDS by EPFO. TDS shall not be deducted in case of transfer of PF from one account to another PF account.

Also, no tax is deducted if employee withdraws PF after a period of five years. 

CBDT Circular on Admissibility of Claim of Bad Debts u/s36(1)(vii)

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CBDT Circular on Admissibility of Claim of Bad Debts u/s36(1)(vii)
Central board of direct taxes issued a circular no. 12/2016 dated 30 May 2016 about admissibility of claim of deduction of Bad Debt under section 36(1) (vii) read with section 36(2) of the Income-Tax Act, 1961. Full circular is as under.

Proposals have been received by the Central Board of Direct Taxes regarding filing of appeals/pursuing litigation on the issue of allowability of bad debt that are written off as irrecoverable in the accounts of the assessee. The dispute relates to cases involving failure on the part of assessee to establish that the debt is irrecoverable.

2. Direct Tax Laws (Amendment) Act, 1987 amended the provisions of sections 36(1)(vii) and 36(2) of the Income Tax Act 1961, (hereafter referred to as the Act) to rationalize the provisions regarding allowability of bad debt with effect from the 1st April, 1989.

3. The legislative intention behind the amendment was to eliminate litigation on the issue of the allowability of the bad debt by doing away with the requirement for the assessee to establish that the debt, has in fact, become irrecoverable. However, despite the amendment, disputes on the issue of allowability continue, mostly for the reason that the debt has not been established to be irrecoverable. The Hon'ble Supreme Court in the case of TRF Ltd. In CA Nos. 5292 to 5294 of 2003 vide judgment dated 9.2.2010', has stated that the position of law is well settled. "After 1.4.1989, for allowing deduction for the amount of any bad debt or part thereof under section 36(1)(vii) of the Act, it is not necessary for assessee to establish that the debt, in fact has become irrecoverable; it is enough if bad debt is written off as irrecoverable in the books of accounts of assessee."

4. In view of the above, claim for any debt or part thereof in any previous year, shall be admissible under section 36(1)(vii) of the Act, if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfills the conditions stipulated in sub section (2) of sub-section 36(2) of the Act. 

5. Accordingly, no appeals may henceforth be filed on this ground and appeals already filed, if any, on this ground before various Courts/Tribunals may be withdraw/not presssed upon.

6. This may be brought to the notice of all concerned.

May 30, 2016

DELHI VAT department withdraw form DS-1

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Delhi Government withdraw DVAT form DS-1 with a notification no. 3 dated 27 May . Full notification is as under.


NOTIFICATION NO.F.3 (671)/POLICY/VAT/2016/284-296, DATED 27-5-2016

Whereas, the Department of Trade and Taxes, Government of National Capital territory of Delhi vide Notification No. F.3(671)/Policy/VAT/2016/251-63 dated 19-5-2016, had notified an online Form Delhi Sugam-1 (DS1), in exercise of the powers conferred under section 70 of the Delhi Value Added Tax Act, 2004, for furnishing the details in respect of any commodities/goods to be moved from Delhi to any place outside the territory of Delhi on account of sale, stock transfer or due to whatsoever reason, by all the registered dealers of Delhi before the actual movement of such goods occurs.

And whereas, on receiving feedback from some stakeholders, it has now been decided to not to implement the said notification.

Now, therefore, I, S.S. Yadav, Commissioner, Value Added Tax, Government of National Capital Territory of Delhi, in exercise of the powers conferred under section 70 of the Delhi Value Added Tax Act, 2004, hereby, withdraw the aforesaid notification.

May 29, 2016

CBDT clarification about when registration u/s 12AA can be cancelled

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CBDT clarification about when registration u/s 12AA can be cancelled
CBDT issued a circular no. 21/2016 dated 27 May 2016 about clarification regarding cancellation of registration u/s I2AA of the Income-tax Act, 1961 in certain circumstances. Full circular is as under.

Sections 11 and 12 of the income-tax Act, 1961 (Act)exempt income of charitable trusts or institutions, if such income is applied for charitable purpose and such institution is registered under section 12AA of the Act, 

2. Section 2(15) of the Act provides definition of "charitable purpose". it includes "advancement of any other object of general public utility provided it does not involve carrying on of any activity in the nature of trade, commerce or business etc. for financial consideration, The 2nd proviso to said section, introduced .e f. 01-04-2009 vide Finance Act 2010, provides that in case where the activities of any trust or institution is of the nature of advancement of any other object of general public utility and it involves carrying on of any activity in the nature of trade, commerce or business; but the aggregate value of receipts from such commercial activities does not exceed Rs. 25,00,000/ - in the previous year the purpose of such trust/institution shall be deemed as "charitable" despite it deriving consideration from such activities. However, if the aggregate value of these receipts exceeds the specified cut-off, the activity would no longer be considered as charitable and the income of the trust /institution would not be eligible for tax exemption in that year Thus an entity, pursuing advancement of object of general public utility, could be treated as a charitable institution in one year and not a charitable institution in the other year depending on the aggregate value of receipts from commercial activities, The position remains similar when the first and second provisos of section 2(15) get substituted by the new proviso introduced w.e.f. 01-04-2016 vide Finance Act, 2015, changing the cut-off benchmark as 20% of the total receipts instead of the fixed limit of R.5.25,00,000/- as it existed earlier. 

3. The temporary excess of receipts beyond the specified cut-off in one year may not necessarily be the outcome of alteration in the very nature of the activities of the trust or institution requiring cancellation of registration already granted to the trust or institution. Hence, section 1 of the Act has been amended vide Finance Act, 2012 by inserting a new sub-section (8) therein to provide that such organization would not get benefit of tax exemption in the particular year in which its receipts from commercial activities exceed the threshold whether or not the registration granted is cancelled. This amendment has taken effect retrospectively from 1,51 April, 2009 and accordingly applies in relation to the assessment year 2009- 10 onwards.

4. In view of the aforesaid position, it is clarified that it shall not be mandatory to cancel the registration already granted u/s 1 to a charitable institution merely on the ground that the cut-off specified in the pro solo section 2(15) of the Act is exceeded in a particular year without there being any change in the nature of activities of the institution. If in any particular year, the specified cut-off is exceeded, the tax exemption would be denied to the institution in that year and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the ground(s) prescribed under the Act. 

5. With the introduction of Chapter Xl1-EB in the Act vide Finance Act, 2016, prescribing special provisions relating to tax on accreted income of certain trusts and institutions, cancellation of registration granted u/s 12AA may lead to a charitable institution getting hit by sub-section (3) of section 115TD and becoming liable to tax on accreted income. The cancellation of registration without justifiable reasons may, therefore, cause additional hardship to an assessee institution due to attraction of tax-liability on accreted income. The field authorities are, therefore, advised not to cancel the registration of a charitable institution granted u/s 12AA lust because the proviso to section 2{15) comes into play. The process for cancellation of registration is to be initiated strictly in accordance with section 12 (3) and 12AA(4) after carefully examining the applicability of these provisions. 

6. The above may be brought to the notice of all concerned, 
Deepshikha Sharma 
Director to the Government of India 


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Section 40A(3) of the income tax act says that if the assessee makes any payment or receipt, expect from cross payee cheque or dd or any banking mode, exceeding Rs. 20000 to a single party is disallowed and treated as the personal expenditure or receipt of the assessee.

There are some exemption of the section 40 A (3) in which this expenditure or receipt will be treated as the genuine expenditure or receipts which are as under.

1- Any payment to Reserve Bank of India or any banking company as specified under section 5(c) of the banking regulation act, 1944. Like if assessee deposits cash in the accounts in bank, section 40A (3) does not effect it.

2- Any cooperative or land mortgage bank

3- Any primary agricultural society or any primary credit society under section 56 of banking regulation act 1949.

4- The Life Insurance Corporation of India.

5- Where any payment required to be made in legal tender to the government, no disallowance operates.

These banking activities are also have exemption from section 40A (3) of the income tax act which are as under.

- Any letter of credit arrangement through a bank.
- A mail or telegraphic transfer through a bank.
- A book adjustment from any account to other through a bank.
- A bill of exchange made payable on a bank.
- RTGS, NEFT or any mode of using an electronic clearing system through a bank account.
- Credit card.
- Debit card.

(1) Payment by adjustment of a liability for goods supplied or services rendered: - where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee, no disallowance operates.

(2) No disallowance operates where payment is made to cultivator, grower or producer of following purchases.

- Agriculture or forest produces.
- The product of animal husbandry.
- Fish or fish products.
- The products of horticulture or apiculture.
- Produce of animal husbandry would include livestock, meat, hides, and skin. Benefits of rule 6DD are available in this condition.

(3) No disallowance operates where the payment is made to a producer for the purchase of the products manufactured or processed without the aid of power in a cottage industry.

(4) No disallowance operates where any payment is made in a village or town which on the date of such payment is not served by bank to any person who ordinarily resides or is carrying on any business, profession or vocation, in any such village or town.

(5) No disallowance operates where any payment by way of gratuity, retrenchment compensation or similar terminal benefit, is made to an employee of the assessee or his heirs of any such assessee on or in connection with the retrenchment, resignation, discharge or death of such employee, if the income chargeable under the head salaries of the employee in respect of the financial year in which such retirement, resignation, discharge or death took place or in the immediately preceding financial year did not exceeds Rs. 50000.

(6) Where salary is paid after deducting tax by an employer to an employee, no disallowance operates, after fulfilling such condition.

(a) Such employee is temporarily posted for a continuous period of 15 days or more in a place other than his normal place of duty or on a ship.

(b) He does not maintain any account in any bank at such place or ship.

(7) No disallowance operates where the payment was made on a day on which the banks were closed either on account of holiday or strike.

(8) No disallowance operates where the payment is made by any person to his agent who is required to make payment in cash for goods or services.

(9) Authorized dealers and money changers are required to pay cash against purchase of foreign currency. So no disallowance is made in this respect.

Tags-section 40a3 of income tax,income tax rule of payment 20000,20000 payment rule of income tax,section 40a 3 of income tax,section 40a 3 of income tax act,section 40 a 3 income tax india,section 40 a 3 exemption

May 28, 2016

DGFT explains e-Commerce for Merchandise Export India Scheme

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The Foreign Trade Policy of India embarks a structure and environment for uplifting the export of goods and services. It is designed to lay emphasis on generation of employment and increasing value addition in the country to align its objectives with the "Make in India" vision of our Hon'ble Prime Minister. The government has considered extending its support to both the manufacturing and services sector, with special emphasis on improving "Ease of Doing Business in India".

The Foreign Trade Policy 2015-201 (hereinafter called as "FTP 2015-20"), introduced 2 new schemes for promoting exports in India. The main objective behind introducing the new schemes was to provide reward to exporters to offset infrastructural inefficiencies and associated costs involved and also to provide exporters a level playing field.

These schemes are as follows-

a. Merchandise Exports from India Scheme (MEIS) -
♦ This is a scheme for the export of certain specified goods to specified markets and aims at reducing the costs involved in export of goods/products which are produced/manufactured in India, especially those which pose high export intensity and employment potential to enhance India's export competitiveness.

♦The notified goods and notified markets have been described in Appendix 3B of the FTP 2015-20.

b.Services Exports from India Scheme (SEIS) -
♦ This scheme is a substitute for a number of schemes launched earlier, with different conditions for eligibility and usage and aims at boosting up the exports of notified services.

♦ The notified services and rates of rewards are listed in Appendix 3D of the FTP 2015-20.

The World Trade Organization (WTO) defines e-commerce2 as the production, distribution, marketing, sale or delivery of goods and services by electronic means.

Generally, e-commerce means goods and services crossing borders electronically. Broadly speaking, e-commerce is the sale or purchase of goods or services provided over internet or other computer networks. An e-commerce transaction can be between enterprises, households, individuals, governments and other public or private organizations."

For the first time under the FTP 2015-20, the Ministry of Commerce& Industry added e-commerce exports to the export subsidy regime. Under the scheme, e-commerce exports through postal and courier services of up to Rs.25,000/- for items such as handlooms, books, leather footwear, toys and customized fashion garments and shipped from Delhi, Mumbai and Chennai airports are eligible to receive incentives under the MEIS.

At present, the consolidated FDI policy defines e-commerce as, the activity of buying and selling by a company through the e-commerce platform. Such companies would engage only in Business to Business (B2B) e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to e-commerce as well.

After the Ministry of Commerce & Industry provided incentive to e-commerce trade under the FTP 2015-20, revenue department hadkept its watch dogs after the ministry asking them to define what e-commerce is; as it was not defined under the FTP. At that instance, the ministry was only looking at bookings through the electronic medium and shipments through couriers, but DIPP had proposed to enlarge the definition of e-commerce. Also many states were coming up with their own definitions of e-commerce so it was a dire need of the hour to define the term at the central level to remove ambiguities.

Over the last couple of years, e-commerce has changed consumer experience. E-commerce companies are redefining how customers buy and manufacturers sell; subsequently, today even a street hawker can approach a global audience of buyers. E-commerce companies compete with conventional consumer goods companies in attracting customers to their sites.

"Prima facie, the Union of India/ State Government cannot, on the one hand, for the purpose of tax, treat such sales as retail and on the other hand, for the purpose of investment, not treat the same as retail sale".

This statement by the Hon'ble Justice Rajiv Sahai Endlaw, while dealing with the petition by the All India Footwear Manufacturers and Retailers Association (AIFMRA) for seeking the clarity on FDI norms for Online Market, created confusion around the e-commerce market and FDI Policy in India3.

There has been a never ending debate going on with respect to the e-commerce space in India. The e-commerce players are exempt from various taxes and hence have an edge over the traditional sellers. However, various states have now started imposing entry tax on the e-commerce player like Gujarat and Uttarakhand etc.

Introduction of e-commerce definition for MEIS
Under the MEIS, the government provides duty benefits at 2 per cent, 3 per cent and 5 per cent, depending upon the products and country. With the increasing use of internet across the globe, large amount of trade is also conducted through online platforms. The online players which have been so far trading in goods exports were deprived of the benefits of export incentives under this scheme as e-commerce had not been defined in the FTP 2015-20. The definition will now cover a wide range of online exporters under the ambit of this scheme.

The Ministry of Commerce & Industry, vide Notification No. 2/2015-204 has introduced the following definition of e-commerce.

"'e-commerce' means buying and selling of goods and services, including digital products, conducted over digital and electronic network. For the purposes of Merchandise Exports from India Scheme (MEIS) e-commerce shall mean the export of goods hosted on a website accessible through the internet to a purchaser. While the dispatch of goods shall be made through courier or postal mode, as specified under the MEIS; the payment for the goods purchased on e- commerce platform shall be done through international credit/debit cards and as per the Reserve Bank of India Circular (RBI/2015-16/185) [A.P. (DIR Series) Circular No. 16 dated September 24, 2015] as amended from time to time."

If observed carefully, the definition can be broken into 4 parts. While the major impact lies in the first two parts of the definition, the remaining two are the supporting provisions which are required for completion of a transaction through e-commerce portals:

Part I
General definition of e-commerce – e-commerce means buying and selling of goods and services, including digital products, conducted over digital and electronic network.
The impetus of this definition is however not affecting the FTP 2015-20 but it will surely be helpful in regulating the e-commerce from the perspective of various laws and regulations which cover buying and selling or say in general, the trading activities related with goods and services.
Part II
Definition of e-commerce for MEIS – For the purposes of Merchandise Exports from India Scheme (MEIS) e-commerce shall mean the export of goods hosted on a website accessible through the internet to a purchaser.
For the purpose of the scheme, the definition will include export of goods which are hosted on the website of the e-commerce player and which are accessible through internet to the buyer. The definition has marked the following as essential features for being categorized as e-commerce –

Export of goods – The important aspect which is missed is that services are still excluded from this definition. This is still a relief for the e-commerce players which largely export services through their online portals such as flight and hotel booking websites, consulting websites, online project vetting and documentation websites, etc.

Hosted on website – This is a restrictive term used. It means mobile applications are still not covered under this definition. Strange to see where the e-commerce portals as big as Myntra, Amazon, Flipkart are shifting to app based portals, the government is still lagging to catch up with the changing scenario of e-commerce.

Accessible through internet – The technology has outreached to such an extent where people do have access to offline pages and offline applications but yet again these have escaped the definition.
Implications – The new definition shall promote many traders and exporters to switch to e-commerce platforms in order to process their trading activities with greater ease. The service providers will however, not be happy as they have been kept out of the purview of the e-commerce definition. They equally deserved the benefits of FTP 2015-20,as the export of services in India amounts to a great chunk of the economy. This will surely look like a setback for the major service providers in IT, consulting, etc.
Part III
Dispatch Mode – While the dispatch of goods shall be made through courier or postal mode, as specified under the MEIS;
This is merely given in the definition for the purpose of reference as the provision remains the same. The dispatch mode has to be the same as specified in the FTP 2015-20, i.e. through foreign post or courier regulations to claim the reward.
Part IV
Payment Mode – the payment for the goods purchased on e- commerce platform shall be done through international credit/debit cards and as per the Reserve Bank of India Circular (RBI/2015-16/185) [A.P. (DIR Series) Circular No. 16 dated September 24, 2015]5 as amended from time to time.
As per this circular of RBI, to facilitate e-commerce, it was decided to permit AD Category-l banks to offer facility of payment for imports by entering into standing arrangements with the Online Payment Gateway Service Providers (OPGSPs).
However, the new definition now introduces international credit card and debit cards as accepted mode of payments. This will facilitate in smooth transactions taking place. The payment system which had to be passed through the ADs will now be directly executed by the parties.
Defining the term "e-commerce" is a very prudent step taken by the government. However, the intention reflecting from this definition does not seem for general good, rather it apparently looks good for scheme specific purposes. It is still like talking about a Macintosh in the age of Apple MacBook Pro.

Where the definition completely ignores services, it has also created space on the goods exported through mobile and computer applications. We can of course sit and wait for a similar definition in the SEIS, but in the meantime this is what the Indian exporters will have to be content with. The idea is not to criticize the step taken, rather the intent is to figure out where the definition lacks and can be worked upon. Growth needs to be boosted for exports of goods and services simultaneously for achieving holistic development.

CBDT extends last date for e-filing appeal before CIT(A)

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CBDT issued a circular no. 20/2016 dated 26 May 2016 about time limit for e-filing appeal before CIT(A) is extended to June 15 from May 15.

Rule 45 of the Income Tax Rules, 1962, mandates compulsory e-filing of appeals before Commissioners of Income Tax (Appeals) with effect from 1-3-2016 in respect of persons who are required to furnish return of income electronically. It has come to the notice of the Central Board of Direct Taxes (hereinafter referred to as the Board) that in some cases the taxpayers who were required to e-file Form 35, were unable to do so due to lack of knowledge about e-filing procedure and/or technical issues in e-filing. Also, the EVC functionality for verification of e-appeals was made operational from 12-5-2016 for individuals and from 19-5-2016 for other persons. Word limit for filing grounds of appeal and mapping of jurisdiction of Commissioners of Income Tax (Appeals) were also a cause of grievance in some cases.

2. The matter has been examined by the Board. While the underlying issues relating to e-filing of appeals have since been addressed and resolved, in order to mitigate any inconvenience caused to the taxpayers on account of the new requirement of mandatory e-filing appeals, it has been decided to extend the time limit for filing of such e-appeals. E-appeals which were due to be filed by 15-5-2016 can be filed up to 15-6-2016. All e-appeals filed within this extended period would be treated as appeals filed in time.

3. In view of the extended window for filing e-appeals, taxpayers who could not successfully e-file their appeal and had filed paper appeals are required to file an e-appeal in accordance with Rule 45 before the extended period i.e. 15-6-2016. Such e-appeals would also be treated as appeals filed within time.

May 27, 2016

Tax credit in 26AS to TDS deducted on sale of Immovable Property

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CPC (TDS) Advisory for Tax Credits in 26AS with respect to Tax Deducted on Sale of Immovable Property (26QB Statement)

As per section 194IA of the Income Tax Act, buyer is required to deduct tax at source @1% of the amount paid/credited to the seller. Therefore, after processing of 26QB statements, the information will appear in 26AS of buyer & Seller in the following manner:-

Scenario 1

If Buyer has deducted & deposited Rs.50,000/- on payment of Rs.50,00,000/-.

Seller: TDS Credit is reflected in Part A2 of the seller to the extent of 1% of amount paid/credited. This credit is available for claim in ITR by the seller .

Buyer: Total tax deposited by buyer is shown in Part F of 26AS of Buyer for information. Part F information is not available for Claim in ITR of buyer.

 Scenario 2: If Buyer has deducted & deposited Rs.60,000/- on payment of Rs.50,00,000/-.

Seller: TDS Credit is reflected in Part A2 of the seller to the extent of 1% of amount paid/credited. This credit is available for claim in ITR by the seller.

 Buyer: (i) Excess Tax Deposited by buyer i.e. Rs.10,000.00(Rs.60000-Rs.50000) is shown in Part A2 of 26AS of Buyer. This credit is available for claim in ITR of Buyer.

Buyer: (ii)Total tax deposited by buyer is shown in Part F of 26AS of Buyer for information. Part F information is not available for Claim in ITR of buyer.

Note: This is only for Information Purpose.

CPC(TDS) is committed to provide best possible services to you.

CBDT circular no. 19 about Income Declaration Scheme 2016

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CBDT has issued a circular no. 19/2016 dated 25 May 2016 about Income Declaration Scheme 2016. Full Circular is as under.

Income Declaration Scheme, 2016, introduced vide Finance Act, 2016 (28 of 2Ol6J, provides an opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income. Rule 4 of the Income Declaration Scheme Rules, 2O16 provides that a declaration of income or income in the form of investment in any asset u/s 183 shall be made in the prescribed marner to the Principal Commissioner or the Commissioner who exercises jurisdiction over the declarant.

2. It is, therefore, clarilied that the jurisdictional Principal Comrnissioner or the Commissioner, as the case may be, who exercises jurisdiction u/s l2O of the Income-tax Act, 96 1, as notified by CBDT from time to time over such declarant, shall be the Principal Commissioner or the Commissioner as referred to in section 186 of the Income Declaration Scheme 2076 to whom declaration under 183 of that Scheme is to be made.

Notet Notifications of the Gouemment of India, Central Board of Drect Taxes, pertaining to the jurisdiction u/ s 12O of the Income-tax Act, 1961 - Published in the Gazette of India, Ertraordinory, Part-I! Section 3, Sub-section (ii)- S.O. 2752 (E ) dated 22.10.2014, S.O. 2754 (E ) dated 22.10.2014,5.O.2814 (E )dated 03.11.2014,5.O.2885 (E )dated 12.11.2014,5.O.3244 (E ) dated 19.12.2O14,5.O.2911 (E ldated 13.11.2014,5.O.2922 (E) dated 15.11.2014, S.O. 2915 (E) dated 13.11.2014, S.O. 3911 (E) dated 16.12.2014, S.O. 355 (E) dated 05.02.2015, S O. 2812 (D dated 13.1O.2O15.

May 26, 2016

RBI relaxes norms of transfer shares to non resident

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 In exercise of the powers conferred by clause (b) of sub-section (3) of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the following amendments in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (Notification No. FEMA. 20/2000-RB, dated 3rd May, 2000) namely:-

Short Title and Commencement
1. (i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventh Amendment) Regulations, 2016.

(ii) They shall come into force from the date of publication in the official Gazette.
New Regulation

2. In the Principal Regulations, after Regulation 10, the following shall be inserted, namely:—
"10A. In case of transfer of shares between a resident buyer and a non-resident seller or vice-versa, not more than twenty five per cent of the total consideration can be paid by the buyer on a deferred basis within a period not exceeding eighteen months from the date of the transfer agreement. For this purpose, if so agreed between the buyer and the seller, an escrow arrangement may be made between the buyer and the seller for an amount not more than twenty five per cent of the total consideration for a period not exceeding eighteen months from the date of the transfer agreement or if the total consideration is paid by the buyer to the seller, the seller may furnish an indemnity for an amount not more than twenty five per cent of the total consideration for a period not exceeding eighteen months from the date of the payment of the full consideration:

Provided the total consideration finally paid for the shares must be compliant with the applicable pricing guidelines."

Things to keep in mind before applying for education loan

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The results of major all-India school board exams (CBSE, ICSE and state boards) are out. It is now time for successful students to seek admission to higher education institutions, be it to study arts, science, commerce, engineering or medical within the country or flying abroad to undertake further studies.

Higher studies are getting expensive by the day, be it within the country or abroad. Studying overseas, especially in the United States and Europe could be expensive for most families. “On one hand cost of education has been constantly rising. However, on the other hand, salary levels of fresh graduates is not rising that rapidly. Employment scenario globally have been going through lots of turbulence causing relatively slow growth in starting salary levels of fresh graduates,” says Ajay Bohora, Co-Founder, MD & CEO of Credila Financial Services Pvt. Ltd, an education loan provider promoted by HDFC Ltd.

If money is a constraint in pursuing your dream career, the best option out is to avail an education loan from a gazetted lender, which may be a bank or a non-banking finance company (NBFC).

However, you might be unsure about how to go about seeking that student loan. The questions that may be bothering you and your parents is how much loan should one take? Whom to approach for an education loan? What are the factors to consider while availing a student loan if one is going abroad? As a general advice, Naveen Kukreja – CEO& Co-founder, says, “Students must avail education loan depending on the nature of course and fee structure.”

Here we bring to you 5 factors that you need to keep in mind while availing an education loan:

Choose longer repayment period: It is advisable for students and parents to choose an education loan with longer repayment tenure resulting in relatively smaller EMIs. “Longer tenure also would entitle you to avail tax benefits on interest paid for a longer period and hence save more,” says Credila’s Bohora.

Factor in all costs: It’s important to calculate complete costs like tuition fee, living costs etc and have the education loan cover the entire cost of attendance and not just tuition fees. For Indian students going abroad, currency depreciation further leads to increase in fees.

Avail maximum loan: Lenders can finance up to 100 per cent of the cost of education, depending on the course, institute and its location. These loans typically covers tuition expenses, living expenses and overhead expenses such as cost of traveling, purchasing laptop, equipment and books says’s Kukreja.

Compare margin money requirements: Most lenders ask for margin money, but some private education loan lenders don’t require any margin money, which helps you get up to 100 per cent of the total cost of education. Lower margin money ensure less financial stress.

Avail loan from a gazetted lender: Education loan comes with tax benefits under Sec 80-E of Income Tax Act. However, this is available only if taken from banks or few private sector lenders. Only then would interest paid on education loan can qualify for income-tax deduction.

CBDT has extended scope of e-Assessment

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Paperless assessment/ e-mail based assessment on a pilot basis was commenced in the financial year 2015-16 in non-corporate charges of five cities i.e. Ahmedabad, Bangalore, Chennai, Delhi and Mumbai. The e-mail based assessment scheme has now been extended to two more cities, namely Hyderabad and Kolkata during the current financial year. It shall now be open for all the taxpayers assessed in these seven cities, whose cases have been selected under scrutiny to opt for being scrutinized under the e-mail based paperless assessment proceedings by giving their consent. However, in case of practical difficulties in submission of scanned copies of voluminous documents through e-mail, the documents could be received by the assessing officer in physical form after recording reasons for the same.

All the taxpayers of the aforesaid seven cities, whose cases are picked up for scrutiny, may convey their consent to their respective Assessing Officers in order to avail the facility of e-mail based paperless assessment proceedings.

(Meenakshi J Goswami)
Commissioner of Income Tax
(Media and Technical Policy)
Official Spokesperson, CBDT.

May 25, 2016

Some Home Loam Incentives you don't know

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.This year is the best for home loan buyers as property as well as interest rates are down. More tax benefits, rate cuts on loans, stagnant property prices, and new launches in the 'affordable' segment with freebies and attractive payment schemes. Many of you will be looking to take advantage of these benefits and buy a house. While hunting for a house at the right price, you'll be haggling with the bank to cut a loan deal too. Even if you get a discount on both, your tax bill can burn a hole unless you know the rules well. Here goes a list of six lesser known and often-missed tax benefits on home loans. 

1. You can claim tax benefit on interest paid even if you missed an EMI. 
Unlike the deduction on property taxes or principal repayment of home loan, which are available on 'paid' basis, the deduction on interest is available on accrual basis. Meaning, even if you have missed a few EMIs during a financial year, you would still be eligible to claim deduction on the on the interest part of the EMI for the entire year. “Section 24 clearly mentions the words "paid or payable" in respect of interest payment on housing loan. Hence, it can be claimed as a deduction so long as the interest liability is there," says Kuldip Kumar, partner-tax, PwC India. However, retain the documents showing the deduction so that you can substantiate if questioned by tax authorities. The principal repayment deduction under Section 80C, however, is available only on actual repayments.

 2. Processing fee is tax deductible. 
Most taxpayers are unaware that charges related to their loan qualify for tax deduction. As per law, these charges are considered as interest and therefore deduction on the same can be claimed. “Under the Income Tax Act, Section 2(28a) defines the term interest as 'interest payable in any manner in respect of any money borrowed or debt incurred (including a deposit, claim or other similar right or obligation)'. This 
includes any service fee or other charge in respect of the loan amount," says Kumar. Moreover, there is a tribunal judgement which held that processing fee is linked to services rendered by the bank in relation to loan granted and is thus covered under service fee. Therefore, it is eligible for deduction under Section 24 against income from house property .Other charges also come under this category but penal charges do not. 

3. Principal repayment tax benefit is reversed if you sell before 5 years. 
You score negative tax points if you sell a house within five years from the date of purchase, or, five years from the date of taking the home loan. “As per rules, any deduction claimed under Section 80C in respect to principal repayment of housing loan, would get reversed and added to your annual taxable income in the year in which the property is sold and you will be taxed at current rates," says Archit Gupta, CEO, Thankfully, the loan amortisation tables are such that the repayment schedule is interest heavy and the tax-reversal rule only apply to Section 80C. 
4. Loans from relatives and friends are eligible for tax deduction. 
You can claim a deduction under Section 24 for interest repayment on loans taken from anyone provided the purpose of the loan is purchase or construction of a property. You can also claim deduction for money borrowed from individuals for reconstruction and repairs of property. It does not have to be from a bank. ""For tax purposes, the loan is not relevant, the usage is. The taxpayer should be able to satisfy the assessing officer how the loan has been utilised for constructing or purchasing a house property and completion of construction was within five years and other conditions are met," says Gupta. Remember, the lender must also file an income-tax return reporting the interest income and paying tax on it. "The interest charged should be reasonable and a legal certificate of interest should be provided by the lender along with name, address and PAN," says Gupta.This rule, however, is only applicable for interest repayment. You will lose all tax benefits for principal repayment if you do not borrow from a scheduled bank or employer. The additional benefit of Rs 50,000 under Section 80EE is also not available. 

5. You may not be eligible for tax break even if you are just a co-borrower. 
You cannot claim a tax break on a home loan even if you may be the one who is paying the EMI. For one, if your parents own a property for which you are paying the EMIs, you can't claim breaks unless you co-own the property. "You have to be both an owner and a borrower to claim benefits. If either of the titles is missing you are not eligible," says Gupta. Even if you own a property with your spouse, you can't claim deductions if your name's not on the loan book as a co-borrower. 

6. You can claim pre-construction period interest for up to 5 years. 
You know you can start claiming your home loan benefits once the construction is complete and you receive possession. So, what happens to the installments you made during the construction or before you got the keys to the house? As per rules, you cannot claim principal repayment but interest paid during the period can be accrued and claimed post-possession. “The law provides a deferred deduction on the interest payable during pre-construction period. The deduction on such interest is available equally over a period of 5 years starting from the year of possession," says Vaibhav Sankla, director, H&R Block. 

May 24, 2016

Indirect Transfer Provision Section 9(1) of Income tax on Determination of Fair Market Value

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Indirect Transfer Provision Section 9(1) of Income tax on Determination of Fair Market Value
 Manner of determination of fair market value and reporting requirement for Indian concern-Indirect transfer provisions-section 9(1) of the Income-tax Act, 1961-reg.

Under section 9 of the Income-tax Act, 1961 (the Act), income arising from indirect transfer of assets situated in India is deemed to accrue or arise in India. The provisions of section 9(1)(i) of the Act provides that if any share of or interest in, a foreign company or entity derives its value substantially from the assets located in India, then such share or interest is deemed to be situated in India. Thereby, any income arising from transfer of such share or interest is deemed to accrue or arise in India.

2. The share or interest is said to derive it value substantially from assets located in India, if fair market value (FMV) of assets located in India comprise at least 50% of the FMV of total assets of the company or entity. The computation of FMV of Indian and global assets is to be in the prescribed manner.

3. Further, section 285A of the Act mandates reporting requirement on the Indian concern
through or in which the foreign company or entity holds the assets in India. The information to be furnished and its manner is also required to be prescribed.

4. In this regard, draft rules and forms to be incorporated in the Income-tax Rules, 1962 have been formulated and uploaded on the Finance Ministry’s website ( and website of the Income-tax Department ( for comments from stakeholders and general public.

5. The comments and suggestion on the draft rules may be sent by 29th May, 2016 electronically at the email address,
(Meenakshi J Goswami)
Commissioner of Income-tax
(Media & Technical Policy)
Official Spokesperson, CBDT