No Claim of Death within 45 Days in PMJJBY

Reserve Bank of India issued a circular no. 20 dated June 30 2016 about no claim will be entertained in case of death within 45 days of issuing of policy of Pradhan Mantri Jeewan Jyoyi Bima Yojana. Full circular is as under.

Please refer to our circular DCBR. BPD(PCB)Cir.No.8/12.05.001/2014-15 dated May 5, 2015 on modalities for Implementation of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY).

2. The Rules for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) have since been reviewed by the Government of India and it has been decided by the Competent Authority to incorporate a lien clause in the rules of PMJJBY with effect from June 1, 2016 whereby claims for deaths which occur during the first 45 days from the date of enrolment will not be paid, effectively meaning that the risk cover will commence only after the completion of 45 days from the date of enrolment into the scheme by the member. However, deaths due to accidents will be exempt from the Lien Clause.

3. All Primary (Urban) Co-operative Banks are requested to initiate necessary action to implement the above-mentioned amendment.

7th Pay Commission Report Highlights and Excel Based Calculator

Government of India approves the recommendation by 7th pay commission and give a go ahead on 29 June 2016. The key highlights og 7th pay commission report and are as under.

1. Recommended Date of implementation: 01.01.2016

2. Minimum Pay – Calculator: Based on the Aykroyd formula, the minimum pay in government is recommended to be set at Rs 18,000 per month.

3. Maximum Pay: Rs 2,25,000 per month for Apex Scale and Rs 2,50,000 per month for Cabinet Secretary and others presently at the same pay level.

 4. Financial Implications:
a) The total financial impact in the FY 2016-17 is likely to be Rs 1,02,100 crore, over the expenditure as per the ‘Business As Usual’ scenario. Of this, the increase in pay would be Rs 39,100 crore, increase in allowances would be Rs  29,300 crore and increase in pension would be Rs 33,700 crore.

b) Out of the total financial impact of Rs 1,02,100 crore, Rs 73,650 crore will be borne by the General Budget and Rs 28,450 crore by the Railway Budget.

c) In percentage terms the overall increase in pay & allowances and pensions over the „Business As Usual‟ scenario will be 23.55 percent. Within this, the increase in pay will be 16 percent, increase in allowances will be 63 percent, and increase in pension would be 24 percent.

d) The total impact of the Commission‟s recommendations are expected to entail an increase of 0.65 percentage points in the ratio of expenditure on (Pay+Allowances+ Pension) to GDP compared to 0.77 percent in case of VI CPC.

5. New Pay Structure: Considering the issues raised regarding the Grade Pay structure and with a view to bring in greater transparency, the present system of pay bands and grade pay has been dispensed with and a new pay matrix has been designed. Grade Pay has been subsumed in the pay matrix. The status of the employee, hitherto determined by grade pay, will now be determined by the level in the pay matrix.


6. Fitment: A fitment factor of 2.57 is being proposed to be applied uniformly for all employees.


7. Annual Increment: The rate of annual increment is being retained at 3 percent.

8. Modified Assured Career Progression (MACP):
a. Performance benchmarks for MACP have been made more stringent from “Good” to “Very Good”.

b. The Commission has also proposed that annual increments not be granted in the case of those employees who are not able to meet the benchmark either for MACP or for a regular promotion in the first 20 years of their service.

c. No other changes in MACP recommended.

9. Military Service Pay (MSP): The Military Service Pay, which is a compensation for the various aspects of military service, will be admissible to the Defence forces personnel only. As before, Military Service Pay will be payable to all ranks up to and inclusive of Brigadiers and their equivalents. The current MSP per month and the revised rates recommended are as follows:

10. Short Service Commissioned Officers: Short Service Commissioned Officers will be allowed to exit the Armed Forces at any point in time between 7 and 10 years of service, with a terminal gratuity equivalent of 10.5 months of reckonable emoluments. They will further be entitled to a fully funded one year Executive Programme or a M.Tech. programme at a premier Institute.

11. Lateral Entry/Settlement: The Commission is recommending a revised formulation for lateral entry/resettlement of defence forces personnel which keeps in view the specific requirements of organization to which such personnel will be absorbed. For lateral entry into CAPFs an attractive severance package has been recommended.

12. Headquarters/Field Parity: Parity between field and headquarters staff recommended for similar functionaries e.g Assistants and Stenos.

13. Cadre Review: Systemic change in the process of Cadre Review for Group A officers recommended.

14. Allowances: The 7th Pay Commission has recommended abolishing 52 allowances altogether. Another 36 allowances have been abolished as separate identities, but subsumed either in an existing allowance or in newly proposed allowances. Allowances relating to Risk and Hardship will be governed by the proposed Risk and Hardship Matrix.

a. Risk and Hardship Allowance: Allowances relating to Risk and Hardship will be governed by the newly proposed nine-cell Risk and Hardship Matrix, with one extra cell at the top, viz., RH-Max to include Siachen Allowance.

The current Siachen Allowance per month and the revised rates recommended are as follows: 

This would be the ceiling for risk/hardship allowances and there would be no individual RHA with an amount higher than this allowance.

b. House Rent Allowance: Since the Basic Pay has been revised upwards, the Commission recommends that HRA be paid at the rate of 24 percent, 16 percent and 8 percent of the new Basic Pay for Class X, Y and Z cities respectively. The Commission also recommends that the rate of HRA will be revised to 27 percent, 18 percent and 9 percent respectively when DA crosses 50 percent, and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.

c. In the case of PBORs of Defence, CAPFs and Indian Coast Guard compensation for housing is presently limited to the authorised married establishment hence many users are being deprived. The HRA coverage has now been expanded to cover all.

d. Any allowance not mentioned in the report shall cease to exist.

e. Emphasis has been placed on simplifying the process of claiming allowances.
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15. Advances:
a. All non-interest bearing Advances have been abolished.

b. Regarding interest-bearing Advances, only Personal Computer Advance and House Building Advance (HBA) have been retained. HBA ceiling has been increased to Rs 25 lakhs from the present Rs 7.5 lakhs.

16. Central Government Employees Group Insurance Scheme (CGEGIS): The Rates of contribution as also the insurance coverage under the CGEGIS have remained unchanged for long. They have now been enhanced suitably. The following rates of CGEGIS are recommended:

17. Medical Facilities:
a. Introduction of a Health Insurance Scheme for Central Government employees and pensioners has been recommended.

b. Meanwhile, for the benefit of pensioners residing outside the CGHS areas, CGHS should empanel those hospitals which are already empanelled under CS (MA)/ECHS for catering to the medical requirement of these pensioners on a cashless basis.

c. All postal pensioners should be covered under CGHS. All postal dispensaries should be merged with CGHS.

18. Pension: The Commission recommends a revised pension formulation for civil employees including CAPF personnel as well as for Defence personnel, who have retired before 01.01.2016. This formulation will bring about parity between past pensioners and current retirees for the same length of service in the pay scale at the time of retirement.

The past pensioners shall first be fixed in the Pay Matrix being recommended by the Commission on the basis of Pay Band and Grade Pay at which they retired, at the minimum of the corresponding level in the pay matrix.

This amount shall be raised to arrive at the notional pay of retirees, by adding number of increments he/she had earned in that level while in service at the rate of 3 percent.

In the case of defence forces personnel this amount will include Military Service Pay as admissible.
Fifty percent of the total amount so arrived at shall be the new pension.

An alternative calculation will be carried out, which will be a multiple of 2.57 times of the current basic pension.

The pensioner will get the higher of the two.

The financial impact of the recommendations of this Commission will be reflected through increases in expenditure on Pay, Allowances and on Pension. The likely quantum of increase on account of each of these is summarised below:

19. Gratuity: Enhancement in the ceiling of gratuity from the existing Rs 10 lakh to Rs 20 lakh. The ceiling on gratuity may be raised by 25 percent whenever DA rises by 50 percent.

20. Disability Pension for Armed Forces: The Commission is recommending reverting to a slab based system for disability element, instead of existing percentile based disability pension regime.

21. Ex-gratia Lump sum Compensation to Next of Kin: The Commission is recommending the revision of rates of lump sum compensation for next of kin (NOK) in case of death arising in various circumstances relating to performance of duties, to be applied uniformly for the defence forces personnel and civilians including CAPF personnel.

22. Martyr Status for CAPF Personnel: The Commission is of the view that in case of death in the line of duty, the force personnel of CAPFs should be accorded martyr status, at par with the defence forces personnel.

23. New Pension System: The Commission received many grievances relating to NPS. It has recommended a number of steps to improve the functioning of NPS. It has also recommended establishment of a strong grievance redressal mechanism.

24. Regulatory Bodies: The Commission has recommended a consolidated pay package of Rs 4,50,000 and Rs 4,00,000 per month for Chairpersons and Members respectively of select Regulatory bodies. In case of retired government servants, their pension will not be deducted from their consolidated pay. The consolidated pay package will be raised by 25 percent as and when Dearness Allowance goes up by 50 percent. For Members of the remaining Regulatory bodies normal replacement pay has been recommended.

25. Performance Related Pay: The Commission has recommended introduction of the Performance Related Pay (PRP) for all categories of Central Government employees, based on quality Results Framework Documents, reformed Annual Performance Appraisal Reports and some other broad Guidelines. The Commission has also recommended that the PRP should subsume the existing Bonus schemes.
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Latest FVU Version 5.1 and FVU Extract 2.147 e-TDS Software Free Download

Latest FVU Version 5.1 and FVU Extract 2.147 e-TDS Software Free Download

Tin.nsdl has launched latest file validation utility 5.1 and fvu extraction utility 2.147 on 28 June 2016. These are the latest version of FVU incorporated with RPU version 1.6. There are many new features added in new FVU version 5.1 which are as under.

Key Features – File Validation Utility (FVU) version 5.1

- New Section code 194LBC (Income in respect of investment in securitization trust) has been added under list of sections available under Form 26Q and 27Q.

- New nature of collection codes 206CL (Sale of Motor vehicle), 206CM (Sale in cash of any goods (other than bullion/jewelry)) and 206CN (Providing of any services (other than Ch-XVII-B)) has been added under list of collection codes available under Form 27EQ.

- This version of FVU is applicable with effect from June 28, 2016
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Latest Return Preparation Utility RPU 1.6 for e-TDS statement

Latest Return Preparation Utility RPU 1.6 for e-TDS statement

Tin.nsdl has launched latest version of return preparation utility RPU version 1.6 e-TDS statement preparation utility. RPU version  is in java platform which can be used online or offline.Latest RPU version 1.6 is launched on 28 June 2016. Tin nsdl has also launched latest FVU version 5.1 with this RPU. There are many new features added with this rpu 1.6 which are as follows.

Return Preparation Utility RPU version 1.6-Key Features

- New Section code 194LBC (Income in respect of investment in securitization trust) has been added under list of sections available under Form 26Q and 27Q.

- New nature of collection codes 206CL (Sale of Motor vehicle), 206CM (Sale in cash of any goods (other than bullion/jewelry)) and 206CN (Providing of any services (other than Ch-XVII-B)) has been added under list of collection codes available under Form 27EQ.

- Incorporation of latest File Validation Utility (FVU) version 5.1 (applicable for TDS/TCS statements pertaining to FY 2010-11 onwards) and FVU version 2.147 (applicable for TDS/TCS statements from FY 2007-08 up to FY 2009-10).
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Clarification on Income Declaration Scheme and Form

Clarification on Income Declaration Scheme and Form

As per Income Declaration Scheme, 2016, the declaration of income or income in the form of investment in any asset under section 183 shall be made in Form-1.

How to download Form 1(IDS) Utility:
-  Go to the Income e-Filing portal at www.incometaxindiaefiling.gov.in

- Under “Downloads” section, click on “Forms (Other than ITR)”

- Form 1 can be downloaded by clicking on the “Download” button.

Click here to download the Form 1 (IDS) Utility.

How to Fill/Upload/View Form 1 Income Declaration Scheme, 2016:

The User Manual having detailed information on “How to fill Form 1”, “How to upload Form 1” and “How to View e-Filed Form 1” is made available in eFiling portal under “Help” menu. Click here to access the User Manual.

The Income Declaration Scheme, 2016 (hereinafter referred to as ‘the Scheme’) incorporated as Chapter IX of the Finance Act, 2016 provides an opportunity to persons who have not paid full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty totaling in all 45% of such undisclosed income declared. The Income Declaration Scheme Rules, 2016 (hereinafter referred to as ‘the Rules’) have been notified. In this regard, Circular No. 17 of 2016 dated 20th May, 2016 issued by the Board provided clarifications to 14 queries. Subsequently, further queries have been received from the public about various provisions of the Scheme. The Board has considered the same and the following clarifications are issued.-

Question No.1: If only part payment of the tax, surcharge and penalty payable on undisclosed income declared under the Scheme is made before 30.11.2016, then whether the entire declaration fails as per section 187(3) of the Finance Act, 2016 or pro-rata declaration on which tax, surcharge and penalty has been paid remains valid?

Answer: In case of part payment, the entire declaration made under the Scheme shall be invalid. The declaration under the Scheme shall be valid only when the complete payment of tax, surcharge and penalty is made on or before 30.11.2016.

Question No.2: In case of amalgamation or in case of conversion of a company into LLP, if the amalgamated entity or LLP, as the case may be, wants to declare for the year prior to amalgamation/conversion, then whethera declaration is to be filed in the name of amalgamated entity/LLP or in the name of the amalgamating company or company existing prior to conversion into LLP?

Answer: Since the amalgamating company or the company prior to conversion into LLP is no more into existence and the assets/liabilities of such  erstwhile entities have been taken over by the amalgamated company/LLP, the declaration is to be made in the name of the amalgamated company or the LLP, as the case may be, for the year inwhich the amalgamation/conversion takes place.

Question No.3: Whether the Scheme is open only to residents or to non-residents also?
Answer: The Scheme is available to every person, whether resident or nonresident.

Question No.4: If undisclosed income relating to an assessment year prior to A.Y. 2016-17, say A.Y. 2001-02 is detected after the closure of the Scheme, then what shall be the treatment of undisclosed income so detected?

Answer: As per the provisions of section 197(c) of the Finance Act, 2016, such income of A.Y. 2001-02 shall be assessed in the year in which the notice under section 148 or 153A or 153C, as the case may be, of the Income-tax Act is issued by the Assessing Officer. Further, if such undisclosed income is detected in the form of investment in any asset then value of such asset shall be as if the asset has been acquired or made in the year in which the notice under section 148/153A/153C isissued and the value shall be determined in accordance with rule 3 of the Rules.

Question No.5: Whether a person on whom a search has been conducted in April, 2016 but notice under section 153A is not served upto 31.05.2016, is eligible to declare undisclosed income under the Scheme?

Answer: No, in such a case time for issuance of notice under section 153A has not expired. Hence the person is not eligible to avail the Scheme in respect of assessment years for which notice under section 153A can be issued.

Question No.6: As per Circular No.17 of 2016, question No.14, it is not mandatory to attach the valuation report. But Form-1 states “attach valuation report”. How to interpret?

Answer: It is necessary for the declarant to obtain the valuation report but it is not mandatory for him to attach the same with the declaration made in Form-1. However, the jurisdictional Pr.
Commissioner/ Commissioner in order to ascertain the correctness of the value of the  asset quoted in Form-1 may require the declarant to file the valuation report before issuing the acknowledgment in Form-2. In such a circumstance, it will be necessary for the declarant to make the report available to the Pr. Commissioner/Commissioner.

Question No.7: Is it mandatory to furnish PAN in the Form of declaration?
Answer: Yes, PAN is the unique identifier for all direct tax purposes. This is also necessary in order to claim the benefits and immunities available under the Scheme.

Question No.8: If any proceeding is pending before the Settlement Commission, can a person be considered eligible for the Scheme?
Answer: No, a person shall not be eligible for the Scheme in respect of assessment years for which proceeding is pending with Settlement Commission.

Question No.9: Land is acquired by the assessee in year 2001 from assessed income and is regularly disclosed in return of income. Subsequently in the year 2014, a building is constructed on the said land and the construction cost is not disclosed by the assessee. What shall be the fair market value of such building for the purposes of the Scheme?

Answer: Fair market value of land and building in such a case shall be computed in accordance with Rule 3(2) by allowing proportionate deduction in respect of asset acquired from assessed income.

Question No.10: Whether cases where summons under section 131(1A) have been issued by the Department or letter under the Non-filer Monitoring System (NMS) or under section 133(6) are issued are eligible for the Scheme?

Answer: Cases where summons under section 131(1A) have been issued by the department or letters for enquiry under NMS or under section 133(6) are issued but no notice under section 142 or 143(2) or 148 or 153A or 153C [as specified in section 196(e)] of the Finance Act, 2016 has been
issued are eligible for the Scheme.

Question No.11: If notices under section 142, 143(2) or 148 have been issued after 31.05.2016 and assessee makes declaration under the Scheme then what shall be the fate of these notices?

Answer: As clarified vide Explanatory Circular No. 17 dated 20.5.2016 , a person shall not be eligible for the Scheme in respect of the assessment year for which a notice under section 142, 143(2) or 148 has been received by him on or before 31.5.2016. In a case where notice has been received after the said date, the assessee shall be eligible to make a declaration under the Scheme for the said
assessment year. Such declaration shall be valid if it has not been made by suppression of facts or misrepresentation and the amount payable under the Scheme has been duly paid within the specified
time. On furnishing by the declarant the certificate issued by the Pr. Commissioner/Commissioner in Form-4 to the Assessing Officer, the proceedings initiated vide notice under section 142, 143(2) or 148 shall be deemed to have been closed.

(Dr. T.S. Mapwal)
Under Secretary to the Government of India

Income Tax 15th Amendment and New Form 61B

Income Tax 15th Amendment and New Form 61B

CBDT has amended income tax rules as 15th Amendment rules with a notification no.  dated 20 June 2016. Full notification and new form 61B are as under.

In exercise of the powers conferred by section 285BA read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Government with respect to registration of persons, due diligence and maintenance of information, and the Central Board of Direct Taxes for matters relating to statement of reportable accounts, hereby make the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income–tax (15th Amendment) Rules, 2016.
 (2) Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules 1962 (hereafter referred to as the said rules) in rule 114F, in clause (6),
in the Explanation, in clause (D),-

(a) in sub-clause (ii), for the word, brackets and figure “clause (3)”, the words, brackets and figure “clause (3), which is not located in any of the jurisdictions specified by the Central Board of Direct Taxes in this behalf” shall be substituted;

(b) for sub-clause (iii), the following sub-clause shall be substituted, namely:-
“(iii) not a withholding foreign partnership or a withholding foreign trust;”,
3. In the said rules, in rule 114H,-
(a) in sub-rule (3),-
(I) in clause (b), in sub-clause (i), for item (D), the following item shall be substituted, namely:-

“(D) in case of U.S. reportable account, any standing instructions to transfer funds to an account maintained in a country or territory outside India and in case of other reportable account, any standing instructions (other than with respect to a depository account) to transfer funds to an account maintained in a country or territory outside India; or”;

 (II) in clause (c), in sub-clause (ii), for item (E), the following item shall be substituted,
namely:-

“(E) in case of U.S. reportable account, any standing instructions to transfer funds currently in effect and in case of other reportable account any standing instructions (other than with respect to a depository account) to transfer funds currently in effect:”;

(III) in clause (d), for sub-clause (ii), the following sub-clause shall be substituted, namely:-
“(ii) in case of a U.S. reportable account which is low value account as on the 30th June, 2014, shall be completed by the 30th June, 2016 and in case of other reportable account which is high value account as on the 31st December, 2015, shall be completed by the 31st December, 2016;”; 

(b) in sub-rule (5), in clause (e), for sub-clause (i), the following sub-clause shall be
substituted, namely:-
“(i) review of pre-existing entity accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account) shall be completed by the 30th June, 2016 and review of pre-existing entity accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the, 31st December, 2015 (in case of other reportable account) shall be completed by the 31st December, 2016;”.

4. In the said rules, in Appendix-II, with effect from 1st January, 2017, for Form 61B, the following form shall be substituted, namely:-
Download form 61B
Threshold Limit of Tax Audit u/s 44AB and 44AD

Threshold Limit of Tax Audit u/s 44AB and 44AD

Section 44AB of the Income-tax Act (‘the Act’) makes it obligatory for every person carrying on business to get his accounts of any previous year audited if his total sales, turnover or gross receipts exceed one crore rupees.

However, if an eligible person opts for presumptive taxation scheme as per section 44AD(1) of the Act, he shall not be required to get his accounts audited if the total turnover or gross receipts of the relevant previous year does not exceed two crore rupees. The higher threshold for non-audit of accounts has been given only to assessees opting for presumptive taxation scheme under section 44AD.
.
(Meenakshi J Goswami)
Commissioner of Income Tax
(Media and Technical Policy)
Official Spokesperson, CBDT.
New Amendment in Income Tax Rule 114H

New Amendment in Income Tax Rule 114H

The rule 114H of the Income-tax Rules, 1962 (the Rules) has been amended vide Notification No.48/2016 [S.O.2151(E)] dated 20th June 2016.

In order to provide sufficient time to the reporting financial institutions for completing the due diligence procedure in respect of other reportable account referred to in Rule 114H (3)(d)(ii), which is high value account as on 31st December, 2015, the timeline specified for review of pre-existing individual account has been extended from 30th June, 2016 to 31st December, 2016. The timeline in case of U.S. reportable account which is low value account as on the 30th June, 2014, shall continue to be 30th June, 2016.

Similarly, in respect of other reportable account referred to in Rule 114H(5)(e)(i), timeline specified for review of pre-existing entity account has been extended from 30th June, 2016 to 31st December, 2016. The timeline in case of a U.S. reportable account shall continue to be 30th June, 2016.

The full text of the notification is available on the departmental website www.incometaxindia.gov.in.

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

Income Declaration Scheme Rule and Form 1, 2,3 and 4 Free Download

CBDT notifies full rule for Income Declaration Scheme 2016 and also notifies form 1, form 2, form 3 and form 4 for making declaration. Full notification and form download are as under.

In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 199 of the Finance Act, 2016 (28 of 2016), the Central Board of Direct Taxes, subject to the control of the Central Government hereby makes the following rules for carrying out the provisions of Chapter IX of the said Act relating to the Income Declaration Scheme, 2016 namely :—

1. Short title and commencement.
(1) These rules may be called the Income Declaration Scheme Rules, 2016.
 (2) They shall come into force on the 1st day of June, 2016.

2. Definitions.
(1) In these rules, unless the context otherwise requires,—
(a) “Act” means the Finance Act, 2016 (28 of 2016);

(b) “Form” means a form appended to these rules;

 (c) “recognised stock exchange” shall have the same meaning as assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

 (d) “registered valuer” means a person registered as a valuer under section 34AB of the Wealth-tax Act, 1957 (27 of 1957);

 (e) “section” means a section of the Act.

(2) Words and expressions used and not defined in these rules but defined in the Act, or the Income-tax Act, 1961 (43 of 1961) or the rules made thereunder, shall have the meanings respectively assigned to them in those Acts and rules.

3. Determination of Fair market value
(1) The fair market value of the asset shall be determined in the following manner, namely:—
(a) the value of bullion, jewellery or precious stone shall be the higher of—

(I) its cost of acquisition; and
(II) the price such bullion, jewellery or precious stone shall ordinarily fetch if sold in the open market as on the 1st day of June, 2016, on the basis of the valuation report obtained by the declarant from a registered valuer;

(b) the valuation of archaeological collections, drawings, paintings, sculptures or any work of art (hereinafter referred to as artistic work) shall be the higher of—
(I) its cost of acquisition; and
(II) the price such artistic work shall ordinarily fetch if sold in the open market as on the 1st day of June, 2016 on the basis of the valuation report obtained by the declarant from a registered valuer;

(c) the value of shares and securities of—
(I) quoted share and securities shall be the higher of—
(i) its cost of acquisition; and
(ii) the price determined by taking—
(A) the average of the lowest and highest price of such shares and securitiesquoted on a recognised stock exchange as on the 1st day of June, 2016; or

(B) the average of the lowest and highest price of such shares and securities on a recognised stock exchange on a date immediately preceding the 1st day of June, 2016 when such shares and securities were traded on a recognised stock exchange, where on the 1st day of June, 2016 there is no trading in such shares and securities on a recognised stock exchange;

(II) unquoted equity shares shall be the higher of—
(i) its cost of acquisition; and
(ii) the value, on the 1st day of June, 2016, of such equity shares as determined in
the following manner, namely:—
the fair market value of unquoted equity shares = (A+B - L) × (PV), (PE)
where,
A = book value of all the assets in the balance sheet (other than bullion, jewellery, precious stone, artistic work, shares, securities and immovable property) as reduced by,- (i) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any, and (ii) any amount shown as asset including the unamortised amount of deferred expenditure which does not
represent the value of any asset;

B= fair market value of bullion, jewellery, precious stone, artistic work, shares, securities and immovable property as determined in the manner provided in this rule;


L= book value of liabilities shown in the balance sheet, but not including the following amounts, namely:—


(i) the paid-up capital in respect of equity shares;

(ii) the amount set apart for payment of dividends on preference shares and equity shares;

(iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation;

(iv) any amount representing provision for taxation, other than amount of income-tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;

(v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities;

(vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares;

PE = total amount of paid up equity share capital as shown in the balance-sheet;
PV= the paid up value of such equity share;

(III) unquoted share and security other than equity share in a company shall be the higher of,—
(i) its cost of acquisition; and

(ii) the price that the share or security shall ordinarily fetch if sold in the open market on the 1st day of June, 2016, , on the basis of the valuation report obtained by the declarant from a registered valuer;

(d) the fair market value of an immovable property shall be higher of—
(I) its cost of acquisition; and
(II) the price that the property shall ordinarily fetch if sold in the open market on the 1st day of June, 2016 on the basis of the valuation report obtained by the declarant from a registered valuer;

(e) value of an interest of a person in a partnership firm or in an association of persons or a limited liability partnership of which he is a member shall be determined in the manner as specified in clause (f);


(f) The net asset of the firm, association of persons or limited liability partnership on the  1st day of June, 2016 shall first be determined and the portion of the net asset of the firm, association of persons or limited liability partnership as is equal to the amount of its capital shall be allocated among its partners or members in the proportion in which capital has been contributed by them and the residue of the net asset shall be allocated among the partners or members in accordance with the agreement of partnership or association or limited liability partnership for distribution of assets in the event of

dissolution of the firm, association or limited liability partnership, or, in the absence of such agreement, in the proportion in which the partners or members are entitled to share profits and the sum total of the amount so allocated to a partner or member shall be treated as the value of the interest of that partner or member in the partnership or association.


Explanation.— For the purposes of this clause the net asset of the firm, association of persons or limited liability partnership shall be (A + B - L), which shall be determined in the manner provided in sub-clause (II) of clause (c);

(g) valuation of any other asset shall be higher of—
(I) its cost of acquisition or the amount invested; and
(II) the price that the asset would fetch if sold in the open market on the 1st day of June, 2016.

Explanation— For the purposes of this rule,—
(a) “quoted share or security” in relation to share or security means a share or security quoted on any recognized stock exchange with regularity from time to time, where the quotations of such shares or securities are based on current transaction made in the ordinary course of business;

(b) “unquoted share and security” in relation to share or security means share or security which is not a quoted share or security;

(c) “balance sheet” in relation to any company means the balance sheet of such company (including the notes annexed thereto and forming part of the accounts) as on 31st day of March, 2016, which has been audited by the auditor of the company appointed under the Companies Act, 2013 (18 of 2013) and where the balance sheet as on 31st day of March, 2016 is not audited, the balance sheet (including the notes annexed thereto and forming part of the accounts) which has been approved and adopted in the annual general meeting of the shareholders of the company.

(2) Where investment in any asset is partly from an income which has been assessed to tax prior to assessment year 2017-18, the fair market value of the asset determined in accordance with sub-rule (1) shall be reduced by an amount which bears to the value of the asset as on the 1st day of June, 2016, the same proportion as the assessed income bears to the total cost of the asset.

4. Declaration of income or income in the form of investment in any asset.
(1) A declaration of income or income in the form of investment in any asset under section 183
shall be made in Form-1.

(2) The declaration shall be furnished:-
(a) electronically under digital signature; or
(b) through transmission of data in the form electronically under electronic verification code; or

(c) in print form, to the concerned Principal Commissioner or the Commissioner who has the jurisdiction over the declarant.

(3) The Principal Commissioner or the Commissioner shall issue an acknowledgement in Form-2 to the declarant within fifteen days from the end of the month in which the declaration under section 183 has been furnished.

(4) The proof of payment of tax, surcharge and penalty made pursuant to the acknowledgement
issued by the Principal Commissioner or the Commissioner shall be furnished by the declarant
to the such Principal Commissioner or Commissioner in Form 3.

(5) The Principal Commissioner or the Commissioner shall grant a certificate in Form-4 to the
declarant within fifteen days of the submission of proof of payment of tax, surcharge along with
penalty by the declarant under section 187 of the Act in respect of the income so declared.

(6) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax
(Systems) shall specify the procedures, formats and standards for ensuring secure capture and
transmission of data and shall also be responsible for evolving and implementing appropriate
security, archival and retrieval policies in relation to furnishing the form in the manner specified
in sub-rule(2).

Explanation.—For the purposes of this rule “electronic verification code” means a code generated
for the purpose of electronic verification of the person furnishing the return of income as per the
data structure and standards specified by Principal Director General of Income-tax (Systems) or
Director General of Income-tax (Systems). 
Download Form 1 Income Declaration Scheme
Download Annexure of Form 1 Income Declaration Scheme
Download Form 2 Income Declaration Scheme
Download Form 3 Income Declaration Scheme
Download Form 4 Income Declaration Scheme

All About Krishi Kalyan Cess on Services

Finance Minister Mr. Arun Jaitley introduced Krishi Kalyan Cess on the budget 2016 which is levied on the value of taxable services at 0.5%. This Krishi Kalyan Cess would be levied over and above the Service tax and the Swachh Bharat Cess.

Krishi Kalyan Cess motive is to improve agriculture with new initiative and technology and KKC is applicable from 1 June 2016.

Meaning of Cess and Krishi Kalyan Cess

A Cess is a type of tax government levy on the tax rate which is used for some specific purpose. Cess amount which government collects can be used only for that specific purpose and not any other purpose.

Krishi Kalyan Cess only levy on service tax and not income tax. It means rate of service tax which was 14.5 %( 14%+0.5% Swachh Bharat Cess) is now 15 %( 14%+0.5 %( SBC) +0.5 %( KKC)).

Krishi Kalyan Cess is applicable on all the services which attract service tax like 
Telephone Bill
Restaurant Bill
Air Travel Agent
Advertisements
Rent Payment etc.

Service provider cannot mention the rate of service tax at 15%. He needs to break up the structure of service tax and Cess like
Service tax -14%
Swachh Bharat Cess- 0.5%
Krishi Kalyan Cess- 0.5%


Krishi Kalyan Cess Applicability

Krishi Kalyan Cess is applicable from 1 June 2016 on all the services which attract service tax. However, if service provided before 1 June 2016 and payment collects on or after 1 June 2016, Krishi Kalyan Cess would be leviable.

In case of part payment received, the part of payment received before 1 June 2016 doesn’t attract Krishi Kalyan Cess and the part which received on or after June 1, 2016 will attract Krishi Kalyan Cess.
S.No.
 Krishi Kalyan Cess    (Minor Head)  
Tax Collection
 Other Reciepts  (Interest)
Deduct Refunds
Penalties
1
0044-00-507
00441509
00441510
00441511
00441512

Other important points regarding Krishi Kalyan Cess.

1-Service providers can take CENVAT CREDIT of Krishi Kalyan Cess. But Input KKC can only be utilized for the payment of Krishi Kalyan Cess. However No CENVAT CREDIT is allowed in case of Swachh Bharat Cess.

2-Krishi Kalyan Cess is only chargeable on the services chargeable to service tax and not on services exempt from service tax.

3-For the service covered under abatement, Krishi Kalyan Cess will apply on the specific percentage of taxable value.

4-Exporters can avail rebate benefit of Krishi Kalyan Cess.

5-SEZ units or developers can avail ab-initio exemption/refund in respect of Krishi Kalyan Cess.

6-Krishi Kalyan Cess collection code is 00441509

Reasons Why File Income Tax Return When Don't Have Taxable Income

Whether a return should be filed or not depends on your income level. When total income is within the minimum exemption limit, it’s not compulsory to file a tax return. The minimum exemption limit is Rs. 2.5 lakh if you are less than 60 years old. For those who between 60 and 80 years of age, income is exempt up to Rs. 3 lakh. And for those who are 80 years and above Rs.5 lakh is the exemption.
It may come as a surprise that return filing may be mandatory or beneficial in some circumstances where you do not have taxable income. Let’s understand them in detail.

You own foreign assets or foreign bank accounts: Return filing is mandatory if you are resident as per income tax act and own foreign assets. Or where you have financial interest in an entity located outside India or have a foreign bank account. This applies even though you have less than taxable income or no income at all. Non-reporting of foreign assets has attracted a lot of attention from the tax department. Penal provisions apply if your status is resident and you do not report them. You must file a return and report all your foreign holdings.

When you buy/sell shares: Sale purchase of equity shares result in capital gains. Many a times retired individuals or housewives trade in equity shares but do not report their gains or losses. Not that it is mandatory to do so when your total income is below exemption limit. But if you have short term capital losses, you can adjust them against capital gains. And in case losses are not fully adjusted they can be carried forward for 8 years and adjusted against capital gains in future. These losses can be carried forward by submitting your tax return for the year to which they belong.

When you are seeking a refund: The only way to claim a refund of taxes is by filing an income tax return. This applies to NRIs who have less than taxable income but are subject to TDS on rent payments. Or where, you could not submit Form 15G/Form 15H timely and TDS was deducted. Tax is already deposited by way of TDS, and the deductor cannot refund this TDS to you. It can only be claimed by filing a tax return. All returns seeking a refund must compulsorily be filed online.
Claim deductions via return: We know that the minimum exemption limit is Rs.2.5 lakh. But is this limit before or after allowing deductions? If you are claiming any deductions under section 80, those must be claimed through a tax return. So, Rs.2.5 lakh exemption is the gross income level. If your income before deductions is more than this limit, you should file a tax return and claim deductions in the return. This applies even if there is no tax payable.

Report exempt income: Sometimes, we earn a large income which is exempt from tax such as commuted pension or tax-free gratuity or long-term capital gains from shares and we do not file a tax return or do not report them.

The government tracks investments and expenses of PAN holders via AIR (Annual Information Report) submitted by banks and financial institutions. Explaining the source of a large investment or expense made via exempt income, may be easier when such income is reported in your tax return.
Planning to apply for a loan or a visa: The most trusted indicator of your earnings is your tax return. Visa authorities’ may ask for copies of your return. Lenders also request for tax return copies as proof of your income capacity. Sometimes, tax returns also have to be submitted for applying for a credit card. So even though, you may have less than taxable income you can benefit by filing your returns regularly.
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