Apr 30, 2017

How Pertrol Pumps Do Cheat in Front of Your Eyes

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A series of raids by Uttar Pradesh Special Task Force (STF) in Lucknow yesterday have revealed how petrol pumps are cheating consumers. 

Most consumers only check the display of the fuel dispensing machine for the amount and the quantity of the fuel filled but the raids show that the pumps were using a remote-controlled electronic chip to dupe consumers. 

This is how petrol pumps are cheating you: 

 * Petrol pumps install a chip inside the fuel dispensing machine, which is designed to reduce the fuel output by nearly five to ten per cent. 

* The chip is attached to a wire, which sets the limit through a remote control. So, if you are buying one-litre of petrol, the machine will release only 940 ml. 

How Pertrol Pumps Do Cheat in Front of Your Eyes
* Such chips cost around Rs 3,000 a piece. 

* The STF suspects that the chips have been sold to a large number of pumps. As per STF estimate, a petrol pump using this chip earns an undue profit of around Rs 14 lakh per month. 

Banks Can't Deny to Accept Faded or Written Notes-RBI

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The RBI has said banks cannot refuse to accept faded notes or those with scribbles. The central bank said such banknotes had to be treated as "soiled notes" and dealt with according to the RBI's "clean note policy". 

The circular to banks was sent by the RBI after it received complaints that many branches were not accepting banknotes, specifically of 500 and 2,000 denominations, with anything written on them or those either smudged with colour or faded due to washing. 

Bank branches have been rejecting such notes following rumours in social media that such notes were not acceptable. 
Banks Can't Deny to Accept Faded or Written Notes-RBI

The RBI drew attention to its December 2013 statement, issued in response to rumours that from 2017 onwards banks would not accept notes with anything written on them. The RBI had then stated that it had not issued any such instruction. The central bank clarified that its instructions on scribbling on notes was a directive for staffers not to write on banknotes.  This was after the RBI had observed that bank officials themselves were in the habit of writing on banknotes, which went against the central bank's clean note policy. 

The RBI has sought cooperation from all members of public, institutions and others in keeping banknotes clean by not scribbling on them.

Apr 29, 2017

CBDT Signed 2 More Unilateral Advance Pricing Agreement

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The Central Board of Direct Taxes (CBDT) entered into two Unilateral Advance Pricing Agreements (APAs) on 27th April, 2017, with Indian taxpayers. Both the agreements also have a “Rollback” provision in them.

The APA Scheme was introduced in the Income-tax Act in 2012 and the Rollback provisions were introduced in 2014. The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the arm’s length price of international transactions in advance for the maximum of five future years. Further, the taxpayer has the option to rollback the APA for four preceding years. Since its inception, the APA scheme has attracted tremendous interest among Multi National Enterprises (MNEs) and that has resulted in more than 800 applications (both unilateral and bilateral) having been filed in just five years.
CBDT Signed 2 More Unilateral Advance Pricing Agreement

The 2 APAs signed yesterday pertain to Information Technology and Banking & Finance sectors of the economy. The international transactions covered in these agreements include Software Development services, IT enabled services and KPO services.

With these, the total number of APAs entered into by the CBDT has reached 154. This includes 11 bilateral APAs and 143 unilateral APAs. The CBDT expects more APAs to be concluded and signed in the near future.

The progress of the APA Scheme strengthens the Government’s commitment to foster a non-adversarial tax regime. The approach and functioning of the officers in the APA teams have been appreciated and acknowledged by the industry in India and abroad.

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

Apr 28, 2017

Doctor Certificate is Must for EPF Withdrawl for Medical Treatment

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In exercise of the powers conferred by section 5 read with sub-section (1) of section 7 of
Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the Central Government  hereby makes the following Scheme, further to amend the Employees’ Provident Funds Scheme, 1952, namely:-

1. Short title and commencement.- (1) The scheme may be called the Employees’ Provident Funds (Fifth Amendment) Scheme, 2017.

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

2. In the Employees’ Provident Funds Scheme, 1952 (hereinafter referred to as the said Scheme), in paragraph 68J,-
(a) sub-paragraph (2) shall be omitted;
(b) proviso to sub-paragraph (3) shall be omitted;
(c) for sub-paragraph (6), the following sub-paragraph shall be substituted, namely;-

“(6) No advance shall be granted to the member under sub-paragraph (1) or sub-paragraph (3) unless
he produces a self-declaration to that effect.”.
Doctor Certificate is Must for EPF Withdrawl for Medical Treatment

3. In the said Scheme, in para 68N, for sub-paragraph (2), the following sub-paragraph shall be substituted, namely:-

“(2) No advance shall be paid to the member under sub-paragraph (1) unless he produces a selfdeclaration to that effect.”.

[F. No. S-35012/02/2017-SS-II]
R. K. GUPTA, Jt. Secy. 

Apr 27, 2017

All About Composition Scheme in GST

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The Biggest Indirect tax reform of Independent India is on its way to implementation. Key steps of Constitution amendment and formation of GST Council were completed in 2015. After 12 meetings of the Council and 2 draft GST Laws (One draft in June 2016 and another Draft in November 2016), the Central Goods and Services Tax Bill 2017 (CGST Bill), Union Territory Goods and Services Tax Bill 2017 (UTGST Bill), Integrated Goods and Services Tax Bill 2017 (IGST) and Goods and Services Tax (Compensation to States) Bill, 2017 were passed by the Lok Sabha on 29.03.2017. The same will be discussed in the Rajya Sabha on 05.04.2017. The 13th Meeting of GST Council held on 31.03.2017 cleared various proposed rules under GST. The same were put up for public comments upto 10.04.2017.Hence, GST will be a reality by 01.07.2017.

As we all are aware of the Central GST is on 'Inter-State Supply of Goods or Services or both'. There is also a threshold exemption limit of Rs. 20 Lakhs. For the benefit of small assesses, there is an optional levy called 'Composition Levy'. This Article discusses on the composition levy, its features, conditions and restrictions and also lists out some frequently asked questions on the composition Levy.

'Composition Levy' in brief
2. The Charging clause 9 (1) of the CGST Bill, 2017 states that there shall be levied a tax called as CGST on Intra-State supplies of Goods or Services or both at value determined under section 15 at such rates, not exceeding 20%, as may be notified by the Government on recommendations of the Council and collected in manner as may be prescribed and shall be paid by the taxable person.

However, as an option to small suppliers, CGST Bill also provides for a 'Composition Levy' under clause 10 of the bill. It gives an option to a registered person whose aggregate turnover in the preceding financial year does not exceed Rs. 50 Lakhs to pay an amount calculated at such rate prescribed instead of tax payable under normal rates.

This is similar to Turnover tax presently prevalent in State Value Added Tax (VAT) in many of the States.

Rates of Composition Levy

2.1 Rate – Not Exceeding

♦ CGST rate = 1% in case of manufacturer
♦ CGST rate = 2.5% in case of restaurants
♦ CGST rate = 0.5% in case of other suppliers

2.2 Eligibility
As per clause 10(2) of the CGST Bill, 2017, read with the Draft Composition Rules, 2017; Option of Composition Levy is not available for:

• Suppliers whose aggregate turnover in the preceding Financial year is >Rs. 50 Lakhs,
• Service providers other than restaurants,
• Persons who make Inter-State supply
• Persons engaged in supply of goods which are not leviable to GST,
• Persons engaged in making supply of goods through e-commerce operator who is liable to TCS,
• Manufacturer of certain notified goods,
• Non-resident taxable person or casual taxable person.

2.3 Conditions and restrictions

■ Proviso to clause 10(2) of the CGST Bill, 2017 places a condition that when more than one registered persons is having the same PAN, the registered person shall not beeligible to opt for the composition scheme unless all such registered persons opt to pay tax under the scheme.

Eg: A Ltd has 4 units located in Andhra Pradesh, Telangana, Madhya Pradesh and Gujarat. Each unit has to obtain separate registration in each State though all the units have same PAN. Condition is that all 4 units have to opt for composition levy or all have to pay under normal scheme.

■ Clause 10(4) of the CGST Bill, 2017 provides than the Supplier opting for Composition levy CANNOT collect tax from any person

■ Clause 10(4) of the CGST Bill, 2017 also provides that the supplier opting for Composition levy CANNOTAVAIL Input Tax Credit (ITC).

■ Supplier opting for Composition Levy SHALL issue BILL OF SUPPLY as per clause 31(3)(c) of the CGST Bill, 2017.

Contents of Bill of Supply - Rule 4 of Invoice Rules lists out the contents of the Bill of Supply
- Name, address and GSTIN of the supplier;
- A consecutive serial number, in one or multiple series, containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as "-" and "/"respectively, and any combination thereof, unique for a financial year;
- Date of its issue;
- Name, address and GSTIN or UIN, if registered, of the recipient;
- HSN Code of goods or Accounting Code for services;
- Description of goods or services or both;
- Value of supply of goods or services or both taking into account discount or abatement, if any; and
- Signature or digital signature of the supplier or his authorized representative

Rule 3 of the Draft Composition Rules, 2017 provides for following restrictions:-
○ Goods held by him have not been purchased in the course of inter-State trade or received from branch outside State or imported from place outside India or from his agent or principal situated outside India.

○ Goods held in stock should NOT have been purchased from an unregistered person OR, if purchased, pay tax under reverse charge.

○ He shall pay tax under reverse Charge in case of any Purchases from Unregistered Persons

○ On top of 'Bill of Supply', he shall mention "composition taxable person, not eligible to collect tax on supplies'

○ On every Notice or Signboard at a prominent place of Business he shall mention the words "composition taxable person" on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business

2.4 Procedure to Opt for Composition Levy
2.4.1 In Cases of Persons Migrated to GST from existing Laws:

All persons who have migrated to GST and who wish to opt for Composition Levy shall submit Form GST CMP-1 PRIOR to appointed date but not later than 30 days

Furnish GST CMP-03 containing Details of Stock Including Purchases from Unregistered Persons on day preceding the day from which he opts for Composition levy WITHIN 60 days

In cases of other Persons:
2.4.2 Any Supplier who opts for Composition Levy shall file Form GST CMP-02 prior to commencement of the financial year

File Form GST ITC-3 containing details of Inputs lying in stock and Capital Goods on which ITC has been availed.

Withdrawl from Composition Levy
2.4.3 On Non-compliance of conditions under Section or Rules, he shall start issuing Tax Invoice and pay tax under normal provisions and also shall file GST CMP-04 for withdrawl of option within 7 days.
All About Composition Scheme in GST

 In case of
Voluntary Withdrawl from composition scheme by filing Form GST CMP-04
○ Denial of option of availing Composition Scheme by an Order in Form GST CMP-07
2.4.4 Form GST ITC-01 containing details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him on the date on which the option is withdrawn or denied shall be filed within 30 days

2.4.5 Returns
■ Clause 39(2) of the CGST Bill, 2017, read with Rule 4 of the Draft Return Rules, 2017 provides that the Persons opting for Composition Levy have to file Returns electronically in Form GSTR-4 on Quarterly Basis by 18th of the month following the quarter. Contents of the Return
(a) Invoice wise inter-State and intra-State inward supplies received from registered and un-registered persons;
(b) Import of goods and services made;
(c) Consolidated details of outward supplies made; and
(d) Debit and credit notes issued and received, if any

■ Clause 29(2)(b) of the CGST Bill, 2017 provides that non-filing of return for 3 consecutive tax periods (3 Quarters) would result in Cancellation of Registration.

3. Frequently Asked Questions
(1) Whether the composition scheme will be optional or compulsory?
→ Optional.

(2) How to compute 'aggregate turnover' to determine eligibility for composition scheme?
→ The methodology to compute aggregate turnover is given in Section 2(6). Accordingly, 'aggregate turnover' means value of all outward supplies (taxable supplies + exempt supplies + exports + inter-State supplies) of a person having the same PAN. It excludes taxes levied under Central tax (CGST), State tax (SGST), Union territory tax (UTGST), integrated tax(IGST) and compensation cess. Also, the value of inward supplies on which tax is payable under reverse charge is not taken into account for calculation of 'aggregate turnover'.

(3) A person availing of composition scheme during a financial year crosses the turnover of Rs. 50 Lakhs during the course of the year, i.e., he crosses the turnover of Rs. 50 Lakhs in December. Will he be allowed to pay tax under composition scheme for the remainder of the year, i.e., till 31st March?
• No, the option availed shall lapse from the day on which his aggregate turnover during the financial year exceeds Rs. 50 Lakhs.

(4) Should the supplier opting for Composition Levy file the intimation every year?
• Need Not file intimation every year

(5) What is the penalty prescribed for a person who opts for composition scheme despite being ineligible for the said scheme?
• Section 10(5) provides that if a person who has paid under composition levy is found as not being eligible for compounding then such person shall be liable to penalty for an amount equivalent to the tax payable by him under the provisions of the Act, i.e., as a normal taxable person and that this penalty shall be in addition to the tax payable by him.

(6) A registered person has excess ITC of Rs 10, 000/- in his last VAT return for the period immediately preceding the appointed day. Under GST he opts for composition scheme. Can he carry forward the aforesaid excess ITC to GST?
• The registered person will not be able to carry forward the excess ITC of VAT to GST if he opts for composition scheme – Section 140(1).

(7) Can the customer who buys from a registered person who is under the composition scheme claim composition tax as input tax credit?
• No, customer who buys goods from registered person who is under composition scheme is not eligible for composition input tax credit because a composition scheme supplier cannot issue a tax invoice.

(8) Mr. A, a registered person, was paying tax under composition scheme upto 30th July, 2017. However, w.e.f 31st July, 2017, Mr. A is liable to pay tax under regular scheme. Is he eligible for ITC?
• Mr. A is eligible for input tax credit on inputs held in stock and inputs contained in semi-finished or finished goods held in stock and capital goods (reduced by such percentage points as may be prescribed) as on 30th July, 2017.

(9) What would happen to the input tax credit availed by a registered person who opts for composition scheme or where the goods or services or both supplied by him become wholly exempt?
→ The registered person has to pay an amount equal to the input tax credit in respect of stocks held on the day immediately preceding the date of exercise of option or date of exemption. In respect of capital goods, the payable amount would be calculated by reducing by a prescribed percentage point. The payment can be made by debiting electronic credit ledger, if there is sufficient balance in the credit ledger, or by debiting electronic cash ledger. If any balance remains in the credit ledger, it would lapse.

(10) Is there any restriction on period for availment of ITC?
→ In cases of new registration, change from composition to normal scheme, from exempt to taxable supplies, the concerned person cannot avail of ITC after the expiry of one year from the date of issue of tax invoice relating to such supply.

Apr 26, 2017

Lease Rent in Industrial Park with Amenities to be Treated as Business Income

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CBDT has issued circular no. 16/2017 dated 25 April 2017 about Lease rent from letting out buildings/developed space along with other amenities in an Industrial Park/SE-- to be treated as business income. 

The issue whether income arising from letting out of premises /developed space along with other amenities in an Industrial Park/SEZ is to be charged under head 'Profits and Gains of Business' or under the head 'Income from House Property' has been subject matter of litigation in recent years. Assessees claim the letting out as business activity, the income arising from which to be charged to tax under the head 'Profits and Gains of Business', whereas the Assessing Officers hold it to be chargeable under the head 'Income from House Property'. 

2. The matter has been considered by the Board. Income from the Industrial Parks/ SEZ established under various schemes framed and notified under section 801A(4)(iii) of the Income-tax Act, 1961 (`Ace) is liable to be treated as income from business provided the conditions prescribed under the schemes are met. 

In the case of Velankani Information Systems Pvt Ltd, the Hon'ble Karnataka High Court observed that any other interpretation would defeat the object of section 80IA of the Act and government schemes for development of Industrial Parks in the country. SLPs filed in this case by the Department have been dismissed by the Hon'ble Supreme Court. 

In a subsequent judgment dated 30.04.2014 in ITA No 76 & 78/2012 in the case of UT vs. Information Technology Park Ltd.2, the Karnataka High Court has reaffirmed its earlier views. It has held that, since the assessee-company was engaged in the business of developing, operating and maintaining an Industrial Park and providing infrastructure facilities to different companies as its business, the lease rent received by the assessee from letting out buildings along with other amenities in a software technology park would be chargeable to tax under the head "Income from Business" and not under the head "Income from House Property". The judgement has been accepted by the Board. 
Lease Rent in Industrial Park with Amenities to be Treated as Business Income

3. In view of the above, it is now a settled position that in the case of an undertaking which develops, develops and operates or maintains and operates an industrial park/SEZ notified in accordance with the scheme framed and notified by the Government, the income from letting out of premises/ developed space along with other facilities in an industrial park/SEZ is to be charged to tax under the head Profits and Gains of Business'. 

4. Accordingly, henceforth, appeals may not be filed by the Department on the above settled issue and those already filed may be withdrawn/ not pressed upon. 

5. The above may be brought to the notice of all concerned. 

Due Date of Filing Service Tax Return is Extended to 30 April 2017

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Due Date of Filing Service Tax Return is Extended to 30 April 2017
CBEC has issued an order no. 1/2017 dated 25 April 2017 about extension of due date of filing service tax return. Full order is as under.

In exercise of the powers conferred by sub-rule(4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the Form ST-3 for the period from 1st October 2016 to 31st March 2017, from 25th April, 2017 to 30th April, 2017. 

The circumstances of a special nature, which have given rise to this extension of time, are as follows: 

" Intermittent difficulties have been faced by assessees in accessing the ACES website on 25th April 2017" 

Apr 24, 2017

5 Points You Must Know Before Taking a Personal Loan

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Taking a personal loan nowadays is just a click away. It can come handy during the times of need – be it a medical emergency, child education, vacation, house refurbhishing, or any other exigency. When you are facing a paucity of funds, your banks come as a great help in providing personal loans. Unlike home loans, personal loans are very expensive but easy to get. Every bank has a different rate of interest for personal loans. So, once a decision on seeking a personal loan is made, there are certain things which are considered once you approach a bank. We take a look at 5 things that you must know before taking a personal loan

We take a look at 5 things that you must know before taking a personal loan:
1. Income: Whether you are employed or unemployed, the bank will consider your income to give you a personal loan. Every bank has a certain minimum monthly income range requirement. The bank will also weigh whether your income can repay the personal loan sought.

2. CIBIL score: Another important criteria that is considered during a personal loan is the CIBIL score. CIBIL score holds importance as the number assigned to each person representing his/her creditworthiness is considered by the banks while deciding whether a personal loan application should be approved or not. This number in CIBIL score is assigned on the basis of a customers’ financial behaviour, which is assigned through the information provided by the banks and other financial institutions. Financial behaviour includes dues, credit card payments, loans repayment and other kind of debts.
5 Points You Must Know Before Taking a Personal Loan

3. Relation with the bank: This is another criteria that holds significance while seeking a loan from your bank. The customer relation with the bank plays a pivotal role in convincing the lender to provide one a loan.

4. Employment: The banks are looking at stability factor while giving you a personal loan along with the company where one is employed. Employability in a firm and smooth company increases chances of getting a loan

5. Other personal liability: Banks also take into consideration your other liability – like pending dues, loans from friend or known person.

Apr 23, 2017

ITR-7 Income Tax Form for FY 2017-18

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CBDT has issued ITR-7 form for the financial year 2017-18. Earlier the department issued income tax return form ITR1(Sahaj), ITR2, ITR 3, ITR4S and ITR 5 for financial year 2017-18.

The department also notified that ITR-6 form will be uploaded very soon. However ITR-7 is only available in java format whereas all other ITR form for FY 2017-18 are available in both java and excel format.
ITR-7 Income Tax Form for FY 2017-18

Excel Utility
Java Utility
For Individuals having Income from Salaries, one house property, other sources (Interest etc.) and having total income upto Rs.50 lakh
For Individuals and HUFs not carrying out business or profession under any proprietorship
For individuals and HUFs having income from a proprietary business or profession
For presumptive income from Business & Profession
For persons other than,- (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7

For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)

Tags-itr 7 for fy 2017-18,itr 7 for financial year 2017-18,itr 7 2017-18,itr 7 2018-19,itr7 2017-18,itr7 17-18,itr7 18-19

Apr 22, 2017

Rate of Interest on Employee Provident Fund is 8.65% for 2016-17

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Labour Minister Bandaru Dattatreya today said that the Finance Ministry has approved 8.65 per cent interest rate on EPF for 2016-17.

The ratification of the 8.65 per cent on EPF will enable the retirement fund body EPFO to credit this rate of return into the accounts of four crore subscribers.

"Finance Ministry has agreed to 8.65 per cent rate of interest. Now, the communication will come. The formal discussions are over," the minister said.

He further added, "We will immediately issue the notification and credit the rate of interest to over four crore subscribers."
Rate of Interest on Employee Provident Fund is 8.65% for 2016-17

The Employees' Provident Fund Organisation trustees had approved 8.65 per cent rate on EPF in December last year.

The Finance Ministry has been nudging the Labour Ministry to lower the EPF rate for aligning it with the rates of small savings schemes like PPF.  Source - http://www.ptinews.com [20-04-2017]

CBDT further Extended Last Date of Filing Declaration Under PMGKY Upto 10 May

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The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY) had commenced on 17th December, 2016 and was open for declarations up to 31st March, 2017.

Representations from stakeholders have been received stating that in some cases tax, surcharge and penalty have been paid on or before 31st March, 2017 but the corresponding deposit under the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 (Deposit Scheme) could not be made by the said date. Accordingly, DEA vide notification S.O.1218(E) dated 19th April, 2017 has extended the date of making deposit under the Deposit Scheme upto 30th April, 2017 in respect of cases where
tax, surcharge and penalty under PMGKY has been paid on or before 31st March, 2017.
CBDT further Extended Last Date of Filing Declaration Under PMGKY Upto 10 May

Subsequently, CBDT vide Circular No.14 of 2017 dated 21st April, 2017 has extended the date of filing of declaration under PMGKY to 10th May, 2017 in cases where tax, surcharge and penalty under PMGKY has been paid on or before the 31st March, 2017, and deposit under the Deposit Scheme has been made on or before the 30th April, 2017.

The Circular may be accessed on the official website of the Income-tax Department www.incometaxindia.gov.in
 (Meenakshi J Goswami)
Commissioner of Income Tax
(Media & Technical Policy) &
Official Spokesperson, CBDT.

Apr 21, 2017

Amenities and Perquisites Paid to Employee in GST

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The final draft of GST laws has been tabled in the Lok Sabha for discussion on 28.03.2017. It is quite certain that the revolutionary taxation reform will be a reality by July, 2017. The government has officially released two drafts of proposed GST Act till date-one in June, 2016 and the other in November, 2016 and has placed the laws in the public domain for suggestions by experts, trade and industry. The proposed GST law has been further refined every time with certain new provisions. The present article attempts to analyse the taxability of transactions between employer and employee in the proposed CGST Bill, 2017.

Seances provided by an employee to the employees

2. Presently, under service tax laws, the services provided by an employee to the employer in the course of or in relation to his employment are excluded from the definition of service, and consequently, no service tax is leviable. Similar provision has been incorporated in the proposed GST regime with certain modifications. The Schedule-III of the CGST Bill, 2017 specifies the activities or transactions which shall be treated neither as a supply of goods nor as supply of services. The first entry of this Schedule states that the services by an employee to the employer in the course of or in relation to his employment will not be treated as either supply of goods or supply of services. So no GST would be leviable. However, the provisions of Schedule-I pertaining to activities to be treated as supply even if made without consideration qualify the entry no. 1 of Schedule-III as stated above. The provision contained in entry no. 2 of Schedule-I reads as follows:-

Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business:

Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

The meaning of related person given in the Explanation to section 15 states that—

For the purposes of this Act,––

(a) persons shall be deemed to be "related persons," if––
(i) such persons are officers or directors of one another's businesses;
(ii) such persons are legally recognised partners in business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or holds twenty-five per cent or more of the outstanding voting stock or shares of both of them;
(v) one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third person; or they are members of the same family.

Definition of related persons
3. It is observed that the definition of related person is very wide. Employer and employees are also considered as related persons. Consequently, any supply made by the employer to employee will be treated as supply, even if made without consideration as per the provisions of Schedule-I. However, exemption has been provided for gifts not exceeding fifty thousand rupees in value in a financial year.

Under the present service tax laws remuneration paid to directors was a matter of dispute all over India wherein it was alleged that exemption is only for services provided by employee to employer. However, the issue has been finally ruled in favour of assessee by accepting that the director pays income-tax on remuneration received from the company under the head income from salary and TDS is also deduced under section 192 of the Income Tax Act, 1962. Moreover, recent decision's given in the case's of SKN Organics (P.) Ltd., SKAN Research Lab (P.) Ltd. v. CCE, Puducherry [2017-TIOL-602-CESTAT-Mad.] also confirm that, although no service tax is payable on the remuneration paid to directors, yet if service tax has been paid by the company under reverse charge mechanism, its credit cannot be denied to the company.

Salary & Perquisites paid to employees vis-à-vis GST
4. It has been interpreted that the amount paid by employer to employee in lieu of services rendered by the employee and which is explicitly mentioned in the offer letter or agreement is exempted from the levy of service tax. However, one may say that every payment and every benefit given by the employer to his employee is part and parcel of the services provided by employee, as nobody will make payment without receiving anything in return. But the interpretation that every payment and benefit paid by employer to his employee will be exempted from levy of tax cannot be accepted by the government. Consequently, the proposed GST Law speaks about levying GST on supplies made by employer to employee exceeding value of Rs. 50,000/- in a financial year. However, it is practically difficult to say whether such supplies have been made as per the employment agreement or otherwise, as at times there is no written agreement determining the benefits admissible to an employee. Moreover, certain supplies are impliedly made and are not agreed upon formally, say Diwali Gifts, Gifts on organisation achieving targets or gifts given casually. Considering such implied gifts, the value of Rs. 50,000 in a financial year appears to be low. Furthermore, perquisites not formally mentioned in the employment agreement may also attract GST. For example, if a chain of hotel throughout India provides free stay and free food to its employees and his family as a goodwill gesture and if this perquisite is not specifically mentioned in the offer letter of employees, it will tantamount to supply of service attracting GST. Another example may be that of Railways providing free travel benefits to its employees without any explicit agreement and. In such cases the value limit of Rs. 50,000/- may appear to be very less.
Amenities and Perquisites Paid to Employee in GST

Concluding & Remarks
5. The provision regarding levy of GST on supplies made by employer to employee exceeding value of Rs. 50,000/- will definitely invite litigation as firstly, there will be dispute as to whether such supply was made in lieu of providing services by employee or not and secondly, the valuation of such supply will also be debatable. This is for the reason that the employer and employee have been considered as related person. In such cases, the revenue authorities have the power to challenge the transaction value. As such, the employees presently enjoying amenities over and above their CTC without paying service tax may have to face the levy of GST in the days to come.

Last Date of Deposit Under PMGKY is Extended to 30 April

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In exercise of the powers conferred by clause (c) of section 199B of the Finance Act, 2016 (28 of 2016) (hereinafter referred to as the Act), the Central Government hereby amends the conditions specified in clause 5 of the Pradhan Mantri Garib Kalyan Deposit Scheme notified vide Notification No.S.O.4061 (E) dated December 16, 2016, amended vide Notification No. S.O. 204(E) dated January 19, 2017 and further amended vide Notification No. S .O. 365 (E) dated Febru
ary 07, 2017.
Last Date of Deposit Under PMGKY is Extended to 30 April

2. In place of clause 5 of the original notification the following shall be substituted:
“5. Effective date of deposit – The effective date of opening of the Bonds Ledger Account shall be the date of receipt of deposits by the Reserve Bank of India from the authorized banks; wherein the due tax, surcharge and penalty has been received till 31st March, 2017;

Provided further that the date of deposit shall in no case be extended beyond 30th April, 2017.”

Apr 18, 2017

CBDT Clarification on Income Tax Laibility of NRI Holding NRE Account with Indian Bank

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CBDT issued circular no. 13/2017 dated 11 April 2017 regarding clarification on liability to income-tax in India for a non-resident seafarer receiving remuneration in HRE (Non Resident External) account maintained with an Indian Bank. 

Representations have been received in the Board that income by way of salary, received by nonresident seafarers, for services rendered outside India on-board foreign ships, are being subjected to tax in India for the reason that the salary has been received by the seafarer into the NRE bank account maintained in India by the seafarer
CBDT Clarification on Income Tax Laibility of NRI Holding NRE Account with Indian Bank

2. The matter has been examined in the Board. Section 5(2)(a) of the Income-tax Act provides that only such income of a non-resident shall be subjected to tax In India that is either received or Is deemed to be received in India. It is hereby clarified that salary accrued to a non-resident seafarer for services rendered outside India on a foreign ship shall not be included in the total income merely because the said salary has been credited in the NRE account maintained with an Indian bank bank by the seafarer.

Apr 15, 2017

Changes in ITR Forms AY 2017-18 Which May Impact You

2:05 PM 0
At the onset of the new financial year, the Central Board of Direct tax has notified the income tax forms applicable for Financial Year 2016-2017 (i.e. Assessment Year 2017-2018). These ITR forms will be applicable for income earned for the period 1 April 2016 to 31 March 2017.

Income tax return forms (ITR-1/ ITR-4) can be filed in paper mode in case of individuals aged 80 years or more (at any time during the year) as well as individuals/Hindu Undivided Families (HUF) whose income does not exceed INR 500,000 with no refund claim in the return.

Major Changes in the ITR- Forms

Less number of ITR Forms

1. The number of ITR Forms have been reduced from 9 to 7.

♦ Erstwhile Form ITR-2A, Form ITR-2 and Form ITR-3 have been changed to single Form ITR-2.
♦ The earlier FormITR-4 has been re-numbered as Form ITR-3.
♦ Form ITR - 4S (Sugam) is now Form ITR 4 (Sugam).
Applicability of Form ITR-1 Sahaj

2. With the aim of making it easier for taxpayers to file annual income tax returns, a crisp one pager form, 'ITR-1 Sahaj' has been notified. ITR 1 Sahaj can be filed by tax payers having income under the following heads, totalling upto INR 50,00,000:

(a) Income from salary/pension,
(b) Income from one house property,
(c) Income from other sources like interest income, etc.
Inter alia, the form will not be eligible in case the tax payer has the following income:

(a) Dividend income exceeding INR 10 lakhs covered under Section 115BBDA of the Income tax Act, 1961 ("the Act"),

(b) Unexplained cash credit or investment taxable at 60% under Section 115BBE of the Act,
(c) Agriculture income exceeding INR 5,000.
Simplified one pager ITR Form. [ITR 1 Sahaj]

3. The following changes are made in the ITR form:

(a) The erstwhile 18 different sub headings under "Deduction under Chapter VIA" has been reduced to 5 sub headings, which are frequently used i.e. section 80C, section 80D, section 80G, section 80TTA and "any other". If taxpayer wants to claim deduction under any other provisions of Chapter VI-A, one can specify the relevant section in column titled as 'Any other'.

(b) Donations under section 80G do not have to be supported with details like Name, PAN and Address of Donee.

(c) Schedules of TDS and TCS have been merged.

(d) Given that the requirement to report specified assets and liabilities is applicable only for persons with total income exceeding INR 50 lakhs, these details are not relevant now in Form ITR 1 and have been removed.

(e) Further, under "exempt income" schedule, specific disclosure is required for the following income:
i. Dividend income earned under section 10(34) of the Act;
ii. Long term capital gain earned under section 10(38) of the Act;
iii. Agricultural income not exceeding INR 5,000; and
iv. Others (specify).
Changes in ITR Forms AY 2017-18 Which May Impact You

Disclosure of cash deposited during demonetization. [ITR 1, 2, 3, 4, 5, 6, 7]

4. In order to track the amount deposited of INR 200,000 or moreduring the demonetization period (i.e. from 9 November, 2016 to 30 December, 2016), details of such amount deposited in bank account would need to be reported in the Income tax return form. The tax payer would be required to mention the IFSC Code, Name of the Bank, account number and the cash amount deposited.

QuotingAadhaar Number. [ITR 1, 2, 3, 4]

5. A new section (section 139AA of the Act) requires every person who are eligible to obtain Aadhaar number, to mandatorily quote the same in the return of income w.e.f. July 01, 2017. If any person does not have the Aadhaar Number but has applied for the Aadhaar card then he can quote Enrolment ID of Aadhaar application Form in the ITR.

Taxpayers are required to get their PAN linked with Aadhaarnumbesr. However, if a taxpayer fails to link the Aadhaar number, the PAN allotted to them shall be deemed to be invalid.

A person who has resided in India for a period amounting to 182 days or more in the twelve months immediately preceding the date of application for enrolment of Aadhaar, is eligible to obtain Aadhaar number as per the Aadhaar Act, 2016.

Deduction under section 80EE of the Act. [ITR 2, 3, 4]

6. Section 80EE of the Act gives additional tax exemption of INR 50,000 for payment of interest on housing loan to first time home buyers. This deduction is over and above the INR 2 lakhs limit covered under Section 24(b) of the Act.

A new field has been provided in ITR forms under Chapter VI-A deductions to claim home loan interest under Section 80EE of the Act.

Detailed declaration of value of assets/liabilities by Individuals/HUF earning income above INR 5,000,000. [ITR 2, 3, 4]

7. Last year the Income-tax department had introduced a new Schedule requiring individuals/HUFs to declare the cost of specified assets and liabilities if their total income exceeds INR 5,000,000.

Now, the tax payers are also required to disclose the following additional details:

(a) Immovable asset: Address of each immovable property held by the tax payer.
(b) Movable asset:
a. Financial assets (at cost)
♦ Bank ( including all deposits)
♦ Shares and securities
♦ Insurance policies
♦ Loans and advances given

b. Details of "Archaeological collections, drawings, painting, sculpture or any work of art.

c. 'Interest held in the assets of a firm or AOP as a partner or member': Members/partners are required to disclose name, address, PAN of the firm or AOP and the assessee's investment in the Firm/ AOP on cost basis.

For taxpayer having income upto INR 5,000,000, the ITR forms have been simplified. However, there are some additional disclosure requirement brought in for tax payer shaving income more than INR 5,000,000.