If the Stipend granted is for furthering education or gaining knowledge , same can be claimed exempt u/s 10 of the I T act . In this regard the decision of the KarnatakaHigh Courtin A. Ratnakarv. Addl. CIT  128 ITR527can be applied.This was also followedby Tribunal in case of Income-tax Officer v. Dr. G.N. Ramachandran[1 ITD902]
20 July 2016
CBDT Notification on Determination of Arm’s Length Price for AY 2016-17 u/s 92C (Transfer Pricing)
The CBDT has notified that where variation between ALP determined u/s 92C does not exceed 1% of the wholesale price (3% otherwise) of international or specified domestic transactions, then actual transaction price shall be taken as ALP for AY 2016-17, i.e. tolerance limits of price variation for transfer pricing purposes, as under:
CBDT Notification No. 57/2016 dt. 14 July 2016
In exercise of the powers conferred by the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961 (43 of 1961), read with proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962, the Central Government hereby notifies that where the variation between the arm’s length price determined under section 92C and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the later in respect of wholesale trading and three percent of the later in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price for Assessment Year 2016-2017.
For the purposes of this notification, “wholesale trading” means an international transaction or specified domestic transaction of trading in goods, which fulfills the following conditions, namely:-
(i) purchase cost of finished goods is eighty percent. or more of the total cost pertaining to such trading activities; and
(ii) average monthly closing inventory of such goods is ten percent. or less of sales pertaining to such trading activities.
NCLT clarifies on functioning of Single Bench & Division Bench
NCLT clarifies that the NCLT, Division Bench is *entitled to function as a Bench and exercise powers of the Tribunals, irrespective of any class of cases* (except those specified by an Order of President); States that the Single Judicial Member posted at various benches of Tribunal are also authorized, in addition, to the Division Bench to function as Bench and exercise *powers of NCLT* in following cases:
(i) _All *cases* that have been *transferred from CLB,*_
(ii) _All *new petitions* where company involved has *paid-up share capital of Rs. 50 lacs or less where Division Bench is available.* Clarifies that, where the Division Bench is not available, the pecuniary limit of Rs. 50 lacs shall not apply,_
(iii) _Any *other matter which the President may authorize* by passing a specific/general order:_ NCLT
18 July 2016
SIT report on Black Money: 6 things you should know about it
The Special Investigation Team (SIT), headed by Justice MB Shah (retired), submitted its fifth report to Supreme Court on methods to curb black money in the economy.
The SIT has made the following recommendations in the Fifth Report
Complete ban should be imposed on cash transactions above Rs 3,00,000. There should be specific provision in the Act that transactions in cash above threshold limit shall be deemed as illegal, invalid and punishable under the law.
If there is cash withdrawal of more than Rs.3,00,000 from any bank, then bank should consider it as a suspicious activity and should report it to Financial Intelligence Unit ('FIU')and the concerned Income–tax Department.
Maximum limit on cash holdings may be fixed between Rs.10 to 15 lacs. In any case, if any person or industry requires to hold more cash, it may obtain necessary permission from the Commissioner of Income–tax of the area.
In addition, starting from the next year, all banks including co–operative banks be directed to notify any income or withdrawals of more than Rs.3,00,000 to the Directorate General of Income-tax (Investigation) Authorities of the State and to the FIU.
Appropriate steps may be taken for amending the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, by incorporating the provision that undisclosed foreign income and assets would vest in the Union of India. Once it is held that under the law, property vests in Union of India, the person who is holding the said property outside the country shall have to prove that it was acquired legally and/or held after obtaining necessary permission from the RBI.
Before investing any amount or purchasing any property outside the country, the assessee must inform the concerned jurisdictional Commissioner of Income Tax Department of the State.
17 July 2016
In case you are unable to register your DSC on MCA portal because your name in the PAN card is not as per the ICAI records, you may send fill up the form in the given link :-
And kindly attach a scanned copy of your PAN card along with copy of any of the documents in which your name is as in your PAN card
Bank passbook with a photo affixed and duly signed by the bank
Voters' Identity card
This will enable us to carry out the necessary alignment to ICAI records to share the same to MCA for their further actions.
16 July 2016
Govt. ready to appoint independent regulators for ICAI, ICSI and MCI
In order to improve standards of professions, the Central Government has planned to appoint regulators for the Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India, Medical Council of India (MCI) and other professional bodies. Key points of this development are as follows:
1. The Ministry of Commerce is working on this proposal with objective that having independent regulators, like SEBI, CCI, etc., for professional bodies would help to make India globallya potential services hub in the upcoming years.
2. At present, ICAI, ICSI and MCI have their own councils of elected or nominated members, which regulate their respective professions. ICAI Council has 40 members, ICSI has 15 and MCI has 100-odd members.
3. From the point of view of number of membership, ICAI is considered as second-largest professional accounting and finance body worldwide.
4. But after appointment of regulators all the professional bodies, including ICAI, ICSI and MCI, would cease to regulate theirrespective professions. However, power to manage internal professional matters will continue to vest in them.
5. The Govt. has taken such step after unravelling of various cases like Kingfisher, Sahara, Saradha and Satyam.
6. On the one hand, it will help these professional bodies to improve the standards in their respective professions and to remove any conflict of interest in their respective roles, on the other hand it will also help in taking quick action against the members of their own professional fraternity on any complaint.
14 July 2016
The Income Declaration Scheme 2016 - Relaxation of time schedule for making payments under the Scheme
During the course of meetings and seminars held in different parts of the country, various stakeholders have expressed concern that the time period available under the Scheme up to 30th November, 2016 for making payment of tax, surcharge and penalty is very short, especially where funds in liquid form are not readily available with the declarants. It has also been mentioned that for making payment by 30.11.2016, the declarants may have to opt for distress sale of the assets.
Taking into consideration the practical difficulties of the stakeholders, the Government has decided to revise the time schedule for making payments under the Scheme as under:
(i) a minimum amount of 25% of the tax, surcharge and penalty to be paid by 30.11.2016;
(ii) a further amount of 25% of the tax, surcharge and penalty to be paid by 31.3.2017; and
(iii) the balance amount to be paid on or before 30.9.2017.
A Notification to this effect shall be issued shortly.
CBDT sets at rest controversy over 31% effective tax rate under IDS; Addressing queries received from stakeholders on whether the payment under IDS can be made out of undisclosed income without including the same in the income declared, thereby whittling down the effective tax rate to 31%, CBDT clarifies that the scheme in "no way intends to modify or alter the rate of tax."
13 July 2016
New functionality of Single/ Centralised Registration in Central Excise for Jewellery and other specified Manufacturers is now available in ACES
Assessees can now opt for centralized registration and capture additional premises through A1 form, as a new functionality is now available at ACES for single/centralised excise registration for certain specified manufacturers, including for new registration, amendments, etc.
A. New Registration as well as amendment of registration to capture additional premises for the first time in ACES
A new facility has been provided in Central Excise Registration form A1 for certain category of assessees to opt for Centralised registration/ Single registration and correspondingly, capture the list of premises covered under Centralised registration/Single registration.
The following categories of assessees are covered under this implementation:
3) Aluminium Roofing Panels
4) Recorded Smart Cards
5) Single registration for CNG
6) Single registration for interlinked units
A new checkbox is provided for selection if the assessee intends to opt for Centralised registration/Single registration. If the option is checked, LOV listing all the above categories is enabled for selection. In case the assessee selects (1) or (2) above, the selection of business category should also correspond to Jewellery or Mines respectively.
In all other cases, the business category shall be Manufacturer. Once the assessee clicks on NEXT after filling up all the fields in the first screen, a new screen to capture list of all additional premises is opened up, if he opts for centralized registration/single registration. The additional premises can be captured online through SAVE and ADD NEW option. Alternatively, if the number of premises are very huge, the assessee can follow the procedure mentioned below:
a) Download the sample XLS file provided in the screen
b) Please read the instructions for filling up the excel worksheet in the README document provided along with the sample XLS file
c) Fill up the excel worksheet as per the instructions and upload the same using the option provided in the screen.
d) The list of premises uploaded will be displayed in the screen and the assessee can further add or delete any of the premises, already uploaded
e) Fill up the remaining particulars in the registration form and save the form
f) The confirmation screen will be opened displaying the A1 form along with the list of premises added/uploaded and the assessee can submit the application.
The above procedure can be adopted by first-time applicant as well as applicant already registered in the above business category, but without capture of additional premises.
The list of premises after generation of RC can be downloaded from the link provided in the VIEW RC screen.
B. Amendment of registration for the above categories, where additional premises have already been captured
For any assessee amending his registration for change of details of additional premises ( where additional premises have already been captured).
1) Click on Amend Registration button in the form.
2) There will be a link for "Download additional premises" which will list out the premises already added for the registration
3) The assessee can add or delete the details in the downloaded list and then upload the XLS again afresh.
4) Make any other changes, if necessary, and then SAVE and SUBMIT the form for approval of the Amendment by AC.
The revised list of premises can be downloaded from the link in the VIEW RC screen as soon as the amendment is approved by AC (if no PV is assigned) and as soon as PV report is approved by AC (if PV is assigned). In case of manufacturers of jewellery, there will not be any PV.
11 July 2016
Assessee cannot be asked to reverse input tax credit due to non-payment of taxes by the selling dealers
PATH BREAKING JUDGEMENT
Assessee cannot be asked to reverse input tax credit due to non-payment of taxes by the selling dealers
Sri Lakshmi Textiles Vs. the Commissioner of Commercial Taxes and Others [2016 (1) TMI 329 – MADRAS HIGH COURT]
Sri Lakshmi Textiles(“the Petitioner”) is a partnership firm engaged in the business of inner garments and textiles registered under Tamil Nadu Value Added Tax Act, 2006 (“TN Vat Act”). The Petitioner was regularly filing the VAT return and paying the VAT liability after adjusting the corresponding input tax credit. For the Assessment Year 2013-2014, the Petitioner had reported total turnover and taxable turnover of Rs. 2,02,88,151/- and Rs. 15,98,693/- respectively in his return.
The Department alleged that because some of the selling dealer of the Petitioner had not paid the tax, the Petitioner is required to reverse the corresponding input tax credit and further sought to levy penalty under Section 27(3) of the TN VAT Act on the Petitioner.
The Hon’ble High Court of Madras relied upon the decision in the case of Sri Vinayaga Agencies Vs. the Assistant Commissioner (Ct), Chennai and another [(2013) 60 VST 283 (Mad)] and held that when the fact of Petitioner paying the taxes to his supplier is not under dispute, the Petitioner cannot be compelled to reverse the input tax Credit due to non-payment of VAT liability by the selling dealership
Government of India
Ministry of Finance
*Government today constituted a Committee headed by Dr. Shankar Acharya (former Chief Economic Adviser) to examine the desirability and feasibility of having ‘a new financial year’*; The Committee to submit its Report by 31st December, 2016.
The Government of India today constituted a Committee to examine the desirability and feasibility of having ‘a new financial year’. The Committee headed by Dr. Shankar Acharya (former Chief Economic Adviser) has Shri K.M. Chandrasekhar (former Cabinet Secretary), Shri P.V. Rajaraman (former Finance Secretary, Tamil Nadu) and Dr. Rajiv Kumar (Senior Fellow, Centre for Policy Research) as other Members. The Committee will examine the merits and demerits of various dates for the commencement of the financial year including the existing date (April to March), taking into account the various relevant factors.
The details on the Composition and the Terms of Reference of the Committee are uploaded on the website of Ministry of Finance (www.finmin.nic.in). The Committee has been given time till 31st December, 2016 to submit its Report.
10 July 2016
CBEC Clarification on Scope of 'Construction Site' for availing Excise Exemption as appearing in Notification No. 12/2012-Central Excise, dated 17.03.2012
CBEC Clarification on Scope of 'Construction Site' for availing Excise Exemption as appearing in Notification No. 12/2012-Central Excise, dated 17.03.2012
08 July 2016
Income Computation and Disclosure Standards (ICDS) notified under Section 145 (2) of the Income -tax Act, 1961 to be applicable from 1stApril, 2016
The revision of ICDS/issue of clarifications as recommended by the Committee, is under consideration. The revision of the Tax Audit Report is also being made for ensuring the compliance with the provisions of ICDS and for capturing the disclosures mandated by the ICDS.
Some of the tax payers might have filed their return of income and obtained Tax Audit Report without incorporating the compliance with the ICDS and related disclosures in the absence of the revised Tax Audit Report. Considering these facts, it has been decided that the ICDS shall be applicable from 1.4.2016 i.e. previous year 2016-17 (Assessment Year 2017-18). The notification to this effect will be issued shortly.
06 July 2016
By: FE Bureau | New Delhi | Published: July 5, 2016 6:36 AM
According to the PIL filed by CPIL, PwC and its network firms indulged in activities in breach of various statutes and policies. (PTI)
The Supreme Court on Monday asked the Institute of Chartered Accountants of India (ICAI), the regulatory body for chartered accountants in India, to file a status report as to what action it has taken against top foreign multinational accounting firms which, in the guise of providing management consultancy services, have expanded to other fields such as accounting, auditing, book-keeping and taxation. Such operations cannot be undertaken by non-Indian entities.
A bench headed by Justice Dipak Misra also sought response from the Centre on an appeal filed by Bengaluru-based tax consultant S Sukumar, alleging violation by various accounting firms like PricewaterhouseCoopers, KPMG, Deloitte, Haskins & Sells, and Ernst and Young.
While lawyers representing the top firms denied any wrongdoing, counsel Prashant Bhushan alleged that some MNCs are providing auditing services in India through “surrogate companies”, thus violating the Chartered Accountants Act.
The ICAI told the court that it has already initiated action against 170 entities in India. Sukumar has sought direction to the ICAI to probe the functioning of these Indian firms that have tie-ups with foreign firms for breach of Code of Professional Conduct prescribed in the Chartered Accountants Act, 1949.
Referring to the 2009 Satyam scam, Bhushan pointed out that PwC has been found guilty of fabricating the accounts of Satyam and the same firm is the auditor for Kingfisher Airlines. He demanded an inquiry into the firm’s alleged financial malpractices and fudging of accounts.
According to the PIL filed by CPIL, PwC and its network firms indulged in activities in breach of various statutes and policies.
05 July 2016
CBEC Clarification reg. Recovery of Confirmed Demands during the pendency of Stay Application
EXTRACT For the quarter ending June 30, 2016 and September 30, 2016:
(i) The timeline for submitting the financial results in compliance with the provisions of this Circular is extended by one month. The results for the quarter ending June 30, 2016 and September 30, 2016 may be submitted by September 14, 2016 and December 14, 2016 respectively.
(ii) For the quarter ending June 30, 2016, Ind-AS compliant financial results for the corresponding quarter ended June 30, 2015shall be provided. For the quarter ending September 30, 2016, Ind-AS compliant financial results for the corresponding year to date / quarter ended September 30, 2015 shall be provided. However, in such cases, limited review or audit of the same is not mandatory.
(iii) For the quarter ending June 30, 2016, submission of Ind-AS compliant financial results for the preceding quarter and previous year ended March 31, 2016is not mandatory. For the quarter ending September 30, 2016, submission of Ind-AScompliant financial results and Balance Sheet for the previous year ended March 31, 2016 is not mandatory. However, in case the entities intend to submit these results, the same may be without limited review or audit.
(iv) In such cases, the listed entities shall disclose with due prominence that the Ind-AS compliant financial results, pertaining to the relevant periods of the previous year as mentioned in (ii) and (iii) above, as applicable, have not been subjected to limited review or audit. However, the management has exercised necessary due diligence to ensure that the financial results provide a true and fair view of its affairs.
(v) The format of Balance Sheet for the Half-Yearly ended September 30, 2016 shall be as per the format for Balance Sheet (excluding notes and detailed sub-classifications) as prescribed in Schedule III to the Companies Act, 2013.
02 July 2016
30 June 2016
June 22, 2016 | by Sreekanth Reddy
Public Provident Fund (PPF) is one of the best Debt oriented Saving options that are available in India. It is also one of the most tax-efficient financial instruments.
PPF Account has a lock-in period of 15 years. A Public Provident Fund (PPF) account gets matured after the completion of 15 years only.
There are certain options for an account holder to make partial withdrawals from PPF. But, a PPF account can be closed prematurely only in the event of the death of the Account holder.
The government has recently issued a notification announcing the latest PPF Account premature closure norms or rules. You can now close your PPF account before the maturity date.
When can I close my PPF Account prematurely?
As per the latest rules, a subscriber of PPF Account shall be allowed premature closure of his/her account (or) account of a minor of whom he/she is the guardian on the below mentioned reasons;
*.A PPF Account can be closed in the event of the death of the Account holder.
*.PPF Account Premature Closure is accepted when the amount is required for the treatment of serious ailments (or) life threatening diseases of the Account holder (self), Spouse, dependent children or parents of the Account holder.
*.PPF Account Premature Closure is also allowed when the amount is required for highereducation of the Account Holder(subscriber/self)or minor account holder.
*.Kindly note that you can close PPF account prematurely only if your account has completed FIVE Financial Years.(This rule is not applicable in case of‘death’ of the account holder.)
*.If the reason for Premature closure of PPF account is ‘medical treatment’, you have to produce supporting documents from competent medical authority.
*.If the reason for premature closure of PPF a/c is ‘higher education’, you have to produce fee bills and documents confirming admission in a recognized institute of higher education in India or abroad(foreign country).
*.Another important point is,a penalty of 1%is deducted from the applicable interest rates on the deposits held in the PPF account. This is applicable on the deposits from the date of opening of the PPF account till the date of premature closure of PPF account.
25 June 2016
CBDT Circular No. 23/2016 dt. 24 June 2016
In order to curb the cash economy, Finance Act 2016 has amended section 206C of the Income-tax Act to provide that the seller shall collect tax at the rate of one per cent from the purchaser on sale in cash of certain goods or provision of services exceeding two lakh rupees. Subsequent to the amendment, a number of representations were received from various stakeholders with regard to the scope of the provisions and the procedure to be followed in case of the amended provisions of Section 206C of the Act. The Board, after examining the representations of the stakeholders, issued FAQs vide circular.No.22/2016 dated 8th June, 2016. The Board has further decided to clarify the issue as regards applicability of the provisions relating to levy of TCS where the sale consideration received is partly in cash and partly in cheque by issue of an addendum to the above circular in the form of question and answer as under:
Question 1: Whether tax collection at source under section 206C(1D) at the rate of 1% will apply in cases where the sale consideration received is partly in cash and partly in cheque and the cash receipt is less than two lakh rupees.
Answer : No. Tax collection at source will not be levied if the cash receipt does not exceed two lakh rupees even if the sale consideration exceeds two lakh rupees.
Illustration: Goods worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.4 lakhs has been received in cheque and Rs.1 lakh has been received in cash. As the cash receipt does not exceed Rs.2 lakh, no tax is required to be collected at source as per section 206C (1D).
Question 2: Whether tax collection at source under section 206C (1D) will apply only to cash component or in respect of whole of sales consideration.
Answer: Under section 206C (1D), the tax is required to be collected at source on cash component of the sales consideration and not on the whole of sales consideration.
Illustration: Goods worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.2 lakhs has been received in cheque and Rs.3 lakh has been received in cash. Tax is required to be collected under section 206C (1 D) only on cash receipt of Rs.3 lakhs and not on the whole of sales consideration of Rs.5 lakh.
24 June 2016
HUF cannot be a partner but its karta or any individual of HUF can be a partner in a partnership firm in its individual capacity and not the HUF
No. 35/2016-Service Tax
New Delhi, the 23rd June, 2016
G.S.R. ---(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), read with sub-section (5) of section 161 of the Finance Act, 2016 (28 of 2016), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services with respect to which the invoice for the service has been issued on or before the 31st May, 2016, from the whole of Krishi Kalyan Cess leviable thereon, subject to condition that the provision of service has been completed on or before the 31st May, 2016.
[F.No. B-1/21/2016 - TRU]
23 June 2016
FAQ-Company Name Reservation and Incorporation at Central Registration Centre (CRC)-MCA
1. What is Central Registration Centre (CRC)?
The Central Registration Centre (CRC) is an initiative of Ministry of Corporate Affairs (MCA) in Government Process Re-engineering (GPR) with the specific objective of providing speedy incorporation related services in line with global best practices.
2. What services are offered by the CRC presently?
CRC is presently tasked to process applications for name availability (INC-1) and forms related to new companies incorporations (INC-2/INC-7/INC-29/INC-22 and DIR-12.
3. How do I apply for a name for a company?
You can use the services of check name availability for first-hand information on whether the proposed name is available and then apply for it in form INC-1 with six alternative names with deferent prefix word or INC-29 (composite Incorporation Form).
4. What do I do if the name applied for is put under resubmission due to the following reasons :
SIMILAR NAME ALREADY EXISTS :
You are requested to read the mail carefully and follow the query. Before resubmitting please recheck the name from name availability option available at MCA website www.mca.gov.in under ‘services’ tab and the Companies Incorporation rules 2014 with six alternative names .
TRADE MARK EXISTS :
You are requested to read the mail carefully and follow the query. Before resubmitting please recheck the details of Trade Marks are available at MCA website www.mca.gov.in
5. How Can I apply for names which includes words like Insurance, Bank, Stock Exchange, Venture Capital, Asset Management, Nidhi, Mutual Fund, Finance, Chits, Investment, Leasing, Hire purchase etc. or any combination thereof?
Please select ‘yes’ in field 14a of INC-1 (Whether the proposed name includes the words such as Insurance, Bank, Stock exchange, Venture Capital, Asset Management, Nidhi, or Mutual Fund etc.) if name has finance or any other indication of finance activity.
In case of INC-29 (Integrated Incorporation Form), if proposed name includes combination of above words, please select ‘yes’ in field 5 (b) (iv).
In respect of section 8 companies, declaration is required to be attached confirming that after Incorporation, all the mandated requirements of the respective Act/regulator, such as IRDA, RBI, SEBI, MCA etc will be complied with.
The above declarations are required to be given in compliance of rule 8 (2) (b) (iii) and (xiii) of the Companies (Incorporation) Rules 2014(as amended).
6. How can I apply for a name if the name of a Trade Mark is included in its proposed name?
Prescribed particulars in E-form INC-1 are required to be filled in field 11 & 12 duly supported by NOC from the Trade Mark owner.
In case of INC-29, Trade Mark details are required to be filled up in field 5(c) of duly supported by NOC from trade mark owner.
The details of Trade Marks are available at MCA Website www.mca.gov.in under Trade Mark link.
7. How can I apply for a name if combination of the proposed name contains only one word of difference with similar prefix of an existing company?
NOC by way of Board resolution from existing company is required to be attached with e-form.
8. How can I apply for a name if prefix of the proposed name is same to the existing company and activity is not mentioned?
This type of name may be allowed when accompanied with NOC by way of board resolution from the existing companies whose name is same.
9. Can I apply for a name which has the word ‘company’ though the proposed company does not fall under the category of a producer company?
Yes. However, an off-line application has to be made to the Joint Secretary, Ministry of Corporate Affairs, Shastri Bhawan, Dr Rajendra Prasad Road, New Delhi-110 001. MCA will process the application on case to case basis for necessary approval. On approval of the application a pre-formatted INC-1 or INC-29 (enabling therein the word company in its name) will be forwarded to the applicant through the jurisdictional RoC for filing purposes.
10. Can I apply for a name in INC-1 to incorporate a Section 8 company with the words ‘micro-finance’ in its name?
Yes for this type of name, you can apply along with declaration as per rule 12 of the Companies (Incorporation) Rule, 2014 if, license is issued under section 8. However, Finance activity is under regulatory control of RBI. Hence at the time of filing incorporation documents promoters/director of proposed company are required to give undertaking as per rule 12 of the Companies (Incorporation) Rules, 2014.
11. What are the steps for incorporating a Section 8 Company?
(i) To incorporate a Section 8 company the promoter/applicant has to first submit an application in INC-1 for reserving a name for a section 8 company (Select radio button of “section 8 Company”).
(ii) On the approval of this application for name, he has to file INC-12 with Jurisdictional RoC for obtaining a License. While making an application for License in INC-12, the approved SRN of INC-1 is a pre-requisite. Please refer the field 3 (* Indicate Registrar of companies (ROC) reference number for name approval (Service Request Number (SRN) of Form INC-1) of INC-12.
(iii) On obtaining the License, he may file INC-7 for incorporating the company. While filling INC-7 the relevant approved SRN of INC-1 and License Number obtained through INC-12 has to be filled in relevant fields.
Note: While INC-1/INC-2/INC-7 along with relevant linked forms viz. INC-22 and DIR-12 and INC-29 are processed by the CRC, application for License (INC-12) is processed by the jurisdictional RoC.
12. How many times ‘Resubmission/Pending for User Clarification (PUCL)’ is allowed in INC-1/INC-2/INC-7 and INC-29?
Resubmission/PUCL is allowed only ‘once’ (in aggregate) in respect of INC-1/INC-2 and INC-7. However, Resubmission/PUCL is allowed ‘thrice’ (in aggregate
22 June 2016
CBDT abolishes tax on start ups issuing shares above market value
Closely held companies used to issues shares at substantial premium to convert black money into white money without providing any valuation justifying the premium. Thus, the Finance Act, 2012 inserted Section 56(2)(viib) to impose tax on closely held companies receiving consideration for shares in excess of fair market value. Valuations of start ups have fallen sharply, recently, on worries over profitability, growth and intense competition. The Income-Tax Dept. discussed a controversial move to impose tax on those startups under the garb of Section 56(2)(viib) on the ground that their last round of valuation was lower than the first round. This move was likely to upset startups who were already worried over funding issue and falling valuations. Thus, there had been a long standing demand of the industry that the Govt. should either do away such tax on startups or provide a threshold exemption limit. Now the CBDT has abolished such tax on start ups. Any consideration received by start ups from resident persons in excess of fair value of shares shall not be charged to tax as income from other sources under Section 56(2)(viib). Editor's Note : However, this benefit is not available for all startups. Tax exemption is available for only those startups which fulfill the conditions specified in notification of Govt. of India, dated 17-02-2016.
Major impetus to job creation and infrastructure: Radical changes in FDI policy regime; Most sectors on automatic route for FDI
|Sector/Activity||New Cap and Route|
(1)Teleports(setting up of up-linking HUBs/Teleports);
(2)Direct to Home (DTH);
(3)Cable Networks (Multi System operators (MSOs) operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability);(4)Mobile TV;
(5)Headend-in-the Sky Broadcasting Service(HITS)
126.96.36.199.2 Cable Networks (Other MSOs not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))
Infusion of fresh foreign investment, beyond 49% in a company not seeking license/permission from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require FIPB approval
1. Pan Blocking shall be after due notice
PAN to be block after due notice to the tax defaulters.
2. PAN blocking shall deprive defaulters from filing their income tax returns
PAN of tax defaulters shall be be blocked in the system, in a such a way that these defaulters would not be allowed to file their Return of Income.
3. PAN blocking to deprive defaulters benefit of carry forward of losses
Blocking of PAN would mean that defaulters cannot avail the benefit of carry forward of Business Loss and Losses under other heads where filing of Return of Income u/s. 139(1) is mandatory.
4. Blocked PAN to be shared with CIBIL
List of such Blocked PANs can be shared with credit rating agency like CIBIL & Banks, so that these defaulters are not sanctioned any loans or overdraft facility by Public Sector Banks, as the same would become NPAs.
5. Withdraw of facility like LPG etc.
Ministry of Finance can be suggested to withdraw facility like LPG Subsidy etc. which are directly credited in to the Bank A/cs, for the said defaulters i.e. Disincentive to be a tax defaulter.
6. Blocking registration of immovable properties
List of blocked PANs can be circulated to Registrar of Properties with a request for not allowing any registration of immovable properties
19 June 2016
*CBDT notifies tax exemption on investments above fair market rate for startups*
In a major incentive, startups can now issue shares to investors at higher than fair value without worrying about tax consequences.
In a major incentive, startups can now issue shares to investors at higher than fair value without worrying about tax consequences.
The Central Board of Direct Taxes (CBDT) has notified the much awaited tax exemption on investments above fair market rate for startups.
"The exemption provided to startups from the 'rigour' of section 56(2)(viib) of Income Tax Act has been long awaited," Amit Maheshwari, Partner Ashok Maheshwaryand Associates LLP, said.
The effect of the CBDT's notification is that in case a startup gets investment from resident angel investors, family offices or funds which were not registered as venture capital funds, it will not be taxed even if the investment is made in excess to the fair value.
"It has been a long standing industry demand to abolish this Angel tax," Maheshwari said.
A startup is a company in which the public are not "substantially interested" and conforms to certain conditions as prescribed by the Department of Industrial Policy and Promotion (DIPP) in February this year.
Under Indian tax law, if an Indian company receives share subscription amount from an Indian resident which exceeds the fair value of shares, then the excess amount is taxed as income of the Indian company, said Rajesh H Gandhi, Partner, Deloitte Haskins and Sells LLP.
"The notification now exempts startups from this rigorous provision. This is a welcome relaxation and would ensure that startups can issue shares to investors at higher than fair value without worrying about any tax consequences," Gandhi said.
A similar exemption already exists for Venture Capital Funds (VCFs).
Maheshwari said this Angel tax still poses threat to earlier investments which could be perceived as being overvalued in light of the declining valuations globally and in India.
Last week, the DIPP has launched a portal and mobile app through which startups can gather all latest updates on various notifications, circulars issued by various departments and different funding agencies.
In January, Prime Minister Narendra Modihad unveiled a slew of incentives to boost startup businesses, offering them a tax holiday and inspector raj-free regime for three years, capital gains tax exemption and Rs 10,000 crore corpus to fund them.
18 June 2016
*2w,Small Cars, CVs – Hero, Bajaj, TVS, Eicher, AL, Maruti*
Currently, the total tax outgo is ~27% (Excise + VAT + CST). A Standard rate of 18% would lead to a ~9% reduction in vehicle prices thereby stimulating demand. OEMs would benefit largely from savings on logistics and warehousing related costs and a simplified tax maintenance structure.
*Large Cars – M&M*
Currently, M&M’s total tax outgo in the UV segment is ~45% (excise + VAT + CST). Luxury cars are recommended to be taxed at higher/demerit tax rate of 40%. UV prices are therefore, likely to reduce by ~5%. We see very little possibility of the SUV segment taxed at a standard rate of 18%, which if happens, can reduce prices by ~27%. Large carmakers would again benefit largely from savings on logistics and warehousing related costs and a simplified tax maintenance structure.
*Tractors – M&M, Escorts*
Tractors is completely exempted from excise and pays an exempted rate of 4% on VAT. As such total tax outgo (including CST) would be ~6%. Note that as tractors is exempt from excise, OEMs currently receive no MODVAT benefit, leading to an indirect excise duty of ~7% and hence a total tax outgo of ~13%. Tractors are likely to be taxed at the ‘Low’ GST rate of 12%, thereby keeping product prices unchanged.
*Batteries – Exide, Amara Raja*
Other players with vast unorganized segments in the replacement market
GST implementation is expected to bring the unorganized players in the tax net – this should reduce the price gap between organized and unorganized players. Battery industry, with ~40% of the replacement market still unorganized, and is likely to benefit from the same and we expect organized players to gain market share. Other smaller auto ancs, catering to replacement market and competing with the unorganized segment are likely to similarly benefit.
*Tiles – Kajaria*
Currently unorganised sector (~50% of the industry) benefits from tax evasion and lower tax rates at 18% vs current duty of 25-27% paid by the organised players 25-27% will reduce the gap between organised and organized
*Plywood – Centuryply*
Currently, unorganised sector (~75% of the industry) imports raw material without paying duty and final goods are sold without any duty.
Though, 18% tax rate will be lower than what the companies are paying currently (~24.5% excise and VAT), we believe that the companies will pass on the benefits to consumers as demand continues to remain weak. The sector will benefit only when the pricing power is strong in the hands of manufacturers.
Large unorganised sector in the air cooler industry (~85% of total market).
The unorganized segment of the consumer durables segment have been evading the indirect taxes for the past many years. The introduction of GST will bring them within the ambit of indirect taxes and would most likely impact their competitive advantage in terms of pricing. The narrowing of the price differential between the organised and unorganised players would help the organised players increase their market share.
*Consumer and Retail Sector*
*HUL, Colgate, Britannia, GSK Consumer, Nestle, Dabur, Emami, Marico, Godrej Cons*
*Asian Paints, Berger, Havells, Pidilite, HSIL*
§ All consumer companies will stand to gain with respect to supply chain and logistic.
§ Indirect tax rate will come down to (as per recommendations to possibly 18%) which would lead to higher purchasing power.
§ More players to come under tax net. Thus, competitiveness of organized players to further improve.
§ In Categories, which have high pricing power, reduction might not be as much and hence, the benefits will flow down.
Retailers will benefit from reduced logistics related costs
*PC Jeweller, Titan*
· Jewelry retailers too, will benefit from reduced logistics costs
· However, a higher rate on precious metals and gold could impact demand
*IL &FS Transportation*
Implementation of e-permit/e-tolling systems, post GST, will help manufacturers save on logistics costs by reducing travel time, reducing the need for warehouses in multiple states and the need for buffer inventory
*Dish Tv & PVR*
§ Dish TV: The company currently pays ~22% tax on revenues (assuming E-tax rate of 7.5% of revenue) and 4% as special additional duty (SAD). With GST implementation, total tax outgo will reduce depending on the final GST rate (we have done scenario analysis in table below). Further, SAD will also get subsumed with GST implementation. At 18% GST rate, Dish TV would have margin expansion 400bps. We have not assumed 1% additional inter-state movement surcharge as there is no clarity on the same.
§ PVR: The company currently pays 22% E-Tax on gross ticket sales, 7-8% VAT on F&B sales, service tax on inputs (rentals, maintenance and others). With GST implementation total tax outgo will reduce depending on the final GST rate (we have done scenario analysis in table below). Primary benefit to PVR would be offset of service tax paid on inputs (~Rs600-650mn in FY16), this amount will further increase as service tax rate will also increase from 14.5% to 18% (in GST regime). At 18% GST rate, PVR would see EBITDA upgrade of 22% on our current assumption Rs4010mn for FY17E, implying 400-500bps margin expansion.
The constitution of these Tribunals marks the dissolution of the Company Law Board (CLB).
Fourteen years after its introduction in the Companies (Second Amendment) Act, 2002, and after several rounds of litigation, the Government has finally constituted these tribunals. The primary objective of these tribunals is to provide simpler, speedier and more accessible dispute resolution mechanism for company related disputes, by unburdening the courts.
Provided hereunder is a brief summary of the differences between the CLB and the NCLT.
*1. Number of Benches*
While the CLB was functioning with only five benches, the NCLT will commence action with eleven benches. It is expected to eventually have benches across each state in India.
While provisions relating to mergers, restructuring and winding-up have not been notified yet, the NCLT, once fully functional, will consolidate the corporate jurisdiction of the
Board of Industrial and Financial Reconstruction;
Appellate Authority for Industrial and Financial Reconstruction and;
Jurisdiction and powers relating to winding up, restructuring and other such provisions, currently vested in the High Courts.
Once notified, the provisions relating to mergers, restructuring and winding up will no longer be under the jurisdiction of the High Court.
*3. Amicus curiae*
The Draft National Company Law Tribunal Rules, 2013 (Draft Rules) enable the NCLT to appoint Amicus Curiae for opinion on various specialised legal issues.
*4. Other professionals allowed to represent*
Until now, Company Secretaries, Chartered Accountants, Cost Accountants could represent their clients only before the CLB, the scope of which was limited. The Draft Rules enable other professionals to represent their clients in matters pertaining to mergers/ winding-up before the NCLT.
*5. Class action suits*
With the constitution of the NCLT, shareholders and creditors can now file class action suits against the company for breaching the provisions of the Act.
While shareholders have always been allowed to protest against the wrong doings of the management, class action suits takes this a step further. The key difference between oppression, mismanagement (Sections 241-244) and class action suits (Section 245) can be summed up in the following points:
Under Section 245, members as well as deposit holders can file an application as opposed to only member;
Application can be filed, in addition to company and its statutory appointees, against audit firms and any other independent consultants;
Application can be filed for future activities as well in addition to current or past activities.
*6. Dedicated online portal*
The Draft Rules introduce a ‘dedicated online portal’ through which all the parties or central or state government agencies and local government bodies may electronically send and receive documents to or from the NCLT and make required payments.
*7. Electronic filing*
As per the Draft Rules, electronic filing and serving of Tribunal documents shall be mandatory except as provided otherwise, with effect from the date to be notified in the official gazette
*8. Members of the Technical Committee and Selection Committee*
In the NCLT, only officers holding ranks of Secretaries or Additional Secretaries can be considered for appointment as technical members. While the CLB did not have a selection committee, the selection committee for the NCLT comprises of four members including the Chief Justice of India, who will have a casting vote.
Appeals from the NCLT will go the NCLAT, and thereafter with the Supreme Court. The High Courts have been eliminated from the chain of appeals.
*10. Ousting of Civil Court jurisdiction*
Under the old regime, there was no express provision ousting the jurisdiction of the Civil Courts, and various judicial pronouncements have time and again reiterated the requirement of an express provision for ousting Civil Court jurisdiction.
Putting an end to the debate, Section 430 the Act expressly ousts the jurisdiction of Civil Courts.
16 June 2016
Date of ending of the quarter of the financial year
15th July of the financial year
15th October of the financial year
15th January of the financial year
30th April of the financial year immediately following the financial year in which declaration is made.