30 June 2016

PPF Account Premature Closure : Latest Rules & Eligibility Amount Calculation

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 CLARIFICATION ON TCS PROVISION

The CBDT vide Circular No. 23/2016 dt. 24 June 2016 has clarified on FAQs of stakeholders reg. scope of the provisions and the procedure to be followed in case of the amended provisions of Section 206C of the Income Tax Act, as under:

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

ICAI - Clarification that 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 - (23-06-2016) -


 http://resource.cdn.icai.org/42465clcgc32221.pdf

Krishi Kalyan Cess exemption

NOTIFICATION

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]

(Mohit Tiwari)

Under Secretary

23 June 2016

FAQ-Company Name Reservation and Incorporation at Central Registration Centre (CRC)-MCA

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

Cheering news for start ups – 
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.

Radical changes in FDI policy regime

Major impetus to job creation and infrastructure: Radical changes in FDI policy regime; Most sectors on automatic route for FDI

The Union Government has radically liberalized the FDI regime today, with the objective of providing major impetus to employment and job creation in India. The decision was taken at a high-level meeting chaired by Prime Minister Narendra Modi today. This is the second major reform after the last radical changes announced in November 2015.  Now most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI.
In last two years, Government has brought major FDI policy reforms in a number of sectors viz. Defence, Construction Development, Insurance, Pension Sector, Broadcasting Sector, Tea, Coffee, Rubber, Cardamom, Palm Oil Tree and Olive Oil Tree Plantations, Single Brand Retail Trading, Manufacturing Sector, Limited Liability Partnerships, Civil Aviation, Credit Information Companies, Satellites- establishment/operation and Asset Reconstruction Companies. Measures undertaken by the Government have resulted in increased FDI inflows at US$ 55.46 billion in financial year 2015-16, as against US$ 36.04 billion during the financial year 2013-14. This is the highest ever FDI inflow for a particular financial year. However, it is felt that the country has potential to attract far more foreign investment which can be achieved by further liberalizing and simplifying the FDI regime.  India today has been rated as Number 1 FDI Investment Destination by several International Agencies. 
Accordingly the Government has decided to introduce a number of amendments in the FDI Policy. Changes introduced in the FDI policy include increase in sectoral caps, bringing more activities under automatic route and easing of conditionalities for foreign investment. These amendments seek to further simplify the regulations governing FDI in the country and make India an attractive destination for foreign investors.  Details of these changes are given in the following paragraphs:
1. Radical Changes for promoting Food Products manufactured/produced in India
It has now been decided to permit 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India.
2. Foreign Investment in Defence Sector up to 100%
Present FDI regime permits 49% FDI participation in the equity of a company under automatic route.  FDI above 49% is permitted through Government approval on case to case basis, wherever it is likely to result in access to modern and 'state-of-art' technology in the country. In this regard, the following changes have inter-alia been brought in the FDI policy on this sector:
i) Foreign investment beyond 49% has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded.  The condition of access to 'state-of-art' technology in the country has been done away with.
ii) FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.
3. Review of Entry Routes in Broadcasting Carriage Services
FDI policy on Broadcasting carriage services has also been amended. New sectoral caps and entry routes are as under:
Sector/Activity New Cap and Route
5.2.7.1.1
(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)
5.2.7.1.2 Cable Networks (Other MSOs not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))
100%
 Automatic
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
4. Pharmaceutical
The extant FDI policy on pharmaceutical sector provides for 100% FDI under automatic route in greenfield pharma and FDI up to 100% under government approval in brownfield pharma. With the objective of promoting the development of this sector, it has been decided to permit up to 74% FDI under automatic route in brownfield pharmaceuticals and government approval route beyond 74% will continue.  
5. Civil Aviation Sector
(i)  The extant FDI policy on Airports permits 100% FDI under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route. FDI beyond 74% for Brownfield Projects is under government route.
(ii)   With a view to aid in modernization of the existing airports to establish a high standard and help ease the pressure on the existing airports, it has been decided to permit 100% FDI under automatic route in Brownfield Airport projects.
(iii) As per the present FDI policy, foreign investment up to 49% is allowed under automatic route in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service. It has now been decided to raise this limit to 100%, with FDI up to 49% permitted under automatic route and FDI beyond 49% through Government approval. For NRIs, 100% FDI will continue to be allowed under automatic route. However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and  non-scheduled air-transport services up to the limit of 49% of their paid up capital and subject to the laid down conditions in the existing policy.
6. Private Security Agencies
The extant policy permits 49% FDI under government approval route in Private Security Agencies. FDI up to 49% is now permitted under automatic route in this sector and FDI beyond 49% and up to 74% would be permitted with government approval route.
7. Establishment of branch office, liaison office or project office
For establishment of branch office, liaison office or project office or any other place of business in India if the principal business of the applicant is Defence, Telecom, Private Security or Information and Broadcasting, it has been decided that approval of Reserve Bank of India or separate security clearance would not be required in cases where FIPB approval or license/permission by the concerned Ministry/Regulator has already been granted.
8. Animal Husbandry
As per FDI Policy 2016, FDI in Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture is allowed 100% under Automatic Route under controlled conditions. It has been decided to do away with this requirement of 'controlled conditions' for FDI in these activities.
9. Single Brand Retail Trading
It has now been decided to relax local sourcing norms up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having 'state-of-art' and 'cutting edge' technology.
Today's amendments to the FDI Policy are meant to liberalise and simplify the FDI policy so as to provide ease of doing business in the country leading to larger FDI inflows contributing to growth of investment, incomes and employment. PIB

The Income Tax Central Action Plan 2016-17 talks of blocking of PAN

The Income Tax Central Action Plan 2016-17 talks of blocking of PAN. The important highlights of the suggestions are as under:

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

*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.

Source: ET

18 June 2016

Sectoral impact of likely passage of GST Bill


*Automobile*  

*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.

 
*Auto Ancillaries*

*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.
 

*Building materials*

*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.

 

*Cement*

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.

*Consumer Durables*

*Symphony*

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*

*FMCG Staples*

*HUL, Colgate, Britannia, GSK Consumer, Nestle, Dabur, Emami, Marico, Godrej Cons*

*Building Products*

*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.

 

*Fashion Retail*

*Shoppers Stop*

 

Retailers will benefit from reduced logistics related costs

 

*Jewellery Retail*

*PC Jeweller, Titan*

·         Jewelry retailers too, will benefit from reduced logistics costs

·         However, a higher rate on precious metals and gold could impact demand

 

*Infrastructure*

 

*Sadbhav Engineering*

*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

 

*Media*

 

*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.

Ten Features that distinguish the NCLT from CLB

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.

*2. Jurisdiction*

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

CLB;
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.

*9. Appeals*

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

Simplified Procedure-Form 15G-H


Simplification of Procedure for Form No. 15G & 15H — CBDT Clarifications
The CBDT vide Notification No. 9/2016 dt. 7th June, 2016 has clarified about the due date for quarterly uploading of 15G/H declarations by payers on e-filing portal & the manner for dealing with Form 15G/15H received by payer during the period from 1.10.2015 to 31.3.2016, as under:
The existing provisions of section 197A of the Income-tax Act, 1961('the Act') inter alia provide that tax shall not be deducted, if the recipient of certain payment on which tax is deductible furnishes to the payer a self-declaration in Form No.15G/15H in accordance with provisions of the said section. The manner of filing such declarations and the particulars have been laid down in Rule 29C of the Income-tax Rules, 1962 (`the Rules') w.e.f 1.10.2015 vide Notification No.76/2015 dated 29.09.2015.
2. As per sub-rule (7) and (8) of rule 29C of the Rules notified vide aforesaid notification, the Principal Director General of Income-tax (Systems) is required to specify the procedures, formats and standards for the purposes of furnishing and verification of the declaration and allotment of unique identification number. In pursuance of the same, Principal Director General of Income-tax (Systems) has issued Notification No. 4/2015 dated 1st December, 2015 to notify the procedure, formats and standards.
3. Representations have been received for clarification on the following issues:
(a) Due date for quarterly uploading of 15G/H declarations by payers on e-filing portal,
(b) The manner for dealing with Form 15G/15H received by payer during the period from 1.10.2015 to 31.3.2016.
4. In this regard, it is hereby specified that:
a) The due date for quarterly furnishing of 15G/15H declarations received by the payer from 1.4.2016 onwards shall be as given below:
SI. No
Date of ending of the quarter of the financial year
Due Date
1.
30th  June
15th  July of the financial year
2.
30th  September
15th  October of the financial year
3.
31st  December
15th  January of the financial year
4.
31st March
30th  April of   the   financial  year immediately following the financial year in which declaration is made.
(b) The payer shall furnish 15G/15H declarations received during the period from 1.10.2015 to 31.3.2016 on e-filing portal (http://incometaxindiaefiling.gov.in) in the  given format on or before 30th June, 2016.


15 things you should know about Model GST Law

On June 14, 2016 the Finance Ministry has released the 'Model GST Law'. It outlines the structure of the GST regime. Further, the draft of 'Integrated GST Bill, 2016' is also released along with such Model GST laws. It also provides the framework for levy and collection of CGST and SGST. "CGST" is the tax levied under the Central Goods and Services Tax Bill, 2016. "IGST" is the tax levied under the Integrated Goods and Services Tax Bill, 2016.
Key takeaways from Model GST law are given hereunder:
1) Threshold limit for registration
The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds Rs.9 lakhs. However, dealers conducting business in any North Eastern State are required to take registration if their turnover exceeds Rs.4 lakhs.
2) Place of registration
The dealer has to take registration in the State from where taxable goods or services are supplied.
3) Migration of existing taxpayers to GST
Every person already registered under extant law will be issued a certificate of registration on a provisional basis. This certificate shall be valid for period of 6 months. Such person will have to furnish the requisite information within 6 months and on furnishing of such information, final registration certificate shall be granted by the Central/State Government.
4) GST compliance rating score
Every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of this Act. The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain.
5) Levy of Tax
The person registered under this law is liable to pay tax if his aggregate turnover in a financial year exceeds Rs 10 lakhs. However, a dealer conducting business in any of the North Eastern is required to pay tax if his aggregate turnover exceeds Rs. 5 lakhs.
A negative list has also been prescribed for transactions and activities of Government and Local Authorities which shall be exempt from GST levy, like activities of issuance of passport, visa, driving license, birth certificate or death certificate, etc.
6) Taxable Event
The taxable event under GST regime will be supply of goods or services. Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration. It also includes importation of service, whether or not for a consideration.
7) Point of taxation
CGST/SGST shall be payable at the earliest of the following dates, namely:
  (i) Date on which the goods are removed for supply to the recipient (in case of movable goods).
 (ii) Date on which the goods are made available to the recipient (in case of immovable goods).
(iii) Date of issuing invoice by supplier; or
(iv) Date of receipt of payment by supplier; or
 (v) Date on which recipient shows the receipt of the goods in his books of account.
8) TCS on online sales of goods or service
Every E-commerce operator engaged in facilitating the supply of any goods and/or services (like Amazon, Flipkart, etc.) shall collect tax at source at the time of credit or at the time of payment whichever is earlier.
9) Valuation Rules
Such Rules shall apply to the supply of goods and/or services under the IGST/CGST/SGST Bill. Some of the methods prescribed for valuation are given hereunder:
  a) Transaction Value: As per this method the value of goods and/or services shall be the transaction value.
  b) Transaction value of goods or services of like kind: Where value of supply cannot be determined under previous method [i.e. point a], the value shall be determined on the basis of transaction value of goods and/or services of like kind and quality supplied at or about the same time to customers.
  c) Computed Value Method: Where value cannot be determined under previous method [i.e., point b], it shall be based on computed value which shall include cost of production, manufacture or processing of the goods or, the cost of the provision of services, the charges, if any, for design and brand and amount towards profit and general expenses.
  d) Residual Method: Where the value cannot be determined under the computed value method, the value shall be determined using reasonable means consistent with the principles and general provisions of these Rules.
10) Utilization of credit:
Utilization of IGST: The amount of input tax credit on account of IGST available in the electronic credit ledger of dealer shall first be utilized towards payment of IGST and the amount remaining, if any, may be utilized towards the payment of CGST and SGST, in that order.
Utilization of SGST: The amount of input tax credit on account of SGST available in the electronic credit ledger shall first be utilized towards payment of SGST and the amount remaining, if any, may be utilized towards the payment of IGST.
Utilization of CGST: The amount of input tax credit on account of CGST available in the electronic credit ledger shall first be utilized towards payment of CGST and the amount remaining, if any, may be utilized towards the payment of IGST.
Note: The input tax credit on account of CGST shall not be available for payment of SGST.
11) Payment
Any tax, interest, penalty, fee, etc., shall be paid via internet banking or by using credit/debit cards or NEFT or RTGS. This amount shall be credited to the electronic cash ledger of dealer.
12) TDS
The Central or a State Government may mandate certain departments (viz, local authority, Govt. agencies) to deduct tax at the rate of one percent on notified goods or services, where the total value of such supply, under a contract, exceeds Rs 10 lakhs.
13) Refund
A person can claim refund of any tax and interest by making an application in that regard to the prescribed officer of IGST/CGST/SGST. The application can be made before the expiry of two years from the relevant date as may be prescribed. It has been provided that the limitation of two years shall not apply where such tax or interest or the amount has been paid under protest.
14) Returns
Dealers shall be required to furnish following returns
  a) Monthly Return: Every registered taxable person shall have to e-file a monthly return for inward and outward supplies of goods and/or services, input tax credit availed, tax payable, tax paid and other particulars within 20 days after the end of such month.
  b) Return for Composition Scheme: Dealers paying tax under composition scheme shall have to furnish a return for each quarter or part thereof, electronically within 18 days after the end of such quarter.
  c) TDS Return: Every dealer who is required to deduct tax at source shall furnish a return electronically within 10 days after the end of month in which deduction is made.
  d) Return for Input Service Distributor: Every Input Service Distributor shall file e-return for every calendar month or part thereof, within 13 days after the end of such month.
  e) First Return: Every registered taxable person paying CGST/SGST on all intra-State supplies of goods and/or services shall have to furnish the first return from the date on which he became liable to registration till the end of the month in which the registration has been granted.
  f) Annual return: Every registered taxable person shall have to furnish an annual return for every financial year electronically on or before the 31st day of December following the end of such financial year.
  g) Final return: Every registered taxable person who applies for cancellation of registration shall have to furnish a final return within three months of the date of cancellation or date of cancellation order, whichever is later, in a prescribed form.
15) Transitional Provisions
  a. Under the Model GST Law, a registered taxable person will be entitled to take credit of the amount of cenvat credit/ Value Added Tax carried forward in a return furnished by him in respect of the period ending with the day immediately preceeding the appointed day.
  b. As per Model GST Law, a registered taxable person shall be entitled to take in his electronic credit ledger/credit of the unavailed cenvat credit/ unavailed input tax credit in respect of capital goods not carried forward in a return furnished by him for the period ending with the day immediately preceding the appointed day.
  c. If a person registered under GST was not liable to be registered under the earlier law or if he was manufacturing exempted goods under the earlier law which are not taxable, then he will be allowed to take credit of eligible duties and taxes in respect of inputs held in stocks or semi-finished/finished goods.
  d. Every claim for refund of any duty/tax and interest, if any, paid on such duty/tax or any other amount, filed by any person before the appointed day, shall be disposed of in accordance with the provisions of earlier law and any amount eventually accruing to him shall be paid in cash. However, where any claim for refund is fully or partially rejected, the amount so rejected shall lapse

Source:taxmann

Don't stress about the future, it hasn't arrived yet

Don't stress about the future, it hasn't arrived yet.

11 June 2016

Separate date for furnishing 15G/15H

Separate date for furnishing 15G/15H announced by CBDT vide Notification dated 09-06-2016

Earlier, TDS return for June was required to be filed by 31st July, for Sep by 31st October, for December by 31st January, for March by 31st May as per N/N 30/2012 dtd. 29-04-2016.

No separate date was prescribed for 15G/15H.However now, separate dates for uploading 15G/15H have been provided vide Notification dated 09-06-2016.

Due Date for QE 30 June shall be 15th July, for 30th Sep shall be 15th October, for 31st December shall be 15th January and for 31st March it shall be 30th April

It means for first three quarters 15G/15H to be filed 16 days ahead of due date for TDS return and for last quarter a month ahead for TDS return, thus maintaining a time distance between the TDS return and 15G/15H so that information regarding 15G/15H may be timely submitted in TDS return.

07 June 2016

Amended Rule 8D for computation of disallowance u/s 14A

CBDT notifies amended Rule 8D for computation of disallowance u/s 14A, clarifies that amount of disallowance as computed under Rule 8D shall not exceed total expenditure claimed by the assessee; Deletes sub-clause (ii) in Rule 8D(2) which dealt with computation of expenditure towards interest (not directly attributable to any particular income/ receipt) as per the prescribed formula; Increases the rate to be applied on annual average value of investments from 0.5% to 1%; Amended Rule shall come into force on the date of its publication in the Official Gazette: CBDT

No Service tax Audit by Department

In the Delhi High Court Mega Cabs Pvt. Ltd. filed writ petition (C) No. 5192/2015 [[Mega Cab v UOI and Anr.] challenging the validity of Rule 5A(2) of the Service Tax Rules as substituted by Notification No. 23/2014-ST, dated 05.12.2014, clause (k) of sub-section (2) of section 94 of the Finance Act, 1994 as inserted w.e.f. 06.08.2014 by the Finance Act, 2014 and also the Circular No. 181/7/2014-ST dated 10.12.2014 directing departmental officers to conduct audit of the service tax assessees as provided in the departmental instructions. In the matter, Delhi High Court has entertain the said writ petition and by order dated 22.05.2015 please to issue Notice to the Union of India, Ministry of Finance, and also to the Service Tax (Audit) Department, Delhi. 
Yesterday, (03.06.2016), the Delhi High Court delivered a landmark Judgment [Mega Cab v UOI and Anr. in WP(C) 5192/2015] - no more audit of assessee records by the Central Excise and Service Tax Department and strike down Rule 5A(2) of Service Tax Rules as ultra vires to the Finance Act, 1994.
The Court also held that "verification" in clause (k) of sub-section (2) of section 94 of the Finance Act, 1994 cannot be constructed as  "audit" which is specialized function otherwise clause (k) suffered from the vice of excessive delegation of legislative power by the Parliament.
The Court also strike down the Circular No. 181/7/2014-ST (F. No. 137/46/2014-ST), dated 10-12-2014 regarding Audit of the Service Tax assessees by the officers of Service Tax and Central Excise Commissionerates as well as circular dated Circular No. 995/2/2015-CX (F. No. 206/03/2014-CX.6),dated 27-2-2015 regarding Central Excise and Service Tax Audit norms to be followed by the Audit Commissionerates.
The High Court further held that Audit Manual – 2015 issued by the Department also has no statutory force by observing that earlier Audit Manual 2011 was also declared without any statutory backing Travelite (India) v UOI 2014 (35) S.T.R. 653 (Del.). The Government has not down anything to remove the defect pointed out in Travelite (India) judgment.
The Court also quashed impugned letter C. No. I-26(494)ST/AMR-48B/Mega Cabs/C-IV/gr-1/2013/383 dated 30.04.2015 issued by service tax Department to Mega Cab regarding audit.
It is a general practice of Service Tax Department to conduct audit of service tax assessee for last five years by deputing their own officers of the rank of inspector and Superintendents. Service Tax Department also seeks voluminous details and seeks information in self-specified format/annexures of about 32 pages, which are not prescribed under the law. Service Tax Department without assigning any reasons and routinely conducts audit even when it is not prescribed under the law and not conducting special audit.
It may be noted that earlier Rule 5A(2) was struck down as ultra vires by  the Hon'ble Delhi High Court in the matter of Travelite (India) v UOI 2014 (35) S.T.R. 653 (Del.), after that amendment was made by the Finance Act, 2014 by inserting clause (k) of sub-section (2) of section 94 and on the basis of that sub-rule (2) to Rule 5A has been again enacted. Whereas in Circular No. 181/7/2014-ST dated 10.12.2014, stand has been taken by the Government that Travelite (India)  judgment can be distinguished as a clear statutory backing for the rule now exists in section 94(2)(k) of the said Act.
The High Court has given detailed judgment considering various judgments. Now this judgment made is clear that the officers of the Department has no power to conduct audit at all. Similarly, the CAG officers also have no power to conduct audit of the assesse records.

Cost inflation index for F.Y.2016-17 will be 1125

Cost inflation index for F.Y.2016-17 will be 1125.

Notification No. 42/2016 dt 2 June 2016

04 June 2016

IDRS

Analysis of Indirect Tax Dispute Resolution Scheme, 2016 (IDRS)
 Indirect Tax Dispute Resolution Scheme, 2016 (IDRS) has been introduced by Finance Act, 2016, vide Chapter XI.  The salient features of the scheme are as follows:

1.         Applicability:
 It shall be applicable to the declarations made up to the 31st day of December, 2016.
 2.         Who can Apply:
Any person whose appeal is pending before Commissioner (Appeals) can opt for this scheme except the following cases, when:
(a)     the impugned order is in respect of search and seizure proceeding; or
(b)     prosecution for any offence punishable under the Act has been instituted before the 1st day of June, 2016; or
(c)     the impugned order is in respect  of narcotic drugs or other prohibited goods; or
(d)     impugned order is in respect of any offence punishable under the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985 or the Prevention of Corruption  Act, 1988; or
(e)     any detention order has been passed under the Conservation of Foreign Exchange and Prevention of Smuggling Act, 1974.
3.         Process of Declaration and getting relieving order:
A person has to follow the following process to benefit from the scheme:
Declare
(1)         Any person opts for the scheme shall apply in Form 1 (in duplicate) in respect of the amount payable under the Scheme on or before 31st December 2016.

Acknowledgement of declaration
(2)         The designated authority shall acknowledge the declaration in Form 2 within seven days of the receipt of declaration.
(3)         Copy of the declaration (Form 1) and the acknowledgement issued by the designated authority (Form 2) shall be furnished within fifteen days of the receipt of acknowledgement by the declarant to the concerned Commissioner (Appeals) before whom the appeal in respect of which the declaration has been made is pending.  No form been prescribed and thus, the filing can be done under a simple letter.
(4)         On the receipt of the declaration and acknowledgement, Commissioner (Appeals) shall not proceed with the appeal in respect of which the declaration has been made for a period of sixty days from the date of receipt of information (Form 1 and Form 2).
Pay Taxes
(5)         The declarant shall pay tax due alongwith the interest thereon at the rate as provided in the Act and penalty equivalent to twenty-five per cent. of the penalty imposed in the impugned order, within fifteen days of the receipt of Form 2.
Intimate about payment
(6)         Declarant should intimate the designated authority in Form 3 within seven days of making such payment giving the details of payment made along with the proof thereof.
Order of discharge
(7)         The designated authority shall, within fifteen days of receipt of the information about the deposit made as submitted in Form 3, issue the order of discharge of dues in respect of the declaration made in Form 4.

Intimate Commissioner (Appeals)
(8)         The declarant shall intimate the concerned Commissioner (Appeals) along with the copy of the order of discharge of dues issued by the designated authority before the expiry of the period of sixty days from his first intimation to Commissioner (Appeals). Since no form has been prescribed, such intimation made be made in form of simple letter.
(9)         On the receipt of the information along with the copy of the order of discharge of dues issued by the designated authority, Commissioner (Appeals) shall remove the appeal from the list of pending appeals with him and intimate the declarant within seven days of the receipt of information.
4.         Immunity from other proceedings under Act.
Upon the passing of an order in Form 4, the appeal pending before the Commissioner (Appeals) shall stand disposed of and the declarant shall get immunity from all proceedings under the Act, in respect of the indirect tax dispute for which the declaration has been made under this Scheme.  Thereafter, no matter relating to the impugned order shall be reopened thereafter in any proceedings under the Act before any authority or court.
5.         Consequences of order made under scheme.
Any amount paid in pursuance of a declaration shall not be refunded.   Also, order of relief in Form 4 shall not be deemed to be an order on merits and has no binding effect in future before any authorities.
6.         Frequently asked Questions
Q1.      Do I have to make seeprate declarations for each appeal or can I file one declaration against all pending appeals.
You have to file separate declarations for every appeal.

Q2.      I have three appeals pending before Commissioner (Appels).  I want to make declaration only for one while the other two I want to contest.  Can I do so?
Yes. Since the declaration is separate for each appeal, when made for one of the appeals would not have any impact on any other pending appeal.

Q3.      Can I opt for the scheme for part of demand against which appeal has been filed i.e. out of three issued pending in an appeal, can I opt for one issue under this scheme and contest the balance two issues?
No. Since the declaration is single for each appeal, there is no provision of opting for part of demand pending in a single appeal.

Q4.      Who can sign the declaration?
The declaration shall be verified in the manner indicated therein and shall be signed by the person making such declaration or by any person competent to act on his behalf.

Q5.      Can I pay demand under this scheme from Cenvat credit?
There is no restriction in such payment as per the scheme provided.  However, interest and penalty cannot be paid by Cenvat credit.  However, as per intimation Form 3, there is no column for such adjustment and thus, the intent of the drafters might be payment in cash only.

Q6.      Will an order of relief in Form 4 shall mean that I have got the order in appeal in my favour?
The scheme is only a dispute resolution scheme and in no manner provides any order on merit.  It simply relieves an assessee from a pending appeal and all proceedings, but such order cannot be used in merit in any future matter of same or some other assessee.

Q7.      Till when should I pay interest under the scheme?
Interest is to be computed and paid upto the date when tax is paid by the assessee under the scheme.

Q8.      I have already deposited 7.5% as stay requirement against such appeal.  Can I take the amount in computing my discharge or should I apply for refund of such amount?
Amount deposited in pending proceedings in the view of the author should be considered as payment under the present scheme.

Q9.      I have deposited tax and interest but failed to pay penalty within 15 days.  Can I still get immunity under the scheme?
No, if the penalty is not paid within he specified time, no relief under the scheme shall be given to the declarant.

Q9.      My declcaration has been rejected for non payment.  Can I adjust the amount paid towards demand upheld by Commissioner (Appeals)?
Yes, any deposit under the scheme when rejected should be considered for demand upheld by Commissioner (Appeal).
 (Courtesy: Gaurav Gupta)

Income Tax Provisions Applicable from 1st June 2016

Income Tax Provisions Applicable from 1st June 2016

(i)         Amendment relating to Advance Tax (The change is effective from financial year 2016-17 onwards)

The schedule for payment of Advance Tax by an Individual and other non-corporate assessee has been amended w.e.f.  1st June 2016 as under:

Due Date of Installment
Amount Payable
On or before 15th June
15% of Advance Tax
On or before 15th September
45% of Advance Tax
On or before 15th December
75% of Advance Tax
On or before 15th March
100% of Advance Tax

Earlier, there was no requirement of paying advance tax in respect of assessees’ who opted for non maintenance of books of accounts and declared profit @8% of gross receipts subject to a maximum of Rs. 1 crore which limit has been enhanced to Rs. 2 crores w.e.f. financial year 2016-17.

In case of such assesses’ (whose businesses are eligible for applying tax @8% on gross receipt) under section 44AD of the Act are also now required to pay 100% of the tax due on such income before 15th March, from financial year 2016-17 onwards.

(ii)           Amendments relating to TDS and TCS

(a)          Increase in threshold limit of deduction of tax at source on various payments mentioned in the relevant sections of the Act




Section

Threshold Limit upto 31st May 2016 (Rs.)
Threshold Limit from 1st June 2016 (Rs.)
192A Payment of accumulated balance due to an employee by the trustees of the Employees Provident Fund Scheme , 1952
30,000
50,000
194BB Winnings from Horse Race
5,000
10,000
194C Payments to Contractors
Aggregate annual limit of  75000
Aggregate annual limit of  100000
194LA Payment of Compensation on acquisition of certain Immovable Property
2,00,000
2,50,000
194D Insurance commission
20,000
15000
194G Commission on sale of lottery tickets
1,000
15000
194H Commission or brokerage
5,000
15000

(b)  Revision in rates of deduction of tax at source on various payments mentioned in the relevant sections of the Act :-

Section
TDS Rates  up to 31st May 2016 TDS (%)
TDS  Rate w.e.f.  1st June 2016 (%)
194DA Payment in respect of Life Insurance Policy
2%
1%
194EE Payments in respect of NSS Deposits
20%
10%
194D Insurance commission
10%
5%
194G Commission on sale of lottery tickets
10%
5%
194H Commission or brokerage
10%
5%

(c)          Regarding : TCS on sale of Vehicles; Goods or services  :-

The following modifications have been made in the scheme of tax collection at source given under section 206C (with effect from 1st June , 2016) –

Sub-section (1F) has been inserted.

This sub-section provides that every person (being a seller who receives any amount as consideration for sale of motor vehicle of value exceeding Rs. 10,00,000 shall collect the tax at the rate of 1 per cent of sale consideration .

This will be applicable whether payment is made by the purchaser in cash or by the issue of a cheque or draft or by any other mode.

Under the existing provisions of sub-section (1D) , seller of bullion (exceeding Rs. 2 lakhs) or jewellery (exceeding Rs. 5 lakhs)  is required to collect tax at source, if the consideration (or any part of it) is received in cash. In such case, tax was required to be collected at the rate of 1 per cent of sale consideration.

New provision

The requirement of collection of tax at source @ 1% from the buyer of goods or services exceeding Rs. 2 lacs has become effective from 1st June, 2016 in case the transaction of purchase of goods or provision of services exceeds Rs. 2 lacs in part or fully is received in cash in case of a single invoice

To illustrate in case a purchase of Rs. 2,50,000/- is made through a single invoice and the buyer pays Rs. 1,50,000/- by cheque and Rs. 1 lac in cash the provision would be attracted and the seller would have to collect 1% of Rs. 2,50,000/-. 
However, provisions of sub-section (1D) will not be applicable in the following 2 cases –

(a)    No tax shall be collected at source on any amount on which tax has been deducted by the payer as applicable.

(b)    Provision of sub-section (1D) will not apply in relation to sale of any goods (other than bullion or jewellery) or service to such classes of buyer who fulfill such conditions, as may be prescribed (As yet no condition has been prescribed).

(iii)             Expenses incurred by the assessee towards specified services to be covered under section 40(a)(ib) [W.e.f. 1-6-2016]

A new levy @ 6% (referred to as Equalization  levy) has been made applicable to payment of online advertisements, provision for digital advertising space or any other facility or service for the purpose of online advertisements or any other notified services to a non-resident (who does not have a Permanent Establishment (PE) in India) provided to:

(a)         a resident in India  or
(b)         a non-resident having a Permanent Establishment (PE) in India

Equalization levy is to be deducted by the payer from the amount paid/ payable to the non-resident service provider.

Any consideration paid or payable (to non-resident for a specified service on which equalization levy is applicable) will be disallowed from June 1, 2016 (i.e. this assessment year 2017-18) in the following cases –

(a)   Equalization levy is deductible but such levy has not been deducted.
(b)  Equalization levy is deductible (and it is so deducted) but it is not deposited [on or before the due date of submission of return of income under section 139(1).
If, however, equalization levy is deducted / deposited in a subsequent year, the aforesaid consideration shall be allowed as a deduction in computing the income of the previous year in which such levy has been paid.

(iv)      Enabling of Filing of Form 15G/15H for rental payments [Section 197A]  [1-6- 2016

At present form 15G can be filled up by a resident assessee requesting for non-deduction of tax at source from certain payments made to him if his income is below the tax exemption limit, similarly, form 15H can be submitted by senior citizen ( above 60 years of age and very senior citizen above 80 years of age). The scope of income that can be included in the above forms is as under:

(i)              Amount received from withdrawal from Employees Provident Fund Scheme
(ii)            Dividend Income
(iii)          Interest other than Interest on Securities
(iv)          Sum received from Life Insurance Policy
(v)            Sum received from National Savings Scheme
(vi)           Rental income has also been allowed to be included in the declarations.

(v)        Relief to a non-resident for furnishing PAN [Section 206AA]

Section 206AA, inter alia, provides that any person (who is entitled to receive any sum on which tax is deductible at source) shall furnish his PAN to the deductor, failing which tax shall be deducted at the rate mentioned in the relevant provision or at the rate of 20 per cent, whichever is higher.

Amendment - Which effect from June 1, 2016, sub-section (7) of the said section has been substituted to provide that above provisions shall not apply to a non-resident / foreign company (who does not have PAN) subject to such condition as may be prescribed (as yet not prescribed).

(vi)      Amendment to section 133C

Section 133C empowers the prescribed income-tax authority to issue notice calling for information and documents for the purpose of verification of information in its possession. This section has been amended (with effect from June 1, 2016) to further provide that the information and documents so obtained by the prescribed income-tax authority may be scrutinized and the outcome of such scrutiny may be made available to the Assessing Officer for further necessary action, if any.

Other amendments not covered in detail effective from 1st June 2016 which would be communicated in a separate mail which are being mentioned here under for the sake of information and are as under:-

(vii)        Income Declaration Scheme 2016 - This scheme will be effective from 1 June 2016 (already notified)

In case you have any income to declare you may discuss the same with us . The tax involved is 45% of the amount proposed to be declared and the eligibility for declaration is subject to certain specified conditions.

(viii)      The Direct Tax Dispute Resolution Scheme, 2016


In case you have any appeal proceedings pending before the Commissioner of Income Tax (Appeals) and the issue involved is not entirely in your favour you may decide to opt for said scheme. 

Empanel as Concurrent Auditors

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