12 POINTS TO KNOW FOR NRIS/TO BE NRIs

1. NRIs whose taxable Indian Income exceeds basic exemption limit or who have earned short-term or long-term capital gains from sale of any investments or assets are liable to file income tax return in India, even if the gains are less than the basic exemption limit.

2. Exception: If taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, there is no need to file tax return.

3. But please remember, for claiming refund of excess TDS, filing tax return is compulsory.

4. Types of bank accounts for NRIs: NRE, NRO and FCNR.

5. Funds in NRE savings accounts are held in convertible rupees - principle and interest are fully repatriable. Interest is fully exempt from tax in India.

No TDS on deposits doesn't mean these are tax-free

Are you receiving emails or telephone calls from banks advising you to invest in recurring deposits because there is no tax deducted at source (TDS) in this case? Remember, such investments aren’t tax-free.

No TDS merely means the bank will pay you the entire interest amount without forwarding the tax on it to the government. However, the fixed deposit holder will have to include this interest income in her/his total income and pay tax on this, according to her/his tax bracket.

Whether provisions of Sec 10A enlarge ambit of term 'computer programme' by including process of management of electronic data - YES: ITAT

THE issue before the Bench is - Whether the provisions of Sec 10A enlarge the ambit of the term 'computer programme' by including the process of management of electronic data. And the answer favours the assessee.

Facts of the case

TDS FROM PAYMENT TO CONTRACTOR SEC. 194 C

Any person responsible for paying any sum to any resident for carrying out any work including supply of labour for carrying out any work in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or the time of payment thereof in

Dividend Stripping!!

What does dividend stripping mean? It refers to a practice of buying shares of a company or units of a mutual fund just before the record date for declaring a dividend, receiving the dividend and then selling the security/unit after the record date.

Normally, the investor would incur a short-term capital loss (because the ex-dividend sale price of

Important points before submitting TDS statements for 4th Quarter of Financial Year 2013-14

One should take care of the following information before submitting TDS statements for 4th Quarter of Financial Year 2013-14

Payment of Taxes deducted/ collected:

• In accordance with Central Government Account (Receipts and Payments) Rules, 1983, Government dues are deemed to have been paid on the date on which the cheque or draft tendered to the bank, was cleared and entered in the receipt scroll.
• Rule 125 of Income Tax Rules, 1962 provisions for Electronic Payment of Tax by way of internet banking facility, for a Company and a Person to whom provisions of section 44AB of the Act are applicable. 

Whether income from letting out property is to be treated as business income merely because property is commercial in nature and rental is exorbitantly high - NO: ITAT

THE issue before the bench is - Whether income from letting out of property can be treated as business income and not as income from house property just because rental income was too high and the property was commercial in nature. NO is the Tribunal's answer.

Facts of the case

The AO noted that the assessee had disclosed income from house property of Rs. 104,887,980/-

File Income Tax Return for Asstt. Year 2014-15 without login on TRACE.

The Income Tax Department has developed the latest JAVA Technology ITR Forms ITR-1 (Sahaj) & ITR-4S (Subam) which have been made to make it user friendly for Asstt. Year 2014-15. This utility can be run on Windows 7.0 or above and latest Linux operating systems, where Java Runtime Environment Version 7 Update 13 (jre 1.7 is also known as jre version 7) or above is installed.

E FILING MANDATORY FROM AY 2014-15 FOR ALL TAXPAYER

Any assessee having total income of Rs. 5 Lakhs and above from AY 2013-14 and subsequent Assessment Years.

Individual/ HUF, being resident, having assets located outside India from AY 2012-13 and subsequent Assessment Years.

Taxability of Housing Societies

Taxability of Housing Societies

In general the perception is that income of Co–operative Societies is not chargeable to tax and therefore many societies do not bother to take PAN No. & file Income Tax returns. This is a wrong perception since though certain types of income of CHS are exempt there are other incomes which are chargeable to Tax.

         We now examine on a case by case basis the income which is normally earned by a Co – Operative Society’s:

Immediate Changes (Companies Act, 2013)

Sl.No.	Agenda	Brief description
1.	Stationery requirements	The Company’s (i) letterhead {business letters}, (ii) billheads, (iii) letter papers, (iv) notices; and (v) other official publications to capture these additional requirements: 1. Company’s former name(s) (since the last two years) to be reflected in the above listed documents for the next two years (since April 1, 2014), 2. Corporate Identity Number, 3. Telephone number, 4. Fax number (if any), 5. Email address, and

Hyderabad Tribunal rules on transfer pricing aspects of corporate guarantee

This Tax Alert summarizes a recent ruling of Hyderabad Income Tax Appellate Tribunal (ITAT) in the case of Four Soft Pvt Ltd, Hyderabad (Taxpayer) on transfer pricing (TP) issues arising from the issuance of a corporate guarantee to banks in favor of associated enterprises (AEs). The Taxpayer, an Indian company, provided a guarantee to a third party bank on behalf of its foreign subsidiary. The Taxpayer did not charge its subsidiary a guarantee fee for provision of such corporate guarantee. During audit proceedings, the Transfer Pricing Officer (TPO) imputed a TP adjustment of 3.75% as an arm’s length guarantee fee. The TPO determined the rate based on the commission charged by an unrelated bank for providing a bank guarantee to customers. The Taxpayer relied on the ITAT’s ruling in its own case for an earlier year to argue that the provision of a guarantee is not an international transaction to which the TP

CPC (TDS) advisory for submitting Form 24Q, Q4 TDS statements for Financial Year 2013-14

Dear Deductor,

Greetings from CPC(TDS) team.

As esteemed stakeholder of CPC(TDS), it may be noted that the due date for filing 24Q quarterly TDS statement for 4^th quarter of FY 2013-14 is approaching fast. You are advised to file TDS statements well before due date (15^thMay, 2014).

It is also requested to refer to Circular 8 of 2013 dated October 10, 2013 in the context of Tax Deduction at Source on Salary Income (attached for your reference) for Computation of Income and Manner of deductionof tax at source.

CDBT Directive On Opposing Mergers/ Amalgamations/ De-Mergers

The CBDT has issued a letter dated 11.04.2014 pointing out that in a recent case, a scheme of amalgamation was designed to seek amalgamation with retrospective effect so as to claim set-off of losses of the amalgamated company with the profits of the amalgamating company. Though the department filed an intervention application in the High Court to object to the amalgamation, the same was dismissed on the ground that the department had no locus standi in the matter. The CBDT has stated that to avoid this situation again, the procedure prescribed in this behalf vide MCA’s Circular No. 1/2014 dated 15.01.2014 (pdf) for objecting to amalgamations etc which are prejudicial to the interests of the revenue should be followed.

Method of Converting Partnership into LLP

To convert partnership firm into limited liability partnership (LLP) one needs to comply with various requirements. The procedure for conversion of Firm into LLP is not a cumbersome process, one need to just comply with the legal & procedural formalities which are described as under –
Some of the pre-requisites for conversion are as follows –

Tax Planning On Sale of House Property

Whenever a person sells any property, he has to pay income tax on the gain he earned.  This gain is the difference between the sale price of the property and the purchase price of the property. 

As we see the property rates have multiplied in recent years, this will result in big amount of capital gain and the person will have to pay income tax on this capital gain. 

Whether profits from mere sale of open land or unused FSI as part of housing project where FSI utilization is way short of permissible limits can be said to have been derived from such project u/s 80IB(10) - NO: High Court

THE issue before the Bench is - Whether mere sale of open land or unused FSI as part of the housing project where utilization of the FSI is way short of permissible limits can be said to have been derived from such housing project. No is the answer from the Bench.

Facts of the case

A) The assessee are developers. They had developed housing projects fulfilling the conditions contained in section 80IB(10) and claimed deduction on the profits earned from sale of such

Whether initiation of re-assessment u/s 147 gets vitiated merely because AO fails to correct assessment completed u/s 143(1) by issuing notice u/s 1432(2) - NO: High Court

THE issues before the Bench are - Whether initiation of re-assessment u/s 147 gets vitiated merely because the AO fails to correct assessment completed u/s 143(1) by issuing notice u/s 1432(2) and Whether a prima facie opinion on escapement of income is good enough reason to resort to the provisions of Sec 147. And the verdict goes against the assessee.

Facts of the case

Best practices to be followed for filing Q4 TDS statements for Financial Year 2013-14

Date of communication : 10/04/2014

Dear Deductor,

CPC (TDS) is reaching out to you to ensure that the best practices are followed for filing of your Q4 TDS statements. The emphasis is on timely, correct and complete reporting for taxes deducted at source, to ensure that the deductees are able to correctly claim TDS Credits and for generating correct TDS Certificates. As the due date for filing quarterly TDS statement for 4^th quarter is approaching close, you are requested to take note of following important information before submitting TDS statements.

Whether provisions of Sec 40A(9) would hit on mere making of provision for retirement benefits to employees - NO: Madras HC

THE issues before the Bench are - Whether where a provision was made that to pay the service weightage to the employees on the eve of their retirement even if there was no sum credited to an individual account, the contribution could be termed as contribution to a fund or a trust; Whether where a mere provision for retirement benefit was made in the accounts and there being no fund, the assessee’s case would be hit by Section 40A(9) of the Income Tax Act and Whether where a provision was made in the books of account for retirement benefit based on the service weightage, and the scheme was not a recognised one, the claim would be hit by Section 40A(7)(a) of the Income Tax Act. And the verdict goes in favour of the assessee.