Exemption to transport of goods by Rail further extended

Section 65(105)(zzzp) of the Finance Act, 1994 – Transport of goods by rail service – Exemption to transport of goods by rail – Amendment in Notification No. 7/2010-ST, dated 27-2-2010

Amends Notification No.7/2010-ST dated 27.02.2010 effective date extended from April to July.

Notification No.7/2012-ST, dated 17-3-2012

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.7/2010-Service Tax, dated the 27th February, 2010, published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i), vide number G.S.R. 151 (E), dated the 27th February, 2010, namely:-

2. In the said notification, in para 2, for the word ‘April’, the word ‘July’, shall be substituted

60% Abatement to Services provided by Air Craft operators for domestic or International Journey

60% Abatement to Services provided by Air Craft operators for domestic or International Journey. (Taxable service under category zzzo)

Section 65(105)(zzzo) of the Finance Act, 1994 – Transport of passengers by air service – Abatement provision supersession of notification no. 26/2010-st, dated 22-6-2010

Notification No.6/2012 – ST, dated 17-3-2012

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act) and in supersession of the Government of India in the Ministry of Finance (Department of Revenue) notification number 26/2010-Service Tax, dated the 22nd June, 2010, published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i) vide number G.S.R. 532(E), dated the 22nd June, 2010, except as respects things done or omitted to be done before such supersession, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service specified in clause (zzzo) of sub-section (105) of section 65 of the Finance Act, from so much of the service tax leviable thereon under section 66 of the Finance Act, as is in excess of the service tax calculated on a value which is equivalent to forty per cent of the value of the taxable service by such service provider for providing the said taxable service:

Provided that this notification shall not apply in cases where the CENVAT credit of duty on inputs or capital goods, used for providing such taxable service, has been taken under the provisions of the CENVAT Credit Rules, 2004.

2. This notification shall come into force on the 1st day of April, 2012.

Service Tax – Small service provider – Aggregate value defined in terms of invoices issued instead of payments received

mends Notification No.6/2005 (Service Tax) (small service provider) aggregate value defined in terms of invoices issued instead of payments received

Threshold exemptions – Amendment in Notification No. 6/2005-ST, DATED 1-3-2005

Notification No.5/2012 – ST, Dated 17-3-2012

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.6/2005-Service Tax, dated the 1st March, 2005, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. number 140(E), dated the 1st March, 2005, namely:-

In the said notification, in the Explanation, for item (B), the following item shall be substituted, namely:-

‘(B) “aggregate value” means the sum total of value of taxable services charged in the first consecutive invoices issued or required to be issued, as the case may be, during a financial year but does not include value charged in invoices issued towards such services which are exempt from whole of service tax leviable thereon under section 66 of the said Finance Act under any other notification‘.

2. This notification shall come into force on the 1st day of April, 2012.

Amendment in Point of Taxation Rules

Point of Taxation (Amendment) Rules, 2012 – Amendment in rules 2, 3 and 4; insertion of rules 2A and 8A; substitution of rules 5 & 7 and omission of rule 6

Notification No.4/2012 – ST, dated 17-3-2012

In exercise of the powers conferred by clause (a) and clause (hhh) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Point of Taxation Rules, 2011, namely:-

1. (1) These rules may be called the Point of Taxation (Amendment) Rules, 2012.

(2) They shall come into force on the 1st day of April, 2012.

2. In the Point of Taxation Rules, 2011 (hereinafter referred to as the said rules), in rule 2, -

(a)  after clause (b), the following clause shall be inserted, namely :-

(ba)  “change in effective rate of tax” shall include a change in the portion of value on which tax is payable in terms of a notification issued in the Official Gazette under the provisions of the Act, or rules made thereunder;

(b)  in clause (c), for the words “or to be provided continuously, under a contract, for a period exceeding three months,” , the words “or to be provided continuously or on recurrent basis, under a contract, for a period exceeding three months with the obligation for payment periodically or from time to time,” shall be substituted.

3. After rule 2 of the said rules, the following rule shall be inserted, namely:-

’2A. Date of payment.- For the purposes of these rules, “date of payment” shall be the earlier of the dates on which the payment is entered in the books of accounts or is credited to the bank account of the person liable to pay tax:

Provided that -

(A)  the date of payment shall be the date of credit in the bank account when -

 (i)  there is a change in effective rate of tax or when a service is taxed for the first time during the period between such entry in books of accounts and its credit in the bank account; and

(ii)  the credit in the bank account is after four working days from the date when there is change in effective rate of tax or a service is taxed for the first time; and

(iii)  the payment is made by way of an instrument which is credited to a bank account,

(B)  if any rule requires determination of the time or date of payment received, the expression “date of payment” shall be construed to mean such date on which the payment is received;’.

4. In rule 3 of the said rules,-

(a)  in clause (a), for the proviso, the following proviso shall be substituted, namely:-

“Provided that where the invoice is not issued within the time period specified in rule 4A of the Service Tax Rules,1994, the point of taxation shall be the date of completion of provision of the service”;

(b)  after clause (b), the following proviso shall be inserted, namely:-

“Provided that for the purposes of clauses (a) and (b), -

 (i)  in case of continuous supply of service where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the receiver of service to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service;

(ii)  wherever the provider of taxable service receives a payment up to rupees one thousand in excess of the amount indicated in the invoice, the point of taxation to the extent of such excess amount, at the option of the provider of taxable service, shall be determined in accordance with the provisions of clause (a).”

5. In rule 4 of the said rules, the Explanation shall be omitted.

6. For rule 5 of the said rules, the following shall be substituted, namely:-

“5. Payment of tax in case of new services.-Where a service is taxed for the first time, then,-

(a)  no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable;

(b)  no tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within fourteen days of the date when the service is taxed for the first time.”.

7. Rule 6 of the said rules shall be omitted.

8. For rule 7 of the said rules, the following rule shall be substituted, namely:-

’7. Determination of point of taxation in case of specified services or persons.-Notwithstanding anything contained in these rules, the point of taxation in respect of the persons required to pay tax as recipients of service under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Act, shall be the date on which payment is made:

Provided that, where the payment is not made within a period of six months of the date of invoice, the point of taxation shall be determined as if this rule does not exist:

Provided further that in case of “associated enterprises”, where the person providing the service is located outside India, the point of taxation shall be the date of debit in the books of account of the person receiving the service or date of making the payment whichever is earlier.’

9. After rule 8 of the said rules, the following rule shall be inserted, namely:-

“8A. Determination of point of taxation in other cases.- Where the point of taxation cannot be determined as per these rules as the date of invoice or the date of payment or both are not available, the Central Excise officer, may, require the concerned person to produce such accounts, documents or other evidence as he may deem necessary and after taking into account such material and the effective rate of tax prevalent at different points of time, shall, by an order in writing, after giving an opportunity of being heard, determine the point of taxation to the best of his judgment.”.

Amendment in Service Tax Rules 2, 4A &6 – Increase in time limit to raise bill to 30 days

vice Tax (Amendment) Rules, 2012 – Amendment in rules 2, 4A and 6

Notification No.3/2012 – ST, dated 17-3-2012

In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:-

1. (1) These rules may be called the Service Tax (Amendment) Rules, 2012.

(2) They shall come into force on the 1st day of April, 2012.

2. In the Service Tax Rules, 1994 (hereinafter referred to as the principal rules), in rule 2, -

(i)  sub-clauses (cc) to (cccc) shall be renumbered as sub-clauses (ca), (cb) and (cc) respectively;

(ii)  after sub-clause (cc) as so renumbered, the following sub-clause shall be inserted, namely:-

“(cd) “partnership firm” includes a limited liability partnership;”.

3. In rule 4A of the principal rules, in sub-rule (1),-

(i)  for the words “fourteen days”, at both the places where they occur, the words “thirty days” shall be substituted;

(ii)  after the third proviso, the following provisos shall be inserted, namely:-

“Provided also that in case the provider of taxable service is a banking company or a financial institution including a non-banking financial company, or any other body corporate or any other person, providing service to any person, in relation to banking and other financial services, the period within which the invoice, bill or challan, as the case may be is to be issued, shall be forty five days;”;

(iii)  after the fifth proviso, the following proviso shall be inserted, namely:-

“Provided also that wherever the provider of taxable service receives an amount upto rupees one thousand in excess of the amount indicated in the invoice and the provider of taxable service has opted to determine the point of taxation based on the option as given in Point of Taxation Rules, 2011, no invoice is required to be issued to such extent.”.

4. In rule 6 of the principal rules,-

(1) in sub-rule (1),-

(i)  in the second proviso, in the opening portion, for the words “Provided also that” the words “Provided further that” shall be substituted;

(ii)  after the second proviso as so amended, the following provisos shall be inserted, namely :-

“Provided also that in case of taxable services covered under sub-rule (1) of rule 3 of the Export of Services Rules, 2005, this sub-rule shall not apply subject to the condition that the payment is received within the period specified by the Reserve Bank of India, including such extended period as may be allowed from time to time:

Provided also that in case of individuals and partnership firms whose aggregate value of taxable services provided from one or more premises is fifty lakh rupees or less in the previous financial year, the service provider shall have the option to pay tax on taxable services provided or to be provided by him up to a total of rupees fifty lakhs in the current financial year, by the dates specified in this sub-rule with respect to the month or quarter, as the case may be, in which payment is received.”,

(2) for sub-rule (4B), the following sub-rule shall be substituted, namely:-

“(4B) The adjustment of excess amount paid, under sub-rule (4A), shall be subject to the condition that the excess amount paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification.”;

(3) in sub-rule (7A), for clause (ii), the following clause shall be substituted, namely:-

“(ii) in all other cases, 3 per cent. of the premium charged from policy holder in the first year and 1.5 per cent. of the premium charged from policy holder in the subsequent years;”;

(4) in sub-rule (7B),-

(a)  in clause (a),-

 (i)  for the figures and words “0.1 per cent.”, the figures and words “0.12 per cent.” shall be substituted;

(ii)  for the word and figures “rupees 25″ the word and figures ” rupees 30″ shall be substituted;

(b)  in clause (b), for the figures and words “100 and 0.05 per cent.”, the figures and words “120 and 0.06 per cent.” shall be substituted;

(c)  in clause (c), -

 (i)  for the figures and words “550 and 0.01 per cent.”, the figures and words “660 and 0.12 per cent.” shall be substituted;

(ii)  for the figures “5000″, the figures “6000″ shall be substituted;

(5) in sub rule (7C), -

(a)  in the TABLE, in column (2), -

 (i)  against serial number 1, for the figures “6000″, the figures “7000″ shall be substituted;

(ii)  against serial number 2, for the figures “9000″, the figures “11000″ shall be substituted.

Rescinds Notification No. 8/2009 –Service Tax dated 24.02.2009 – Effective rate of 10% withdrawn from 01.04.2012 – Making the effective and tariff rate 12%

Rate of service tax – Rescission of Notification No. 8/2009-ST, dated 24-2-2009
Notification No.2/2012 – ST, dated 17-3-2012
In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby rescinds the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 8/2009 – Service Tax, dated the 24th February, 2009, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 120 (E), dated the 24th February, 2009, except as respects things done or omitted to be done before such rescission.
2. This notification shall come into force on the 1st day of April,

Home » Service Tax » Amends Notification No. 42/2011 – Service Tax dated 25.7.2011 – Coop societies included in exemption

on 65(105)(zzze) of the Finance Act, 1994 – Club or association service – Exemption to specified services – Amendment in Notification No. 42/2011-ST, dated 25-7-2011

Notification No.1/2012 – ST, dated 17-3-2012

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No. 42/ 2011 – Service Tax, dated the 25th July, 2011, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. 566 (E), dated the 25th July, 2011, namely:-

In the said notification,-

 (i)  for the words “of dyeing units”, the words “, including registered cooperative societies,” shall be substituted;

(ii)  in the Explanation, the words “discharged by dyeing units”, shall be omitted.

2. This notification shall come into force on the date of its publication in the Official Gazette

TP provisions extended to domestic transactions exceeding Rs 5 Cr

THE transfer pricing regulations have been proposed to be extended to the transactions entered into by domestic related parties or by an undertaking with other undertakings of the same entity for the purposes of section 40A, Chapter VI-A and section 10AA. However, such extension has been restricted to the transactions, which exceed a monetary threshold of Rs. 5 crores in aggregate during the year.

Memorandum explaining such amendment

Section 40A of the Act empowers the Assessing Officer to disallow unreasonable expenditure incurred between related parties. Further, under Chapter VI-A and section 10AA, the Assessing Officer is empowered to re-compute the income (based on fair market value) of the undertaking to which profit linked deduction is provided if there are transactions with the related parties or other undertakings of the same entity. However, no specific method to determine reasonableness of expenditure or fair market value to re-compute the income in such related transactions is provided under these sections.

The Supreme Court in the case of CIT Vs. Glaxo SmithKline Asia (P) Ltd. (2010-TII-02-SC-LB-TP), in its order has, after examining the complications which arise in cases where fair market value is to be assigned to transactions between domestic related parties, suggested that Ministry of Finance should consider appropriate provisions in law to make transfer pricing regulations applicable to such related party domestic transactions.

The application and extension of scope of transfer pricing regulations to domestic transactions would provide objectivity in determination of income from domestic related party transactions and determination of reasonableness of expenditure between related domestic parties. It will create legally enforceable obligation on assessees to maintain proper documentation. However, extending the transfer pricing requirements to all domestic transactions will lead to increase in compliance burden on all assessees which may not be desirable.

Therefore, the transfer pricing regulations need to be extended to the transactions entered into by domestic related parties or by an undertaking with other undertakings of the same entity for the purposes of section 40A, Chapter VI-A and section 10AA. The concerns of administrative and compliance burden are addressed by restricting its applicability to the transactions, which exceed a monetary threshold of Rs. 5 crores in aggregate during the year. In view of the circumstances which were present in the case before the Supreme Court, there is a need to expand the definition of related parties for purpose of section 40A to cover cases of companies which have the same parent company.

It is, therefore, proposed to amend the Act to provide applicability of transfer pricing regulations (including procedural and penalty provisions) to transactions between related resident parties for the purposes of computation of income, disallowance of expenses etc. as required under provisions of sections 40A, 80-IA, 10AA, 80A, sections where reference is made to section 80-IA, or to transactions as may be prescribed by the Board, if aggregate amount of all such domestic transactions exceeds Rupees 5 crore in a year. It is further proposed to amend the meaning of related persons as provided in section 40A to include companies having the same holding company.

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the Assessment Year 2013-14 and subsequent assessment years.
Amended Provision
Amendment in section 92B of the Act

Sub-section (2) and (3) of section 92B of the Act amended by substituting the words “international transaction” with the words “international transaction or specified domestic transaction”

Insertion of new section 92BA - Meaning of specified domestic transaction
‘92BA. For the purposes of this section and sections 92, 92C, 92D and 92E, “specified domestic transaction” in case of an assessee means any of the following transactions, not being an international transaction, namely:-

(i) any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A;
(ii) any transaction referred to in section 80A;
(iii) any transfer of goods or services referred to in sub-section (8) of section 80-IA;
(iv) any business transacted between the assessee and other person as referred to in sub-section (10) of section 80-IA;
(v) any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sub-section (8) or sub-section (10) of section 80-IA are applicable; or
(vi) any other transaction as may be prescribed,

and where the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of five crore rupees.’

Relief to Companies – maintain one set of books of accounts – IFRS Norms

International Financial Reporting Standards (IFRS) convergence, has gained momentum all over the world. It has become the most popular discussion though uncertainty still prevails over the implementation date of the IFRS. Let us first understand why companies should implement IFRS as many people are yet not aware of it. With the convergence to IFRS, companies will have an easy access to international capital markets without undergoing through the formalities of conversion and filling process. This will help in cost curtailment, time saving and faster access to global market. It becomes very important to mention here that “convergence” is different from “adaptation”. Convergence is an approach towards IFRS which means bringing IFRS into Indian Accounting Standards (IAS).
The accounting treatments in IFRS vary with our Indian Accounting Standards in certain areas but the main objective is to establish a simple structure for both taxation  as well as for accounting purpose. In view of this, the Finance Ministry has made a proposal in a Discussion Paper on “Tax Accounting Standards (TAS)” aiming to reduce the “burden of businesses with respect to various compliances”.
The proposal emphasis on the matter that presently companies are required to maintain two sets of books of accounts: i.e.

1. In accordance with the Accounting Standards of the Income Tax Act and
2. In accordance with the Accounting Standards issued by the ICAI under the Companies Act, 1956

 But under the new proposal the companies will be required to maintain books of accounts in accordance with the ICAI norms under the Companies Act, 1961 and the computation of taxable income will be in accordance with the “Tax Accounting Standards (TAS)”. The Finance Ministry further clarifies that the above proposal will not only reduce the burden of taxpayers to maintain two sets of books, it will encourage smooth convergence to IFRS and will reduce accounting issues when comes to preparation of books as per both the Acts.
As per the guidelines of Ministry of Corporate Affairs, in the first phase,companies with networth exceeding Rs 1,000 crore and public limited companies are required to implement IFRS in complete form.

GAAR : A Revenue's response to aggressive tax planning

THE much-talked GAAR is finally here. The proposal to introduce General Anti Avoidance Rules (GAAR) with effect from 1st April 2013 (applicable for Assessment Year 2013-14 and subsequent years), which was proposed to be introduced when the Direct Tax Code (DTC) bill was passed, would add additional burden and to the woes of the corporate world. Only a few days before, the Parliamentary Standing Committee on DTC has recommended some major changes in the provisions of GAAR in DTC. It seems these recommendations have not at all been considered by the Finance Minister. The introduction of GAAR is expected to impact the foreign investment in India.

Concept of GAAR

RPU 2.8 Released - Please Now onwards use the same for filing E TDS Return

Key features of NSDL Return Preparation Utility (RPU) version 2.8

·         Incorporated FVU: FVU version 3.4 and FVU version 2.132 are incorporated.

·         Relaxation in the validation for date of deduction, wherein the user can quote “Date of Deduction” beyond the quarter

SERVICE TAX CHANGES IN BUDGET 2012

Service Tax Changes in Buget 2012.

01. Negative List of 17 services introduced. hence all other services are now taxable 

02.  Rate of Service Tax Increased to 12.36%

03. Now export can be said if the following conditions are satisfied :
(a) Service provided from India
(b) Service received outside India
(c) POS outside India
(d) Receipt of Forex

04. Reverse charge on service tax introduced for Motor Car hire, Man power Service etc. and Work contract tax. hence in case service provider is taking abatement then service receipt is require to pay balance tax.

05. billing incresased by any amount now under service tax but not interest and penalty

06.  Individual/Firm whose Turnover are less than 50 Lakhs now can opt for payment basis.

07.  Proposal for Monthly filing of return

08.  Now adjustment of excess service tax paid is possible. 

09. Railways are now also covered under Service Tax with abatement of  30%

10. Special Audit Provisions Introduced.

11. Systeam of Appeal are now in line with Excise 

S. 40A(3): Financial crises may be “exceptional or unavoidable circumstance” for cash payment

Basu Distributor Pvt Ltd vs. ACIT (Delhi High Court)

The assessee made payments exceeding Rs. 10,000 in cash and claimed that a disallowance u/s 40A(3) read with Rule 6DD(j) & Circular No.220 dated 31.05.1997 could not be made as a payment by cheque etc was not possible due to “exceptional or unavoidable circumstances” etc. The Tribunal rejected the assessee’s claim on the ground that that the assessee’s explanation that the payees would not accept cheques as they had been dishonoured on earlier occasions was “fantastic and fanciful” as in such case the assessee could have deposited cash and obtained bank drafts. It was also held that the assessee had not explained how it obtained the cash for making the payments & if the amounts were borrowed, there was a violation of s.269SS. On appeal by the assessee to the High Court, HELD reversing the Tribunal:

S. 80-I: Despite “Dependence” on Old Unit, Unit Can Be “New Industrial Undertaking”

Gujarat Alkalies & Chemicals Ltd vs. CIT (Gujarat High Court)

The assessee had a plant to produce caustic soda. It increased capacity from 37425 MT to 70425 MT by installing “12 new cells” and incurred expenditure of Rs.7.5 crore towards new machinery and plant added to the existing plant. The assessee claimed that a “new industrial undertaking” had come into being which was eligible for relief u/s 80-I. The AO, CIT (A) & Tribunal disallowed the claim on the ground that it was a case of substantial expansion and not a “new industrial undertaking” on the ground that though new plant and machinery by investing substantial funds had been installed, the undertaking was not an “integral unit by itself” but was dependent on the old undertaking for its functioning. On appeal by the assessee to the High Court, HELD reversing the lower authorities:

DIRECT TAX CHANGES IN BUDGET 2012

SUMMARY OF BUDGET 2012

PERSONAL INCOME TAX

Rate of Personal Income Tax

Upto Rs. 2 Lakh                               NIL

Between Rs 2 Lakh to 5 Lakh       10%

Between Rs. 5 Lakh to 10 Lakh    20%

Above Rs. 10 Lakh                          30%

No separate rate for Women now

Person age above 60 no tax upto Rs. 2,50,000/-

Person age above 80 no tax upto Rs. 5,00,000/-

Net saving is Rs. 22,000/- 

·         TDS on sale on immovable Property – 1% (Rs. 50 Lakhsin urban ara and others 25 Lakhs)  - w.e.f – 1-10-2012 – no need to obtain TAN.

·         TCS on purchase of Jewellary – 1% - exceeds Rs. 2 Lakhs in Cash . – 1-7-2012.

·         Compulsory filing of return of income in case assets located outside India sold.

·         Reassessment period extends upto 15 Years for assets relocated outside India.

·         Additional Penalty @ 10% for undisclosed income found during the search.

·         Senior Citizen now not require to pay advance tax.

·         Wealth Tax – Residential house allotted to employees  - Now gross salary increased to Rs. 10 Lakh.

·         Relief from long term capital gains on transfer of residential property if invested in manufacturing small or medium enterprise – with certain condition.

·         Deduction for expenditure on preventive health check up – Rs. 5,000/-

·         No tax on interest received from Banks  - Rs. 10,000/-

·         Fair market value to be full value of consideration in certain cases.

·         Exemption of any sum or property received by an HUF from its members.

·         Processing of return now not necessary when case selected for scrutiny.

·         No Donation in cash excess of Rs. 10,000/-.

·         Rajiv Gandhi Investor Scheme have started having tax benefit of 50% max income of Rs. 10 Lakh.

CORPORATE INCOME TAX

·         No Change in Tax rates

·         Sec 194LC – TDS on interest to Non resident by infrastructure companies – 5% (surcharge and education cess applicable)

·         AMT is now applicable on all entities where profit incentives deductions are there. 

·         TDS on Director Remuneration – 194J – 10% - 1-7-2012.  

·         TCS @ 1% on purchase of Coal, Lignite and Iron Ore.

·         Share Premium in excess of FMV is to be treated as income.  W.e.f 1-4-2013.

·         Dividend received from foreign companies – 15%

·         Removal of cascading effect of DDT – w.e.f  - 1-7-2012.

·         Additional depreciation @ 20% to power sector companies.

·         Turnover for the tax audit purpose extended upto Rs. 1 Crore.

·         Reduction in STT – new rate is 0.1%

·         Extension of sunset date for tax holiday for power sector.

·         Number of weighted deduction for specified capital expenditure

·         Decision of Hindustan Coco-Cola now become act. Now in case of default of TDS deduction, the payer discharge his tax, then not require to pay tax again. Only interest is require to pay.  W.e.f 1-7-2012.

·          Further, if the assessee proves that payer had paid tax, then same is now not to be disallowed under section 40(a)(i).

·         Penalty of Rs. 200/- per day for late furnishing of E TDS return  plus Rs. 10,000/- to Rs. 100,000/-.  This also applicable for providing incorrect information in E TDS return.  W.e.f – 1-7-2012.

·         Now intimation issued under section 200A can be subject to rectification and appeal . It is now also a demand notice – w.e.f 1-7-2012.

·         Time limit for passing order under section 201 increased to 6 years.

·         TDS on compulsory acquisition  - 10% - amount exceeds Rs. 2 Lakhs. – w.e.f 1-7-2012.

·         TDS on debentures – 10% - amounts not exceeding Rs. 5,000/-. – w.e.f 1-7-2012.

·         Vodafone SC judgments reversed by making number of amendments in definition.

·         Software is now covered under Royalty. Necessary changes made in section 9.

·         Tax @ 20% on non – resident entertainer, sports persons etc. – w.e.f 1-7-2012.

·         Tax Residence Certificate for claiming relief under DTAA.

·         Introduction of Advance Pricing Agreement  - determine ALP in advance -

·         Examination by the TPO of international transaction not reported by the assessee.

·         TP Regulation is now applicable to domestic transactions also.

·         5% safe harbor is not taken as standard deduction .

·         Due date of TAR for TP cases is now November 30,

·         Intangible assets are now covered under International transactions.

·         3% is new tolerance range for TP 

·         Penalty @ 2% of international transactions for failure in TP compliance  - – w.e.f 1-7-2012.

·         Now AO can file appeal at ITAT against the order passed by DRP.

·         Power of DRP extended to enhance the variation.

·         Introduction of General Anti – Avoidance Rule (GAAR)

·         Time limits to complete the assessment and reassessment increased by 3 Months.  - – w.e.f 1-7-2012.

·         Presumptive taxation is not applicable in the case of profession etc.

·         Book Profit under section 115JB now include revaluation reserve relating to the revalued assets.

·         Fee for AAR increased to Rs. 10,000/- – w.e.f 1-7-2012.

LIVE BUDGET 2012

Extracts of Budget 2012
(begins from 11.A.M. 16-03-2012)
Keep on refreshing as same is updated as and when information received

1. GST to be operational from August 2012

2. Advance Pricing Agreement started 


3. Rajiv Gandhi Investor Scheme have  started having tax benefit of 50% max income Rs. 10 Lakh . details provided later

4. IPO Greater than Rs. 10 Cr thru Electrnonc Form

5. Qualified FIIScan now enter Bond Market

6.  Increase in Tax Saving Infrastructure fund will save tax for small investor

7. Direct cash subsidiy for oil and Kerosine

8. 3% subsidy to Farmers on Loan

9.  Prosecution for Undisclosed Bank Account overseas.

10. Income tax rates are  now

upto 2 Lakh Nil
2-5 Lakh 10%
5-10 Lakh  20%
above 10   30%

11. DTC Delayed

12.Interest from Bank exempt upto Rs. 10,000

13. For personal health Check Up deduction of Rs. 5,000

14. No advance Income tax for Senior Citizen

15. No Change in Corporate Income tax rate

16. Witholding tax reduced on ECB from 20% to 5%  for Infrastructure sector

17. Tax 15% on Foreign Company Dividend 

18. Tax Audit Limit raised to 1 Cr 

19.  STT Reduced by 20% new rate is 0.1%

20. in case of undisclosed foreign investment  reassessment period is 15 Years

21.  GAAR introduced

22.  Service Tax - Rate increased to 12.36%

23.  All services tax to be taxed except negative list of 17 services .

24. excise duty hike to 12%

25. Rules of CENVAT - there are some amendments

26.  Income tax weighted deduction @ 150% introduced for number of infrastructure development 

27. TDSon sale of Immovable Property

28. sunset clause for power sector extended

29. Addln Depreciation @ 20% for power sector companies

Is TDS Applicable on Interest Paid to Legal Heir ?

Every legal heir whose father or mother had term deposits in Bank may ask whether  TDS is applicable on interest, because bank informs them about impending TDS on  payments of interest on fixed deposits or term deposits which are  in name of person who dies suddenly or unexpectedly.The ther question which arises , generally in midn of legal heirs is if TDS applicable on interest , whether form 15 G can be filed by them to prevent TDS on such interest payments. Earlier , on this blog a posting regarding the eligibility of filing Form 15G by legal representative of the deceased was made , but it is felt that the issue should be covered in detail as one reader- Sri G. Malviya of Lucknow  has asked very relevant question in this regard.

He asks : “My father was having Fixed Deposits in Bank. He died. After his death the Maturity Amount (Principal + Interest) is being paid to me as per Nomination. Now Bank is deducting TDS on Interest. My queries are :-

1. Can Bank Deduct TDS on Interest earned and being paid to me?
2. If TDS is deducted than TDS Certificate should be in whose name i.e. my father or me?
3. My Gross Income including from my all sources Plus Interest Income from Father’s Fixed Deposits will be below the Taxable limit. In the circumstances can I submit Form 15G for not deducting TDS on Interest Income? If not then–
4. Can I submit 15G on my behalf of my deceased father?

The answer to the question is being done in manner that all the readers can get benefit out of it. The first thing to ponder over the taxation of income of deceased , then the rules regarding filing of return of income, then comes the rule regarding the TDS on interest payments on term deposit of fixed deposits .

Is the interest received by legal heir taxable in his hand or in his capacity as legal representative?

If the asset ( principal amount has legally beein transferred to the name f legal heir , any income arising out of such asset which is  , by virtue of law,  now the asset of the legal heir , is taxable in his hand as his income. If the assets of deceased person has not become the asset of his/her heirs by law, till that time income on those assets has to be assessed in the name of his legal representative.

For example , if there are more than one legal heir and on expiry of the person , the Fixed deposits are not divided among the legal heirs, in that case the interest earned on the fixed deposit or term deposit , should be assesseed in hand f legal representative . After the division of the property , the asset is the property of respective legal heir , and any income earned on such asset is to be assessed in his individual capacity only.

Who can be legal representative  for Income Tax Act purpose?

Any one among legal heirs can be authorized to act as legal representative for the purpose of I T Act. Get signature of all legal heir on a non judicial stamp paper wherein it is declared that Mr X or Mrs X will act as legal representative of deceased person.

In whose name the return should be filed?

The return of income should be filed as if the deceased person is alive . The name of the deceased assessee should be used  and under which you can put name of legal representative.

Is TDS required on interest n fixed deposit or term deposit?

Under the law , the bank is required to deduct the tax u/s 194A at the time of credit or payment of interest. At that moment , it does not matter if the payee has actually died or if the payment is being done to legal heir.

In fact , even in case of Senior Citizen Savings Scheme it has been made rule through CBDT circular   F.No. 2/8/2004/NS-II, dated 6-6-2006.    that TDS should be deducted on undrawn interest payment  to legal heir of a deceased subscriber to   the Senior Citizens Savings Scheme, 2004.

So, it is for sure that TDS is deductible if the payment of interest is more than Rs 10,000 .

Can legal heir or nominee file 15 G ?

Definitely he can file the form 15 G if the condition for filing 15 G is being fulfilled. It must be pointed out that 15 G can be filed by any payee as per the section 197A of Income Tax Act . Since , the legal heir is only acting on behalf of the payee whoo  has died , the right to file Form 15 G is not abolished.

The matter will be clear from the  Central Board of Direct Taxes  Office Memorandum F. No. 275/36/2009-IT(B), dated May 14, 2009, by which it had been clarified that  nominee of the investors of SCSS can also produce 15G Form (declaration of non-deduction of tax from the amount of interest payable) at the time of payment after the death of the depositor.

Is there any other way to prevent TDS ?

Yes, legal heir should approach the TDS wing officer and pray in writing for issue of a non deduction certificate . For this , it is better, the family member approach the Commissioner or Add.CIT ( TDS ) and pray in writing and by meeting them , telling them of the problem they are facing on account of death of the payee. For making application for no deduction of tax certificate , there is lower deduction  prescribed Form no 13.

What if the Bank make TDS despite your best effort ?

You will have to file income tax return in name of deceased person and sign the return as legal representative and claim refund by giving your bank account number in return of income.

Whether leasehold right in a property is akin to capital asset, and thus consideration received on surrender of such rights attracts provisions of Sec 50C- NO, rules ITAT

 THE issues before the Bench are - Whether leasehold right in a property is akin to capital asset, and thus the consideration received on surrender of such rights attracts provisions of Sec 50C; Whether merely because assessee is a party to the tripartite agreement signed on sale of the property, the receipt received by the assessee-tenant is attributable to ownership right and whether cost of acquisition of tenacy rights is to be computed by totalling up the rentals paid and the benefits of cost inflation index for computing capital gains tax. And the answer goes against the Revenue.

Facts of the case

Assessee, alongwith one Amardeep Singh, had acquired, vide registered lease deeds dated 19th November 1992 with Shree Khubchand Sethia Charitable Trust (KSCT, in short) , lease hold rights for 99 years in a house property in Kolkata. This property was collectively purchased by three entities, namely Sugam Builders Pvt Ltd, Neelanchal Sales and

Difference between “Finance Lease” & “Operating Lease” Explained

IndusInd Bank Ltd vs. ACIT (ITAT Mumbai Special Bench)

The assessee, a bank, purchased a boiler and gave it on lease to Indo-Gulf Fertilisers. The assessee claimed depreciation on the said boiler on the basis that it was the “owner” thereof. The AO & CIT (A) disallowed the claim for depreciation on the basis that the transaction was a “finance lease” which was akin to a loan given by the assessee and that the assessee was not the “owner“. On a reference to the Special Bench HELD:

LIMITED LIABILITY PARTNERSHIP

I. INTRODUCTION

Despite rapid growth of the service sector in the last few years, service based organizations such as doctors, lawyers and accountants have not been able to grow to their full potential. The ‘general partnership’ has traditionally been the entity of choice for professional bodies and small enterprises. The partnerships in India which was till now, governed exclusively by the Indian Partnership Act, 1932, had some

Sole Proprietorship and Partnerships: apparent limitations and posed following hindrances: •
Largely unregulated and are being used by entities from small kirana stores to large international professional outfits •
Unlimited liability poses a significant hindrance to growth • Traditional form of partnership does not permit expansion beyond 20 partners Companies: •
Regulated entity with various compliance procedures