Important message for employees retiring within the next six months

The Department of Pension and Pensioners Welfare is organizing a Pre-retirement counselling workshop on 25th August, 2015 from 2.00 PM to 5.00 PM in the Lecture Room-I, India International Centre (Annexe) 40, Max Muller Marg, New Delhi-110003.

The employees of Government of India retiring within the next six months and who have not attended the workshop yet are hereby informed that they may attend the workshop. Confirmation with Name, Ministry & Phone No. may be sent at the email address mkumar.mol@nic.in.

The persons desirous of attending the workshop are also requested to bring their PAN and Aadhar No. A write-up on the Commendable works done by the retiring employee during his entire service is also required to upload the same on ‘ANUBHAV’ on website persmin.nic.in/pension.asp

sd/-
US (Sankalp)
Department of Pension & Pensioners’ Welfare
Phone No.24641627

Authority: http://pensionersportal.gov.in/

Putting TDS provisions for recurring deposits to work

TDS on recurring deposits makes investors either submit the exemption forms if there is no taxable income. In case of TDS on RD, they may have to revisit their tax calculations and accordingly pay tax

The provisions for the applicability of the tax deduction at source (TDS) for recurring deposits are now into the implementation phase. This means that there is one additional area where the tax payer has to focus their attention. Since there was no tax deduction at source earlier there was no tax implication for any investment made into this area at this initial stage but this will now change. There are several steps that need to be taken so that the individual is in tune with the changed circumstances. Here is a closer look at what needs to be done and the manner in which this can be accomplished.

Change

The change that the union budget 2015 has brought about is that there would be the coverage of recurring deposits in the list of instruments that would be subject to the tax deduction at source. This would mean that if an investor has an income in excess of Rs 10,000 from recurring deposits then this would suffer the same kind of TDS that they would experience when they have fixed deposits. This would mean that at the time of redemption of the investment there would be a lower amount that would come to the investor because the TDS would reduce the amount as compared to earlier when the entire figure would be received by the investor. The main point to remember here is to give the PAN to the bank otherwise the rate of the deduction will be higher.

This does not change the overall nature of taxation for the interest on fixed deposit as these remain taxable which was also the case earlier. So for investors this move will actually ensure that a part of their payment is actually made through the TDS route and hence they would have a reduced liability in terms of payment of advance or self assessment tax. 

Form 15G/15H

Investors who do not have any taxable income and hence would not want any tax to be deducted from the amount that they earn on the recurring deposits would have to ensure that they submit the required forms to the bank. This would have to be done immediately otherwise the deduction would start as the income is earned. This is significant as there is a time element for the submission of the forms and the investor should focus attention to this area if they need to ensure that there is no deduction that they actually face. Senior citizens would need to be especially alert because they are most likely to be covered under these kind of conditions.

Annual update

For a long period of time many investors actually did not pay much attention to the recurring deposit investments that they actually made. This was because they thought that there is not much to do in terms of the tax impact. This often led to a situation wherein the income that was earned from the recurring deposits never made it to the income tax returns at the end of the financial year. This is something that needs to be avoided as it shows that some of the income that is actually taxable is not being shown properly. 

Now this would need special attention as there is likely to be both income as well as tax deduction that would present. Not claiming the tax deduction would lead to a loss of benefit while the non inclusion of the income would mean that the right picture is not being shows in the tax returns. Interest on recurring deposits is taxable and hence has to be included in the calculations as such. Both these aspects would need the attention of the investors and hence this would have to be the focus area and it would need work at the end of every financial year which in a way is a good thing as it ensures that nothing is missed out.

Source: Money Control

Simple 3 steps for Service Tax code verification online.

Service tax code verification can be done online using simple 3 steps. It is helpful to determine the genuineness of the party whom we are paying service tax. Here, we have explained the manner of verification of service tax number and basics of service tax number.

SERVICE TAX CODE VERIFICATION ONLINE:

WHY SERVICE TAX NUMBER VERIFICATION IS IMPORTANT?
If we are working with someone in the area of service and we take some services from such persons who provide the same service which we required but how we know about that whether the Service Tax Code Number Provide or mentioned on the bill is genuine or related with such entity who provide us the same service. For this we have an online system to verify the Service Tax Code Online.

Basically the Service Tax Code Number is  PAN Based in the New System of Service Tax, Service Tax Code Number is 15 Digit Code and Based on PAN Number.

First Ten (10) character are same as PAN ,11-12 digit is “ST” in all service tax code(In few cases “SD” is also used) ,13-15 is serial Number no for service tax number allotted against a pan number ,if you have applied for one service tax number against a pan than your service tax number will pan+st+001. So if you have a PAN number of the firm then checks service tax number as below:-
Assessee code to be digitized in case of Service Tax (major account head 0044) as:
1-10 digits: 10-digit PAN / TAN
11-12 digits: ST
13-15 digits: ZZZ

In case the Assessee is unable to provide a valid location code, the location code may be digitized as :
1-2 digits: any Commissionerate Code associated to the bank branch
3-6 digits: ZZZZ

If you have service tax number and just want to verify it is it correct or not than follow this steps:

Step 1:
Go to the  following Link:-
https://cbec-easiest.gov.in/

Following screen will be appeared:








Step 2:
Click on assessee code based search

Step 3:
Input Your Assessee Code and Verification Image you get the following result
INPUT:15 digit SERVICE TAX CODE
OUTPUT:
REGISTER UNDER SERVICE TAX/EXCISE
NAME OF ASSESSEE
ADDRESS OF ASSESSEE
LOCATION CODE.

Similar steps should be followed to determine excise number verification online. I hope this post helps you to do service tax code verification. 

Source: Internet

If tax is deducted under a wrong provision of the Income-tax Act, the payment is to be disallowed under Section 40(a)(ia) of the said Act

Recently, the Kerala High Court (High Court) in the case of P V S Memorial Hospital Ltd1 (the taxpayer) held that if the tax is deductible under Section 194J2 of the Income-tax Act, 1961 (the Act) but is deducted under Section 194C3 of the Act, the disallowance under Section 40(a)(ia) of the Act is still applicable. The High Court observed that the expression ‘tax deductible at source under Chapter XVII-B’ occurring in Section 40(a)(ia) of the Act has to be understood as tax deductible at source under the appropriate provision of Chapter XVII-B of the Act. Further, the latter part of this Section that such tax has not been deducted again refers to the tax deducted under the appropriate provision of Chapter XVII-B of the Act.

Facts of the case
  • The taxpayer, a hospital, had entered into an agreement with Lakeshore Hospital and Research Centre Limited (Lakeshore). In terms of the agreement, Lakeshore had undertaken to perform various professional services in the taxpayer’s hospital.
  • During Assessment Years (AYs) 2005-06 and 2006-07, the taxpayer made payment to Lakeshore. The taxpayer deducted tax at the rate of 2 per cent under Section 194C of the Act. However, assessment was completed on the basis that the tax is deductible at 5 per cent under Section 194J of the Act and therefore, the entire tax was disallowed under Section 40(a)(ia) of the Act.
  • The Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer (AO). The Income-tax Appellate Tribunal (the Tribunal) has also confirmed the order of the lower authorities for AY 2005-06.
  • However, for AY 2006-07, the Tribunal followed the decision of the Calcutta High Court in the case of S. K. Tekriwal4 and held that the conditions laid down under Section 40(a)(ia) of the Act for making an addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied, then such payment can be disallowed under Section 40(a)(ia) of the Act. It was also held that where tax is deducted by the taxpayer, even if it is under a wrong provision of the law, as in this case, the provisions of Section 40(a)(ia) of the Act cannot be invoked.
High Court’s ruling
  • As per the provisions of the agreement, Lakeshore had undertaken to render professional services to the taxpayer and it was not a case where they were undertaking contract work. If that be so, the tax was deductible under Section 194J of the Act and not under Section 194C as done by the taxpayer.
  • A disallowance under Section 40(a)(ia) of the Act is attracted in cases where fees for professional or technical services is ‘payable on which tax is deductible at source and such tax has not been deducted or after deduction has not been paid.
  • Provision of Section 40(a)(ia) of the Act is not a charging section but is a machinery section and such a provision should be understood in such a manner that the provision is workable. It has been so held by the Supreme Court in the case of Gurusahai Saigal5.
  • If Section 40(a)(ia) of the Act is understood in the manner as laid down by the Supreme Court, it can be observed that the expression ‘tax deductible at source under Chapter XVII-B’ occurring in the Section has to be understood as tax deductible at source under the appropriate provision of Chapter XVII-B of the Act.
  • Therefore, in the present case, if tax is deductible under Section 194J of the Act but is deducted under Section 194C of the Act, such a deduction would not satisfy the requirements of Section 40(a)(ia) of the Act. The latter part of this Section that such tax has not been deducted again refers to the tax deducted under the appropriate provision of Chapter XVII-B of the Act. Thus, a cumulative reading of Section 40(a)(ia) of the Act, indicates that deduction under a wrong provision of law will not save the taxpayer from Section 40(a)(ia) of the Act.
  • The decision of the Calcutta High Court in the case of S.K.Tekriwal relied on by the Tribunal is incorrect. A view cannot be accepted that if the tax is deducted even under a wrong provision of law, Section 40(a)(ia) cannot be invoked.

Source: www.tdsman.com

7th CPC Report is likely to be finalised by September 28, 2015 – NC JCM Staff Side

"NC JCM Staff Side Secretary said that it was assumed that the report of the VII CPC, as was promised for 28th August this year, may be delayed by one month. The letter is reproduced and given below for your information"…

Brief of the meeting held today with the VII Central Pay Commission

Shiva Gopal Mishra
Secretary
Ph.: 23382286
National Council (Staff Side)
Joint Consultative Machinery
for Central Government Employees
13-C, Ferozshah Road, New Delhi – 110001
E Mail : nc.jcm.np@gmail.com

No. NC/JCM/VII(CPC)
Dated: August 7, 2015
All Constituents Organizations,
National Councii(JCM)(Staff Side)

Dear Comrades,
Sub: Brief of the meeting held today with the VII CPC

Today morning I met the Chairman, Seventh Central Pay Commission, Shri Ashok Kumar Mathur and Secretary, Mrs. Meena Agarwal.

It was assumed that the report of the VII CPC, as was promised for 28th August this year, may be delayed by one month.

I have impressed upon him once again for improvement in the service conditions of all the Central Government Employees working in different sectors with special emphasis in the matter of fixation of Minimum Wage and other benefits.

This is for your information.

Comradely yours,
sd/-
(Shiva Gopal Mishra)
Secretary Staff Side
NC/JCM

Authoirty: http://ncjcmstaffside.com

Will the 7th Pay Commission gives 35% hike salary ?

“All the Economists and Analysts, and not just in India, is discussing the 7th Pay Commission.”

Last week, Neelkanth Mishra of Credit Suisse said that there are chances of 40% increase in salary. He also remarked that post-7th Pay Commission, the financial status of Central Government employees will grow high enough to afford a car.

Yesterday, an article in the International Business Times analyzed the role of the Pay Commission in the economic development of India. The article had expressed an estimate on how substantial the hike in salaries would be following the 7th Pay Commission recommendations. Bank of America has estimated a 15% hike in the salary; Religare fixes the hike at between 28 to 30%, and Credit Suisse has marked it as 40%.

Since the Pay Commission has a huge influence on the country’s economic development, financial experts are keenly observing the 7th Pay Commission. This is why everybody is curious to know what the recommendations have in store for the country.

According to the article, the 6th Pay Commission gave a hike of 35% and more than 30 months arrears to the employees. As a result, the robust demand for consumer discretionary products that resulted in sustained stock performance over 3-5 years.

The report will directly impact 50 lakh Central Government employees (including 15 lakh armed forces personnel), and more than 1 crore state government employees. Also, the report would affect more than 30 lakh pensioners. The Bank of America estimates the salary hike to be at 15% and analyst expectes it to be the range of 15 to 40%.

The article made it clear that the 6th Pay Commission gave the kind of economic growth among Central Government employees that was not seen in the past 50 years.

The big question justify now is – will the 7th Pay Commission give 35% hike, like the 6th Pay Commission did?

5 Important Key Changes in New ITR Forms 3,4,5,6 and 7 For Asstt. Year. 2015-16

The new ITR Forms 1, 2 and 4S were notified for the Assessment Year 2015-16 vide Notification No. 41/2015, Dated 15-04-2015. However, in view of representations received from various stakeholders, the CBDT came out with simplified version of ITR forms 1, 2, 2A and 4S.

Now the CBDT has notified the remaining ITR forms, viz, ITR Forms 3, 4, 5, 6 and 7 vide Notification No. 61/2015. Key changes in ITR forms is highlighted below.
Expenditure on CSR activities: Section 37(1) was amended by the Finance (No. 2) Act, 2014 to provide that any expenditure incurred by an assessee on the activities relating to corporate social responsibility (CSR) shall not be allowed as deduction as same could not be considered to be incurred for the purposes of the business or profession. Accordingly, ITR 6 has been revised to provide for reporting of expenditure on CSR activities if the same is debited to profit and loss account.

Foreign portfolio investors/Foreign Institutional investors: Foreign Institutional Investor (FII) and Foreign Portfolio Investor (FPI) are required to furnish their SEBI registration number in the new ITR 5 and 6.

Bank accounts held by assessee: In old return forms taxpayers are required to give details of only one bank account. Now in new return forms taxpayer are required to report details of all bank accounts except dormant accounts.

Change in partners/members: A new column has been inserted in ITR-5 to require the assessee to furnish the details of change in the partners/members of the firm/AOP/BOI, as the case may be, during the previous year.

Aadhaar Number and passport number: Aadhaar number and passport number are required to be given in new ITR 3 and 4 (if assessee has obtained the same). 

Source: Internet

Tax is not to be deducted at a higher rate of 20 percent u/s. 206AA of the Income-tax Act when the benefit of tax treaty is available

Recently, the Bangalore Bench of the Income-tax Appellate Tribunal (the Tribunal) held that there is no scope for the tax deduction at source (TDS) at a higher rate of 20 per cent as per the provisions of Section 206AA of the Income Tax Act, 1961 (the Act) when the benefit of tax treaty is available to a non-resident.

Facts of the case
  • The taxpayer is engaged in the business of Business Process Outsourcing (BPO). The taxpayer made certain payments to a non-resident on account of royalty and/or Fees for Technical Services (FTS). As the benefit of a tax treaty was available to the non-resident, tax was deducted by applying the beneficial rate prescribed under the tax treaty in terms of the provision of Section 90(2) of the Act.
  • The taxpayer filed statements of deduction of tax at source for various quarters of the relevant financial year in respect of payments made to non-resident during the period.
  • The Assessing Officer (AO) after processing TDS statement issued intimation under Section 200A of the Act. The AO raised a tax demand on account of the short deduction of tax and interest was also charged on the same. The tax demand was raised on the ground that the taxpayer has not furnished the PAN of the non-resident deductee/recipient. The AO held that if the taxpayer did not furnish PAN, as per the provisions of Section 206AA of the Act, the TDS should have been deducted at the rate of 20 per cent
  • The Commissioner of Income-tax Act, 1961 [CIT(A)] rejected the objection of the taxpayer regarding the scope of Section 200A for making the adjustment and consequential demand. However, the CIT(A) decided the matter in favour of the taxpayer and held that payment made to the nonresident recipient was eligible for the tax treaty benefit and by applying the beneficial provisions, the rate of tax to be withheld cannot be more than the tax liability provided in the tax treaty.
Tribunal’s ruling

Applicability of higher TDS under Section 206AA of the Act  
  • The Tribunal held that there was no dispute that the benefit of the tax treaty was available to the nonresident recipient. Therefore, the tax liability of the recipient could not be more than the rate prescribed by the tax treaty or the Act, whichever is lower.
  • Reliance was placed on the Pune Tribunal’s decision in the case of Serum Institute of India Limited1 wherein the Tribunal observed that Section 206AA of the Act does not override the provisions of Section 90(2) of the Act. The taxpayer had rightly applied the rate of tax as per the tax treaty and not as per Section 206AA of the Act since the provision of the tax treaty was more beneficial.
  • The Tribunal observed that the similar view has been taken by the co-ordinate bench in the case of Bosch Ltd.
  • The Tribunal relied on the decision of Karnataka High Court in the case of Bharti Airtel Ltd.3 where it was held that the Act is to be read as an integral code. To deduct tax while making payment to a nonresident, the amount paid must be ascertainable as income chargeable to tax in the hands of the nonresident. TDS is a vicarious liability, and it presupposes the existence of primary liability and hence the TDS provisions need to be read in conformity with the charging provisions i.e. Section 4, 5 and 9 of the Act.
  • The Tribunal held that provisions of TDS had to be read along with the machinery provisions of computing the tax liability on the sum in questions.
  • Following the aforesaid decisions, the Tribunal held that there was no error in the CIT(A)’s order where it was held that there is no scope for deduction of tax at the rate of 20 per cent as provided under the provisions of Section 206AA of the Act when the benefit of tax treaty is available.
Adjustment under Section 200A of the Act
  • While making the adjustment under Section 200A of the Act the AO had ignored the provisions of the tax treaty.
  • The payment in question was made to the nonresident, and the provisions of tax treaty were applicable. Thus, the issue of applying the rate of tax at 20 per cent and ignoring the provisions of tax treaty is a debatable issue and does not fall into the category of any arithmetical error or incorrect claim apparent from any information in the statement, as per the provisions of Section 200A(1) of the Act.
  • On reference to Explanation to Section 200A(1) of the Act it is clear that in respect of deduction of tax at source where such rate is not in accordance with provisions of the Act, it can be considered as an incorrect claim apparent from the statement. However, in the present case it was not a simple case of deduction of tax at source by applying the rate only as per the provisions of the Act, when the benefit of tax treaty was available to the recipient of the amount.
  • Therefore, the question of applying the rate of 20 percent as provided under Section 206AA of the Act is an issue which requires a long drawn reasoning and finding. Hence, it was held that applying the rate of 20 per cent without considering the provisions of the tax treaty and consequent adjustment while framing the intimation under Section 200A is beyond the scope of the said provision.
  • Thus, the AO had travelled beyond the jurisdiction of making the adjustment as per the provisions of Section 200A of the Act. Accordingly, the issue was decided in favour of the taxpayer.

Source: www.tdsman.com

Things to note to avoid notice from Department

With the Income Tax Department becoming net savvy and going online, it has become very easy for them to identify discrepancies in your papers and to keep a close eye on almost every financial transaction. Therefore, while filing return, one needs to be extra careful. Any wrong details furnished might put you in trouble.   images

From past few years, almost every taxpayer is receiving notices from Department. Now, it has become important that every provision and clause of tax laws shall be strictly abided. There are few reasons due to which notices are being issued and these reasons are very common among taxpayers. Find below, things to note to avoid notice from Department:

1.  Always file your return timely and correctly – Every assessee liable to file return shall do the same within due date. While filing return due care must be taken to avoid any mistake. Details required in return shall be truly and fully disclosed. Notice shall be issued, if any default found.

2.  Balance between Income and Expenses/investments – Ignorance regarding balance between income and expense/ investments may become an issue. Many times it is found that assessee invests more than what they earn and then they have to justify the source of funds which has been used for investment. If balance is not properly maintained then be ready to receive notice.

3.  Gifts credited to your account – Assessee are generally found taking gifts from friends and relatives. Gifts taken may be in cash or kind. If such gifts appear in your account then do not forget to document the evidence for the same. Department may ask for details and source of gifts received. If proper and satisfactory evidence not provided then department shall issue notice regarding the same.

4.  Check your Form 26AS (Tax Credit Statement) – Form 26AS is an easy way to find out the details of TDS deposited on your behalf. You should always go through your 26AS to match the TDS with the books of accounts. Any mismatch found may appear in the notice from department.

5.  Pay Advance Tax – Advance tax shall be paid if the tax liability for a financial year is more than Rs. 10,000. Such tax shall be paid within the same year on the basis of self assessment. Any assessee liable to pay advance tax shall pay it within due date as specified. Failure to which you can get notice from department.

6.  Non-Declaration of Exempt Income – All income earned are generally taxed but there are few income which are exempt from payment of tax. Assessee generally does not disclose such income while filing their return thinking that as no tax is paid on such income it is not necessary to disclose it. But this is a myth which needs to be cleared. Incomes like long term capital gains tax from equity, dividends received on equity shares of Indian companies, saving bank account interest up to Rs. 10000 etc. though exempt shall be disclosed while filing your return.

7.  High value transactions – If there is high value transactions either for investments or spending then chances of you getting the notice from IT Department are very high. There are few transactions which are reported to the IT department under Annual information Returns filed by respective companies and may attract an enquiry ranging from simple to exhaustive by IT department. Any high value transaction should be incurred in planned way. Examples of such transactions are:

  • Credit card usage of more than Rs. 2 lakhs p.a.
  • Investing in FDs for more than Rs. 5 lakhs
  • Depositing more than Rs. 10 lakhs in your bank account
  • Investing more than Rs. 2 lakhs in MFs or Rs. 1 lakh in shares
  • Buying or selling property over Rs. 30 lakhs

 8.  Interest from FDs or Savings A/C – Utmost care shall be given in interest received from banks. Assessee believe that as banks deduct 10% TDS on the deposits interest, there is no need to pay tax on the same by them. In such case, facts are other way round which shall necessarily be understood to avoid notices. Though bank deducts TDS but you are suppose to pay any additional tax depending on your income tax bracket.

For instance, If you are 30% tax bracket and you have FD in bank of Rs. 10 lakhs. Interest rate on the same is 10%. This means interest received is Rs. 1,00,000. Now, the bank pays Rs. 90,000 after deducting TDS @ 10% i.e. Rs. 10,000 and pay to the government. As you are in 30% tax bracket, you actually need to pay 30% to government, which means that at the end of the year you need to pay additional Rs 20,000. If you are not doing the same, then you might be inviting trouble for future in form of notice.

Mistakes are common, if due care taken then it can be avoided to a great extent. Therefore, small points as stated above shall be kept in mind to escape from notices.

Source: Mr. Alok Patnia, founder of Taxmantra.com