7th Pay Commission proposes to visit Mumbai from 6th to 8th November, 2014.

The commission has, in its first phase of interaction, been seeking the views of various stakeholders on its terms of reference. To this end, meetings have been held in Delhi with various organisations and heads of various agencies.

In its second phase of interaction, the Commission has started holding meetings in different parts of the country to facilitate stakeholders staying in various areas to present their views personally before the Commission and ensure larger representation. This exercise is being undertaken to enable the Commission to get a first-hand impression about the functioning and the condition of service prevailing in different parts of the country.

Accordingly, the Commission, headed by its Chairman, Justice Shri A. K. Mathur, proposes to visit Mumbai from 6th November, 2014 to 8th November, 2014. The Commission would like to invite various entities/associations/federations representing any/all categories of employees covered by the terms of Reference of the Commission to present their views.

Your request for a meeting with the Commission may be sent through e-mail to the Secretary, 7th Central Pay Commission at secy-7cpc@nic.in. The memorandum already submitted by the requesting entity may also be sent as an attachment with this e-mail.

The last date for receiving request for meeting is 30th October, 2014 (1700 hours).

Salary modes & Income Tax reliefs by amended Finance Act, 2014 for Asstt. Year 2015-16.

Advance learning on tax treatment of various forms of salary like bonus, overtime pay, salary in lieu of notice period, etc. (Theory)
Tax treatment of advance salary :
Advance salary received by an employee is taxed in the year of receipt. The rule behind this is the basis of taxability of salary, i.e., salary is taxed on due or receipt basis, whichever is earlier. However, an employee can claim relief under section 89 (discussed later) in respect of advance salary.

Arrears of salary :
Arrears of salary received by an employee are taxed in the year of receipt if the same were not taxed earlier on due basis. However, an employee can claim relief under section 89 (discussed later) in respect of arrears of salary.

Tax treatment of bonus :
Bonus received by an employee is charged to tax in the year of receipt. Relief under section 89 can be claimed in respect of arrears of bonus received during the year.

Tax treatment of fees or commission :
Fees or commission received by the employee from the employer are charged to tax as salary income. Commission will be taxed as salary income, irrespective of the fact that it is received as fixed monthly amount or is received as a percentage of any particular item like turnover achieved by the employee.

Tax treatment of salary in lieu of notice period :
Salary in lieu of notice period is charged to tax on receipt basis, i.e., it is charged to tax in the year of receipt.

Gifts received from the employer :
Any voluntarily gift received by the employee from the employer is charged to tax as salary income (perquisite). However, non-monetary gifts are exempt upto Rs. 5,000. The detailed tax treatment of gift in the form of perquisite is discussed in advance learning on perquisites.

If gift has no relation to the service rendered by the employee, then the same can be charged to tax under the head “Income from other sources”.

Compensation received from the employer :
Compensation received from the employer in connection with modification of terms of employment will be charged to tax as salary income, i.e., profits in lieu of salary.

Pay for extra work :
If an employee receives any payment in respect of extra work done by him then the same is charged to tax under the head “Salaries”. In other words, remuneration received for extra work will be charged to tax as salary income.

Tax treatment of allowances :
Tax treatment of various allowances is discussed in the advance learning on allowances.

Tax treatment of perquisites :
Tax treatment of various perquisites is discussed in the advance learning on perquisites.

Tax treatment of retirement benefits :
Tax treatment of various retirement benefits is discussed in the advance learning on retirement benefits.

Tax treatment of salary received by a partner :
For taxing any income under the head “Salaries”, the relation of the payer and payee should be that of the employer and the employee. In case of a partnership firm, the partners are not the employees of the firm and, hence, salary received by the partners from the firm is not charged to tax under the head “Salaries”. Salary received by partner from the firm is charged to tax under the head “Profits and gains of business or profession”.

Tax treatment of salary received by an Indian citizen deputed outside India :
Salary received by an Indian citizen deputed outside India by the Government is treated as income deemed to be accrued or arisen in India and will be taxed in India. However, in such a case allowance and perquisites will be exempt from tax.

Tax treatment of salary foregone by the employee :
Salary is charged to tax on due or receipt basis whichever is earlier, hence, salary foregone by the employee is charged to tax on due basis, even though it is not received by him. In other words, salary foregone after its accrual is charged to tax, even though it is not received by the employee.

Tax treatment of surrender of salary to the Central Government :
Salary foregone after its accrual is charged to tax, even though it is not received by the employee. However, if salary is surrendered to the Central Government under section 2 of the Voluntary Surrender of Salary (Exemption from Taxation) Act, 1961, then such surrendered salary is not charged to tax.

Tax treatment of salary received from the UNO :
Salary received from the United Nations Organisation is exempt from tax as per section 2 of the United Nations (Privileges and Immunities) Act, 1947.

Tax treatment of amount received before joining the job :
Any payment received by an employee from his present employer or former employer or prospe ctive employer will be charged to tax under the head “Salaries” (as profits in lieu of salary). Hence, amount received from prospective employer will also be charged to tax under the head “Salaries”.

Relief under section 89 in respect of arrears of salary :
Under section 89, read with Rule 21A(2), an employee can claim relief in respect of arrears of salary. Relief can be computed in the following manner:
Step 1 : Calculate total tax liability (including surcharge and cess, if any) on the total income, including the additional salary of the previous year in which such salary is received.

Step 2 : Calculate total tax liability (including surcharge and cess, if any) on the total income, excluding the additional salary of the previous year in which such salary is received.

Step 3 : Find the difference between tax computed at (1) and (2) above.

Step 4 : Calculate total tax liability (including surcharge and cess, if any) on the total income, including the additional salary of the previous year(s) to which such salary relates to. 

Step 5 : Calculate total tax liability (including surcharge and cess, if any) on the total income, excluding the additional salary of the previous year(s) to which such salary relates to.

Step 6 : Find the difference between tax computed at (4) and (5) above. Relief under section 89 is the excess of tax computed at Step 3 over tax computed at Step 6. No relief is available, if tax computed at Step 3 is less than tax computed at Step 6. If the additional salary pertains to more than one previous year, then relief shall be computed in above manner by spreading such salary over the previous years to which such salary pertains to.

To read details of this Amendment Finance Act, 2013 (Click Here)

Approval of Long Term Bond and Rate of Interest for concessional TDS under Sec. 194LC w.e.f. 1.10.2014 - CBDT.

CBDT prescribes conditions to get automatic approval for long term bonds for concessional TDS under Sec. 194LC vide circular No. 15/2014 dated 17th Oct., 2014.

Section 194LC of Income Tax Act, 1961, introduced by the Finance Act, 2012, provided for lower withholding tax at the rate of 5% on the interest payments by Indian companies on borrowings made in foreign currency by such companies from a source outside India.  The benefit was available in respect of borrowings made either under an agreement or by way of issue of long terms infrastructure bonds.  The section further provided that such borrowing and the rate of interest should be approved by the Central Government Subsequently with a view to lower the compliance burden and reduce the time lag which would have arisen on account of case-by-case approval, the Central Government has decided to grant approval to all borrowings by way of loan agreement on long term infrastructure bond provided by satisfy certain condition.  The approval and the conditions were detailed in the CBDT circular No. 7 of 2012 dated 21st Sep., 2012.

The Finance (No.2) Act, 2014 has amended section 194LC w.e.f. 01.10.2014.  Consequent to the amendment, the concessional rate of withholding tax has been extended to borrowing by way of any long term bonds, not limited to a long term infrastructure bond, if the borrowing is made on or after 1st day of October, 2014.  Further, the concluding date of the period of borrowings eligible for concession under Section 194LC which was earlier 01.07.2015 has been extended to borrowings made before the 1st day of July, 2017.

Therefore, the approval of the Central Government is further required in respect of long term bond issue and the rate of interest to be paid on such borrowings.

Considering the fact that there would be a large number of bond issues to be undertaken by Indian companies, providing a mechanism involving approval in each and every specific case would entail avoidable compliance burden on the borrower/issuer of bond.  In order to mitigate the compliance burden and hardship, the CBDT (with the approval of the central Government) coneys the approval of the central Government for the purposes of section 194LC in respect of the issue of long term bond including long term infrastructure bond by Indian companies which satisfy the following conditions:
  • The bond issue is at any time on or after 1st day of October, 2014 but before the 1st day of July, 2014.
  • The bond issue by the Indian company should comply with clause (d) of sub section (3) of section 6 of the foreign Exchange Management Act, 1999 read with Notification No. FEMA3/2000-RB viz. Foreign Exchange Management (Borrowing or Lending in Foreign exchange) Regulations 2000, dated May 3, 2000, as amended from time to time (hereafter referred to as "ECB regulations"), either under the automatic route or under the approval route.
  • The bond issue should have a loan Registration Number issued by the RBI.
  • The term "long term" means that the bond to be issued should have original maturity term of three years or more.
Further, the Central Government has also approved the interest rate of the purpose of section 194LC in respect of borrowing by way of issue of long term bond including long term infrastructure bond as any rate of interest which is withing the ALL-in-cost ceilings specified by the RBI under ECB regulations as applicable to the borrowing through a long term bond issue having regard to the tenure thereof.

In view of the above, any bond issue, which satisfies the above conditions, would be treated as approved by the Central Government for the purposes of section 194LC.

It is also clarified that consequent to the amendment to section 194 LC the approval of the Central Government contained in Circular No. 07/2012, in so far as they apply to borrowings by way of a loan arrangement, shall be valid for the borrowings made on or before 30/06/2017 instead of 30/06/2015 as emendation in the said Circular.


Download Circular (Click Here)

CBDT extends due date of filing 2nd Quarter TDS/TCS returns for Asstt. Year 2015-16

CBDT has issued a Press Release on 17th Oct., 2014 to extend due date of filing of TDs/TCS Statements for 2nd Quarter for Fin. Year 2014-15 for specially deductors/collections belonging to states of Andra Pradesh, Jammu & Kashmir, Odisha and Telangana State.

In view of the recent natural calamities in the States of Andhra Pradesh, Jammu & Kashmir, Odisha & Telangana, the Central Board of Direct Taxes has issued an order extending the due date for filing the TDS/TCS Statements for the 2nd Quarter of Financial year 2014-15 by the deductors/collectors in these States.  In case of Government deductors/collectors that are mapped to a valid AIN, the due date is extended from 31st October, 2014 to 7th November, 2014. In case of all other deductors/collectors, the due date is extended from 15th October, 2014 to 31 st October, 2014.

Download Due Date Extended TDS/TCS 2nd Quarter Statement Press Release (Click Here)

Request to TDS Deductors to follow up for Filing of Form No. 24G For Asstt. Year 2015-16 - CPC (TDS)

This is to inform you that your office (Accounts Office Identification Number (AIN)) have filed Form 24G for all 12 months in Financial Year 2013-14, however, you have not filed Form no. 24G for any of the months during Financial Year 2014-15.
  • Please note that In case of delay in filing of Form No. 24G by the AINs:
  • There would be delay in generation of Book Identification Number (BIN) and subsequent intimation of the same by the PAOs to the concerned DDOs.
  • This contributes towards delay in filing of quarterly TDS/ TCS statements resulting into levy of late filing fee u/s 234E of the I.T. Act (a sum of Two Hundred Rupees for every day during which the failure continues) on the deductors.
  • Late filing of TDS statements also results into the TDS Credit not being available to the deductees (employees / vendors) for claiming the amount of tax already deducted from the payments made to them besides generating correct TDS Certificates for them.
  • In view of the above, you are advised to file Form No. 24G well within the due date so that the DDOs are able to file there quarterly TDS / TCS Statements within the due time and avoid levy of fee u/s 234E of the Income Tax Act.
In case you have not filed due to one of the following probable reasons, please inform accordingly to this office with due support of documents:
a) the filing has been centralized and the filing is being done under any other AIN - Please surrender the AIN already allotted to you under intimation to this office
b) new AIN has been procured for filing Form No. 24G and old AIN no. is discarded - Please surrender the AIN already allotted to you under intimation to this office
c) not filed due to some internal problems of organization - Please take necessary steps to file 24G on priority basis under intimation to this office
d) any other problem - Please take necessary steps to file 24G on priority basis under intimation to this office
CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

CPC (TDS) wants Feedback from Taxapayers' on Deductor's Survey.

CPC(TDS) feels glad to release a survey "Deductor's Survey Questionnaire: Your Feedback Matters" with an objective to understand your satisfaction since the time CPC(TDS) and TRACES website came into existence. CPC(TDS) has undertaken transformational initiatives to improve overall service levels for deductors and tax payers by following:-
  • Faster Processing of Quarterly TDS Statements, including Corrections
  • Enablement of Online Correction facility.
  • e-tutorials and FAQs for educating user community.
  • Timely communication for correct reporting of TDS / TCS.
  • Assisting deductors/collectors for rectification of Defaults.
Through this survey, CPC(TDS) would like to collect your valuable opinion in enhancing the services offered. The Link for the survey is provided below and you are requested to fill this survey with your honest and unbiased feedback after logging on TRACES portal.

Link: https://www.tdscpc.gov.in/app/login.xhtml

For any assistance, you can call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

Adjust Excess TDS paid in next Coming Months.

There are many discrepancy regarding adjustment of Excess TDS deductions.  If the deductor remitted excess TDS amount from any employee under section 192, it can be adjusted under the same section in the coming month.

As per Income Tax Act for TDS Deduction under section 192(3), it is clearly provides that the deductor can enhance reduce the amount of tax to be deducted for the purpose of adjusting any excess or deficiency in previous action of deduction of tax at source. The excerpts of the said provision is given below:
“(3) The person responsible for making the payment referred to in sub-section (1) or sub-section (1A)or sub-section (2) or sub-section (2A) or sub-section (2B) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year.”
Therefore, you can do the said adjustment without any hesitation.

CBDT speeds up refund claims of taxpayers of J&K - Press Release

CBDT has issued a press released on 15thth October, 2014 regarding immediate issue of Income Tax Refund claim to taxpayers of J & K due to devastation caused by floods u/s. 139 of Income Tax Act, 1961.

In view of the large devastation caused by the recent floods in Jammu & Kashmir, the Income tax Department is taking necessary steps to process expeditiously the refund claims of the taxpayers residing in the state of Jammu & Kashmir who have submitted their returns through electronic mode. Instances have come to notice where the refund cheques could not be delivered at the address indicated by the taxpayers in their returns due to dislocation caused by floods.

Non-Corporate taxpayers of Jammu and Kashmir who desire to provide a new address for delivery of their refund cheques, may log in to the e-filing site https://incometaxindiaefiling.gov.in, and update their address through the path Profile Setting -> My Profile-> Address . Alternatively, the taxpayers can contact the helpdesk at Centralised Processing Centre (CPC), Bangalore at 1800 425 2229 and provide the updated address.


Updated Interest Rates on late deposit of service tax

Simple interest rate enhanced, where there is short payment or delay in payment of service tax, vide notification no. 12/2014-ST, dated 11th July, 2014

As per section 75, interest on delayed payment of service tax would be as follows:
  • Turnover below Rs. 60lacs in F.Y/preceding F.Y.–15% p.a
  • Turnover above Rs. 60lacs in F.Y/preceding F.Y. – 18% p.a.
Another Simple interest rates per annum payable under section 75, to vary on the basis of extent of delay in payment of service tax w.e.f. 1st October, 2014 are as under :

Extent of delay Simple interest rate per annum:
  • Up to six months            18%
  • From six months and up to one year    24%
  • More than one year            30%

GET FREE EMAIL UPDATES

Join us for free and get valuable content delivered right in your inbox.