Service Tax Rate 14% with Point of Taxation Rules, 2011

Service Tax Rate 14% with Point of Taxation Rules, 2011

Dear All

Central Government has enhanced the rate of Service Tax Rate from 12.36% to 14% vide Notification 14/2015-ST dated 19th May, 2015. New rate of 14% is effective from 01st June, 2015.Pursuant to the above stated increase, the rate of tax that would be applicable in certain situations, as per the Point of Taxation Rule would be as under:-

S. No.	Taxable Service provided when-Before/After the notified date	Issue of Invoice when- Before/after the notified date	Receipt of Payment when- Before/after the notified date	Point of Taxation	Rate Applicable
a)	Before	After	After	Date of payment or issue of invoice whichever is earlier	14%
b)	Before	Before	After	Date of issue of  Invoice	12.36%
c)	Before	After	Before	Date of Payment	12.36%
d)	After	Before	After	Date of Payment	14%
e)	After	Before	Before	Date of payment or issue of invoice whichever is earlier	12.36%

The following transitional issues merit attention:· 

·         In case of situations stated in (c) & (e) above, in accordance with Rule 2A of POT Rules if the payment is not credited in the bank within 4 working days from the notified date, the new rate of 14% would apply.

·         In case of situations stated in (d) above, service tax would have already been paid at the old rate (12.36%) when the invoice was issued or payment received before the change of rate of tax applying Rule 3 of POT Rules. However, due to subsequent increase in rate, there would be a short payment which the assessee may have to deposit. However, no interest would apply if the assessee deposits the differential amount within the due date reckoned from the point of taxation.

Hope the information/analysis helps you is assisting you in professional endeavours. 

Source : Point of Taxation Rules, 2011

Gaurav Arya- www.caclubindia.com

Amendment to the conditions for determining residency status in respect of Companies in Finance Act-2015

The existing provisions of section 6 of the Act provides for the conditions under which a person can be said to be resident in India for a previous year. In respect of a person being a company the conditions are contained in clause (3) of section 6 of the Act. Under the said clause, a company is said to be resident in India in any previous year, if-

(i) it is an Indian company; or

(ii) during that year, the control and management of its affairs is situated wholly in India.

Due to the requirement that whole of control and management should be situated in India and that too for whole of the year, the condition has been rendered to be practically inapplicable. A company can easily avoid becoming a resident by simply holding a board meeting outside India. This facilitates creation of shell companies which are incorporated outside but controlled from India. 'Place of effective management' (POEM) is an internationally recognized concept for determination of residence of a company incorporated in a foreign jurisdiction. Most of the tax treaties entered into by India recognise the concept of 'place of effective management' for determination of residence of a company as a tie-breaker rule for avoidance of double taxation. Many countries prefer the POEM test to be appropriate test for determination of residence of a company. The principle of POEM is recognized and accepted by Organisation of Economic Cooperation and Development (OECD) also. The OECD commentary on model convention provides definition of place of effective management to mean the place where key management and commercial decisions that are necessary for the conduct of the entity's business as a whole, are, in substance, made.

The modification in the condition of residence in respect of company by including the concept of effective management would align the provisions of the Act with the Double Taxation Avoidance Agreements (DTAAs) entered into by India with other countries and would also be in line with international standards. It would also be a measure to deal with cases of creation of shell companies outside India but being controlled and managed from India.

In view of the above, it is proposed to amend the provisions of section 6 to provide that a person being a company shall be said to be resident in India in any previous year, if-

(i) it is an Indian company; or

(ii) its place of effective management, at any time in that year, is in India .

Further, it is proposed to define the place of effective management to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance made.

Since POEM is an internationally well accepted concept, there are well recognised guiding principles for determination of POEM although it is a fact dependent exercise. However, it is proposed that in due course, a set of guiding principles to be followed in determination of POEM would be issued for the benefit of the taxpayers as well as, tax administration.

These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.

Source-Memorandum explaining finance bill 2015 

RBI may cut repo rate by 25 bps on June 2: Assocham

The Reserve Bank is likely to slash the benchmark interest rate by 0.25 per cent to stimulate demand, with retail inflation at 4.87 per cent in April, much below the apex bank's target of 6 per cent by January 2016, according to Assocham. 

The industry body also estimated that the RBI may cut the benchmark interest rate by another 0.50 per cent in the two quarters post the June 2 monetary policy review. 

In a note submitted to RBI Governor Raghuram Rajan, Assocham Secretary General D S Rawat pointed out that the Consumer Price Index (CPI) inflation is expected to be in a range of 4.5-6 per cent over the remainder of 2015. Based on the RBI's view, the real interest rate should be around 150-200 basis points. 

"Thus, we anticipate a 50 bps reduction in the repo rate over the remainder of this calendar year, while 25 bps should be announced right away," Rawat said. 

In its previous monetary policy review on April 7, the RBI had kept policy rate unchanged, saying it was assessing the impact of unseasonal rains and hailstorms on food prices, even though it hoped that normal monsoon in the coming months would bring down retail inflation to about 4 per cent by August. 

The RBI had also sounded optimistic about meeting the 6 per cent retail inflation target for January 2016. 

Source- Economics Times

Abolition of levy of wealth-tax under Wealth-tax Act, 1957

Wealth-tax Act, 1957 (‘the WT Act’) was introduced w.e.f. 01.04.1957 on the recommendation of Prof. Nicholas Kaldor for achieving twin major objectives of reducing inequalities and helping the enforcement of Income-tax Act through cross checks. Accordingly, all the assets of the assessees were taken into account for computation of net-wealth. The levy of wealth-tax was thoroughly revised on the recommendation of Tax Reform Committee headed by Raja J. Chelliah vide Finance Act, 1992 with effect from 01.04.1993. The Chelliah Committee had recommended abolition of wealth-tax in respect of all items of wealth other than those which can be regarded as unproductive forms of wealth or other items whose possession could legitimately be discouraged in the social interest.

Currently, wealth-tax is levied on an individual or HUF or company, if the net wealth of such person exceeds Rs.30 lakh on the valuation date, i.e. last date of the previous year. For the purpose of computation of taxable net wealth, only few specified assets are taken into account.

The actual collection from the levy of wealth-tax during the financial year 2011-12 was Rs.788.67 crore and during the financial year 2012-13 was Rs.844.12 crore only. The number of wealth-tax assessee was around 1.15 lakh in 2011-12. Although only a nominal amount of revenue is collected from the levy of wealth-tax, this levy creates a significant amount of compliance burden on the assessees as well as administrative burden on the department. This is because the assessees are required to value the assets as per the provisions of Wealth-tax Rules for computation of net wealth and for certain assets like jewellery, they are required to obtain valuation report from the registered valuer. Further, the assets which are specified for levy of wealth-tax, being unproductive, such as jewellery, luxury cars, etc. are difficult to be tracked and this gives an opportunity to the assessees to under report/under value the assets which are liable for wealth-tax. Due to this, the collection of wealth-tax over the years has not shown any significant growth and has only resulted into disproportionate compliance burden on the assessees and administrative burden on the department. It is, therefore, proposed to abolish the levy of wealth tax under the Wealth-tax Act, 1957 with effect from the 1st April, 2016. It is also proposed that the objective of taxing high net worth persons shall be achieved by levying a surcharge on tax payer earning higher income as levy of surcharge is easy to collect & monitor and also does not result into any compliance burden on the assessee and administrative burden on the department. The details regarding levy of enhanced surcharge on this account are given under the heading “Rates of Income-tax”. It is also proposed that information relating to assets which is currently required to be furnished in the wealth-tax return shall be captured by suitably modifying income-tax return.

This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years

Service Tax Rationalization of Abatements in Finance Act-2015

Rationalization of Abatements: 

• At present, service tax is payable on 30% of the value of rail transport for goods and passengers, 25% of the value of goods transport by road provided by a goods transport agency and 40% for goods transport by vessels. The conditions also vary. A uniform abatement is now being prescribed for transport by rail, road and vessel. Service Tax shall be payable on 30% of the value of such services subject to a uniform condition of non-availment of Cenvat Credit on inputs, capital goods and input services. 

• At present, Service Tax is payable on 40% of the value of air transport of passenger for economy as well as higher classes, e.g. business class. The abatement for classes other than economy is being reduced and service tax would be payable on 60% of the value of such higher classes.

• Abatement is being withdrawn from chit fund service. Consequently, Service Tax shall be paid by the chit fund foremen at full consideration received by way of fee, commission or any such amount. They would be entitled to take Cenvat Credit. The proposed rationalization in abatements shall come into effect from the 1st day of April, 2015.

Clarification regarding deduction of tax from payments made to transporters

Clarification regarding deduction of tax from payments made to transporters Under the existing provisions of section 194C of the Act payment to contractors is subject to tax deduction at source (TDS) at the rate of 1% in case the payee is an individual or Hindu undivided family and at the rate of 2% in case of other payees if such payment exceeds Rs. 30,000 or aggregate of such payment in a financial year exceeds Rs. 75,000. Prior to 1.10.2009, section 194C of the Act provided for exemption from TDS to an individual transporter who did not own more than two goods carriage at any time during the previous year. Subsequently, Finance (No.2) Act, 2009 substituted section 194C of the Act with effect from 1.10.2009, which inter alia provided for non- deduction of tax from payments made to the contractor during the course of plying, hiring and leasing goods carriage if the contractor furnishes his Permanent Account Number (PAN) to the payer.

The memorandum explaining the provisions of Finance (No.2) Bill, 2009 indicates that the intention was to exempt only small transport operators (as defined in section 44AE of the Act) from the purview of TDS on furnishing of Permanent Account Number (PAN). Thus, the intention was to reduce the compliance burden on the small transporters. However, the current language of sub-section (6) of section 194C of the Act does not convey the desired intention and as a result all transporters, irrespective of their size, are claiming exemption from TDS under the existing provisions of sub-section (6) of section 194C of the Act on furnishing of PAN. 28

As there is no rationale for exempting payment to all transporters, irrespective of their size, from the purview of TDS, it is proposed to amend the provisions of section 194C of the Act to expressly provide that the relaxation under sub-section (6 ) of section 194C of the Act from non-deduction of tax shall only be applicable to the payment in the nature of transport charges (whether paid by a person engaged in the business of transport or otherwise) made to an contractor who is engaged in the business of transport i.e. plying, hiring or leasing goods carriage and who is eligible to compute income as per the provisions of section 44AE of the Act (i.e a person who is not owning more than 10 goods carriage at any time during the previous year) and who has also furnished a declaration to this effect along with his PAN. This amendment will take effect from 1st June, 2015.

Source- Memorandum Explaining the Provisions in The Finance Bill, 2015

ALL YOU NEED TO KNOW ABOUT ADVANCE TAX

ALL YOU NEED TO KNOW ABOUT

ADVANCE TAX

 1.- Section 208

:- An assessee is liable to pay Advance Tax only if his ‘’Advance Tax’’ Liability is Rs.10,000 or more during the previous year.

:- An individual whose age is 60 years or more at anytime during the previous year is not required to pay Advance Tax if his Total Income does not carry income under the head P/G/B/P.

:- While computing Advance Tax Liability, TDS/TCS amount shall not be reduced if the person liable to deduct TDS has failed to deduct or if the person liable to collect TCS has failed to collect it.

2.- Due Date of Payment of Advance Tax

Due Date                 %of Advance Tax                                           % of Advance Tax

Required to be deposit                                    Required to be deposit

(CORPORATE ASSESSEE)               (OTHER THAN CORPORATE ASSESSEE)

15th June                       15%                                                      0%

15th Sept.                      45%                                                     30%

15th Dec.                      75%                                                     60%

15th Mar.                     100%                                                   100%

3.- Section 210

:- An Assessing officer may require assessee to pay Advance Tax by serving notice u/s 210 at an amount and in such manner as may be specified in the notice.

:- No Appeal is possible against order u/s 210

:- No order u/s 210 can be issued after 28th Feb of previous year.

:- No order u/s 210 can be issued where no assessment has been made in respect of any Assessment year.

:- Amount of Advance Tax required to be deposit shall be computed by Assessing officer on the following manner :

            :- Last Assessment made

:- Return filed by Assessee

Whichever is higher.

:- An assessee may voluntarily pay Advance Tax at an amount higher than the amount specified in order  u/s 210

4.- Computation of Advance Tax Liability

Income under head Salary                                   xxx

Income under head House Property                    xxx

Income under head Capital Gain                         xxx

Income under head Other Sources                     xxx

Income under head P/G/B/P                              xxx

 

Gross Total Income                                      xxx

(-)Deductions under chapter VI-A                    xxx

 

Total Income                                                xxx

Tax on Total Income                                   xxx

(-) TCS / TCS                                           xx

(-) MAT credit                                          xx

(-) Section 89(1) relief                               xx

(-) Relief u/s 90 & 91                                xx

 
TOTAL ADVANCE TAX LIABILITY     xxx

Income Tax E-filing – Maximum 4 users for the same Mobile No. and & ID – www.incometaxindiaefiling.gov.in

One Mobile number-Email Id can be used for Maximum 4 users at Income Tax India E filing Site i.e. www.incometaxindiaefiling.gov.in

The tax filers know that they have to first get registered themselves with the Income Tax Department. For getting registered with the Income Tax Department, the assessee should have a Permanent Account Number. On the basis of PAN, other details such as corresponding address, contact details etc are to be provided to the Income Tax Department by registering with the Income Tax Department through its official online portal.

While filing online Income tax Returns, the assessee is required to enter the contact details i.e. Mobile Number and electronic contact details i.e. e – mail address. Till now it happened that the consultants who filed the returns of their clients used to enter their own contact number and e – mail address so that the correspondence was directly sent to the consultant. But this matter created serious security problems as it was not safe. The same was known when a student has hacked the security passwords and was able to get the details of well known assessees. Another problem was that, any one was able to change the password of any assessee if the high security option was not used.

To overcome such issues, the Income Tax Department has made the regulations of e – filing of Income Tax Returns very strict. The Income Tax Department has announced such security actions wide press release.

The following security problems were considered in the press release issued by the Income Tax Department:

• The taxpayers are not having their own valid contact details registered with the Income Tax Department.
• The same issue is with the assessees who are filing their Income Tax Returns online and are not providing the authenticated contact details and due to this matter, the department is not able to contact the assessee directly.
• The problems are seen in resetting the passwords and the same is because the resetting details are sent by the department to the contact details registered with the Income Tax Department and the contact details amy be of person different then an assessee.

BY keeping in mind the above matters, the Income Tax Department has taken the following actions to overcome the security issues:

• Not more than four assessees will be able to use single mobile number or Email ID for filing the Income Tax Return with the Income Tax Department. It means that now one contact details i.e. mobile number and e – mail ID can be used maximum by the four assessees for registering with the site of Income Tax Department. Such decision is taken so that group of family members can be covered under single contact detail.
• The another facility provided by the Income Tax Department is that, the assessee will be allowed to enter secondary contact details and the communication will also be sent to the secondary contact details provided by the assessee. There is no limit as to number of assessee for common secondary contact details. It means that the restriction does not apply to the providence of secondary contact details.

According to the above announcement, all the assessees are required to update their contact details and should have to provide authenticate details for the same. The Income Tax Department has also provided the process by which the assessee can update their existing contact details. We have provided the process of updating contact details in very simple language here with.

Process of updating and authenticating the contact details for New User:

This process is provided for the assessees who are going to register with the Income Tax Department on the online portal for the first time. So the new users may follow the following procedure to update their contact details:

• Go to the official online e – filing portal of the Income Tax Department i.e.www.incometaxindiaefiling.gov.in
• Enter your correct details including correct contact details
• After successfully providing the registration details, the department will send the activation link to your e – mail id and also a One Time Password (OTP) to your mobile number
• Open your e – mail account and go to your inbox and find the e – mail containing activation link sent by Income Tax Department and click on the activation link
• You will be asked to enter the OTP received on your mobile number
• You will be successfully registered with the Income Tax Department.

Process of updating and authenticating the contact details for existing registered users:

The Income Tax Department has provided the following process for updating the contact details of the assessees who are already registered with the Income Tax Department. So the existing return filers are advised to follow the following procedure to update their contact details:

• The registered user will have to visit the official online e – filing portal of the Income Tax Department i.e. www.incometaxindiaefiling.gov.in and get themselves login with the site by entering the ID and password
• A Pop –up dialog box will be displayed automatically on logging in with the site
• The Dialog box will be asking you to update your contact details
• Provide the authenticate mobile number and e – mail ID that belongs to you
• The option is also provided that the assessee can confirm that the existing contact details are already authenticate and no changes are required to be made
• But in case when the existing details are not authenticate, the asseessee is required to enter new contact details
• On registering the new details, the Income Tax Department will send two pins i.e. PIN 1 to the mobile number and PIN 2 to the e – mail ID
• The assess will have to enter both the PINs in the site of department and confirm the same
• The assessee is required not to close the webpage until the One Time PIN are not entered otherwise the above process will be required to be repeated by the assessee.
• In case when the mobile number of the assessee have been changed during the year, the assessee will have to repeat the above process of validating the contact details.

Process of entering secondary contact details:

• Go to the official online e – filing portal of the Income Tax Department i.e.www.incometaxindiaefiling.gov.in and login with your ID and password
• Visit “My Profile” link given under “Profile Settings” menu
• Enter the details of secondary contact and save the same.

The Income Tax Department has advised the assessees to check that they have included the e – mail in the “safe List” and SMS in the “white list”. Else the communication details will be received as spam by the assessee or may also be rejected.

Know your PAN, Verify PAN, PAN Verification, PAN card Status Online, Know your PAN card details using PAN Number

PAN card is a very important document constituting one of your KYC proof. Whereas PAN is nothing but a Permanent Account Number allotted to you by the Income Tax Department on application made by any person defined under Income Tax Act. PAN is a number that acts as your identity in cases of filing your return, paying taxes etc. Now let us get familiar with the structure of PAN.

PAN*

Captcha Code Image

Enter the number as in above image*

PAN is a 10 digit number containing alphabets as well as numbers. Thus we can say that PAN is made up of 10 digit alphanumeric number. It has a fixed format. The first 5 digits are made up using alphabets ranging from A to Z, the next 4 digits are made up of numbers from 0 to 9 and the last digit is again an alphabet from A to Z.

Again there are different fixed alphabets for fixed digit. In other words, first three alphabets are allotted randomly. The fourth one is based on the status of the individual. It means if the assessee is an individual than fourth digit will be ‘P’, if the assessee is a company than the fourth digit will be ‘C’, for Trust it is ‘T’, for Partnership Firms it is ‘F’, for Body of Individual it is ‘B’, for Association of Person the digit will be ‘A’, for HUF the same will be ‘H’, for Local Authority ‘L’ will be allotted, for Government Entity it will be ‘G’ and alphabet ‘J’ is allotted for Judicial Artificial person.

If we want to make it simple than the list can be as follows:

Individual : P

Company : C

Trust : T

Partnership Firm : F

Body of individual : B

Association of Persons: A

HUF : H

Local Authority : L

Government Entity : G

Judicial Artificial Person : J

Now let us move forward with the fifth digit allotted in the PAN. In case of individual, the fifth digit will be the first letter of surname / last name of the individual. If the assessee is not an individual, than the fifth digit will be the first letter of the name of the entity.

Your details such as your name, address, date of birth etc are registered with the Income Tax Department under your PAN. If you want to know your name registered with the Income tax department than you can find it out by following the following steps:

• First of all visit the site incometaxindiaefiling.gov.in
• Click on the link given named “know your PAN”
• You will be provided a form like structure and you will have to enter details like your Date of birth in case of individual or date of incorporation in case of other persons, Surname in case of Individual or name of the entity on other cases and enter the captcha as provided in the image
• Click on the submit button
• All the registered details will be displayed along with your jurisdiction.

The details maintained under the PAN by the Income Tax Department are accurate and reliable as the same are recorded after verifying them with the supporting documents. NSDL is the authority administering the receipt of application of PAN and allotting the PAN. It also provides facility of checking the application status of PAN once you have applied for your PAN. www.tin-nsdl.com is the website maintained by NSDL where the assessee can check the PAN application status. Application forms for PAN are also available on the same site. PAN application form can be downloaded and filled up and application can be made via NSDL Facilitation centres or the assessee can also opt for applying for PAN online through the official site of NSDL as mentioned above.

KNOW DEALERS DETAIL BY TIN (VAT) NUMBER OR BY NAME

KNOW DEALERS DETAIL BY TIN (VAT) NUMBER OR BY NAME

Tax Identification number indicates TIN. It is a number allotted by the VAT authority of the state on application made by the dealer. This number is a unique identity of the dealer in the database of VAT authorities of the state. TIN / VAT Number is made up of 11 digit numbers. The First two digits are allotted on the basis of code of various states Such as Code of Gujarat is 24, so the dealers of Gujarat are allotted TIN numbers starting from 24 succeeded by other 9 digits. Codes of all the states and Union territories of the country are as follows:

Jammu & Kashmir 01	Sikkim 11	Orissa 21	Lakshdweep 31
Himachal Pradesh 02	Arunachal Pradesh 12	Chhattisgarh 22	Kerala 32
Punjab 03	Nagaland 13	Madhya Pradesh 23	Tamil nadu 33
Chandigarh 04	Manipur 14	Gujarat 24	Pondicherry 34
Uttranchal 05	Mizoram 15	Daman & Diu 25	Andaman & Nicobar Islands 35
Haryana 06	Tripura 16	Dadra & Nagar Haveli 26
Delhi 07	Meghalaya 17	Maharashtra 27
Rajasthan 08	Assam 18	Andhra Pradesh 28
Uttar Pradesh 09	West Bengal 19	Karnataka 29
Bihar 10	Jharkhand 20	Goa 30

Lots of well known sites from where we can find the details of any dealer using the TIN Number of that dealer are available online. Details of Dealers all over the country can be known from the said sites. You only require the TIN of the dealer in case you want to find details of any dealer online. If you don’t have TIN / VAT number of the dealer then the same can be availed from various documents such as VAT invoice, Excise Invoice, VAT / Excise return and other documents which are government certified and are related to the VAT authority. VAT / CST Number are almost same for all dealers. Thus both can be used to know the details of the dealer.

In cases where a need arises to get dealers detail, you can visit various sites providing such information and find the details. It will also be helpful to check your own database which is maintained by the VAT or CST authority. If you want to find the dealers details in an easier manner then we are herewith providing the steps to download the dealer’s details. We hope that these steps will be very helpful to you. Thus the direction to get Dealer’s details by TIN / VAT number is as under:

• First of all you have to type the website address in the address bar of your web browser. So type the address of the website from which you would like to search the dealer’s details
• As a next step we advise you to once read the paragraph given on homepage of the site
• You should now type the TIN Number / VAT Number in the box given under the head “TIN Search”
• Be sure that you provide the correct TIN / VAT Number in the space provided
• Click on the “Search” button and the TIN Number will be found out from the database
• Once the search is complete, following dealers details will be published:
  • Name of the Dealer,
  • Address of the Dealer
  • Status of the entity i.e. Proprietorship, Partnership, Company etc,
  • PAN of the entity,
  • Activity status of the entity i.e. whether the entity is active or not, etc.

Once you follow the above procedure, we assure that you will be easily able to find the dealer’s details from the reliable stated site. So whenever you want to know the details of any of your dealer you can visit same website and find the basic details of the dealer.

Source-http://www.taxfinanceinfo.com/