One Documentary Proof of Address - RBI further simplifies KYC Norms for Bank Accounts

Important RBI Circular No. RBI/2013-14/634 dated 09-June-2014 regarding One Documentary Proof of Address - RBI further simplifies KYC Norms for Bank Accounts.
http://rbidocs.rbi.org.in/rdocs/notification/PDFs/CA090614FCN.pdf

Update your Contact Details in Income Tax E-Filing Portal – CBDT

Important announcement for Tax payers for updating contact details in e-Filing Portal – PINs Validation extended up to 24 hours – (Updated on 27.06.2014)
Income-Tax Department uses the registered contact details (Mobile number & E-mail ID) for all communications related to e-Filing. It is mandatory that all tax payers must have a valid contact details registered in e-Filing portal.
It is noticed that many registered users are not having authenticated contact details in e-Filing or may have provided details of other persons for convenience. This prevents the Department from interacting directly with taxpayers on their personal email and Mobile.
Further, it has been observed that in many cases taxpayers are not able to reset their password since the email communication from the Department may be sent to their registered email or Mobile which may be different from the taxpayer’s personal email or mobile.
Hence, it is requested that all the e-Filing users may immediately update and authenticate their correct contact details so that the communication can be sent to the valid Mobile number and E-mail ID.

New User

Provide the correct Mobile Number and Email ID during the Registrationin the e-Filing portal, Activation link would be sent to the registered E-mail ID and a One Time Password (OTP also called PIN) is sent to the registered Mobile Number. User needs to Click on the Link provided in the E-mail and enter the OTP received in the mobile number for Successful activation of the registered user in e-Filing portal

Registered User

After the user logs in to the e-filing account, the user is requested to update the current Mobile number and E-mail ID. The user should update their personal Mobile number and Email so that the updated contact particulars are registered with the Department or confirm that the Mobile number and email ID already registered is their valid personal contacts. Upon submitting the details, Department would immediately send OTPs (PIN1 & PIN2) to new mobile number and Email ID. The respective PINs-PIN1 and PIN2 received through Mobile number and E-mail ID should be entered by them in the respective input fields to authenticate that the email ID and mobile are correct. Upon successful validation the Mobile number and email ID would be updated in the taxpayer’s profile and the process would be complete. If the PINs are not received within specified time (say 2 minutes), the taxpayer may opt for “Resend PINs” option. The PINs once received will be valid for 24 hours. The taxpayers are advised to validate the contact details using the PINs received within 24 hours. If PINs are not validated within 24 hours, the taxpayer has to login and follow the same procedure as above again.

Note:
Taxpayers are advised to follow the process mentioned above in the interest of the security of their e-filing account and to directly receive communication from the Department about status of processing and issue of refunds etc.This is a one-time process to validate the mobile number and email ID. However, whenever the taxpayer changes the Mobile Number or email ID in their Profile, the process will be repeated to ensure that the particulars provided are correct.One mobile number or email ID can be used for a maximum of 4 user accounts as the Primary Contact- Mobile Number and Email ID in e-Filing. This is to ensure that family members (not exceeding 4 separate users) not having personal email or mobile can be covered under a common email or mobile, but in general taxpayers should have their own unique email ID and Mobile registered with the Department.The taxpayer can enter any other person’s email or mobile number in addition as a Secondary Contact (without any restriction on the number of user accounts linked as a Secondary Contact). Using “Profle Settings -> My Profile” the taxpayer can select to include the Secondary Contact to also receive emails, alerts etc.
Include the emails and SMS from the Income tax Department in the ‘safe list’ or ‘white list’ to prevent the communications from the Department from being blocked or rejected or sent to Spam folder.
As a best practice, please update and authenticate the current contact and address details under “Profile Settings -> My Profile” after login to eFiling portal.

TDS----Rate Chart, Provisions, Penalty for non Compliance, Due Date for TDS return Filing

Tax Deducted at Source (TDS) is one of the modes of collecting income tax in India at the very source of income, governed under the Indian Income Tax Act of 1961. It is controlled by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue in-charge of Indian Revenue Service (IRS).

TDS is simply an indirect method of collection of tax which combines the concepts of “pay as you earn” and “collect as it earned.” Its importance to the government lies in the fact that it prepones the collection of tax, provides a greater reach and wider base for tax. At the same time, it benefits to the tax payer also, it distributes the incidence of tax and provides a simple and convenient mode of payment of taxes.
The concept of TDS requires that the person, on whom responsibility has been cast, is to deduct tax at the appropriate rates, from payments of specific nature which are being made to a specified recipient. The deducted sum is required to be deposited to the credit of the Central Government. The recipient from whose income tax has been deducted at source gets the credit of the amount deducted in his personal assessment on the basis of the certificate issued by the deductor.
In the concept of TDS, Income Tax Act requires specified persons to deduct tax on specified nature of payments being made by them. An Individual or an H.U.F. is not liable to deduct TDS on such payment except where the individual or H.U.F. is carrying on a business/profession where accounts are required to be audited u/s 44AB, in the immediately preceding financial year. A person is liable to get its accounts audited u/s 44AB if during the relevant financial year its gross sales, turnover or gross receipts exceeds Rs. 1 Crore in case of a business, or Rs. 25 lacs in case of a profession.
There are also some conditions also where there is no liability of deductor to deduct TDS which are as follows.
On declaration furnished by payee on Form 15G or 15H as the case may be.
On certificate issued by ITO.
Payment to Government/RBI/Statutory Corporation etc.
Exempt Incomes.
Interest Payment by Offshore Banking Units.
Payment to New Pension System Trust.
Notified payment to Notified Institutions / Associations.

TDS Rates and Returns for Assessment Year 2014-15 (Financial Year 2013-14)
TDS Rate on Payment of Salary and Wages:

Section 192	Payment of Salary and Wages
Criterion of Deduction	TDS is deducted if the estimated income of the employee is taxable. Employer must not deduct tax on non-taxable allowances like conveyance allowance, rent allowance, medical allowance and deductible investments under sections like 80C, 80CC, 80D, 80DD, 80DDB, 80E, 80GG and 80U. No tax is required to be deducted at source if the estimated total income of the employee is less than the minimum taxable income (Rs. 2,20,000/- in case of Individual, HUF, AOP, BOD and AJP. Nil for others.)
TDS Rate	As per Income Tax, Surcharge and Education Cess rates applicable on the estimated income of employee for the year.

TDS Rates on Payments other than Salary and Wages to Residents (including domestic companies)

Section	For Payment of	On Payments Exceeding	Individual/HUF	Others
193	Interest on Debentures	Rs. 5000/-	10%	10%
194	Deemed Dividend	No minimum	10%	10%
194 A	Interest other than on securities by banks	Rs. 10000/-	10%	10%
194 A	Interest other than on securities by others	Rs. 5000/-	10%	10%
194 B	Winnings from Lotteries / Puzzle / Game	Rs. 10000/-	30%	30%
194 BB	Winnings from Horse Race	Rs. 5000/-	30%	30%
194 C (1)	Payment to Contractors	Rs. 30000/- for single payment Rs. 75000/- for aggregate payment during Financial Year	1%	2%
194 C (2)	Payment to Sub-Contractors / for Advertisements
194 D	Payment of Insurance Commission	Rs. 20000/-	10%	10%
194 EE	Payment of NSS Deposits	Rs. 2500/-	20%	NA
194 F	Repurchase of units by Mutual Funds / UTI	Rs. 1000/-	20%	20%
194 G	Commission on Sale of Lottery tickets	Rs. 1000/-	10%	10%
194 H	Commission or Brokerage	Rs. 5000/-	10%	10%
194 I	Rent of Land, Building or Furniture	Rs. 180000/-	10%	10%
	Rent of Plant & Machinery	Rs. 180000/-	2%	2%
194 IA	Transfer of Immovable Property (w.e.f. 01.06.2013)	Rs. 50 lacs	1%	1%
194 J	Professional / technical services, royalty	Rs. 30000/-	10%	10%
194 J (1)	Remuneration / commission to director of the company	-	10%	10%
194 J (ba)	Any remuneration / fees / commission paid to a director of a company, other than those on which tax is deductible u/s 192.	-	10%	10%
194 L	Compensation on acquisition of CapitalAsset	Rs. 100000/-	10%	10%
194 LA	Compensation on acquisition of certain immovable property	Rs. 200000/-	10%	10%

Notes:

1. No surcharge or education cess is deductible / collectible at source on payments made to residents {Individuals / HUF / Society / AOP / Firm / Domestic Company) on payment of incomes other than salary or wages.
2. TDS at higher rate of 20% or TDS rate, whichever is higher, has to be deducted if the deductee does not provide PAN to the deductor. (section 206AA)

All persons who are required to deduct tax at source or collect tax at source on behalf of IncomeTax Department are required to apply for and obtain Tax Deduction or Tax Collection Account Number (TAN).

Point of Deduction of TDS

Salary: At the time of payment

Other Payments: When income paid or credited including credit to “Payable” or “Suspense” account.

Consequences of failure to deduct tax: 

Interest - 1% of the tax deductible.

Penalty - equal to the amount of tax deductible but not deducted.

Due Dates for depositing TDS

Quarter	Salary Payments	Other Payment
April to February	7th of next month	7th of next month
March	30th April	30th April

 Consequences of default:

Interest @ 1.5% of tax not deposited is payable u/s 201(A).

Punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine under Section 276(B).

Issue of TDS Certificate

1. Section 192 (TDS on Salary) :

The certificate on Form No. 16 should be issued by the deductor by 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted.

2. In all other cases :

The certificate on Form No. 16A should be issued within fifteen days from the due date for furnishing the “statement of TDS” under rule 31A.

Penalty on Failure to Issue TDS Certificate: Rs. 100/- every day for the period failure continues subject to a maximum of TDS amount.

Forms for submitting Quarterly Statements of Tax Deducted at Source (Rule 31A)

(a) Statement of deduction of tax under section 192 in Form No. 24Q

(b) Statement of deduction of tax under sections 193 to 196D in :

1. Form No. 27Q in respect of the deductee who is a non-resident not being a company or a foreigncompany or resident but not ordinarily resident; and
2. Form No. 26Q in respect of all other deductees.

Due Dates for submitting Quarterly Statements of Tax Deducted at Source (Rule 31A)

Date of ending of the quarter of the financial year	Due date, if deductor is an office of the Government	Due Date for others
30th June	31st July of the financial year	15th July of the financial year
30th September	31st October of the financial year	15th October of the financial year
31st December	31st January of the financial year	15th January of the financial year
31st March	15th May of the financial year immediately following the financial year in which deduction is made	15th May of the financial year immediately following the financial year in which deduction is made.

Penal Provisions for failure / default in submitting returns /statements
Section 272A(2)	Failure to submit returns prescribed under Section 200(3)	Penalty of Rs. 100/- every day during which the failure continues upto a maximum of TDS amount.
Section 234E	Failure to TDS return in time	Fine of Rs. 200/- every day during which the failure continues will be levied on deductor as long as the default continues, subject to a maximum of TDS amount.
Section 271H	(i) If deductor defaults for more than 1 year in filing TDS Statement (ii) If deductor furnishes incorrect details like PAN, TDS amount, Challan particulars etc.	Penalty which shall not be less than ten thousand rupees but which may extend to one lakh rupees.

Rail infra may get 100% FDI push

Railway minister Sadananda Gowda is likely to announce 100% FDI and a more investor-friendly PPP model for the sector in his maiden budget.In a meeting with finance minister Arun Jaitley on Tuesday, the minister discussed steps to boost railway's revenue receipts. According to sources, Gowda has also asked for a hike in the gross budgetary support (GBS) in the coming general Budget by almost Rs 10,000 crore to Rs 40,000 crore. The GBS was put at Rs 30,000 crore in the interim Budget. The issue of fare hike was also discussed in the meeting, sources said. 

Source : http://www.financialexpress.com/news/rail-infra-may-get-100-fdi-push/1261759

Conversion Rate for Foreign Exchange (w.e.f. 20th June 2014)

As per Section 67A of the Finance Act, 1994 read with explanation to Section 14 of the Customs Act, 1962, rate of exchange for calculation of gross value of taxable service tax would be the rate, as determined by CBEC for the conversion of foreign currency into Indian currency or vice versa, applicable on the date on which taxable service has been provided or agreed to be provided. CBEC from time to time issues Notification to notify rate of exchange determined by it. Though Notifications issued under Customs use the words “For Imported Goods” or “Exported Goods” but these rates apply mutatis mutandis in case of Services as well by virtue of Section 67A. For Rate of Exchange applicable from 20^th June, 2014 please refer Annexure-A.

Annexure-A

SCHEDULE-I

 

S. No.	Foreign Currency	Rate of exchange of one unit of foreign currency equivalent to Indian rupees
(1)	(2)	(3)
		(a)	(b)
		(For Imported Goods)	(For Export Goods)
1.	Australian Dollar	57.15	55.60
2.	Bahrain Dinar	163.65	154.60
3.	Canadian Dollar	56.10	55.70
4.	Danish Kroner	11.10	10.75
5.	EURO	82.55	80.55
6.	Hong Kong Dollar	7.80	7.65
7.	Kuwait Dinar	218.95	206.70
8.	New Zealand Dollar	52.90	51.60
9.	Norwegian Kroner	10.15	9.80
10.	Pound Sterling	103.10	100.80
11.	Singapore Dollar	48.55	47.45
12.	South African Rand	5.80	5.45
13.	Saudi Arabian Riyal	16.45	15.55
14.	Swedish Kroner	9.15	8.90
15.	Swiss France	67.75	66.05
16.	UAE Dirham	16.80	15.85
17.	US Dollar	60.45	59.45

 

 

SCHEDULE-II

                               

S. No.	Foreign Currency	Rate of exchange of 100 units of foreign currency equivalent to Indian rupees
(1)	(2)	(3)
		(a)	(b)
		(For Imported Goods)	(For Export Goods)
1.	Japanese Yen	59.55	58.10
2.	Kenya Shilling	70.60	66.45

 

MCA issues Circular on Applicability of PAN requirement for Foreign Nationals as Director of Company at the time of Incorporation

MCA issues General Circular No. 16/2014 Dated 10.06.2014 for Applicability of PAN requirement for Foreign Nationals as Director of the Company at the time of Incorporation.
As per this circular, PAN is compulsory for a Foreign National who is a subscriber / promoter at the time of incorporation of the company. However, if the Foreign National does not possess a PAN, then he / she is required to furnish a declaration / undertaking in prescribed format as an attachment to Form INC – 7 at the time of incorporation of the company.
Further, a National Director of the proposed company shall be required to furnish the PAN details at the time of incorporation.
Prescribed Format is Produced hereunder for ready reference. The said undertaking / declaration is to be attached with Form INC – 7 at the time of incorporation of the new company.

Undertaking

I. . . . . . . . . . . . . (name) . . . . . . . . . . . . ., son of . . . . . . . . . . . . . (father’s name) . . . . . . . . . . . ., citizen of . . . . . . . . . . . . . (nationality) R/o (Address) . . . . . . . . . . . . . having passport No. . . . . . . . . . . . . . (passport Number) . . . . . . . . . . . . . hereby declare as under:

 (i)    That I am not required to obtain Income Tax Permanent Account Number (PAN) under the provisions of Income Tax Act, 1961;

(ii)   That in view of the above I have not been issued any PAN; and

(iii)  That I undertake to furnish to the Registrar of Companies (mention jurisdiction) details of my PAN as soon as a Permanent Account Number is allotted to me.

Date:
Place:	(Signature)
	Name of the Person

Our Analysis: This Clarification has come as a relief for foreign nationals / foreign promoters. The Ministry has relaxed the norms for applicability of PAN to foreign nationals / foreign promoters. By giving the above declaration / undertaking, the foreign nationals / foreign promoters are not required to apply for the PAN in India. However, the responsibility shifts to the national promoter / national director to comply with the PAN formalities at the time of Incorporation of a New Company under the Companies Act 2013. Further, it is also mandatory to have one local / national director in newly incorporated companies under the Companies Act 2013.

Budget session likely in second week of July

Parliamentary Affairs Minister Venkaiah Naidu said while pending Bills in the Lok
Sabha had lapsed, the government would be prioritising 60 Bills pending in the Rajya
Sabha.
The Budget session of the 16th Lok Sabha will begin in the second week of July,
revealed Parliamentary Affairs Minister Venkaiah Naidu on Thursday.
Naidu said the government was working with that time frame in mind and the final
details would be worked out by the prime minister and the Cabinet.
The session of the Lok Sabha, which concluded on Thursday, had time only for
introducing the new members, the Presidential address and the Motion of Thanks on the
address.
Several other decisions, including election of Deputy Speaker, will be taken in the
Budget session. The government is believed to be in favour of having the key posts of
chairmen of the public accounts committee, and standing committee on finance and
deputy speaker - all usually held by the principal Opposition - to be divided among
opposition parties, the Congress, All-India Anna Dravida Munnetra Kazhagam, the
Trinamool Congress and the Biju Janata Dal. Speaker Sumitra Mahajan will take a call
on giving Leader of Opposition status to the Congress in the coming session.

Three ordinances, including the one enabling former Telecom Regulatory Authority of
India Chairman Nripendra Mishra to be appointed as principal secretary to the prime
minister, promulgated by the new government, will be taken up for ratification in the next
session. The ordinances have been tabled in Parliament.
The minister said while pending Bills in the Lok Sabha had lapsed, the government
would be prioritising 60 Bills pending in the Rajya Sabha.
Naidu, who also holds charge of the urban development ministry, said he would like to
focus on "housing for the poor" but the "big problem" at hand was getting former
ministers vacated from bungalows so that those would be allotted to new ones.

(Business Standard) 

Provisions requiring Immediate Compliance in Companies Act, 2013

MEETING OF BOARD (SECTION-173) (Importance of Independent Director)

• At least one meeting in a period of 12 months has to be physically attended by every director;
• Director will Vacate the office if he is absent from all Meetings of the Board during 12 months with or without leave of absence (Attending one BM in a period of 12 months is must).
• No provision for proxy at Board Meetings.
• Separate meeting of Independent Director once in a year.
• Meeting may be called at shorter notice condition with the presence of one Independent director should be made mandatory for board meetings called.  In such meetings the mandatory presence of at least one Independent Director. If even one Independent Director is not present in the emergency meeting, then decisions taken at such meetings should be subject to ratification by at least one Independent Director. 

This would mean that a meeting of the Board may be called at shorter notice to transact urgent business subject to the condition that at least one independent director, if any, shall be present at the meeting thus it means for calling meeting at shorter notice will not be possible without Independent Director.

Punishment for contravention of Section 173- The Company shall be punishable with fine which shall not be less than one lakh but which may extend to five lakh rupees.

RBI Has Simplified Norms Of Opening Bank Accounts In Respect Of Address Proof

COST INFLATION INDEX

ICAI suggests Verification of all income-tax returns by Professionals

Issue/Justification

There are classes of persons who are filing income tax returns but are not declaring their income properly. Either the income is suppressed or various deductions are being claimed which are not legally permissible. With the increase in the work of the Department it is not practicable to scrutinize each and every return. Taking into consideration this aspect the person filing the return takes a calculated risk. Further, basic deductions provided by the Act like section 80C (Rs.1, 00,000), section 80D (15,000), section 24(b)(Rs.1,50,000) being claimed by the individuals and HUFs, in large numbers, have huge revenue impact. To check on the admissibility of the claim for deduction, no proof of investment is called for by the assessee. Today as per e-filing website there are 2.79 crore assessees who have filed return for ITR-1,2,3,4 and 4S online for the AY 2013-14 and are thus expected to have an income of Rs.5,00,000 or more. Considering the slab rate of 10%, the minimum revenue impact is 2,70,000*10.3%*2.79 crore is approximately Rs. 77600 crores. In case the applicable rate of tax is 20.6%, the revenue impact is approx. 155180 crores. In case the applicable rate of tax is 30.9%, the maximum revenue impact is Rs. 232770 crores.

To address this, it is important that all the returns filed are thoroughly checked and cross-verified with the information collected through AIR and other sources by the Department. This process is entirely different from the scrutiny process. In this verification, not only the arithmetical accuracy but the admissibility of the claim regarding the expenditure incurred, income earned or investment made on the basis of the evidence collected from
various sources will also be verified. Since this work is voluminous, the same will also be required to be out-sourced preferably to the professionals understanding the law better and who are in a position to identify the grey areas. Although the chartered accountants, through whom approx 85% of the returns are filed, ensure the correctness of the claim, the law does not recognizes the same. Thus, the chartered accountant is questioned by the assessee, when documents are asked for. In the interest of the revenue, it is imperative to have a certification of claims of deductions under section 80C, 80D, 24(b) and the like. This process once started will ensure better voluntary compliance as every taxpayer filing the return would be aware that the return being filed would be subject to a verification process and he cannot afford to take the liberty of making adjustments which are legally impermissible.

Suggestion – Since non verification of admissibility of basic deductions provided in sections 80C, 80D and 24(b) have huge revenue impact, it is imperative to have a certification /verifications of all claims of deductions under section 80C, 80D, 24(b) and the like. In this verification, not only the arithmetical accuracy but the admissibility of the claim regarding the expenditure incurred, income earned or investment made on the basis of the evidence collected from various sources will also be verified. Since this work is voluminous, the same will also be required to be out-sourced preferably to the professionals understanding the law better and who are in a position to identify the grey areas.

(SUGGESTION TO IMPROVE TAX COLLECTION)

Source- Pre-Budget Memorandum – 2014 on Direct Taxes by The Institute Of Chartered Accountant Of India, New Delhi