Wednesday 24 December 2014

SERVICE TAX ---- RESTAURANT SERVICES




INTRODUCTION
Service Tax on restaurant service was introduced on 1.5.2011 (Notification No. 29/2011-ST dated.25.4.2011). 

Service Tax on Restaurant Service
The levy of Service tax on services provided by restaurants, in relation to serving of food and beverages within the said premises, was imposed in May 2011 and was restricted to just air-conditioned restaurants serving alcohol at that time. With the introduction of the negative list regime in July 2012, the ambit of Service tax was extended beyond restaurants to include even eating joints & messes.
There was no distinction made while levying service tax between premium restaurants and eating joints with self service.  

Q. What was the definition of Restaurant services before introduction of Negative list ?
Taxable service means the service provided in relation to serving of food or beverages by a restaurant, eating joint or mess, other than those having:
I) the facility of air conditioning or central air heating in any part of the establishment, at any time during the year and
II) a license to serve alcoholic beverages.


Change in Definition
However in the budget 2013, P. Chidambaram removed the 2nd condition and now Service Tax would be levied on all restaurants which are air conditioned.


Q. Exemption as mentioned in Mega Notification?
The Finance Act, 2013 vide Notification No.3/2013-ST dated   1-3-2013 with effect from 1-4-2013.
Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air conditioning or central air heating in any part of the establishment, at any time during the year, and which has a license to serve alcoholic beverages were exempted from service tax.

However, this has been modified and now exemption will be available only to non air conditioned (non centrally air heated) restaurants. The dual requirement earlier that it should also have a license to serve alcohol is being done away with it.



Q. Meaning of Establishment
Establishment means a hotel, restaurant, or any eating joint or mess like Pizza hut or Mc donalds etc, which provides the facility of air conditioning or central air heating at any time during the year.

Q. Does service tax levy on both air conditioned & non air conditioned restaurant ?
No. If the complex having more than one restaurant which are clearly demarcated and separately named and food is provided from the common kitchen, only the service provided in air conditioned restaurant is liable to Service Tax, service provided in a non air conditioned restaurant or non centrally air heated restaurant will not liable to service tax and is treated as seprate exempt service.

Service tax on food served in restaurant
The Charges for the Food served in a Restaurant is a composite charge for the food as well as for the Services. As it is a composite charge, Service tax cannot be levied on the whole amount. As per service tax rules Service tax should be charged only on 40% of the food bill (including service charge) and not on the total bill.         
Or in other words only 4.94% Service tax on Restaurant (i.e 40% of 12.36%) shall be chargeable.   

 
Service tax and Vat both levied on restaurants
As per the Service Tax Rules, Service Tax on food served in Restaurants is chargeable on only 40% of the Food bill as they’ve estimated that out of the Total Food Bill - 40% is for the Services provided and 60% is for the items sold. Now as per the logic, Vat should be charged only on 60% of the Food bill as Service Tax has already been charged on 40% of the Food bill. The vat laws specifically state that Vat rate is to be applied on the Total Food bill (including of Service Charge). 

Monday 22 December 2014

Changes in e-TDS/TCS RPU & FVU validations.





It is proposed to release new version of NSDL Return Preparation Utility (RPU) and File Validation Utility (FVU) incorporating the below features:
Features of NSDL RPU
· Allow update in field in Form no. 27Q “Whether TDS rate of TDS is IT act (a) and DTAA (b)” where the tax has been deducted at higher rate.
· Incorporation section code:
o “194LBA” & “194DA” have been added for below forms which will be applicable for a statement pertaining to FY 2014-15 & Q3 onwards.
o Section code 194LBA will be applicable for Form 26Q and 27Q.
o Section code 194DA will be applicable only for Form 26Q.
o For section code “194LBA”, select “4BA” from the dropdown of section code column in Annexure I sheet.
o For section code “194DA”, select “4DA” from the dropdown of section code column in Annexure I sheet.
· Latest FVU versions incorporating latest validations.


Features of FVU
· Incorporation section code“194LBA” & “194DA” for Form 26Q
·         The said section codes will be applicable for TDS statement pertaining to FY 2014-15 (Q3 onwards).

The Income Tax Department has released the following new File Validation Utilities on 20th December 2014: 
• FVU version 4.5 – For Statements pertaining to FY 2010-11 onwards.
• FVU version 2.141 – For Statements upto FY 2009-10.



Wednesday 17 December 2014

Deduction for Salaried Employee under Chapter VI-A for Asstt. Year 2015-16

DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT FOR THE ASSTT. YEAR 2015-16 FOR SALARIED EMPLOYEE


In computing the taxable income of the employee, the following deductions under Chapter VI-A of the Act are to be allowed from his gross total income:

Deduction in respect of Life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. (section 80C)

A. Section 80C, entitles an employee to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs.1,50,000/-:

   (1) Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual.

   (2) Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity;

   (3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary;

   (4) Any contribution made :
       (a) by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies;
       (b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children; 
           [The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E) dated 3.11.05]
       (c) by an employee to a Recognized Provident Fund;
       (d) by an employee to an approved superannuation fund; 
           It may be noted that "contribution" to any Fund shall not include any sums in repayment ofloan or advance;

   (5) Any subscription :-
       (a) to any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;
       (b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf.
           [The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E) dated 3.11.05and National Saving Certificate (IXth Issue) vide Notification . G.S.R. 848 (E), dated the 29th November, 2011, publishing the National Savings Certificates (IX-Issue) Rules, 2011 G.S.R. 868 (E), dated the 7th December, 2011, specifying the National Savings Certificates IX Issue as the class of Savings Certificates F No1-13/2011-NS-II r/w amendment Notification No.GSR 319(E), dated 25-4-2012 ]

   (6) Any sum paid as contribution in the case of an individual, for himself, spouse or any child,
       a. for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India;
       b. for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to section 10 (23D) and as notified by the Central Government.
          [The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated 3.11.05.]

   (7) Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify;
       [The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E) dated 3.11.05 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006 ]

   (8) Any subscription made to any units of any Mutual Fund, of section 10(23D), or from the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002 under any plan formulated in accordance with any scheme as the Central Government, may, by notification in the Official Gazette, specify in this behalf;
       [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]
       The investments made after 1.4.2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C.

   (9) Any contribution made by an individual to any pension fund set up by any Mutual Fund referred to in section 10(23D), or, by the Administrator or the specified company defined in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002, as the Central Government may, by notification in the Official Gazette, specify in this behalf; 
       [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

  (10) Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

  (11) Any subscription made to any such deposit scheme, as the Central Government may, by notification in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.
       [The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No.37(E), dated 11.01.2007, for the purposes of Section 80C(2)(xvi)(a)].

  (12) Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it has not been used for assessee's own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing Board etc.
       The deduction will also be allowable in respect of re-payment of loans borrowed by an assessee from the Government, or any bank or Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act.
       The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall also be covered. Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out. Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property.
       Where the house property in respect of which deduction has been allowed under these provisions is transferred by the tax-payer at any time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xviii), no deduction under these provisions shall be allowed in respect of such sums paid in such previous year in which the transfer is made and the aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly.

  (13) Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.
       Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes.
       It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.

  (14) Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution.

  (15) Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company.

  (16) Investment as a term deposit for a fixed period of not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes.
       [The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28.7.2006]

  (17) Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf.

  (18) Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004. 

  (19) Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.

B. Section 80C(3) & 80C(3A) states that in case of Insurance Policy other than contract for a deferred annuity the amount of any premium or other payment made is restricted to:

*Introduced by Finance Act 2013
Actual capital sum assured in relation to a life insurance policy means the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account –
 i. the value of any premium agreed to be returned, or
ii. any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy by any person

Deduction in respect of contribution to certain pension funds (Section 80CCC)

Section 80CCC allows an employee deduction of an amount paid or deposited out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the Fund referred to in section 10(23AAB). However, the deduction shall exclude interest or bonus accrued or credited to the employee's account, if any and shall not exceed Rs. 1 lakh.

However, if any amount is standing to the credit of the employee in the fund referred to above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the interest or bonus accrued or credited to this account due to the reason of 
  1. Surrender of annuity plan whether in whole or part
  2. Pension received from the annuity plan

then the amount so received during the Financial Year shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax.  Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.

Deduction in respect of contribution to pension scheme of Central Government (Section 80CCD):

Section 80CCD(1) allows an employee, being an individual employed by the Central Government or by any other employer on or after 01.01.2004, or any other assessee being an individual, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified vide Notification F. N. 5/7/2003- ECB&PR dated 22.12.2003 (National Pension System –NPS) or as may be notifed by the Central Government. However, the deduction shall not exceed an amount equal to 10% of his salary (includes Dearness Allowance but excludes all other allowance and perquisites). The deduction under section 80CCD(1) shall not exceed Rs. 1,00,000/-.

As per Section 80CCD(2), where any contribution in the said pension scheme is made by the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% of his salary of the previous year.

If any amount is standing to the credit of the employee in the pension scheme referred above and deduction has been allowed as stated above, and the employee or his nominee receives this amount together with the amount accrued thereon, due to the reason of
  1. Closure or opting out of the pension scheme or
  2. Pension received from the annuity plan purchased and taken on such closure or opting out

then the amount so received during the FYs shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax. 

Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.

Further it has been specified that w.e.f 01.04.09 that any amount received by the employee from the new pension scheme shall be deemed not to have received in the previous year if such amount is used for purchasing an annuity plan in the same previous year.

It is emphasized that as per the section 80CCE the aggregate amount of deduction under sections 80C, 80CCC and Section 80CCD(1) shall not exceed Rs.1,50,000/-. However, the deduction under Section 80CCD(1)shall not exceed Rs.1,00000 but contribution made by the Central Government or any other employer to a pension scheme u/s 80CCD(2) shall be excluded from the limit ofRs.1,00,000/- provided under this Section.

Deduction in respect of investment made under an equity savings scheme (Section 80 CCG):

Section 80CCG provides deduction w.e.f .assessment year 2013-14 in respect of investment made under notified equity saving scheme. Rajiv Gandhi Equity Savings Scheme 2012 has been notified vide SO No 2777 E dated 23.11.2012 as a scheme under this section. The scheme was modified in December 2013 vide notification SO No. 3693 dated 18.12.2013 as RGESS 2013.

The deduction under this section in accordance with RGESS 2013, is available if following conditions are satisfied:
  • The assessee is a resident individual
  • His gross total income does not exceed Rs. 12 lakhs;
  • He has acquired listed shares in accordance with a notified scheme or listed units of an equity oriented fund as defined in section 10(38);
  • The assessee is a new retail investor;
  • The investment is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;
  • The assessee satisfies any other condition as may be prescribed.

Amount of deduction –The amount of deduction is at 50% of amount invested in equity shares/units. However, the amount of deduction under this provision cannot exceed Rs. 25,000. Withdrawal of deduction – If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.

This deduction is allowed for three consecutive assessment years beginning with the AY in which the listed equity shares or units were first acquired. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any other year.

Tuesday 16 December 2014

Out of 17 Crore PAN holders only 3.5 crore files Income Tax Return

Gap between PAN card holders and number of taxpayers

Further, PAN has been allotted to around 17 crore entities while I-T returns have been filed by only 3.5 crore entities. The gap between PAN card holders and number of taxpayers is growing over time. While the number of PAN card holders increased by 175 per cent during FY2005-06 to FY20 10-11, the number of taxpayers in the same period rose only by 17 per cent. Of the total 12.11 crore PAN card holders during FY2010-1 1, the number of taxpayers stood only at 3.48 crore and has remained almost constant thereafter. To a significant extent, the differencereflects the use of PAN card as a proof of identity for various stipulated economic functions that have no relation to tax. Nevertheless, the gap must have a bearing on the efforts to widen the tax base as also the efficacy of the PAN card distribution system. A huge gap has also been noticed between the number of entities to whom tax deduction account number(TAN) has been allotted vis-à-vis number of deductors filing TDS returns/submissions. The reasons need to be comprehensively identified for such a widening gap and whether there is room to enhance the I-T base from the information thus obtained.

Vigorous efforts are required both in terms of policy and enforcement in widening the tax base, which as seen above is not commensurate with the growth in income over the years. The reasons for this include India’s huge rural and underground economies, which present severe logistical constraints with respect to collecting tax. There is a flourishing underground economy, where transactions are in cash and people simply pay no taxes. Further, tax collectors have failed to raise as much as they should from high-income sections of society – doctors, lawyers, designers – and other independent, self-employed professionals whose tax is not deducted at source. Even a large number of rich farmers, who earn more than salaried employees in the cities, get away with paying no tax at all in view of the government’s lack of will to consider an agricultural income tax.

Ultimately, TARC s consultations led to the conclusion that the tax system is not only complicated, confounding and contradictory, it is also affected by corruption, inefficiency and incompetence. Even ordinary taxpayers need to hire a tax consultant for tax payment, which costs them money, and, therefore, they become willing tax avoiders. Compliance systemsshould be made simple and user-friendly so that more people are encouraged to pay taxes, not avoid them.


Wednesday 10 December 2014

Excise and Taxation Commissioner, Punjab has, by way of Public Notice, extended the last date for e-filing of Annual Statement in Form VAT-20 till 15th December, 2014.

Thursday 4 December 2014

STATE BANK OF INDIA deposit holder can generate Form 15G or 15H to avoid TDS deductions by Online "Generate 15 G/H" Utility


Recently, State Bank of India has provided a very important and useful utility with the name of "Generate 15 G/H". To avoid TDS deduction on the fixed deposits, please download form 15 G/H, verify it , sign it and submit it to the branch concerned (in three copies) for recording the same in CBS. The branch will subsequently submit the form 15 G/H to the Income TaxAssessing Officer under whose jurisdiction the branch is located. The functionality for onlinegeneration of Form 15G/H has been introduced for the sake of customer convenience by obviating the manual filling up fixed deposit details by the customers.
Required Fields to Generate 15 G/H :
Name
Address
Mobile No.
Pan No.
Deposit Details etc.

Some fields like A.O. Codes and nature of business were asked to enter manually.
Requirement for generation of Form 15G / 15H :
SBI login user id and password.
Any deposit in the shape of FDR with any branch of State Bank of India.
Path for Generation of Form 15G or 15H. is given in below picture.

Monday 1 December 2014


Q  My query is that in case, there are only 2 shareholders. Out of these, one cannot attend AGM, according to Sec 103 of Companies Act, 2013, whether one person attending the AGM, would be taken as quorum in case of adjourned meeting?

Answer: No, one person cannot form quorum even in case of any Adjourned meeting. There should be atleast 2 members personally present for the purpose of convening AGM as per Section 103 of the Companies Act, 2013 and Letter No. 8/16(1)/61-PR dated May 19, 1961 of Ministry of Corporate Affairs.
As in your case where one shareholder cannot attend AGM, you should apply to the ROC requesting to extend the time for convening AGM explaining the reasons for the same.
Then, you have to convene AGM at the time when both shareholders are present.