Draft MEF panel

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CBDT has amended Sec. 44AD

New Delhi, 19th December, 2016.

Press Release

Measures for Promoting Digital Payments & Creation of Less-Cash Economy

Under the existing provisions of section 44AD of the Income-tax Act, 1961 (the Act), in case of certain assesses (i.e. an individual, HUF or a partnership firm other than LLP) carrying on any business (other than transportation, agency, brokerage and commission) and having a turnover of Rupees Two Crore or less, the profit is deemed to be 8% of the total turnover.

In order to achieve the Government's mission of moving towards a less cash economy and to incentivise small traders / businesses to proactively accept payments by digital means, it has been decided to reduce the existing rate of deemed profit of 8% under section 44AD of the Act to 6% in respect of the amount of total turnover or gross receipts received through banking channel / digital means for the financial year 2016-17. However, the existing rate of deemed profit of 8% referred to in section 44AD of the Act, shall continue to apply in respect of total turnover or gross receipts received in cash.

Legislative amendment in this regard shall be carried out through the Finance Bill, 2017.

(Meenakshi J. Goswami)

Commissioner of Income Tax

(Media and Technical Policy)

Official Spokesperson, CBDT.

http://pib.nic.in/newsite/erelease.aspx?relid=155638

Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016?

*1. What is Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016?*

Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016 is a scheme notified by the Government of India on December 16, 2016 which is applicable to every declarant under the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016.

*2. Who is eligible to deposit in PMGKS?*

The deposit under this Scheme shall be made by any person who declared undisclosed income under sub-section (1) of section 199C of the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016.

*3. In what form will the deposits under this scheme be held?*

The Deposits shall be held at the credit of the declarant in Bond Ledger Accounts (BLA) maintained with Reserve Bank of India.

*4. Who are the authorized agencies where the application and amount of deposit will be accepted?*

Application and amount for the deposit (in the form of Bond Ledger Account) shall be received by any banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (Authorized Banks).

*5. Where can declarants get the application form?*

Application for the deposit will be available at branches of authorized banks. It is also available in the Reserve Bank of India website.

*6. When can a declarant make the deposit into the scheme?*

The deposits under this Scheme shall be made in a single payment in any of the authorized banks from the 17th day of December, 2016 till 31st day of March, 2017

*7. What are the Know-Your-Customer (KYC) norms?*

Permanent Account Number (PAN) is the KYC document for individuals depositing in the scheme. If a declarant does not hold PAN, he shall apply for PAN and provide the details of such PAN application along with acknowledgement number to the bank while making the application. On receipt of PAN, the details may be updated with the bank from which application was made.

*8. What is the minimum and maximum limit for depositing in the scheme?*

The deposit by a declarant shall not be less than twenty-five per cent of the undisclosed income declared under sub-section (1) of section 199C of the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016. Deposit shall be made in multiples of ₹ 100.

*9. Will any interest be paid on the deposit under the scheme?*

No interest shall be paid for deposits made in this scheme.

*10. After making the deposit, will any documentary evidence be issued?*

On deposit, an acknowledgement receipt mentioning name of declarant and amount deposited will be duly authorized and provided by the bank from which application was made. Subsequently a certificate of holding for the BLA will be issued which may be collected from the authorized bank.

*11. When will the deposit be repaid?*

Repayment of the deposit will be made after a period of 4 years from the effective date of deposit (ie., date of tender of cash or the date of realization of draft or cheque or transfer through electronic transfer)

*12. What will the declarant get on redemption?*

On redemption, the entire amount deposited into the scheme will be repaid.

*13. How will the declarant get the redemption amount?*

The redemption amount will be credited to the bank account furnished by the person in the application form.

*14. What are the procedures involved during redemption?*

On the date of maturity, the proceeds will be credited to the bank account as per the details on record.

In case there are changes in any details, such as, account number, IFSC code, email ids etc then the investor must intimate Reserve Bank Of India , through the authorized banks promptly.

*15. Can the deposit made into this scheme be prematurely redeemed ?*

No, option for premature redemption of the BLA is not available.

*16. Can the BLA be gifted/transferred to a relative or friend on some occasion?*

No, the BLAs cannot be gifted/transferred to any relative or friend. Transferability of the Bond Ledger Account shall be limited to nominee or to the legal heir of an individual holder, only in the event of death of the declarant.

*17. Who will provide other services to the declarants after deposit in the scheme?*

The banks through which the deposit into this scheme was made will provide other customer services such as change of bank account details, cancellation of nominee etc.

*18. What are the payment options for depositing in PMGKS?*

The deposit shall be made in the form of cash or draft or cheque drawn in favour of the authorised bank accepting such deposit or by electronic transfer.

*19. Whether nomination facility is available for these investments?*

Yes, nomination facility is available as per the provisions of the Government Securities Act 2006 and Government Securities Regulations, 2007. A nomination form is available along with Application form. In case of cancellation/change in nomination, a separate form is to be filled and submitted to the authorized bank.

*20. Are the BLAs tradable?*

No, the Bonds ledger Account are not tradable.

Tax incentive for cash less transaction

Tax incentive for cash less transaction: Deemed profit to be reduced from 8% to 6% u/s 44 AD:

New Delhi, 19th December, 2016.
Press Release

Measures for Promoting Digital Payments & Creation of Less-Cash Economy

Under the existing provisions of section 44AD of the Income-tax Act, 1961 (the Act), in case of certain assesses (i.e. an individual, HUF or a partnership firm other than LLP) carrying on any business (other than transportation, agency, brokerage and commission) and having a turnover of Rupees Two Crore or less, the profit is deemed to be 8% of the total turnover.

In order to achieve the Government's mission of moving towards a less cash economy and to incentivise small traders / businesses to proactively accept payments by digital means, it has been decided to reduce the existing rate of deemed profit of 8% under section 44AD of the Act to 6% in respect of the amount of total turnover or gross receipts received through banking channel / digital means for the financial year 2016-17. However, the existing rate of deemed profit of 8% referred to in section 44AD of the Act, shall continue to apply in respect of total turnover or gross receipts received in cash.

Legislative amendment in this regard shall be carried out through the Finance Bill, 2017.

(Meenakshi J. Goswami)
Commissioner of Income Tax
(Media and Technical Policy)
Official Spokesperson, CBDT.

CAG Empanelment

Online Applications are invited from Chartered Accountant firms/LLPs who desire to be empanelled with the office of the Comptroller and Auditor General of India for appointment as auditors of Government Companies/Corporations for the year 2017-18 from 1st January 2017 to 15th February 2017. For more details visit www.saiindia.gov.in

Taxation Laws (Second Amendment) Act,2016

Ministry of Finance16-December, 2016 18:17 IST

Taxation Laws (Second Amendment) Act, 2016 came into force yesterday i.e. 15th December, 2016 and rules notified today and placed in public domain; The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 introduced under the said Act to commence from tomorrow i.e.17th December, 2016 and to remain open for declarations up to 31st March, 2017.

 

The Taxation Laws (Second Amendment) Act, 2016 has come into force on 15th December, 2016.  The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (the Scheme) introduced vide the said Act shall commence on 17^th December, 2016 and shall remain open for declarations up to 31^st March, 2017. The rules in this regard have been notified vide Notification No.116 dated 16^th December, 2016 and have been placed in public domain. A separate notification has been issued for Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 by Department of Economic Affairs.  

           

The salient features of the Scheme are as under:

 

     (i)            Declaration under the Scheme can be made by any person in respect of undisclosed income in the form of cash or deposits in an account with bank or post office or specified entity.

   (ii)            Tax @30% of the undisclosed income, surcharge @33% of tax and penalty @10% of such income is payable besides mandatory deposit of 25% of the undisclosed income in Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The deposits are interest free and have a lock-in period of four years.

 (iii)            The income declared under the Scheme shall not be included in the total income of the declarant under the Income-tax Act for any assessment year.

 (iv)            The declarations made under the Scheme shall not be admissible as evidence under any Act (eg. Central Excise Act, Wealth-tax Act, Companies Act etc.). However, no immunity will be available under Criminal Acts mentioned in section 199-O of the Scheme.

 

            Non declaration of undisclosed cash or deposit in accounts under the Scheme will render such undisclosed income liable to tax, surcharge and cess totaling to 77.25% of such income, if declared in the return of income. In case the same is not shown in the return of income a further penalty @10% of tax shall also be levied followed by prosecution. It may be noted that the provisions for levy of penalty for misreporting of income @200% of tax payable under section 270A of the Income-tax Act have not been amended and shall continue to apply with respect to cases falling under the said section.

 

The Taxation Laws (Second Amendment) Act, 2016 has also amended the penalty provisions in respect of search and seizure cases. The existing slab for penalty of 10%, 20% & 60% of income levied under section 271AAB has been rationalised to 30% of income, if the income is admitted and taxes are paid. Otherwise a penalty @60% of income shall be levied.

           

The Scheme, Rules and Notifications are available on the official website of the Department www.incometaxindia.gov.in .  Any queries/clarifications relating to the Scheme may be emailed at ts.mapwal@nic.in .

 

 

*****

 

DSM/KA

 

(Release ID :155589)

ICAI issues mandatory KYC Norms

ICAI - ICAI issues mandatory KYC Norms applicable w.e.f 1.1.2017 - (10-12-2016) - http://resource.cdn.icai.org/44165icai-kyc-esb.pdf

The CBDT has issued Circular No. 40/2016

The CBDT has issued Circular No. 40/2016 dated 9th December 2016 directing Assessing Officers not to reopen assessments of earlier years u/s 147 of the Act merely because there is an increase in turnover of the present year because of the adoption by the assessee of digital means of payment. The CBDT has pointed out that such move would cause “undue harassment” to the taxpayers

Service tax Exemption Notification

No service tax on credit, debit card transactions up to 2,000

The Government will waive service tax on debit and credit card transactions of up to Rs. 2,000 to promote digital transactions amid cash crunch following the withdrawal of old Rs. 500 and 1,000 banknotes.

The Government has decided to "exempt services by an acquiring bank to any person in relation to settlement of an amount up to Rs. 2,000 in a single transaction through credit, debit card or other payment card service", sources said.

A notification to this effect will be tabled by Finance Minister Arun Jaitley in Parliament.

Following demonetisation of old high value notes, there has been a cash crunch in the country as people have been making a beeline for banks and ATMs to withdraw new currency.

The Government has been taking steps to promote cashless or digital transactions to take India towards a less-cash economy.

Recently, the Government asked banks to install additional 10 lakh PoS terminals by March 31 in different parts of the country.

The service tax notification of June 2012 will be amended to include exemption on credit and debit cards, the sources added.

As of now, services provided by organisations such as United Nations and other international bodies are exempt from tax.

A range of other services provided by arbitral tribunals, testing of newly developed drugs, educational institutions, trade unions, general insurance business and sports bodies, among others, too are exempt from the levy.

Circular on ;OIDAR

Ministry of Finance11-November, 2016 21:01 IST

To provide a level playing field to Indian service providers, the exemption given to service providers located in foreign territory but providing taxable online information and database access or retrieval [OIDAR] services including electronic services in India, is being withdrawn with effect from 1st December, 2016

 With a view to provide a level playing field to Indian service providers providing taxable online information and database access or retrieval [OIDAR] services including electronic services in India, the exemption to such services provided in India by service providers located in foreign territory is being withdrawn with effect from 1^st December, 2016. Thus cross border business to consumer [B2C] OIDAR services provided by a foreign service provider to a person in India will become taxable from 1^st December, 2016 onwards.

The salient features of this levy are as under:

·         A simplified online mechanism of taking registration has been prescribed and registration will be deemed to be granted online on submission of registration application.

·         A simplified mechanism of online payment of taxes and online filing of returns is being prescribed.

            A detailed Circular No. 202/12/2016-Service Tax dated 09.11.2016 has been issued by CBEC, explaining the likely issues arising from the withdrawl of this exemption.

Useful links:

1)      http://www.cbec.gov.in/ServiceTax-Notifications

2)      http://www.cbec.gov.in/htdocs-servicetax/st-circulars/st-circulars-2016/st-circ-202-2016

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Service Tax on AC Restaurants is unconstitutional

November 24, 2016[2016] 75 taxmann.com 272 (Kerala)

Service Tax : Levy of service tax on Air Conditioned Restaurants is unconstitutional since when food is supplied as part of any service, such transfer would be deemed as sale. Thus, there is no component of service which could be charged to service tax when food is supplied by Air Conditioned Restaurant

• The Kerala High Court held that levy of service tax on air conditioned restaurants is unconstitutional. It relied on its own judgment in case of Kerala Classified Hotels & Resorts Association v. Union of India [2013] 35 taxmann.com 568 (Kerala) where it was held that the Article 366(29A)(f) of the Constitution empowers the State Governments to impose sales tax on supply of goods, whether it is by way of or as a part of any service and when food is supplied as part of any service, such transfer would be deemed to be a sale. Thus, there is no component of service which could be charged to service tax when food is supplied by Air Conditioned Restaurant.

Editor's Comment:

• The Government [vide LETTER C.NO.ST-20/STD/MISC./SEVOTTAM/62/12/4693, DATED 13-8-2015] has clarified that service-tax could not be levied either on takeaway orders or home deliveries by the Air Conditioned Restaurants.

• In case of takeaway orders or home deliveries, the dominant nature of the transaction is that of sale and not service, as the food is not served at the Restaurant. Further, no other element of service is offered at the Restaurants, be it ambience, live entertainment, Air Conditioning, or personalized hospitality. The Service tax can be levied if there is an element of 'Service' involved which would typically cover the case where food is served in Restaurant.

• However, the Kerala High Court held that the goods sold at Restaurants could only be considered as sale, irrespective of the fact whether any service is involved in it or not. The aforesaid ruling of the High Court is pending before the Apex Court. 

FAQ on PMGKY

FAQs on Pradhan Mantri Garib Kalyan Yojana   The Government has announced demonetization of existing currency of Rs. 500/1000 with effect from the 9th November, 2016. However, concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 ('Act') could possibly be used for concealing black money. So, the Government has introduced Taxation Laws (Second Amendment) Bill, 2016 in the Lok Sabha to amend the provisions of Income-Tax Act. The Bill was also cleared in the Lok Sabha.   The Government has announced Pradhan Mantri Garib Kalyan Yojana 2016 (PMGKY) in the Taxation Laws (Second Amendment) Bill, 2016. As per this PMGKY black money deposited in banks or held in cash can be offered for taxation at 49.9% (i.e., 30% tax, 9.9% surcharge and 10% penalty).