S. 272B Penalty is Rs. 10000 per deductor and not per wrong PAN

The assessing officer had imposed penalty of Rs. 10,000/- in each case where PAN Number was not provided by the deductee. There were in all 30706 cases in which the PAN Number was missing or was incorrectly stated. The assessing officer, accordingly, imposed penalty of Rs. 10,000/- in each case. Thus, penalty of Rs.30,70,60,000/- was imposed. Board in the letter dated 5.8.2008 vide No.275/24/2007-IT(B) has clarified that penalty of Rs. 10,000/- under Section 272B is linked to the person, i.e., the deductor who is responsible to deduct TDS, and not to the number of defaults regarding the PAN quoted in the TDS return. Therefore, regardless of the number of defaults in each return, maximum penalty of Rs. 10,000/- can be imposed on the deductor. Penalty cannot be imposed by calculating the number of defective entries in each return and by multiplying them with Rs. 10,000/-. This also appears to be a legislative intent, as in many cases, the TDS amount may be small or insignificant fraction of Rs. 10,000/-.

HIGH COURT OF DELHI AT NEW DELHI

ITA 314/2013

COMMISSIONER OF INCOME TAX-TDS

versus

DHTC LOGISTICS LTD.

ORDER

26.07.2013

1. There are two reasons why we feel the present appeal should not be entertained.

2. Firstly, the assessing officer in the penalty order under Section 272B has not specifically referred to any default or failure by the respondent-assessee mentioning PAN Number even when the said particulars and details were available. The stand taken by the respondent was that the PAN Numbers were not furnished by the Truck owners and, therefore, they were not quoted by them or PAN Numbers as informed were quoted. In case, the PAN Numbers are not furnished by the deductees, the respondent- assessee cannot be penalized under Section 272B. Section 139A also imposes the obligation on the deductees to furnish PAN Number to the deductor.

3. Secondly, the stand taken by the revenue is contrary to the stand taken by Central Board of Direct Taxes. The assessing officer had imposed penalty of Rs. 10,000/- in each case where PAN Number was not provided by the deductee. There were in all 30706 cases in which the PAN Number was missing or was incorrectly stated. The assessing officer, accordingly, imposed penalty of Rs. 10,000/- in each case. Thus, penalty of Rs.30,70,60,000/- was imposed. Board in the letter dated 5.8.2008 vide No.275/24/2007-IT(B) has clarified that penalty of Rs. 10,000/- under Section 272B is linked to the person, i.e., the deductor who is responsible to deduct TDS, and not to the number of defaults regarding the PAN quoted in the TDS return. Therefore, regardless of the number of defaults in each return, maximum penalty of Rs. 10,000/- can be imposed on the deductor. Penalty cannot be imposed by calculating the number of defective entries in each return and by multiplying them with Rs. 10,000/-. This also appears to be a legislative intent, as in many cases, the TDS amount may be small or insignificant fraction of Rs. 10,000/-.

4. We clarify that we have not examined in this appeal, question and issue that if a deductee has made a representation to the deductor and inspite of the said representation, proper details and particulars are not correctly mentioned/recorded by the deductor, whether penalty under Section 272B can be imposed, as a separate case.

5.In view of the aforesaid position, we do not think any substantial question of law arises for consideration.

The appeal is dismissed.

CBEC on Implementation of decision of Hon'ble Supreme Court in case of M/s Fiat India ltd

CBEC issues clarifications on application of SC decision in Fiat India Ltd to determine transaction value; Mere sale of goods below manufacturing cost and profit, not sole basis to reject transaction value; Valuation a matter under self - assessment procedure, but excise officer can conduct verification of valuation during audits; Aspects like loss percentage on sale, period / reasons for such loss making price must be considered while applying Fiat ratio; Cost auditing of unit / summoning of costing data should be done, only where investigation at Commissioner level; Calculations of manufacturing cost may be carried out using CAS-4 standards; Circular clarifies that extended period of limitation, for period prior to judgment date, shall not apply where show cause notice issued on grounds of Fiat judgment alone; However, any sale post Fiat ruling, where circumstances similar to Fiat case exist, then such transaction value would amount to wilful mis-statement of assessable value : CBEC Circular.

No TDS on Service Tax if shown separately

The CBDT has issued Circular No. 1/2014 dated 13.01.2014 pointing out that the Rajasthan High Court has taken the view in CIT(TDS) vs. Rajashthan Urban Infrastructure (copy attached) that if as per the terms of the agreement between the payer and the payee, the amount of service-tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service-tax component u/s 194J of the Act. Pursuant thereto, the CBDT has decided in exercise of powers u/s 119 that wherever the terms of the agreement/ contract between the payer and the payee, the service tax component comprised in the amount is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

 

 

No TDS on Service Tax if shown separately

CIRCULAR NO. 1/2014 [, DATED 13-1-2014

Subject: TDS under Chapter XVII-B of the Income-tax Act, 1961 on service tax component comprised in thepayments made to residents - clarification regarding

The Board had issued a CircularNo.4/2008 dated 28-04-2008 wherein it was clarified that tax is to be deducted at source under section 194-I of the Income-tax Act, 1961 (hereafter referred to as 'the Act'), on the amount of rent paid/payable without including the service tax component. Representations/letters has been received seeking clarification whether such principle can be extended to other provisions of the Act also.

2. Attention of CBDT has also been drawn to the judgement of the Hon'ble Rajasthan High Court dated 1-7-2013, in the case of CIT (TDS) Jaipur v. Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.

3. The matter has been examined afresh. In exercise of the powers conferred under section 119 of the Act, the Board has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

4. This circular may be brought to the notice of all officer for compliance

F.NO.275/59/2012-IT(B)]

Amendment to ST Mega Exemption Notification

Service Tax :
Central Govt extends service tax exemption to sponsorship of national sports events; Amends Mega Exemption Notification No. 25/2012 - ST

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Notification No.01/2014 Service dated January 10, 2014 

Names of Audit Firms approved for appointment as Statutory Central Auditors in 25 Public Sector Banks for the year 2013-14

Sr.No Auditors appointed for 2013-14     1. Allahabad Bank, Kolkata 1 M/s N K Bhargava & Co., New Delhi 2 M/s Raghu Nath Rai & Co., New Delhi 3 M/s Khandelwal  Kakani & Co., Indore 4 M/s Batliboi & Purohit , Mumbai 5 M/s Sarath & Associates, Hyderabad 2. Andhra Bank, Hyderabad 1 M/s Umamaheswara Rao & Co., Hyderabad 2 M/s R Subramanian and  Company , Chennai 3 M/s Patro & Co., Bhubaneshwar 4 M/s C R Sagdeo & Co., Nagpur 5 M/s  Nag & Associates, Dankuni 3. Bank of Baroda, Mumbai 1 M/s S K Mittal & Co., New Delhi 3 M/s Ray & Ray, Kolkata  4 M/s N B S & Co, Mumbai 5 M/s Laxminiwas Neeth & Co., Hyderabad 5 M/s K A S G & Co, Dhanbad 6 M/s Khandelwal Jain & Co., Mumbai 4. Bank of India, Mumbai 1 M/s S R B & Associates, Bhubaneshwar 2 M/s Isaac & Suresh, Thiruvananthapuram 3 M/s M M  Nissim & Co., Mumbai 4 M/s  J P Kapur & Uberai, New Delhi 5 M/s D Singh & Co., New Delhi 6 M/s A N D R O S & Co., New Delhi 5. Bank of Maharashtra, Pune 1 M/s Kirtane & Pandit , Pune 2 M/s J C Bhalla & Co, New  Delhi 3 M/s G Basu & Co, Kolkata 4 M/s Singh Ray Mishra & Co, Bhubaneshwar 6. Canara Bank , Bangalore 1 M/s Loonker & Co., Mumbai 2 M/s P Chopra & Co., Karnal 3 M/s A R Das & Associates, Kolkata 4 M/s S C Vasudeva & Co., New Delhi 5 M/s Vinay Kumar & Co., Allahabad 6 M/s Ford Rhodes Parks & Co., Mumbai 7. Central Bank of India, Mumbai 1 M/s Kumar Chopra & Associates, New Delhi 2 M/s P K Subramaniam & Co, Raichur 3 M/s Doogar & Associates, New Delhi 4 M/s N Sarkar & Co., Kolkata 5 M/s N Chaudhuri & Co., Kolkata 6 M/s B N Misra & Co., Bhubaneshwar 8. Corporation Bank, Mangalore 1 M/s Suresh Chandra & Associates, New Delhi 2 M/s B K Ramadhyani & Co., Bangalore 3 M/s Nripendra & Co., Kanpur 4 M/s G M J & Co., Mumbai 5 Manohar Chowdhry & Associates, Chennai 9. Dena Bank, Mumbai 1 M/s S N Dhawan & Co, New Delhi 2 M/s S C Ajmera & Co., Udaipur 3 M/s Anand & Ponnappan, Chennai 4 M/s  A P A S & Co., Raipur 10. Indian Bank,Chennai 1 M/s Sharp & Tannan, Mumbai 2 M/s Bhattacharya  Das & Co, Kolkata 3 M/s Deoki Bijay & Co, Kolkata 4 M/s  S P Puri & Co., New Delhi 5 M/s C K Prusty & Associates, Bhubaneshwar 11. Indian Overseas Bank, Chennai 1 M/s Badari Madhusudhan & Srinivasan, Bangalore  2 M/s B Thiagarajan & Co, Chennai  3 M/s Sankar & Moorthy, Thiruvananthapuram 4 M/s P R Mehra & Co, New Delhi 5 M/s Dass Khanna & Co, Ludhiana 12. Oriental Bank of Commerce, New Delhi 1 M/s Jain Kapila Associates, New Delhi 2 M/s P L Tandon & Co., Kanpur 3 M/s Shah & Taparia, Mumbai 4 M/s Bansal R Kumar & Associates, New Delhi 5 M/s R S Sipayya & Co., New Delhi 13. Punjab & Sind Bank, New Delhi 1 M/s R M Lall & Co., Lucknow 2 M/s O P Tulsyan & Co., New Delhi 3 M/s B K Shroff & Co., Kolkata 4 M/s R Kothari & Co., Kolkata   14. Punjab National  Bank, New Delhi 1 M/s Borkar & Muzumdar, Mumbai 2 M/s G S Madhava Rao & Co., Hyderabad 3 M/s Phillipos & Co, Bangalore 4 M/s K N Gutgutia & Co, Kolkata 5 M/s C V K & Associates, Mumbai 6 M/s Ramesh Kapoor & Co, Srinagar 15. Syndicate Bank 1 M/s Chandiok & Guliani, New Delhi 2 M/s J N Sharma & Co, Kanpur 3 M/s Ramanlal G Shah & Co, Ahmedabad 4 M/s Sambhu N De & Co, Kolkata 5 M/s K N Goyal & Co, New Delhi   16. UCO Bank, Kolkata 1 M/s SBA  Associates, Kolkata 2 M/s Ved & Co, Ghaziabad 3 M/s Dass Gupta & Assocites,  New Delhi 4 M/s Gupta Sharma & Associates, Jammu 5 M/s A Kayes & Co., Kolkata   17. Union Bank of India, Mumbai 1 M/s Price Patt & Co., Chennai 2 M/s  S G C O & Co., Mumbai 3 M/s Jindal & Co., New Delhi 4 M/s Shah Gupta & Co., Mumbai 5 M/s V Rohatgi & Co., Ranchi 6 M/s J Gupta & Co., Kolkata     18. United Bank of India, Kolkata 1 M/s Dinesh Mehta & Co, New Delhi 2 M/s Ramamoorthy (N) & Co., Hyderabad 3 M/s S P M R & Associates., New Delhi 4 M/s P C Bindal & Co., Jammu       19. Vijaya Bank, Bangalore 1 M/s Mukund M Chitale & Co., Mumbai 2 M/s Karra & Co., Chennai 3 M/s N C Mittal & Co., New Delhi 4 M/s K P M C & Associates, Ghaziabad 20. State Bank of India 1 M/s Singhi & Co, Kolkata 2 M/s SCM Associates, Bhubaneshwar 3 M/s S N Nanda & Co, New Delhi 4 M/s Prakash & Santosh , Kanpur 5 M/s K B Sharma & Co, Jammu 6 M/s ADD & Associates, Kolkata 7 M/s V P Aditya & Co, Kanpur 8 M/s S Venkatram & Co, Chennai 9 M/s S Jaykishan, Kolkata 10 M/s T R Chadha & Co, New Delhi 11 M/s Dhamija Sukhija & Co, Srinagar 12 M/s Sriramamurthy & Co, Visakhapatnam 13 M/s S R R K Sharma Assocaites, Bangalore 14 M/s Mehra Goel & Co., New Delhi 21. State Bank of Bikaner & Jaipur, Jaipur 1 M/s Agarwal Anil & Co, New Delhi 2 M/s M K Aggarwal & Co, New Delhi 3 M/s Chaturvedi & Co, Kolkata 4 M/s Uberai Sood & Kapoor, New Delhi 5 M/s P S D & Associates, Jaipur   22. State Bank of Hyderabad, Hyderabad 1 M/s Rao & Narayan, Hyderabad 2 M/s S Mann & Co, New Delhi 3 M/s Elias George & Co, Kochi 4 M/s Khanna & Annadhanam, New Delhi 5 M/s Sharma Goel & Co, New Delhi 6 M/s SRI Associates, Kolkata 23. State Bank of Mysore, Bangalore 1 M/s B L Ajmera & Co., Jaipur 2 M/s M K P S & Associates. Bhubaneshwar 3 M/s Maharaj N R Suresh and Co., Chennai 4 M/s Bubber Jindal & Co, New Delhi 24. State Bank of Patiala, Patiala 1 M/s Abhijit Dutta & Associates, Kolkata  2 M/s Rawla & Co, New Delhi 3 M/s Sreedhar Suresh & Rajagopalan, Chennai 4 M/s Patel Mohan Ramesh & Co, Bangalore 25. State Bank of Travancore, Thiruvananthapuram 1 M/s G K Rao & Co, Hyderabad 2 M/s Abraham & Jose, Thrissur 3 M/s R G N Price & Co Chennai 4 M/s Kumar Vijay Gupta & Co., New Delhi

No CA Attestation-DSC

Dear Members,

Chartered Accountant (CA)  is not allowed to attest documents acceptable as proof of identity and proof of address for issuance of Digital Signature Certificate (DSC) wef 15^th Jan,2014- SEE NOTIFICATION.

Amendments to CENVAT CREDIT Rules

Dear Members,

The CBEC has as amended the Cenvat Credit Rules, 2004 vide Notification No. 01/2014-CE(NT) dated 08.01.2014 in relation to cenvat credit on removal/writing off of inputs and capital goods under Rule 3. Also, the date for payment of duty on removal of inputs/capital goods under the said rule has now been inserted as Explanation to Rule 3(5C).

Sec 234E-HC Interim Stay Order

High Court grants interim stay on levy of fee for failure to file TDS statement Narath Mapila LP School vs. UOI (Kerala High Court) S. 234E: High Court grants interim stay on levy of fee for failure to file TDS statement S. 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day's delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). The constitutional validity of s. 234E has been challenged in the Kerala High Court. Vide an interim order dated 18.12.2013, the High Court has admitted the Petition and granted a stay of proceedings for a period of two months.

VCES Clarifications-11-12-2013

F. No. B1/19/2013-TRU (Pt.)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

(Tax Research Unit)

***

New Delhi the 11th December, 2013

 To,

All Chief Commissioners of Central Excise/Service Tax

Director General Service Tax

All Commissioners of Central Excise/Service Tax

Madam/Sir,

Sub: The Service Tax Voluntary Compliance Encouragement Scheme – issues for clarification – reg

            The undersigned is directed to state that the  Board has issued clarifications on issues concerning various aspects of the VCES, vide circulars dated 13.05.2013, 8.08.2013 and 25.11.2013. A FAQ has also been issued on VCES.  However, certain instances have come to notice, as mentioned below, that the declarants under the VCES are still facing difficulties.

2.         In one instance, the Designated Authority has asked a declarant, who has "tax dues" only for a part of the period covered by the Scheme, to furnish an undertaking that he had no unpaid "tax dues" for the remaining period covered by the Scheme. However, the Scheme does not envisage furnishing of any such undertaking. A declarant may have tax dues only for a part period covered by the Scheme. In terms of the Scheme a declaration of tax dues has to be made in Form VCES-I, which includes an undertaking that the information given in the declaration is correct and complete. Therefore, the Designated Authority should not ask for any other undertaking or declaration beyond what has been prescribed in the Scheme or Rules made there under.

3.         In another instance, the Designated Authority has objected to the payment of the first tranche of 50%, payable by 31.12.2013, in installments. It is clarified that the Scheme only prescribes that the declarant would pay a minimum amount of 50% of the tax dues by 31.12.2013. Rest of the payment may be made by 30.6.2014, without any interest, and any amount remaining unpaid on 30.6.2014 shall be paid by 31.12.2014, with interest for the period of delay beyond 30.6.2014. There is no bar to pay these amounts in installments. For example a declarant may pay the 50% amount that he is required to pay by 31.12.2013 in more than one installment. Therefore, payment of 50% "tax dues" in lump-sum may not be insisted to.

4.         In some instances, it has been observed that the Designated Authority has raised frivolous/unnecessary queries as regards the veracity and the manner of calculation of tax dues. While the designated authority may cause arithmetical check as regards the correctness of computation of tax dues, the Scheme does not envisage investigation by the designated authority into the veracity of declaration. Only if the Commissioner has reason to believe that the declaration filed by the declarant is substantially false he may, for reasons to be recorded in writing, serve notice on the declarant requiring him to show cause why he should not pay the tax dues not paid or short-paid. 

Yours faithfully,

(S.Jayaprahasam)

Technical Officer (TRU)

Tel. No.: 2309 5547.

CAG Report on Trusts

Trusts evading taxes - Income Tax Department casual - CAG Fumes 

IN its Report No. 20 of 2013 submitted top Parliament, the CAG has come down heavily on the Income Tax Department for its laxity in dealing with Trusts - not all that charitable. It is a mandatory requirement for charitable trusts/Institutions (Trusts) to get registration under Act for claiming exemption. The CAG scrutinized 90,000 cases in which the Income Tax Department (ITD) granted registration and observed several mistakes, some of which are:

ITD granted registrations/approvals/notifications to the 799 Trusts without verifying necessary documents such as copy of the Trust Deed, proper clauses in the Trust Deed, audited accounts etc. ITD granted approvals/registrations/notifications in 457 cases in which there was no dissolution clause in the Trust Deed. ITD granted registrations/approvals/notifications to 73 Trusts having no PAN which is in contravention of the provisions of Act. ITD granted approvals /registrations In 60 cases Involving tax effect of 87.33 crore irregularly to Trusts whose objects were not charitable in nature. There was no correlation in granting or rejecting approvals/registrations among different authorities. ITD did not take action to cancel registration in three cases Involving tax effect of Rs. 4.94 crore. ITD granted registration/exemption in 161cases irregularly involving revenue impact oft 24.23 crore with retrospective effect contravening provisions contained in Act. There was a delay of more than 6 months to 24 months beyond stipulated period in granting approvals/registrations/notifications in 594 cases. The delay on the part of ITD resulted in deemed approval, to Trusts which were otherwise not eligible. ITD allowed irregular exemptions involving tax effect of 8.88 crore to 53 Trusts without granting registrations /approvals/notifications. ITD allowed exemptions In 72 cases Irregularly Involving tax effect of Rs. 8.88 crore despite rejection of registrations/approvals by the competent authority. ITD allowed exemptions in 9 cases irregularly u/s 10(23C) (iiia)/(iiiad) involving tax effect of 2.39 crore though the gross receipt exceeded one crore. ITD granted exemptions in 117 cases irregularly without submission of audit reports with the returns.

Credit Card-NPA

Date: Dec 20, 2013 Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts RBI/2013-14/414 DBOD.No.BP.BC.78/21.04.048/2013-14 December 20, 2013 The Chairman and Managing Director/ Chief Executive Officer of All Scheduled Commercial Banks Dear Sir, Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts Please refer to paragraph 2.1 of the Master Circular dated July 01, 2013 on Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, wherein definitions of non-performing assets (NPAs) have been indicated. 2. In credit card accounts, the amount spent is billed to the card users through a monthly statement with a definite due date for repayment. Banks give an option to the card users to pay either the full amount or a fraction of it, i.e., minimum amount due, on the due date and roll-over the balance amount to the subsequent months' billing cycle. 3. It has come to our notice that there are divergent practices being followed by banks with regard to asset classification status of credit card accounts if minimum amount due is not paid on the specified due date. While some banks reckon the due date specified in the statement for payment of minimum amount due to determine the over-due status, some banks reckon the subsequent billing date to determine the over-due status of the minimum amount due. In order to bring in consistency and induce transparency, it is advised that a credit card account will be treated as non-performing asset if the minimum amount due, as mentioned in the statement, is not paid fully within 90 days from the next statement date. The gap between two statements should not be more than a month. 4. Banks should follow this uniform method of determining over-due status for credit card accounts while reporting to credit information companies and for the purpose of levying of penal charges, viz. late payment charges, etc., if any. Yours faithfully, (Chandan Sinha) Principal Chief General Manager

CBDT on Safe Harbour Rules

Transfer Pricing: CBDT Issues Important Directives On Safe Harbour Rules

Pursuant to the Safe Harbour Rules in Rules 10TA to 10TG, the CBDT has issued a letter dated 20.12.2013 in which it has laid down important directives and clarifications on the manner in which the Safe Harbour Rules are meant to be implemented. The directives and clarifications are as follows:

 (i) AOs should carefully verify and provide to the CBDT in writing the details of all Form 3CEFA received by them relating to Safe Harbour Options;

(ii) There should be no confusion between Safe Harbour Option filed in paper format in Form 3CEFA and the Form 3CEB (detailing international transactions) which is filed electronically. The AO has to examine the form and decide within 2 months of the end of the month in which the option is filed as to whether to accept the Safe Harbour option or to make a reference to the TPO. If no action is action, the Safe Harbour option will be considered as having been accepted and it will remain valid for 5 years;

(iii) If there are minor defects in Form 3CEFA, the AO has to provide an opportunity to the taxpayer to rectify the same. However, the statutory time limit of 2 months provided in Rule 10TE (14)(i) cannot be exceeded;

(iv) The AO has to verify the eligibility of the assessee and the international transactions. Under Rule 10TF, the Safe Harbour Rules will not apply to a country notified in s. 94A (e.g. Cyprus);

(v) If the taxpayer has opted for Safe Harbour but has reported rates or margins less than the Safe Harbour rates or margins, the income has to be computed on the basis of the Safe Harbour rates or margins;

(vi) The Safe Harbour rates or margins are not a benchmark for cases not covered by the Safe Harbour Rules. In such cases, a regular transfer pricing audit should be carried out without regard to the Safe Harbour rates or margins.

RBI on NRI

Investments by persons resident outside India in tax free, secured, redeemable, non-convertible bonds - RBI Instructions

REGULATION No. 6 (2) of Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000 imposes restrictions on person resident in India who have borrowed in Rupees from a person resident outside India to the effect that such borrowed funds cannot be used for any investment, whether by way of capital or otherwise, in any company or partnership firm or proprietorship concern or any entity, whether incorporated or not, or for relending.

RBI has now decided to permit such resident entities / companies in India, authorised by the Government of India, to issue tax-free, secured, redeemable, non-convertible bonds in Rupees to persons resident outside India to use such borrowed funds for the following purposes:

(a) for on lending / re-lending to the infrastructure sector; and

(b) for keeping in fixed deposits with banks in India pending utilization by them for permissible end-uses.

Reserve Bank has since amended the Regulations accordingly through the Foreign Exchange Management (Borrowing and Lending in Rupees) (Amendment) Regulations , 2013, which have been notified, vide Notification No. FEMA.287/2013-RB dated September 17, 2013.

Regards,

VMVSR

FM-Stern Action-Service Tax Evaders

--

Press Information Bureau
Government of India
Ministry of Finance

30-December-2013 12:34 IST

Press Statement of the Finance Secretary on VCES

There has been an overwhelming response to the VCES . In the last four days, we have received over 16,000 applications involving Rs. 1500 crores of service tax dues. Upto 29-12-2013 we have received over 40,000 declarations involving over Rs 5500 crores. This would broadly correspond to Rs 55,000 crores of services, which have escaped the tax net. I would like to remind all service providers, both registered and unregistered, that this scheme is open till 31-12-2013 only. There will be no extension of the scheme since the last date is laid down in the Finance Act. We are making every effort to help all declarants. Our offices have been open on Saturdays and this last weekend, even on Sunday. Seeing the response, we have decided that today , the 30th of December 2013, the offices will be open well beyond normal working hours , in order to attend to all those who come in to file their declarations . Tomorrow, the 31st December 2013, the offices will be open till midnight to facilitate acceptance of declarations.

Another special measure is that the Government has also extended banking hours in the designated branches , upto 6 pm on 31-12-2013. In addition, all Commissionerates have been advised to accept demand drafts/ pay orders submitted by declarants, under the Receipt Payment Rules.

It is hoped that with all these measures, the service providers would respond and avail the benefits of VCES. The declarants are once again reminded that they have to pay 50% of the declared tax dues by 31-12-2013, failing which they would be ineligible for the scheme.

I would like to advise that from 1st January, 2014, stern action will be taken against service tax evaders and the provisions in the Finance Act relating to arrest and prosecution will be enforced in right earnest.

***

Amendment to Cenvat and CE Rules

We are pleased to share the following tax alert:

The CBEC has as amended the Central Excise Rules, 2002 and Cenvat credit Rules, 2004 in relation to procedures to be followed for availing cenvat credit on invoices issued by an importer vide  Notification No. 17/2013- CE(NT) and 18/2013- CE(NT) both dated 31.12.2013. The amendments would come into force w.e.f. 01.03.2014. The salient amendments are:

1. Registration is now made compulsory for importers issuing invoices on which CENVAT Credit can be taken.

2. An importer issuing cenvat table invoice is now made a "First Stage Dealer"

3. Other consequential amendments.

VCES Grand Success

Service Tax - VCES - A Grand Success - Excellent Performance by officers? 

THOUGH the Final figure is not yet officially out, the Government is said to have collected nearly 8000 Crores under the Voluntary Compliance Encouragement Scheme 2013. But you know what their target was? A measly 1050 Crores!

As per their "Results Framework Document" 2013-14 (RFD), if they collected 550 Crores in 2013-14, their performance is excellent.

What is RFD?

The Prime Minister approved the outline of a "Performance Monitoring and Evaluation System (PMES) for Government Departments". Under PMES, each department is required to prepare a Results-Framework Document (RFD).

An RFD provides a summary of the most important results that a department/ministry expects to achieve during the financial year. This document has two main purposes: (a) move the focus of the department from process-orientation to result-orientation, and (b) provide an objective and fair basis to evaluate department's overall performance at the end of the year.

So, our CBEC also sincerely prepared the RFD in which on page 9, they have shown VCES target for 2013-14 as Rs. 500 Crores and the projected value for 2014-15 as Rs. 550 Crores (maybe they hope to get some interest on delayed payments) - So, all they targeted was Rs. 1050 Crores. As with all Government statistics, which nobody perhaps reads, this report is also not without its contradictions. In page 9, their target for 2013-14 is Rs.500 Crores, while in page 4 it is 550 Crores - but what is after all 50 Crores when they have collected nearly 8000 Crores?

Thankfully, many of the officers were not aware the target as mentioned in the RFD - otherwise they would have closed the VCES counters much before the December 31 deadline.

ser

TDS STATEMENT LATE FEE U/s 234E CAN BE WAIVED ?

TDS STATEMENT LATE FEE U/s 234E CAN BE

TDS STATEMENT LATE FEE U/s 234E CAN BE WAIVED ? CA Rajesh Mehta Indore

One of the assessee had filed his tds statement for 1st quarter of F.Y. 2012-13 delayed by 260 days, he is in receipt of notice showing late fee of ` 200/- per day i.e. aggregate late fee of ` 52000/- for 260 days, regarding late fee on late filing of TDS statement. Provisions of Sec. 234E has been made applicable w.e.f. 1st July, 2012. It states that " Amount of late fee shall be paid before delivering a TDS statement", It means that any late fee should have been deposited just at the time of delivering  TDS statement and not later than this. The authorized TIN- NSDL centre which accepted the TDS statement also accepted these without late fee, as well as the software utility of the TDS department itself accepted these without late fee. Once the TDS statement has been accepted without late fee, then such late fee cannot be recovered later on. However this late fee cannot be waived even for any reasonable. As per provisions of Sec. 234E(4) late fee is applicable for "TDS statement which is to be delivered or caused to delivered for tax deducted at source or tax collected at source, as the case may be, on or after 1st July 2012". Late fee cannot be recovered for TDS statements which were due for F.Y. 2011-12 as well as TDS statement late fee cannot be recovered for F.Y. 2012-13, if not collected at the time of delivering TDS statement to the department. On the other hand it is also pertinent to note that the law has not made any person responsible, to deposit late fee, in case of default in depositing late fee alongwith tds statement, which can be inferred from the provisions of Sec. 204 of the act, which states as under:- "Sec. 204 of the act . For the purposes of [the oregoing provisions of this Chapter] and section 285, the expression "person responsible for paying" means—        i.       in the case of payments of income chargeable under the head "Salaries", other than payments by the Central Government or the Government of a State, the employer himself or, if the employer is a company, the company itself, including the principal officer thereof;       ii.       in the case of payments of income chargeable under the head "Interest on securities", other than payments made by or on behalf of the Central Government or the Government of a State, the local authority, corporation or company, including the principal officer thereof; [(iia) in the case of any sum payable to a non-resident Indian, being any sum representing consideration for the transfer by him of any foreign exchange asset, which is not a short-term capital asset, the [authorised person] responsible for remitting such sum to the non-resident Indian or for crediting such sum to his Non-resident (External) Account maintained in accordance with [the Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder;]      iii.       [in the case of credit, or, as the case may be, payment] of any other sum chargeable under the provisions of this Act, the payer himself, or, if the payer is a company, the company itself including the principal officer thereof;      iv.       in the case of credit, or as the case may be, payment of any sum chargeable under the provisions of this Act made by or on behalf of the Central Government or the Government of a State, the drawing and disbursing officer or any other person, by whatever name called, responsible for crediting, or as the case may be, paying such sum.]" The section 204 specifically says that "for the purposes of Sec. 190 to Sec. 203 and for Sec. 285 of the act the following persons would be responsible" , so it is clear that for the purpose of Sec. 234E none of the person has been made responsible, therefore if any late fee is due and not deposited alongwith the tds statement none can be held responsible to deposit it. Demand of late fee cannot be raised also by way of processing of TDS statement, because provisions of Sec. 200A of the act does not cover default in payment of late fee, except any arithmetical error, or incorrect claim, or default in payment of interest, any tds payable or refundable etc. In view of the above it is my opinion that late fee cannot be recovered later on by way of any notice, neither notice of demand U/s 156 can be issued for this. Any querries and suggestions are welcome on this issue.

Clarification on Applicability of CPE hours requirement for the newly enrolled members

Clarification on Applicability of CPE hours requirement for the newly enrolled
members during the block of three years 1.1.2011 to 31.12.2013. - (09-12-2013)1.

As per the Statement on CPE a member is exempted only for the particular calendar year during which he gets his membership for the first time.2.  For Example: members enrolled at any point of time during the Calendar year 2011 (1st January-31st December, 2011) are exempted for the Calendar Year 2011. For the Calendar Years 2012 & 2013 they would be required to comply with proportionate CPE hours requirement. Members enrolled during the year 2011 with COP would be required to complete 60 CPE hours in the calendar year 2012 and 13. Out of 60 CPE hours, minimum 40 CPE hours should be under Structured Learning and 20 CPE hours under Structured/Unstructured Learning as per choice and Non-COP holders are required to complete 30 CPE hours under Structured/Unstructured Learning as per choice.3   members enrolled at any point of time during the Calendar year 2012 (1st January-31st December, 2012) are exempted for the Calendar Year 2012. For the Calendar Year 2013 they would be required to comply with proportionate CPE hours requirement. Members enrolled during the year 2012 with COP would be required to complete 30 CPE hours for the calendar year 2013. Out of 30 CPE hours minimum 20 CPE hours should be under Structured Learning and 10 CPE hours under Structured/Unstructured Learning as per choice and Non-COP holders are required to complete 15 CPE hours under Structured/Unstructured Learning as per choice for the calendar year 2013.4   members enrolled at any point of time during the Calendar year 2013 (1st January-31st December, 2013) whether holding COP or not are exempted for this block of three years (2011 to 2013)5.  ICAI’s CPE Advisory on Unstructured Learning and prescribed format for claiming Unstructured CPE Credit hours is available at URL:http://www.cpeicai.org/Advisory-Unstructured%20Learning%20Activities.pdf.