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| Date: Jul 17, 2014 | |
| Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000 | |
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18 July 2014
RBI-LRS-Immovable Property Outside India
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17 July 2014
MCA vide circular no 23/2014 dated 17th July 2014
MCA vide circular no 23/2014 dated 17th July 2014 has issued various clarifications on one of the most of the argumentative section under the Companies Act 2013 i.e. section 188.
Highlights of the clarifications issued are given below:Voting by related parties in general meeting
As per second proviso to sub-section (1) of section 188 no member of the company shall vote on a special resolution to approve the contract or arrangement (referred to in the first proviso), if such a member is a related party.
It is clarified that 'related party' referred above has to be construed with reference only to the contract or arrangement for which the said special resolution is being passed. Thus, the term 'related party' in the above context refers only to such related party as may be a related party in the context of the contract or arrangement for which the said special resolution is being passed.
But the above clarification will still not provide any solution to the problem faced by the private companies where the directors and shareholders are generally common and are related to each other.
Applicability of Section 188 to corporate restructuring, amalgamations etc.
It is clarified that transactions arising out of Compromises, Arrangements and Amalgamations dealt with under specific provisions of the Companies Act, 1956/Companies Act, 2013, will not attract the requirements of section 188 of the Companies Act, 2013.
Requirement of fresh approvals for past contracts under Section 188.
A very common issue of debate was related to the status of contracts entered into by companies, after making necessary compliances under Section 297 of the Companies Act, 1956, which already came into effect before the commencement of Section 188 of the Companies Act, 2013. Whether any fresh approval was required under section 188 or not for such contracts?
As per the clarification, no fresh approval will be required for aforesaid mentioned contracts u/s 188 till the expiry of the original term of such contracts. But if any modification in such contract is made on or after 1st April, 2014, the requirements under section 188 will have to be complied with.
Case Law on TDS Credit
IN THE ITAT MUMBAI BENCH 'A'
LSG Sky Chef (India) (P.) Ltd.
v.
Deputy Commissioner of Income-tax -5(2), Mumbai*
AND SANJAY ARORA, ACCOUNTANT MEMBER
IT Appeal No. 4828 (Mum.) of 2012
[ ASSESSMENT YEAR 2009-10 ]
MARCH 27, 2014
Section 199, read with section 198, of the Income-tax Act, 1961 - Deduction of tax at source - Credit for tax deducted (Short credit) - Assessment year 2009-10 - Whether Form No. 26AS is a statement generated at end of revenue, and assessee cannot be in any manner held responsible for any discrepancy therein or for non-matching of TDS reflected therein with assessee's claims - Held, yes - Whether assessee, by furnishing TDS certificates bearing full details of tax deducted at source, had discharged primary onus on it towards claiming credit in its respect and, accordingly, Assessing Officer was to be directed to allow assessee credit of tax so deducted - Held, yes [Paras 4.2, 4.3 & 4.4] [In favour of assessee]
15 July 2014
Provident fund (PF) wage ceiling limit increased to Rs 15,000
Provident fund (PF) wage ceiling limit increased to Rs 15,000
The finance ministry has approved the proposal of the Employees' Provident Fund Organisation's (EPFO) to raise the monthly wage ceiling to Rs 15,000 (as against the earlier cap of Rs 6,500 per month).
Accordingly, an employee earning monthly wage ceiling up to Rs 15,000 will now be mandatorily required to contribute towards employee provident fund scheme and the employer will also have to make a matching contribution. This move is likely to bring enhanced coverage of large employee population under the social security ambit.
Further, for the convenience of the provident fund subscribers, Employees' Provident Fund Organisation proposes to launch the 'uniform account number' service for contributing members to facilitate portability of provident fund accounts.
By - CA VMVS RAO
Source:
(As per Budget Speech of Mr.Arun Jaitley,Ministry of Finance on July 10,2014 (Point No.40)
Income Tax Update Union Budget 2014-15 (5)- Compensation
Income Tax Update Union Budget 2014-15 (5)
Enhanced compensation to be taxable only upon final order :- Presently compensation awarded in the first instance is chargeable under the head Capital Gains of the previous year in which compensation/consideration or part thereof, was first received, and enhanced or further enhanced compensation is chargeable in the previous year in which such enhanced amount is received by the assessee, and if such compensation or enhanced compensation is reduced by any court, tribunal or other authority, then previously assessed capital gain shall be recomputed by taking such compensation as reduced by the court,tribunal or other authority.
Now in the budget it is proposed to insert a proviso to Sec. 45(b) so that “any amount of compensation received in pursuance of an interim order of a court, Tribunal or other authority shall be deemed to be income chargeable under the head “Capital Gains” of the previous year in which the final order of such court, Tribunal or other authority is made.
CA. Vinay Mittal, Ghaziabad
14 July 2014
Service Tax Update Union Budget 2014-15
Service Tax Update Union Budget 2014-15
Please take care in depositing of Service Tax amount to central Govt.
As per proposed budget
Intt. Rate on delay deposit will be very high, it is not a welcome step by Central Government
If delay upto 6 months
Rate of intt. Will be 18% ( SSP 15%)
if delay more than 6 months to 1 year
Rate of intt. Will be 24% (SSP 21%)
If delay more than 1 year
Rate of intt. Will be 30% ( SSP 27%) annual simple intt.
SSP=assessee who taxable services less than 60 lacs in a FY.
Rate of intt. Given by govt. on refund 6% pa simple intt.
Srrvice tax on ACCURAL BASIS, Original not receive but pay service tax from own pocket
now we understand position of service provider.
Disallowance U/s 40(a)(ia) restricted to 30% of sums paid
Union Budget 2014-15 (1)
An Amendment proposed by Budget 2014 :- Disallowance U/s 40(a)(ia) restricted to 30% of sums paid :- Presently any interest, commission, brokerage, rent, royalty, fees for professional or technical services payable to a resident, payments to resident contractor or sub contractor are fully disallowed if tax was deductible on such sums but not deducted or not paid before due date specified U/s 139(1).
Presently no disallowance U/s 40(a)(ia) is made for non deduction of TDS on payment of salary or directors remuneration or purchase of immovable property (Sec. 194IA).
Now “All expenses” on which tds is deductible and not deducted or deducted but not deposited before due date specified U/s 139(1), then 30% of such expenses will be disallowed U/s 40(a)(ia), therefore salary and directors remuneration, purchase of immovable property exceeding Rs. 50 Lakh by a builder or colonizer are also covered now and disallowance is restricted to 30%.
And such disallowed 30% sum will be allowed in the subsequent previous year :- (i) in which such tds has been deducted and deposited or (ii) in the year in which such tds has been deposited, if it was deducted in the previous year but paid after due date specified U/s 139(1).
Deductor can alternatively furnish form No. 26A as required by second proviso to Sec. 40(a)(ia) from the recipient of sum, but it has to be seen that the recipient has filed his/its income tax return within the due date applicable to payer of sum, otherwise it will be disallowed in the this year and will be allowed in the following year, when the recipient has filled his/ its return.
10 July 2014
Highlights of Budget for 2014-15
Highlights of Budget for 2014-15
--------------------------------------
* To hike FDI in defence to 49%
* NDA policy to encourage FDI in selective sectors
* Domestic defence mfg sector at nascent stage
* FDI in selected sectors to help larger interest of country
* Plan to enlarge scope of income tax settlement commission
* To provide certainty in tax laws
* Propose changes in transfer pricing rules
* Propose to strengthen authority for advance ruling in tax
* High level panel to interact with industry on indirect tax
* Clarification on tax issues to be given
* Plan law, administrative changes to reduce tax disputes
* Resident tax payer to get facility of advance tax ruling
* Propose changes to resolve ongoing direct tax disputes
* Aim stable, predictable investor-friendly tax regime
* Tax demands worth 4 trln rupee currently under litigation
* GST to result in higher tax mop-up for Centre, states
* Committed to stable, practical tax regime
* All cases of retrospective tax to be studied by CBDT panel
* GST to streamline tax administration
* Tax regime to be investor friendly
* Assure states govt to be more than fair on GST
* Won't ordinarily bring in tax changes retrospectively
* Govt's right for retrospective legislation unquestionable
* Retrospective taxes should be done with caution
* Hope to bring final solution to GST issue in FY15
* Aim to make food subsidy better directed, more inclusive
* Hope to have final solution on GST this yr
* GST debate must come to an end
* To review food, fuel subsidy
* Food, oil subsidy to be more targeted
* Committed to minimum govt, maximum governance
* New urea policy will be formulated
* To constitute expenditure mgmt panel
* No option but to undertake bold steps to enhance econ
* Time has come to revive efficiency of govt spend
* Today's measures are directional
* Must address problem of black money
* Still not out of the woods on inflation
* Seen gradual moderation in WPI inflation recently
* Aim 3.0% fiscal gap in FY17
* Aim 3.6% fiscal gap in FY16
* Accepted FY15 4.1% fiscal deficit target as a challenge
* Reduction in fiscal deficit achieved by spending cuts
* Jaitley: Aim of 4.1% of GDP fisc gap indeed daunting
* Need fisc prudence that will lead to fisc consolidation
* Jaitley: To continue to remain watchful on CAD front
* Must improve tax-GDP ratio
* Need to revive growth in infra, manufacturing sectors
* Non-tax revenue must be increased
* Must reduce wasteful expenditure
* Urgent need to generate more resources for econ
* Tax GDP ratio must be improved
* Steps today start of macro economic stabilisation
* Fisc prudence of paramount importance
* Cannot spend beyond our needs
* Can't leave behind legacy of debt
* Should we be victims of mere populism?
* Fiscal prudence of paramount importance
* Not wise to expect too much from new 45-day govt
* Task before me today is very challenging
* Need to revive growth in mfg, infra sectors
* Econ situation presents a grave challenge
* Won't leave any stone unturned for vibrant, strong India
* Not wise to expect anything major in first budget
* Higher growth is a sine qua non
* Have to ensure anti-poverty plans are well aimed
* Can't be oblivious that large population below poverty line
* Budget is the most comprehensive action plan
Basic tax exemption limit raised
to Rs 2.5 lakh, and Rs 3 lakh for senior citizens (60-plus).
No changes made incorporate or other direct taxes.
Limits under section 80C raised to Rs 1.5 lakh -as indicated in raising the PPF limit to Rs1.5 lakh.
EMI exemption for self-occupied
property raised to Rs 2 lakh.
Companies to get 15 percent investmentallowance for fresh investments above Rs 25 crore.
Foreign institutional investors to
get tax-breaks to entice them to move back from Mauritius. Their incomes will be treated as capital gains - which is 15 percent for short-term gains and zero tax for long-term gains.
Non deduction of TDS disallowance reduced from 100% of expenditure to 30% of expenditure
09 July 2014
Journal Entries-Sec 269SS
Journal entries should enjoy equal immunity on par with account payee cheques or bank drafts for the provisions of section 269SS
Date of Order: 27-6-2014
Recently ITAT Mumbai in Lodha Builders Pvt Ltd vs. ACIT in (2014) TaxCorp(LJ) 3436 (ITAT) held that Journal entries should enjoy equal immunity on par with account payee cheques or bank drafts for the provisions of section 269SS.
The ITAT held as under:
It is clear that the journal entries are hit by the relevant provisions of section 269SS of the Act. However, it is the finding of the Hon‟ble High court that completing the "empty formalities" of payments and repayments by issuing/receiving cheque to swap/squire up the transactions, is not the intention of the provisions of section 269SS of the Act, when the transactions are otherwise bonafide or genuine. Such reasons of the assessee constitute „reasonable cause‟ within the meaning of section 273B of the Act. In the light of the above ratio of judgment, we analyse the facts of the present case here as under.
There is no finding of AO in the order of the AO during the assessment proceedings that the impugned transactions constitutes unaccounted money and are not bona fide or not genuine. As such, there is no information or material before the AO to suggest or demonstrate the same. In the language of the Honble High court, „neither the genuineness of the receipt of loan/deposit nor the transaction of repayment of loan by way of adjustment through book entries carried out in the ordinary course of business has been doubted in the regular assessment. Admittedly, the transactions by way of journal entries are aimed at the extinguishment of the mutual liabilities between the assessees and the sister concerns of the group and such reasons constitute a reasonable cause.
In the present case, the causes shown by the assessee for receiving or repayment of the loan/deposit otherwise than by account-payee cheque/bank draft, was on account of the following, namely: alternate mode of raising funds; assignment of receivables; squaring up transactions; operational efficiencies/MIS purpose; consolidation of family member debts; correction of errors; and loans taken in case. In our opinion, all these reasons are, prima facie, commercial in nature and they cannot be described as non-business by any means. Further, we asked ourselves as to why should the assessee under consideration take up issuing number of account payee cheques / bank drafts which can be accounted by the journal entries.
This being the spirit of Hon‟ble High Court of Bombay, the ITAT adopts the same to the present issue. As such, the same is binding on us. What is the point in issuing hundreds of account payee cheques / account payee bank drafts between the sister concerns of the group, when transactions can be accounted in books using journal entries, which is also an accepted mode of accounting?
In our opinion, on the factual matrix of these cases under consideration, journal entries should enjoy equal immunity on par with account payee cheques or bank drafts. Of course, the above conclusion apply so long as the transactions are for business purposes and do not involve unaccounted money and they are genuine. In fact, such journal entries shall save large number of cheque books for the banks.
Further, There is no dispute that the impugned journal entries in the respective books were done with the view to raise funds from the sister concerns, to assign the receivable among the sister concerns, to adjust or transfer the balances, to consolidate the debts, to correct the clerical errors etc. In the language of the Hon‟ble High court, the said „journal entries‟ constitutes one of the recognized modes of recording the loan/deposit. The commercial nature and occurrence of these transactions by way of journal entries is in the normal course of business operation of the group concerns. In this regard, there is no adverse finding by the AO in the regular assessment. AO has not made out in the assessment that any of the impugned transactions is aimed at non commercial reasons and outside the normal business operations. As such, the provisions of section 269SS and 269T dof the Act shall not be attracted where there is no involvement of the „money‟ as held by the Hon‟ble High Court of Delhi in the above cited cases, supra. Therefore, in the facts of the present case, in our opinion, though the assessee has violated the provisions of Section 269SS / 269T of the Act in respect of journal entries, the assessee has shown reasonable cause and, therefore, the penalty imposed under Section 271D/E of the Act are not sustainable. Regarding an amount of „money‟ said to have been paid in violation of the said provisions, the same needs to be deleted,
07 July 2014
Maharashtra Act XXVII of 2014
Maharashtra Act XXVII of 2014 has received assent of the Governor on 26th June, 2014 and highlights of the changes in respect of Maharashtra VAT and Profession Tax are as follows -
- VAT Registration limit increased to 10 lakhs
- Dealers other than importers, whose turnover during the FY 2013-14 not exceeded registration limit of Rs.10 lakhs, can apply for cancellation on or before 30-09-2014 and will be cancelled w.e.f. 1-10-2014.
- Late Fee reduced to Rs.2,000/- if filed within 30 days from due date.
- Provision giving power to Commisioner on application by dealer for giving directions in respect of assessment deleted.
- If order cancelling the Assessment on an application u/s 23(11) is not passed within 3 months from end of the month in which application is made, assessment will be deemed to be cancelled.
- No stay against the dues on account of non-production of certificates or declaration if two years has passed from the end of year for which claim relates, unless 100% tax in respect of such claim is paid.
- Penalty for concealment is restricted to 100% of tax evasion but will not be less than 25% of tax evasion u/s 29(3)
- If dealer has filed late return on or after 1-8-2012 and paid late fee also, penalty if levied will not be recovered.
- No 30(4) penal interest is payable on additional liability on account of non-production of certificates or declarations.
- No 30(4) penal interest if tax paid as per revised return is less than 10% of tax paid with original return.
- TDS by person who awards quarrying lease or quarrying permit in respect of minor minerals.
- Facility to apply for refund per return filed extended to units covered under Package Scheme of Incentives 2013.
- VAT Audit limt raised to 1 crore
- Turnover of Sales for VAT Audit to include value of goods transferred outside state not by reason of sale
- Dealers holding liquor licenses mentioned in clause (b) omitted form VAT Audit unless covered due to turnover limit
- Power of waiver of Audit penalty if filed within one month deleted.
- Profession Tax limit for salaried persons increased to Rs.7,500/-
- Power given to State Government to waive or reduce late fee
- Exemption extended to person who is suffering from mental retardation specified
For Act XXVII of 2014, visit website http://mahavat.gov.in or www.meraconsultant.com
SC on Sec 40(a)(ia)
Section 40(a)(ia) disallowance is attracted only in cases of non deduction of tax at source on expenses payable. Non deduction of tax at source on expenses paid will not attract section 40(a)(ia)
06 July 2014
Maharashtra Co-operative Auditors (existing Panel) – Profile Updation has been extended till 10th July, 2014.
Maharashtra Co-operative Auditors (existing Panel) – Profile Updation has been extended till 10th July, 2014. Also the following clarification has been updated; please visit for further information http://mahasahakar.maharashtra.gov.in
04 July 2014
Email requirements
Income tax requirement of email and Mobile has been relaxed to 10. Further representations have been made in this context.
03 July 2014
The Co-operative department circular
FYI- The Co-operative department has issued a circular which has been uploaded on the website of www.mahasahakar.maharashtra.gov.in. As per this notification, all the existing empanelled auditors will have to update their profile by 6.7.2014. The complete message is as under:
Important Information
(1) Online Enrolment is only for Auditors Empanelled with Commissionerate of Cooperation and Registrar of Cooperative Societies only.
(2) Commissionerate of Cooperation and Registrar of Cooperative Societies has not invited any new applications from Auditors for empanelment through this activity. Any fresh application would be rejected by the District Officials of Commissionerate of Cooperation and Registrar of Cooperative Societies.
(3) Username and Password provided to Auditors via SMS will not work any more on MahaSahakar site.
(4) Previous Audit Tracking System is discontinued by Department as new enhanced application is hosted on MahaSahakar.
(5) Enrolment drive would be available till 6th July,2014 11;59 pm. No further extension would be provided by Department.
(6) All auditors Data entered before 2nd July,2014 would be flushed from the system
(7) All empanelled auditors need to enroll online before 6th July,2014 11;59 pm.
Major changes in Income Tax Returns
Major changes in Income Tax Returns this year are as under:
1. All taxpayers filing E-Returns will have to compulsorily update correct mobile number and E- Mail ID's. Otherwise there will be login issues before uploading of return on income tax Depts Website.
2. Now onwards Income Tax Refund will be issued directly in the bank account of the taxpayer through ECS only, cheques are discontinued. Therefore at most care should be taken while mentioning Bank Account Number and IFSC Code in the income tax returns.
3. From this year while claiming TDS in Income Tax return facility has been given to carry forward the TDS of previous year and brought forward TDS to next year. Due to this reconciliation of TDS claimed on Income and total available TDS as per Form 26 can be made. Tax payers which follow cash system of accounting will be benefited, like Doctors, Advocates, CAs and other professionals.
4. As per newly inserted Section 87A if annual income of the taxpayer is up to Rs. 5,00,000/- then Tax relief of maximum of Rs. 2,000/- is given. For claiming this relief separate space has been inserted in the return.
5. As per newly inserted Section 80EE if taxpayer has purchased house up to Rs. 40 Lakh and taken housing loan of Rs. 25 Lakh then taxpayer can claim deduction of interest up to Rs. 1 Lakh. For claiming this deduction separate space has been inserted in the return.
6. If income of the taxpayer is more than Rs. 1 crore then surcharge of 10% is applicable. For this separate space has been inserted in the return.
7. All salaries taxpayers will now have to give now separate details of LTA (Leave Travel Allowance) and HRA (House Rent Allowance) and other allowances separately. This will help Govt. to track proper claim of such deductions, recent HRA and LTA fallacious claimed by some MPs and Govt. taxpayers may have forced for such changes.
8. From this year the details of short and long term capital gain will have to be given in three parts viz.
a) sale of plot / flat
b) sale of STT paid shares and mutual funds
c) sale of other assets.
Further in case of sale of land or building Stamp Duty Value will have to be mentioned. Further if taxpayer is availing exemption under capital gains then value of newly purchased asset, date of acquisition of the asset and if invested in capital gain account then its details will have to be mentioned.
9. Corporate or LLP assessee will have to mention Corporate Identification Number or LLP Identification Number. Further Director or Designated Partner Identification Number will have to be mentioned. This will help in cross check of information with other legal departments by income tax dept or visa a versa.
10. If assessee carrying on business is taking deduction of bad debts of more than Rs. 1 Lakh of single person, then his PAN will have to be mentioned.
11. As per newly inserted section 43 CA if, taxpayer have sold other than capital assets below stamp duty value (eg. builders / developers) then the difference between the two will be considered as deemed income of the assessee and tax will have to be paid on it. For this separate space has been inserted in the return.
12. If there is more than one owner of the house then, while mentioning details in the schedule of Income from House Property the percentage of co ownership will have to be given.
13. From this year e-filing of wealth tax return is compulsory and in this return the details of all wealth whether taxable or not, will have to be given in depth.
02 July 2014
Multipurpose Empanelment Form (MEF)
Multipurpose Empanelment Form (MEF) for the year 2014-15 has been hosted on www.meficai.org.
Last date for online submission of MEF/ Bank Audit form is 4th August, 2014.
Tax Audit limit for a Financial Year
The Council of the Institute at its 331st meeting held in February, 2014 decided to increase the specified number of tax audits from 45 to 60 and an Announcement dated 11.2.2014 in this regard was hosted on the website of the Institute. The Council subsequently at its 333rd meeting held in May, 2014 decided that the specified limit of 60 would relate to an assessment year as against the existing stipulation of a financial year.
In view of the aforesaid decisions of the Council, the existing Para 6 of Chapter VI of the Council Guidelines No. 1-CA(7)/02/2008 dated 8th August, 2008 as contained in Appendix No. (34) to the Chartered Accountants Act, 1949 stands modified as under:-
1. In para 6.1 (a) and (b), the figure “45” pertaining to specified number of tax audit assignment has been substituted by the figure “60”.
2. In para 6.0 and 6.1, the words “in a financial year” have been substituted by the words “relating to an assessment year”.
3. In para 6.1.6, the words “in each financial year” have been substituted by the words “relating to each assessment year”.
As already announced the revised limit of 60 tax audits would be applicable w.e.f. 1st April, 2014. The above announcement is published for information of the members at large.
(T. Karthikeyan)
30 June 2014
MCA extend last date for filing DPT4 without additional fee upto August 30,2014
MCA extend last date for filing DPT4 without additional fee upto August 30,2014
27 June 2014
CBDT releases E-filing Utility of ITR-5 for AY 2014-15
The Recent Clarifications issued by MCA on 25th June 2014
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