CBDT amends Rule to prescribe Form No 13

No deduction of tax certificate u/s 197 - CBDT amends Rule to prescribe Form No 13

CBDT amends rule 28AA to provide issue of nil TDS certificate to deductor and lower TDS certificate to recipient of income.

MEF Update...

MEF Update...
List of applicants who have submitted their MEF online but declaration is yet to be received from them. This list is  available on http://www.meficai.org​ .​

Breaking news: CBDT issues Press release to extend due date to 30th November.

In Compliance with Gujarat High Court decision, CBDT extended the due date for furnishing return of income from 30th September to 30th November 2014 for the Assessment Year 2014-15 for all purposes of the Act in the case of an assessee, who is required to file his return of income by 30th September 2014, and is also required to get his accounts audited under section 44AB of the Act or is a working partner of a firm whose accounts are required to be audited under section 44AB of the Act.

There shall be no extension of the due date for the purpose of charging of interest under section 234A of the Act for late filling of return of income and the assessee shall remain liable for the payment of interest as per the provisions of section 234A of the Act.

See the link:
http://pib.nic.in/newsite/mbErel.aspx?relid=110071

CBEC on Service Tax on Joint Ventures

FinMin clears air on service tax levy on joint ventures

The Finance Ministry has made it clear that "taxable services" provided by members of a joint venture (JV) to a JV and vice-versa will attract service tax. This will be the case when the "taxable services" are provided for a consideration, the Finance Ministry said in a circular on Wednesday.

The same treatment will hold good when taxable services are provided between members of a JV for a consideration, says the circular.

India is currently adopting the concept of negative list for services taxation and except for a specified set of services in this list, all other services are subject to service tax.

As regards taxation of cash calls or capital contributions made by the members to the JV, the Ministry said that detailed and close scrutiny of the terms of JV agreement may be required in each case.

If "cash calls" are merely a transaction in money, they are excluded from the definition of service and, therefore, will not attract tax, says the circular.

Tax authorities at the field level have been advised to carefully examine the leviability of service tax with reference to the specific terms/clauses of each JV agreement.

---

India is currently adopting the concept of negative list for services taxation and except for a specified set of services in this list, all other services are subject to service tax.

National Taxation Tribunal law is unconstitutional, rules apex court Terms it the ultimate encroachment on the exclusive domain of superior courts The Supreme Court on Thursday declared as unconstitutional a law under which a national tribunal was to be set up to decide tax-related cases by taking away the jurisdiction of High Courts in such matters. A five-Judge Constitution Bench comprising Chief Justice RM Lodha and Justices JS Khehar, J Chelameswar, AK Sikri and Rohinton Nariman held that the law, the National Tax Tribunal Act, was the ultimate encroachment on the exclusive domain of the superior Courts of Record. The UPA-I had enacted the law paving the way for the creation of National Tax Tribunals, which would have helped reduce pendency of tax cases before High Courts. Tax experts say this decision could impact speedier disposal of pending cases that run into thousands of crores of rupees. The Bench passed the order on a batch of petitions filed by the Madras Bar Association and others challenging the constitutional validity of the NTT Act contending that there was a grave danger that the judiciary would be substituted by quasi-judicial tribunals functioning as departments of ministries. Writing the main judgment, Justice Khehar said: "The Parliament has the power to enact legislation and to vest adjudicatory functions, earlier vested in the High Court, with an alternative court/tribunal. Exercise of such power by the Parliament would not per se violate the basic structure of the Constitution. Conform to standards "The basic structure of the Constitution will stand violated if, while enacting legislation pertaining to transfer of judicial power, the Parliament does not ensure that the newly created court/tribunal conforms with the salient characteristics and standards of the court sought to be substituted…" "The National Tax Tribunal encroaches upon the power of higher judiciary, which can only decide issues involving substantial laws and not a tribunal." Justice Nariman wrote in a separate but concurring judgment. The Bench said: "It is obvious that substantial questions of law which relate to taxation would also involve many areas of civil and criminal law… It is therefore not correct to say that taxation, being a specialised subject, can be dealt with by a tribunal. All substantial questions of law have, under our constitutional scheme, to be decided by the superior courts and the superior courts alone. "Indeed, one of the objects for enacting the National Tax Tribunals Act, as stated by the Minister on the floor of the House, is that the National Tax Tribunal can lay down the law for the whole of India which then would bind all other authorities and tribunals. This is a direct encroachment on High Courts' power under Article 227 of the Constitution to decide substantial questions of law which would bind all tribunals." Verdict on tax tribunal law may delay cases The Supreme Court's move to strike down the National Tax Tribunal as "unconstitutional" will impact speedier disposal of appeals before High Courts, say tax experts. This verdict is certainly a legal victory and in the bargain may turn out to be a loss for taxpayers, as huge number of tax cases are pending before High Courts, Aseem Chawla, Partner, MPC Legal, a law firm, told BusinessLine . R Sekar, Partner, Deloitte, Haskins & Sells LLP, said the ruling may be appreciated for upholding Constitutional principles and judicial hierarchy. However, the verdict will go against the concept or intention of setting up of tribunals by the Government for speedy disposal of appeals, he said. Now the Government will have to find a way of ensuring the speedier disposal of appeals, Sekar said, adding that the creation of NTT and constitution of NTT was a step in the right direction. The Apex Court on Thursday held that NTT cannot decide on the matters involving substantial questions of law and also that Tribunals cannot take away the power of High Court. Pallavi Bakhru, Director-Grant Thornton Advisory, said striking down the NTT does create a void of expectations in taxpayers' minds who were looking forward to an alternative to the judicial process. Judicial delays notwithstanding, the points raised by the Supreme Court are well-noted, and the Central Government could, after careful analysis , propose an alternative institutional set up to cleanse up the pending litigation on central tax laws, she added. Chawla said tribunalisation of justice had always been a contentious matter. Now one needs to see that how judicial reforms in the tax sphere are carried out, he said.     Madras Bar Association vs. UOI (Supreme Court – Full Bench) The NTT Act "crosses the boundary" & is unconstitutional. CAs/CSs are specialists on accounts & facts and are not capable of arguing/ deciding 'Substantial Questions Of Law' The Full Bench of the Supreme Court had to consider whether the National Tax Tribunals Act, 2005, which sought to take away the jurisdiction of the High Courts in tax matters was constitutional. The Full Bench has struck down the entire Act as being unconstitutional on the ground that though "tribunalization" has been allowed subject to safeguards, the NTT Act "crosses the boundary" and "encroaches the exclusive domain" of the High Courts. In the course of the judgement, the Supreme Court had to consider whether Chartered Accountants could be appointed Members of the NTT and whether s. 13(1) of the Act which permitted Chartered Accountants to represent a party to an appeal before the NTT was valid in law. It also had to consider the application by the Company Secretaries that they are equal in all respects to the CAs and should also be permitted to appear and plead before the NTT. HELD by the Full Bench: A perusal of the reported judgements shows that while deciding tax related disputes, provisions of different laws on diverse subjects had to be taken into consideration. The Members of the NTT would most definitely be confronted with the legal issues emerging out of Family Law, Hindu Law, Mohammedan Law, Company Law, Law of Partnership, Law related to Territoriality, Law related to Trusts and Societies, Contract Law, Law relating to Transfer of Property, Law relating to Intellectual Property, Interpretation of Statutes, and other Miscellaneous Provisions of Law, from time to time. The NTT besides the aforesaid statutes, will not only have to interpret the provisions of the three statutes, out of which appeals will be heard by it, but will also have to examine a challenge to the vires of statutory amendments made in the said provisions, from time to time. They will also have to determine in some cases, whether the provisions relied upon had a prospective or retrospective applicability. Keeping in mind the fact, that in terms of s. 15 of the NTT Act, the NTT would hear appeals from the Income Tax Appellate Tribunal and the CESTAT only on "substantial questions of law", it is difficult for us to appreciate the propriety of representation, on behalf of a party to an appeal, through either Chartered Accountants or Company Secretaries, before the NTT. The determination at the hands of the NTT is shorn of factual disputes. It has to decide only "substantial questions of law". In our understanding, Chartered Accountants and Company Secretaries would at best be specialists in understanding and explaining issues pertaining to accounts. These issues would, fall purely within the realm of facts. We find it difficult to accept the prayer made by the Company Secretaries to allow them, to represent a party to an appeal before the NTT. Even insofar as the Chartered Accountants are concerned, we are constrained to hold that allowing them to appear on behalf of a party before the NTT, would be unacceptable in law. We accordingly reject the claim of Company Secretaries, to represent a party before the NTT. We simultaneously hold s. 13(1), insofar as it allows Chartered Accountants to represent a party to an appeal before the NTT, as unconstitutional and unsustainable in law.

National tax tribunal unconstitutional

SC: Substantial questions of law to be decided only by superior crts. Basic structure of the constitution has been violated. 

SC: NTT is not endowed with salient features of judicial powers. Separation of powers between executive and the judiciary is critical.
National tax tribunal unconstitutional says SC

EXTENSION OF DUE DATE : STATUS OF VARIOUS COURT

EXTENSION OF DUE DATE : STATUS OF VARIOUS COURT
Madras High Court
Hearing today.
Madras High Court directs CBDT to Extend Due Date of filing ITR to 30/11/2014.

Rajasthan High Court, Jaipur Bench - Raj Tax Consultants Vs UO I And Ors, Civil Writ No. 9540/2014
Listing in Rajasthan High Court Today, Case No. 9540/20114...Adjourned for 26/09/2014.

Bombay High Court - The Chamber of Tax Consultants & Others Vs. Union of India -
WRIT PETITION (L)NO.2492 OF 2014
Case adjourned for 24/09/2014 in Bombay High Court. Today Hearing in Bombay High Court. Arguments at 3 PM

High Court at Hyderabad for the States of Telangana and Andhra Pradesh - WP 28159/2014, WP 28672/2014
Disposed of by the Hon’ble High Court at Hyderabad observing that there is no justification or reason to extend the
date for TAR alone and not to extend the date for ITR and accordingly the Union of India and CBDT were directed to
consider the contents of the representations of AIFTP for extending the date for filing ITRs in tandem with the date for
TAR and dispose of the representations well before the date for filing ITR i.e. 30-09-2014.

Delhi High Court tax Audit case update

LATEST & Most Awaited News from Delhi High Court in case of Mahesh Kr & Co. Vs UOI  & ors WP 5990/14 reg issue of furnishing Tax Audit Report subsequent to filing of ITR & Dt.extension.--
Petitioner's Counsel Ms Rashmi Chopra gracefully seeks permission to withdraw. Court orders "Petition Dismissed as withdrawn."CBDT's counsel urges that case has travelled  so far and CBDT has granted relief by way of affidavits. However,court expresses the view that nothing remains once petition is withdrawn.

However, relief already stands granted to assessees by Gujrat HC. As, it has directed CBDT to extend date of filing ITR to 30th Nov 2014. CBDT yet to issue notification for same.
--Sanjay Sharma(Adv) & Team casansaar from Delhi HC.

Case adjourned for tomorrow in Bombay High Court.

Gujarat High Court date extension issue

Gujarat High Court directs CBDT to extend due date for filing of ITR to 30-11-2014 subject to Sec. 234A interest

The CBDT vide Order [F.No.133/24/2014-TPL], dated 20-8-2014 had extended the due date for filing of tax audit report to November 30, 2014. However, the CBDT had not extended the due date for filing of the Income-tax Return ('ITR'). Consequently, many taxpayers were facing difficulty in filing of ITR without filing the tax audit reports.

In view of this, All Gujarat Federation of Tax Consultant filed a writ petition in the Gujarat High Court contending for the extension of the due date for filing of ITR to November 30, 2014.

On the impugned issue, petitioner argued that ITR is prepared on the basis of information collated and reported in the tax audit report and in absence of tax audit report it would not be possible for a taxpayer to compute his tax liability and file return of income on due date 30-09-2014. On the other side, the Income-tax Department argued that if the blanket extension is given for filing of return of income, the taxpayer would also defer the payment of due taxes to the credit of Central Government which would be prejudicial to interest of revenue. Dept. also gave surety to the Court that no penalty or interest would be levied for revision of return by the taxpayer, if any, pursuant to such tax audit.

However, Gujarat High Court suggested a mid-way which would tackle the practical problem being faced by the taxpayers and which would save the interest of revenue. Gujarat High Court directed the CBDT to extend the due date for filing of return of income for all purposes, inter-alia, carry forward of losses, allowability of deductions under Sections 80-IA, 80-IB, 80-IC, 80-ID, etc.

However, such extension has been granted subject to charge of interest under Section 234A for the period commencing from 01-10-2014 and up to the actual date of filling the return of income.

However, in such cases, the taxpayer will enjoy the option of paying taxes before the due date of 30-09-2014 and to that extent enjoy the exemption from levy of interest under Section 234A.

Gujarat HC tax audit verdict

Gujarat HC asks CBDT to extend due date of ITR to 30th Nov. However,  234A will be applicable. More details awaited.

Gujarat High Court tax Audit update

Guj HCs Remark that TAR is mini Asst & is must before filing of ITR is the Moot point which the HC has Extracted, & that point will become the Gates to the Extension of the date of filing of ITR by Guj HC & followed by all other HCs. It seems Verdict to be announced is Clear now only Official Announcement awaited.

RBI eases FDI norms on issue of equity shares

The Reserve Bank of India (RBI) has eased foreign direct investment (FDI) norms, allowing Indian companies to issue shares/convertible debentures to a person resident outside India against any payables, subject to certain conditions like entry route, sectoral cap, pricing guidelines and compliance with the applicable tax laws.

As of now an Indian company may issue shares/convertible debentures under the automatic route to a person resident outside India against lump-sum technical know-how fee, royalty, external commercial borrowings (ECBs) (other than import dues deemed as ECB or Trade Credit as per RBI guidelines) and import payables of capital goods by units in Special Economic Zones subject to certain conditions like entry route, sectoral cap, pricing guidelines and compliance with the applicable tax laws.

As per the new norms, such equity shares can be issued against any other funds payable by the investee company, remittance of which does not require prior permission of the government or RBI under FEMA.

The riders being that the shares shall be issued in accordance with the extant FDI guidelines on sectoral caps and pricing guidelines, etc.

Also, the issue of equity shares under this provision shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes.

The relevant circular is enclosed for reference.

Hope you find the update useful.

Note: The above update is just for reference and does not constitute an advice or an opinion.  As always, professional assistance is highly recommended before acting on the above.

Warm Regards,

 

CA. Pravesh Kumar M
Pravesh�Kumar & Associates

Tax Audit Delhi High Court update

Delhi High Court once again Adjourned the Tax Audit Deferment case to Monday. Court ask cbdt to file an affidavit that no penal provision and no section 271 1 (c) in case Assesse file the return and then revised it later. Also asked for 25 days black out period of new utility.

Tax Audit Deferment case with Delhi High Court update

Tax Audit Deferment case with Delhi High Court.
Court asked the CBDT for revenue losses in case ITR date extended to 31st Oct. CBDT lawyer not able to answer and Court Adjourned the case tomorrow for final hearing.
CASANSAAR team was there for all live updates.
Hoping date will be extended to 31st Oct.

Supreme Court on Sec 113

CIT vs. Vatika Township (Supreme Court – Full Bench) S. 113 Proviso inserted by FA 2002 w.e.f. 01.06.2002 to impose surcharge in search assessments is not clarificatory or retrospective. Suresh Gupta 297 ITR 322 (SC) overruled A search and seizure operation u/s 132 was conducted on 10.02.2001 pursuant to which an assessment order for the block period from 01.04.1989 to 10.02.2000 was passed on 28.02.2002 at a total undisclosed income of Rs.85 lakhs. Tax was charged at the rate prescribed in s. 113. Subsequently, a Proviso was inserted to s. 113 by the Finance Act 2002 w.e.f. 01.06.2002 to provide for the levy of surcharge at 10%. The AO took the view that the said amendment was clarificatory in nature and he levied surcharge by passing an order u/s 154. However, the Tribunal and High Court upheld the assessee's claim that the said amendment was prospective in nature and did not apply to block periods falling before 01.06.2002. However, the plea of the assessee was rejected by the Supreme Court in Suresh N. Gupta 297 ITR 322 (SC) (followed in (Rajiv Bhatara (SC)) and it was held that the said proviso is clarificatory in nature and applied to earlier block periods. When the present case reached the Supreme Court, the Bench was of the view that the issue ought to be referred to a larger Bench of 5 judges. HELD by the Full Bench of the Supreme Court:     (iv) There cannot be imposition of any tax without the authority of law. Such a law has to be unambiguous and should prescribe the liability to pay taxes in clear terms. If the concerned provision of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subjects, as against there the revenue, has to be preferred. This very principle is based on the "fairness" doctrine as it lays down that if it is not very clear from the provisions of the Act as to whether the particular tax is to be levied to a particular class of persons or not, the subject should not be fastened with any liability to pay tax.  (vi) Consequently, the conclusion in Suresh N. Gupta 297 ITR 322 (SC) treating the proviso to s. 113 as clarificatory and giving it retrospective effect is not correct and is overruled.

Guidance note on tax audit

Updated Guidance note on tax audit by ICAI

http://220.227.161.86/34728gn-taxaudit-dtcicai.pdf

Consequences of late filling of return

Assessee file return any time even up to march 2015 in case of audit also. Only following consequence.

1. He may have to pay Interest U/s. 234A of the Income Tax Act, 1961 on taxes outstanding.
2. Losses if any may not be allowed to be carried forward under the provisions of section 80 Read with section 139(3) of the Income tax Act, 1961.
3. To claim deduction of statutory expenses falling under section 43B,       Assessee have to pay these Statutory on or  before the filing of ITR or Due Date of return filing (Due Date of ROI is 30.09.2014) whichever is earlier.
4. Some of the deduction i.e. Under Section 10A, which requires Assessee to file his return on or before the due date specified under sub section (1) of section 139 may not be allowed to Assessee.
5. If Assessee not able to file his Return on or before 30.09.2014 he may not be able to revise his Return of Income.

Case Law on Bogus Purchases

IT: Where purchases were supported by bills, entries were made in books of account and payment was made by cheque, said purchases could not be held as bogus purchases

IT: Commission paid through account payee cheques on account of sales canvassed by party was not bogus payment

■■■

[2013] 40 taxmann.com 206 (Gujarat)

HIGH COURT OF GUJARAT

Commissioner of Income-tax-I

v.

Nangalia Fabrics (P.) Ltd.*

AKIL KURESHI and ms. SONIA GOKANI, JJ.

Tax Appeal No. 689 of 2010†

APRIL  22, 2013 

I. Section 68 of the Income-tax Act, 1961 - Cash credit [Unverifiable purchases] - Assessing Officer found that purchases made by assessee could not be verified as parties were untraceable - Accordingly, he made addition to assessee's income - However, Tribunal held that since purchases were supported by bills, entries were made in books of account and payment was made by cheque, addition should have to be deleted - Whether issue being based on facts, required no consideration - Held, yes [Para 4] [In favour of assessee]

II. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of [Commission] - Whether where brokerage commission was paid through account payee cheques for sales canvassed by a party and also in consideration of collection recovered from purchaser, said commission payment could not be held to be bogus - Held, yes [Para 6] [In favour of assessee]

Sudhir M. Mehta  for the Appellant.

ORDER

 

Ms. Sonia Gokani, J. - Aggrieved by the order of the Income Tax Appellate Tribunal dated 28.10.2009, revenue has challenged the said order in this tax appeal proposing following substantial questions of law:

"1.		Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting Rs. 1,27,02,869/- made by the assessing officer on account of unverifiable purchases?
2.		Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting disallowance of Rs. 72,37,808/- made by the Assessing Officer on account of brokerage commission?"

2. We have heard learned counsel Mr. Mehta for the revenue and learned senior counsel, Mr. Soparkar for the assessee-respondent. The first question pertains to the addition made by the Assessing Officer and reduced by 5% from the total amount of Rs. 1.27 crores (rounded off) by the CIT and deleted in its entirety by the Tribunal.

3. The question pertains to the purchases made by the assessee-respondent. On account of unverifiable purchases, the Assessing Officer made additions to the tune of Rs. 1.27 crores. He was of the opinion that none of the parties could be located and therefore, such purchases were held to be bogus. When it was challenged before the CIT(A), the CIT(A) was of the opinion that they could not be held bogus as the corresponding sales had been effected by the respondent in the next year. In subsequent year also and in the past, such purchases were made which were never questioned. When challenged before the Tribunal on the basis of the facts presented before us, it held that these purchases could not be held bogus by holding thus:

"13. We have considered the rival submissions and the materials placed on record. The purchases are supported by bills, entries in the books of account, payment by cheque and quantitative details Assessing Officer did not find any inflation in purchase price or inflation in consumption or suppression the production. The addition had been made only on the ground that the parties are not traceable. Assessee had made payment through crossed cheques and assessing officer did not find that payment made came back to assessee. Assessing Officer has made addition in respect to the outstanding amount as on 31.3.2001 which has been cleared in the succeeding years. The ratio of the creditor to the purchases is normal considering the past records of the assessee. The creditors were outstanding owing to liquidity as assessee is also required to get credit in respect of sales also. Even otherwise provision of section 68 is not attracted to amounts representing purchases made on credit as held in the case of Panchan Dass Jain cited supra. The addition for bogus purchases cannot also be sustained in full or in part in view of the various cases laws cited by the assessee and in view of the facts that the decision of Vijay Proteins Ltd. and Sanjay Oil Cake Industries are not applicable to the facts of the assessee's case. Assessee's case is covered by the decision of Hon'ble Gujarat High Court in case of Kashiram Textile Mills. In view of the matter, addition made by the assessing officer is deleted. Ground No.1 of Assessee's appeal is allowed and ground No.1 of Revenue's appeal is dismissed."

4. The issue is essentially based on facts. The Tribunal, having been satisfied by genuineness of the purchases as also specially considering the payments made through the cheques, was of the opinion that such addition could not be sustained. Issue, essentially and pre-dominantly based on facts, requires no consideration as no question of law arises.

5. The second question pertains to brokerage commission of Rs. 72,37,808/- disallowed by the Assessing Officer. The Assessing Officer disallowed the commission on the ground that M/s. Shree Shantinath Silk Industries did not maintain its record and its name did not appear on sale bill. When it was challenged before the CIT(A) it was of the opinion that the only one party had been examined by the Assessing Officer and the person examined for and on behalf of such party in fact was not dealing with sales, and therefore, would not be having any knowledge of the brokerage. After dealing with the issue at length, it sustained addition of Rs. 36.18 lacs (rounded off).

6. When CIT(A)'s order was challenged before the Tribunal, the Tribunal deleted the entire addition by observing thus:

"23. We have heard the rival submissions and the materials placed on record. We are inclined to agree with the submission made on behalf of the assessee and find that no evidence had been placed on record that the commission expense is bogus. Assessee made payment of commission expenses is bogus. Assessee made payment of commission through account payee cheques for sales canvassed by the party and also in consideration of the collection recovered from purchaser. Payments cannot be unreasonable particularly when M/s. Shree Shantinath Silk Industries is not related to the assessee and so even disallowance made by CIT(A) is not proper. We therefore delete the full disallowance of Rs. 72,37,808/- made by the assessing officer. Hence assessee's ground of appeal is allowed and revenue's ground of appeal is allowed and revenue's ground of appeal is dismissed."

7. This issue is again based on facts. Essentially, the Tribunal has, with cogent reasons dealt with the issue, no question of law, much less any substantial question of law arises. The Tax appeal is, resultantly, dismissed.

POOJA

 

* In favour of assessee.

† Arising out of Tribunal's order dated 28-10-2009. 

Forfeiture of advance money

Forfeiture of advance money against capital asset is now treated as income U/s 56(2)(ix) w.e.f. A.Y. 2015-16. But if any advance money is forfeited against any rural agricultural land then it cannot be treated as income U/s 56(2)(ix) because rural agricultural land is not a capital asset.
(urban agricultural land is a capital asset but rural agricultural land is not a capital asset).

Disclosure of unclaimed amount by Insurer

RDA mandates insurers to disclose details of unclaimed amount from October 2014.  

In an effort to arrest the growth of unclaimed money, IRDA has instructed insurance companies to disclose the details of unclaimed amount on their respective websites. The unclaimed amounts are accumulated through non-encashment of maturity proceeds by investors.

The regulator has asked insurance companies to disclose details of those policies where payment exceeds Rs 1,000. The regulation will come into effect from October 1, 2014.

In a circular, the regulator said, “All insurers are required to display the information about any unclaimed amount above Rs.1,000 of policyholders on their respective websites.”

In order to increase transparency, IRDA has asked insurers to set up a mechanism through which policyholders can get access to policy details by keying in their basic information like name and date of birth.  IRDA has instructed insurers to update such information on a half-yearly basis. The insurers have to provide search option in such disclosure for the convenience of policyholders.

IRDA data shows that the unclaimed amount lying idle with insurance companies increased by 60% to Rs. 4,866 crore in FY 2012-13 from Rs 3,038 crore in FY 2011-12. In FY 2009-10, the unclaimed amount was Rs 1,373 crore. The regulator attributed this to lack of awareness, delay in claim settlement process and change in address of policyholders.

Earlier in April, IRDA had mandated insurance companies to settle insurance claims through electronic payment mode. However, the regulator has asked insurance companies to make e-payment of those policies where payment exceeds Rs 10,000 (life insurance) and Rs 25,000 (non-life insurance).

Meanwhile, IRDA has directed insurance companies to get bank account details while issuing new policies. Insurers will have to collect proof of bank account (cancelled cheque) from policyholders. Policyholders can update their bank account details at any point of time. Term plans are exempted from this requirement