CORPORATE AND PROFESSIONAL UPDATE May 25, 2017

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Direct Tax:

ITAT Delhi held that Medical illness and that to be in the nature of the typhoid fever and UTI is definitely reasonable cause for non- appearing on the date and therefore, no penalty should be levied u/s 271(1)(b) in such circumstances as the same is covered under exception of ‘reasonable cause’ as enshrined in section 273B. Sangeeta Sawhney Vs. ACIT (ITAT Delhi)

Delhi High Court held that Addition is justified for Voluntarily admitted tax liability retracted after 2 years PR. CIT (C)-2 Vs Avinash Kumar Setai (Delhi High Court)

 Indirect Tax:

  • High court held that Section 35L is being amended so as to clarify that determination of disputes relating to tax ability or excisability of goods is covered under the term ‘determination of any question having a relation to rate of duty’ and hence, appeal against Tribunal orders in such matters would lie before the Supreme Court. Commissioner Service Tax Vs DLF Golf Resorts Ltd. (Punjab & Haryana High Court)
  • MCA has revised the versions of e Forms – Form DIR-3C and Form RD – 1 (Applications made to Regional Director) are being revised w.e.f. 11th May, 2017.

Key dates:

Advance Information for 1st fortnight of June functions with booking cost > Rs. 1 lakh in Banquet Halls, hotels etc. in DVAT: 27/05/2017

Issue of TCS Certificates by collectors for quarter ended March: 30/05/2017

 Other Updates:

Takeaways of Final GST Rules passed by GST Council:

 

In its 14th meeting in Srinagar on 18th and 19th May,2017 the all-powerful GST council cleared seven rules pertaining to different aspects of GST. These rules relate to Registration, Input Tax Credit, Payment, Refund, Invoice, Valuation and Composition and have paved the way for the rollout of GST from July 1, 2017. The key highlights of these final GST Rules are as follows:

Registration:

1)  PAN is mandatory for taking registration under GST. PAN will be validated by CBDT. After successful validation, registration will be granted.

2)  If a person has a SEZ unit, then he is required to make separate registration application for that unit. Similarly, a separate application of registration is required for becoming Input Service Distributor.

3)  A non- resident seeking registration under Non-Resident Taxable Person has to appoint an authorized signatory who will sign the application of registration. That person must be resident of India having a valid PAN.

4)  A person registered under GST is required to display his certificate of registration at a prominent location at his principal place of business and GST Number on the name board at entry of his principal place of business.

5)  Physical verification of place of business will not be conducted to grant registration under GST. But officer can do physical verification after granting of registration, if he is satisfied that it is necessary to do the same. He must upload verification report on GST Portal within 15 working days after verification.

Invoice:

6)  Tax invoice in case of supply of taxable services must be issued within 30 days of date of supply of services. However, time limit for banking company, insurance company or financial institutions is 45 days.

7)  The invoice shall be in triplicate for Supply of Goods and in duplicate for Supply of Services.

8)   The serial number of invoices issued will be furnished electronically on GST Portal.

9)  On receiving advance, Receipt Voucher will be issued. If rate is not determinable, tax is to be paid at 18%. If nature of supply is not determinable, it will be treated as Inter-State Supply.

10)  If reverse charge is applicable, the recipient will issue Payment Voucher.

Payment:

11)  Electronic Liability Register shall be maintained for each person liable to pay tax on the GST Portal.

12)  Electronic Credit Ledger and Electronic Cash Ledger shall also be maintained on the GST Portal for the person eligible for input tax credit and for person liable to pay tax respectively.

13)  Tax will be paid only through internet banking, RTGS, NEFT or Debit and Credit Cards. However, over the counter payment is allowed through authorized banks for the amount up to Rs.10,000 per challan per tax period.

Refund:

14)  A separate formula is prescribed for Maximum Refund in case of inverted duty structure, i.e., GST rate is higher on Inputs than on Output Supply.

15)  Refund application shall be filed electronically on GST Portal.

16)  The grant of provisional refund shall be made if person clamming refund has not been prosecuted during any period of 5 years preceding the tax period for which refund is claimed. However, the following 2 condition mentioned in Draft Refund rules have been deleted:

a)     The assessee should have a GST compliance rating of not less than

b)     The assessee should not have any pending proceeding or appeal on any issue.

17  17)   If Commissioner wants to withhold refund, order must be issued along with reasons of withholding refund.

Valuation:

18)  The value of supply made by principal to its agent or made to any related person shall be 90% of price charged for the supply of like kind and quality to unrelated person.

19)  The value of a token, coupon or a voucher shall be equal to the money value of goods redeemable against such token or voucher or coupon.

20)  The expense incurred by a supplier as a pure agent will not form value of supply and shall be excluded. The supplier will be treated as pure agent on complying with following three conditions:

a)     He makes payment to third party on authorization by such recipient.

b)     The payment made by pure agent on behalf of recipient has been shown separately on invoice.

c)     The supplies procured from third party by pure agent on behalf of recipient are in addition to services he supplies on his own account.

Earlier, in draft rules, 8 conditions were prescribed. Now, only these three conditions have to be fulfilled.

Input Tax Credit:

21)  The person eligible to take credit in respect of input of goods held in stock after registration is required to file a declaration on GST Portal that he is eligible for input tax credit within 30 days.

22)  ITC would not be available to registered person if tax has been paid by supplier after issuing demand order on account of fraud, wilful misstatement or suppression of facts.

23)  The time limit to claim input tax credit is not applicable to re-claim credit reversed earlier due to non-payment of consideration to supplier.

Composition:

24)  Following persons will not be eligible for composition scheme:

a)     Casual taxable person or non-resident taxable person

b)     Person having goods in stock which were purchased in course of inter-State trade or from unregistered person

25)  Rates of Taxes for Composition Levy

a)     Manufacturers, other than manufacturers of such goods as may be notified by the Government – at 1%

b)     Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II – at 2%

c)     Any other supplier – at 0.5%

Quote of the Day:

“Take rest; a field that has rested gives a bountiful crop.”

We look forward for your valuable comment www.carajput.com

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Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 18, 2015

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 18, 2015

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ST: Whether the activity of transportation services carrying employees of companies from specific points to the factory / establishment and back can be categorized under Tour operator service – Held NO – M/s L.N. Gupta Transport Co. Vs. C. C. E., Nagpur (CESTAT Mumbai)

VAT & ST: Merely because a chemical may not be recommended for spraying on crops it cannot be said that it cannot be used for plant protection as it could be added to seeds or to the soil – State of Haryana Vs. Om Pesticides, Karnal and Anr (Punjab And Haryana High Court)

ST: CENVAT Credit – inputs and capital goods were used in construction of jetty for rendering port service. There is no reason to deny CENVAT credit on such input and capital goods – M/s Adani Port & SEZ Ltd. & M/s Adani Petronet Port Pvt. Ltd. Vs C.S.T., Ahmedabad (2015 (12) TMI 1060 – CESTAT Ahmedabad)

VAT & ST: Taxability of Sodexo Meal Vouchers – Paper based vouchers – affiliates are bound to honour – appropriate test would be as to whether such vouchers can be traded and sold separately. The answer is in the negative. Therefore this test of ascertaining the same to be goods is not satisfied – Sodexo SVC India Pvt. Ltd. Vs. State of Maharashtra & Others (2015 (12) TMI 1041 – Supreme Court)

VAT & ST: Sale of hypothecated vehicles – sale of the repossessed cars by the Appellant Bank is incidental or ancillary or in connection with the Appellant s business – M/s. Citi Bank Vs C.S.T. (2015 (12) TMI 1040 – Delhi High Court)

ST: Advances received against bank guarantee – services to be provided – It is more in the nature of a deposit – not liable to service tax – Thermax Instrumentation Ltd. Vs. C.C.E., Pune-I (2015 (12) TMI 1222 – CESTAT Mumbai)

VAT & ST: Benefit under Section 9(1) of the DVAT for input tax credit – transactions involving two firms were sham / bogus transactions – validity of order of the Objection Hearing Authority (OHA) to remand back the cast of AO – HC refused to interfere into the matter – U.K. Overseas Vs. Commissioner of Trade & Taxes (2015 (12) TMI 1194 – Delhi High Court)

MCA: Annual Filing of Forms – Just 3 days (28 Dec to 30 Dec) left without payment of Additional Fees. Thereafter, normal Additional Fee will be applicable.

MCA: Statutory Auditor (Chartered Accountant) Cost Auditor or Secretarial Auditor has to report a fraud in the company in the prescribed manner – F. No. 1/33/2013-CL-V – Dated 14-12-2015

MCA: CLB to upload the certified copies of the “Interim Orders” passed by the Principal Bench and New Delhi Bench on its official web site w. e. f 1st January, 2016

MCA clarifies – The last date for Annual Filing Forms is 30 DEC 2015 and NO Further Extension would be accorded after this date.

Stamp Duty: Property valued below Circle Rates can be registered in the Capital – Delhi High Court.

IT: Revision u/s 263 – Addition u/s 68 – AO did not make befitting inquiry in the given circumstances and the CIT has held the asst. order to be erroneous and prejudicial to the interest of the revenue – order of revision and additions confirmed – insertion of proviso to section 68 is retrospective – Auroplas Gold Pvt. Ltd. & Ors Vs. CIT (2015 (12) TMI 1241 – ITAT Kolkata)

IT: Status of the assessee – Merely because PAN was issued by the Department erroneously there cannot be any insistence that return should be filed in the same capacity. Erroneous description in the PAN would not change the reality that no such partnership firm ever existed – Tulsi Mall (AoP) And 8 Vs. CIT, Valsad (2015 (12) TMI 1077 – Gujarat High Court)

IT: Reopening of assessment – action for sanction by JCIT was without application of mind but done in a mechanical manner – revenue appeal dismissed after condonation of delay – CIT, Jabalpur Vs. M/s. S. Goyanka Lime & Chemical Ltd. (Supreme Court Of India)

DTAA: Government of the Republic of India and the Government of the Republic of Macedonia sign DTAA for the avoidance of double taxation. Notification No. 94/2015, dt.21 DEC 2015.

CBDT states inapplicability of MAT to Flls / FPIs having no permanent establishment / place of business in India for the period prior to 01.04.2015 and decided to carry out appropriate amendment to this effect Instruction No.18/2015, dt. 23 DEC 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

SELLING EXPENSES INCURRED FOR MAKING SALES ARE DISTINCT FROM AMP EXPENSES AND, HENCE, SHOULD NOT BE INCLUDED IN BASE AMOUNT FOR COMPUTING ALP OF AMP EXPENSES

SELLING EXPENSES INCURRED FOR MAKING SALES ARE DISTINCT FROM AMP EXPENSES AND, HENCE, SHOULD NOT BE INCLUDED IN BASE AMOUNT FOR COMPUTING ALP OF AMP EXPENSES

www.carajput.com; Service Expenses

www.carajput.com; Service Expenses

Discovery Communications India v. DCIT  [Delhi ITAT], ITA No. 2931 of 2015, Date of Decision: December 04, 2015

Facts of the Case

The assessee is a subsidiary of Discovery Channel (Mauritius) Pvt. Ltd. with Discovery Communication Inc., USA as the parent company of this group, engaged in the distribution of Discovery Channel, Discovery Travel and Living Channel and Animal Planet Channel in India region and also sale of advertisement inventory on the channels. The assessee reported six international transactions. The assessee employed Transactional Net Margin Method (TNMM) as the most appropriate method for demonstrating that its first three international transactions were at arm’s length price (ALP). The remaining three were ‘At cost’ only. On a reference made by the AO for determining the ALP of the international transactions, the TPO accepted the reported international transactions at ALP. He, however, observed that the assessee incurred AMP (Advertisement, Marketing and Promotion) expenses which were not reported. For determining the ALP of the international transaction of AMP expenses, he chose certain companies as comparables. In addition to that he noticed that the assessee had not charged any ‘Interest on receivables’ from its AE. The AO, inter alia, made these two additions on account of transfer pricing adjustments.

Decision of the Tribunal

The Appellate Tribunal held that that the Distribution and AMP functions are two separate international activities, which need to be compared with uncontrolled transactions. Because of their inter-twinning, it is only for the purpose of determining their ALP that both these transactions can be aggregated in the first instance, so that the surplus from one could be adjusted against the deficit from the other in an overall approach. As the total AMP expenses incurred by the assessee are on account of its own business and also relatable to the creation of marketing intangibles for its AE, the entire expenditure, which also includes advertisement expenses for promotion of channels of its AEs, for which the assessee received 20% of gross receipts, cannot be considered as exclusively relatable to advertisement of channels of its AEs and hence deductible in full. As admittedly the AMP expenses are one composite amount and there is no separately identifiable advertisement expense relatable to promotion of TV channels of its AEs. The treatment of the entire amount of AMP expenses as deductible u/s 37(1), would amount to considering the entire AMP spend for business purpose, thereby leaving nothing for the promotion of brand of its AE, which will be contrary to the judgment of the Hon’ble High Court in assessee’s own case for earlier assessment year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE TAX UPDATE FOR 25th OCTOBER 2015

CORPORATE TAX UPDATE FOR 25th OCTOBER 2015

Liaison Office of foreign MNC established in India for sourcing goods for exports to its overseas customers as per their requirements will not be treated as PE under the DTAA between India-USA.

Columbia Sportswear Company v. DIT(IT) W.P. NO. 39548 OF 2012 [AP HC] Date of Decision: September 03, 2015

Facts of the case

The petitioner is a company incorporated in the USA and is a tax resident of the USA and it is a multinational company engaged in the business of designing, developing, marketing and distributing outdoor apparel with operations in North America, Europe and Asia. They do not distribute or retail its products in India. The designing of all products is exclusively undertaken from outside India as by its very nature, the activity is based on customer/user requirement arising from market place and as nothing specific to place of manufacturing. The petitioner’s centralized sourcing group located outside India is responsible for all key purchase functions including (a) choosing the producing country; (b) Vendor Selection (c) Co-ordination of global production management and planning and (d) global quality assurance and strategy and policy development. With the permission of the Reserve Bank of India, the petitioner established a liaison office in Chennai in 1995 for undertaking liaison activities in connection with purchase of goods from India. The petitioner purchases products from third party Indian Vendors on principal to principal basis. The Indian liaison office is involved only in activities relating to purchase coordination for the petitioner. As part of these activities, the India liaison office is engaged in vendor identification, review of causing data, uploading of material prices into the Internal Product Data Management (PDM) system of the petitioner, vendor recommendation and quality control. It also monitors vendors for compliance with petitioner’s policies, procedures and standards related to quality, delivery, pricing and Labour practices. It does not supervise, direct or control the production facilities of the Indian Vendors. Consistent with the RBI approval, accorded to it, the India liaison office does not undertake any activity of trading, Commercial or Industrial nature. It has no revenue streams and it does not source products to be sold locally in India.

Decision of the Court 

The Andhra Pradesh High Court held that if the petitioner has to purchase goods for the purpose of export, an obligation is cast on the petitioner to see that the goods, which are purchased in India for export outside India is acceptable to the customer outside India. To carry on that business effectively, some steps (i.e. the petitioner identifies a competent manufacturer, negotiates a competitive price, helps in choosing the material to be used, ensures compliance with the quality of the material, acts as go-between, between the petitioner and the seller or the manufacturer, seller of the goods and even gets the material tested to ensure quality in addition to ensuring compliance with its policies and the relevant laws of India by the suppliers) are to be taken by the seller, lest, the goods, which are purchased in India, may not find a customer outside India. Therefore, these acts didn’t involve all the activities connected with the business, except the actual sale of the products outside the country.

In our considered information, all these acts are necessary to be performed by the petitioner before export of goods. Consequently, the liaison office in question wouldn’t qualify to be a permanent establishment in terms of Article 5 of the DTAA. The liaison office is established only for the purpose of carrying on business of purchasing goods for the purpose of export and all that activity also falls within the meaning of the words “collecting information” for the enterprise

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com  or call at 9555555480

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Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

REIMBURSEMENT OF EXPENSES

REIMBURSEMENT OF EXPENSES

Untitled213Generally, foreign company raise debit notes on their Indian subsidiary/ associate companies for certain expenses paid by them on behalf of Indian Companies. If these expenses would have been directly incurred or paid by Indian Company, the same may be taxable in India, depending on the applicable Domestic Law provisions & DTAA provisions.

Some of these expenditures are:

  • Payment for Link Charges: Non-taxable
  • Payment for Cargo communication facility: Non-taxable
  • Reimbursement of management expenses to parent company: Non-taxable
  • Per-Diem Allowance during employee stay abroad: Non-taxable
  • Reimbursement of technical expenses-Cost Allocation: Non-taxable
  • Reimbursement of relocation expenses of outbound employees : Non-taxable
  • Reimbursement of Audit fees: Taxable
  • Reimbursement of Purchase service charges: Non-taxable
  • Reimbursement for marketing services: Taxable
  • Reimbursement of travelling expenses as FTS: Taxable
  • Reimbursement of Travelling Expenses: Non-taxable
  • Reimbursement of travelling expenses as FTS: Taxable

Conclusion: If the main expenditure is not chargeable to tax in India either under IT Act or DTAA, then reimbursement of such expenses will also be not chargeable to tax in India. Similarly, if the main expenditure is chargeable to tax in India then the reimbursement of the same shall also be chargeable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

FORM 15CB TO BE ISSUED FOR PAYMENT TO NON-RESIDENT FOR USING IMMOVABLE PROPERTY SITUATED IN INDIA.

FORM 15CB TO BE ISSUED FOR PAYMENT TO NON-RESIDENT FOR USING IMMOVABLE PROPERTY SITUATED IN INDIA

Untitled213The primary right to tax the income from immovable property is with the country where the immovable property is situated as per Article 6 of the DTAA. This view holds good for all the Model Tax conventions namely, OECD, U.N, U.S. The situs of the immovable property has vital role in determining distributive rules for taxation i.e. State of source vs. State of residence. Various paragraphs of Article 6 has been discussed under all the three Model Conventions:

Distributive Rule of Taxation

This paragraph denotes that income derived by a resident of a Contracting state from immovable property situated in other contracting state may be taxed in that other state. The paragraph uses the words “may be taxed in” which implies that state of source is not getting exclusive but primary right to tax and hence, the state of residence may also tax the same income. Double taxation so arising, is mitigated by way of exemption or tax credit mechanism available under the tax treaty (Article 23A or 23B). There are tax treaties of India with Bangladesh, Greece and Egypt which provides that- income from immovable property shall be taxable in the contracting state in which such property located. Thus, the source state retains an exclusive right to tax the income from immovable property. The use of different terminologies, i.e, ‘may be taxed in’ & ‘shall be taxed only in’ led to controversies in the interpretation of tax treaties.

With respect to Article 6, a landmark decision was given by the Apex court of India in case of CIT vs. P.V.A.L. Kulandagan Chettiar. The Supreme Court held that income arising from rubber estate in Malaysia was not liable to tax in India, even though Article 6 uses the language ‘may be taxed in’. A notable fact, in the context of language ‘may be taxed in’ is NOTIFICATION 91/2008 dated. 28 August, 2008  which clarifies – in case tax treaty provides that any income of a resident of India “may be taxed in” in the other country, such income shall be included in his total income chargeable to tax in India and relief shall be granted in accordance with the treaty provisions. Thus, it is clear that India preserves right to tax worldwide income of its tax residents also under the tax treaties. However, this notification has remained unnoticed and doesn’t find reference in rulings dealing with the phrase ‘may be taxed in’.

In a situation where a resident of one of the Contracting State earns income from immovable property located in third state, the same shall fall outside the ambit of Article 6 and it shall bear the character of ‘other income ‘ and taxed accordingly.

Income from Agriculture and forestry

Model tax Conventions also include Income from agricultural and forestry within the ambit of income from immovable property, because of the concept that these incomes primarily concern with use of land. However, ownership of immovable property which is exploited for the purpose of agriculture and forestry need not rest with the person carrying out the activities of agriculture and forestry.

However, Income from Agriculture is exempt u/s 10 of Income Tax Act, 1961, hence, there is no need to take the benefit of the treaty.

Computation of income from immovable property

Article 6 deals only with attribution of taxation on income arising from immovable property, it is silent on the modalities of determining income. It also doesn’t mention about deductible expenses. In absence of such specification, the computation shall have to be carried out as per domestic tax laws of the state of source.

Conclusion

The primary taxation right over income from immovable property is always with State of situs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

KEY CHANGES IN NEW ITR FORMS 3,4,5,6 AND 7

Key changes in new ITR Forms 3, 4, 5, 6 and 7

Untitled7CBDT has notified ITR Forms 1, 2 and 4S for the Assessment Year 2015-16 vide Notification No. 41/2015, Dated 15-04-2015. However, after representations received from various stakeholders, the CBDT came out with simplified version of ITR forms 1, 2, 2A and 4S.

Now the CBDT has notified the remaining ITR forms, Forms 3, 4, 5, 6 and 7 vide Notification No. 61/2015.

Different forms are prescribed for different taxpayers. The following table gives an overview of the return formsapplicable to different taxpayers.

ITR Form Taxpayer
ITR-3 This form shall be used by an individual or HUF:■  Who is a partner in a firm; and

■  If his income chargeable to tax under the head ‘Profits or gains from business or profession’ does not include any income except income by way of any interest, salary, bonus, commission or remuneration due to, or received by him from such firm.

ITR-4 This form is relevant for an individual or HUF who is carrying on a proprietary business or profession.
ITR-5 This ITR form can be used by a firm, LLP, AOP, BOI, artificial juridical person, cooperative society or local authority. However, a person who is required to file return in ITR 7 shall not use this form.
ITR-6 This form shall be used by a company, other than a company claiming exemption under section 11, to file its return of income.
ITR-7 Applicable to a persons including companies who are required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) (i.e., trusts, political parties, institutions, colleges, etc.)

Key changes in ITR forms are as follows:

Details of all bank accounts held by assessee [ITR 3, 4, 5, 6, 7]

Under new ITR form, an assessee is required to furnish details of all bank accounts held by him in India at any time during the previous year. However immunity has been provided to the taxpayer from furnishing details about the bank accounts which have become dormant.

The ‘dormant’ account shall be those current and saving bank accounts which have not been operational for more than 3 years.

Details to be reported in respect of each bank account held in India by assessee are same as earlier i.e.

  (a) IFSC Code of the Bank

  (b) Name of the Bank

  (c) Account Number

  (d) Nature of the bank account, i.e., current account or saving account

Date of Formation of HUF [ITR 4]

HUF is required to report date of its formation in new ITR Form.

Aadhaar Number and passport number  [ITR 3, 4]

Aadhaar number and passport number are required to be given in new ITR forms (if assessee has obtained the same).

Reporting of amount that has remained unutilized in capital gains account [ITR 3, 4, 5, 6]

If assessee is unable to roll over the investment in new capital asset within the specified time period so as to avail of the exemptions under section 54, 54B, etc., he can deposit the sum in capital gains account scheme.

In that case, exemption to be granted to assessee shall be aggregate of actual investment in new capital asset and amount deposited in capital gains account scheme before due date of filing of return of income.

The amount so deposited in the capital gains account scheme should be utilized for investment in specified asset within specified time-limit, otherwise the unutilized amount shall be chargeable to tax in the previous year in which the time-limit expires. The unutilized amount would be taxable as short-term capital gain/long-term capital gain, depending upon the nature of original capital gain.

In ITR forms, requisite details are required to be provided in respect of amount so deposited in capital gains account scheme.

The details which are required to be provided if amount is deposited in capital gains account scheme are as follows:

  (a) Previous year in which asset is transferred

  (b) Section under which exemption is claimed

  (c) Year in which new asset is acquired

  (d) Amount utilized out of capital gains account scheme to acquire new asset

  (e) Amount that has remained unutilized in capital gains account scheme or amount which is not used for making investment in specified new asset

Details about the foreign assets and foreign income [ITR 3, 4, 5, 6, 7]

The ITR forms seek more details about the foreign assets and income from any source outside India. Schedule FA is substituted which requires assessee to provide detailed information about such foreign assets and income. The additional disclosures in the new ITR form shall be as under:

(1) Foreign Bank Account:  (a) Status of account holder (i.e., Owner/Beneficial Owner/Beneficiary)  (b) Date of opening of such bank account;  (c) Interest accrued in the account; and  (d) Details about the interest offered to tax in the return.

(2) Financial Interest in a foreign entity:  (a) Nature of financial interest (direct, beneficial ownership or beneficiary) in such entity;  (b) Date since such interest is held;  (c) Income accrued from such interest;  (d) Nature of income; and  (e) Details about the income offered to tax in this return.

(3) Foreign Immovable Property or any other capital asset:  (a) Whether ownership in such asset is direct or beneficial or as beneficiary;  (b) Date of acquisition of such asset;  (c) Income derived from such asset;  (d) Nature of income; and  (e) Details about the income offered to tax in this return

(4) Signing authority in any foreign account:  (a) Whether income accrued in such account is taxable in assessee’s hands; and (b) If yes then furnish details about the income offered to tax in this return

(5) Trustee or Beneficiary or Settlor in a foreign trust:  (a) Date since the position of trustee or beneficiary or settlor held in foreign trust;  (b) Whether income derived from the trust is taxable in assessee’s hands; and  (c) If yes, details about the income offered to tax in this return

(6) Any other income derived from any source outside India:  (a) Country Name and Code;  (b) Name and address of the person from whom income is derived;  (c) Amount of income derived;  (d) Nature of income;  (e) Whether income is taxable in assessee’s hands; and  (f) If yes, details about the income offered to tax in this return.

Reporting of deemed let-out house property [ITR 3, 4, 5, 6, 7]

If assessee owns more than one house, one house can be claimed by him as self-occupied while all other houses shall be deemed to be let out. Assessee shall be required to select a check-box in the ITR Form to indicate whether a house owned by him shall be deemed to be let-out.

Concessional tax rate in case of sale of listed securities (other than unit) [ITR 3, 4, 5, 6]

As per the existing proviso to Section 112, if tax payable on long-term capital gains arising on transfer of a capital asset, being listed securities or units or zero coupon bonds, exceeds 10% per cent of the amount of capital gains before allowing for indexation adjustment, then such excess shall be ignored.

The Finance (No. 2) Act, 2014 amended the said proviso to provide that the concessional rate of tax of ten per cent shall be available only for long-term capital gain arising from transfer of listed securities (other than unit) and zero coupon bonds.

Therefore, consequential amendment is made to ITR forms in accordance with the amendment.

Now Long term capital gain from sale of MF is includable in this scheduled only if sale is on or before 10-07-2014

Agricultural income [ITR 3, 4, 5, 6]

The Schedule EI in ITR forms requires assessee to provide following figures separately:

  (a) Gross agricultural receipts

  (b) Expenditure incurred on agriculture

  (c) Unabsorbed agricultural loss of previous eight assessment years

  (d) Net agricultural income for the year.

Details of change in partners/members [ITR 5]

A new column has been inserted to require the assessee to furnish the details of change in the partners/members of the firm/AOP/BOI, as the case may be, during the previous year. Following details shall be furnished in the table newly inserted in Part A – General:

  (a) Name of the partner or member

  (b) Status as to whether admitted or retired

  (c) Date of admission or retirement

  (d) Percentage of share (if determinate)

Details of interest rate and remuneration payable to partners/members [ITR 5]

New ITR 5 requires disclosures of rate of interest and remuneration paid/payable to the partners or members in firm/AOP/BOI or settlor/trustee/beneficiary in the trust, as the case may be.

Detail of Salary/remuneration paid to partners/members [ITR 5]

New ITR Forms requires separate disclosures of salary or remuneration paid or payable to the partners during the year.

Bifurcation of interest paid to resident and non-resident [ITR 5]

New ITR 5 requires separate disclosure of interest paid:

  (a) Outside India or paid in India to a Non Resident

  (b) Paid in India or paid to a resident

All interest payments shall be bifurcated to indicate how much interest has been paid to:

  (a) The partners; and

  (b) Others

Return filed pursuant to order of CBDT under Section 119  [ITR 3, 4, 5, 6, 7]

For avoiding genuine hardship, by general or special order, the Board may authorize any tax authority other than CIT (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief after the expiry of the period specified under the Act.

If assessee is filing return of income pursuant to an order of CBDT under Section 119(2)(b), it shall tick the check-box [ under Section 119(2)(b)] introduced in the new ITR forms.

Generally CBDT extends date of filing of return under Section 119 in cases of natural calamities or when taxpayer faces genuine hardship in certain circumstances. Recently, the due date of filing of return for J&K taxpayers was extended by the CBDT due to devastation caused by flood in J&K.

Expenditure on CSR activities [ITR 6]

An Explanation was inserted in section 37(1) by Finance (No. 2) Act, 2014 to clarify that any expenditure incurred by an assessee on the activities relating to corporate social responsibility (CSR) referred to in section 135 of the Companies Act, 2013 shall not be allowed to be deducted as same could not be considered to be incurred for the purposes of the business or profession.

Thus, ITR 6 has been revised to provide for reporting of expenditure on CSR activities if the same is debited to profit and loss account.

Deduction under section 32AC [ITR 6]

Any company engaged in business of manufacture or production of any article or thing is entitled to claim allowance under Section 32AC for investment in new plant and machinery. Now a particular field is provided in new return form under ‘Schedule BP’ for reporting of investment allowance under Section 32AC.

Alternate Minimum Tax [ITR 4, 5, 7]

The existing provisions of section 115JC provides that alternate minimum tax (‘AMT’) shall be payable at the rate of 18.5% on adjusted total income. Further, the adjusted total income was computed by including only profit linked deductions (i.e., deductions claimed under Part C of Chapter VI-A and deductions claimed under section 10AA) in total income.

However, with a view to include investment linked deduction in adjusted total income, Section 115JC was amended by Finance (No.2) Act, 2014 to provide that total income shall be increased by the deduction claimed under section 35AD for purpose of computation of adjusted total income.

Accordingly, the return forms have been revised to include Section 35AD deduction for computation of adjusted total income.

Foreign portfolio investors/Foreign Institutional investors [ITR 5, 6]

Foreign Institutional Investor (FII) and Foreign Portfolio Investor (FPI) are required to furnish their SEBI registration number in the new return Form.

Verification [ITR 3, 4, 5, 6, 7]

Where return is being furnished under section 92CD, assessee shall provide an additional declaration that the critical assumptions specified in the agreement have been satisfied and all the terms and conditions of the agreement have been complied with.

Securities held by FIIs [ITR 3, 4, 5, 6]

Section 2(14) of the Act was amended by the Finance (No. 2) Act, 2014 to provide that securities held by FIIs shall be deemed as ‘Capital Assets’. The amendment was made to end the controversy of categorization of income of FIIs as business income or capital gains.

Consequential changes have been made in ITR forms in this regard.

Sale of units of business trust [ITR- 3, 4, 5, 6]

The Finance (No. 2) Act, 2014 introduced a new Chapter XII-FA in the I-T Act to provide for special provisions relating to business trust. The special taxation regime contains provisions for taxability of income in the hands of business trusts and the income distributed to its unit holders.

Consequential amendment is made to Section 10(38) to provide that long-term capital gain arising from transfer of unit of a business trust on which securities transaction tax (STT) is paid shall be exempt from tax.

Similarly, Section 111A has been amended to provide that short-term capital gain arising from transfer of unit of a business trust on which STT is paid shall be chargeable to tax at reduced rate of 15%.

Necessary changes have been made in this regard in the ITR forms.

Details of income taxable under DTAA [ITR 3, 4, 5, 6]

If capital gain or residuary income of assessee is taxable as per provisions of the DTAA entered into between India and a foreign country, of which the assessee is a resident, following details shall be furnished in the return:

  (a) Name of the Country and Code

  (b) Relevant Article of the DTAA

  (c) Rate of tax under DTAA (applicable in case of residuary income)

  (d) Confirmation if TRC has been obtained

  (e) Corresponding section of the Act which prescribe the rate of tax (applicable in case of residuary income)

  (f) Amount of income

Further, the special tax rate on capital gain or residuary income and tax on such income as per DTAA shall be disclosed separately in Schedule SI.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

NEW CHANGES ON TDS – CHANGES IN WITHHOLDING TAX

www.carajput.com; New Change In TDS

NEW CHANGES ON TDS – CHANGES IN WITH HOLDING TAX

www.carajput.com;Income Tax

www.carajput.com;Income Tax

Section 192 (2D) – TDS on Salary: The person responsible for making the payment referred to in sub-section (1) shall, for the purposes of estimating income of the assessee or computing tax deductible under sub-section (1), obtain from the assessee the evidence or proof or particulars of prescribed claims (including claim for set-off of loss) under the provisions of the Act in such form and manner as may be prescribed.

Now the employer is responsible to verify all the supporting documents before determining the applicable Tax liability of employees.

Applicable with effect from 1 June 2015

Section 195 – Payment to Non-Resident: The person responsible for making the payment referred to in sub-section (1) shall, for the purposes of estimating income of the assessee or computing tax deductible under sub-section (1), obtain from the assessee the evidence or proof or particulars of prescribed claims (including claim for set-off of loss) under the provisions of the Act in such form and manner as may be prescribed.

Now the 15 CA should be furnished for the cases even if tax at source is not applicable

Applicable with effect from 1 June 2015

Section 194 C – Deduction of Tax on Transporter :In section 194C of the Income-tax Act, in sub-section (6), with effect from the 1st day of June, 2015, for the words “on furnishing of”, the words “where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with” shall be substituted.

Now the transporter needs to provide above stated declaration along with PAN to get the payment without ant Tax Deduction

Applicable with effect from 1 June 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact:   info@carajput.com or call at 011-233 433 33

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)