CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 17,2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 17,201629

DIRECT TAX

  • Income Tax: Income-tax (5th Amendment) Rules, 2016) – Rules in respect of fund manager regime under section 9A of the Income-tax Act, 1961 – Notification
  • Income Tax: Addition u/s 68 – merely because the bank statement an ITR of the lender were not submitted, in spite of submitting balance sheet and profit and loss account of the company, confirmation stating its PAN and also transactions are through account payee cheques and in absence of any inquiry, we are of the view that no addition can be made in the hands of the assessee
  • Income Tax: Penalty u/s 271C – non deduction of tds u/s 194LA – there was no mala fide intention on the part of the assessee for non-deduction of TDS since it had recovered the TDS from the concerned as soon as the violation of law was brought into assessee’s notice
  • Income Tax: Agricultural lands in terms of Sec 2(14) – Though the circumstance that the land is classified as Agricultural in the revenue records and the Village Panchayats President, Navallur, has certified that the land is away from municipality, other circumstances proves otherwise – Held as not an agriculture land
  • Income Tax: The assessee had a dividend income (income from other sources). Thus the assessee fell within the purview of the exception carved out in the explanation to Section 73 and that consequently the assessee would not be deemed to be carrying on a speculation business for the purpose of Sec. 73(1).
  • Income Tax: Addition made on inflation of purchases of raw material u/s. 69 – CIT(A) has wrongly relied on the input output consumption ratio – addition deleted

INDIRECT TAX            

  • Service Tax: Validity of Tribunal’s order waiving the penalty – the question of applicability of section 80 w.e.f. 14-5-2015 has not been examined by the Tribunal at all. There is rather no reference to Section 80 of the Finance Act, 1994. As the Tribunal’s order is cryptic and the reasons are wholly unsatisfactory, needs to be quashed and set aside – HC
  • Central Excise: Differential duty demand – demand arose on account of the fact that the appellant cleared the goods from its depot at a price higher than the price at which the duty was paid at the time of clearance from the factory – demand confirmed
  • Central Excise: SSI Exemption – The notification as amended was very clear and unambiguous. In the era of self assessment, it is the responsibility of the assessee to correctly determine the duty as per law. It is seen that the appellant failed to do so in this case
  • Central Excise: Denial of Cenvat credit on capital goods – stock taking was done by way of eye estimation – the allegation of shortage of raw materials, does not stand. – demand set aside
  • Central Excise: Refund claim – duty liability subsequent to clearance of their products – unjust enrichment – when duty is paid after clearance of goods, on insistence of anti-evasion branch, burden of duty is not passed on to the customers – refund allowed
  • Central Excise: Differential duty – as the appellant was clearing the goods on payment of duty and subsequently on their own revised the price and discharged the differential duty there seems to be no violation of any provisions – Demand on interest confirmed – But, no penalty be levied
  • Central Excise: MRP based valuation – removal of goods without packing – It is not the packaging that determines the applicability of mandate of affixing the ‘retail sale price’ but the product itself. Consequences of non-conforming packaging are not escapement from the mandate but the enforcement of penal detriment – appellant is eligible for the abatement
  • Central Excise: The duty can be demanded from a manufacturer of the goods as it is a factum record that the impugned goods have been fabricated on job work basis by the contractors, therefore, as per the Central Excise provision, the appellant cannot be the manufacturer of the said goods.
  • Customs: Rejection of refund claim – Period of limitation – Once the appellant has been given acknowledgement unless until this held to be fake or forged, the said acknowledgement has to be accepted as proof of filing the refund claim.

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 Continue reading

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 16,2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 16,2016Untitled213

DIRECT TAX

  • Income Tax: Disallowance of Privilege fee paid u/s 40(a)(ii) or (iib) – sharing of revenue with the state – The privilege fee payable by the petitioner to the State Government would be taxable with effect from 1.4.2014 and not prior thereto – HC
  • Income Tax: Adoption of Profit Level Indicator (PLI) of OP/TC to determine ALP – , in the absence of identification or segregation of capital employed with regard to AE’s transaction and those with others, the RoCE method would not indicate the appropriate margin for determining the ALP. – HC
  • Income Tax: Disallowance of interest u/s 36(1)(iii) – it can be said that amount invested in the subsidiaries company was arising out of commercial expediency and was thus for the purpose of business of the assessee.
  • Income Tax: Sale of factory land at Guindy, Chennai – Capital Gain OR business profit – without bringing any material on record merely based on some remote circumstances, an inference cannot be drawn that the Assessees indulged in an adventure in the nature of business or trade.
  • Income Tax: Penalty u/s 271(1)(c ) – after taking into consideration the human conduct and preponderance of probability clearly indicate that the assessee became a willing party to nefarious black money racket for obtaining bogus gifts. Such acts cannot be taken lightly as they lead to scourge of black money in the country.

INDIRECT TAX

  • Service Tax: Cenvat Credit – input service – Outdoor catering services – a notification issued in Notification No.3/2011 dated 1.3.2011 excluding the outdoor catering services came into effect on 1.4.2011 but here the period relates to a period prior to 1.4.2011. – credit allowed – HC
  • Central Excise: Reversal of CENVAT credit – whether the appellant while clearing the imported inputs which were found to be defective and unusable and later re-exported from their premises, is required to pay an amount equal to the credit availed on such inputs as per Rule 3(5) of the Cenvat Credit Rules, 2004 – Held No
  • Central Excise: Claim of exemption on Air conditioning unit, condensing unit, chillers, walk in cold rooms – the institution is not engaged in commercial activity and the goods are required for research purposes – respondent has complied with the Notification 10/97 dated 01.03.1997 – benefit of exemption allowed
  • Central Excise: New case cannot be made out after issuance of show cause notice and after passing the adjudication order. Both the lower authority have wrongly denied the Cenvat credit on the Capital goods.
  • Customs: Clim of refund – Excess payment of CVD at the time of import – there was indeed no assessment order as such passed by the customs authorities – The order of the Assistant Commissioner (Refund) rejecting the refund claim of the Petitioner on the ground of maintainability was, for the aforementioned reasons, plainly erroneous.
  • Customs: Import of goods – Change in standards under the FSS Act – The legitimate expectation of the importer would always subject to the policy change of the State. If the law is changed as on the date of release, the importer is bound by the law on the date of release. – HC
  • Customs: Release of property – seizure of gold and Indian currency – violation of provision of Customs Act. – the petitioner has to establish his ownership over the property before the Adjudicating Authority. Whether the adjudication proceedings are initiated legally or not, is not a question at the time of invoking the power under Section 110A of the Customs Act but what is contemplated under Section 110A is that the said person making the claim should be the owner of the goods to be released – HC

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 Continue reading

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 15, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 15, 2016

Untitled94A

The Reserve Bank of India (RBI), it seems, has finally lent ear to millions of such prospective account holders. It has simplified the KYC documentation to make account opening less onerous.

Moving ‘The Real Estate (Regulation and Development) Bill, 2015’ for consideration and passage, Urban Development Minister M Venkaiah Naidu said it aims to protect the interests of buyers and bring more transparency in the sector.

RBI has issued Know Your Customer Direction, 2016 for all Banks or entities licensed u/s 22 of Banking Regulation Act, 1949, Etc.

Govt. approves guidelines to promote electronic payments

Central Government issues instructions for reduction of government litigation through withdrawal of appeal by the department before CESTAT by instruction no. F.No.390/Misc./163/2010-JC-

Income Tax: TDS u/s 195 – the assessee can not be said to have paid the consideration for use of or the right to use copyright but has simply purchased the copyrighted work embedded in the CD- ROM which can be said to be sale of ‘good’ by the owner. The consideration paid by the assessee thus as per the clauses of DTAA can not be said to be royalty

EPS: The Union Govt. after exempting EPF, considering a proposal to make it mandatory for Employer to route most of its saving to Employee Pension Scheme (EPS) a move for creating pensioned society.

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE: Where assessee had benchmarked its international transactions on TNMM basis and TPO had neither disputed assessee’s claim that TNMM was most appropriate method, nor comparables selected by assessee, it was not open for TPO to reject benchmarking done by assessee and make adhoc ALP additions in value of international transactions – [2016] 67 16 (Mumbai – Trib.)

6% Tax on online advertisement / Google Tax, Such provisions are applicable from 1st June, 2016.The levy clearly is targeted to tax various online advertisements companies like YouTube , Google , Facebook , Twitter etc.

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 Continue reading

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 13, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 13, 2016

Untitled95A

DIRECT TAX

  • TDS u/s 194J or 194C – payments made to various TV channels – section 194J is attracted to the facts of the instant case. Merely because in earlier years this issue was not examined and the assessee’s contention got accepted without verification, cannot give license to it claim in the later years that the correctly applicable section be put under carpet
  • TDS – granting of any license to use the software amounts to ‘royalty’ and the provisions of sec.9(1)(vi) are applicable – assessee is in default u/s.201(1)/201(1A) for non-deduction of TDS
  • Principals of mutuality – Contribution by the members of a Group Housing Society – work is done by the society for and on behalf of that member – there is no question of any income – Not taxable
  • Revision u/s 263 – Directions of the Ld.CIT given to the AO to verify the unsecured creditors, unsecured loans, the AO in his fresh assessment order passed u/s 143(3) r.w.s.263 of the Act, did not draw any adverse inference. This direction of the Ld.CIT was in the nature of directing rowing enquiries. – Revision is bad in law.
  • TDS u/s 195 – Addition u/s 40(a)(ia) – no liability for deduction of tax at source arose under Section 195 in the case of mobilization and demobilization costs reimbursed to a non-resident, not being taxable in India, hence disallowance under Section 40(a)(ia) did not arise.
  • TDS u/s 195 – Addition u/s 40(a)(ia) – no liability for deduction of tax at source arose under Section 195 in the case of mobilization and demobilization costs reimbursed to a non-resident, not being taxable in India, hence disallowance under Section 40(a)(ia) did not arise.
  • Addition u/s 68 – Notice u/s 133(6) is issued by the AO could not be served on the share applicants and Inspector’s report also shows that this companies do not exists at the given address, we are of the view that no fault can be found against the assessee for this.

INDIRECT TAX

  • ST- Refund claim – As the service was rendered to self and service tax was paid thereon, burden can only passed on to self and passing on the burden to self is not tantamount to passing it to any other person. Therefore, the appellant is not hit by the doctrine of unjust enrichment
  • ST­-Refund of Cenvat credit – input services – When the premises was occupied by the appellant and day-to-day repairs and maintenance are carried out in that premises then obviously, the said services i.e. repair, maintenance, electricity are received and used by the tenant only i.e. the appellant and not by the landlord – refund allowed
  • ST-Cenvat Credit – Amount towards Exempted service wrongly shown in ST-3 return – In the absence of identification of the exempted service provided by the appellant and in the wake of the assertion of the appellant that it had not provided any exempted services during the relevant period, the demand cannot be sustained
  • ST-Whether services of cutting, drilling, punching, bending and notching of material on job work basis, in the factory of the principal, provided by the respondent falls under the category of Manpower Recruitment or Supply Agency Services
  • Central Excise-Classification of PVC Doors and Windows – The process involved before fixing the windows or doors is a simple assembly at site as the profiles beadings and other items required are as per the specific dimensions of various windows or doors. We find that applying the Rule 2 (a) of the interpretation Rules, it is clear that the unassembled windows and doors, even incomplete or unfinished are to be classified with reference to goods which are complete or finished – under heading 3925.20
  • Central Excise- Penalty under section 11AC – clearance against the dummy challan – clandestine removal – Penalty was not confirmed under any other provision nor also invoked in the show cause notice. Accordingly, confirmation of penalty cannot be sustained.

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 Continue reading

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 11, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 11, 2016

Untitled3

DIRECT TAX

  • Income Tax: Qualification for exemption u/s 10(5) – LTC paid to the employees involving foreign travel – TDS on the payment of LTC to the employees – Revenue has rightly held the assessee to be in default, as the assessee has not deducted TDS intentionally on the reimbursement of expenditure incurred on LTC/LFC.
  • Income Tax: TDS u/s 195 – the assessee can not be said to have paid the consideration for use of or the right to use copyright but has simply purchased the copyrighted work embedded in the CD- ROM which can be said to be sale of ‘good’ by the owner. The consideration paid by the assessee thus as per the clauses of DTAA can not be said to be royalty
  • Income Tax: Non service of notice u/s 143(2) – Apparently, the notice was sent on the wrong address as the assessee has categorically given his address in the relevant return of income – Presumption can only be raised against the assessee for service of notice u/s 143(2) when the notice was sent on the correct address.
  • Income Tax: Rejection of books of accounts – denial of natural justice – Assessing Officer has not provided sufficient opportunity of being heard to the assessee rather rejected the books of accounts arbitrarily and declared the bills filed by the assessee as bogus unilaterally. – Matter remanded back
  • Income Tax: Revision u/s 263 – AO has to consider the provisions applicable under Rule 8D effective from assessment year 2008-09. But the AO made disallowance by following Co-ordinate Bench decision for earlier assessment year. It is apparent from facts and circumstances the order of the Assessing Officer is erroneous and prejudicial to the interest of Revenue – Revision proceedings are correct
  • Income Tax: Penalty u/s 271(1)(c) – the money has been appropriated by ICICI Bank after collection and the assessee has claimed the deficiency in realization as Bad debts. The income of 2% was not considered in profit and loss account by assessee. – The explanations given by the assessee cannot be considered as bonafide and assessee tried to conceal the income by misrepresenting the case – penalty confirmed
  • Income Tax: Eligibility of deduction u/s 80IC on freezing charges – freezing charges earned by the assessee is an integral part of the processing of vegetables and therefore is eligible for deduction u/s 80IC of the Act
  • Income Tax: Capital gains – calculation of number of trees – The evidence filed by the assessee in terms of certificate of Tehsildar or that of a retired IAS officer is of no evidentiary value, specially in the presence of Jamabandi, which is an actual proof of land holding and cultivation thereon.

INDIRECT TAX

  • Service Tax: ST-3 return form amended to insert the columns related to Swachh Bharat Cess – Service Tax (Second Amendment) Rules, 2016 – Notification
  • Central Excise: Extended period of limitation – When the material facts are disclosed, a particular classification followed by the appellant will not make a case for suppression – the appeal in so far as it relates to extended period is allowed.
  • Central Excise: SSI Exemption – Manufacture and clearing dutiable goods with the brand name or trade name of another person – for denial of exemption the brand name or trade name has a wider connotation, registration being not mandatory
  • Central Excise: Demand of duty for clearance of waste and scrap – the transparency in the appellant’s dispatch of waste and scrap and receiving the granules back cannot be questioned only on the ground that the Notification 214/86-CE is not applicable to waste and scrap.
  • Central Excise: Liability to pay the excise duty – consignee does not sent the certificate of re-warehousing within the period of 90 days – department cannot ask the appellant to pay the duty as the department cannot recover the duty twice for the same consignment and moreover as per the sub-clause (3) of Rule 20 it is the responsibility of the buyer to pay the duty
  • Customs: Valuation -As the Supply Agreement is consistent with the Technology Transfer Agreement, and the supplier had the right to terminate the supplies in case of non-payment of royalties, the payment of royalty is a condition of sale and includible in the assessable value
  • Customs: Invokation of Rule 9(1)(c) – Royalty and Technical know-how fee paid on domestic sale – Whether includible or not in the value of goods imported – Held that: Not to be included
  • Customs: Contravention of provisions of Regulation 13(e) and 13(o) of CHA Licensing Regulation, 2004. – CHA has not even claimed that it had ever verified the existence of the importer at the given address which means the appellant has failed to fulfil the requirement of Regulation 13(o) ibid. – Action against CHA sustained
  • Customs: Entitlement – Benefit of Notification No. 12/2012-Cus, – beyond doubt that ‘bulk drugs’ are also ‘drugs’ – benefit of exemption allowed

OTHER UPDATES

  • EPS: The Union Govt. after exempting EPF, considering a proposal to make it mandatory for Employer to route most of its saving to Employee Pension Scheme (EPS) a move for creating pensioned society.

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 Continue reading

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 10, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 10, 2016

Untitled12A

DIRECT TAX

EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME:Tribunal faced strong criticism for not following the judgment of jurisdictional High Court given in the case of the petitioner itself for an earlier Assessment Year on identical issue of applicability of Section 14A of the Act to partially disallow interest expenditure when interest free funds available with the Petitioner are in excess of investments made in tax free securities – [2016] 42 (Bombay)

INVESTMENT IN MUTUAL FUND : Where Assessing Officer disallowed part of interest expenses under section 14A for earning exempt income which was a plausible view, Commissioner could not exercise revisionary power under section 263 to disallow whole of interest expenses – [2016]  6 (Gujarat)

INTEREST ON BORROWED CAPITAL : Expansion of business : Where assessee paid interest on borrowed capital which was used for acquisition of windmill for extension of existing business of generation of electricity through windmill, interest could not be allowed till capital asset acquired by assessee was put to use – [2016] 277 (Chennai – Trib.)

DEEMED DIVIDEND LOANS : Where assessee, having beneficial ownership of more than 10 per cent shares in a closely held company, claimed to have received certain amount from company for purchase of land for company but failed to prove same by furnishing relevant details, such amount would come within ambit of section 2(22)(e) – [2016] 67 taxmann 15 (Visakhapatnam – Trib.)

INDIRECT TAX

WORKS CONTRACT SERVICES : Where assessee has paid service tax on full contract price of a works contract and availed credit of inputs and services and there is no revenue loss to department, department cannot seek to deny credit relying upon valuation rule 2A – [2016]

TAX REFUND : Excise duty refund received by assessee in terms of new industrial policy and concessions formulated by Central Government for State of Jammu and Kashmir vide Office Memorandum of 14-6-2002, whereby Central Government intended to eradicate social problem of unemployment in State by accelerated industries development, would be treated as capital receipt – [2016] 67 taxmann 14 (Amritsar – Trib.)

MCA UPDATES

INCORPORATION OF COMPANY : Section 35 debars raising of any objection relating to incorporation of company after issuance of certificate of incorporation by ROC – [2016]

OTHER UPDATES

Govt. approves guidelines to promote electronic payments

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 Continue reading

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 9, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 9, 2016

29

DIRECT TAX

IT: There cannot be a notice for re-assessment inasmuch as the question of re-assessment arises only when there is an assessment in the first instance – M/s Standard Chartered Finance Ltd. Vs. CIT, Bangalore & Anr (2016 (3) TMI 150 – Supreme Court)
IT – VDS’ 2016: Cases where notices have been issued or search has taken place or individuals against whom Govt. has prior information from another Country won’t be eligible for scheme.
INCOME ACCRUEL OF INTREST :Where assessee was following mercantile system of accounting, once interest amount had been credited to assessee and tax had also been deducted by payer, assessee could not take plea of not offering it as income on ground that he had not actually received same – [2016]  (Mumbai – Trib.)
• CBDT notifies 15% depreciation allowance on Oil Wells. Notification 13/2016.

INDIRECT TAX

ST: Management Maintenance and Repair Services – Whether notional interest to be taken as value of service – prima facie case is against the appellant since Notional interest is to be included in the value of services – Satya Prakash Builders Pvt. Ltd. Vs. CCE&ST, Jaipur-I (2016 (3) TMI 137 – CESTAT New Delhi
• 6% Tax on online advertisement / Google Tax, Such provisions are applicable from 1st June, 2016.The levy clearly is targeted to tax various online advertisements companies like YouTube , Google , Facebook , Twitter etc.

OTHER UPDATES

Bank Branch Statutory Audit: Banks have received the lists from RBI and commenced sending emails to the prospective Auditors.

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

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 8, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 8, 2016

The Ongoing Controversy On Erroneous Applicability Of Dividend Distribution  Tax Finally Ends    

During the past quarters, the provisions of law regarding buy-back of shares since introduction of dividend distribution tax (‘DDT’) under section 115Q of the Act w.e.f. 01.04.2003 till 31.05.2013 are being interpreted in a conflicting manner by the tax authorities and taxpayers, thereby giving rise to disputes on this issue. It has been contended that subsequent to introduction of section 115QA in the Act , the income-tax authorities, in some cases have sought to re-characterize the purchase consideration received on account of buy-back of shares, undertaken prior to 01.06.2013, as dividend and accordingly, subjecting the amounts so distributed by the companies to DDT. This has lead to un-ended litigation and undue harassment to the tax payers.

In a welcome move, the CBDT has come up with a clarification so far as income arising to the shareholder on but back of shares between the period 01.04.2000 till 31.05.2013 would be taxed as capital gains in the hands of the recipient in accordance with section 46A of the Act and no such amount shall be treated as dividend in view of provisions of section 2(22)(iv). The ongoing controversy is enclosed herewith along with the latest CBDT Circular No. 03/2016 dt. 26th Feb 2016.

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

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 7,2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 7,2016

BRIEF SUMMARY OF THE AMENDMENTS PROPOSED BY THE FINANCE BILL, 2016

(Income Tax & Service Tax)

Part-I: Amendments Proposed in the Income Tax

  • No change in Tax rates or Income slabs.
  • Tax Rebate u/s 87A has been increased from Rs.2,000 to Rs.5,000 for the taxable income Upto Rs.5,00,000. (No Tax up to an Income of Rs.3 Lac)
  • Deduction for Rent paid u/s 80GG increased from existing Rs.24,000 PA to Rs. 60,000 PA.
  • Tax Audit Limit U/s 44AB for the Professionals increased from Rs.25 Lac to Rs.50 Lac
  • Increase in turnover limit under Presumptive Taxation scheme u/s 44AD from Rs.1 Crore to Rs. 2 Crores
  • Extension of Presumptive Taxation to Professionals – 50% of Gross Receipts upto Rs.50 Lac
  • Accelerated depreciation under Income Tax will be limited to maximum of 40%
  • Benefit of deductions for Research would be limited to 150% from 01.04.2017 and 100% from 1.4.2020
  • Benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.03.2020.
  • The weighted deduction under section 35CCD for skill development will continue up to 01.04.2020
  • New manufacturing companies incorporated on or after 1.3.2016 to have an option to be taxed at 25% + SC + Cess but no profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation but subject to MAT.
  • Lower the corporate tax rate for the next financial year for relatively small enterprises, i.e, Companies with turnover not exceeding Rs.5 crore (in the financial year ending March 2015) to 29% + SC + Cess.
  • 100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019, however MAT will apply in such cases.
  • 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident.
  • Non-banking financial companies (NBFCs) shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts.
  • Long Term Capital Gain Benefit in case of securities of unlisted companies – Holding Period reduced  to 2 years from 3 Years
  • Non Corporate Assessees to pay Advance Tax in 4 installments on 15thJune – 15%, 15th Sep – 45%, 15thDec-75% & 15th Mar-100% (similar to the Corporate)
  • New condition for conversion of a company into Limited Liability Partnership (LLP). The value of the total assets in the books of accounts of the company in any of the three previous years preceding the previous year in which the conversion takes place, should not exceed five crore rupees
  • Processing of  I T Returns u/s 143(1) be mandated before assessment u/s 143(3)
  • Time limit for assessment, reassessment and recomputation – the period, for completion of assessment u/s 143 or 144 be changed from existing two years to twenty one months from the end of the assessment year in which the income was first assessable. Now Assessment by Dec 31stinstead of 31st
  • Determination of residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by one year.
  • Commitment to implement General Anti Avoidance Rules (GAAR) from 01.04.2017.
  • Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of National Pension Scheme (NPS). Annuity fund which goes to legal heir will not be taxable.
  • In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made on or from 01.04.2016.
  • Limit for contribution of employer in recognized Provident and Superannuation Fund of  1.5 lakh per annum for taking tax benefit.
  • 100% deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 and completed in three years. MAT to apply.
  • Additional interest deduction of Rs.50,000 PA for loans up to Rs.35 Lac sanctioned in 2016-17 for first time home buyers, where house cost does not exceed Rs.50 Lac.
  • Distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax, in respect of dividend distributed after the specified date.
  • Dividend Receipts in excess of Rs.10 Lac to be taxed @ 10%
  • Individuals with Income above 10 Lac to pay 15% Cess against 12%
  • TCS / TDS @ 1 % on purchase of luxury cars exceeding value of Rs.10 Lac and purchase of goods and services in cash exceeding Rs. 2Lac
  • Securities Transaction tax in case of ‘Options’ is proposed to be increased from 0.017% to 0.05%.
  • Equalization levy of 6% of gross amount for payment made to non- residents exceeding ` 1 Lac a year in case of B2B transactions.
  • Domestic VDS Scheme for undisclosed income @ 45%.
  • New Dispute Resolution Scheme – No penalty in respect of cases with disputed tax up to Rs.10 Lac in other cases 25% of the minimum imposable penalty.
  • No discretion of AO on imposition of Penalty.
  • Penalty rates to be 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts.
  • Disallowance will be limited to 1% of the average monthly value of investments yielding exempt income, but not exceeding the actual expenditure claimed under rule 8D of Section 14A of Income Tax Act.
  • Mandatory stay of demand once the assessee pays 15% of the disputed demand, while the appeal is pending before CIT (Appeals).
  • Monetary limit for deciding an appeal by a single member Bench of ITAT enhanced from Rs.15 Lac to Rs.50 Lac.
  • No higher TDS for non-residents if alternative documents to PAN card provided.
  • Expansion of e-assessments Scheme to assessees in 7 mega cities in the coming years.
  • Interest at the rate of 9% PA against normal rate of 6% PA for delay in giving effect to Appellate order beyond ninety days.
  • ‘e-Sahyog’ to be expanded to reduce compliance cost, especially for small taxpayers.

TDS limits increased as below

  •  192A – Payment of accumulated balance due to an employee  from 30,000 to 50,000
  • 194BB – Winnings from Horse Race from Rs. 5,000 to Rs. 10,000
  • 194C – Payments to Contractors – from Aggregate annual limit of 75,000 to Aggregate annual limit of 1,00,000
  • 194LA – Payment of Compensation on acquisition of certain Immovable Property – from 2,00,000 to Rs. 2,50,000
  • 194D – Insurance commission from Rs. 20,000 to 15,000
  • 194G – Commission on sale of lottery tickets from 1,000 to 15,000
  • 194H – Commission or brokerage  from Rs. 5,000 to 15,000

TDS Rates reduced as below

  • 194DA – Payment in respect of Life Insurance Policy – from 2% to 1%
  • 194EE  – Payments in respect of NSS Deposits – from 20% to 10%
  • 194D – Insurance commission – from 10% to 5%
  • 194G – Commission on sale of lottery tickets – from 10% to 5%
  • 194H – Commission or brokerage – form 10% to 5%.

TDS Sections Omitted w.e.f. 01.06.2016 as below

  • 194K Income in respect of UnitS
  • 194L Payment of Compensation on acquisition of Capital Assets

 Part-II: Amendments Proposed in Service Tax Law

Exemption of Service Tax on 

  • Services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana
  • Services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship.
  • General Insurance Services provided under ‘Niramaya’ Health Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability.
  • Annuity services provided by NPS and Services provided by EPFO to employees.
  • Exemption from service tax on construction of affordable houses up to 60 square metres under any scheme of the Central or State Government including PPP Schemes.
  • Reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.
  • Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016 – CENVAT credit available. Total ST now 15% as against 14.50 % earlier.
  • Assignment of right to use the spectrum and its transfers has been deducted as a service leviable to service tax and not sale of intangible goods.
  • Additional options to banking companies and financial institutions, including NBFCs, for reversal of input tax credits with respect to non- taxable services.
  • The power to arrest is being restricted only to situations where the tax payer has collected the tax but not deposited it to the credit of central government, and that too above a threshold of Rs.2 crore. The monetary limit for launching prosecution is being increased to Rs. 2 crore of Service Tax evasion.

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