Union Budget 2016 – Updates on Service Tax

The Union Budget for 2016 – 2017 has some important updates here.

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Proteus Consultants and I are not responsible for any and all losses, claims, damages and liabilities arising out of or related to following anything that may be posted in this blog. If you rely upon anything posted here, you do so at your sole risk and responsibility.

 

CBDT clarification on CASS assessments

 

The CBDT has issued Instruction Number 20/2015 to clarify several issues in connection with scrutiny in CASS assessments. This is a very welcome step taken by the CBDT although it remains to be seen whether the assessing officers will follow these instructions in word and spirit. The said instructions are attached.

Disclaimer:
Proteus Consultants and I are not responsible for any and all losses, claims, damages and liabilities arising out of or related to following anything that may be posted in this blog. If you rely upon anything posted here, you do so at your sole risk and responsibility.

New monetary limits for quoting of PAN

Vide Press Release, the CBDT has announced that revised monetary limits for compulsory quoting of PAN shall apply from 01st January, 2016. The Press Release is available here. The change in Rule 114B may be expected shortly.

 

Disclaimer:
Proteus Consultants and I are not responsible for any and all losses, claims, damages and liabilities arising out of or related to following anything that may be posted in this blog. If you rely upon anything posted here, you do so at your sole risk and responsibility.

CBDT simplifies requirements relating to Form 15CB

The CBDT has simplified the requirements relating to obtaining Form 15CB in respect of payments made out of India. The list of payments that do not require Form 15CB has been expanded and greater clarity has been provided in the way in which Form 15CA is to be filled in. Please write to us at info@proteusconsultants.com for more details.

 

Disclaimer:
Proteus Consultants and I are not responsible for any and all losses, claims, damages and liabilities arising out of or related to following anything that may be posted in this blog. If you rely upon anything posted here, you do so at your sole risk and responsibility.

CBDT Order: extension of due date

The CBDT has today (30th September, 2015) extended the due date for filing return of income and tax audit report to 31st October, 2015 for assessees in Gujarat and Punjab & Haryana who were due to file this by 30th September, 2015. This order is in compliance with the directions of the jurisdictional High Courts in the cases of Vishal Garg & Ors v Union of India & Anr (CWP 19770-205) as well as All Gujarat Federation of Tax Consultants v CBDT (Special Civil Application No. 15075 of 2015).

This appears to be an aggressive stand of the CBDT and the relation has probably not been extended to other states because no Court has directed the CBDT to do so. The order is subject to the outcome of any further appeal/SLP that the CBDT may file against the judgments referred to above.

Disallowance u/s 40(a)(ia)

Section 40 of the Income Tax Act, 1961 deals with amounts not deductible in computing the income chargeable under the head “Profits and gains of business and profession”. According to sub-section (ia), as amended by the Finance (No. 2) Act, 2014 w.e.f. 01.04.2015, 30% of any sum payable to a resident on which tax was deductible at source but on which tax has either not been deducted or, after deduction has not been paid on or before the due date for filing return of income was to be disallowed in the hands of the deductor at the time of computing income under the head of “Profits and gains of business and profession”. In such cases, the sum could be claimed as a deduction in the year in which the tax was actually paid [first proviso to section 40(a)(ia)].

 

The Finance Act, 2013 introduced a second proviso to section 40(a)(ia). According to this, if the deductor has failed to deduct the whole or any part of tax that was deductible on payment of any sum to a resident but is not deemed to be an assessee in default as per section 201, then the tax shall be deemed to have been deducted and paid on the date on which the payee (recipient) has filed his/her/its return of income.

 

For the deductor to be deemed to be not an assessee in default as per section 201, the following are to be satisfied vide proviso to section 201(1) inserted by the Finance Act, 2012 w.e.f. 01.07.2012:

 

  1. The deductor has failed to deduct the whole or any part of the tax deductible on sum paid/credited to a resident;
  2. The payee has furnished his return of income u/s 139;
  3. The payee has taken into account such sum for computing his income in his return of income;
  4. The payee has paid the tax due on the income declared by him in the return of income; and
  5. Form 26A is furnished by the payee vide Rule 31ACB.

 

Therefore, government was not really losing any revenue because the tax was being paid by the resident payee although it was not deducted at source /not paid after deduction by the deductor. Although in such cases the deductor was not being considered an assessee in default vide section 201, during the course of assessment, the deductor was not being able to claim the benefit of deduction of the sum in computing his return of income for assessment years up to the date of amendment by the Finance Act, 2013. The revenue authorities continued to disallow the amount u/s 40(a)(ia) up to AY 2012-13 because the amendment in this section was effected from AY 2013-14.

 

In an order that has recently been confirmed by the Hon’ble High Court (in the case of Ansal Land Mark Township Pvt. Ltd.), Delhi, the ITAT, Agra Bench considered the entire issue in the case of Rajiv Kumar Agarwal in ITA 337/Agra/2013. The ITAT analysed the provisions in detail and reasoned that the insertion of the second proviso to section 40(a)(ia) was declaratory and curative in nature and should be given retrospective effect from 01.04.2005.

 

This judgment of the Hon’ble High Court, Delhi should be of assistance to those who face disallowance u/s 40(a)(ia) of such sums, although they are not be held assessees in default as per section 201.

Regarding extension of due date of filing return of income to 07th September, 2015

On 2nd September, 2015, it was notified by the CBDT that the due date for filing return of income for all assesses who were required to file their returns electronically by 31st August, 2015 had been extended to 07th September, 2015.

Many people seem to have missed the fact that the extension has been granted only for those who were required to file their returns electronically and not to all taxpayers. The extension, therefore, applies only to the following:

  1. Individual or HUF filing return of income in ITR 3 or ITR 4, that is, earning income from being Partners in Firm or having income from proprietorship business, but not liable for tax audit;
  2. Resident individual having income from any source outside India;
  3. Individual claiming any relief under DTAA with another jurisdiction;
  4. Individuals filing return in Form ITR 1 or ITR 2 and having total income in excess of INR 5 Lakhs or claiming refund of taxes;
  5. Firm not liable for tax audit u/s 44AB.

The extension of due date for filing return of income does not apply to those who were required to file their return of income by 31st August, 2015 but who do not fall in the above category.

 

Disclaimer:
Proteus Consultants and I are not responsible for any and all losses, claims, damages and liabilities arising out of or related to following anything that may be posted in this blog. If you rely upon anything posted here, you do so at your sole risk and responsibility.

New Rule defining period of stay in India for crew of ships

Section 6 of the Income Tax Act, 1961 deals with “Residence in India”. The Finance Act, 2015 inserted Explanation 2 to Section 6(1) which says that for an individual who is a citizen of India and a member of a crew of a foreign bound ship leaving India, the period of stay in India in respect of the voyage as such a crew member shall be determined in the prescribed manner.

Now the CBDT has issued notification number 70/2015 prescribing the manner of determination of period of stay for such cases. According to the said Notification, in case of a citizen of India and a member of a crew of a ship, the period or periods of stay in respect of an eligible voyage shall not include the following period(s): the period from the date of joining the ship till the date of signing off from the ship as entered in the Continuous Discharge Certificate in respect of the voyage.

You can read the rest of the brief here.

Disclaimer:
Proteus Consultants and I are not responsible for any and all losses, claims, damages and liabilities arising out of or related to following anything that may be posted in this blog. If you rely upon anything posted here, you do so at your sole risk and responsibility.

India revises DTAA with South Korea

The Indian government approved the revised DTAA on May 6, 2015 in a cabinet meeting. The official text is expected to be available soon.

The revised DTAA provides for source based taxation of capital gains, provisions for making adjustments to profits of associated enterprises on the basis of arm’s length principle, provides for residence based taxation of shipping income, provisions for service of permanent establishment, rationalizes tax rates in the articles on dividend, interest and royalties and fees for technical services, it added.

The agreement further incorporates provisions for effective exchange of information and assistance in collection of taxes between tax authorities and also incorporates limitation of benefits provisions, to ensure that the benefits of the agreement are availed of by genuine residents of both countries.

 

Disclaimer:
Proteus Consultants and I are not responsible for any and all losses, claims, damages and liabilities arising out of or related to following anything that may be posted in this blog. If you rely upon anything posted here, you do so at your sole risk and responsibility.

Finance Act 2015 available for download

The 2015 Finance Act has been passed and is now available for download here. Some interesting features are:

 

General Announcements

  • Current account deficit for FY15 to be below 1.3 % of GDP.
  • Expect CPI to remain close to 5% by year-end.
  • To achieve 3.9% fiscal deficit in FY16.
  • To put in place Direct Tax Regime.
  • Increase in Visa On Arrival facility from 43 to 150 countries.

Taxes

  • To rationalise & remove exemptions for corporates.
  • Basic rate of Corporate Tax reduced from 30% to 25% over next 4 years.
  • Exemptions for Individual Tax payers to continue.
  • Distinction between foreign direct investment and foreign portfolio investment will be abolished
  • GAAR deferred by two years.
  • To incentivise debit-credit card transactions.
  • To exempt SAD on all items.
  • To replace wealth tax with additional 2% surcharge on super rich with annual income of over 1 crore rupees.
  • To increase central excise duty to 12.5%.
  • Excise duty cut on footwears.
  • Changes in Excise duty on cigarettes.
  • To increase service tax rate from 12.36% to 14%.
  • Transport Allowance exemption increased to Rs. 1600.
  • To allow Exemption of Rs. 1.5 lakh under New Pension Scheme.
  • Health insurance premium exemption raised to Rs 25,000 from Rs 15,000.
  • Health Insurance premium limit for senior citizens to be Rs. 30,000.
  • Giving the PAN number to be made mandatory for any purchases above Rs 1 lakh.

For more details, read the budget.

 

Disclaimer:
Proteus Consultants and I are not responsible for any and all losses, claims, damages and liabilities arising out of or related to following anything that may be posted in this blog. If you rely upon anything posted here, you do so at your sole risk and responsibility.