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80 Exemption to certain companies u/s.211(3) for
Public Financial Institutions.
MCA vide Notification No. S.O. 300(E), dated
8th February 2011 has u/s.211(3) exempted Public Financial Institutions as
specified u/s.4A of the Companies Act, 1956 from disclosing Investments as
required under paragraph (1) of Note (1) of Part-I of Schedule VI in their
balance sheet, subject to fulfilment of the following conditions, namely :
(i) the Public Financial Institutions shall make
the complete disclosures about investments in the balance sheet in respect of
the following, namely :
(a) immovable property;
(b) capital of Partnership firms;
(c) all unquoted investments, and;
(d) investments in subsidiary companies.
(ii) the Public Financial Institutions shall
disclose the total value of quoted investments in each of the following
respective categories, namely :
Government and trusts
securities;
shares
debentures;
bonds; and
other securities.
(iii) in each of the above categories referred to
in sub-paragraphs (i) and (ii), investments where value exceeds two percent of
total value in each category or one crore rupees, whichever is lower, shall be
disclosed fully, provided that where disclosures do not result in disclosure
of at least fifty percent of total value of investment in a particular
category, additional disclosure of investments in descending order of value
shall be made so that specific disclosures account for at least fifty percent
of the total value of investments in that category;
(iv) the Public Financial Institutions shall also
give an undertaking to the effect that as and when any of the shareholders ask
for specific particulars, the same shall be provided;
(v) all unquoted investments shall be separately
shown;
(vi) the company shall undertake to file with any
other authorities, whenever necessary, all the relevant particulars as may be
required by the Government or other regulatory bodies;
(vii) the investments in subsidiary companies or
in any company such that it becomes a subsidiary, shall be fully disclosed.
2. This Notification shall be applicable in respect
of balance sheet and profit and loss accounts prepared in respect of the
financial year ending on or after the 31st March, 2011.
MCA vide Notification No. S 301, dated 8th February
2011 has in public interest, exempted the following classes of companies from
disclosing in their profit and loss account the information mentioned under
column (3), against each class of companies mentioned under column (2) of the
table given below subject to fulfilment of the conditions stipulated in
paragraph 2 of this Notification, namely :
SI.
No.
Class of companies
Exemptions from paragraphs of Part-II of Schedule VI
1
Companies producing
defence equipments including space research;
paragraphs 3(i)(a),
3(ii)(a), 3(ii)(d), 4-C, 4-D(a) to (e) except (d).
2
Export-oriented
company (whose export is more than 20% of the turnover);
1. MCA vide General Circular No.
2/2011No.:51/12/2007-CL-III issued on 8th February 2011, has given general
exemption u/s.212(8) of the Companies Act provided certain conditions as follows
are fulfilled.
The Central Government hereby directs that
provisions of section 212 shall not apply in relation to subsidiaries of those
companies which fulfil the following conditions :
(i) The Board of Directors of the company has by
resolution given consent for not attaching the balance sheet of the subsidiary
concerned;
(ii) The company shall present in the annual
report, the consolidated financial statements of holding company and all
subsidiaries duly audited by its statutory auditors;
(iii) The consolidated financial statement shall
be prepared in strict compliance with applicable Accounting Standards and,
where applicable, Listing Agreement as prescribed by the Security and Exchange
Board of India;
(iv) The company shall disclose in the
consolidated balance sheet the following information in aggregate for each
subsidiary including subsidiaries of subsidiaries : (a) capital (b) reserves
(c) total assets (d) total liabilities (e) details of investment (except in
case of investment in the subsidiaries) (f) turnover (g) profit before
taxation (h) provision for taxation (i) profit after taxation (j) proposed
dividend;
(v) The holding company shall undertake in its
annual report that annual accounts of the subsidiary companies and the related
detailed information shall be made available to shareholders of the holding
and subsidiary companies, seeking such information at any point of time. The
annual accounts of the subsidiary companies shall also be kept for inspection
by any shareholders in the head office of the holding company and of the
subsidiary companies concerned and a note to the above effect will be included
in the annual report of the holding company. The holding company shall furnish
a hard copy of details of accounts of subsidiaries to any shareholder on
demand;
(vi) The holding as well as subsidiary companies
in question shall regularly file such data to the various regulatory and
Government authorities as may be required by them;
(vii) The company shall give Indian rupee
equivalent of the figures given in foreign currency appearing in the accounts
of the subsidiary companies along with exchange rate as on the closing day of
the financial year;
MCA vide Circular dated 8th February 2011, have
made the following amendments in Schedule XIII to Companies Act, 1956 :
In the Schedule XIII, in Part II, in S. II :
(i) in sub-para (C), in third proviso, after the
word, ‘scale’ occurring at the end, the following words shall be inserted,
namely :
“if the company is a listed company or a
subsidiary of a listed company”;
(ii) for Explanation IV, to the S. II, the
following Explanation shall be substituted, namely : For the purposes of this
Section, ‘Remuneration Committee’ means :
(i) ‘in respect of a listed company, a committee
which consists of at least three non-executive independent directors including
nominee director or nominee directors, if any; and
(ii) in respect of any other company, a
Remuneration Committee of Directors’;
MCA vide General Circular No. 1/2011, F. No.
2/7/2010-CL V, dated the 3rd February 2011 in continuation to its Circular No.
6/2010, dated 3-12-2010 thereon decided to extend the Scheme for another three
months i.e., up to 30th April, 2011. Further all the terms of Circular
No. 6/2010, dated 3-12-2010 remain the same.
75 Managerial remuneration in unlisted companies
having no profits/inadequate profits.
MCA vide Press Release No. 4/2011, dated 8-2-2011
has exempted public limited companies (listed and unlisted) with no
profits/inadequate profits, so long as the conditions specified in Schedule
XIII, including special resolution of shareholders and absence of default on
payment to creditors, from the requirement of approaching the Ministry for
approval in those cases where the remuneration of directors/equivalent
managerial personnel exceeds certain limits. The matter has been re-examined in
the light of the evolving economic and regulatory environment.
Accordingly, Schedule XIII of the Companies Act,
1956 is being amended to provide that unlisted companies (which are not
subsidiaries of listed companies) shall not require Government approval for
managerial remuneration in cases where they have no profits/inadequate profits,
provided they meet the other conditions stipulated in the Schedule.
Changes relating to Company Law for the period 15th October,
2010 to 15th November, 2010.
Additional fees payable as per S. 611(2).
The Ministry of Corporate Affairs has decided to revise the
additional fees payable as per S. 611(2) of the Companies Act, 1956 (except Form
5) as per details in the Table 1 with effect from 5-12-2010 :
Table 1
Period of delay
Fixed rate of additional fee
Up to 30 days
Two times of normal filing fee
More than 30 days and up to 60 days
Four times of normal
filing fee
More than 60 days and up to 90 days
Six times of normal
filing fee
More than 90 days
Nine times of normal filing fee
In order to avoid payment of additional fees, please file
within stipulated time.
A comparative between old rates and new rates of additional
fees is given below in
A.P. (DIR Series) Circular No. 6, dated August 3, 2009 —
Memorandum of Instructions governing money-changing activities
Presently, Authorised Dealers/FFMC are required to obtain
certain documents, including a conduct certificate from the local police
authorities, while conducting the due diligence of their agents/franchisees.
However, they have been experiencing difficulties in obtaining conduct
certificate from local police authorities in respect of agents/franchisees,
which are incorporated entities.
This Circular has done away with the requirement of
obtaining conduct certificate from local police authorities in respect of
agents/franchisees, which are incorporated entities. Henceforth, Authorised
Dealers/FFMC have been permitted to accept certified copy of the Memorandum
and Articles of Association and Certificate of Incorporation in lieu of
conduct certificate from the local police authorities, in respect of
agents/franchisees, which are incorporated entities.
101 Age restriction in the
Service Tax Return Preparer Scheme, 2009 omitted — Notification No.
44/2010-Service Tax, dated 20-7- 2010.
By this Notification
restriction regarding age limit of 35 years for the purpose of enrolment,
training and certification to act as Service Tax Return Preparer has been
omitted.
100 Processing of returns of
A.Y. 2009-10 — Steps to clear backlog —Instruction No. 7/2010 dated 16-8-2010.
In supersession and
modification of Instruction No. 5/2010 dated 21-7-2010, CBDT has taken the
following decisions :
(i) In all the returns
filed in ITR-1 and ITR-2, for the Asst. Year 2009-10, where the aggregate TDS
claim does not exceed Rs. Three lakh (3 lacs) and where the refund computed
does not exceed Rs.25,000; the TDS claim of the tax payer shall be accepted at
the time of processing of the return provided that the TDS payment reported in
AS-26 is more than Rs. Zero.
(ii) In all the returns
filed in forms other than ITR-1 and ITR-2, for the Asst. Year 2009-10, where
the aggregate TDS claim does not exceed Rs. Three lakh (3 lacs) and the refund
computed does not exceed Rs.25,000 and there is at least 10% matching of TDS
amount claimed, the TDS claim shall be accepted at the time of processing of
the return.
(iii) In all remaining
cases, TDS credit shall be given after due verification.
F. No.225/25/2010-ITA.II (Ajay
Goyal)
Director (ITA.II)
As per proviso to Ss.(a) &
(b) of S. 80IB(10), Slum Rehabilitation Scheme needs to be notified to be
eligible to the benefits of the deduction as stipulated therein. The CBDT issued
this long pending notification under the said Proviso wherein any scheme of Slum
Rehabilitation as contained in Regulation 33(10) of Development Control
Regulation for Greater Mumbai 1991 read with the relevant notifications under
these regulations and stipulated conditions would be eligible for claiming
deductions u/s.80IB of the Act provided all the other conditions are fulfilled.
98 Press Release for
extension of due date of filing the tax returns of individual taxpayers.
The Central Board of Direct
Taxes has extended the due date of filing of income tax return from 31st July,
2010 to 4th August, 2010 in view of technical snags in the e-filing computer
systems and inclement weather at various locations causing difficulties in
filing or uploading income tax returns.
97 Issue of certificate of
lower collection of income-tax at source u/s.206C(9) — regarding — Instruction
No. 4/2010, dated 21-7-2010.
I am directed to state that
Instruction No. 8/2006, dated 13-10-2006 was issued by the Board making it
mandatory to get prior administrative approval of the Additional Commissioner of
Income-tax/Joint Commissioner of Income-tax before issue of any certificate of
lower deduction of tax at source u/s.197 of the Income-tax Act, 1961. Further,
Instruction No. 7/2009, dated 23-12-2009 was issued communicating prior
administrative approval of the Commissioner of Income-tax (TDS) in the cases
where the cumulative amount of tax foregone by non-deduction/lesser rate of
deduction of tax arising out of certificate u/s.197 during the financial year
for a particular assessee exceeds Rupees fifty lakh in major stations and Rupees
ten lakh for other stations.
2. For effective monitoring
and control of tax foregone through certificate of lower tax collection at
source (TCS), I am directed to communicate that for issue of certificate of
lower collection for tax at source u/s.206C(9), prior administrative approval of
the Additional Commissioner of Income-tax/Joint Commissioner of Income-tax shall
be obtained in each case. Further, prior administrative approval of the
Commissioner of Income-tax (TDS) shall be taken where cumulative amount of tax
foregone by lesser rate of tax collection at source during the financial year
for a particular buyer or licensee or lessee, as the case may be, exceeds Rupees
fifty lakh in Delhi, Mumbai, Chennai, Kolkata, Bangaluru, Hyderabad, Ahmedabad
and Pune Stations and Rupees ten lakh for other stations. Once the Addl. CIT/JCIT
or the CIT(TDS), as the case may be, gives administrative approval of the above,
a copy of it has to be endorsed to the jurisdictional CIT also.
3. In relation to TCS
matters of a buyer or licensee or lessee falling within the jurisdiction of
Directorate of Income-tax (International Taxation), the powers indicated above
shall be vested in the officers concerned i.e., Range Additional DIT/JDIT
(International Taxation) or Director of Income-tax (International Taxation), as
the case may be.
4. ‘Tax foregone’ in case of
a buyer or licensee or lessee, as the case may be, should ordinarily mean
difference between taxes computed at the relevant rate of collection stipulated
and the tax computed on the basis of rate at which the certificate u/s.206C(9)
is sought to be issued.
5. The content of this
instruction may be brought to the notice of all officers working in your charge
for strict compliance.
6. Hindi version will
follow.
F. No. 275/23/2007-IT(B) (Ajay
Kumar)
Director (Budget)
28 Deposits under the National Housing Bank
(Tax Saving) Term Deposit Scheme, 2008 eligible investment u/s.80C of the Act —
Notification No. 3/2009, dated 5-1-2009.
69 The interest rate for Employees’
Provident Fund for the financial year 2007-08 has been declared at 8.5% :
Notification no. Invst II/(3)(2)133/07-08/ROI/pt, dated 17-7-2008.
I. The Core Group constituted by the Ministry of Corporate
Affairs has approved the roadmap recommended by Sub-group I in respect of
convergence of Indian Accounting Standards with International Financial
Reporting Standards (IFRS) for Insurance companies, Banking companies and
non-banking finance companies as under : (http://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/IEPRGOV0604010.pdf)
1. Insurance companies :
(i) All insurance companies will convert their opening
balance sheet as at 1st April, 2012 in compliance with the converged Indian
Accounting Standards.
2. Banking companies :
(i) All scheduled commercial banks and those urban
co-operative banks (UCBs) which have a net worth in excess of Rs.300 crores
will convert their opening balance sheet as at 1st April, 2013 in compliance
with the first set of Accounting Standards (i.e., the converged Indian
Accounting Standards).
(ii) Urban co-operative banks which have a net worth in
excess of Rs.200 crores but not exceeding Rs.300 crores will convert their
opening balance sheets as at 1st April, 2014 in compliance with the first
set of Accounting Standards (i.e., the converged Indian Accounting
Standards).
(iii) Urban co-operative banks which have a net worth not
exceeding Rs.200 crores and Regional Rural banks (RRBs) will not be required
to apply the first set of Accounting Standards i.e., the converged Indian
Accounting Standards (though they may voluntarily opt to do so) and need to
follow only the existing notified Indian Accounting Standards which are not
converged with IFRSs.
3. Non-banking
financial companies :
(i) The following categories of non-banking financial
companies (NBFCs) will convert their opening balance sheet as at 1st April,
2013 if the financial year commences on 1st April (or if the financial year
commences on any other date, then on the date immediately following 1st
April, 2013) in compliance with the first set of Accounting Standards (i.e.,
the converged Indian Accounting Standards). These NBFCs are :
(a) Companies which are part of NSE — Nifty 50
(b) Companies which are part of BSE — Sensex 30
(c) Companies, whether listed or not, which have a net
worth in excess of Rs.1,000 crores.
(ii) All listed NBFCs and those unlisted NBFCs which do
not fall in the above categories and which have a net worth in excess of
Rs.500 crores will convert their opening balance sheet as at 1st April 2014
if the financial year commences on 1st April (or if the financial year
commences on any other date, then on that date following 1st April 2014) in
compliance with the first set of Accounting standards (i.e., converged
Indian Accounting Standards).
Unlisted NBFCs which have a net worth of Rs.500 crores or
less will not be required to follow the first set of accounting standards
(i.e., the converged Indian accounting standards), though they may voluntarily
opt to do so, but need to follow only the notified Indian Accounting Standards
which are not converged with the IFRSs.
II. The Securities and Exchange Board of India (SEBI)
has, vide Circular No. CIR/CFD/DIL/1/2010 dated 5th April, 2010, reviewed
and amended the Equity Listing Agreement with respect to the following in
exercise of its powers under Section 11 and S. 11A of the Securities and
Exchange Board of India Act, 1992 :
(i) Requirement of Auditors’ Certificate for accounting
treatment under schemes of arrangement
(ii) Timelines for submission and publication of
financial results by listed entities
(iii) Voluntary adoption of International Financial
Reporting Standards by listed entities having subsidiaries.
(iv) Requirement of a valid peer review certificate for
statutory auditors
(v) Interim disclosure of balance sheet items by listed entities
30 Adjustment of Refund of F.Y. 2009-10 in F.Y. 2010-11 —
Trade Circular No. 15T of 2010, dated 15-3-2010.
Dealers who have excess credit less than rupees 1 lac in the
return for the period ending on 31st March, 2010 can adjust their refund in the
return to be filed for F.Y 2010-11. But dealers who have already filed the claim
of refund would not be allowed to carry forward to the next financial year. This
facility is provided only for current year, that is, for 31st March, 2010 only.
29 Change in rate of tax — Trade Circular No. 14T of 2010,
dated 31-3-2010.
Commodities under MVAT Schedule Entry A-9A & A-51 currently
being tax-free, the same would continue to be tax-free.
Concessional tax rate for raisins and currants under Schedule
Entry No. C-108(1)(a), tea in leaf and powder form (including instant tea) under
Schedule Entry No. C-108 (1) (b) would continue but with increased MVAT rate
from 4% to 5% w.e.f. 1-4-2010 with the result that rates for these commodities
would be 5% from 1-4-2010.
For aviation turbine fuel (duty paid) covered by Schedule
Entry D-11, when sold within Maharashtra, excluding the geographical limit of
Brihan Mumbai Corporation & Pune District, concessional rate of tax 4% would
continue. It is clarified that this exemption would continue up to 31st March,
2011 or till the Goods & Service Tax Law is implemented in the State, whichever
is earlier.
No extension of concession to timber and dry fruits (other
than raisins and currants) which were taxable 4% up to 31st March, 2010. So
w.e.f. 1-4-2010 they would be taxable @12.5%.
28 Extension of due date for submission of MVAT Audit Report
— Trade Circular No. 13T of 2010, dated 31-3-2010.
Due date for submission of MVAT audit report in Form 704 for
the period 2008-09 is extended from 31st March, 2010 to 30th April, 2010 and the
statement of submission of such report along with required documents can be
submitted on or before 10th May, 2010.
By this Notification, Notification No. 09/2010-Service Tax,
dated the 27th February, 2010 and Notification No. 1/2006-Service Tax, dated the
1st March, 2006 regarding abatement of 70% in case of transport of goods by rail
are amended for a further period of 3 months i.e., the substitution of the word
‘Transportation of Goods in Containers by Rail’ by the words ‘Transportation of
Goods by Rail’ will be effective from 1st July, 2010.
By this Notification, earlier Notification No.
08/2010-Service Tax, dated the 27th February, 2010 is amended to defer exemption
from levy of service tax on services provided in relation to transport of goods
by rails for specified goods for a further period of 3 months i.e., exemption
shall be effective from 1st July, 2010.
By this Notification, earlier Notification No.
07/2010-Service Tax, dated the 27th February, 2010 is amended to defer
rescinding of exemption from levy of service tax on services provided by
transportation of goods in container by railway for further period of 3 months
i.e., up to 30th June, 2010.
24 Declaration to be submitted by specified assessees who
were registered before the launch of ACES — Trade Notice No. 1/ ST/ 2010, dated
8-3-2010.
All assesses, who are compulsorily covered for e-returns and
e-payment as aforesaid, who were registered before the launch of ACES and who
yet do not have their login and password, need to apply in the ‘Declaration Form
for ACES’ to the concerned Division/Range officer. The Form can be downloaded
from the website http://www.servicetaxdelhi.gov.in.
23 Procedure for electronic filing of service tax returns and
e-payment of Service Tax — Circular No. 919/09/2010-CX, dated 23-3-2010.
By this Circular a detailed procedure has been provided for
electronic filing of service tax return and electronic payment of service tax,
which has been earlier made mandatory w.e.f. 1-4-2010 vide Notification No.
01/2010-ST, dated 19th February, 2010 for the assessee who has paid total
service tax of Rs.10 lacs or more (including amount paid by way of utilisation
of CENVAT Credit) in preceding financial year. The detailed procedure is
available at the website http://www.cbec.gov.in.
22 Notification No. 24 vide F. No.164/02/-2008-ITA.I, dated
8-4-2010. — REC Bonds.
The Central Government has notified ten-year Deep Discount
Bond to be issued by Rural Electrification Corporation Limited (REC) by 31st
March 2011 as Zero Coupon Bonds for the purpose of S. 2(48) of the Income-tax
Act, 1961.
The Double Tax Avoidance Treaty and protocol signed between
Mexico and India on 10th September 2007 has been notified to be entered into
force on 1st February, 2010. The Treaty shall apply from 1st January, 2011 for
Mexico and from 1st April, 2011 for India.
21 Notification No. 22 of 2010; F.No.142/5/2010-SO (TPL),
dated 13-4-2010. — Specified Territories for S.90
The Central Government has approved notification of (i)
Bermuda, (ii) British Virgin Islands, (iii) Cayman Islands, (iv) Gibraltar, (all
British Overseas Territories); (v) Guernsey, (vi) Isle of Man, (vii) Jersey,
(all British Crown Dependencies); (viii) Netherlands Antilles (an Autonomous
Part of the Kingdom of Netherlands); and (ix) Macau (a Special Administrative
Region of the People’s Republic of China) as ‘specified territory’ for the
purpose of Explanation 2 to S. 90 of the Income-tax Act, 1961. S. 90 of the
Income-tax Act was amended by the Finance Act, 2009 to enable the Central
Government to enter into an agreement with any specified territory outside
India, in addition to the already existing provision of agreement with the
government of any country. Now the Central Government can initiate and negotiate
agreements for exchange of information for the prevention of evasion or
avoidance of income tax and assistance in collection of income tax with these
nine specified territories.
Rules 11U and 11UA have been inserted, which provide for
determination of fair market value of the property other than immovable property
for the purpose of valuation u/s.56 of the Act. The said rules shall come into
force from 1st October, 2009. These Rules define the valuation of jewelery,
artistic work, quoted shares and securities as well as unquoted instruments for
the purpose of computation of income u/s.56(vii) of the Act.
27 Additional procedural conditions
prescribed for scientific research association and universities, etc. carrying
out such activities : Income-tax (Second Amendment) Rules, 2009, dated
5-12-2009.
The CBDT has prescribed certain information to be furnished
the Commissioner/Director of Income-tax, by the due date of filing the return of
income for these organisations. This information pertaining to the year gone by
includes :
Detailed note on activities undertaken;
summary of research articles published in national or international journals
any patent or other similar rights
programme of research projects to be undertaken during the forthcoming year
and the financial allocation thereof.
26 Conditions prescribed to eligibility of
the prepaid electronic meal card for FBT purposes u/s.115WB(2)(b)(iii) of the
Act : Income-tax (First Amendment) Rules, 2009, dated 5-1-2009.
FBT provisions were amended to exclude the prepaid electronic
meal cards from the ambit of the head of entertainment and hospitality on which
FBT is levied. Rule 40E has been introduced, which prescribes certain conditions
as stipulated for eligibility for the electronic meal cards for exclusion
purposes.
30 A.P. (DIR Series) Circular No. 37, dated
16-4-2008 — Direct receipt of Import Bills/Documents for Import of Rough
Precious & Semi-Precious Stones — Liberalisation.
Presently, remittances for imports up to US $ 100,000 can be
made even when the import bills/ documents are directly received by the importer
from the overseas supplier.
This Circular has increased this limit to US $ 300,000 in
case of import of rough precious and semi-precious stones by non-status holder
exporters. Hence, non-status holder exporters of rough precious and
semi-precious stones can now make remittances for imports up to US $ 300,000
even when the import bills/documents are directly received by them from the
overseas supplier. Thus, they have been brought on par with non-status holder
exporters who import rough diamonds.
10 Exemption on services provided in relation to the
authorised operations in a Special Economic Zone, and received by a
developer or units of a Special Economic Zone, whether or not the said
taxable services are provided inside the Special Economic Zone
By this Notification the taxable services specified in
clause (105) of S. 65 of the Finance Act, 1994 which are provided in
relation to the authorised operations in a Special Economic Zone, and
received by a developer or units of a Special Economic Zone, whether or not
the said taxable services are provided inside the Special Economic Zone, are
exempt from the whole of the Service Tax leviable thereon u/s.66 of the said
Finance Act, subject to conditions specified in this Notification.
8 Export of Services Rules, 2005 applicable when
benefits accrue outside India Circular No. 111/2009, dated 24-2-2009 :
In terms of Rule 3(2)(a) of the Export of Services Rules
2005, a taxable service shall be treated as export of service if “such
service is provided from India and used outside India”. By this
Circular, it has been clarified that export of service may take place even
when all the relevant activities take place in India so long as the benefits
of these services accrue outside India.
7 Reference from Commissioner, Nashik, seeking
clarification in respect of levy of Service Tax on
repair/renovation/widening of roads. Circular No. 110/2009, dated 23-2-2009
:
It has been clarified that management, maintenance or
repair of roads are in the nature of taxable services and attracting Service
Tax u/s.65(105) (zzg) of the Finance Act, 1994. In this Circular, activities
called as ‘construction of road’ and ‘maintenance or repair of roads’ have
been categorised as follows :
(A) Maintenance or repair activities :
I. Resurfacing
II. Renovation
III. Strengthening
IV. Relaying
V. Filling of potholes
(B) Construction activities :
I. Laying of a new road
II. Widening of narrow road to broader road (such as
conversion of a two-lane road to a four-lane road)
III. Changing road surface (gravelled road to metalled
road/metalled road to black-topped/ black-topped to concrete, etc.)
6 Filing of claim for refund of Service Tax paid under
Notification No. 41/2007-ST, dated 6-10-2007. Circular No. 112/2009, dated
12-3-2009 :
In this Circular procedural clarifications have been
given in relation to claiming refund of Service Tax paid under Notification
No. 41/2007-ST, dated 6-102007. which provides exemption by way of refund on
account of specified taxable services used for export of goods.
Clarification under this Circular are in addition to Circulars issued
earlier No. 101/4/ 2008-ST, dated 12-5-2008 and No. 106/9/2008-ST, dated
11-12-2008.
It has been clarified that screening of a movie is
not a taxable service except where the distributor leases out the
theatre and the theatre owner get a fixed rent. In such case, the
service provided by the theatre owner would be categorised as ‘Renting
of immovable property for furtherance of business or commerce’ and the
theatre owner would be liable to pay tax on the rent received from the
distributor. All pending cases to be disposed of accordingly.
68 Service tax levy on goods transport by
road services — Circular No. 104/07/2008-ST, dated 6-8-2008.
Certain clarifications have been provided by this Circular as
under :
Abatement of 75% would be available to the consolidated amount mentioned in
the invoice which includes various intermediary and auxiliary services
provided by GTA and included in the invoice, since these services are not
provided as independent activities but are the means for successful provision
of the principal service, namely, the transportation of goods by road.
Where service is provided by a person who is registered as GTA service
provider and issues consignment note for transportation of goods by road in a
goods carriage and the amount charged for the service provided is inclusive of
packing, then the service shall be treated as GTA service and not cargo
handling service.
In case of time-sensitive transportation of goods by road carriage, if the
entire transportation is done by road and the person transporting the goods
issues a consignment note, then the service would be GTA service and not
courier services.
67 Certain services in connection with
sports activities notified u/s.194J : Notification No. 88/2008, dated 21-8-2008
being rendered by the following persons.
The CBDT has notified the following services in relation to
sports activities as ‘Professional Services’ for deduction of tax at source
u/s.194J of the Act :
66 Certain clarifications have been issued
by RBI to all the banks in connection with TDS on 8% Savings (Taxable) Bonds,
2003 : RBI/2008-2009/121 — Ref. DGBA.CDD. No. H — 1311/13.01.299/2008-09, dated
5-8-2008.
While referring to the earlier Circular issued by RBI —
DGBA.CDD No. H-3024/13.01.299/2007-08, dated September 19, 2007, RBI has issued
further clarifications on deduction of tax at source on the subject matter based
on clarifications received from the CBDT. The important clarifications in this
matter are as under :
The date from which TDS needs to be deducted is 1-6-2007. Accordingly,
irrespective of the date of investment, if interest is credited to the account
of any investor after 1-6-2007, TDS needs to be deducted.
Forms 15H and 15G (exemption from TDS) need to be accepted if the conditions
mentioned for the said forms are satisfied.
In case of cumulative schemes of investment of bonds, TDS would be deducted as
and when the interest is credited, irrespective of the fact that the payment
is made at the end of the tenure of the bonds.
Lower deduction/NIL deduction certificate from the tax authorities is required
in case of charitable institutions, for exemption from deduction of tax at
source from interest eligible by such institutions.
65 Clarification issued by CBDT in
connection with TDS on service tax u/s.194J of the Act : Letter F.No./275/3/2007-IT(B),
dated 30-6-2008.
The Board had earlier clarified vide Dir.Tax/761, dated
5-5-2008 that TDS would not be applicable on Service tax element of rental
income u/s.194I of the Act. In this Notification it has been clarified that
u/s.194I, what has been covered is rental income, whereas u/s.194J, what is
covered is any sum paid as professional or technical fees. Hence, for the
purpose of S. 194J, TDS needs to be deducted on the total amount including
Service tax element.
64 Relaxation in the rules for mention of
PAN in the TDS returns : Internal instructions.
As per the recent Circulars of CBDT, threshold limits were
laid for mentioning of PAN of deductees in the TDS return. However, due to
practical difficulties faced by the assessees, these norms have been relaxed.
Now, if the payment has been made for the total amount of TDS and the
information is available of few deductees, then return can be filed with the PAN
of those deductees. Consequently, the cor-rection return can be filed after
obtaining the PAN of the remaining deductees. Care needs to be taken that the
amount paid as TDS needs to tie up with the total amount mentioned in both the
TDS returns.
63 Scrutiny of Tax Audit Report during
assessment proceedings : Instruction No. 9/2008, dated 31-7-2008 (reproduced
below)
Kindly refer to the above.
2. C&AG and carried out a systems review of Third Party
certification under the Income-tax Act. This has brought out that in many cases
the information available in the tax audit reports is not being properly
analysed during assessment proceedings, thereby defeating the very purpose of
providing for audit of accounts in the Income-tax Act i.e., to ensure
that correct deductions are claimed by the assessee. It is, therefore,
reiterated that the tax audit reports as well as other statutory audit reports
should be critically examined along with connected records and other available
evidence, and the information as available in these reports should be
effectively utilised while finalising the assessment of cases selected under
scrutiny. In case of e-filed returns as well as annexure-less returns, tax audit
reports and other statutory audit reports should be requisitioned and thoroughly
examined during the assessment proceedings in cases under scrutiny.
3. With effect from 10th August 2006, the ‘Accountants’ are
required to indicate in Form 3CD as to whether a certificate has been obtained
from the respective assessees regarding payment relating to any
expenditure/taking or accepting of loans or deposits or repayment of the same
through account-payee cheque/bank draft (refer points 17(h) and 24(c) of Form
No. 3CD).
4. Instead of simply relying on the said certificates given
by the assessees, the assessing officers should undertake a test-check of such
transactions while completing the assessments under scrutiny. Results of such
test-check should also be kept on record. In case, any violation is noticed,
follow-up action as per the Income-tax Act including invoking of penal
provisions should be taken.
5. In cases where any factual misrepresentation by the
Accountants is observed, suitable action should be taken against them as
provided u/s.288 of the Income-tax Act, 1961.
This may be brought to the notice of all concerned for strict
compliance.
62 Norms relaxed for the corporate tax
returns : Internal instructions.
Scrutiny not to be undertaken for top 1000 companies, provided no disputes are
pending against them.
If the Tax Department has not raised a demand for more than 10 lakhs over and
above the taxes paid by the companies, then those companies’ cases would not
be picked up for scrutiny.
In case the capital infused in the company is more than 50 lakhs, then the
case may be picked up for scrutiny.
In case the company has filed for any tax exemption viz. S. 10A, S.
80IC etc., then the return may be picked up for scrutiny.
Full texts of
relevant Notifications, Circulars and Forms are available on the BCAS website :
www.bcasonline.org
68 Income limits for assigning cases to Deputy
Commissioners/Assistant Commissioners, Income-tax officers increased, applicable
with effect from 1-4-2011 — Instruction No. 1/2011, dated 31-1-2011.
Metros charges for the
above purpose would be Ahmedabad, Bangalore, Chennai, Delhi, Kolkata,
Hyderabad, Mumbai and Pune.
86 Notification No. 42/2010 — Service Tax, dated 28-6-2010.
W.e.f. 1-7-2010, by this Notification the Central Government
has exempted taxable services of commercial or industrial construction when
provided wholly within the airport.
85 Notification No. 41/2010 — Service Tax, dated 28-6-2010.
W.e.f. 1-7-2010, by this Notification taxable services as
enlisted in the Notification have been exempted when provided wholly within the
port or other port or airport.
84 Notification No. 39/2010 — Service Tax, dated 28-6-2010.
W.e.f. 1-7-2010, by this Notification Service Tax Rules, 1994
have been amended to provide in respect of services of transportation of
passengers by air, an invoice or bill or challan shall include ticket in any
form.
83 Notification No. 38/2010 — Service Tax, dated 28-6-2010.
W.e.f. 1-7-2010, by this Notification commercial or
industrial construction services provided wholly within the port or other port
for construction, repair, alteration and renovation of wharves, quays, docks,
stages, jetties, piers and railways have been exempted.
82 Notification No. 37/2010 — Service Tax, dated 28-6-2010.
This Notification has amended the principal Notification
17/2009 — Service Tax, dated 7th July, 2009 (as lastly amended by Notification
No. 40/2009 — Service Tax, dated 30th September, 2009) by inserting the new
entry No. 18 to grant exemption to service provided by airport authority or any
other person in any airport in respect of the export of the goods.
81 Notification No. 36/2010 — Service Tax, dated 28-6-2010.
Finance Act, 2010 has brought in the net of service tax eight
new services and has modified the scope of nine existing services. Since these
changes become effective from 1-7-2010, activities that are covered under
taxable service categories due to such additions or modifications, would attract
service tax from this date. This Notification exempts service tax on the partial
or full amount received in advance by the service provider before 1-7-2010 in
respect of services that have become taxable from that date if in respect of
such advances such taxable services are provided after that date. However this
exemption would not apply to commercial training or coaching services and
renting of immovable property service.
Full texts of
relevant Notifications, Circulars and Forms are available on the BCAS website :
www.bcasonline.org
67 Instruction No. 3/2011 (F. No. 279/MISC. 142/2007-ITJ)
dated 9-2-2011 — Appeals and Revision of monetary limits for filing of appeals
by the Department before Income-tax Appellate Tribunal, High Courts and Supreme
Court — Section 268A of the Income-tax Act, 1961 — Measures for reducing
litigation (reproduced)
Reference is Invited to Board’s instruction No. 5/2008, dated
15-5-2008 wherein monetary limits and other conditions for filing Departmental
appeals (in income-tax matters) before the Appellate Tribunal, High Courts and
Supreme Court were specified.
2. In supersession of the above instruction, it has been
decided by the Board that Departmental appeals may be filed on merits before the
Appellate Tribunal, High Courts and Supreme Court keeping in view the monetary
limits and conditions specified below.
3. Henceforth appeals shall not be filed in cases where the
tax effect does not exceed the monetary limits given hereunder :
Sr. No.
Appeals in income-tax matters
Monetary limit
(in Rs.)
1.
Appeal before Appellate
Tribunal
3,00,000
2.
Appeal u/s.260A before High
Court
10,00,000
3.
Appeal before Supreme Court
25,00,000
It is clarified that an appeal should not be filed merely
because the tax effect in a case exceeds the monetary limits prescribed above.
Filing of appeal in such cases is to be decided on merits of the case.
4. For this purpose, ‘tax effect’ means the difference
between the tax on the total income assessed and the tax that would have been
chargeable had such total income been reduced by the amount of income in respect
of the issues against which appeal is intended to be filed (hereinafter referred
to as ‘disputed issues’). However, the tax will not include any interest
thereon, except where chargeability of interest itself is in dispute. In case
the chargeability of interest is the issue under dispute, the amount of interest
shall be the tax effect. In cases where returned loss is reduced or assessed as
income, the tax effect would include notional tax on disputed additions. In case
of penalty orders, the tax effect will mean quantum of penalty deleted or
reduced in the order to be appealed against.
5. The Assessing Officer shall calculate the tax effect
separately for every assessment year in respect of the disputed issues in the
case of every assessee. If, in the case of an assessee, the disputed issues
arise in more than one assessment year, appeal can be filed in respect of such
assessment year or years in which the tax effect in respect of the disputed
issues exceeds the monetary limit specified in paragraph 3. No appeal shall be
filed in respect of an assessment year or years in which the tax effect is less
than the monetary limit specified in paragraph 3. In other words, henceforth,
appeals can be filed only with reference to the tax effect in the relevant
assessment year. However, in case of a composite order of any High Court or
Appellate Authority, which involves more than one assessment year and common
issues in more than one assessment year, appeal shall be filed in respect of all
such assessment years even if the ‘tax effect’ is less than the prescribed
monetary limits in any of the year(s), if it is decided to file appeal in
respect of the year(s) in which ‘tax effect’ exceeds the monetary limit
prescribed. In case where a composite order/judgment involves more than one
assessee, each assessee shall be dealt with separately.
6. In a case where an appeal before a Tribunal or a Court is
not filed only on account of the tax effect being less than the monetary limit
specified above, the Commissioner of the Income Tax shall specifically record
that “even though the decision is not acceptable, appeal is not being filed only
on the consideration that the tax effect is less than the monetary limit
specified in this instruction”. Further, in such cases, there will be no
presumption that the Income Tax Department has acquiesced in the decision on the
disputed issues. The Income Tax Department shall not be precluded from filing an
appeal against the disputed issues in the case of the same assessee for any
other assessment year, or in the case of any other assessee for the same or any
other assessment year, if the tax effect exceeds the specified monetary limits.
7. In the past, a number of instances have come to the notice
of the Board, whereby an assessee has claimed relief from the Tribunal or the
Court only on the ground that the Department has implicitly accepted the
decision of the Tribunal or Court in the case of the assessee for any other
assessment year or in the case of any other assessee for the same or any other
assessment year, by not filing an appeal on the same disputed issues. The
Departmental representatives/counsels must make every effort to bring to the
notice of the Tribunal or the Court that the appeal in such cases was not filed
or not admitted only for the reason of the tax effect being less than the
specified monetary limit and, therefore, no inference should be drawn that the
decisions rendered therein were acceptable to the Department. Accordingly, they
should impress upon the Tribunal or the Court that such cases do not have any
precedent value. As the evidence of not filing appeal due to this instruction
may have to be produced in Courts, the judicial folders in the office of CsIT
must be maintained in a systemic manner for easy retrieval.
8. Adverse judgments relating to the following issues should
be contested on merits notwithstanding that the tax effect entailed is less than
the monetary limits specified in paragraph 3 above or there is no tax effect:
a) Where the Constitutional validity of the provi-sions of an Act or Rule are under challenge, or
b) Where Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or c) Where Revenue Audit objection in the case has been accepted by the Department.
9. The proposal for filing Special Leave Petition under Article 136 of the Constitution before the Supreme Court should, in all cases, be sent to the Directorate of Income-tax (Legal & Research), New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice.
10. The monetary limits specified in paragraph 3 above shall not apply to writ matters and direct tax matters other than Income-tax, filing of appeals in other direct tax matters shall continue to be governed by relevant provisions of the statute and rules. Further, filing of appeal in cases of Income-tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions u/s.12A of the Income-tax Act, 1961, shall not be governed by the limits specified in para 3 above and decision to file appeal in such cases may be taken on merits of a particular case.
This instruction will apply to appeals filed on or after?………?2011*. However, the cases where appeals have been filed before?…….?2011* will be governed by the instructions on this subject, operative at the time when such appeal was filed.
This issues u/s.268A(1) of the Income-tax Act,1961.
*As clarified subsequently, these instructions will apply to appeals filed on or after 9th February, 2011.
80 Notification No. 35/2010 — Service Tax, dated 22-6-2010.
By this Notification Central Government has amended the
Notification 9/2010 dated 27th February, 2010 to defer the levy of service tax
on taxable services provided by Government Railways to any person in relation to
transport of goods by rail to 1st January, 2011.
Full texts of
relevant Notifications, Circulars and Forms are available on the BCAS website :
www.bcasonline.org
66 Instructions No. 2/2011 (F.No. 225/25/2010/ITA-II), dated
9-2-2011 — Processing of returns of A.Y. 2010-11 — Section 143 of the Income-tax
Act, 1961 — Steps to —
(reproduced)
The issue of processing of returns for A.Y. 2010-11 and
giving credit for TDS has been considered by the Board. In order to clear the
backlog of returns, the following decisions have been taken :
(i) In all returns (ITR-1 to ITR-6), where the difference
between the TDS claim and matching TDS amount reported in AS-26 data does not
exceed Rs.1 lakh, the TDS claim may be accepted without verification.
(ii) Where there is zero TDS matching, TDS credit shall be
allowed only after due verification. However, in case of returns of ITR-1 and
ITR-2, credit may be allowed in full, even if there is zero matching, if the
total TDS claimed is Rs. five thousand or lower.
(iii) Where there are TDS claims with invalid TAN, TDS
credit for such claims is not to be allowed.
(iv) In all other cases TDS credit shall be allowed after
due verification.
Full texts of
relevant Notifications, Circulars and Forms are available on the BCAS website :
www.bcasonline.org
65 Press Release : Central Board of Direct Taxes — No.
402/92/2006-MC (04 of 2011), dated 12-2-2011.
India has entered into a Tax Information Exchange Agreement
(TIEA) with the Bahamas for sharing information, including exchange of banking
and ownership information. The Agreement was signed on 11th February 2011.
Full texts of
relevant Notifications, Circulars and Forms are available on the BCAS website :
www.bcasonline.org
64 CBDT Instructions No. F. No. 225/25/2010/ITA.II, dated
10-2-2010 regarding extension of time limit for filing ITR-V forms.
CBDT has extended the time limit for filing ITR-V forms
relating to income-tax returns for A.Y. 2010-11 filed electronically (without
digital signature) on or after 1st April, 2010. These ITR-V forms can now be
filed up to 31st July, 2011 or within a period of 120 days from the date of
uploading of the electronic return data, whichever is later.
24. Clarification from RBI for deduction of
tax at source on remittance of foreign exchange for import purposes : No.
FE.CO.FID.5759/22.20.001/2007-08, dated 11-9-2007.
As per the provisions of S. 195 of the Act, while remitting
any sum chargeable under the Act to a non-resident, tax needs to be deducted at
source. There was some confusion regarding tax to be deducted from remittances
for import of articles or things or computer software, etc. As per A.P. (DIR
Series) Circular No. 3, dated 19 July 2007, RBI clarified that remittance for
such imports also would need CA certification and the procedures prescribed in
CBDT Circular No. 10/2002 (F.No. 500/152/96-FTD) need to be followed. Since
various trade bodies and banks have approached RBI expressing their
apprehensions and difficulties in this matter, RBI has once again taken up the
matter with CBDT. Pending any clarification from the Board, it has been
clarified that the procedure prescribed by CBDT needs to be followed and in case
there are any doubts, the taxpayer needs to approach the Board directly.
4 Clarification regarding approvals of 100% EOUs for
the purpose of deduction u/ s.10B of the Act — Instruction No. 2/2009, dated
9-3-2009 (reproduced).
S. 10B of the Income-tax Act provides for exemption of
income in case of hundred percent export-oriented undertakings subject to
prescribed conditions. Explanation 2(iv) below to the said Section defines a
‘hundred percent export-oriented undertaking’ as an undertaking so approved
by the Board appointed in this behalf by the Central Government u/s.14 of
the Industries Development and Regulation Act, 1951. Subsequent to the
delegation of this power by the Ministry of Commerce and Industries to the
Development Commissioners, such approvals to 100% EOU’s are now being
granted by the Development Commissioners, which are later ratified by the
Board of Approvals.
The matter regarding validity of approvals given by
Development Commissioners has been examined in the Board. It has been
decided that an approval granted by the Development Commissioner in the case
of an export-oriented unit set up in an Export Processing Zone will be
considered valid, once such approval is ratified by the Board of Approval
for EOU scheme.
23 Method prescribed for determining the
amount of expenditure relating to exempt income : Income-tax (Fifth Amendment)
Rules, 2008, dated 24-3-2008.
Pursuant to an amendment in S. 14A of the Act, the Board has
prescribed a method to determine an amount of expenditure which can be
attributed to exempt income in cases when either the AO is not satisfied with
the correctness of the claim of the assessee for such expenditure or when the assessee has
claimed that no expenditure is incurred in relation to exempt income. As per the
said method the expenditure in relation to exempt income shall be aggregate of
the following 3 amounts :
Expenses directly relating to exempt income
Interest not directly relating to exempt income * Average of the amount of
investment, on the first and the last days of the year, which generates exempt
income/average of total assets as appearing on the balance sheet on the first
day and the last day of the year.
One-half percent of the average value of investment, on the first and the last
days of the year, which generates exempt income.
For the purpose of this Rule, total assets shall mean, total
assets as appearing in the balance sheet excluding the increase on account of
revaluation of assets but including the decrease on account of revaluation of
assets.
77 Exemption to electricity distribution services —
Notification No. 32/2010 — Service Tax, dated 22-6-2010.
From the date of this Notification exemption has been granted
to taxable services provided to any person, by a distribution licencee, a
distribution franchisee, or any other person by whatever name called, authorised
to distribute power under the Electricity Act, 2003, for distribution of
electricity.
75 Exemption in respect of specified sponsorship services —
Notification No. 30/2010 — Service Tax, dated 22-6-2010.
W.e.f. 1-7-2010, by this Notification exemption has been
provided to tournaments and championships organised by specified sports
authorities and organisations listed in the Notification.
74 Marginal relief to buyers of residential, commercial or
industrial properties under construction — Notification No. 29/2010 — Service
Tax, dated 22-6-2010
W.e.f. 1-7-2010, this Notification has amended Notification
No. 1/2006-Service Tax dated 1st March, 2006, so as to grant enhanced exemption
from so much of the service tax leviable as is in excess of the 25% (in place of
earlier 33%) of the value of gross amount charged for the services provided in
relation to commercial or industrial construction or construction of complex.
However, this exemption shall not apply where the cost of land has been
recovered separately from the buyer by the builder or his representative.
73 Exemption to construction of complex services to JNNURM &
RAY — Notification No. 28/2010 — Service Tax, dated 22-6-2010.
W.e.f. 1-7-2010, by this Notification Central Government has
exempted the taxable services of Construction of Complex as defined in Section
65(105)(zzzh) of the Act, provided to Jawaharlal Nehru National Urban Renewal
Mission & Rajiv Awaas Yojana from whole of the Service tax.
72 Exeption in respect of air travel from and to specified
places — Notification No. 27/2010 — Service Tax, dated 22-6-2010.
W.e.f. 1-7-2010, by this Notification the Central Government
has exempted the taxable service of air transport of passengers from whole of
service tax in respect of passengers embarking on a journey originating or
terminating in an airport located in Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim, Tripura or at Baghdogra of West Bengal.
71 Exemption in respect of transport of passengers by air
service — Notification No. 26/2010 — Service Tax, dated 22-6-2010.
W.e.f. 1-7-2010 by this Notification services provided by
aircraft operator to any passenger in relation to scheduled or non-scheduled air
transport in India for domestic or international journey have been exempted,
subject to conditions, from so much of service tax as is in excess of :
(a) ten percent of the gross value of the ticket or Rs.100
per journey, whichever is less, for passengers travelling in any class, within
India;
(b) ten percent of the gross value of the ticket or rupees
five hundred per journey, whichever is less, for passengers embarking in India
for an international journey in economy class. The expression economy class
has been explained in the Notification.
70 Architects, chartered engineers & licensed surveyors
authorised to issue completion certificate in construction services — Service
Tax (Removal of difficulty) Order, 2010 No. M.F. (D.R.) Order No. 1/2010, dated
22-6-2010.
W.e.f. 1-7-2010, by this Order architects, chartered
engineers and local licensed surveyors are authorised as competent authorities,
apart from government authorities, to issue completion certificate in relation
to commercial or industrial construction or construction of complex services.
Rule 67 regulates the manner of investment of Recognised
Provident Funds. This rule has been amended and now these funds can invest
up to 55% in Government securities and units of mutual funds which invest in
Government securities, 40% in prescribed debt securities and time deposit
receipts, 5% in money market instruments and 15% in derivatives of companies
available on BSE/NSE and equity-linked schemes of regulated mutual funds.
There are certain restrictions and conditions prescribed for each individual
limit aforementioned.
2 Insertion of Rules 37BA and 37I — Income-tax (Sixth
Amendment) Rules, 2009, — Notification No. 28/2009, dated 16-3-2009.
Rule 37BA has been inserted wherein the CBDT has
clarified certain issues relating to credit available u/s.199 of the Act on
TDS and TCS. Important clarifications issued are as under :
Credit shall be available based on the information
provided by the tax deductor to the tax authorities in the E-TDS returns
filed by them.
Credit
shall be available to persons other than the deductee in case :
clubbing provisions are attracted, or
income is taxed in the hands of beneficiaries of a trust or an AOP,
partner of a firm or karta of an HUF,
cases of joint ownership when the income is
clubbed with
the other person’s income, and the deductee provides details of name,
address and PAN of such other person to the deductor by way of a
declaration. In such cases the deductor needs to issue the certificate
in the name of the other person mentioned in the declaration.
Credit for TDS would be given in the year in which the
income is assessable to tax. In case the taxability of the income is
deferred, then the credit for tax would be allowed over the said period of
years in proportion to the income charged for each year.
Rule 37I has also been inserted with similar provisions
relating to tax collection at source.
1 CBDT has started issuing Annual Tax Statement to
assessees
The CBDT has started issuing Annual Tax Statement to
assessees, a consolidated statement in Form 26AS which gives details for a
particular tax year of details of tax deducted by the employer/others and
the taxes by way of advance tax/self-assessment tax during the said tax
year. The intention is verification of these details by the taxpayer for
getting suitable tax credit. The Department would rely on this while
processing the returns of assessees. In case there is some discrepancy
noticed by the tax payer, they should contact the tax deductor/relevant bank
to sort the same. Also the Tax Department should be intimated about the
errors.
Given below are the highlights of 6 Press Notes issued by the
Ministry of Commerce & Industry.
21 Press Note No. 6 (2008), dated 12-3-2008.
—FDI Policy for mining of titanium bearing minerals and ores.
The guidelines for mining of titanium bearing minerals and
ores are :
FDI up to 100% is allowed after obtaining prior approval of
FIPB in mining and mineral separation of titanium bearing minerals and ores, its
value addition and integrated activities, subject to sectoral regulations and
the Mines and Minerals (Development and Regulation) Act, 1957.
In case of separation of titanium bearing minerals and ores,
the following additional conditions will apply :
(a) Value addition facilities are set up in India along
with transfer of technology.
(b) Disposal of tailing during mineral separation will be
carried out in accordance with regulations framed by the Atomic Energy
Regulatory Board.
FDI will not be allowed in mining of ‘prescribed substances’
listed in the Government of India Notification No. S.O. 61(E), dated 18-1-2006
issued by the Department of Atomic Energy.
FDI policy Annexed to Press Note No. 4 (2006), dated 10-2-2006 stands
modified to the extent stated above.
Given below are the highlights of 6 Press Notes issued by the
Ministry of Commerce & Industry.
20 Press Note No. 5 (2008), dated 12-3-2008.
— Rationalisation of FDI Policy for the Petroleum & Natural Gas Sector.
FDI policy in the Petroleum & Natural Gas sector has been
rationalised as under :
(a) The condition of compulsory divestment of up to 26%
equity within 5 years, in case of 100% foreign ownership in companies engaged
in actual trading and marketing of petroleum products, stands deleted.
(b) FDI up to 49% is allowed after obtaining prior approval
of FIPB in petroleum refining by Public Sector Undertakings (PSU) without
involving any divestment or dilution of equity in existing PSU.
FDI policy Annexed to Press Note No. 4 (2006), dated
10-2-2006 stands modified to the extent stated above.
Given below are the highlights of 6 Press Notes issued by the
Ministry of Commerce & Industry.
19 Press Note No. 4 (2008), dated 12-3-2008.
— FDI Policy for the Civil Aviation Sector.
The guidelines for Foreign Direct Investment (FDI) in Civil
Aviation sector are :
Airports :
(a) Greenfield projects — FDI up to 100% is permitted under
the automatic route.
(b) Existing projects — FDI up to 100% is allowed. However,
investment beyond 74% will require FIPB approval.
Air Transport Services :
(a) Scheduled Air Transport Service/Domestic Scheduled
Passenger Airline — FDI up to 49% and investments by Non-Resident Indians (NRI)
up to 100% under the automatic route. However, foreign airlines cannot make
any investment, direct or indirect.
(b) Non-Scheduled Air Transport Service/Non-Scheduled
Airlines & Chartered Airlines — FDI up to 74% and investments by NRI up to
100% under the automatic route. However, foreign airlines cannot make any
investment, direct or indirect.
(c) Cargo Airlines — FDI up to 74% and investments by NRI
up to 100% under the automatic route.
(d) Helicopter Services/Seaplane Services requiring DGCA
approval — FDI up to 100% allowed under the automatic route.
Civil Aviation Sector :
(a) Ground Handling Services — FDI up to 74% and
investments by NRI up to 100% under the automatic route. This is subject to
sectoral regulations and security clearances.
(b) Maintenance and Repair organisations, flying training
institutes and technical training institutions — FDI up to 100% allowed under
the automatic route.
FDI policy Annexed to Press Note No. 4 (2006), dated
10-2-2006 stands modified to the extent stated above.
Given below are the highlights of 6 Press Notes issued by the
Ministry of Commerce & Industry.
18 Press Note No. 3 (2008), dated 12-3-2008.
— Guidelines for Foreign Direct Investment (FDI) in Credit Industrial Parks.
This press note clarifies that FDI up to 100% under the
automatic route will be allowed in established Industrial Parks as well as for
setting new Industrial Parks and the conditions mentioned in Press Note 2 (2005)
would not be applicable, provided :
1. The Industrial Park comprises of 10 units and no single
unit occupies more than 50% of the allocable area.
2. The minimum area allocated for industrial activity is
not less than 66% of the total allocable area of the Industrial Park.
Given below are the highlights of 6 Press Notes issued by the
Ministry of Commerce & Industry.
17 Press Note No. 2 (2008), dated 12-3-2008
— Guidelines for foreign Investment in Commodity Exchanges.
The guidelines for foreign investment in Commodity Exchanges
are :
1. Foreign investment i.e., Foreign Direct
Investment (FDI) and Portfolio Investment Scheme (PIS) is allowed up to 49%
after obtaining prior approval from FIPB.
2. Investment by FII under PIS will be limited to 23% and
they can buy only in the secondary market.
3. Investment under FDI will be limited to 26%.
4. No foreign investor/entity, including persons acting in
concert, can hold more than 5% of the equity in these companies.
Given below are the highlights of 6 Press Notes issued by the
Ministry of Commerce & Industry.
16 Press Note No. 1 (2008), dated 12-3-2008.
— Guidelines for Foreign Investment in Credit Information Companies.
The guidelines for foreign investment in Credit Information
Companies (CIC) are :
1. Foreign investment in CIC is subject to the Credit
Information Companies (Regulation) Act, 2005.
2. Foreign investment i.e., Foreign Direct
Investment (FDI) and Portfolio Investment Scheme (PIS) is allowed up to 49%
after obtaining prior approval from Foreign Investment Promotion Board (FIPB)
and regulatory clearance from RBI.
3. Foreign Institutional Investors (FII) can invest up to
24% in CIC listed on Stock Exchanges, provided :
(a) No single FII can directly or indirectly hold more
than 10% of the equity.
(b) Any acquisition in excess of 1% will have to be
reported to RBI.
(c) FII cannot seek representation on the Board of
Directors based on their shareholding.
In Annex to Press Note No. 4 (2006), dated 10-2-2006 ‘Credit
Reference Agencies’ is deleted from list of NBFC activities.
15 Non-filing of VAT returns : Trade Cir.
No. 7T of 2008, dated 5-3-2008.
The Circular states that in cases where show-cause notices
for prosecution due to non-filing of returns have been issued, and pursuant to
notices, the dealers file their returns before actual launch of prosecution
proceedings, the prosecution proceedings would be dropped. However, the interest
and penalty provisions would apply in these cases also. This relaxation would be
available only till 31-3-2008.
14 E-returns under MVAT : Trade Cir. No. 8T
of 2008 No. VAT/AMD-1007/1B/Adm-6 Mumbai, dated 19-3-2008.
It has now been made mandatory for registered dealers of
Maharashtra, whose tax liability in the previous year was Rs.1 crore or more to
file returns electronically for the periods starting on or after 1st February
2008. The condition which has been prescribed is that the tax payment needs to
be made first before filing the e-return. New forms have been prescribed in this
new scheme. Since it is a new scheme, for these dealers who are e-filing their
return of Vat, for the month of March, the due date has been extended till 31
March 2008. Templates of new return forms as well as detailed guidance is
provided on the new website of the Sales Tax Department www.mahavat.gov.in In
case the dealer has a digital signature, then the return can be uploaded along
with the signature, otherwise a paper return needs to be filed within 10 days of
uploading the e-return. In case of dealers not required to file the e-return,
they have the option to file their returns in the old or new forms. There is a
new procedure prescribed for certain dealers under the Package Scheme of
Incentives. Certain dealers were permitted to file separate returns for their
respective places or constituents of the business. This permission stands
withdrawn. There are other amendments also made for filing of returns by deemed
authorised dealers, as also change in periodicity for newly registered dealers.
13 Service Tax (Publication of Names) Rules,
2008 : Notification No. 15/2008-Service Tax, dated 1-3-2008.
These Rules have been notified so as to prescribe the rules
for publication of names and particulars of specified persons who have
intentionally evaded or failed to pay Service Tax. These names could be
published only after due dates of filing appeals at various stages have expired
and no appeals have been filed in this respect. Also, the jurisdictional
Commissioner of Excise would forward the proposal to print the names of
defaulters in the format prescribed to the Chief Commissioner who would in turn
clear/reject it within 15 days. In case it is cleared, then the proposal is
passed on to the Board, who on their own also, would publish such names. Further
guidelines have been issued in this matter vide Circular No. 100/3/2008-ST,
dated 12-3-2008.
12 In case of a person located outside
India, who for his customer who is also located outside India, books
accommodation in hotel in India, then provision of taxable service by such
person is exempted from Service Tax : Notification No. 14/2008-Service Tax,
dated 1-3-2008.
11 Unconditional exemption from service tax
is being provided to the extent of 75% of the gross amount charged as freight
for services provided by a goods transport agency in relation to transport of
goods by road in a goods carriage : Notification No. 13/2008-Service Tax, dated
1-3-2008.
10 Goods Transport Agency service is being
excluded from the scope of output service under CENVAT Credit Rules, 2004 :
Notification No. 12/2008-Service Tax, dated 1-3-2008.
9 Limit for registration of special
category of persons and exemption from registration hasbeen increased
from 7 lacs to 9 lacs w.e.f. 1-4-2008 : Notification No. 9/2008, 10/2008 and
11/2008-Service Tax, dated 1-3-2008.
The Core Group constituted by MCA for convergence of Indian
Accounting Standards with the International Financial Reporting Standards (IFRS)
had announced the approach and timelines for achieving convergence with IFRS on
22nd January 2010 and a separate approach on 31st March 2010 for the convergence
of Indian Accounting Standards by the banking companies, Insurance companies and
non-banking finance companies. Both the Press Releases are available on the
Ministry’s website at www.mca.gov.in.
In response to the requests, MCA has published a
‘Consolidated statement on clarifications on the roadmap for application of
converged Indian Accounting Standards by companies’ on 4th May 2010. This
statement provides clarity to the earlier announcements, which in turn should
facilitate a smoother transition to IFRS in India.
This statement can be accessed on www.mca.gov.in under Press Releases for
2010 under Information & Reports (Press Note 04/05/2010)
50 Revised versions of
Form 10, Form 17, Form 18, Form 19, Form 1A, Form 1B, Form 2, Form 20, Form 21,
Form 3, Form 35A, Form 37, Form 39, Form 5, Form 8, Form 62, Form 68, Form 25A,
Form 1 (statement of amounts credited to investor education and protection
fund), Form of annual return of a foreign company having a share capital are
required to be used from 9-5-2010 as the older versions have been discontinued.
49 SEBI has issued Circular No. CFD/DCR/5/2010, dated
7-5-2010 for making Annual Reports of listed companies easily accessible
Pursuant to the decision to discontinue the EDIFAR site,
SEBI, vide its Circular No. CIR/CFD/DCR/3/2010, dated April 16, 2010, has
advised all Stock Exchanges to carry out amendments to the Equity Listing
Agreement viz. omission of Clause 51 from the Listing Agreement.
Prior to its omission, Clause 51 of the Equity Listing
Agreement required listed companies to inter alia upload full version of Annual
Report on EDIFAR website. However with discontinuation of EDIFAR site, it has
become necessary to ensure that Annual Reports of listed companies are
available/easily accessible to investors on alternative sites. Accordingly all
Stock Exchanges are advised to make the Annual Reports for the financial year
2009-10 onwards, submitted to Stock Exchange as per Clause 31 of Equity Listing
Agreement, available on their respective websites.
This Circular states that the Government of India has omitted
item number 8 of Schedule II to the Foreign Exchange Management (Current Account
Transaction) Rules, 2000. As a result, foreign exchange can be withdrawn for
payment of royalty and lump sum payment under technical collaboration agreements
without prior approval of the Ministry of Commerce and Industries, Government of
India, irrespective of the amount involved.
Presently, Infrastructure Finance Companies (IFC) are
permitted to avail of ECB for on-lending to infrastructure sector, subject to
certain conditions, under the Approval Route.
This Circular now permits, subject to certain conditions IFC
to avail ECB (including outstanding ECB) up to 50% of their owned funds under
the Automatic Route. ECB exceeding the above limit can be availed under the
Approval Route.
45 A.P. (DIR Series) Circular No. 50, dated 4-5-2010 —
Release of foreign exchange for visits abroad — Currency component.
Presently, travellers proceeding to countries other than
Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of
Commonwealth of Independent States are permitted to carry foreign exchange in
the form of foreign currency notes and coins, up to US $ 2,000 or its
equivalent.
This Circular has increased this limit from US $ US $ 2,000
or its equivalent to US $ 3,000 or its equivalent with immediate effect, without
the prior permission from the Reserve Bank. Accordingly, travellers proceeding
to countries other than Iraq, Libya, Islamic Republic of Iran, Russian
Federation and other Republics of Commonwealth of Independent States are
permitted to carry foreign exchange in the form of foreign currency notes and
coins, up to US $ 3,000 or its equivalent. However, travellers proceeding to
Iraq or Libya are permitted to carry US $ 5,000 or its equivalent, out of the
overall foreign exchange released and travellers proceeding to the Islamic
Republic of Iran, Russian Federation and other Republics of Commonwealth of
Independent States can carry the full entitlement of foreign exchange in the
form of foreign currency notes and coins.
44 A.P. (DIR Series) Circular No. 49, dated 4-5-2010 —
Notification No. FEMA 205/2010-RB dated 7-4-2010 — Foreign Direct Investment
(FDI) in India — Transfer of shares/Preference shares/Convertible debentures by
way of sale — Revised pricing guidelines.
This Circular contains the revised the guidelines for
transfer of equity shares from a resident to a non-resident and from a
non-resident to a resident. The guidelines are applicable to transfer of shares
of an Indian company in all sectors. The said guidelines are as under :
(a) Where shares of an Indian company are listed on a
recognised stock exchange in India — The price of shares transferred by way of
sale shall not be less than the price at which a preferential allotment of
shares can be made under the SEBI Guidelines, as applicable, provided that the
same is determined for such duration as specified therein, preceding the
relevant date, which shall be the date of purchase or sale of shares.
(b) Where the shares of an Indian company are not listed on a
recognised stock exchange in India — The transfer of shares shall be at a price
not less than the fair value to be determined by a SEBI registered Category-I
Merchant Banker or a Chartered Accountant as per the discounted free cash flow
method.
The price per share arrived at should be certified by a SEBI
registered Category-I Merchant Banker /Chartered Accountant. Also, when the
transfer is from a non-resident to a resident, the price of shares transferred
by way of sale, must not be more than the minimum price at which the transfer of
shares can be made from a resident to a non-resident.
43 Clarification regarding availment of credit on input
services — Circular No. 122/03/2010-ST, dated 30-4-2010.
By this Circular following issues regarding avail-ment of
credit on Input services have been clarified :
(a) As per Rule 4(7) of the CENVAT Credit Rules, 2004, the
CENVAT credit on input services is available only on or after the day on which
payment is made of the value of input service and service tax. The Rule however,
does not mention form of payment, nor does it place restriction on payment
through debit in books of account or book adjustment. Therefore, it is clarified
that if the service charges as well as the service tax have been paid in any
prescribed manner so as to be entitled to be called ‘gross amount charged’
within the meaning of S.67(4) of the Finance Act, 1994, then credit should be
allowed under said Rule 4(7).
(b) In the cases where the receiver of service reduces the
amount mentioned in the invoice/bill/challan and makes discounted payment, then
it should be taken as final payment towards the provision of service. The
invoice in fact stands amended to that extent and accordingly credit taken would
be equivalent to the amount that is paid as service tax. The mere fact that
finally settled amount is less than the amount shown in the invoice, does not
disentitle the service receiver to take credit of input service tax paid.
42 No Service Tax on Container Detention Charges — Circular
No. 121/3/2010-ST, dated 26-4-2010.
By this Circular it has been clarified that in respect of
marine containers, full load of container is taken out of port and activity of
stuffing or de-stuffing is carried out at the place of exporter/ importer. The
shipping companies provide a pre-determined period within which the container is
to be returned which is called the pre-holding period. In case there is delay on
the part of the customer in returning the container, the charges known as
‘detention charges’ are collected. Such charges can best be called as ‘Penal
Rent’ for retaining the container beyond predetermined period. In such view of
the matter, to retain container beyond predetermined period is neither service
provided in the nature of Business Auxilliary Service, nor is it an
infrastructural support in the nature of Business Support Services. Therefore,
the amount collected as detention charges is not chargeable to service tax.
41 No Service Tax on Re-insurance Commission — Circular No.
120(a)/2/2010-ST, dated 16-4-2010.
By this Circular it has been clarified that the insurance
company in terms of S. 101A (Part IV-A) of the Insurance Act, 1938 is required
to re-insure a specified percentage of sum insured with another insurance
company. The shared amount of expenditure is commonly known as ‘Commission’
though strictly it is not in the nature of commission. Since the arrangement
between insurance company and re-insurance company is only sharing of expense
and there is no question of services provided by the insurance company to the
re-insurer for consideration. Hence question of charging service tax even under
any other taxable service does not arise.
40 Assessee rendering services in the nature of Modular
Employable Skill Course not to pay Service Tax — Notification No. 23/2010-ST,
dated 29-4-2010.
By this Notification exemption has been granted to taxable
services referred to in sub-clause (zzc) of clause (105) of S. 65 when provided
in relation to Modular Employable Skill Courses approved by the National Council
of Vocational Training.
To avail such exemption, the Vocational Trainer should be
registered under the Skill Development Initiatives Scheme with the Directorate
General of Employment and Training, Ministry of Labour & Employment, GOI.
39 Amendments to MVAT Rules 2005 — Circular No. 18T of 2010,
dated 18-5-2010.
Retailer opting for Composition of Tax and dealer having
liability to file six-monthly return shall be required to pay tax, from the end
of the six monthly period, within 30 days instead of 21 days and additional time
of 10 days from due date to upload the return continues to be available.
Amendment would apply for six-monthly period ending on 30th September, 2010 and
thereafter. Newly registered dealer now required to file quarterly return
instead of six-monthly return.
