Coins of 25 Paise and Below - Withdrawal from Circulation
RBI/2010-11/428
UBD.BPD. (PCB). Cir.No. 39 /09.73.000/2010-11
March 15, 2011
The Chief Executive Officers,
All Primary (Urban) Co-operative Banks.
Madam / Dear Sir,
Coins of 25 Paise and Below - Withdrawal from Circulation
Please refer to the Govt. of India Gazette Notification S.O 2978(E) dated December 20, 2010 and the Reserve Bank Press Release dated February 1, 2011 on the above subject (copies enclosed).
2. The Government of India has decided to withdraw coins of denomination of 25 paise and below from circulation with effect from June 30, 2011. The Reserve Bank of India has instructed the banks maintaining small coin depots to arrange for exchange of coins of denomination of 25 paise and below for their face value at their branches. The coins will be exchanged at the branches of these banks as also the offices of the Reserve Bank till the close of business on June 30, 2011. Coins of denomination of 25 paise and below will not be accepted for exchange at the bank branches from July 1, 2011 onwards. The UCBs may take note of the above instructions.
3. Please acknowledge receipt to the Regional Office concerned.
Yours faithfully
(Uma Shankar)
Chief General Manager
Friday, March 18, 2011
Thursday, March 17, 2011
What is GST?
What is GST?
If the news reports are to be believed, India may implement GST around October 2011. Hence, its just matter of few months more before GST becomes a reality. In the following paras the author has made an attempt to demystify GST 21 FAQs.
1. What is GST?
GST is abbreviation for Goods and Service Tax. GST would be levied on all the transactions of goods and services made for a consideration. This new levy would replace almost all of the indirect taxes. In particular, it would replace the following indirect taxes:
At Central level
• Central Excise Duty
• Service Tax
• Various additional Excise Duties
• Excise Duty levied on Medicinal and Toiletries preparations
• Additional Customs Duty (levied on imports in lieu of Excise duty)
• Special Additional Customs Duty (levied on imports in lieu of VAT)
• Central Sales Tax
• Surcharges and cesses
At State level
• VAT/Sales tax
• Purchase tax
• Entertainment tax (unless it is levied by the Local Authorities)
• Luxury Tax, Taxes on lottery/betting/gambling
• Entry tax not in lieu of Octroi
• Cesses and Surcharges
2. Which levies/products would be outside GST?
Products such as alcohol, tobacco and specified petroleum products would remain outside GST regime. Further, Land and properties may remain outside since they are neither goods nor services. Taxes such as Octroi, which is levied by municipal corporations, may also remain outside GST regime. Electricity duty is another levy which may remain outside GST regime.
In my view, keeping certain products outside GST regime and allowing parallel levies will only add to cascading effect than any good to industry/economy.
3. What are the international practices on GST?
Internationally, GST was first introduced in France and now more than 150 countries have introduced GST. Most of the countries, depending on their own socio-economic formation, have introduced National level GST or Dual GST.
4. How GST would be implemented in India?
India is implementing ‘dual GST’. In ‘dual GST’ regime, all the transactions of goods and services made for a consideration would attract two levies i.e. CGST (Central GST) and SGST (State GST).
5. Why GST is being introduced?
A product or service passes through many stages till it reaches the consumer. Governments at Central and State level have, as and when the need arose, introduced many indirect taxes on various taxable events in this value chain (such as Excise duty on ‘manufacture’, VAT on ‘sale’ etc).
As these taxes are levied on different taxable events they have their limitations. To illustrate further, let’s take example of Excise Duty. Excise duty is levied on ‘manufacture’ and thus it fails to tax the value addition at trader/retail sale level.
Additionally, at present, ‘goods’ primarily suffer two levies (Excise duty and VAT) whereas ‘taxable services’ suffer only one levy i.e. Service tax. This leads to distortion: distortion arises because the relative prices of serviceswould be lower as compared to goods.
Even though current indirect tax system treats goods and servicesdifferently, in certain cases there is double taxation. Software being one of such case where the industry has taken conservative stand and both VAT and Service Tax is being currently levied.
Also, there are restrictions on availment of credit such as a service provider cannot avail credit of VAT and a trader cannot avail credit of Service tax.
The above lacunas affect free flow of goods and services. Additionally, it brings uncertainty in the trade which is not good for the economy as a whole. GST is now being projected as a solution to all these problems.
6. Whether GST will cure all the problems prevalent in the current tax structure?
Though not all, but surely, most of the current issues will be resolved such as the classification, valuation, double taxation disputes etc. On a positive note, most of the credit which is not available will be available in GST regime such as the service provider will be eligible to avail credit of VAT, Luxury tax, Entertainment Tax etc. The compliances are also expected to reduce drastically.
7. How GST is different from the current tax structure?
GST is different from the current tax structure in many ways. Currently,indirect taxes treat goods and services differently. As mentioned above, ‘goods’ attract Excise duty at manufacturing level and VAT at the time of sale. In contrast, services attract only one levy i.e. Services tax on provision of taxable services.
This distinction, in GST regime, would loose its importance as both goods and services would be treated as par for taxing purposes. Supply of goods and services for a consideration would attract CGST and SGST. Thus, State Governments now get the power to tax services and Central Government gets the power to levy tax at the trader and retail level.
8. When GST would be introduced?
Though, over the last 3-4 years Government worked with great perseverance to introduce GST and the Finance Minister also had assured and reassured the Parliament that it will be his earnest endeavour to introduce GST along with the DTC in April, 2011. However, then the FM announced that it will not be possible to introduce GST in April 2011.
However, S Dutt Majumdar, Member (Central Excise), Central Board of Excise and Customs (CBEC), has stated that GST is likely to be introduced from October 2011.
9. What about the legislations and the rules?
GST would be implemented with single CGST statute which would beapplicable across India. However, for SGST, each state will have its own statute. At present, the Government is working on the requisite constitutional amendments, the draft legislation and the rules. It appears that the draft GST legislation may be made public, for feedback, at a date near December 2010.
10. What would be the rate?
The Finance Minister at the meeting with the Empowered Committee of State Finance Ministers on 21 July 2010 announced that ‘services’ would attract 8% CGST and 8% SGST each whereas ‘goods’ would attract GST at the following rates:
Particulars Goods
CGST SGST
Lower rate Standard rate Lower rate Standard rate
Year 1 6% 10% 6% 10%
Year 2 6% 9% 6% 9%
Year 3 8% 8% 8% 8%
Thus, year 3 onwards India may have a single cumulative GST rate of 16% spanning across goods and services.
It is worth noting that the proposed cumulative rate of GST is much higher than the Revenue Neutral Rate suggested by the Thirteenth Finance Commission (TFC). TFC had suggested a rate of 5% CGST and 7% SGST.
It appears that the Government is reviewing the existing exemptions so that the list of goods exempt from CGST is aligned to the SGST list and 99 items currently exempt from VAT may be exempt from both components of GST.
11. How the input tax credit mechanism would work in GST?
Input tax credit of CGST would be available for payment of CGST and input tax credit of SGST would be available for payment of SGST. Thus, effectively GST may be levied on the value addition.
It may be noted that input tax credit of CGST would be available for payment of CGST and input tax credit of SGST would be available for payment of SGST. However, cross utilization of tax credit between the Central GST and the State GST would be allowed in the case of inter-State supply of goods and services under the IGST model.
12. What about the current input tax credit balance?
Looking at the experience we have on VAT introduction, it appears that, the input credit balances may be allowed to be carried forward and set off against CGST and SGST subject to certain conditions.
13. Whether there would be any basic exemption limit?
The Finance Minister of India at the meeting with the Empowered Committee of State Finance Ministers on 21 July 2010 announced that there would basic exemption threshold Rs. 10 lakhs for both CGST and SGST.
However, the speech was silent about the basic exemption threshold for ‘Integrated GST’.
14. How Interstate transactions will be taxed?
First Discussion Paper categorically states that all the inter-State transactions of goods and services would attract IGST (which would beCGST plus SGST). Also, there would be appropriate provision forconsignment or stock transfers.
The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. Centre will transfer to the importing State credit of IGST used in payment of SGST.
15. How to tax transactions of interstate supply of ‘services’?
Given the intangible nature of ‘services’ it would not be simple to tax the inter-State transaction of services. Hence, in GST regime, Government will have to introduce appropriate Place of Supply Rules to determine the place of consumption of service.
At present, place of supply rules exist in case export of services [Export of Services Rules, 2005] and import [Taxation of Services (Provided from outside India & Received in India), Rules, 2006. To tax interstate supply of services, on similar lines the Government may introduce place of supply rules. In my view the Government should also consider the ‘Place of Supply Rules’ which are prevalent in European Union (EU has 27 member countries).
16. Whether there would be any special provisions for small tax payers?
The First Discussion Paper suggest that tax payers having turnover of less than Rs. 50 lacs can opt for Composition scheme wherein they need to discharge tax at a floor rate of 0.50%.
17. How exports and SEZ would be treated?
Exports would be zero rated, as currently they are. In case of SEZ, if the supply of goods or services is for consumption in processing zone then it would be zero rated. Supply of goods and services from SEZ to domestic tariff area would be treated as domestic transaction and taxed.
18. How imports would be taxed?
Currently, import of ‘goods’ normally suffers ACD (in lieu of Excise duty) at the rate of 10.30% and SACD (in lieu of VAT) at the rate of 4%. On import of ‘taxable services’, Service tax is attracted. In GST regime, both CGST and SGST would be levied on import of goods and services.
Consecutively, import of services will become costlier as service import would attract GST at the rate of 16% as compared to the present Service tax rate of 10.30%. Even, import of goods may become cheaper or costlier depending on the fact whether they attract GST at lower rate (12%) or standard rate (20%).
GST paid on goods and services would be eligible for input tax credit.
19. How GST would be administered?
It appears that CGST will be administered by ‘Central Government’ and SGST will administered by the respective State Governments. So, an assessee will have to liaise with these two Departments.
At present, a manufacturer liaises with two Departments viz. Excise Department (for excise duty) and VAT Department (for sales tax). Whereas, a service provider and trader deals with only one Department, Service Tax Department and VAT Department respectively. So in GST regime, the service providers and traders will have to deal with two departments.
20. How the Government would ensure that proper IT infrastructure is in place?
For the purpose of simplification and to minimize physical interference between taxpayer and administration, the Government is keen to have robust IT infrastructure in place before introduction of GST. To facilitate such infrastructure FM proposed constitution of an Empowered Group chaired by Dr. Nilekani with joint representation from the Centre and the States which would be authorized to take decisions about the size, features and functionalities of such IT system.
If the news reports are to be believed, India may implement GST around October 2011. Hence, its just matter of few months more before GST becomes a reality. In the following paras the author has made an attempt to demystify GST 21 FAQs.
1. What is GST?
GST is abbreviation for Goods and Service Tax. GST would be levied on all the transactions of goods and services made for a consideration. This new levy would replace almost all of the indirect taxes. In particular, it would replace the following indirect taxes:
At Central level
• Central Excise Duty
• Service Tax
• Various additional Excise Duties
• Excise Duty levied on Medicinal and Toiletries preparations
• Additional Customs Duty (levied on imports in lieu of Excise duty)
• Special Additional Customs Duty (levied on imports in lieu of VAT)
• Central Sales Tax
• Surcharges and cesses
At State level
• VAT/Sales tax
• Purchase tax
• Entertainment tax (unless it is levied by the Local Authorities)
• Luxury Tax, Taxes on lottery/betting/gambling
• Entry tax not in lieu of Octroi
• Cesses and Surcharges
2. Which levies/products would be outside GST?
Products such as alcohol, tobacco and specified petroleum products would remain outside GST regime. Further, Land and properties may remain outside since they are neither goods nor services. Taxes such as Octroi, which is levied by municipal corporations, may also remain outside GST regime. Electricity duty is another levy which may remain outside GST regime.
In my view, keeping certain products outside GST regime and allowing parallel levies will only add to cascading effect than any good to industry/economy.
3. What are the international practices on GST?
Internationally, GST was first introduced in France and now more than 150 countries have introduced GST. Most of the countries, depending on their own socio-economic formation, have introduced National level GST or Dual GST.
4. How GST would be implemented in India?
India is implementing ‘dual GST’. In ‘dual GST’ regime, all the transactions of goods and services made for a consideration would attract two levies i.e. CGST (Central GST) and SGST (State GST).
5. Why GST is being introduced?
A product or service passes through many stages till it reaches the consumer. Governments at Central and State level have, as and when the need arose, introduced many indirect taxes on various taxable events in this value chain (such as Excise duty on ‘manufacture’, VAT on ‘sale’ etc).
As these taxes are levied on different taxable events they have their limitations. To illustrate further, let’s take example of Excise Duty. Excise duty is levied on ‘manufacture’ and thus it fails to tax the value addition at trader/retail sale level.
Additionally, at present, ‘goods’ primarily suffer two levies (Excise duty and VAT) whereas ‘taxable services’ suffer only one levy i.e. Service tax. This leads to distortion: distortion arises because the relative prices of serviceswould be lower as compared to goods.
Even though current indirect tax system treats goods and servicesdifferently, in certain cases there is double taxation. Software being one of such case where the industry has taken conservative stand and both VAT and Service Tax is being currently levied.
Also, there are restrictions on availment of credit such as a service provider cannot avail credit of VAT and a trader cannot avail credit of Service tax.
The above lacunas affect free flow of goods and services. Additionally, it brings uncertainty in the trade which is not good for the economy as a whole. GST is now being projected as a solution to all these problems.
6. Whether GST will cure all the problems prevalent in the current tax structure?
Though not all, but surely, most of the current issues will be resolved such as the classification, valuation, double taxation disputes etc. On a positive note, most of the credit which is not available will be available in GST regime such as the service provider will be eligible to avail credit of VAT, Luxury tax, Entertainment Tax etc. The compliances are also expected to reduce drastically.
7. How GST is different from the current tax structure?
GST is different from the current tax structure in many ways. Currently,indirect taxes treat goods and services differently. As mentioned above, ‘goods’ attract Excise duty at manufacturing level and VAT at the time of sale. In contrast, services attract only one levy i.e. Services tax on provision of taxable services.
This distinction, in GST regime, would loose its importance as both goods and services would be treated as par for taxing purposes. Supply of goods and services for a consideration would attract CGST and SGST. Thus, State Governments now get the power to tax services and Central Government gets the power to levy tax at the trader and retail level.
8. When GST would be introduced?
Though, over the last 3-4 years Government worked with great perseverance to introduce GST and the Finance Minister also had assured and reassured the Parliament that it will be his earnest endeavour to introduce GST along with the DTC in April, 2011. However, then the FM announced that it will not be possible to introduce GST in April 2011.
However, S Dutt Majumdar, Member (Central Excise), Central Board of Excise and Customs (CBEC), has stated that GST is likely to be introduced from October 2011.
9. What about the legislations and the rules?
GST would be implemented with single CGST statute which would beapplicable across India. However, for SGST, each state will have its own statute. At present, the Government is working on the requisite constitutional amendments, the draft legislation and the rules. It appears that the draft GST legislation may be made public, for feedback, at a date near December 2010.
10. What would be the rate?
The Finance Minister at the meeting with the Empowered Committee of State Finance Ministers on 21 July 2010 announced that ‘services’ would attract 8% CGST and 8% SGST each whereas ‘goods’ would attract GST at the following rates:
Particulars Goods
CGST SGST
Lower rate Standard rate Lower rate Standard rate
Year 1 6% 10% 6% 10%
Year 2 6% 9% 6% 9%
Year 3 8% 8% 8% 8%
Thus, year 3 onwards India may have a single cumulative GST rate of 16% spanning across goods and services.
It is worth noting that the proposed cumulative rate of GST is much higher than the Revenue Neutral Rate suggested by the Thirteenth Finance Commission (TFC). TFC had suggested a rate of 5% CGST and 7% SGST.
It appears that the Government is reviewing the existing exemptions so that the list of goods exempt from CGST is aligned to the SGST list and 99 items currently exempt from VAT may be exempt from both components of GST.
11. How the input tax credit mechanism would work in GST?
Input tax credit of CGST would be available for payment of CGST and input tax credit of SGST would be available for payment of SGST. Thus, effectively GST may be levied on the value addition.
It may be noted that input tax credit of CGST would be available for payment of CGST and input tax credit of SGST would be available for payment of SGST. However, cross utilization of tax credit between the Central GST and the State GST would be allowed in the case of inter-State supply of goods and services under the IGST model.
12. What about the current input tax credit balance?
Looking at the experience we have on VAT introduction, it appears that, the input credit balances may be allowed to be carried forward and set off against CGST and SGST subject to certain conditions.
13. Whether there would be any basic exemption limit?
The Finance Minister of India at the meeting with the Empowered Committee of State Finance Ministers on 21 July 2010 announced that there would basic exemption threshold Rs. 10 lakhs for both CGST and SGST.
However, the speech was silent about the basic exemption threshold for ‘Integrated GST’.
14. How Interstate transactions will be taxed?
First Discussion Paper categorically states that all the inter-State transactions of goods and services would attract IGST (which would beCGST plus SGST). Also, there would be appropriate provision forconsignment or stock transfers.
The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer will claim credit of IGST while discharging his output tax liability in his own State. Centre will transfer to the importing State credit of IGST used in payment of SGST.
15. How to tax transactions of interstate supply of ‘services’?
Given the intangible nature of ‘services’ it would not be simple to tax the inter-State transaction of services. Hence, in GST regime, Government will have to introduce appropriate Place of Supply Rules to determine the place of consumption of service.
At present, place of supply rules exist in case export of services [Export of Services Rules, 2005] and import [Taxation of Services (Provided from outside India & Received in India), Rules, 2006. To tax interstate supply of services, on similar lines the Government may introduce place of supply rules. In my view the Government should also consider the ‘Place of Supply Rules’ which are prevalent in European Union (EU has 27 member countries).
16. Whether there would be any special provisions for small tax payers?
The First Discussion Paper suggest that tax payers having turnover of less than Rs. 50 lacs can opt for Composition scheme wherein they need to discharge tax at a floor rate of 0.50%.
17. How exports and SEZ would be treated?
Exports would be zero rated, as currently they are. In case of SEZ, if the supply of goods or services is for consumption in processing zone then it would be zero rated. Supply of goods and services from SEZ to domestic tariff area would be treated as domestic transaction and taxed.
18. How imports would be taxed?
Currently, import of ‘goods’ normally suffers ACD (in lieu of Excise duty) at the rate of 10.30% and SACD (in lieu of VAT) at the rate of 4%. On import of ‘taxable services’, Service tax is attracted. In GST regime, both CGST and SGST would be levied on import of goods and services.
Consecutively, import of services will become costlier as service import would attract GST at the rate of 16% as compared to the present Service tax rate of 10.30%. Even, import of goods may become cheaper or costlier depending on the fact whether they attract GST at lower rate (12%) or standard rate (20%).
GST paid on goods and services would be eligible for input tax credit.
19. How GST would be administered?
It appears that CGST will be administered by ‘Central Government’ and SGST will administered by the respective State Governments. So, an assessee will have to liaise with these two Departments.
At present, a manufacturer liaises with two Departments viz. Excise Department (for excise duty) and VAT Department (for sales tax). Whereas, a service provider and trader deals with only one Department, Service Tax Department and VAT Department respectively. So in GST regime, the service providers and traders will have to deal with two departments.
20. How the Government would ensure that proper IT infrastructure is in place?
For the purpose of simplification and to minimize physical interference between taxpayer and administration, the Government is keen to have robust IT infrastructure in place before introduction of GST. To facilitate such infrastructure FM proposed constitution of an Empowered Group chaired by Dr. Nilekani with joint representation from the Centre and the States which would be authorized to take decisions about the size, features and functionalities of such IT system.
Monday, January 31, 2011
Supreme Court stays order of Delhi High Court stopping Centre from recovering Service Tax on Renting of Immovable Property for commercial use.
A BREAKING NEWS:
Supreme Court stays order of Delhi High Court stopping Centre from recovering Service Tax on Renting of Immovable Property for commercial use.
Supreme Court stays order of Delhi High Court stopping Centre from recovering Service Tax on Renting of Immovable Property for commercial use.
Service Tax Audit Norms
Dear Professional Colleague,
Please find attached norms of audits for service tax assessees.
QUOTE
Frequency Norms of Audit for Service Tax Assessees
Director General of Audit, New Delhi has published Service Tax Audit Manual, 2010. As per the guidelines, tax payers whose annual service tax payment (including cash and CENVAT) was Rs.3 crore or more in the preceding financial year may be subjected to mandatory audit each year. It is preferable that Audit of all such Units is done by using Computer Assisted Audit Program (CAAP) techniques. The frequency of audit for other taxpayers would be as per following norms:-
i. Taxpayers with Service Tax payment above Rs.3 crores (Cash + CENVAT) (MANDATORY UNITS) – to be audited every year.
ii. Taxpayers with Service Tax payment between Rs.1 crore and Rs.3 crores (Cash + CENVAT) – to be audited once every two years.
iii. Taxpayers with Service Tax payment between Rs.25 lakhs and Rs.1 crore (Cash + CENVAT) – to be audited once every five years.
iv. Taxpayers with Service Tax payment upto Rs.25 lakhs (Cash + CENVAT) – 2% of taxpayers to be audited every year.
The Audit selection guidelines, therefore, would apply to the non-mandatory taxpayers, forming part of the discretionary workload. These taxpayers should be selected on the basis of assessment of the risk potential to revenue. This process, which is an essential feature of audit selection, is known as Risk Assessment. It involves the ranking of taxpayers according to a quantitative indicator of risk known as a “risk parameter”. It is also suggested that the taxpayers whose returns were selected for detailed scrutiny, may not be taken up for Audit that year, to avoid duplication of work. Similarly, the taxpayers who have been selected for Audit, may not be taken up for detailed scrutiny of their ST-3 Returns during that year.
Please find attached norms of audits for service tax assessees.
QUOTE
Frequency Norms of Audit for Service Tax Assessees
Director General of Audit, New Delhi has published Service Tax Audit Manual, 2010. As per the guidelines, tax payers whose annual service tax payment (including cash and CENVAT) was Rs.3 crore or more in the preceding financial year may be subjected to mandatory audit each year. It is preferable that Audit of all such Units is done by using Computer Assisted Audit Program (CAAP) techniques. The frequency of audit for other taxpayers would be as per following norms:-
i. Taxpayers with Service Tax payment above Rs.3 crores (Cash + CENVAT) (MANDATORY UNITS) – to be audited every year.
ii. Taxpayers with Service Tax payment between Rs.1 crore and Rs.3 crores (Cash + CENVAT) – to be audited once every two years.
iii. Taxpayers with Service Tax payment between Rs.25 lakhs and Rs.1 crore (Cash + CENVAT) – to be audited once every five years.
iv. Taxpayers with Service Tax payment upto Rs.25 lakhs (Cash + CENVAT) – 2% of taxpayers to be audited every year.
The Audit selection guidelines, therefore, would apply to the non-mandatory taxpayers, forming part of the discretionary workload. These taxpayers should be selected on the basis of assessment of the risk potential to revenue. This process, which is an essential feature of audit selection, is known as Risk Assessment. It involves the ranking of taxpayers according to a quantitative indicator of risk known as a “risk parameter”. It is also suggested that the taxpayers whose returns were selected for detailed scrutiny, may not be taken up for Audit that year, to avoid duplication of work. Similarly, the taxpayers who have been selected for Audit, may not be taken up for detailed scrutiny of their ST-3 Returns during that year.
Friday, January 28, 2011
Family Members Investments Qualified Under Section 80C
Family Members Investments Qualified Under Section 80C
There has always been misunderstanding in the mind of us toward claiming the deduction under section 80c for investment made on behalf of the family members. In this article, we will talk about all circumstances, where an individual can get the benefit of deduction u/s 80C for payment on behalf of his/her family members. Every person should plan his investments and plan his taxes. Section 80C of Income tax is one of the parts for tax planning. This article seeks to explain the various common questions arise in the mind of a layman like -
• Can I get the deduction u/s 80C for payment on behalf of my wife ?
• Whether making payment of LIC premium to policy of major child will be eligible for claim under section 80C?
• Whether payment of LIC premium of my independent and major child will be eligible for deduction u/s 80C?
An individual can avail the benefit of deduction under section 80C for payment of investments on behalf of his/her family members (Individual/Spouse/Children) up to Rs. 1,00,000.
1. Annuity plans
2. Life Insurance Premium
3. Public Provident Fund
4. ULIP
Life Insurance Premium
In case of an individual policy should be taken on his own life, of the spouse or any child.
Annuity Plan
Annuity plan should be taken in the name of the individual, his wife/her husband on any child of such individual.
Public Provident Fund (PPF)
An individual can open public provident fund account in his own name or in the name of minor of whom he is the guardian. One can get the deduction u/s 80c, deposit in his own account, or his/her spouse or in the account of his /her children.
• Important Note: Under Public Provident Fund (PPF) the maximum contribution is Rs. 70,000/-.
ULIP
ULIP should be taken on his own life, life of the spouse or any child.
Important Notes:
• Hindu Undivided Family (HUF) can also avail the deduction u/s 80C for investment on the name of any member of the family.
Child may be
• Dependent/independent,
• Male/female,
• Minor/major,
• Married/unmarried
Example for life insurance Premium paid for family members
Compute the eligible deduction u/s 80C for payment by a on behalf of his family members as following
1. LIP (Life Insurance Premium) on his own life – Rs. 20000/-
2. LIP on the life of his wife – Rs. 30000/-
3. LIP on the life of his major son (Not Dependent on A) – Rs. 40000/-
4. LIP on the life of his dependent brother – Rs. 5000/-
Amount eligible for deduction u/s 80C will be Rs. 90000 (20000+30000+40000) except LIP on the life of his dependent brother.
There has always been misunderstanding in the mind of us toward claiming the deduction under section 80c for investment made on behalf of the family members. In this article, we will talk about all circumstances, where an individual can get the benefit of deduction u/s 80C for payment on behalf of his/her family members. Every person should plan his investments and plan his taxes. Section 80C of Income tax is one of the parts for tax planning. This article seeks to explain the various common questions arise in the mind of a layman like -
• Can I get the deduction u/s 80C for payment on behalf of my wife ?
• Whether making payment of LIC premium to policy of major child will be eligible for claim under section 80C?
• Whether payment of LIC premium of my independent and major child will be eligible for deduction u/s 80C?
An individual can avail the benefit of deduction under section 80C for payment of investments on behalf of his/her family members (Individual/Spouse/Children) up to Rs. 1,00,000.
1. Annuity plans
2. Life Insurance Premium
3. Public Provident Fund
4. ULIP
Life Insurance Premium
In case of an individual policy should be taken on his own life, of the spouse or any child.
Annuity Plan
Annuity plan should be taken in the name of the individual, his wife/her husband on any child of such individual.
Public Provident Fund (PPF)
An individual can open public provident fund account in his own name or in the name of minor of whom he is the guardian. One can get the deduction u/s 80c, deposit in his own account, or his/her spouse or in the account of his /her children.
• Important Note: Under Public Provident Fund (PPF) the maximum contribution is Rs. 70,000/-.
ULIP
ULIP should be taken on his own life, life of the spouse or any child.
Important Notes:
• Hindu Undivided Family (HUF) can also avail the deduction u/s 80C for investment on the name of any member of the family.
Child may be
• Dependent/independent,
• Male/female,
• Minor/major,
• Married/unmarried
Example for life insurance Premium paid for family members
Compute the eligible deduction u/s 80C for payment by a on behalf of his family members as following
1. LIP (Life Insurance Premium) on his own life – Rs. 20000/-
2. LIP on the life of his wife – Rs. 30000/-
3. LIP on the life of his major son (Not Dependent on A) – Rs. 40000/-
4. LIP on the life of his dependent brother – Rs. 5000/-
Amount eligible for deduction u/s 80C will be Rs. 90000 (20000+30000+40000) except LIP on the life of his dependent brother.
Tuesday, January 18, 2011
How to read CIN(Corporate Identification Number) of a company?
CIN IS OF 21 DIGIT NO.
1st digit Listing status
Next 5 digit Industry code
Next 2 digit State code
Next 4 digit Year of incorporation
Next 3 digit Ownership
Last 6 digit ROC reg.
1st digit Listing status
Next 5 digit Industry code
Next 2 digit State code
Next 4 digit Year of incorporation
Next 3 digit Ownership
Last 6 digit ROC reg.
Monday, January 17, 2011
Stay Petitions: Recovery of outstanding tax demands
FULL TEXT OF IMPORTANT INSTRUCTIONS
Recovery of outstanding tax demands
[Instruction No. 1914 F. No. 404/72/93 ITCC dated 2-12-1993 from CBDT]
The Board has felt the need for a comprehensive instruction on the subject of recovery of tax demand in order to streamline recovery procedures. This instruction is accordingly being issued in supersession of all earlier instructions on the subject and reiterates the existing Circulars on the subject.
The Board is of the view that, as a matter of principle, every demand should be recovered as soon as it becomes due. Demand may be kept in abeyance for valid reasons only in accordance with the guidelines given below :
Responsibility:
It shall be the responsibility of the Assessing Officer and the TRO to collect every demand that has been raised, except the following : (a) Demand which has not fallen due;(b) Demand which has been stayed by a Court or ITAT or Settlement Commission;(c) Demand for which a proper proposal for write-off has been submitted;(d) Demand stayed in accordance with paras B & C below.
Where demand in respect of which a recovery certificate has been issued or a statement has been drawn, the primary responsibility for the collection of tax shall rest with the TRO.
It would be the responsibility of the supervisory authorities to ensure that the Assessing Officers and the TROs take all such measures as are necessary to collect the demand. It must be understood that mere issue of a show cause notice with no follow-up is not to be regarded as adequate effort to recover taxes.
Stay Petitions:
Stay petitions filed with the Assessing Officers must be disposed of within two weeks of the filing of petition by the tax- payer. The assessee must be intimated of the decision without delay.
Where stay petitions are made to the authorities higher than the Assessing Officer (DC/CIT/CC), it is the responsibility of the higher authorities to dispose of the petitions without any delay, and in any event within two weeks of the receipt of the petition. Such a decision should be communicated to the assessee and the Assessing Officer immediately.
The decision in the matter of stay of demand should normally be taken by Assessing Officer/TRO and his immediate superior. A higher superior authority should interfere with the decision of the AO/TRO only in exceptional circumstances; e.g., where the assessment order appears to be unreasonably high-pitched or where genuine hardship is likely to be caused to the assessee. The higher authorities should discourage the assessee from filing review petitions before them as a matter of routine or in a frivolous manner to gain time for withholding payment of taxes.
Guidelines for staying demand:
A demand will be stayed only if there are valid reasons for doing so. Mere filing an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. A few illustrative situations where stay could be granted are:
It is clarified that in these situations also, stay may be granted only in respect of the amount attributable to such disputed points. Further where it is subsequently found that the assessee has not co-operated in the early disposal of appeal or where a subsequent pronouncement by a higher appellate authority or court alters the above situation, the stay order may be reviewed and modified. The above illustrations are, of course, not exhaustive.
In granting stay, the Assessing Officer may impose such conditions as he may think fit. Thus he may — a. require the assessee to offer suitable security to safeguard the interest of revenue;b. require the assessee to pay towards the disputed taxes a reasonable amount in lump sum or in instalments;c. require an undertaking from the assessee that he will co-operate in the early disposal of appeal failing which the stay order will be cancelled.d. reserve the right to review the order passed after expiry of a reasonable period, say up to 6 months, or if the assessee has not co-operated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations;e. reserve a right to adjust refunds arising, if any, against the demand.
Payment by instalments may be liberally allowed so as to collect the entire demand within a reasonable period not exceeding 18 months.
Since the phrase "stay of demand" does not occur in section 220(6) of the Income-tax Act, the Assessing Officer should always use in any order passed under section 220(6) [or under section 220(3) or section 220(7)], the expression that occurs in the section viz., that he agrees to treat the assessee as not being default in respect of the amount specified, subject to such conditions as he deems fit to impose.
While considering an application under section 220(6), the Assessing Officer should consider all relevant factors having a bearing on the demand raised and communicate his decision in the form of a speaking order.
Miscellaneous:
Even where recovery of demand has been stayed, the Assessing Officer will continue to review the situation to ensure that the conditions imposed are fulfilled by the assessee failing which the stay order would need to be withdrawn.
Where the assessee seeks stay of demand from the Tribunal, it should be strongly opposed. If the assessee presses his application, the CIT should direct the departmental representative to request that the appeal be posted within a month so that Tribunal’s order on the appeal can be known within two months.
Appeal effects will have to be given within 2 weeks from the receipt of the appellate order. Similarly, rectification application should be decided within 2 weeks of the receipt t hereof. Instances where there is undue delay in giving effect to appellate orders, or in deciding rectification applications, should be dealt with very strictly by the CCITs/CITs.
The Board desires that appropriate action is taken in the matter of recovery in accordance with the above procedure. The Assessing Officer or the TRO, as the case may be, and his immediate superior officer shall be held responsible for ensuring compliance with these instructions.
This procedure would apply mutatis mutandis to demands created under other Direct Taxes enactments also.
Part payment of outstanding demand — Clarification regarding adjustment thereof
[Instruction No. 1936 - F. No. 404/62/95-ITCC dated 21-3-1996 from CBDT]
A question has been referred to the Board seeking clarification that :
"If the tax paid by the assessee is not sufficient to cover the total demand then should it first be adjusted against the interest."
The Board have been informed that the Assessing Officers are not following any uniform procedure in this regard. While one set of Assessing Officers are first adjusting the part payment received from the assessee against the tax due, the others are adjusting the part payments towards the outstanding interest due under section 220(2). The matter was referred to the Ministry of Law for their opinion and they have also observed that both the views are possible.
For the sake of uniformity the Board have decided that part payment received from assessee should first be adjusted towards the tax due and not the interest calculated under section 220(2) of the Income-tax Act.
The aforesaid instruction may be brought to the notice all officers working under your charge.
Clarification regarding charging of interest u/ss. 201(1A) and 220(2) of Income-tax Act
[Instruction No. 1944 — F. No. 275/14/97-IT(B) dated 27-8-1997 issued by CBDT]
The Central Board of Direct Taxes have received several representations seeking clarification about the simultaneous charging of interest u/s. 201(1A) and u/s. 220(2) of the Income-tax
Act, 1961.
After due consideration, it is hereby clarified that for non-deduction of tax at source or failure to pay the tax after deducting the same, interest u/s. 201(1A) is chargeable. If the tax and/or interest is not paid within the stipulated time, then interest u/s. 220(2) also becomes chargeable.
Recovery of outstanding tax demands
[Instruction No. 1914 F. No. 404/72/93 ITCC dated 2-12-1993 from CBDT]
The Board has felt the need for a comprehensive instruction on the subject of recovery of tax demand in order to streamline recovery procedures. This instruction is accordingly being issued in supersession of all earlier instructions on the subject and reiterates the existing Circulars on the subject.
The Board is of the view that, as a matter of principle, every demand should be recovered as soon as it becomes due. Demand may be kept in abeyance for valid reasons only in accordance with the guidelines given below :
Responsibility:
It shall be the responsibility of the Assessing Officer and the TRO to collect every demand that has been raised, except the following : (a) Demand which has not fallen due;(b) Demand which has been stayed by a Court or ITAT or Settlement Commission;(c) Demand for which a proper proposal for write-off has been submitted;(d) Demand stayed in accordance with paras B & C below.
Where demand in respect of which a recovery certificate has been issued or a statement has been drawn, the primary responsibility for the collection of tax shall rest with the TRO.
It would be the responsibility of the supervisory authorities to ensure that the Assessing Officers and the TROs take all such measures as are necessary to collect the demand. It must be understood that mere issue of a show cause notice with no follow-up is not to be regarded as adequate effort to recover taxes.
Stay Petitions:
Stay petitions filed with the Assessing Officers must be disposed of within two weeks of the filing of petition by the tax- payer. The assessee must be intimated of the decision without delay.
Where stay petitions are made to the authorities higher than the Assessing Officer (DC/CIT/CC), it is the responsibility of the higher authorities to dispose of the petitions without any delay, and in any event within two weeks of the receipt of the petition. Such a decision should be communicated to the assessee and the Assessing Officer immediately.
The decision in the matter of stay of demand should normally be taken by Assessing Officer/TRO and his immediate superior. A higher superior authority should interfere with the decision of the AO/TRO only in exceptional circumstances; e.g., where the assessment order appears to be unreasonably high-pitched or where genuine hardship is likely to be caused to the assessee. The higher authorities should discourage the assessee from filing review petitions before them as a matter of routine or in a frivolous manner to gain time for withholding payment of taxes.
Guidelines for staying demand:
A demand will be stayed only if there are valid reasons for doing so. Mere filing an appeal against the assessment order will not be a sufficient reason to stay the recovery of demand. A few illustrative situations where stay could be granted are:
It is clarified that in these situations also, stay may be granted only in respect of the amount attributable to such disputed points. Further where it is subsequently found that the assessee has not co-operated in the early disposal of appeal or where a subsequent pronouncement by a higher appellate authority or court alters the above situation, the stay order may be reviewed and modified. The above illustrations are, of course, not exhaustive.
In granting stay, the Assessing Officer may impose such conditions as he may think fit. Thus he may — a. require the assessee to offer suitable security to safeguard the interest of revenue;b. require the assessee to pay towards the disputed taxes a reasonable amount in lump sum or in instalments;c. require an undertaking from the assessee that he will co-operate in the early disposal of appeal failing which the stay order will be cancelled.d. reserve the right to review the order passed after expiry of a reasonable period, say up to 6 months, or if the assessee has not co-operated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations;e. reserve a right to adjust refunds arising, if any, against the demand.
Payment by instalments may be liberally allowed so as to collect the entire demand within a reasonable period not exceeding 18 months.
Since the phrase "stay of demand" does not occur in section 220(6) of the Income-tax Act, the Assessing Officer should always use in any order passed under section 220(6) [or under section 220(3) or section 220(7)], the expression that occurs in the section viz., that he agrees to treat the assessee as not being default in respect of the amount specified, subject to such conditions as he deems fit to impose.
While considering an application under section 220(6), the Assessing Officer should consider all relevant factors having a bearing on the demand raised and communicate his decision in the form of a speaking order.
Miscellaneous:
Even where recovery of demand has been stayed, the Assessing Officer will continue to review the situation to ensure that the conditions imposed are fulfilled by the assessee failing which the stay order would need to be withdrawn.
Where the assessee seeks stay of demand from the Tribunal, it should be strongly opposed. If the assessee presses his application, the CIT should direct the departmental representative to request that the appeal be posted within a month so that Tribunal’s order on the appeal can be known within two months.
Appeal effects will have to be given within 2 weeks from the receipt of the appellate order. Similarly, rectification application should be decided within 2 weeks of the receipt t hereof. Instances where there is undue delay in giving effect to appellate orders, or in deciding rectification applications, should be dealt with very strictly by the CCITs/CITs.
The Board desires that appropriate action is taken in the matter of recovery in accordance with the above procedure. The Assessing Officer or the TRO, as the case may be, and his immediate superior officer shall be held responsible for ensuring compliance with these instructions.
This procedure would apply mutatis mutandis to demands created under other Direct Taxes enactments also.
Part payment of outstanding demand — Clarification regarding adjustment thereof
[Instruction No. 1936 - F. No. 404/62/95-ITCC dated 21-3-1996 from CBDT]
A question has been referred to the Board seeking clarification that :
"If the tax paid by the assessee is not sufficient to cover the total demand then should it first be adjusted against the interest."
The Board have been informed that the Assessing Officers are not following any uniform procedure in this regard. While one set of Assessing Officers are first adjusting the part payment received from the assessee against the tax due, the others are adjusting the part payments towards the outstanding interest due under section 220(2). The matter was referred to the Ministry of Law for their opinion and they have also observed that both the views are possible.
For the sake of uniformity the Board have decided that part payment received from assessee should first be adjusted towards the tax due and not the interest calculated under section 220(2) of the Income-tax Act.
The aforesaid instruction may be brought to the notice all officers working under your charge.
Clarification regarding charging of interest u/ss. 201(1A) and 220(2) of Income-tax Act
[Instruction No. 1944 — F. No. 275/14/97-IT(B) dated 27-8-1997 issued by CBDT]
The Central Board of Direct Taxes have received several representations seeking clarification about the simultaneous charging of interest u/s. 201(1A) and u/s. 220(2) of the Income-tax
Act, 1961.
After due consideration, it is hereby clarified that for non-deduction of tax at source or failure to pay the tax after deducting the same, interest u/s. 201(1A) is chargeable. If the tax and/or interest is not paid within the stipulated time, then interest u/s. 220(2) also becomes chargeable.
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