January 22nd, 2013 — Company Law
Stakeholders are hereby informed that operator for MCA21 project is changing w.e.f. 17.01.2013 from M/s. TCS Ltd to M/s. Infosys Ltd. Due to this the new contact numbers for DIN Cell and Help desk will be:
DIN Cell : 0124-4583766 – 69
Help Desk : 0124-4832500
January 3rd, 2013 — Income Tax
NOTIFICATION NO. 56/2012 [F. NO. 275/53/2012-IT(B)], DATED 31-12-2012
In exercise of the powers conferred by sub-section (1F) of section 197A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), excluding a foreign bank, namely:-
(i) bank guarantee commission;
(ii) cash management service charges;
(iii) depository charges on maintenance of DEMAT accounts;
(iv) charges for warehousing services for commodities;
(v) underwriting service charges;
(vi) clearing charges (MICR charges);
(vii) credit card or debit card commission for transaction between the merchant establishment and acquirer bank.
2. This notification shall come into force from the Ist day of January, 2013.
December 20th, 2012 — VAT
Toll Free Number for TIN Verification of Dealers Registered under Central Sales Tax Act :
1800 2200 17
Steps to be followed for TIN Verification :
1) Please dial the toll free number 1800 2200 17 from a BSNL / MTNL landline phone from anywhere in India.
2) Welcome message will be played by the Interactice Voice Response (IVR) System.
3) The system will prompt you to choose ’1′ for English ’2′ for Hindi”.
4) Select the required language.
5) The system will prompt you to enter the 11 digit TIN of the dealer you wish to verify.
6) Now enter the 11 digit TIN number.
7) The system will prompt you the dealer details of the corresponding TIN.
December 7th, 2012 — Income Tax, Investment in India
The Present Circle Rates of the Residential Properties in Eight Categories of Colonies in Delhi
The Government of Delhi has introduced the new circle rates in eight categories of colonies in Delhi with effect from December 05, 2012.
The Delhi government had first introduced the circle rates for the real estate properties in Delhi in July 2007. These rates were notified under the provisions of Delhi Stamp (Prevention of Undervaluation of Instruments) Rules, 2007 on July 18, 2007.
At present, there are eight categories of colonies in the Delhi — A, B, C, D, E, F, G, and H based on the Municipal Corporation of Delhi (MCD) categorization. The circle rates vary depending on the category of a colony or residential area in Delhi.
As notified by the Government of Delhi, with effect from December 05, 2012 the new circle rates of real estate properties in Delhi based on the colonies categorization are:
Category A Colonies – Rs. 645,000 Per Square Meter
Category B Colonies – Rs. 204,600 Per Square Meter
Category C Colonies – Rs. 131,040 Per Square Meter
Category D Colonies – Rs. 106,384 Per Square Meter
Category E Colonies – Rs. 58,316 Per Square Meter
Category F Colonies – Rs. 47,141 Per Square Meter
Category G Colonies – Rs. 37,820 Per Square Meter
Category H Colonies – Rs. 19,361 Per Square Meter
From November 16, 2011 to December 04, 2012, the circle rates of real estate properties in Delhi were:
Category A Colonies – Rs. 215,000 Per Square Meter
Category B Colonies – Rs. 136,400 Per Square Meter
Category C Colonies – Rs. 109,200 Per Square Meter
Category D Colonies – Rs. 87,200 Per Square Meter
Category E Colonies – Rs. 47,840 Per Square Meter
Category F Colonies – Rs. 38,640 Per Square Meter
Category G Colonies – Rs. 31510 Per Square Meter
Category H Colonies – Rs. 15,870 Per Square Meter
From February 08, 2011 to November 15, 2011, the circle rates of real estate properties in Delhi were:
Category A Colonies – Rs. 86,000 Per Square Meter
Category B Colonies – Rs. 68,200 Per Square Meter
Category C Colonies – Rs. 54,600 Per Square Meter
Category D Colonies – Rs. 43,600 Per Square Meter
Category E Colonies – Rs. 36,800 Per Square Meter
Category F Colonies – Rs. 32,200 Per Square Meter
Category G Colonies – Rs. 27,400 Per Square Meter
Category H Colonies – Rs. 13,800 Per Square Meter
From July 18, 2007 to February 07, 2011, the circle rates of real estate properties in Delhi were:
Category A Colonies – Rs. 43000 Per Square Meter
Category B Colonies – Rs. 34100 Per Square Meter
Category C Colonies – Rs. 27,300 Per Square Meter
Category D Colonies – Rs. 21,800 Per Square Meter
Category E Colonies – Rs. 18,400 Per Square Meter
Category F Colonies – Rs. 16,100 Per Square Meter
Category G Colonies – Rs. 13,700 Per Square Meter
Category H Colonies – Rs. 6900 Per Square Meter
November 27th, 2012 — Investment in India
A.P. (DIR Series) Circular No. 55
November 26, 2012
All Authorised Dealers Category – I Banks
Madam / Sir,
Liaison Office (LO) / Branch Office (BO) in India by Foreign Entities – Reporting to Income Tax Authorities.
- Attention of Authorised Dealer Category – I banks is invited to A.P. (DIR Series) Circular No. 24 dated 30.12.2009 in terms of which LOs/BOs are required to furnish copy of the Annual Activity Certificate (AAC) to Director General of Income Tax (International Taxation), Drum Shaped Building, I.P. Estate, New Delhi 110002.
- It is clarified that copies of the AACs submitted to the DGIT (International Taxation) should be accompanied by audited financial statements including receipt and payment account.
- Further, at the time of renewal of permission of LOs by AD banks, they may note to endorse a copy of each such renewal to the office of the DGIT (international Taxation).
- AD Category – I banks may bring the contents of this circular to the notice of their constituents/customers concerned and ensure compliance.
- The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
(Rudra Narayan Kar)
Chief General Manager
November 16th, 2012 — Investment in India
Employees’ Provident Funds (Fourth Amendment) Scheme, 2012
MINISTRY OF LABOUR AND EMPLOYMENT
New Delhi, the 5th October, 2012
*G.S.R. 744(E).- In exercise of the powers conferred by section 5, read with sub-section (1) of section 7 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the Central Government hereby makes the following Scheme further to amend the Employees’ Provident Funds Scheme, 1952, namely:-
1. (1) This Scheme may be called the Employees’ Provident Funds (Fourth Amendment) Scheme, 2012.
(2) It shall come into force on the date of its publication in the Official Gazette.
2. In the Employees’ Provident Funds Scheme, 1952 (hereinafter referred to as the principal Scheme), under paragraph 83 relating to special provisions in respect of International Workers.-
(a) in paragraph 69 of the principal Scheme, as modified by para 6 of aforesaid paragraph 83, for sub-paragraph (4), the following sub-paragraph shall be substituted, namely:-
“(4) In respect of a member covered under social security agreement entered into between Government of India and any other country, on ceasing to be an employee in an establishment covered under the Act.”;
(b) in paragraph 72 of the principal Scheme, as modified by para 7 of aforesaid paragraph 83, for sub-paragraph (2), the following sub-paragraph shall be substituted, namely:-
“(2) The due amount in respect of the member shall be payable in the payees bank account directly or through the employer”.
RAVI MATHUR, Addl. Secy.
Foot Note: The Employees’ Provident Funds Scheme, 1952 was published in the Gazette of India, Part-II, Section 3, Sub-section (i), vide number S.R.O. 1509, dated the 2nd September, 1952 and lastly amended vide number G.S.R.382(E), dated the 24th May, 2012.
October 25th, 2012 — Uncategorized
A. P. (DIR Series 2012-13) Circular No. 47, dated 23-10-2012
Attention of the Authorised Dealers is invited to regulation 6 of the Notification No. FEMA 23/2000-RB, dated May 3, 2000 viz. Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, as amended by the Notification No.FEMA.36/2001-RB, dated February 27, 2001, in terms of which designated officials of the Ministry of Information Technology, Government of India at the Software Technology Parks of India (STPIs) or at Free Trade Zones (FTZs) or Export Processing Zones (EPZs) or Special Economic Zones (SEZs), had been authorized to certify exports declared through SOFTEX Forms.
2. Considering the spurt in the volume of software exports from India in recent times, the complexity of work contracts involved, the voluminous nature of contract agreements and the duration involved in execution of each contract as well as the time-consuming process involved in the certification of SOFTEX forms, simplified and revised Softex procedure was introduced vide A.P. (DIR Series) Circular No. 80, dated February 15, 2012. Initially the revised procedure was applicable in STPI at Bangalore, Hyderabad, Chennai, Pune and Mumbai with effect from April 1, 2012.
3. Since the revised procedure is running successfully at the 5 designated centres, it has been decided to implement the revised procedure in all the STPIs in India with immediate effect.
4. As per the revised procedure, a software exporter, whose annual turnover is at least Rs.1000 crore or who files at least 600 SOFTEX forms annually on all India basis, will be eligible to submit a statement in excel format as detailed in our A.P. (DIR Series) Circular No.80 dated February 15, 2012.
5. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.
6. The directions contained in this circular have been issued under section 10(4) and section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.
October 23rd, 2012 — Service Tax
Now all the assesses will be able to file their Service Tax return for the quarter April’2012 to June’ 2012, last due date of which is 25th November, 2012. However, such facility is available in offline mode only i.e. through Excel Utility. Assesses will not be able to fill their ST-3 data online after logging into ACES website.
October 15th, 2012 — Service Tax
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
New Delhi, the 15th October, 2012
ORDER NO: 3/2012
In exercise of the powers conferred by sub-rule(4) of rule 7 of the Service Tax Rules,1994, the Central Board of Excise & Customs hereby extends the date of submission of the return for the period 1st April 2012 to 30th June 2012, from 25th October, 2012 to 25th November,2012.
The circumstances of a special nature which have given rise to this extension of time are as follows:
a) ACES will start releasing the return in Form ST3 in a quarterly format, shortly before the due date of 25th October, 2012.
b) This will result in all the assesses attempting to file their returns in a short time period, which may result in problems in the computer network and delay and inconvenience to the assesses.
Commissioner Service Tax
Central Board of Excise and Customs
Chief Commissioners of Central Excise & Customs(All)
Chief Commissioners of Central Excise(All)
Director General of Systems
Director General of Service Tax
Commissioners of Service Tax (All)
Additional Directors General Systems (All)
August 18th, 2012 — Service Tax
Provision of service is the taxable event for service tax although Point of Taxation Rules (POTR) governs the timing of tax. Usually the provider of service is liable to discharge service tax liability unless it is otherwise earmarked for recipient of service. It is comparatively easy to keep a track on service tax liability arises on income but to detect service tax liability under reverse charge basis one needs to give a deep dive in the expenditure statement of a business entity.
Position up to June 30, 2012
Import of any service and limited number of specified services such as insurance auxiliary service, sponsorship service, services pertaining to transportation of goods by road, service of distribution of mutualfundbymutualfund distributor or agent etc. were covered under recipient based service tax, popularly known as service tax paid under reverse charge basis. A close look of the then position revealed that apart from importation of service and Goods Transport Service (GTA) all other services covered under reverse charge basis have limited impact on the routine transactions of the business entities.Moreover,methods of computation of tax were also simple since limited conditions were attached to such computation.
Position from July 1, 2012 on wards
Services that are used by almost all the business entities on a regular basis, such as works contract, security service, car rental service, work force supply service etc are now under the coverage of reverse charge mechanism.
Top of it for some of the services such as Insurance Auxiliary, sponsorship service, services rendered by advocate etc. recipient is liable to pay full service tax and for other services such as car rental, supply of work force, works contract etc. recipient is liable to pay a portion of the tax.
Moreover partial tax liability is also varies from service to service, e.g. car rental without abatement liability under reverse charge is 40% and with abatement liability is 100%, works contract liability under reverse charge is 50% whereas the same for supply of work force is 75%.
Not only that, one should, need to verify the status of the service provider and the service recipient, in other words, one need to enquirewhether the service provider is a corporate entity or not, whether service recipient is an individual or business entity or corporate entity before apply the rule of reverse tax mechanism to discharge the tax liability.
- Tracking of payments that are liable to tax under reverse charge basis.
Manual tracking of payments, which will trigger service tax exposure, is not possible for any sizable business operation. Accounting software is required to be upgraded by putting relevant patches that will help business entity to arrest the payments, vulnerable to service tax.
- Obtaining registration and compliance of law.
Business entities, which are purely in manufacturing/trading operation and were never before under the service tax net, may require to take fresh registration under service tax and require to comply the relevant provisions of the law, such as payment of tax, filing of return, facing service tax audit etc. Moreover, for appropriate discharge of service tax liability many factors such as nature of service, whether service vendor is availing abatement or whether service vendor is availing cenvat credit needs to be verified. Any short payment of tax will lead to payment of interest and penalty apart from litigation.
Unique feature of service tax, paid under reverse charge mechanism is that the payment has to be made in cash. Business entity cannot touch the accumulated cenvatcredit to discharge the service tax liability. It will definitely have an impact on the cash flow specifically for that entity that does not have any (or less) service tax/excise duty appetite. It will certainly hit bottom line of the pure trading company since trading company does not have any service tax liability to set off the credit.
There is no shelter available to escape the service tax liability under reverse charge basis. Even for a payment of a single rupee, business entity is required to discharge its service tax liability under reverse charge. It will cause immense hardship for small business entities that were enjoying tax shelter under the threshold limit regime.
- Eligibility of cenvat credit
In view of the amended definition of input service, eligibility of cenvat credit on service tax paid under reverse charge basis is required to be assessed case-to-case basis.
Applicability of service tax under reverse charge depends on the status of the vendor as well. Most of the cases if the provider of service is a corporate entity, payment of service tax under reverse charge mechanism will not be applicable. Master record of vendors is required to be configured accordingly to avoid compliance lapses.
- Handling of service tax audit.
Last but not the least is handling of service tax audit under the new tax regime. Business entities are prone to commit error to comply such complex procedures. The department is also knows this and thus they will focus more on this area, which will eventually become breeding grounds for litigations.
- Review of expenditure statement to identify payments, which will be liable to service tax under reverse charge basis.
- Analyse the impact of such payment on additional cash out flow, cenvat credit and profitability of the company.
- Explore solutions if any to minimise the impact.
- Upgrade accounting software to make it compatible to new changes.
- Closely monitor Vendor master file
- Conduct periodic internal review to ensure that the business entity is not in the wrong side of the law.
- Educate in house people who are dealing with payments.
Curtsy: Ca. Subhasis Banerjee (email@example.com)