Entries Tagged 'Income Tax' ↓

Union Budget 2012- Direct Tax Budget Proposal part-1

INDIVIDUAL TAXATION

1. Slab Rates

a) Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person
(i) The rates of income-tax in the case of every individual or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person are as under :-

Income Slabs#                                        Proposed Tax Rates

Upto Rs. 2,00,000                                Nil.

Rs. 2,00,001 to Rs. 5,00,000             10 %
Rs. 5,00,001 to Rs. 10,00,000           20 %
Above Rs. 10,00,000                           30 %

** The Basic Exemption Limit of Rs.1,80,000/- has been increased to Rs.2,00,000/- which will give the benefit of Rs.2,060/- to the individual taxpayers. Further, the limit for the 30% slab rate has been increased from Rs.8,00,000/- to Rs.10,00,000/-, which will give benefit to the taxpayers falling in the high tax bracket.

** Earlier, the Basic Exemption Limit for women was Rs.1,90,000/-, which is now increased to Rs.2,00,000/- and brought in line with the general exemption limit.

(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more(Senior Citizens) but less than eighty years at any time during the previous year:

Income Slabs#                                                         Proposed Tax Rates

Upto Rs. 2,50,000                                                  Nil.

Rs. 2,50,001 to Rs. 5,00,000                              10 per cent.
Rs. 5,00,001 to Rs.10,00,000                             20 per cent.

Above Rs. 10,00,000                                            30 per cent.

(iii) In the case of every individual, being a resident in India, who is of the age of eighty years or more (Very Senior Citizens) at any time during the previous year, –

Income Slabs#                                                     Proposed Tax Rates

Upto Rs. 5,00,000                                              Nil.

Rs. 5,00,001 to Rs. 10,00,000                        20 per cent.

Above Rs. 10,00,000                                        30 per cent.

** For financial year 2012-13, additional surcharge called the “Education Cess on income-tax” and “Secondary and Higher Education Cess on income-tax” shall continue to be levied at the rate of 2% and 1% respectively, on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such Cess.

b) Co-operative Societies
In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part III of the First Schedule to the Bill. These rates will continue to be the same as those specified for assessment year 2012-13. No surcharge will be levied.

c ) Firms

In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for assessment year 2012-13. No surcharge shall be levied.

d) Local authorities

The rate of income-tax in the case of every local authority is specified in Paragraph D of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for the assessment year 2012-13 No surcharge will be levied.

2. Alternate Minimum Tax (AMT) on all persons other than companies

Existing Provisions: Under the existing provisions of the Income-tax Act, Minimum Alternate Tax (MAT) u/s 115 JB and Alternate Minimum Tax (AMT) u/s 115 JC are levied on companies and limited liability partnerships (LLPs) respectively. However, no such tax is levied on the other form of business organisations such as partnership firms, sole proprietorship, association of persons, etc.

Proposed: In order to widen the tax base, it is proposed to amend provisions regarding AMT contained in Section 115JC under Chapter XII-BA in the Income-tax Act to provide that a person other than a company, who has claimed deduction under any section (other than section 80P) included in Chapter VI-A or under section 10AA, shall be liable to pay AMT.

Under the proposed amendments, where the regular income-tax payable for a previous year by a person (other than a company) is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of such person and he shall be liable to pay income-tax on such total income at the rate of 18.5%.

For the purpose of the above:

(i) “adjusted total income” shall be the total income before giving effect to provisions of Chapter XII-BA as increased by the deductions claimed under any section (other than section 80P) included in Chapter VI-A and deduction claimed under section 10AA;

(ii) “alternate minimum tax:” shall be the amount of tax computed on adjusted total income at a rate of18.5% and

(iii) “Regular income-tax” shall be the income-tax payable for a previous year by a person other than a company on his total Income in accordance with the provisions of the Act other than the provisions of Chapter XII-BA.

It is further provided that the provisions of AMT under Chapter XII-BA shall not apply to an individual or a Hindu undivided family or an association of persons or a body of individuals (whether incorporated or not) or an artificial juridical person referred to in section 2(31)(vii) if the adjusted total income of such person does not exceed twenty lakh rupees.

It is also provided that the credit for tax (tax credit) paid by a person on account of AMT under Chapter XII-BA shall be allowed to the extent of the excess of the AMT paid over the regular income-tax. This tax credit shall be allowed to be carried forward up to the tenth assessment year immediately succeeding the assessment year for which such credit becomes allowable. It shall be allowed to be set off for an assessment year in which the regular income-tax exceeds the AMT to the extent of the excess of the regular income-tax over the AMT.

Effective Date: These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-14 and subsequent assessment years.

CORPORATE TAXATION

Corporate Tax structure left unchanged

The existing surcharge of 5% in case of a domestic company shall continue to be levied. In case of companies other than domestic companies, the existing surcharge of 2% shall continue to be levied.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

The existing surcharge of 5% in all other cases (including sections 115JB, 115-O, 115R, etc.) shall continue to be levied.

For financial year 2012-13, additional surcharge called the “Education Cess on income-tax” and Secondary and Higher Education Cess on income-tax” shall continue to be levied at the rate of 2% and 1% respectively, on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such Cess.

OTHER IMPORTANT AMENDMENTS:
TDS and TCS:
Tax deduction at source (TDS) on transfer of certain immovable properties (other than Agricultural Land)
Existing Provision: Under the existing provisions of the Income-tax Act, tax Act, on transfer of immovable property by a non-resident, tax is required to be deducted at source by the transferee. However, there is no such requirement on transfer of immovable property by a resident except in the case of compulsory acquisition of certain immovable properties.

Proposed : In order to collect tax at the earliest point of time and also to have a reporting mechanism of transactions in the real estate sector, it is proposed to insert a new provision by Section 194LAA to provide that every transferee, at the time of making payment or crediting any sum by way of consideration for transfer of immovable property (other than agricultural land), shall deduct tax, at the rate of 1% of such sum, if the consideration paid or payable for the transfer of such property exceeds –

(a) Fifty lakh rupees in case such property is situated in a specified urban agglomeration; or

(b) Twenty lakh rupees in case such property is situated in any other area.

It is further proposed to provide that where the consideration paid or payable for the transfer of such property is less than the value adopted or assessed or assessable by any authority of a State Government for the purposes of payment of stamp duty, the value so adopted or assessed or assessable shall be deemed as consideration paid or payable for the transfer of such immovable property.

For better compliance, it is also proposed to provide that a registering officer appointed under the Indian Registration Act,1908 (Registrar) shall not register the transfer of any immovable property where taxes are required to be deducted under this provision unless the transferee furnishes proof of deduction and payment of TDS.

For reducing the compliance burden on the transferee, it is also proposed that a simple one page challan for payment of TDS would be prescribed containing details (including PAN) of transferor and transferee and also certain details of the property. The transferee would not be required to obtain any Tax Deduction and Collection Account Number (TAN) or to furnish any TDS statement as this would be mostly a onetime transaction. The transferor would get credit of TDS like any other pre-paid taxeson the basis of information furnished by the transferee in the challan of payment of TDS.

Effective Date: – This amendment will take effect from 1st October, 2012.

TDS on remuneration to a director
Existing Provision: Under the existing provisions of the Income-tax Act, a company, being an employer, is required to deduct tax at the time of payment of salary to its employees including managing director/whole time director. However, there is no specific provision for deduction of tax on the remuneration paid to a director which is not in the nature of salary.

Proposed: It is proposed to amend section 194J to provide that tax is required to be deducted on the remuneration paid to a director, which is not in the nature of salary, at the rate of 10% of such remuneration.

Effective Date: – This amendment will take effect from 1st July, 2012.

Tax Collection at Source (TCS) on cash sale of bullion and jewellery
Existing Provision: Under the existing provisions of the Income-tax Act, tax is required to be collected at source by the seller at the specified rate on certain goods like alcoholic liquor, tendu leaves, scrap etc. at the time of sale.

Proposed: To reduce the quantum of cash transaction in bullion and jewellery sector and for curbing the flow of unaccounted money in the trading system of bullion and jewellery, it is proposed to provide under section 206C that the seller of bullion and jewellery shall collect tax at the rate of 1% of sale consideration from every buyer of bullion and jewellery if sale consideration exceeds two lakh rupees and the sale is in cash. This would be irrespective of the fact whether buyer is a manufacturer, trader or purchase is for personal use.

Effective Date: – This amendment will take effect from 1st July, 2012.

TCS on sale of certain minerals
Existing Provision: There is a no existing provision regarding the TCS on minerals.

Proposed : In order to collect tax at the earliest point of time and also to improve reporting mechanism of transactions in mining sector, it is proposed that tax at the rate of 1% (under Section 206C) shall be collected by the seller from the buyer of the following minerals:

(a) Coal;

(b) Lignite; and

(c) Iron ore.

However, the seller shall not collect tax on sale of the said minerals if the same are purchased by the buyer for personal consumption. Further, the seller of these minerals shall not collect tax if the buyer declares that these minerals are to be utilized for the purposes of manufacturing, processing or producing articles or things.

Effective Date: This amendment will take effect from 1st July, 2012.

Threshold for TDS on Compensation for Compulsory Acquisition:

Existing Provision: Under the existing provisions of the section 194LA of the Income-tax Act, a person responsible for paying any compensation or consideration for compulsory acquisition of immovable property (other than agricultural land) is required to deduct tax at the rate of 10% in case the consideration exceeds Rs.1,00,000/-.

Proposed: In order to reduce the compliance burden of small assessee, it is proposed to increase the aforesaid threshold limit from Rs.1,00,000/- to Rs. 2,00,000/- .

Effective Date: This amendment will take effect from 1st July, 2012.

Threshold for TDS on payment of Interest on Debentures:

Existing Provision: Under the existing provisions of section 193 of the Income-tax Act, a person responsible for paying interest to a resident individual on listed debentures of a company, in which the public are substantially interested, is not required to deduct tax on the amount of interest payable if the aggregate amount of interest paid during a financial year does not exceed Rs.2, 500/- and the interest is paid by account payee cheque. However, in the case of unlisted debentures of a company, no threshold limit is specified for deduction of tax on payment of interest.

Proposed: In order to reduce the compliance burden on small assessee and companies, it is proposed that no deduction of tax should be made from payment of interest on any debenture, (whether listed or not) issued by a company, in which the public are substantially interested, to a resident individual or Hindu undivided family, if the aggregate amount of interest on such debenture paid during the financial year does not exceed Rs.5, 000/- and the payment is made by account payee cheque.

Effective Date: This amendment will take effect from 1st July, 2012.

Rationalization of TDS and TCS Provisions:
Deemed Date of Payment of tax by the resident payee:
Existing Provision: Under the existing provisions of Chapter XVII-B of the Income-tax Act, a person is required to deduct tax on certain specified payments at the specified rates if the payment exceeds specified threshold. In case of non-deduction of tax in accordance with the provisions of this Chapter, he is deemed to be an assessee in default under section 201(1) in respect of the amount of such non-deduction.

However, section 191 of the Act provides that a person shall be deemed to be assessee in default in respect of non/short deduction of tax only in cases where the payee has also failed to pay the tax directly. Therefore, the deductor cannot be treated as assessee in default in respect of non/short deduction of tax if the payee has discharged his tax liability.

Proposed: In order to provide clarity regarding discharge of tax liability by the resident payee on payment of any sum received by him without deduction of tax, it proposed to amend section 201 to provide that the payer who fails to deduct the whole or any part of the tax on the payment made to a resident payee shall not be deemed to be an assessee in default in respect of such tax if such resident payee –

(i) Has furnished his return of income under section 139;

(ii) Has taken into account such sum for computing income in such return of income; and

(iii) Has paid the tax due on the income declared by him in such return of income, and the payer furnishes a certificate to this effect from an accountant in such form as may be prescribed.

The date of payment of taxes by the resident payee shall be deemed to be the date on which return has been furnished byte payer.

It is also proposed to provide that where the payer fails to deduct the whole or any part of the tax on the payment made to a resident and is not deemed to be an assessee in default under section 201(1) on account of payment of taxes by the such resident, the interest under section 201(1A) (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident payee.

Amendments on similar lines are also proposed to be made in the provisions of section 206C relating to TCS for clarifying the deemed date of discharge of tax liability by the buyer or licensee or lessee.

Effective Date: These amendments will take effect from 1st July, 2012.

Disallowance of Business Expenditure on account of non-deduction of tax on payment to resident payee:

Existing Provision: Presently, disallowance is made under section 40(a)(ia) of certain business expenditure like interest, commission, brokerage, professional fee, etc. due to non-deduction of tax. It has been provided that in case the tax is deducted in subsequent previous year, the expenditure shall be allowed in that subsequent previous year of deduction.

Proposed: In order to rationalise the provisions of disallowance on account of non-deduction of tax from the payments made to a resident payee, it is proposed to amend section 40(a)(ia) to provide that where an assessee makes payment of the nature specified in the said section to a resident payee without deduction of tax and is not deemed to be an assessee in default under section 201(1) on account of payment of taxes by the payee, then, for the purpose of allowing deduction of such sum, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee.

These beneficial provisions are proposed to be applicable only in the case of resident payee.
Effective Date: These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013- 14 and subsequent assessment years.

Fee and Penalty for delay in furnishing of TDS/ TCS Statement and penalty for incorrect information in TDS/ TCS Statement:

Existing Provision: Under the existing provisions of section 272A, penalty of Rs.100 per day is levied for delay in furnishing of TDS statement, however, no specific penalty is specified for furnishing of incorrect information in the TDS statement. The said provisions of penalty are not proved to be effective in reducing or eliminating defaults relating to late furnishing of TDS statement.

Proposed: In order to provide effective deterrence against delay in furnishing of TDS statement, it is proposed –

(i) To provide for levy of fee of Rs.200 per day for late furnishing of TDS statement from the due date of furnishing of TDS statement to the date of furnishing of TDS statement. However, the total amount of fee shall not exceed the total amount of tax deductible during the period for which the TDS statement is delayed, and

(ii) To provide that in addition to said fee, a penalty ranging from Rs.10,000 to Rs.1,00,000 shall also be levied for not furnishing TDS statement within the prescribed time.

In view of the levy of fee for late furnishing of TDS/ TCS statement, it is also proposed to provide that no penalty shall be levied
for delay in furnishing of TDS statement if the TDS/ TCS statement is furnished within one year of the prescribed due date after payment of tax deducted along with applicable interest and fee.

In order to discourage the deductors to furnish incorrect information in TDS/ TCS statement, it is proposed to provide that a penalty ranging from Rs.10,000 to Rs.1,00,000 shall be levied for furnishing incorrect information in the TDS/TCS statement.

Consequential amendment is proposed in section 273B so that no penalty shall be levied if the deductor proves that there was a reasonable cause for the failure.

Consequential amendment is also proposed in section 272A to provide that no penalty under this section shall be levied for late filing of TDS statement in respect of tax deducted on or after 1st July, 2012.

Effective Date: These amendments will take effect from 1st July, 2012 and will, accordingly, apply to the TDS or TCS statement to be furnished in respect of tax deducted or collected on or after 1st July, 2012.

 

Whether deduction u/s 80C is available on Principal Amount of Housing Loan repaid when House is under Construction

As stated in section 80C (2) “The sums referred to in sub section (1) shall be any sums paid or deposited in the previous year by the assessee –
———————
(xviii) For the purpose of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property”
———————– ”

As per the provisions of section 80C, the deduction for principal repayment of housing loan is provided only in respect of a house property, whose income is chargeable to tax under the head lncome from house property.
As the house property is still under construction in previous year in which loan is paid, no income is chargeable to tax under the head income from house property.
Hence, no deduction shall be available under section 80C for principal repayment of the housing loan for property under construction.

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FDI in Single Brand Retail Trading

Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
(FC-I Section)
Press Note No.1 (2012 Series)

Subject: Review of the policy on Foreign Direct Investment- liberalization of the policy in Single-Brand Retail Trading.

1.0 Present Position:

Foreign Direct Investment (FDI), in retail trade, is prohibited except in single brand product retail trading, in which FDI, up to 51% is permitted, subject to conditions specified under paragraph 6.2.16.4 of ‘Circular 2 of 2011 – Consolidated FDI Policy’.

2.0 Revised Position:

The Government of India has reviewed the extant policy on FDI and decided that FDI, up to 100%, under the government approval route, would be permitted in Single-Brand Product Retail Trading, subject to specified conditions, as indicated in paragraph 3.0 below.

3.0 Accordingly, the following amendment is made in ‘Circular 2 of 2011- Consolidated FDI Policy’, dated 30.09.2011, issued by the Department of Industrial Policy & Promotion:

Paragraph 6.2.16.4 is substituted with the following:

6.2.16.4 Single Brand product retail trading 100% Government

(1) Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices.

(2) FDI in Single Brand product retail trading would be subject to the following conditions:
(a) Products to be sold should be of a ‘Single Brand’ only.
(b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c) ‘Single Brand’ product-retail trading would cover only products which are branded during manufacturing.
(d) The foreign investor should be the owner of the brand.
(e) In respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian ‘small industries/ village and cottage industries, artisans and craftsmen’. ‘Small industries’ would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a ‘small industry’ for this purpose. The compliance of this condition will be ensured through self-certification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain.

(3) Application seeking permission of the Government for FDI in retail trade of ‘Single Brand’ products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The application would specifically indicate the product/ product categories which are proposed to be sold under a ‘Single Brand’. Any addition to the product/ product categories to be sold under ‘Single Brand’ would require a fresh approval of the Government.

(4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for Government approval.

4.0 The above decision will take immediate effect.

5.0 The above provisions will be incorporated in the next Circular on Consolidated FDI Policy to be issued on 31.3.2012.

Sd/-
(Anjali Prasad)
Joint Secretary to the Government of India

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Correction in TDS Challan

 Correction in TDS Challan

 NSDL receives tax collection data as uploaded by the bank. NSDL is not authorized to carry out any changes in the data sent by the bank to TIN.

The fields that can be corrected by the Taxpayer through Bank are tabulated below:

Sl. No.              Type of Correction on Challan              Period for correction request (in days)

1                        PAN/TAN                                      Within 7 days from challan deposit date

2                        Assessment Year                          Within 7 days from challan deposit date

3                        Total Amount                                 Within 7 days from challan deposit date

4                        Major Head                                      Within 3 months from challan deposit date

5                        Minor Head                                      Within 3 months from challan deposit date

6                        Nature of Payment                         Within 3 months from challan deposit date

 

Note :

1.   Above correction mechanism is applicable only for physical challans with deposit date greater than equal to September 1,2011.

2.   Any correction request initiated by the taxpayer after the time limit specified above shall be rejected by Bank.

3.   For challans with challan deposit date from September 1, 2011 to September 30, 2011, the time limit for correction in TAN/PAN,       Assessment Year and Amount will be within 45 days from challan deposit date.
4.  The fields that can be corrected and the entity authorized to carry out corrections on challan with deposit date less than       September 1, 2011 are as below:

 

Sl. No.              Type of Correction on Challan              Performed By

1                        PAN/TAN                                                          Assessing Officer

2                        Assessment Year                                             Assessing Officer

3                        Major Head                                                       Assessing Officer /Bank

4                        Minor Head                                                       Assessing Officer

5                        Nature of Payment                                          Assessing Officer

6                        Total Amount                                                   Bank

7                        Name                                                                 Bank

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Deregulation of Savings Bank Deposit Interest Rate

RBI/2011-12/ 281
UBD.BPD.(PCB)CIR No. 13 /13.01.000/2011?12 November 25, 2011
The Chief Executive Officers
All Primary (Urban) Co-operative Banks

Dear Sir/Madam,
Deregulation of Savings Bank Deposit Interest Rate
Please refer to our circular No.UBD.BPD.(PCB)CIR No.45/13.01.00/2010-11 dated May 3, 2011 enclosing a Directive UBD.BPD.DIR. No.3/13.01.00/2010-11 dated May 3, 2011 on interest rates on deposits.
2. As indicated in the Second Quarter Review of Monetary Policy announced on October 25, 2011, it has been decided to deregulate the savings bank deposit interest rate with immediate effect. Accordingly, banks are free to determine, with immediate effect, their savings bank deposit interest rate, subject to the following two conditions:
o First, each bank will have to offer a uniform interest rate on savings bank deposits up to Rs. 1 lakh, irrespective of the amount in the account within this limit.
o Second, for savings bank deposits over Rs.1 lakh, a bank may provide differential rates of interest, if it so chooses, subject to the condition that banks will not discriminate in the matter of interest paid on such deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices.
3. The above revised instructions would be applicable to savings bank deposits of resident Indians only.
4. Interest rate on Non-Resident (External) Accounts Scheme and Ordinary Non-Resident Deposit under savings account, which has been prescribed at 4 per cent per annum at present, will continue to be regulated until further review.
5. An amending directive UBD.BPD.DIR. No. 4 /13.01.000/2011-12 dated November 25, 2011 is enclosed.

Yours faithfully
(A.Udgata)
Chief General Manager-in-Charge
Encls: As above

RBI liberalises Forex Facilities for Individuals

The Reserve Bank of India has further liberalised foreign exchange facilities for individuals under the Foreign Exchange Management Act, (FEMA) 1999. The facilities are:
1. NRIs can be Joint Holders in Resident’s SB/EEFC/RFC Accounts
Individual residents in India are now permitted to include non-resident close relative(s) as joint holder(s) in their resident bank accounts, namely, savings(SB), Exporter Earners’ Foreign Currency (EEFC) and Residents’ Foreign Currency (RFC) accounts, on ‘former or survivor’ basis.
2. Residents can be Joint Holders in NRE/FCNR Accounts
Non-Resident Indians (NRIs)/ Person of Indian Origin (PIO) , are now permitted to open Non-Resident (External) (NRE) Rupee Account Scheme/Foreign Currency (Non-Resident) (FCNR) Account (Banks) Scheme with their resident close relative(s) as joint holder(s) on ‘former or survivor’ basis.
3. Residents can gift Shares/Debentures upto USD 50,000 Value
A person resident in India can now give to a person resident outside India, by way of gift, any security/shares/debentures of value upto USD 50,000 in value per financial year subject to certain conditions. Earlier, a person resident in India could give to a person resident outside India, by way of gift, any security/shares/debentures of value upto USD 25,000 per calendar year.
4. Sale Proceeds of FDIs can be credited to NRE/FCNR (B) Account
Sale proceeds of Foreign Direct Investment (FDI) can be credited to Non-Resident (External) Rupee (NRE) Account Scheme/Foreign Currency (Non-Resident) Account FCNR (Banks) Scheme provided the original acquisition was by way of inward remittance or funds held in their NRE/FCNR (B) accounts.
5. Gifts to NRIs can be credited to NRO Accounts in Rupees
Resident individuals are now permitted to make rupee gifts within the overall limit of USD 200,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) to an NRI/PIO who is a close relative by way of crossed cheque/electronic transfer to the Non-Resident (Ordinary) Rupee Account (NRO) of the NRI/PIO. 2
6. Loans to NRI Close Relatives can be given in Rupees
Similarly, Resident individuals are now permitted to lend in Rupees within the overall limit under the Liberalised Remittance Scheme of USD 200,000 per financial year to a Non Resident Indian (NRI)/ Person of Indian Origin (PIO) close relative by way of crossed cheque/electronic transfer, subject to certain conditions.
7. Residents can repay the loans given to NRI Close Relatives
Resident individuals are now granted general permission to repay loans availed of in Rupees from banks in India by their NRI close relatives. Earlier, repayment of loans by close relative in respect of Rupee loan availed by NRIs was restricted only to housing loans.
8. Residents can bear Medical Expenses of NRIs
Residents will now be allowed to bear the medical expenses of visiting NRIs/PIOs close relatives. Earlier, residents were allowed to make payment in rupees towards meeting expenses on account of boarding, lodging and services related to it or travel to and from and within India of a person resident outside India and who is on a visit to India.

Press Release : 2011-2012/455

New Guideline for banks’ customer service

AT a recent conference of Banking Ombudsman held in RBI, it was decided, among others, that:-

  • Banks should issue tax deduction at source (TDS) certificates duly completed in all respects to the account holders and despatch it to their mailing address.
  • In case of ATM/Internet based banking transactions, in the event of any monetary dispute involving the customer and the bank, the onus should be on the bank to prove the customer’s negligence or mistake. Customer must be compensated for the losses arising out of customers’ non-authorised transactions.
  • Banks must not recover pre-payment charges in floating rate loans.
  • The Reserve Bank/IBA would examine the issues pertaining to monetary compensation for mental harassment suffered by bank customers.
  • To create awareness about the Banking Ombudsman Scheme, the Banking Ombudsmen will annually share with local media, information regarding complaints received and resolved, including important cases and awards given.

RBI Governor Subba Rao said that often, prevention was better than cure. In customer service area too, rendering good customer service was like ‘prevention’ and was better than the ‘cure’ which was the various grievances redressal mechanisms. He flagged various issues relating to banks’ customer service for the consideration of the participants. He asked whether customer service was a criterion in evaluating the performance of a branch level official or did levying of penalty on a bank reflected in any manner on the staff which caused the levy of penalty; do all banks have customer grievances redressal officer and at what level; were the most important terms and conditions (MITC) explained to the bank customers before they signed the documents; and whether the deviation from most important terms and conditions of a banking product transparent. He urged bankers to identify ten action points to further improve their customer service.

What will be the last date of filing of tax return if last day is Sunday or holiday

In case last date falls on weekly holiday (Sunday) or gazetted holiday then last date of filing of tax return will be next working day. So this year as 31st July 2011 is Sunday, then last date of filing of tax return is 1st August 2011

FAQ on Income Tax Return filing

Q:           What is the purpose of Notification No. SO 1439(E), dated 23-6-2011 and who are proposed to be exempted from the requirement of filing of the return?

Ans:       The primary objective of this notification is to exempt those salaried taxpayers from the requirement of filing income-tax returns, who have (i) total income not exceeding Rs. 5,00,000, and (ii) the total income consists only of income chargeable to income-tax under the head ‘Salaries’ and interest income from savings bank account if such interest income does not exceed Rs. 10,000.

Further, such salaried taxpayer would be eligible for exemption from filing a return of income only if tax liability has been discharged by the employer by way of Tax Deducted at Source (TDS) and the deposit of the same to the credit of the Central Government. For this purpose, taxpayer has to intimate his interest income to the employer during the course of the year.

For Example –

(i) If an individual has salary income of Rs. 4,90,000 and interest income from savings bank account not exceeding Rs.10,000 (which has been reported to the employer and tax has been deducted thereon), then the taxpayer would be exempt from the requirement of filing income-tax returns since the total income from both the above sources does not exceed five lakh rupees.

(ii) A taxpayer having salary income of Rs. 4,98,000 and interest income from savings bank account of Rs. 2,000 (which has been reported to the employer and tax has been deducted thereon), would also be eligible under this Scheme.

(iii) A taxpayer having salary income up to Rs. 5,00,000 and nil interest income would also be eligible under this Scheme.

(iv) A taxpayer having salary income of Rs.5,50,000, interest income from savings bank account of Rs. 8,000(which has been reported to the employer and tax has been deducted thereon), and who has claimed deduction of Rs. 70,000 under section 80C (on account of certain payments / investments / savings) would also be eligible under the Scheme.

(v) A taxpayer having salary income of Rs. 6,10,000, interest income from savings bank account of Rs. 10,000 (which has been reported to the employer and tax has been deducted thereon), and who has claimed deduction of Rs. 1,00,000 under section 80C (on account of certain payments / investments / savings), a deduction of Rs. 20,000 under 80CCF (Infrastructure Bonds) and a further deduction of Rs. 15,000 under section 80D (Health Insurance Premium) would also be eligible under the Scheme.

Q.           Whether a salaried taxpayer having total income of less than Rs. 5,00,000 and claiming a refund of Rs. 3,000 would be eligible under this Scheme

 

Ans:        No. The taxpayer has to file a return of income for making a claim of refund.

Q:           Is having a valid PAN a precondition for being covered by the notification?

Ans:       Yes. The notification clearly specifies that the individual has to report his PAN to the employer.

Hence having a valid PAN is a precondition for falling within the ambit of the notification.

Q:           Can an individual who is getting income under the head “salaries” from more than one employer take benefit of the notification?

Ans:       No. A salaried taxpayer who has earned income from more than one employer during the financial year is not covered under this Scheme.

Q:           Whether this notification would also cover taxpayers having ‘loss from house property’, which are often reported by the employees to the employer.

Ans:       No. Under the existing procedure, DDO/employer can give credit to the employee for a claim for loss under the head “income from house property” under section 24 made by the employee. As a result, a salaried employee’s total income may reduce to less than Rs. 5,00,000 as loss from the head “income from house property” would have been set-off against salary income. Such a taxpayer is not exempted from filing his return of income as the notification exempts only cases where the total income is under the head “salary” and from savings bank account (income from other sources) not in excess of Rs. 10,000. If the taxpayer has any loss under the head “income from house property”, he will not be eligible for exemption from filing a return of income.

Q:           Does savings bank account include other banking accounts like fixed deposits or recurring deposits accounts?

Ans:       No. The benefit of the notification is available to taxpayers whose interest income comprises of interest earned on savings bank account ONLY.

Q:           Circular No. 8/2010, dated 13-12-2010 which is applicable for Assessment Year 2011-12 stipulates that the Drawing and Disbursing Officer (DDO)/Employer while deducting TDS from salary of an employee cannot allow deduction u/s 80G except donations made to the Prime Minister’s Relief Fund, the Chief Minister’s Relief Fund or the Lt. Governor’s Relief Fund. Whether the notification would cover only these cases?

Ans:       Yes. An individual cannot avail the exemption under this notification if the claim of deduction for donations under section 80G is for donations other than those mentioned in Circular No. 8/2010. A taxpayer has to file a return of income for making a claim in respect of claim of deduction under section 80G for such donations (not specified in Circular No. 8/2010).

Q:           Will a salaried individual having agricultural income, which is exempt from tax, be covered within the ambit of the notification?

Ans:       A salaried individual with agricultural income exceeding five thousand rupees shall be out of the ambit of the notification. A return will have to be filed in such a case, even if other conditions of the notification are satisfied as the agricultural income (of more than Rs. 5,000) has to be included, for rate purposes, in the total income.

 

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Issuance of TDS Certificates in Form No. 16A downloaded from TIN

As per CBDT circular no. 03/2011 dated May 13, 2011, TDSCertificates in Form No. 16A will be generated from Tax Information Network (TIN).It is mandatory for Companies and Banks to issue Form 16A from TIN to their deductees for deductions made from April 1, 2011 (F.Y.2011-12 onwards).

Deductors other than Company andBanks can also request Form 16A from TIN.

Form 16A is available for F.Y. 2010-11 also on the TINwebsite.

It is available to TANs registered at TIN website (www.tin-nsdl.com).

Register your TANonline at the TIN website now for Form 16A from TIN.

Brief procedure for receiving Form 16A from TIN website:

Login to TAN     Registration Account with user id, password and TAN.
Request Form 16A by carrying out verification by providing details of challan and deductees present in the TDS statement for     which Form 16A is requested.
Form 16A will be provided on successful verification.
Two attempts within a day for successful verification are provided.
On successful  verification, request number is generated and text file containing Form     16A details is e-mailed within 48 hours at the e-mail ID present in the  registered TAN account.
In case of large number of records multiple files of Form 16A are created and will be sent through     multiple emails.
Convert the text file to     Form 16A by passing the text file through the PDF Convertor Utility. The     utility is available to registered TAN post login.

 

CIRCULAR NO. 03 /2011

F. No 275/34/2011-( IT-B)
Government of India
Ministry of Finance

Department of Revenue

Central Board of Direct Taxes
New Delhi,

dated the 13th May, 2011

Subject: Issuance of TDS Certificates in Form No. 16A downloaded from TIN Website and option to authenticate the same by way of digital signature – Circular under section 119 of the Income-tax Act 1961.
Section 203 of the Income-tax Act 1961 (‘the Act’) read
with the Rule 31 of the Income-tax Rules 1962 (‘the IT Rules’) provides for
furnishing of certificate of tax deduction at source (TDS) by the deductor to
the deductee specifying therein the prescribed particulars like amount of TDS,
permanent account number (PAN), tax deduction and collection account number
(TAN), etc. The relevant form for such TDS certificate is Form No.16 in case of
deduction under section 192 and Form No.16A for deduction under any other
provisions of Chapter XVII-B of the Act. TDS certificate in Form No.16 is to be
issued annually whereas TDS certificate in Form No.16A is to be issued
quarterly.

2. Currently, a deductor has an option to authenticate TDS
certificate in Form No.16 by using a digital signature. However, no such option
of using a digital signature is available to a deductor for issuing TDS
certificate in Form No.16A and it, therefore, needs to be authenticated by a
manual signature. The Central Board of Direct Taxes (the Board) has received
representations to allow the option of using digital signature for
authentication of TDS certificate in Form No.16A as issuance of TDS certificate
in Form No.16A by manual signature is very time consuming, specially for deductors
who are required to issue a large number of TDS certificates.

3. The Department has already enabled the online viewing
of Form No.26AS by deductees which contains TDS details of the deductee
based on the TDS statement (e-TDS statement)filed electronically by the
deductor. Ideally, there should not be any mismatch between the figures
reported in TDS certificate in Form No. 16A issued by the deductor and figures
contained in Form No.26AS which has been generated on the basis of e-TDS
statement filed by the deductor.
However, it has been found that in some cases the figures contained in Form No.26AS are different from the figures reported in Form No.16A. The gaps in Form No.26AS and TDS certificate in Form No. 16A arise mainly on account of wrong data entry by the deductor or non-filing of e-TDS statement by the deductor. As at present, the activity of issuance of Form No.16A is distinct and independent of filing of e-TDS statement, the chances of
mismatch between TDS certificate in Form No.16A and Form No.26AS cannot be
completely ruled out. To overcome the challenge of mismatch a common link has
now been created between the TDS certificate in Form No.16A and Form No.26AS
through a facility in the Tax Information Network website (TIN Website) which
will enable a deductor to download TDS certificate in Form No.16A from the TIN
Website based on the figures reported in e-TDS statement filed by him. As both
Form No.16A and Form No.26AS will be generated on the basis of figures reported
by the deductor in the e-TDS statement filed, the likelihood of mismatch
between Form No.16A and Form No.26AS will be completely eliminated.

4. In view of the above, for proper administration of the Act, the Board have,
in exercise of powers under section 119 of the Act, decided the following :-

4.1 ISSUE OF TDS CERTIFICATE IN FORM NO. 16A

(i) For deduction of tax at source made on or after 01/04/2011:

(a) The deductor, being a company including a banking
company to which the Banking Regulation Act,1949 applies and any bank or
banking institution, referred to in section 51 of that Act or a co-operative
society engaged in carrying the the business of banking, shall issue TDS
certificate in Form No.16A generated through TIN central system and which is
downloaded from the TIN Website with a unique TDS certificate number in respect
of all sums deducted on or after the 1st day of April, 2011 under any of the provisions
of Chapter-XVII-B other than section 192.
(b) The deductor, being a person other than the person referred
to in item (a)above, may, at his option, issue TDS Certificate in Form
No.16A generated through TIN central system and which is downloaded from the
TIN Website with a unique TDS certificate number in respect of all sums
deducted on or after the 1st day of April, 2011 under any provisions of
Chapter-XVII-B other than section 192.

(ii) For deduction of tax at source made during financial year 2010-11:

The deductor, may, at his option, issue the TDS
certificate in Form No.16A generated through TIN central system which is
downloaded from the TIN Website with a unique TDS certificate number in respect
of all sums deducted during the financial year 2010-11 under any of the
provisions of Chapter-XVII-B other than section 192.
4.2 AUTHENTICATION OF TDS CERTIFICATE IN FORM NO.16A

(i) The deductor, issuing the TDS certificate in Form No.16A by downloading from the TIN Website shall authenticate such TDS certificate by either using digital signature or manual signature

(ii) The deductor being a person other than a person referred to in item 4.1(i)(a) above and who do not issue the TDS Certificate in Form No.16A by downloading from the TIN Website shall continue to authenticate TDS certificate in From No.16A by manual signature only.

5. The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purpose of issuance of TDS certificate in Form No.16A which is downloaded from the TIN Website and shall be responsible for the day-to-day administration in relation to the procedure, formats and standards for issuance of TDS certificate in Form No.16A in electronic form.

6. It is further clarified that TDS certificate issued in Form No. 16A by the deductors covered by para 4.1(1)(a) in accordance with this circular and procedure, format and standards specified by the Director General of Income-tax (Systems) shall only be treated as a vilid TDS certificate in Form No. 16A for the purpose of section 203 of the Act read with Rule 31 of the IT Rules,1962.

7. Hindi version shall follow.

(AJAY KUMAR)

Director (Budget)

Tel.No.2309-2641

Copy to all CCsIT/ DsGIT for circulation