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Thomson Reuters presents Amicus Curiae a tax show on ET Now

Union Budget 2014-15

Some key announcements in Union Budget for FY 2014-15

KEY DIRECT TAXES PROPOSALS‰

  • Personal Income-tax exemption limit raised by  Rs. 50,000/- that is, from Rs.2 lakh to Rs.2.5 lakh in the case of individual taxpayers, below the age of 60 years. Exemption limit raised from Rs. 2.5 lakh to Rs. 3 lakh in the case of senior citizens.
  •  Investment limit under section 80C of the Income-tax Act raised from Rs.1 lakh to Rs.1.5 lakh.
  • Deduction limit on account of interest on loan in respect of self occupied house property raised from Rs. 1.5 lakh to Rs2 lakh.
  • Investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs. 25 crore in any year in new plant and machinery.The benefit to be available for three years i.e. for investments upto 31.03.2017.
  • 10 year tax holiday extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017.
  • Concessional rate of 15 percent on foreign dividends without any sunset date to be continued.
  • The eligible date of borrowing in foreign currency extended from 30.06.2015 to 30.06.2017 for a concessional tax rate of 5 percent on interest payments. Tax incentive extended to all types of bonds instead of only infrastructure bonds.
  • To remove tax arbitrage, rate of tax on long term capital gains increased from 10 percent to 20 percent on transfer of units of Mutual Funds, other than equity oriented funds.
  • Income and dividend distribution tax to be levied on gross amount instead of amount paid net of taxes.
  • In case of non deduction of tax on payments, 30% of such payments will be disallowed instead of 100 percent.
  • Government to review the DTC in its present shape and take a view in the whole matter.

 Transfer Pricing:

  • Introduction of a “Roll Back” provision in the Advanced Pricing Agreement (APA) scheme so that an APA entered into for future transactions is also applicable to international transactions undertaken in previous four years in specified circumstances.
  • Introduction of range concept for determination of arm’s length price in transfer pricing regulations.
  • To allow use of multiple year data for comparability analysis under transfer pricing regulations.

 

KEY INDIRECT TAXES PROPOSALS

  • To boost domestic manufacture and to address the issue of inverted duties, basic Customs duty (BCD) reduced on certain items.
  • To encourage production of LCD and LED TVs below 19 inches in India, basic customs duty on LCD and LED TV panels of below 19 inches reduced from 10 percent to Nil.
  • Increase / Decrease in Excise Duty on certain products.

 Service tax.

  • Changes in Point of Taxation rules
  • Changes in Place of Provision of Services Rules
  • Increase in interest rate charge for late payment of service tax
  • To broaden the tax base in Service Tax, sale of space or time for advertisements in broadcast media, extended to cover such sales on other segments like online and mobile advertising. Sale of space for advertisements in print media however would remain excluded from service tax.
  • Service provided by radio-taxis brought under service tax.
  • Services by air-conditioned contract carriages and technical testing of newly developed drugs on human participants brought under service tax.
  • Provision of services rules to be amended and tax incidence to be reduced on transport of goods through coastal vessels to promote Indian Shipping industry.
  • Services provided by Indian tour operators to foreign tourists in relation to a tour wholly conducted outside India to be taken out of the tax net and Cenvat credit for services of rent-a-cab and tour operators to be allowed to promote tourism.
  • Service tax exempted on loading, unloading, storage, warehousing and transportation of cotton, whether ginned or baled.
  • Services provided by the Employees’ State Insurance Corporation for the period prior to 1st July 2012 exempted, from service tax.
  • Exemption available for specified micro insurance schemes expanded to cover all life micro-insurance schemes where the sum assured does not exceed Rs.50, 000 per life insured.

 Other Important changes

Convergence with International Financial Reporting Standard (IFRS) by Adoption of the new Indian Accounting Standards (2nd AS) by Indian Companies:

  • Indian companies will have to adopt the new Indian Accounting Standards (Ind AS) voluntarily from F.Y 2015-16 and on a mandatory basis from F.Y 2016-17

File Validation Utility (FVU) 4.3 and 2.139 – Applicable from 28th June 2014

Another Tax filing period & another FVU change

FVU Applicability

Date Applicable from FVU Version
From 28th June 2014 4.3 & 2.139
Till  27th June 2014 4.2 & 2.138

 

 

 

Unlike previous instances NSDL haven’t brought too many changes/validations with this FVU release. They have got the following:

 

Addition of New State – Telangana

Applicable Forms – 24Q, 26Q, 27Q & 27EQ

  • Telangana – the newly formed State has now been added onto the List of States.

 

Bank Branch Code

Applicable Forms – 24Q, 26Q, 27Q & 27EQ

  • Bank Branch Code refers to the BSR codes.
  • FVU validates every BSR code which is entered
  • And in case of a BSR code mismatch,an Error/Warning file used to be generated
  • NSDL have now updated the list of BSR codes
  • The number of errors/warnings on account of BSR code mis-match would now be reduced.

 

 

* Points expressed here are the Author’s interpretation. This cannot substitute Expert advice

File Validation Utility (FVU) 4.2 and 2.138 – Applicable from 26th April 2014

It’s the start of Tax compliance Season  and as with the last 3 quarters, there is a new FVU. NSDL came out with the latest  utility on 25th April 2014 late evening

FVU Applicability

Date Applicable from FVU Version
From 26th April 2014 4.2 & 2.138
Till  25th April 2014 4.1 & 2.137

Through the new FVU  the following changes/validations have been brought in place:

NIL Returns

Applicable Forms – 24Q

  • A Deductor would now be able to file NIL returns for all years
  • Since FVU 4.0, there was a lot of confusion on the filing on NIL returns
  • It’s still not clear whether NIL returns need to submitted for other Forms

Unique Acknowledgement Number (UAN)

Applicable Forms – 27Q

  • UAN refers to the acknowledgement received on successful filing of Form 15CA
  • The new utility now allows a User to key in alphanumeric values from 12 to 15 characters

Validation in the absence of Deductee’s PAN

Applicable Forms – 24Q

  • It’s well understood that, in case a Deductee doesn’t have a PAN, TDS needs to be deducted at higher of 20% or applicable rate.
  • This point was not being checked till the previous FVU filings.
  • Henceforth, the new Utility would now be validating this feature (i.e – If a Deductee does not have a PAN, and if the TDS deducted amount is less than 20%, the FVU would show an error

* Points expressed here are the Author’s interpretation. This cannot substitute Expert advice

File Validation Utility (FVU) 4.1 and 2.137 – Applicable from 04th January 2014

NSDL came out with a new FVU late evening yesterday 02nd January 2014

FVU Applicability

Date Applicable from FVU Version
From 04th Jan 2014 4.1 & 2.137
Till  03rd Jan 2014 4.1 & 2.137 and 4.0 & 2.136

Points introduced in the new version are:

Deletion of Deductee Record

Applicable Forms – 24Q, 26Q, 27Q, 27EQ

  • Deletion of Deductee’s records (in Correction Return) is no longer permitted.
  • Till the prior FVU versions Deductee records could be deleted, while filing the Correction Return.
  • Henceforth a Deductor would be required to modify the particular Deductee  details in the Correction return and enter zero against the following fields:
    • Amount of payment
    • Amount of Deduction
    • Amount of Deposit
    • Rate of Deduction
    • Date of Deduction should be blank

Form 27A

  • Form 27A is used for providing summarized information with the Statement of Tax deduction/Tax Collection at source.
  • Now on, the Form 27A would be auto generated on creation of the .fvu file
  • The new Form27A also contains a barcode (refer file attached)

27A

Date of Tax Deduction and/or Tax Collection

Applicable Forms – 24Q, 26Q, 27Q, 27EQ

  • Going ahead transactions, on which tax is deducted prior to the filing period, cannot be included in the TDS return.
  • Ex – In the Dec 2013 quarter, a Deductor cannot include a TDS deduction entry prior to 01st October 2013
  • Earlier there were no restrictions and one could declare transaction related to previous quarter in the subsequent filing quarters
  • Now on, a Deductor is required to file a Correction return, if they have any (such) transaction relating to previous filing periods.

Challan/Transfer Voucher validation

Applicable Forms – 24Q, 26Q, 27Q, 27EQ

  • Challan amount should be more than or equal to total of Tax deducted, interest payments, late filing fees and other amounts.
  • i.e – No challan can be submitted with a short payment
  • Ex –  Assume a scenario as below:
TDS Amount 10,000
Interest  5,000
Other Amount  4,000
Fees  1,000
TOTAL 20,000
  •  In this case, the Challan amount has to be more than/equal to Rs. 20,000

* Points expressed here are the Author’s interpretation. This cannot substitute Expert advice

For March 2011 deposit TDS before April 30, 2011

Today is April 7 and as a deductor you must be planning to deposit TDS for all payments made during March 2011.  Hold ! the rule has been changed and now the last date of deposit for such transactions is April 30.

For non government deductors , earlier tds on all payments made during March was to be deposited before 7th of April. For all provisional entries credited on 31st March, the last date of deposit was 31st May.

The amended rule does not distinguish between payment entries and provisional entries and the last date of deposit for all such entries is April 30

Notification 41/2010 dated 31.05.2010

Above Notification amended rules pertaining to deposit of tax, issue of tds certificate and filing of eTDS statement.

The above amendment was explained in detail in our Bulletin of June 1010. The same can be viewed by clicking the following link

http://fastfacts.co.in/bulletin/FFB_Jun10.pdf

The relevant extract of amended Rule 30 is reproduced below

30.

(1) All sums deducted in accordance with the provisions of Chapter XVII‐B by an office of the Government shall be paid to the credit of the Central Government ‐ (a)  on  the  same  day  where  the  tax  is  paid  without  production  of  an  income‐tax challan; and (b) on or before seven days from the end of the month in which  the deduction is made or income‐tax is due under sub‐section (1A) of section 192, where tax is paid accompanied by an income‐tax challan.

(2)  All  sums  deducted  in   accordance  with   the   provisions  of   Chapter XVII‐B by deductors other  than  an  office  of  the  Government  shall  be  paid  to  the  credit  of  the  Central Government ‐ (a)  on or before 30th day of April where  the  income or  amount  is  credited or paid in the month of March; and (b)  in any other case, on or before seven days from the end of the month in which‐      (i)  the deduction is made; or      (ii)  income‐tax is due under sub‐section (1A) of section 192.

New Validations : FVU 3.1

NSDL has released FVU version 3.1 and FVU version 2.130 on March 18,2011

  • FVU version 3.1 is applicable for statements for the Financial Year 2010-11 and onwards
  • FVU version 2.130 is applicable for statements for the Financial Year upto 2009-10

New Validations

Separate flag for TDS transaction below threshold limit

  • Tax is not to be deducted in case amount paid/ payable to a deductee is below prescribed threshold limit. Example :  For Professional Fees threshold limit is Rs. 30,000.
  • However, when payment subsequently exceeds threshold limit, tax has to be deducted on the past payments made without tax deduction also

Example :

10-04-2010          Professional Fees to ABC Consultants     Rs. 20,000            No TDS

10-05-2010          Professional Fees to ABC Consultants     Rs. 5,000              No TDS

10-09-2010          Professional Fees to ABC Consultants     Rs. 15,000            TDS to be Deducted on 40,000

  • Earlier there were no clear guidelines for reporting such transactions below threshold. Some deductors were reporting such transactions in statements , others were not. Those who reported such transaction, received notice from income tax department citing this as case of short-deduction.
  • To remove such confusion , now it is required to report such transaction.
  • Transaction below threshold limit must have : “Y” in the column “Reason for non deduction /lower deduction” , 0.00 as rate of Deduction, 0.00 as Amount Deducted, 0.00 as Amount Deposited
  • Transaction where threshold limit is crossed and tax is deducted on past transactions also, rate has to be adjusted to show correct TDS amount. In the above example, it will be show as below

10-09-2010          Professional Fees to ABC Consultants     Rs. 15,000            TDS to be Deducted on 40,000

TDS on Rs. 40,000 @ 10% =  Rs. 4000

TDS Rate = 4000/15000 =  26.67%

New Fields

  • Mandatory to quote Mobile No. for deductor category other than Central govt. and State Govt.
  • Re-introduction of PAN reference no. field in deductee/collectee details. Value quoted PAN reference no. (Last PAN reference no.) will  not be considered as verification key

New Validations and additions in Form 24Q – Q4

  • Provision to quote the deduction under section 80CCF in salary details (applicable for 24Q Q4).
  • Surcharge’ amount in salary details  should be less than or equal to ‘Total Taxable Income’.
  • ‘Education cess’ amount in salary details  should be less than or equal to ‘Total Taxable Income’.
  • ‘Net Income tax payable’ amount in salary details  should be less than or equal to ‘Total Taxable Income’.

Changes in Correction Statements

  • Mandatory to provide section code irrespective of challan update.
  • Book entry flag to be provided in C5 correction (deductee/ collectee PAN update).

Acceptance of e-TDS/TCS statements in Pen Drive:

  • As of now, deductor has to submit eTDS statement on CD. That too must contain only one eTDS Statement.
  • Now it is possible to submit eTDS Statement in a Pen Drive.
  • The pen drive may contain multiple eTDS Statements
  • The TIN-FC will return the Pen Drive after accepting the statements