Wednesday, January 28, 2015

Sukanya Samriddhi Account eligible scheme under Section 80C

NOTIFICATION NO. 9/2015 [F.NO.178/3/2015-ITA-1]DATED 21-1-2015
In exercise of the powers conferred by clause (viii) of sub-section (2) of section 80C of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies the 'Sukanya Samriddhi Account' for the purposes of the said clause.
2. This notification shall come into force with effect from the date of its publication in the Official Gazette.

Main features of the SUKANYA SAMRIDHHI ACCOUNT scheme 

Interest rate on Sukanya Samriddhi Account has been announced at 9.1% per Annum.

8 Draft E book on Service Tax by IDTC of ICAI

As you may be aware, the Indirect Taxes committee of the ICAI has taken up an initiative to develop Background Material on Service Tax for various sectors.

With great pleasure, we would like to inform you that the Indirect Taxes Committee of ICAI has come up with its first draft of Technical Guides/ Background Material on Service Tax for following Sectors which are hosted on the links provided against them.

We request you to provide us your comments/ suggestions on the following Technical Guides/ Background Material on Service Tax:

Renting of a building for a hotel, is not liable to Service tax under 'Renting of immovable property’ services

We are sharing with you an important judgment of Hon’ble CESTAT, New Delhi, in the case of Jai Mahal Hotels (P.) Ltd.Vs. Commissioner of Central Excise, Jaipur [(2015) 53 206 (New Delhi - CESTAT)] on the following issue:
Whether the ‘Renting of a building for a hotel’ is liable to Service tax under 'Renting of immovable property’ services?
Facts & background:
Jai Mahal Hotels (P.) Ltd. (“the Appellant”) entered into a joint venture agreement dated August 28, 1985 with Indian Hotels Company Limited (“IHCL”) for running hotel business at immovable property owned by the Appellant. The Department contended that the Appellant had provided the taxable service namely ‘Renting of immovable property’, defined in erstwhile Section 65(90a) read with Section 65(105)(zzzz) of the Finance Act, 1994 (“the Finance Act”). Accordingly, demand of Service tax along with interest and penalty was confirmed against the Appellant for the period from June, 2007 to March, 2010.
Being aggrieved, the Appellant filed an appeal before the Hon’ble CESTAT, Delhi arguing that 'hotel buildings' were not covered under taxable service in view of the exclusion clause under Section 65(105)(zzzz) of the Finance Act and even otherwise, there was no provision of service, as there was  a joint venture.
The Hon’ble CESTAT, Delhi after analyzing exclusionary and inclusionary clauses under Explanation I to the erstwhile Section 65(105)(zzzz) of the Finance Act, held that as per Explanation 1(d) to erstwhile Section 65(105)(zzzz) of the Finance Act, ‘immovable property’ does not include buildings used for purpose of accommodation, including hotels. Hence, buildings used for, or as, hotels do not amount to immovable property.

Therefore, renting of a building for a hotel i.e. buildings used for purpose of accommodation including hotels is covered by exclusion clause and does not fall within ambit of taxable service namely ‘Renting of immovable property’.

The alternative argument of the Appellant as regards joint-venture was not discussed and the matter was decided in favour of the Appellant relying upon the provisions under Section 65(105)(zzzz) of the Finance Act.

Bimal Jain 
FCA, FCS, LLB, B.Com (Hons)

Tuesday, January 27, 2015

Compensation under Workmens Compensation Act, 1923

An employee covered under Employees’ State Insurance Act, 1948 will not be entitled to claim benefit under Workmens Compensation Act, 1923. 

Employer's liability to pay compensation to a workman Sec.3

On death or personal injury resulting into total or partial disablement or occupational disease caused to a workman arising out of and during the course of employment.

An employee shall be eligible for compensation under Employees’ Compensation Act, 1923 which results in the total or partial disablement of the workman for period exceeding THREE DAYS.

When an employee is not liable for compensation [Sec. 3(a) & (b)]

An employee shall not be eligible for the Compensation for any injury caused to by his willful negligence or failure to adhere to safety standards prescribed by the employer. 

  1. In respect of any injury which does result in the total or partial disablement of the workman for a period exceeding three days.
  2. In respect of any injury, not resulting in death or permanent total disablement caused by an accident which is directly attributable to-
  3. The workman having been at the time thereof under the influence of drink or drugs, or
  4. Wilful disobedience of the workman to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workmen, or
  5. Wilful removal or disregard by the workman of any safety guard or other device which he knew to have been provided for the purpose of securing the safely of workman.

Amount of Compensation under Workmens Compensation Act, 1923 is as under., 

A. In case of death: An amount equal to 50% of monthly wages of the deceased workman multiplied by relevant factor or an amount of Rs.1,20,000/‐ WHICHEVER IS MORE. 

B. In case of Permanent total disablement: 60% of monthly wages multiplied by relevant factor or an amount of Rs.1,40,000/‐ WHICHEVER IS MORE 

Procedure for Calculation: Higher the age – Lower the compensation Relevant factor specified in second column of Schedule IV giving slabs depending upon the age of the concerned workman. 

Monday, January 26, 2015


Vat was introduced in all over country in 2006 and GST is the logical conclusion of the successful introduction and imposition of Value added Tax in India. In its standard format GST is a single tax replacing all the indirect taxes and collected by a single authority but in our country the system of Governance is Federal and both centre and states have the power to collect indirect taxes in one form or another. Hence a formula is developed to introduce a compromised GST with the consent of the States hence we can call it Indian format of GST. 

First it was referred in 2006 in the Budget speech of the FM that GST will be introduced in India from 1st. April 2010 but later for one or other reasons it was postponed from year to year and it is evident from this delay that it is not easy for the lawmakers to introduce GST in our country and now since 2016 is declared as GST introduction year, let us see what is Indian format of the GST and further what is the basic characteristics of India GST , the problems associated with it and further what is the possibility that the 2016 deadline will be met. 

Exchange traded fund: History, evolution benefits and operational process

In a recent development, Exchange traded funds has gained wide popularity, among investors as financial instruments, because of the unique advantages they provide over mutual funds. These instruments are highly advantageous for investors, who find it difficult to master the tricks of the trade resulting out of analyzing and picking stocks for their portfolio.(

Various Asset Management Companies, Managing Mutual funds have started providing ETF products that attempt to replicate the indices on NSE, so as to provide returns that closely correspond to the total returns of the securities represented in the index. ETF’s now currently available on NSE are extremely diverse which include Equity, Debt, Gold and International Indices ETF’s.

Read other types of Mutual Funds

ETF's launched on NSE

Exchange Traded Funds (ETF) are essentially Index Funds that are listed and traded on exchanges like stocks. An ETF is a basket of stocks that reflects the composition of an Index, like CNX Nifty. The ETFs trading value is based on the net asset value of the underlying stocks that it represents. The funds rely on an arbitrage mechanism to keep the prices at which they trade roughly in line with the net asset values of their underlying portfolios. For the mechanism to work, potential arbitragers need to have full, timely knowledge of a fund's holdings.

ETF’s was first introduced in USA in 1993. It took several years for them to attract public interest. But once they did, the volumes took off with a vengeance. Over the last few years more than $120 billion (as on June 2002) is invested in about 230 ETFs. About 60% of trading volumes on the American Stock Exchange are from ETFs. The most popular ETFs are QQQs (Cubes) based on the Nasdaq‐100 Index, SPDRs (Spiders) based on the S&P 500 Index, iSHARES based on MSCI Indices and TRAHK (Tracks) based on the Hang Seng Index. The average daily trading volume in QQQ is around 89 million shares.

ETF s Scheme launched on National Stock Exchange, NSE, represent Equity, Debt. Gold and World Indices. ETFs are just what their name implies: baskets of securities that are traded, like individual stocks, on an exchange.

Advantages of ETF’s over Mutual Fund:

There are certain specific advantages which ETF has over Mutual Fund which are listed below:

1. Unlike regular open‐end mutual funds, which are also basket of securities, ETFs can be bought and sold throughout the trading day like any stock.

2. Most ETFs charge lower annual expenses than index mutual funds. However, as with stocks, one must pay a brokerage to buy and sell ETF units, which can be a significant drawback for those who trade frequently or invest regular sums of money.

3. Even though ETFs and Futures allow investors exposure to an index, they are different in many regards. While Futures is a derivative product and trades in the F&O segment of NSE, ETFs are a cash market product and trade in the Capital Market segment of NSE.

4. The maximum tenure available for futures is 3 months while ETFs can be held for as long as the investor wants.

Saturday, January 24, 2015


New Delhi, the 23rd January, 2015 

No. 1-CA(7)/167/2014.- Whereas certain draft regulations further to amend the Chartered Accountants Regulations, 1988, were published as required by sub-section (3) of section 30 of the Chartered Accountants Act, 1949 (38 of 1949), in the Gazette of India, Extraordinary, Part III, Section 4, dated the 10th September, 2014, inviting objections and suggestions from persons likely to be affected thereby, before the expiry of forty -five days from the date on which the copies of the Gazette containing the said notification were made available to the public; 

And whereas the copies of the said Gazette were made available to the public on the 12th September, 2014; 

And whereas the objections and suggestions received from the public on the said draft regulations have been considered by the Council of the Institute; 



ANSWER:  There are Two Situations: First Analyze Section- 139(2) Applicable on your company or Not. Companies fall under Section- 139(2) as given below(exclude small company and one person company):

·         All Listed Companies
·         Every Public Company having a Paid-Up Share Capital of Rs. 10 Crore (Ten crore rupees) or more.
·         Every Private Limited Company having Paid-Up Share Capital of Rs. 20 Crore (Twenty crore rupees) or more.
·         All Companies having public borrowings from Financial Institutions, banks or public deposits of Rs. 50 Crore (Rupees Fifty Crore Only) or more.

Friday, January 23, 2015

Govt. notifies 9.1% interest rate for investment in 'Sukanya Samridhi Account' during 2014-15


OFFICE MEMORANDUM [F.NO. 2/3/2014.NS-II], DATED 20-1-2015

Subject: Launch of scheme for Girl Child named "Sukanya Samridhhi Account" by Hon'ble Prime Minister - rate of interest reg.

In compliance of announcement by Finance Minister in his Budget Speech 2014-15 the Government of India has introduced a new scheme named "Sukanya Samridhhi Account" vide Notification No.GSR No.863(E), dated 2nd December, 2014. It has been decided to allow 9.1% rate of interest on investments in the scheme during the financial year 2014-15.

This has the approval of Union Finance Minister.

Exporter can convert shipping bill under one export promotion scheme to another to avail the benefit of scheme

We are sharing with you an important judgment of Hon’ble CESTAT, Chennai in the case of Suzlon Energy Ltd. Vs. Commissioner of Customs, Chennai [(2014) 51 176 (Chennai - CESTAT)] onthe following issue:
Whether Exporter can convert shilling bill under one export promotion scheme to another to avail the benefit of scheme?
Facts & background:
Suzlon Energy Ltd. (“the Appellant”) sought conversion of five shipping bills from EPCG Drawback Scheme to EPCG Drawback and Advance Licence/ DEEC Scheme. In terms of the Circular No. 4/2004-Customs, dated January 17, 2004 (“the Circular”) such conversion can only be allowed when the benefit of export promotion scheme claimed by an exporter has been denied by the DGFT/ Ministry of Commerce/ Customs due to any dispute. In absence of the aforesaid denial, the conversion claimed in the instant case was rejected by the Adjudicating Authority under Section 149 of the Customs Act, 1962 (“the Customs Act”) read with the Circular. Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Chennai.
The Hon’ble CESTAT, Chennai held that in terms of Section 149 of the Customs Act, the conversion is possible on the documents in existence at the time of export. The shipping bills in the instant case were supported by a certificate from the Chartered Engineer, which was endorsed with the export particulars. It was further observed that the export was made in the month of March and the request for the conversion was made in the following month. Hence, the Hon’ble Tribunal allowed the conversion of shipping bills from “EPCG Drawback Scheme” to “EPCG Drawback and Advance License” to the Appellant.

Bimal Jain 
FCA, FCS, LLB, B.Com (Hons) 

Thursday, January 22, 2015

Summons not to be issued to top management of companies

On 20-Jan-15, CBEC has issued instructions directing the Central Excise officers to be very cautious before issuing summons under excise & service tax laws.

The Board instructed the Superintendents to obtain prior permission of Assistant Commissioner with reasons for issuance of summons in writing.

Post issuance of summons, a report incorporating the briefing of proceedings in the case file should also be submitted by the person issuing the summons.

Further, it also stated that summons should not be issued to senior mgt. officials such as CEO,CFO,General Manager of a large company or a PSU, unless there is an indicator of their involvement in decision making process which led to loss of revenue.


The aforesaid instructions have acted as a breather to the industry. Let's hope to get some relief from undue harassment done by the departmental officials without application of mind. 

Sumit Grover

Chartered Accountant

F. No. 207/07/2014-CX-6
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
  New Delhi, the 20th January, 2015  


Principal Chief / Chief Commissioners of Central Excise (All),
Principal Chief / Chief Commissioners of Central Excise of Central Excise & Service Tax (All),
                        Web-master, CBEC.  

Sub: Instructions regarding issue of summons in Central Excise and Service Tax matters – reg.


           It has been brought to the notice of the Board that in some instances, the summons under Section 14 of the Central Excise Act, 1944 have been issued by the field formations to the top senior officials of the companies in a routine manner to call for material evidence/ documents. Besides, summons have been issued to enforce recovery of dues, which are under dispute. As per Section 14 of Central Excise Act, 1944, summons can be used in an inquiry for recording statements or for collecting evidence/ documents. While the evidentiary value of securing documentary and oral evidence under the said legal provision can hardly be over emphasized, nevertheless, it is desirable that summons need not always be issued when a simple letter, politely worded, can also serve the purpose of securing documents relevant to investigation. It is emphasized that the use of summons be made only as a last resort when it is absolutely required.

2.         On this issue, Board has already issued a circular vide F. No 208/122/89-CX.6 dated 13.10.1989 in respect of Central Excise. Instruction has also been issued vide F. No. 137/39/2007-CX.4 dated 26.2.2007 in Service Tax matters.

3.   The following guidelines are being issued to be followed in both Central Excise and Service Tax matters:–

(i) Power to issue summons are generally exercised by Superintendents, though higher officers also issue summons. Summons by Superintendents should be issued after obtaining prior written permission from an officer not below the rank of Assistant Commissioner with the reasons for issuance of summons to be recorded in writing;
(ii) where for operational reasons it is not possible to obtain such prior written permission, oral/telephonic permission from such officer must be obtained and the same should be reduced to writing and intimated to the officer according such permission at the earliest opportunity;
(iii) In all cases, where summons are issued, the officer issuing summons should submit a report or should record a brief of the proceedings in the case file and submit the same to the  officer who hadauthorised the issue of summons.
4. Further, senior management officials such as CEO, CFO, General Managers of a large company or a PSU should not generally be issued summons at the first instance. They should be summoned only when there are indications in the investigation of their involvement in the decision making process which led to loss of revenue.

5. These instructions may be brought to the notice of all the field officers for strict compliance. Non observance of the instructions will be viewed seriously. Hindi version would follow.

Yours faithfully,

Under Secretary, (CX-6)