Thursday, August 28, 2014

EPF WAGE CEILING LIMIT INCREASED TO 15000 FROM 6500 WEF 01.09.2014 NOTIFICATION


Government of India, Ministry of Labour & Employment issued notifications enhancing statutory wage ceiling from existing Rs. 6,500/- to Rs. 15,000/-, fixing minimum pension of Rs, 1000/- per month and 20% additional relief on the amount of assurance benefit admissible under EDL1 Scheme, 1976 .

As we have earlier informed you that Central Board of trustees (CBT,EPF)  in his meeting dated 05.02.2014 has approved  to increase ceiling limit to Rs 15000/-  from earlier Rs 6500/-

Further EPF department has already sent letter to its regional offices to get ready for implementation of increased ceiling limit on 14.07.2014 and at that time we have informed you tentative date of implementation as 01.08.14 or 01.09.14

The copies of the said notifications are given as under.

Note :You may download these notifications from Link given at the end of this post.

RBI simplified KYC (Know Your Customer) for Bank Customers


The Reserve Bank of India today released a note along with a poster and a booklet comprising a few common questions relating to Know Your Customer (KYC) norms for opening bank accounts. The objective of this is to bring awareness among the general public about the KYC simplification measures taken by the Reserve Bank in the recent times with a view to helping the common man in opening bank accounts.

Measures taken for simplification:

1. Single document for proof of identity and proof of address
There is now no requirement of submitting two separate documents for proof of identity and proof of address. If the officially valid document submitted for opening a bank account has both, identity and address of the person, there is no need for submitting any other documentary proof.
Officially valid documents (OVDs) for KYC purpose include: Passport, driving licence, voters’ ID card, PAN card, Aadhaar letter issued by UIDAI and Job Card issued by NREGA signed by a State Government official.
To further ease the process, the information containing personal details like name, address, age, gender, etc., and photographs made available from UIDAI as a result of e-KYC process can also be treated as an ‘Officially Valid Document’.

2. No separate proof of address is required for current address
Since migrant workers, transferred employees, etc., often face difficulties while submitting a proof of current address for opening a bank account, such customers can submit only one proof of address (either current or permanent) while opening a bank account or while undergoing periodic updation. If the current address is different from the address mentioned on the proof of address submitted by the customer, a simple declaration by her/him about her/his current address would be sufficient.

3. No separate KYC documentation is required while transferring accounts from one branch to another of the same bank
Once KYC is done by one branch of the bank, it is valid for transfer of the account to any other branch of the same bank. The customer would be allowed to transfer her/his account from one branch to another branch without restrictions and on the basis of declaration of his/her local address for communication.

4. Small Accounts
Those persons who do not have any of the ‘officially valid documents’ can open ‘small accounts’ with banks. A ‘small account’ can be opened on the basis of a self-attested photograph and putting her/his signature or thumb print in the presence of an official of the bank. Such accounts have limitations regarding the aggregate credits (not more than Rupees one lakh in a year), aggregate withdrawals (not more than Rupees ten thousand in a month) and balance in the accounts (not more than Rupees fifty thousand at any point in time). These small accounts would be valid normally for a period of twelve months. Thereafter, such accounts would be allowed to continue for a further period of twelve more months, if the account holder provides a document showing that she/he has applied for any of the officially valid document, within twelve months of opening the small account.

5. Relaxation regarding officially valid documents (OVDs) for low risk customers
If a person does not have any of the ‘officially valid documents’ mentioned above, but if is categorised as ‘low risk’ by the banks, then she/he can open a bank account by submitting any one of the following documents:
(a) identity card with applicant's photograph issued by Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions;
(b) letter issued by a gazetted officer, with a duly attested photograph of the person.

6. Periodic updation of KYC
Time intervals for periodic updation of KYC for existing low/medium and high risk customers have been increased from 5/2 years to 10/8/2 years, respectively.

7. Other relaxations
  1. KYC verification of all the members of Self Help Groups (SHGs) is not required while opening the savings bank account of the SHG and KYC verification of only the officials of the SHGs would suffice. No separate KYC verification is needed at the time of credit linking the SHG.
  2. Foreign students have been allowed a time of one month for furnishing the proof of local address.
  3. In case a customer categorised as low risk is unable to submit the KYC documents due to genuine reasons, she/he may submit the documents to the bank within a period of six months from the date of opening account.
Alpana Killawala
Principal Chief General Manager

Certificate by Indian Railways an eligible document for CENVAT credit:Circular


Service tax on transportation of goods was effectively levied w.e.f. 1st Oct’12(though levied from 1st July’12, but was deferred till 30th Sep’12).

However, abatement of 70% was allowed vide N/N 26/2012-ST, hence effective rate of tax imposed was 3.708%.

Ministry of Railways issued a circular- TCR/1078/2011/2 ,dated 27th Jun’12 to deal with the issues arising out of the aforesaid levy & in para 4(xi) of the same, it was stated that on written request from customers, a consolidated certificate for each customer shall be issued by the authorised officer of Indian Railways(CCM/Dy. CAO) on monthly basis giving following details date-wise & rake-wise:

  • o Service Tax;
  • o Education Cess;
  • o Higher Education Cess; and
  • o Total Service Tax

 It further stated that the said certificate can be used by the customers for taking CENVAT. However, no corresponding amendment was made by Ministry of Finance in rule 9 of CENVAT Credit rules, 2004, which deals with the list of eligible documents for availment of CENVAT.

 Now, vide N/N 26/2014-C.E.(N.T.), rule 9 of CENVAT Credit Rules, 2004 has been amended & clause (fa) has been inserted therein to include following certificate as an eligible document for the purpose of availing CENVAT:

“a Service Tax Certificate for Transportation of goods by Rail (herein after referred to as STTG Certificate) issued by the Indian Railways, along with the photocopies of the railway receipts mentioned in the STTG certificate”.

Henceforth, the eligibility stated vide circular issued by Ministry of Railways has finally been brought at par with CENVAT credit rules.

CA Sumit Grover  
Sumitgrover.ca@gmail.com  +91-9910946323

Notification No. 26/2014 – Central Excise (N.T.), dated 27-Aug-2014
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3,SUB-SECTION (i)]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

Notification No. 26/2014 – Central Excise (N.T.)  New Delhi, the 27th August, 2014

G.S.R. (E). – In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely : –

1. (1) These rules may be called the CENVAT Credit (Eighth Amendment) Rules, 2014.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the CENVAT Credit Rules, 2004, in rule 9, in sub-rule (1), after clause (f), the following clause shall be inserted, namely:-

“(fa) a Service Tax Certificate for Transportation of goods by Rail (herein after referred to as STTG Certificate) issued by the Indian Railways, along with the photocopies of the railway receipts mentioned in the STTG certificate; or” 

[F. No. 267/87/2013-CX.8]
(Pankaj Jain)
Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II,  Section 3, Sub-section (i), dated the 10th September, 2004, vide Notification No. 23/2004 –Central Excise (N.T.) dated the 10th September, 2004, vide number G.S.R. 600(E), dated the 10th September, 2004 and last amended vide Notification No. 25/2014 - Central Excise (N.T.) dated the 25th August, 2014 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 615 (E), dated the 25th August, 2014.

Wednesday, August 27, 2014

Important Service Tax amendments applicable from 1st October, 2014


We are sharing with you certain amendments made vide recent Notifications dated August 25, 2014 issued by the Central Board of Excise & Customs (“the CBEC”):

1.    Fixation of date of applicability of Clauses (A), (B), (C) of Section 114 of the Finance (No.2) Act, 2014

The CBEC vide its Notification No. 18/2014-ST dated August 25, 2014 (“the Notification”) has fixed the date of applicability of provisions of Section 114(A),(B),(C) of the Finance (No.2) Act, 2014 as October 1, 2014 (“Effective Date”) which are given as under:-

Service tax on advertisement on website,sign board applicable from 01.10.2014


CBEC has issued two notifications 18/2014 & 19/2014- ST dated 25.08.2014 regarding changes in Negative list. This changes has been proposed in recent budget but date of applicability is to be notified on later date . Now CBEC has notified the date as 01.10.2014 for changes in service tax on radio taxis and Service tax on advertisement in other than Print media.

Tuesday, August 26, 2014

CENVAT Credit GTA Services.What would be the Place of Removal of Goods?


Hon’ble High Court of Chhatisgarh, in a recent case of UltraTech Cement Ltd. Versus Commissioner of Central Excise, Raipur, AIT-2014-105-HC, held that place of removal can be gate of factory or the premises of consumer, as the case may be, depending upon the type of agreement. Thus, availability of CENVAT Credit will be determined accordingly i.e.-
  • In case the place of removal is the gate of factory, credit of GTA services used for transportation till that extent will be allowed.
  • In case the place of removal is the premises of consumer, credit of GTA services used for transportation till that extent will be allowed.
In the instant case, the appellant is a manufacturer of cement on which a specified rate of excise duty is charged. The appellant availed the credit of service tax paid on services of GTA for transporting the goods to the premises of customer, under the belief that the place of removal is the premises of consumer. The plea of the appellant was rejected on the grounds that in case of specified rate of duty, the place of removal is shifted to the gate of factory. The matter being now represented in the high court, it was observed that no provision of law or notification or circular explains such an intention of the government. Hence, in absence of such provision, there cannot be established a presumption of law.

The case was accordingly sent back to the tribunal to determine the place of removal of goods in accordance with the agreement, depending on which credit will be available.


Atul Kumar Gupta
B Com (Hons) FCA, FCMA, MIMA, CIQA, PGDEMM
Central Council Member of ICAI (2013-16)
M: 9810103611 E: atul@servicetax.net

CENVAT Credit available to service recipient even if Service Provider has not discharged its Service Tax Liability


In the recently concluded case of General Manager, BSNL v. Commissioner of Central Excise, Lucknow 2014 (8) TMI 343, the honourable New Delhi CESTAT held that non-payment of Service Tax by the service provider to government shall not affect the eligibility of the service recipient to claim CENVAT Credit of the same provided that he has duly complied the provisions of Rule 4(7) of CENVAT Credit Rules, 2004.

In the instant case, CENVAT credit was availed by BSNL on 31st March 2007 in accordance with Rule 4(7) ibid prevalent during the period i.e. after payment of invoice amount and Service Tax amount to the service provider. The CENVAT Credit was disallowed to the recipient of service i.e. BSNL, on the grounds that the service provider had not paid the collected Service Tax amount to the credit of Central Government till the date of availment of CENVAT credit on the same by BSNL.

The honorable CESTAT held that for the purpose of availing CENVAT Credit, there is no requirement that the Service Tax should have been deposited by the service provider before the availment of the credit. If the service provider has not deposited the service tax with the department on due date, revenue's remedy lies at the end of the service provider for recovery of the service tax along with interest; CENVAT Credit to the service recipient shall not be disallowed.



Atul Kumar Gupta
B Com (Hons) FCA, FCMA, MIMA, CIQA, PGDEMM
Central Council Member of ICAI (2013-16)
M: 9810103611 E: atul@servicetax.net

Monday, August 25, 2014

TAXATION OF CHARITABLE ORGANISATIONS


'Charitable Purpose' includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forest and wildlife) and preservation of monuments or places or objects of artistic or historic interest and the advancement of any object of general public utility. [Section 2(15)]. The Finance Act 2009, has amended the definition of 'charitable purpose' to provide that 'advancement of any other object of general public utility' will not be considered as 'charitable purpose' if it involves carrying on of any activity in the nature of trade, commerce, or business or any activity of rendering any service in relation to any trade, commerce or business for any fee, cess or other consideration.

The aggregate value of the receipts from such activities is not more than Rs .25,00,000 during the year, such purpose would still be a charitable.

INCOME OF THE TRUST

Income derived from property under trust subject to sections 60 to 63 wholly for charitable or religious purposes is exempt to the extent such income is applied on the objects of the trust in India, during the previous year. The trust must apply at least 85% of such income on the objects in such cases balance 15% will deemed to be accumulated for the purpose of charity and exempt. 

[Section 11(2)]. If the amount applied by the trust is less than 85%, the shortfall in application is not taxable in the following cases —

1. Income is accumulated up to 5 years and the purpose of accumulation is specified to the AO in Form No. 10 :The time limit for filing Form No. 10 is the same as time limit for filing return u/s 139(1) (Rule 17). If accumulated amount could not be applied due to order/ injunction of the court, such period will be excluded. However in the case of CIT vs. Nagpur Hotel Owners Association [247 ITR 201 SC] the Hon'ble Supreme Court has held that in the absence of reference to time limit in the section itself, such form can be submitted any time before the completion of assessment.

  • a. The income accumulated must be applied for the specified purpose within the period of accumulation as per application in Form 10. Till the accumulated amount is applied, it must be invested as specified in Section 11(5).
  • b. From A.Y. 2003-04, if the accumulated income is credited/paid to any trust registered u/s 12AA or referred to in subclause (iv), (v), (vi) or (via) of 10(23C), it shall not be treated as application of income
  • c. [2nd proviso to Section 11(3A)] In the case of dissolution of the trust, the AO may allow the application of income in the year in which it is dissolved by way of transfer of the accumulation to other trust registered u/s. 12 AA or institution referred to in Section 10(23C).
  • d. If there is violation of any of the conditions relating to accumulation of income, such income will be deemed to be income of the previous year in which the conditions are violated or the previous year immediately following the expiry of the period of accumulation.
2. Income Not Received during the previous year [Explanation 2 to Section 11(1)]:-Where due to reason that whole or any part of the income has not been received during the year, the amount can be applied in the year of receipt or in the following year. However, intimation in writing must be sent to AO before the expiry of time allowed u/s. 139(1) for furnishing the return. In case the amount is not applied, it will be deemed to be the income of previous year immediately following year of receipt.

3. Income in commercial sense:- In the case of CIT vs. Institute of Banking Personnel Selection 264 ITR 110 (Bom), the Bombay High Court held that income derived from the trust property is to be computed on commercial principles. the income should be applied 85% of the total receipt in that financial year.

4. Meaning of application of fund :-

i) Capital expenditure on purchase of fixed assets as per the sc CIT vs Moolchand sharvati devi hospital trust that capital expenditure on building and infrastructure were basic necessary and therefore should be treated as expenditure under section 11(1).

ii) Payment of wealth tax and income tax also an application of fund as per CIT vs Ganga charity trust fund.

iii) Repayment of the any debt or has been considered as application as per CIT vs. Maharana of Mewar Charitable Foundation and circular no 100.

iv) Loan given to another charitable organization can be treated as application of fund.

v) Advance for property with adequate documentation will be treated as application of fund as per DIT vs Maharaja agresen Technical Society.

vi) Donation by one charitable trust to another trust will be treated as application of fund.

5. Depreciation :as per the recent observation of the CAG that many NGO has claimed double depreciation even if the entire of the asset was treated as application in the year of purchase. Depreciation can be claimed if the fixed asset purchased in the following situations.

i) Fixed asset purchased out of the accumulation of funds.

ii) At the time of the purchase of fixed asset the entire cost of the asset was not considered as application of fund during the year.

6. Business Income :-as per section 11(4A) whereas institution is carrying on any business activity as incidental to attainment of objective of institution a separate books of account are to be maintain. If the profit out of that business income has been utilized for the fulfillment of the objective of such institution then it will be treated as application of fund.

7. Exemption U/S 11 Not To Apply In Certain Cases (Section 13)

  • A. Section 13(1)(a) — Trust for private religious purposes.
  • B. Section 13(1)(b) — Trust established for the benefit of any particular religious community or caste.
  • C. Section 13(1)(c) — Income of the trust is applied directly or indirectly for the benefit of persons referred to in sub-section (3).
  • D. Section 13(1)(d) — Funds are invested otherwise than in any form or modes specified in 11(5).

8. Following will be considered as Benefit to a person section 13(3)

a. Interest free loan or loan without security

b. Use of properties without charging adequate rent.

c. Excessive payment for services.

d. Services of trust without adequate remuneration.

e. Purchase of property for trust for excessive consideration.

f. Sale of trust property for inadequate consideration.

g. Diversion of income or property exceeding Rs 1000.

h. Investment in substantial interest concerns. 

9. Corpus Donation:-following are the provision relates to corpus donation.

a) According to section 11(1)(d) any voluntary contribution received by a trust created wholly for charitable or religious purpose with a specific direction that they shall form part of the corpus of the trust, shall not be included in the total income u/s 11.

b) A charitable organization lose exemption by virtue of violation u/s 13 (1) then corpus income will also be included in the total income.

c) To claim a donation as a corpus donation, a written document with a specific direction from the donor should be obtain. The recipient organization has no right to treat a donation as a corpus donation.

d) Donation by one charitable organization to another charitable organization is treated as a valid application of fund.

e) A corpus donation is not required to be spent in a same year it can be accumulated and form no. 10 is not required to be submitted in the Income Tax department.

f) Corpus Donation to an inter charity organization to be given  out of income during the year not as a part of corpus donation received by the Trust.

g) As per circular no 108 dated 20.03.1973 by CBDT it cover u/s 12(1) which indicated that such corpus donation is not the part of income u/s 2(24).

10. Anonymous Donation:-in order to tax unaccounted money being contributed to charitable institutions by way of anonymous donations a new section 115BBC has been inserted so as to provide that any income by way of anonymous donation of following entities shall be included in the total income and taxed at the rate of 30%.

11. Privileges to Donor u/s 80G:-following are the privileges that has been enjoyed by the donor under income tax.

a. Section 80G(1) specifies two categories of donations, one for 100% deduction and other for 50% deduction.

b. The maximum limit of qualifying amount u/s 80G is 10% of the total income before allowing the deduction.

c. Section 80G is not applicable to donations in kind. Donations in the form of money only are eligible.

d. Deduction u/s 80G is available only against positive income. 

It can neither be claimed against losses nor can it be carried forward.

e. Deduction is available against taxable income only. If some part of the income is not taxable then it should be excluded for the purposes of sec 80G.

f. Donations need not necessarily be made out of current year's income. Donations out of the reserve fund or the previous year's income are eligible for deduction.

g. It is not necessary that the donation should have a nexus with the prospects of business.

h. To claim deduction u/s 80G, it is necessary to produce adequate proof of payment.

i. For registration u/s 80G, the organisation has to apply in Form 10G to the Commissioner of income tax Exemption.

12. Persons referred to in section 13(3) :following are the persons which are covered under this section.

a. The author of the trust or the founder of the institution.

b. Any person who has made a substantial contribution to the trust or institution that is to say any person whose total contribution at the end of the relevant previous year exceeds fifty thousand rupees.

c. Where such author founder or person is a Hindu undivided family a member of the family.

d. Any trustee of the trust or manager ( by whatever name called ) of the institution.

e. Any relative of any such author, founder , person, member, trustee or manager as aforesaid.

f. Any concern in which any of the persons referred to in all above clauses has a substantial interest.

13. Rate of Taxes :-the rate of tax applicable to a public trust / institutions for the purpose of assessment under income tax act is that applicable to an association of person. The AOP is taxable as the same rate as applicable to individual, the basic exemption limit of Rs 200000 will also be available.

However if any part of the income is not exempt under section 11 or 12 due to the following situations shall be charged at maximum marginal rate.

a. Any directly or indirectly benefit to the person referred under section 13(3).

b. Any part of the income applied for any person referred to section 13(3).

c. The fund of the trust are not invested as per section 11(5).

14. Loss/ Deficit of the Earlier Year:-If the excess spending either out of corpus or out of revenue income is there then it can be carried forward and available as utilization in next financial year. In other words earlier year loss will be available as set off against the surplus of succeeding year ( CIT vs Trustee of Seth Merwarjee Framji Pandey Charitable Trust).

Saturday, August 23, 2014

How to Register under the Delhi VAT Act


Steps for Registration under the Delhi VAT Act- Guidelines

1. First of all, the dealer have to go to the official website of Delhi VAT by using following domain, i.e.,www.dvat.gov.in

2. Then click on the link of “New Registration” available on the left side of the page.

3. After that, the dealer have to submit some basic details for PAN verification from NSDL, such as, Name of the Firm/Company, Constitution, PAN, Aadhaar No. and Contact details online.

4. On successful PAN verification, the dealer will be provided Username and password through e-mail for
further process.

5. The dealer would login and fills up registration forms, i.e., for Local “DVAT-04” & for Central “Form-A” in which dealer have to submit details as mentioned below: -

  • a. Address of principal place of business;
  • b. Any additional place of business;
  • c. Bank details;
  • d. Particulars of persons involved in the Firm/Company;
  • e. List of Goods to be dealt in along with goods required for packing; etc.

6. And upload supporting documents such as ownership proof/rent agreement/NOC of landlord/electricity bill/telephone bill, address proof, identification proof, etc.

7. The size of respective documents should be less than 100 KB each in the format of pdf/jpeg.

8. If the size of documents gets greater than 100 KB, then the dealer can use various softwares, such as, Microsoft Office picture manager, Photoshop, Coreldraw, etc. to reduce the size to 100 KB or less.

9. Then go to the link of submission to submit the registration application with VAT department.

10. After submitting, the dealer will receive one e-mail consisting of temporary TIN and password which can
be used for further transactions.

11. The Court fee of Rs. 1,025/- (w.e.f. 17.6.2014) for new registration will be submitted online.

12. After the whole procedure is approved by the VATI, the dealer can take out the print of online generated Registration Certificate and need not to go to Trade & Taxes Department.