Articles
(A) TDS in Salaries (Section 192):-
Section 192 of the Act amended to provide that the person responsible for paying, for the purpose of estimating income of the assessee or computing tax deductible under Section 192(1) of the Act, shall obtain from the assessee, evidence or particulars or proof of the prescribed claim, including claim for set-off of loss under the provisions of the Act in the prescribed form and manner. Form will prescribe shortly.
(B) TDS Mechanism for EPF Scheme (EPFS) Section 192A:-
New Section 192A inserted which provides that notwithstanding anything contained in any other provisions of this Act, the Trustees of the EPF Scheme 1952 framed under Section 5 of the Employees Provident Funds and Miscellaneous Provisions Act 1952 or any other person authorized under the Scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognized provident fund is includible in his total income owing to the provision of Rule 8 of Part A of the Fourth Schedule not being applicable, at the time of payment of such accumulated balance due to the employee, deduct tax thereon @10%. Rules will notify shortly
However, no deduction under aforesaid Section to be made where the amount of such payment or, as the case may be, the aggregate amount of such payments to the payee is less than Rs 30,000. It is further provided that any person entitled to receive any amount on which tax is deductible under this Section shall furnish his PAN to the person responsible for deduction of tax failing which tax shall be deducted at the maximum marginal rate.
(C) Deduction of Tax on interest (Other than interest on Securities) (Section 194A):-
(I) Payment of interest by Co-operative banks to its members:
Section 194A of the Act amended to provide that the exemption from deduction of tax from payment of interest by a co-operative bank to its members under Section 194A (3)(v) of the Act shall not apply to the payment of interest on time deposits by the co-operative bank to its members. But cooperative societies can enjoy the benefit even after his amendment.
(II) Amendment of definition of Time Deposit:
Definition of “Time Deposits” amended so as to include Recurring Deposits within its scope for the purpose of deduction of tax under Section 194A of the Act. However, with a view to protect the interest of small depositors, the existing threshold limit of Rs 10,000 for non deduction of tax shall also be applicable in case of interest payment on Recurring Deposits.
(III) Interest payments by banks working on Core Banking Solutions (CBS):
Provisions of Section 194A amended to provide that computation of interest income for the purpose of deduction of tax under Section 194A should be made with reference to the income credited or paid by the Banking Company or the Co-operative Bank or the Public Company (all branches) which has adopted Core Banking Solutions. The interest income of all branches of one bank has to be considered for TDS purpose.
(IV) Motor Accident Claim Tribunal Compensation:
Provisions of Section 194A amended to provide that deduction of tax under Section 194A in respect of interest payment on the compensation amount awarded by the Motor Accident Claim Tribunal shall be made only at the time of payment, if the amount of such payment or aggregate amount of such payments during a financial year exceeds Rs 50,000.
(D) Clarification on TDS on payments made to Transporters (Sec 194C) :-
Provisions of Section 194C amended to provide that the relaxation under Section 194(6) from non deduction of tax shall be applicable only to payments in the nature of transport charges, whether paid by a person engaged in the business of transport or otherwise, to a contractor who is engaged in the business of transport i.e. plying, hiring or leasing goods carriage and who is eligible for computing income as per Section 44AE of the Act (i.e. a person who is not owning more than 10 goods carriage at any time during the previous year) and who has also furnished a declaration in every year to this effect along with his PAN.(Sample declaration attached)
(E) TDS relating to Rent (Section 194I):-
Section 194I of the Income Tax Act amended by providing for no deduction under this Section where income by way of rent is credited or paid to a business trust, being a real estate investment trust, in respect of any real estate asset as per Section 10(23FCA), directly owned by such business trust.
(F) TDS relating to certain income from units of a Business Trust (Section 194LBA):-
Section 194LBA(1) amended to provide for deduction of income tax @10% in case where any distributed income as referred to under Section 115UA, being in the nature referred to in Section 10(23FCA) is payable by a Business Trust to its unit holder who is a resident at the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or issuance of cheque or draft or by any other mode, whichever is earlier.
Where the unit holder is a non-resident (not being a Company) or a foreign company, the deduction of income tax at source has to at the rate as in force at the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or issuance of cheque or draft or by any other mode, whichever is earlier.
(G) TDS relating to income in respect of units of Investment Fund (New Section 194LBB):-
This newly inserted Section 194LBB provides for deduction of tax @10% on any income other than that proportion of income which is of the same nature as referred in Section 10(23FBB) that is payable to a unit holder in respect of units of an investment fund as specified under Section 115UB (Explanation1- Clause a), at the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or issuance of cheque or draft or by any other mode, whichever is earlier.
(H) TDS relating to income by way of Interest on certain Bonds & Government Securities (Section 194LD):-
Section 194LD amended to provide that the concessional rate of 5% withholding tax on interest payment in respect of investments in Government securities or Rupee denominated Corporate Bonds shall now be available on interest payable before 01.07.2017 (extended from the present cut- off date of 01.06.2015)
(I) Furnishing of information under Section 195(6):-
Section 195 of the Act to be amended so as to provide that persons responsible for paying any sum to a non resident, not being a Company or a foreign Company, whether chargeable to tax or not, shall be required to furnish the information of the prescribed sum in such form and manner as may be specified. The form prescribed is Form 15CA and 15CB.
Insertion of a new provision under section 271I for levy of penalty of Rs 1,00,000 in case of non-furnishing of information or furnishing of incorrect information under Sub section (6) of Section 195(6) of the Act. i.e, Form 15CA & 15CB
Also provisions of Section 273B amended to provide that no penalty shall be imposed under the new provision if it is proved that there was reasonable cause for non furnishing or incorrect furnishing of information under Section 196(6) of the Act.
(J) No deduction to be made in certain cases (Section 197A):-
Existing provisions of Sub section (1A) & (1C) of Section 197A provides for no deduction of tax shall be made under the Sections referred to the aforesaid sub-sections in case of a person specified therein provided that he furnishes, in duplicate, a written declaration in the prescribed form, duly verified to the effect that the tax on his estimated total income for the previous year in which such income is to be included will be Nil.
Sub section (1A) & (1C) of Section 197A amended so as to give reference of Section 192A & 194DA also in the said sub sections.
(K) Relating to duty of person deducting tax (Section 200):-
Sub section (2A) inserted which provides that in case of an office of the Government where sum deducted in accordance with provisions of Chapter XVII or tax referred to under Section 192(1A) has been paid to the credit of Central Government without the production of challan, then the person responsible for deduction of tax by whatever name called shall deliver or cause to be delivered a statement in such form, duly verified setting forth such particulars and within such time as may be prescribed.
(L) Defining of TDS Statement processing procedure: (Section 200A):-
Under the existing provisions of Section 200A, there is no mechanism for determination of late fee under Section 234E at the time of processing of TDS Statements. Accordingly, provisions of Section 200A amended so as to provide for computation of fee payable under Section 234E at the time of processing of TDS statement under Section 200A of the Act.
(M) Relaxing the requirement of obtaining TAN for certain deductors (Section 203A):-
Under Section 203A, every tax deductor and tax collector is required to obtain TAN and quote the same for reporting of tax deduction/ collection to the Income Tax Department. However, at present, for reporting of tax deducted from payment over a specified threshold limit made for acquisition of immovable property (other than rural agricultural land) from a resident transferor under Section 194-IA, the deductor is not required to obtain and quote TAN and is allowed to report tax deduction quoting his PAN.
Obtaining of TAN creates compliance burden for individuals or HUFs who are exempt from audit under Section 44AB. With a view to reduce the compliance burden on these type of deductors, Section 203A is being amended so as to provide that the requirement of obtaining and quoting TAN under Section 203A shall not apply to notified deductors or collectors.
(N) Profits & gains from the business of trading in alcoholic liquor, forest produce, scrap etc (Section 206C):-
Sub section (3A) inserted which provides that in case of an office of the Government where sum deducted under sub section (1) or sub-section (1C) or sub-section (1D) has been paid to the credit of Central Government without the production of challan, then the person responsible for deduction of tax by whatever name called shall deliver or cause to be delivered a statement in such form, duly verified setting forth such particulars and within such time as may be prescribed.
(O) Insertion of New Section regarding processing of TCS Returns: (Section 206CB):-
As no procedures were specified in the Income Tax Act with regard to processing of TCS Returns, it is proposed to insert a new Section (206CB) relating to processing of TCS Statements. The said Section states that TCS Statement or a correction statement made under Section 206C shall be processed in the manner specified therein.
Central Board of Excise and Customs has issued notification 14/2015 S.T. dated 19th May, 2015 announcing that from 01.06.2015 the rate of service tax will be 14%.
Section 67A of the Finance Act, which deals with date of determination of rate of tax, value of taxable service and rate of exchange is reproduced below:
The rate of service tax, value of a taxable service and rate of exchange, if any, shall be the rate of service tax or value of a taxable service or rate of exchange, as the case may be, in force or as applicable at the time when the taxable service has been provided or agreed to be provided.
Explanation.— For the purposes of this section, "rate of exchange" means the rate of exchange determined in accordance with such rules as may be prescribed.
Clarity on the following appears to emerge based on the above provision:
- time of provision of service,
- receipt of payment and
- raising on invoice.
The rate of service tax will be as applicable at the time when taxable service has been provided or agreed to be provided.
Consider the following situations:
SITUATION-1:
Where the occurrence of any one of the above said rudiments are not certain, then the provision of an activity will be determined as per the Point Of Taxation Rules, 2011. Besides in this connection, Rule 4 of the Point of Taxation Rules, 2011 needs to be referred to determine the point of taxation in case of change in effective rate of tax. According to the rule 4 of Point Of Taxation Rules, the rate of service tax prevalent on the date when the point of taxation occurs is rate of service tax applicable on any taxable service.
A summary of the applicable rate in accordance to Rule 4 is provided below:
Sr. No. | Provision of an activity | Point when the Invoice is raised | Point when the payment is received | Point of Taxation | Rate of S.T. |
01. | Before rate change | After rate change | After rate change | Date of invoice or payment which is earlier | 14% |
02. | Before rate change | Before rate change | After rate change | Date of invoice | 12%## |
03. | Before rate change | After rate change | Before rate change | Date of payment | 12%## |
04. | After rate change | Before rate change | After rate change | Date of payment | 14% |
05. | After rate change | Before rate change | Before rate change | Date of invoice or payment which is earlier | 12%## |
06. | After rate change | After rate change | Before rate change | Date of invoice | 14% |
### Edu. Cess @ 2% on Service Tax & S.H.E. Cess @ 1% on Service Tax; extra to be levied over and above 12% of service tax.
SITUATION – 2:
However as per the proviso to rule 6 of the Service Tax Rules, 1994; individuals and partnership firms whose aggregate value of taxable services provided from one or more premises is fifty lakh rupees or less in the previous financial year, they have the option to pay tax on taxable services provided or agreed to be provided by him up to a total of rupees fifty lakhs in the current financial year based on the payment received.
Moreover the term date of payment has been defined by rule 2A of the Point of Taxation Rules, 2011 is reproduced below:
2A. Date of payment.
For the purposes of these rules, "date of payment" shall be the earlier of the dates on which the payment is entered in the books of accounts or is credited to the bank account of the person liable to pay tax:
Provided that —
(A) the date of payment shall be the date of credit in the bank account when —
(i) | there is a change in effective rate of tax or when a service is taxed for the first time during the period between such entry in books of accounts and its credit in the bank account; and |
(ii) | the credit in the bank account is after four working days from the date when there is change in effective rate of tax or a service is taxed for the first time; and |
(iii) | the payment is made by way of an instrument which is credited to a bank account, |
Based on the combine reading of Rule 6 of Service tax Rules, 1994 and Rule 4 of the Point of Taxation Rules, 2011; we can conclude that the point of taxation for the above specified persons is the date of payment. So let us substitute the point of taxation in the above given table and analyse the position:
Sr. No. | Provision of an activity | Point when the Invoice is raised | Point when the payment is received | Point of Taxation | Rate of S.T. |
01. | Before rate change | After rate change | After rate change | Date of payment | 14% |
02. | Before rate change | Before rate change | After rate change | Date of payment | 14% |
03. | Before rate change | After rate change | Before rate change | Date of payment | 12%## |
04. | After rate change | Before rate change | After rate change | Date of payment | 14% |
05. | After rate change | Before rate change | Before rate change | Date of payment | 12%## |
06. | After rate change | After rate change | Before rate change | Date of payment | 12%## |
According to the above table The rate of service tax for a situation where the invoice is raised prior to change in rate but the payment is received after the change in rate tax is payable at the new rate i.e. 14%. This is irrespective of the provision of service before or after the change in rate of tax.
However the Delhi High Court in the case of Delhi Chartered Accountants Society Vs. UOI and others reported in 2013 TIOL 81-HC-DEL-ST dated 01.02.2013 has quashed circular no. 158/2012 & 154/2012 datd 28.03.2012 and 08.05.2012 respectively as contrary to The Finance Act, 1994 and Point of Taxation Rules, 2011. The amendment to POT Rules, 2011 by way of insertion of Rule 2A w.e.f 01.04.2012 remains unchallenged.
In conclusion the following situation emerges in the case of small service providers [Individual/Firm] whose turnover is up to fifty lakhs in the preceeding financial year:
“Amounts outstanding as on May 31, 2015 and realised on or after June 1, 2015 service tax shall be payable at the rate of 14%”.
The Union Cabinet on Thursday approved amendments to the Foreign Direct Investment (FDI) policy on investments by Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizen of India (OCIs) for greater forex remittances.
A decision in this regard was taken by the Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi.
The Cabinet "approved amendments to FDI policy on investments by NRIs, PIOs & OCIs. This will give PIOs & OCIs parity with NRIs in eco & edu (economy and education)," an official spokesperson said.
"The amendment in FDI for OCIs, NRIs & PIOs will lead to greater forex remittances & investment," he added.
As per the DIPP's proposal any investment made by NRIs. OCIs and PIOs from their rupee account in India, will not be treated as foreign investment.
An official said that the non-repatriable NRI funds would be treated as domestic investments.
The government wants to channelise the funds of NRIs, who now have set up large businesses abroad, by treating non-repatriable investments by NRIs as domestic investment.
The proposal was floated by the Department of Industrial Policy and Promotion to tap the NRIs for investments in defence, railways among other sectors. Last year, the government had formed a committee on this matter
Since coming to power in May last year, the Narendra Modi government has liberalised the FDI limit in crucial sectors like defence, insurance, real estate, railways and medical devices. The measures were aimed at improving India's ranking in the World Bank's Ease of Doing Business index, where India stands at 142 among 189 countries.
The measures could also be seen in the context of the Modi government allowing NRIs to vote through e-ballot system or proxy.
62% CEOs in India are very confident of growth in the short-term. 59% CEOs in India see an improvement in global economic growth over the next one year. 63% CEOs in India plan to enter into new strategic alliances or joint ventures over the next year.82% CEOs in India say they have a strategy to promote diversity and inclusiveness.53% CEOs in India perceive cyber security as a threat.
The GST rate will be "much more diluted" than the speculated 27 per cent and the final rate will be worked out by the GST Council, Finance Minister Arun Jaitley said today.
"We have decided to keep petroleum out and every state finance minister is not interested in imposing higher taxes on its own people, and neither the central government. Therefore, this figure (RNR) is going to much more diluted compared to the figure (27 per cent) which has been mentioned," he said.
Revenue Neutral Rate (RNR) is the rate at which there will be no revenue loss to the states after GST implementation.
GST is termed as the biggest indirect tax reform since 1947. A single rate GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer of goods and services.