Nov 292012
 

TDS on Salaries

If a person is running his own business firm and have a regular staff on his payroll, it is mandatory under section 192 of the Income Tax Act  1962 to make tax deduction from the income of his employee, if the employee comes under the taxable limit.

An employer is supposed to make tax deduction at source from the payment made to the employees. If he has paid some advance salary or arrears thereon, he has to take such payment into consideration for tax deduction.

The computation of tax deduction also called as TDS projection must be done at the start of the Financial Year. If employee has got some other income source it has also to be considered. Through careful consideration of exemptions, deductions, investments under section 80C etc. Employee’s tax liability needs to be calculated and the tax rates imposed there-upon should be in force in the respective financial year. Every month 1/12th of the net tax liability has to be deducted.

Rates of Income Tax for the FY 2012-13.

Male Citizen Female Citizen Rate of Tax
The Total Income is less than Rs. 2,00,000/-. The Total Income is less than Rs. 2,00,000/-. Nil
The Total Income is between Rs. 2,00,000/- and Rs. 5,00,000/- The Total Income is between Rs. 2,00,000/- and Rs. 5,00,000/- 10 per cent, of the amount by which the total income exceeds Rs. 2,00,000/-
The Total Income is between Rs. 5,00,000/- and Rs. 10,00,000/-. The Total Income is between Rs. 5,00,000/- and Rs. 10,00,000/-. Rs. 30,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
The Total Income exceeds Rs. 10,00,000/-. The Total Income exceeds Rs. 10,00,000/-. Rs. 130,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-.

 

Sr. Citizens between 60years and 80 years Rate of Tax
The Total Income is less than Rs.2,50,000/-. Nil
The Total Income is between Rs. 2,50,000/- and Rs. 5,00,000/- 10 per cent, of the amount by which the total income exceeds Rs. 2,50,000/-
The Total Income is between Rs. 5,00,000/- and Rs. 10,00,000/- Rs. 25,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-.
The Total Income exceeds Rs. 10,00,000/-. Rs. 125,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-

TDS Deposit

After the TDS has been deducted from the salary of the employee, the deducted tax has to be deposited to the government online using challan 281. The tax has to be deposited within 7 days from the end of the month in which tax gets deducted. Except tax deducted in the month of March, should be deposited before 30th of April.

Due date for submitting Quarterly TDS return

  • By July 15th after the end of the first quarter. [April, May and June (Q1)]
  • By 15th October after the end of the second quarter.[ July, August and September (Q2)]
  • By 15th January after the end of the third quarter [October, November and December (Q3)]
  • By 15th May after the end of the fourth quarter [January, February and March (Q4)]

Issuance of TDS certificate

The deductor has to issue a certificate which comes in Form 16  containing name of the employer, salary details, exemptions, investment details, tax deduction and payment details like  BSR code, date of TDS deposit, serial no. of challan and tax amount . The due date for furnishing TDS certificate to the employee or deductee is May 31st

There are penalties for default of TDS for not deducting TDS or not depositing TDS into Central Government Account in the prescribed manner. Along with penalties, the person can be prosecuted. So being familiar with the provisions concerning with Tax deduction at source is very important.

Nov 282012
 

Leave Travel Allowance

 

Que.: What is an LTA?

Ans.:- An LTA is the remuneration paid by an employer for Employee’s travel in the country, when he is on leave with the family or alone. LTA amount is tax free.

Que.: Who can claim for an LTA?

Ans.: If an employee is able to furnish the documents as a proof of travel, he can claim the expense of travel in the same year. The total cost of the holidays is not covered, only the travelling cost is covered.

Que.: What documents does an employee need to present to claim for an LTA?

Ans.: An employee must maintain proof of whichever means he has travelled by and wherever he has travelled in the country. The proof is inclusive of tickets, travel agent’s invoice or boarding passes as a proof against his travel which actually help during tax claims. These documents concerning with travelling indicate that an employee has travelled by a particular means of transportation.

Que.: How many members can an employee claim for LTA?

Ans.: Employee and his family. An Employee’s family is inclusive of his siblings and parents who are dependent on him, spouse & up to two children. If your family is travelling without you, an LTA cannot be claimed, so for claiming LTA either an employee  has to travel alone, or if his family is travelling, you have to be with them.

Que.: How can an employee get an LTA?

Ans.: An Employee is able to receive leave travel allowance if he has applied for leave from his company and has actually travelled.

Que.: How often can an employee travel using an LTA?

Ans.: The government fixes blocks of years. The current block is January 2010 to December 2013. The previous block is  January 2006 to December 2009.

Que.: In what circumstances LTA is tax exempted?

Ans.: An LTA is tax exempted in case he or she travels by taking a shortest route. Travelling can be by economy class air fare,  first class rail ticket or first class bus fare.  If you cannot get a public transport and take a private like rent  a car, get a bill issued by such rental company and can claim expenses equal to first class train fare.

Que.: Can the entire amount of travelling cost be claimed?

Ans.: Yes, the entire amount of  travelling cost can be claimed.

Que.: Can both husband and working spouse claim for LTA?

Ans.:  No,  LTA cannot be claimed twice for the same journey.

Que.: Can LTA be brought forward?

Ans.: Yes, if an Employee does not avail LTA during the block of 4 years, he can utilize the pending LTA in the first year of the subsequent block and thus can travel more three times in the same block of years.

Que.: How can Leave Travel Allowance be calculated?

Ans.: An employee and his wife are Employees having LTA Rs 20,000/- each as part of the salaries. He travelled with his wife and a child and the travel cost comes to Rs. 15,000/- which is claimable amount for tax deduction but the remaining Rs 5000/- is taxable. At the same time,  his spouse cannot claim for tax deduction since at one time only one employer can defray the cost of travel. Only one person from a couple is able to receive benefits of LTA at one time. But if the spouse wants to claim her LTA for another travel she can claim LTA.

Nov 272012
 

1. Can I use C&I taxonomy to create Cost Audit Report or Compliance Report?

No, there is a separate in-Cost taxonomy for creating Cost Audit Report or Compliance Report. The Costing Taxonomy can be accessed from the website of Ministry of Corporate Affairs. The relevant link for the costing taxonomy is:

http://www.mca.gov.in/Ministry/pdf/Costing_taxonomy_2012-09-12.zip

2. Do I need separate validation tool for validating the instance document of Cost Audit Report/Compliance report or the same validation tool as applicable for validating the instance document of Balance Sheet and Profit & Loss account can be used?

Ministry of Corporate Affairs is in the process of developing a single validation tool that will validate all types of instance documents whether it is for Cost Audit Report or Compliance report or Balance Sheet and Profit & Loss account. However, while validating, the user would be required to select appropriate taxonomy used for creation of the Instance document.

3. My company has to file both Cost Audit Report and Compliance report. Can I use the same taxonomy for both the reports?

Yes. The in-Cost taxonomy contains elements for both Cost Audit Report and Compliance Report. The entry points are different. However, common elements are defined at one place only.

4. Costing taxonomy shows variation when compared to the formats of Cost Audit Report and Compliance Report given in the notified Cost Accounting Records Rules and Cost Audit Report Rules. Can the instance documents created as per Costing taxonomy be filed with the Central Government or I need to create instance document conforming to the notified formats?

In XBRL mode, only the requisite data & other information as per the Costing Taxonomy is required to be filed by attaching the valid instance document with the relevant e-Form. No other formats as earlier notified are required to be filed. The final Costing Taxonomy as available on the MCA website supersedes the formats of Cost Audit Report and Compliance Report as given in the earlier notified Cost Accounting Records Rules and Cost Audit Report Rules.

5. The revised structure of the Compliance Report as well as the Cost Audit Report has stipulated reporting at the “Product or Activity Group” level. What would be the basis of determining a “Product or Activity Group” for a multi-product company?

“Product or Activity Group classification” shall be strictly in accordance with the notification issued by the Ministry of Corporate Affairs vide S.O. No. 1747(E) dated 7th August 2012. The link for accessing the product group notification is:

http://mca.gov.in/Ministry/pdf/S.O.(E)1747_07_08_2012.pdf

6. If my company deals in multiple product groups and there are multiple cost auditors appointed in the company. Do I need to file multiple Cost Audit Reports or only consolidated Cost Audit Report in XBRL format?

In the XBRL format, you are required to file only one consolidated Cost Audit Report for the company as a whole. If a company has multiple Cost Auditors, then in such case, one of them may be designated/nominated as the lead Cost Auditor who will file the consolidated cost audit report for the company as a whole. However, the lead Cost Auditor would be required to provide details of all the Cost Auditors of the company including the report of the individual Cost Auditors with their comments and observations separately for each Cost Auditor in the consolidated report. Only the data contained in para 3 to 11 would be consolidated, wherever applicable.

7. In the Abridged Cost Statement (Para 5) of the Cost Audit Report pertaining to my company, I want to report cost elements for which I am not able to find the corresponding elements in the taxonomy? How do I report such costs?

In the Costing taxonomy, there is provision for separate link Table for Industry Specific Operating Expenses in the Abridged Cost Statement of the Cost Audit Report. Such cost details, for which no matching corresponding cost element is found in the Abridged Cost Statement, such cost elements are to be defined and reported in the industry specific operating expenses link table.

8. In the Abridged Cost Statement (Para 5) of the Cost Audit Report pertaining to my company, I want to report more than 10 numbers of materials / utilities / industry specific operating expenses? However, the taxonomy supports only reporting 10 numbers of materials / utilities / industry specific operating expenses in the corresponding link tables? How do I report additional cost elements under these heads?

The materials/utilities/industry specific operating expenses link tables in the Abridged Cost Statement have a provision for reporting only 10 different cost elements respectively. In case, a company has more than 10 numbers of materials/utilities/industry specific operating expenses, 9 nos. of such materials/utilities/industry specific operating expenses, whose value is in descending order need to be reported separately and the balance may be clubbed together as “others” so as to ensure that the total value of such materials/utilities or industry specific operating expenses is equal to the materials cost or the utilities cost or the industry specific operating cost [as the case may be] reported in the main part of the Abridged Cost Statement. Since the “others” category would be an amalgamation of different elements, the unit, quantity and rate in the “others” category may be kept blank.

9. Where do I get 8-digit ITC Codes / NPCS Codes to be used for preparing the Cost Audit Report?

The 8-digit ITC Codes can be accessed from the link:

http://www.mca.gov.in/XBRL/pdf/ITC_HS_codes.pdf

The 8-digit NPCS Code can be accessed from the link:

http://mca.gov.in/XBRL/pdf/NPCS_codes.pdf

10. In my company, two different units of measurement are used for the same product group. How do I report details about such product groups under the relevant Para of the Cost Audit Report?

If a company has two different units of measurement for the same product group, then details for the same product group are to be reported twice with different units of measurement for all the relevant paras and such details need not be aggregated on the Product or Activity Group Code. In this connection, the notes provided in the notification issued by the Ministry of Corporate Affairs vide S.O. No. 1747(E) dated 7th August 2012 may be referred to.

Nov 272012
 

1. Whether the existing e-forms are to be used for filing Cost Audit Report / Compliance Report in XBRL mode?

No, the existing forms are not to be used for filing Cost Audit Report/ Compliance Report. For this, new Form 23CAR-XBRL and 23CR-XBRL will be shortly made available on the MCA portal.

2. By when can we file the Form 23CAR-XBRL and 23CR-XBRL for Cost Audit Report & Compliance Report?

All cost auditors and companies can file their Cost Audit Reports / Compliance Reports by 31st December 2012, in XBRL mode by using e-Form 23CAR-XBRL and 23CR-XBRL, without any penalty, up to 31stDecember 2012 or 180 days from the end of the financial year, whichever is later.

3. Do we have the option to file detailed Cost Audit Report/ Compliance Report with the form as PDF attachment instead of XBRL format?

No, the PDF formats of Cost Audit Report / Compliance Report are not allowed to be attached. Only the XBRL instance documents of Cost Audit Report / Compliance Report needs to be attached with the Form 23CAR-XBRL and 23CR-XBRL respectively.

4. Whether the instance documents attached with Form 23CAR-XBRL and 23CR-XBRL needs to be digitally signed. If yes, by whom?

No, the instance documents attached with the e-Forms are not required to be digitally signed. Only the e-Form 23CAR-XBRL for filing the Cost Audit Report need to be digitally signed by the Cost Auditor [or by the lead Cost Auditor as the case may be as well as by one director and another director/ manager/company secretary of the company.

The e-Form 23CR-XBRL for filing the Compliance Report need to be digitally signed by the Cost Accountant who has certified such Compliance Report of the company as well as by one director and another director/manager/ company secretary of the company.

5. While filing the Form 23C in MCA-21 portal, there was some mistake pertaining to the name of the firm. Can I still file the Cost Audit Report for the company?

Yes, you can still file the Cost Audit Report in the XBRL format provided the Form 23C belongs to the same company and same cost auditor.

6. Does Government allow re-filing of the revised Cost Audit Report / Compliance Report in case of any errors in the original filings?

For the current year, the MCA-21 system would allow re-filing of the revised Cost Audit Report/ Compliance Report of the company only in case of an error in the original fillings.

7. Does Government allow multiple filings of the Cost Audit Report / Compliance Report for the same company?

For each company, only one consolidated Cost Audit Report/ Compliance Report for the company as a whole is required to be filed in the XBRL format.

8. What shall be the process for uploading the filled Form 23CAR-XBRL and 23CR-XBRL on MCA portal?

The process for uploading the filled Form 23CAR-XBRL and 23CR-XBRL is same as the process of filing of any other e-form, for example, Form 23C or Form 23D or earlier e-form for filing cost audit report with pdf attachment.

9. How to view the Cost Audit Report / Compliance Report submitted in XBRL format on MCA Portal?

TThe Cost Audit Report / Compliance Report filed by the company are not public documents and cannot be viewed in public domain by anyone.

Nov 272012
 

1. Which are the companies that need to file the Cost Audit Report and Compliance Report in XBRL format?

Ministry of Corporate Affairs has mandated filing of the Cost Audit Report and Compliance Report from the financial year 2011-12 onwards (including overdue reports relating to any previous year) by using the XBRL taxonomy. The relevant General Circular No. 8/2012 dated 10.5.2012 [as amended on 29.6.2012] and No. 18/2012 dated 26.7.2012 issued by MCA can be accessed from the following link: http://www.mca.gov.in/Ministry/companies_act.html

2. Which companies are not required to file the Cost Audit Report?

All such companies that are NOT covered under the company specific Cost Audit Orders issued prior to 31.3.2011 and/or under the industry specific Cost Audit Order No. 52/26/CAB-2010 dated 2nd May 2011, 30th June 2011 and 24th January 2012 are not required to file Cost Audit Report. However, companies meeting with the threshold limits as prescribed in
the relevant Cost Accounting Records Rules 2011 are required to file Compliance Report in the XBRL format.

3. Which companies are exempted from filing the Compliance Report?

All such companies that are not covered under any of the Cost Accounting Records Rules notified in 2011 are not required to file the Compliance Report.

Further, as per MCA’s General Circular No. 68/2011 dated 30.11.2011 read with the General Circular No. 12/2012 dated 4.6.2012, such companies that are covered under any of the Cost Accounting Records Rules notified in 2011 but wherein all their products/activities, excluding the exempted categories, are covered under cost audit, are not required to separately
file the Compliance Report.

4. If my Cost Audit Report pertains to the financial year prior to 2011-12, then do I need to file the report in XBRL format?

As per MCA’s General Circular No. 8/2012 dated 10.5.2012, all Cost Audit Reports required to be filed with the Central Government starting from financial year 2011-12 and also in respect of any financial years prior to 2011-12 [that has not been filed so far] need to be filed in XBRL format.

5. Central Government vide General Circular no. 18/2012 dated July 26, 2012 has extended filing of the Cost Audit Report in XBRL format till December 31, 2012. A company follows different financial year viz. from October 01, 2011 to September 30, 2012. As per Companies (Cost Audit Report) Rules, 2011, filing of Cost Audit Report becomes due by March 27, 2013, i.e. within 180 days from the end of the reporting year. Is this company still required to file the Cost Audit Report in XBRL format by December 31, 2012 or it would be allowed to file the report until March 27, 2013?

The companies are required to file their Cost Audit Report [or the Compliance report] for the year 2011-12 within 180 days of the close of the financial year or by December 31, 2012, whichever is later.

6. Who will certify XBRL filing for Cost Audit Report?

The Cost Auditor [or the lead Cost Auditor in case the company has more than one Cost Auditors] is required to digitally sign and file the Cost Audit Report for the company as a whole.

7. Who will certify XBRL filing for Compliance Report?

Any valid Member of the Institute of Cost Accountants of India who is either in full-time employment with the concerned company or is holding full-time Certificate of Practice can only certify the Compliance Report.

8. I am holding valid membership of the Institute of Cost Accountants of India as well as of the Institute of Company Secretaries of India. As a full-time employee of the company, can I certify its Compliance Report?

Yes, being a valid Member of the Institute of Cost Accountants of India and in full-time employment with the concerned company, you can certify its Compliance Report provided you are not signing the Compliance Report as Company  Secretary or as Director of the company also.

9. The responsibility of filing Cost Audit Report with the Central Government lies with the Cost Auditor. Whose responsibility is it to create XBRL document?

Creation of the Cost Audit Report in XBRL format, as approved by the Board and certified by the Cost Auditor, is the responsibility of the company. However, filing the Cost Audit Report in XBRL format with the Central Government is the responsibility of the Cost Auditor, who has to ensure the correctness of data and other information contained in the XBRL Instance Document.

10. I have completed the Cost Audit and the Board of Directors has also approved the Cost Audit Report / Compliance Report. Is the Board of Directors of the company required to approve the Instance document of the Cost Audit Report / Compliance Report?

No separate approval from the Board is required for the Instance document of the Cost Audit Report or of the Compliance Report since the data/information contained in the Instance document would already have been approved by the Board of Directors. However, if the data & other information as given in the Instance document differ from that approved by the Board, then it is advisable to get fresh approval of the revised Cost Audit Report or the Compliance Report unless the Board while according approval had authorized any officer of the company to make modifications as required in the XBRL document.

11. A company has not appointed anyone as the lead cost auditor. Is it required to appoint a lead cost auditor for consolidation?

The company is not required to separately appoint a lead Cost Auditor. It may designate/nominate any one of the existing Cost Auditors as the lead Cost Auditor and assign the additional task of consolidation, who would be responsible for verifying the consolidated report and filing the same with the Central Government.

12. Is Performance Appraisal Report required to be filed with the Central Government as a part of the Cost Audit Report?

As per provisions of the Companies (Cost Audit Report) Rules, 2011, every cost auditor, who submits a cost audit report, is also required to furnish Performance Appraisal Report to the Board/Audit Committee of the company in the prescribed format (Form III). However, this report will not be required to be filed with the Central Government.

13. My company is in the business of power generation. As per the MCA Circular, power companies are not required to file the Balance Sheet and Profit & Loss Account in XBRL format. Do I still need to file Cost Audit Report / Compliance Report (as applicable)
in XBRL format?

Power generation companies have been exempted from filing their Balance Sheet and Profit & Loss Account in XBRL format as the relevant taxonomy as per disclosure requirements under the Electricity Act, 2003 is still under development. However, under the said Act, there are no such separate disclosure requirements for cost details. Hence, the costing Taxonomy for filing the Cost Audit Report or the Compliance Report is common to all companies. Therefore, companies engaged in the business of power generation, transmission or distribution are also required to file Cost Audit Report / Compliance Report (as applicable) in the XBRL format.

Nov 232012
 

Rajiv Gandhi Equity Saving Scheme (RGESS)


Eligibility:

The Rajiv Gandhi Equity Saving Scheme is applicable to those individual.

1. Whose Taxable Income is not more than Rs. 10,00,000/- in a Financial Year.
2.  Who have no Equity or Derivative transaction in the Demat Account linked to their PAN.

The objective of the scheme is to promote New Investor to invest into financial or stock market. The government is looking forward to getting good response from new investors willing to invest into equity market.  The scheme is a once in a life-time and are not eligible to reinvest into this scheme again.

Amount of Investment:

The Amount of Investments in this scheme can be maximum up to Rs. 50,000/- to avail tax benefits. For the benefit of the small investors, investments into the scheme can be made into installment for the financial year in which tax claims are made.

Calculation:

The individual will get 50% deduction of Amount invested under RGESS from the taxable income,  this way you can reduce your tax liability. For instance, if you invest Rs. 50, 000/- you would get Rs.25,000/- as deduction from total taxable income and if applicable tax rate is 20%, then an amount of Rs 5,000/- is saved from your taxes.

Period:

The lock in period is of three years. However, after the initial one year, the investor can trade in his securities if he is able to maintain a certain investment level which depends upon the value of shares at the time of the sale.

Before initiating a sale transaction, the investor must maintain the level of investment during these two years, at the amount which they have claimed for the tax benefits or the value of shares, which ever is less, for atleast 270 days in a year.

Investment can be done in to one or more of the followings :

  • Stocks or Shares listed under BSE100 / CNX100.
  • PSUs which are categorized as Navratnas, Maharatnas, and Miniratnas companies
  • Public offers of these companies,
  • Initial Public Offers of PSUs whose turnover must be over Rs 4000 crores in each of the last three financial years.
  • Exchange Traded Funds (ETFs) and Mutual Funds incorporated into the scheme, and exchange traded funds.

Although the RGESS has been designed for new retail investors, the demat account holders can also avail benefits if they have not transacted in equity or derivatives up to the date of notification of the RGESS.

The PAN monitoring based mechanism is in operation under RGESS by the tax authorities. The usual valuation of securities from RGESS portfolio will be carried out by the depositories. If the investors are unable to fulfill the conditions stipulated, the tax benefits will be withdrawn.

Nov 222012
 

Maharashtra Labour Welfare Fund (MLWF)

Maharashtra Labour Welfare Fund has become effective in the year 1953 and is applicable to all the companies in the state that has 5 or more persons employed, who are considered contract labours as per the Act. 

Includes all employee, including employee through contractor, except those working in the managerial or supervisory position and drawing wages more than Rs. 3,500/- per month.

These funds are considered as fringe benefits since they are offered through collective contribution which is supported by employee, employer who contributes three-times of the amount contributed by the employee and the state government.

Calculation:

Here contribution from an employee is of Rs12/- while the employer contributes Rs.36/-. The total contribution comes to Rs.48/-.

Payable:

The periodicity is 30th June and 31st December. The last date for submission is 15th July and 15th January respectively.

Penalty:

The Employer has to maintain the entire record against the fund transaction failure to which there is a penalty. If the employer is not able to produce the records or documents stating details of the fund and employee details,
1. The employer may get a three months term or Rs 500/- fine or both.
2. For subsequent offences, six months term or fine of Rs 1000/- or both.

Nov 212012
 

Profession Tax on Employees in Maharashtra

Profession tax also called tax on employment is imposed by a state under article 276 of the Constitution of India. This tax is deducted from the salary of an employee every month. The profession tax amount is considered exemptible from taxable income of the employee.

Profession Tax is imposed upon professions and employments although the employee is already paying an income tax. As per Article 276, Constitution of India, the total amount payable to any one municipality, local board, district board, or any other legislative agency in the state by way of taxes on Professions, Trades, Callings and Employments is not supposed to exceed Rs. 2,500 p.a.

Employer who must have a certificate of enrollment from tax government department is defined as a person or officer who is answerable for payment or salary or wages of the employee. This authority is supposed to be the head of the office of any establishment or employer.

Profession Tax

  1. An Employer having more than one place of work, will have to apply separately to each authority as regards the place of work coming under the jurisdiction of that authority.
  2. Company hiring many persons has to pay profession tax since being engaged in trade and needs to have certificate of enrollment.
  3. Every Employer has to receive a certificate of Registration within Thirty days from the date of becoming able to pay Profession Tax.
  4. Each person liable to pay tax under this Act has to receive a Certificate of Enrollment in the prescribed manner from the prescribed authority.
  5. If a person is in employment of any diplomatic office, office of consulate, or trade commissioner of foreign country located in any part of the state, he or she has to obtain a certificate of enrollment in case he or she is liable to pay tax and pay the tax by themselves. These offices don’t have to get certificate of registration. If any foreigners are employees in these offices then they are not liable to pay profession tax.
  6. If a person who has to apply for a certificate of enrollment, and has several work places within State of Maharashtra, he or she will need to submit one application for all places of work. He is supposed to give one name of place of work as main place work and submit the application to an authority under whose jurisdiction, the main place of work is located.

Profession Tax Slab for Salaried Employees in Maharashtra

Salary or Wages
Upto Rs.5000/- Nil
Rs.5,001/- to Rs.10,000/- Rs.175/-
Rs.10,001/- and above Rs.200/-*
* Rs.300/- for the month of February

Registration

The employer is supposed to deduct tax as per above mentioned rates and deposit with Government. However even if profession tax not deducted, employer is liable to pay tax. For this purpose the Employer should obtain the Registration Certificate from Department within 30 days from date of his liability. The employer should also file the returns and pay taxes as per monthly/quarterly/annual return which ever is applicable to him, determined as per tax liability.

Liability to File Return and Payment of Tax for Employer (From 1-4-2011) onwards

Tax Liability Periodicity Months of salary to be covered Due Date
Less than  Rs. 50,000 in previous year Annual March of the previous year and April to February of the current year 31st March

Rs. 50,000/- or more in previous year

Monthly

Salary of previous month

End of the month for which return is filed

In case of first year of registration

Monthly Salary of previous month

End of the month for which return is filed

With effect from 1st February, 2011, an Assessee whose Profession Tax liability during the previous year is Rs. 20,000 or more is required to upload his return in Electronic Mode. (Refer Notification No. VAT/AMD-1010/IB/PT/ADM-6 dated 26-11-2010) and is thus able to make payment of Profession Tax in Form MTR-6.

Profession Tax Penalties

- Delays in obtaining Enrollment , a penalty of Rs. 2/per day and  for Registration, a penalty of Rs. 5/- per day.
– Providing false information regarding enrollment – Penalty of 3 times of tax amount.
– Non-payment or late payment of profession tax – Penalty is equal to 10% of the amount of tax to be imposed.
– Late filing of Returns – Penalty of Rs. 300 per return.

Profession tax are exempted in the following cases,

  1. Senior Citizen above 65 years age is tax exempt.
  2. Person suffering from permanent physical disability.
  3. Parent of a child suffering from physically disability.
  4. Parent of a mentally retarded child.
Nov 202012
 

Deduction under Section 80CCF is not available for Asst. Year 2013-14.

80CCF Infrastructure Bonds

The better option with all the investors for fixed investments is available in the market to make savings on their capital and minimize the risk of returns on their investments. Nowadays investment in infrastructure bonds is becoming more of interest to people. Bond is issued by a company that has been authorized to sell these bonds in the market to the investors. The companies release these bonds among public which later investors subscribe these bonds. The investment made by public into these bonds is utilized for “Infrastructure Lending” as defined by RBI.  The investor receives returns on his investment into these bonds.

As per government’s notification number 50/2011 dated 09-09-2011, government has recently notified saying five types of companies would be considered valid for subscription of these bonds for 80CCF deductions.

1. The India Infrastructure Finance Company Ltd,
2. The Infrastructure Development Finance Company Ltd,
3. The Life Insurance Corporation of India,
4. The Industrial Finance Corporation of India and
5.  A Non-banking Finance Company (classified by Reserve Bank of India as Infrastructure Finance Company)

The above are the authorized sources that can issue infrastructure bonds. Minimum of ten years period is the tenure of the bond while the minimum lock-in period is of five years. The investor can keep his investment for 10 years but withdrawal of amount is possible only after 5 years. There is tax exemption under section 80CCF on an amount of Rs. 20, 000/- along with the benefit of Rs. 1,00, 000/- under section 80C.

The income earned on these infrastructure bonds is taxable. The buy-back facility is offered by all the issuers of these bonds after completion of 50% of the tenure.  Suppose after five years the rate of interest in the market is less the investor can choose to continue his investment till its maturity. If interest rates in the market are more than the interest rates on the bonds and the investor can sell off the bonds and start reinvesting his returns in a better form of investment. A tax payer would always prefer to invest in infrastructure bonds to save tax.  

The Demat Account is not mandatory but PAN Card is mandatory in order subscribe these bonds.

Nov 192012
 

House Rent Allowance

Income tax department offers HRA tax exemption for those individual tax payer who stays in a rented house. Section 10(13A) of the income tax act allows the exemption of HRA. Employee can claim for HRA exemption if he or she lives in a rented house. To be eligible for claim of HRA deduction, an employee must be paying for the rent to his landlord and maintain the receipts which state that he has been paying for his rental expenditure. If an employee stays in his own house there is no tax deduction on HRA.

Following points to be considered for Calculation of HRA exemption.

1. Amount equal to 50 percent of Salary where residential house is situated in Mumbai, Delhi, Kolkatta or Chennai or Amount equal to 40 percent of Salary for other places.

2. House Rent Allowance received by the Employee

3.  Excess of Rent paid over 10% of Salary.

Salary includes Basic Salary + Dearness Allowance + Commission on fixed percentage of turnover achieved by an Employee.

Minimum of point no. 1, 2 & 3  is exempted.

For Example,

Basic Salary (Rs 5000/- per month —— Rs. 60, 000/- yearly),
Dearness Allowance (Rs. 1000/- per month —- Rs. 12, 000/- yearly).
Actual Rent Paid (Rs 2000/- per month —— Rs 24000/- yearly),
HRA received by Employee (Rs. 2000/- per month —- Rs. 24, 000/- yearly)
City: Mumbai

1.  50% of  Salary (Basic + DA) = Rs. 36,000/-

2. Rent Received = Rs. 24,000/-

3. Rent paid in excess of 10% of Salary (Basic + DA) =  Rs. 16, 800/-,

Hence, Rs. 16800/- would be exempt and the rest Rs 7,200/- would be included in gross salary for tax calculation.

Documents needed to claim HRA includes rent receipts, rental agreement, PAN details of the landlord.