Mar 152013
 

New TDS Rules as per the new Notification 11/2013 dated 19th feb 2013.

Central Board Of Direct Taxes has issued the notification no 11/2013 dated 19 Feb 2013 allowing TDS statements with a digital signature. The Income Tax Rules, 1962 are altered by the CBDT to bring about these changes. With this notification the rule 31A has been amended that will agree to the furnishing of TDS statement under digital signature. This provides the submission of TDS (Tax Deduction at Source) return electronically and furnishing of statement  with the verification  under the form 27A .It is now possible to  carry the soft copy of the statements along with signed form 27A  to the TIN facilitation centres in order to file these statements. NSDL also provides the submission of the TDS statements electronically which calls for a prior registration. However the new guidelines are awaited regarding the submission of TDS statements under digital signature and the electronic verification process.

Form 26A – certificate from the accountant u/s 201

The form 26A will hold a certificate from the accountant under section 201. Under certain circumstances, the deductor shall not be deemed to be the assessee in default where tax is not deducted at source, in such cases the deductor shall be eligible to present the certificate from accountant. The form 26A serves this purpose. Director General of Income Tax (System) shall detail the format, procedures and standards for the same. The guidelines for the same are pending.

Form 26b – claim for refund

If extra TDS has been deposited, the surplus can be refunded by claiming the same under Chapter XVII-B .The deductor must file a refund under the new form 26B. The rules, formats and procedures recounting the same shall be told by the Director General of Income Tax (System). This form needs to be submitted electronically under digital signatures.

Amounts paid without tax deduction at source-submission of its particulars

Submitting the details of the amounts paid on which TDS has not been deducted, the notification 56/2012 dated 13/2/2013 is introduced. For Certain payments which are made to banks, the tax is not deducted at source . Submitting the details for such amounts is now possible in TDS statements.

The amendments have been made in several forms under this section. Amendment in Rules 31A & 31AA; Substitution of Rules 31ACB, 37J and  Form Nos.15G, 15H, 16, 16A, 24Q, 26Q, 27C, 27D, 27Q & 27EQ and Insertion of Form No. 26B Notification No. 11/2013[F.NO.142/31/2012-SO(TPL)]/SO 410(E). The data structure needs to be formally amended by the NSDL and the changes need to be notified in order that these changes come into effect. The changes regarding the TDS/TCS Certificate have been notified in  Forms 16,16A,27D.The changes regarding the TDS Statements in Forms 24Q,26Q,27Q and 27EQ.Declarations for payments without TDS / TCS in Forms 15G, 15H, 27C .

Mar 082013
 

HIGHLIGHTS OF THE BUDGET 2013

The long-awaited Budget for the new financial year 2013-14 was announced by the Finance Minister P. Chidambaram. The budget comes up with some major and minor amendments in the financial plan, the common man needs to find out what’s in for him, the plus and the minus. Here are the highlights of the Budget 2013:

  • Budget expenditure for 2013-14- Plan expenditure fixed at Rs 555,322 crore; Non plan expenditure at Rs 11,09,975 crore.
  • Law has been modified to prevent tax avoidance that shall come into effect from the 1st of April,2016.For contributions to national children’s fund , 100% tax deduction is allowed
  • Mutual fund tax redemptions reduced to .001 percent
  • With a 5% increase in the total figure dedicated to defence has risen to Rs.203,672 crore.
  • Maintenance repair overhaul sector (MRO) shall be encouraged by  granting concessions to smoothen the business in the aviation segment
  • 18% excise duty increased on cigarettes
  • Customs duty on non agricultural products remain same
  • A considerable increase in import duty from 75% to 100% is noted on heavy  vehicles.
  • No change in basic customs duty rate of ten per cent and service tax rate of 12 per cent.
  • Import duty on rice bran oilcake withdrawn
  • Tax Administrative Reforms Commission to be set up to regularly review tax law applications.
  • Rajiv Gandhi Equity Scheme to be liberalised.
  • Need to encourage FDI in consonance with economic priorities
  • Tds is proposed on the sale of immovable properties. In spite of no capital gain on sale, 1% consideration to be deducted by government.
  • From the 1st June,2013 Wealth Tax Returns will be electronically filed.
  • Defective Return: To save the return from being counted in the defective or invalid return, the tax should be paid before filing the return.
  • Investment allowance deduction to be treated as income under profits and gains of business or profession. This condition arises when the asset on which deduction is allowed is transferred within 5yrs.
  • Taking a loan in order to acquire a residential property from the bank, allows the loan seeker a deduction over and above 1.50.000 adding up the total benefit to Rs.2,50,000.
  • Commodities Transaction Tax (CTT) this tax is to be  levied on sale of commodity derivatives and transactions traded in recognized associations at the rate of 0.01
  • Agricultural land’s meaning has been modified from its earlier definition. If the situation of the land is 2 kms/6kms/8kms from the local municipality and the population lies between 10,000-1,00,000, 1,00,000-10,00,000 and above 10,00,000 respectively, then the area shall be called urban area.
  • Security Transaction Tax Reduced from 10% to 25 %
  • Royalty/Fees for Technical Services Paid to Non-Residents increased from 10% to 25%
  • Immovable property when received for a consideration less than stamp duty value, the difference between stamp value and sale price ,in the hands of purchaser and buyer are taxable under the heads income from other sources and capital gains/business/ profession respectively.
  • Keyman insurance policy assigned to any person, no exemption is granted on maturity if transferred from the company to keyman.
  • For  land/building held as stock in trade,  the stamp duty value to be taken as consideration under the head profits and gains from  business/profession.

FISCAL DEFICIT

Fiscal deficit shall be seen at 4.8 point of GDP in 2013-14 as compared to 5.2 point of GDP in 2012-13.rationalizing expenditure seems to be the option to face the huge deficit. The financial plan aims at reducing the fiscal deficit to 3% and revenue deficit to 1.5% of GDP by 2016-17

INCOME TAX

Relief in Tax credit of Rs.2000 to be provided to every person with an annual income upto Rs.5 lakh, around 1.8 crore people will benefit from this .Personal income tax slabs have not been increased or decreased.. Those with an income of Rs.1 crore and above, 10% surcharge applicable.

For Domestic Companies Surcharge at the rate 5% to be continued if Taxable Income exceeds Rs. 1 crore but upto Rs. 10 crore.10% if Taxable Income exceeds Rs. 10 crore. Education Cess and Marginal Relief to be continued as before

For foreign companies , 2% surcharge in case of income ranging in between 1crore-10 crore, whereas ,for income above 10 crore  5% surcharge applicable.

SERVICE TAX

  • Service tax remains untouched at the 12 % rate
  • Service tax on all air conditioned restaurants (those serving alcohol and those not serving, both)
  • No service tax to be charged on vocational courses offered by the government institutions
  • No service tax on agricultural testing procedures.
  • Vehicle parking to general public will be covered under the service tax
  • For service tax defaulters, One time voluntary compliance scheme is introduced. The Direct tax proposals are expected to yield Rs 13,300 crore  while  indirect tax proposal to give Rs 4,700 crore. Under the Voluntary Compliance Encouragement Scheme 2013, service providers can register themselves and declare the last 5yrs’ accountability and refrain from any sort of penalty if tax is paid on time.
  • Courses approved by State Council of Vocational Training to be included in the Approved Vocational Educational Course .
  • Charitable organizations’ services to be exempted from tax .(The limit of value of progression reduced from Rs.25 lacs to Rs.10 lacs)
  •  The abatement for construction to be reduced from 75% to 70% provided carpet area of residential unit is greater than 2000 sq.ft.

WOMEN’S DEVELOPMENT

  • Rs. 1000 crore to be used for establishing Nirbhaya funds
  • In order to ensure dignity, safety and security of women various measures of safety shall be introduced and investments on plans and programmes seeking the above for the female population and promoting the progress of the girl child.Rs.97000 to be put towards women’s development.

POWER AND ENERGY SECTOR

  • Promotion and encouragement of waste to energy project in the cities.
  • Low interest rate funds will be made available in order to promote clean energy and make it easier for the people.
  • A shift from profit sharing to revenue sharing will be seen in oil and gas sector

The funds allocated for/under various schemes / sectors are stated as follows:

Allocated funds                                   Plan/ scheme/sector                      

  •  Rs.500 crore                                    Promoting crop diversification
  •  Rs.200 crore                                    Promoting nutrient-rich crops
  •  Rs.50 crore                                      Farmer-producer organisations
  •  Rs.50 crore                                      Textile ministry establishing apparel parks
  • Rs.96 crore                                       Handloom sector to benefit 150,000 weavers by

Concessional  six per cent interest on loans

  • Rs.41,000 crore                               Scheduled Caste plan
  • Rs.110 crore for                              Department of disabilities
  •  Rs.37,330 crore                              Health ministry
  • Rs.65,867 crore                               Human resource development ministry
  • Rs.13,250 crore                               midday meals scheme
  • Rs.17,700 crore                               Integrated Child Development Scheme
  • Rs.15,260 crore                               Drinking water and sanitation ministry
  • Rs.307 crore                                     National livestock mission to be launched
  • Rs.10,000 crore                               Initial expenditure on implementation
  • Rs.80,294 crore                               Rural development ministry allocation raised by 46 per cent
  • Rs.33,000 crore                               Rural jobs scheme
  • Rs.140 billion                                   capital infusion in state-run banks
  • Rs.800 crore                                     New and Renewable energy

Infrastructure

  • Tax free infrastructure bonds to be issued worth rs.50000 crore.
  • Infrastructure debt funds will be proposed to be promoted
  • In the first six months of 2013, 3000 km of road projects to be granted. A regulator needs to be appointed for the same.
  • For investors (investing over Rs.100 crore) in infrastructure projects, over 15 percent and more of  incentive allowance permitted depreciation
  • Two  major ports coming up between west Bengal and Andhra Pradesh which will augment the 100 million tonnes handling capacity
  • To ensure the operations are being carried out at Dabhol gas handling terminal in Maharashtra.
  • New cities to emerge along Delhi – Mumbai corridor
  • Elementary work to start up on Bangalore Mumbai industrial corridor

FOREIGN TRADE: Duty on exports of precious and semi precious stones to be cut to 2 point .No duty to be imposed on import of ships, vessels.

With the rising cost of living, the new budget will facilitate bond to protect our investments against inflation.

Health and Education shall be seen as the priorities along with welfare of women and children. Healthcare/medical institutions/affiliated schools will see some government spending. 3 billion to be allocated for programs aimed at solving the health issues like malnutrition. Alongside, safe drinking water to be made available by setting up more and more purification plants in order to combat food inflation, the food supply will be augmented. Foodgrain production for 2013 has been estimated to reach 250 million tonnes. Rs.10,000 crore allocated for initial expenditure on implementation. Creating abundant opportunities and scope for the youth in terms of job prospects/self employment will be laid emphasis upon thus increasing employment and ensuring security to many.

Mar 052013
 

EPF interest rate increased to 8.5% for the year 2012-13

EPF has come up with a mount in interest rate, taking it to 8.5%  for the year 2012-13. The interest rate for the new fiscal year is 8.5% , as compared to the 8.25% in the previous year. As one basis point equals 0.01%, the 50 million subscribers of the employees’ Provident Fund Organisation will earn 8.5% with the 25 basis point increase. The trade unions’ demand of 8.6% interest still remains unfulfilled . The Central Board Of Trustees (CBT) explains that with the proposal of paying 8.6% interest , they would be left with a Rs 240 crore deficit, while  the 8.5% rate allows a surplus of Rs. 400 crore.

But , the trade unions whose proposal was not accepted, have argued upon as to if the banks pay 9-10% and the government pays up to 8.8% , then why only 8.5% is being paid. Albeit there is a   rise from previous year’s 8.25 to 8.5%,it is much less than the PPF rates or Bank fixed deposits rates.  The previous years’ interest rate has been a considerable decline from 9.55 in 2011-12 to 8.25% in 2011-12. The EPF rates in 2011-12 were decreased to 8.23% from the 9.25%  in 2010-11,while there was an increase in PPF rates from 8.6% in 2012-12 to 8.8% in 2012-13. The CBT  has relaxed the rules in order to permit the EPFO invest in corporate bonds up to 25 year maturity from the present 15 years.

Also, the EPFO has allowed the fund manager to invest in debt market in order to improve earnings. The CBT commissioner has stated that a bit of relaxation in the rules is done so as to ease investment in debt market.

The EPFO can invest in the following seven firms along with the investments in bonds of PSUs.

  • HDFC Bank Ltd
  • ICICI Bank Ltd
  • Axis Bank Ltd
  • LIC Housing Finance Ltd
  • IL&FS Ltd
  • IDFC Ltd
  • Housing Development Finance Corp. Ltd.

The EPFO has come up to the decision to invest in AA or AAA rated bonds of companies that have a minimum net worth of Rs 3000 crore with a 15% dividend paying track record. However, they will refrain from investing in stock market as decided by the organization.

The new investment pattern is expected to yield higher returns, as per the central provident fund commissioner.