Apr 302015

In pursuance of clause (3) of article 348 of the Constitution of India, the following translation in English of the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2015 (Mah. Act No. XVII of 2015), is hereby published under the authority of the Governor.

Following Amendments passed

1. (Levy, Amendment and Validation) Act, 2015.

** In regards to Profession Tax, if any employer has finalize the salary of Apr-2015 Pls recalculate  the same as per new slab

(b) (i) in case of a male, exceed Rs. 7,500 but do not exceed Rs. 10,000 ;
175 per month
(ii) in case of a female, do not exceed Rs. 10,000 ;
Pls click below is the said Notification of the same

Download Circular

courtesy: [Prakash Consultancy Services]

Apr 302015

Union cabinet approves continuation of minimum pension of Rs 1,000 per month

The Union cabinet on Wednesday approved continuation of the minimum pension of Rs 1,000 per month beyond 2014-15 on a perpetual basis, benefiting about 20 lakh retirees covered under the pension scheme run by the Employees’ Provident Fund Organisation. Providing a minimum pension of Rs 1,000 per month is an effort to provide meaningful subsistence to pensioners who have served in the organized sector,” the government said in a statement.

The cabinet also approved Rs 850 crore per year grant to meet the liability on a tapering basis, it said.

The Employees’ Pension Scheme, 1995 (EPS), which was effective from September 2014, had expired on March 31, 2015, after which EPFO had restored to the earlier provision that had led to widespread protests from trade unions.

The UPA-II government had in February 2014 accorded approval to the proposal for ensuring a minimum pension of Rs 1,000 per month for the pensioners of EPS for 2014-15 and provided a budgetary support of Rs 1,217.03 crore.

However, the proposal could only be implemented by the BJP-led NDA government with effect from September 1 last year after necessary amendments to the EPS Act.

reproduced from economic times

Apr 282015

Public Provident Fund – Best investment destination


PPF is money that will be yours forever.

Knowledge of the different features of the PPF account will help you when you want to take a loan against the account, withdraw from the account, re-activate a discontinued account etc.

Here an attempt is made to introduce you all features of PPF.

What is PPF?

Public Provident Fund (PPF) is a scheme of the Central Government, framed under the PPF Act of 1968. Briefly, PPF is a government backed, long-term small savings scheme which was initially started by the Government in order to provide retirement security to self-employed individuals and workers in the unorganized sector. Today the PPF is the Indian citizens’ darling investment avenue.

But keep in mind, you need to be disciplined to make the most of the PPF investments, and also meet your liquidity needs elsewhere; because under this investment avenue your money is blocked for 15 years.

Main Features

Eligibility You need to be a Resident Indian Individual
Entry Age No age is specified(Minor is allowed through guardian)
Interest rate 8.70% p.a. compounded annually*
Tenure 15 complete financial yearsplus the first year of investment means total your fund will get blocked for minimum 16 years
Extension in tenure On completion of 15 years, the account can be extended in a block of 5 years. However there is no restriction on no. of extension an invester can availed.
Minimum Investment Rs 500 p.a.
Maximum Investment Rs 1,50,000 p.a.
Limit over no of deposits in a financial year A maximum of 12 deposits allowed in a financial year
Tax Benefit Up to Rs 1,50,000 under Section 80C;
Interest exemption under EEE model Interest earned is exempt from tax and so are the maturity proceeds
Can be opened at Any Post Office and Authorized branches of Banks
Who cannot invest Hindu Undivided Family (HUF’s);Non Resident Indian’s (NRI’s); andPerson of Foreign Origin
Mode of Payment Cash Crossed Cheque Demand DraftPay Order Online Transfer in favour of the Accounts Officer
Nomination Nomination facility is available
Interest rate Declared annually.The interest rate is currently 8.70% p.a.- This is subject to change.

Change in interest rates over year

PPF interest rate has steadily dropped over the years, and can be expected to slowly fall as the years proceed. Here’s a look at what rates used to be:

Period Interest Rate p.a.
01 April 1986 – 14 Jan 2000 12%
15 Jan 2000 – 28 Feb 2001 11%
01 March 2001 – 28 Feb 2002 9.50%
01 March 2002 – 28 Feb 2003 9.00%
01 March 2003 – 30 Nov 2011 8.00%
01 Dec 2011 – 31 March 2012 8.60%
01 April 2012 – 31 March 2013 8.80%
01 April 2013 – till date 8.70%

 It is noteworthy that the interest rate on PPF is benchmarked against the 10-year G-Sec yield and is usually 0.25% higher than the average yield on G-Secs. The interest rates on PPF are announced every year by the Reserve Bank of India (RBI) for the upcoming financial year.

Now let’s see the PPF Withdrawal Rules in SBI. According to PPF Rules in India a user can withdraw fromPPF SBI Account after the completion of 6 years. See a chart below for more information

In the above case a user can withdraw money from his / her PPF Account only at the end of 6th Year of operation, so its ideally 7th year beginning. The PPF Withdrawal Rules in SBI states that the maximum amount of withdrawal from PPF Account is 50% of the amount retained / remaining in the ppf account in the end of 4th year. In the above example its 3,55,293.45 INR and 50% of this amount is 1,77,646.73 INR and so the Withdrawal Rules in SBI PPF continues till the end of 12th year of which the amount can be withdrawn during the 15 year end. So ideally in PPF Withdrawal Rules in SBI is valid from 7th year end to 15th year end. This amount can be used for any emergency purpose or for higher studies.

Apr 272015

Benefits available in EPF

A small part of your salary, i.e., 12% of your basic salary is invested in Employee Provident Fund and an equal amount is matched by your employer each month. Here in this article an attempt is made to pin point all the benefits available in EPF account:

One can get pension under EPF

The EPF part is actually for your provident fund and EPS is for your pension. The 12% contribution made by you from your salary goes into your EPF fully, but the 12% contribution which your employer makes, out of that 8.33% actually goes in EPS and the rest goes into Employer EPF. However, conditions to avail these benefits are given below:

  • One is entitled for pension only if one has completed the age of 58.
  • One is entitled for pension only if he has completed 10 yrs of service (in case of more than one companies, the EPF should have been transferred, not withdrawn)
  • The maximum Pension per month is subject to maximum of Rs 3,250 per month
  • Lifelong pension is available to the member and upon his death members of the family are entitled for the pension.

No interest is given on EPS (pension part)

The compound interest is provided only on EPF part. The EPS part (8.33% out of 12% contribution from your employer does not get any interest. At the time of PF withdrawal, you get both EPF and EPS.

You might not get 100% of your Provident Fund money

You always get 100% of your EPF part, but for EPS there is separate rule. There is something called Table ‘D’ , under which its mentioned how much you get at the time of exit from your job, there is a slab for each completed year and you get “n” times of your last drawn salary (depending on the completed year of service).

Voluntary Provident Fund: You can invest more in Provident Fund

You can always invest more than 12% of your basic salary in Employee Provident Fund which is called voluntary provident fund. In this case the excess amount will be invested in PF and you will keep on getting the interest, but the employer is not supposed to match your contribution. He will just invest upto maximum of 12% of your basic, not more than that.

Withdrawing of EPF amount at job change is illegal

You can only withdraw your Employee provident fund money, only if you have no job at the time of withdrawing your money and if 2 months have passed.

Only transfer is allowed in case you get a new job and you switch to it. While there are no cases where EPF office tracks these things and takes up this matter, still just for your information you should know that if you got a new job and took it and then you are applying for withdrawal, its illegal as per law.

However in case of EPS, if the service period is less than 10 years, you’ve option to either withdraw your corpus or get it transferred by obtaining a ‘Scheme Certificate’. Once, the service period crosses 10 years, the withdrawal option ceases.

Just for your information, you can withdraw your EPF money without the help of past employer signature by attesting your withdrawal form by a bank manager or some gazzeted officer.

Your EPF gives you some life insurance too

This is because there is something called Employees’ Deposit Linked Insurance (EDLI) scheme and your organisation has to contribute 0.5% of your monthly basic pay, as premium for your life cover. However companies which already have life insurance benefits to employees as part of the company, are exempted from this EDLI scheme.

Apr 212015

An overview on Professional Tax

Meaning of professional tax:

Professional Tax is the tax charged by the state governments in India.

Any one earning an income from salary or any one practicing a profession such as chartered accountant, lawyer, doctor etc. are required to pay this professional tax. Different states have different rate and method of collection. Following states impose this levy in India – Karnataka, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya, Orissa, Tripura and Madhya Pradesh etc. Business owners, working individuals, merchants and people carrying out various occupations comes under the purview of this tax.

Professional tax is levied by particular Municipal Corporations. The maximum amount payable per year is Rs.2,500/- and in line with your salary, there are predetermined slabs every state acts.

Applicability of Professional Tax as per the Constitution of India:

Article 276 of the Constitution of India lays down that “there shall be levied and collected a tax on professions, trades, callings and employments, in accordance with the provisions of this Act.”

As the different states have its own act for its applicability, levy, collection and assessment hence it is imperative to provide you a list of states where professional tax is applicable and acts passed in those states to ritualized its collection.

Here a list of states with enactments passed for effective implementation of professional tax administration is provided for your ready reference.For more information on professional tax slab, please refer to our other blog on the topic.

 Professional Tax in various States

States where professional tax is implemented

1.Andhra Pradesh
8.Madhya Pradesh
15.Tamil Nadu
19.West Bengal
20.Himachal Pradesh
21.Jammu & Kashmir

States where professional tax is not implemented

26.Arunachal Pradesh
30.Uttar Pradesh
32.Andaman & Nicobar
34.Daman & Diu
35.Dadra & Nagar Haveli

Apr 062015

Practical case study on computation of income from House Property

After discussion basic factors that are necessary for computation of income from house property, now here we can analyse the practical case study on computation of income from house property:


Mrs. A owns a house property: comprising eight let out residential unit at Bombay with following specifications:

Rental details Local taxation detail
– Fair rent of the property in Rs 61, 000,- Standard rent is Rs 60,500.

– Annual rent of Rs. 62,000

– Rateable value according to municipal records is Rs.50,000

– General tax: 25.5%- Water tax: 9%

– Sewage (halalkhore) tax: 5%

– Education cess: 5%

– Water Benefit tax 6%

– Sewerage benefit tax 4%

– State education tax 6%

Expenditure Incurred by Tenants Expenditure by Mrs A
– Repairs expenditure paid by tenants 6,000 – Insurance premium due but outstanding Rs 2,000- Annual charge created by Mrs A: Rs. 2,000
Interest details
– interest on borrowed capital for construction (inclusive of brokerage of Rs.1,000 for arranging loan) Rs 17,000- Date of commencement of construction: June 1994

– Date of completion of construction: January 15,1998

Rental Recovery Expenses Unrealized Rent
– Legal charges for notice sent to three tenants for arrears of rent: Rs 4,00;- Collection charges payable Rs 219 – Unrealised rent of Rs 2001-02 (defaulting tenants has vacant the property) Rs. 3,000,- Unrealised rent of 2013-14 : Rs 1,590;

– Deduction allowed earlier: Rs 17860 and recovers Rs 2,100 after incurring expenditure of Rs 700

Occupancy status
One flat (rent Rs.600 per month) remained vacant for four months

 Following are the notable points in the above case:

  • For computing income Gross Municipal value is taken, i.e., Annual rent + Repair charges (1/9th of Rs 50,000) + water tax (Rs 4500) + Sewage (halalkhore) tax (Rs 2500) = Rs 62556
  • Municipal taxes = General tax + Water tax + Sewage (halalkhore) tax + Education cess = Rs 22.250
  • No treatment of repair done by tenants or Mrs A.
  • All other expenses by Mrs A are irrelevant for calculation.

 Now calculation of property income for Mrs A shall be given below:-

Income from a let out house property is determined as under:-
1. Calculation of Gross Annual Value
1. Gind out reasonable expected rent of proprty 60,500
Gross municipal valuation of property 62,556
fair rent of property 61,000
standared rent (As per rent control act) 60,500
2. Find out rent actually received or receivable 60,410
Rent of PY (or that part of PY) property is available for letting out 62,000
Less: after excluding unrealized rent 1,590
3. Loss due to vacancy 2,400
Period for which property is available 96 12 X 8
Period for which property remain vacant 4 @ 600 PM
Gross annual value 58,100
Less: Municipal taxes 22,250
Net annual value        35,850
Less:Deduction under section 24
-Standared Deduction 10,755
-Interest on borrowed capital 16,000          26,755
Income from HP          9,095

Apr 012015

Creation Hindu undivided families – Part 1

Meaning of Hindu undivided families

Under the Income-tax Act, a Hindu undivided family (HUF) is treated as a separate entity for the purpose of assessment.

Benefit of treating separate entity:

  • HUF become separate natural person.
  • All benefits available to individual under income tax act are also available to HUFs, i.e., benefits of maximum amount not chargeable to tax of Rs 2,00,000, benefits of deduction u/s 80C etc,
  • Created from status.
  • All we need to do is to apply for new PAN card in the name of XXX (HUF).
  • HUF can earn all types of income except salary income.

The term “Hindu undivided family” has not been defined under the Income-tax Act. The expression is however, defined under the Hindu law as a family which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters.

The relation of a Hindu undivided family does not arise from a contract but arises from status.

Jain and Sikh families

Though Jain and Sikh families are not governed by the Hindu law, such families are treated as Hindu undivided families for the purpose of the Income-tax act.

This means like Hindu family, Jains and Sikhs can also form families and separate entity for taxation of income and may enjoy the benefits.


Hindu Coparcenary included those persons who acquire by birth an interest in joint family property. Previously, it was limited to male descendants only. With the introduction of Hindu Succession (Amendment) Act, 2005 from September 6, 2005, daughters also are given coparcener status.

Hindu Mitakshara Coparcener includes daughters of the Hindu Undivided Family in addition to sons, grand-sons and great-grand sons.

One of the important tests of coparcenary is that a coparcener enjoys the right to enforce partition.

Basic conditions of assessment

Income of a joint Hindu / Jain / Sikh family may be assessed as income of a Hindu undivided family if the following two conditions are satisfied:

  • There should be coparcenership. In this connection, it is worthwhile to mention that once a joint family income is assessed as that of Hindu undivided family, it continues to be assessed as such in subsequent assessment year till the partition is claimed by its coparceners.
  • There should be a joint family property which consists of ancestral property acquired with the aid of ancestral property and property transferred by its members.

Ancestral property

Ancestral property may be defined as the property which main inherits from any of his three immediate male ancestors, i.e., his father, grandfather and great-grandfather. Therefore, property inherited from any other relation is not treated as ancestral property.

Ancestral property may be defined as the property which a man inherits from any of his three immediate male ancestral property is taxable as income of Hindu undivided family.

Property obtained by daughter from the joint family property would be her absolute property. Any income therefrom is chargeable to tax in her hands in the individual’s status only. This will also apply to any legal heir obtaining property in the capacity of descendants.