Thursday, March 15, 2018

The Lok Sabha on Wednesday passed the Finance Bill 2018 with 21 amendments,

The Lok Sabha on Wednesday passed the Finance Bill 2018 with 21 amendments, some of which had to do with the controversial long-term capital gains tax on equity announced in the Budget speech by Finance Minister Arun Jaitley, while others had to do with the tax exemptions available to start-ups.
The Finance Bill was passed without discussion amid much ruckus, following which both Houses of Parliament were adjourned for the day.
Regarding the long-term capital gains tax (LTCG), one of the major amendments made was that the grandfathering of gains till January 31, 2018 will now be incorporated in the computation of LTCG itself, rather than for the purposes of computing tax at the rate of 10%.
"This resolves the ambiguity contained in the language of the Finance Bill 2018 on the need for a duplicated computation viz. first for computing LTCG without grandfathering and then for applying 10% tax rate with grandfathering," Rajiv Chugh, Tax Partner at EY India said in a note.
"The amended Finance Bill 2018 clears the air on several ambiguities and anomalies on new LTCG regime, cost base for depreciation allowance on stock in trade converted into capital asset, valuation of securities held as inventory by scheduled banks and public financial institutions, due date for CbCR (Country by Country Reporting) compliance by Indian constituent entity of non-resident parent entity and turnover cap for eligible start-ups."
However, tax experts say that ambiguities on other proposals continue to exist, such as the deemed dividend taxation of accumulated profits of an amalgamating company, potential extension of SEP to physical transactions, applicability of prosecution for non-filing of returns of income to foreign companies whose incomes are fully covered by withholding tax, restrictive relief from Minimum Alternate Tax (MAT) for non-resident companies under presumptive basis of taxation.
"Markets were expecting some relief from the government like deferment of new capital gains tax or increase in the threshold limit from ₹1 lakh to ₹2 lakh for levy of capital gains tax at the rate of 10%," Naveen Wadhwa, DGM, at said. "However, the Finance Bill 2018 as passed by the Lok Sabha didn't make any significant change in the original proposal."
"The only noteworthy change is that of allowing the indexation benefit to shares which were unlisted as on January 31, 2018 but are listed on the date of transfer which happens to be on or after April 1, 2018," Mr. Wadhwa added.
The amended Finance Act also made changes to the rules regarding how start-ups can avail of tax deductions on profits.
Previously, start-ups were allowed 100% deduction of profits for any three out of seven years from the year of incorporation. To avail of this incentive, the start-ups were required to comply with a condition that stipulated that their turnover could not exceed ₹25 crore in those seven years.
"This was considered restrictive, as exceeding the turnover threshold in later years could have jeopardised the claim for earlier years (even though the conditions were met in those years)," Jiger Saiya, Partner - Tax and Regulatory Services at BDO India said in a note.
"In an amendment to the Finance Bill as passed by the Lok Sabha today [Wednesday], the condition is relaxed largely to the effect that turnover should not exceed the prescribed limit for the year for which 100% deduction is claimed by the start-up. The linking of turnover limit directly to year of claim is welcome."
Chandrashekhar V. Chitale

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Friday, March 2, 2018

Brief About E-Assessments under Income Tax Act

As a part of e-governance initiative to facilitate conduct of assessment proceedings electronically, Income-tax Dept. has launched 'E-Proceeding' facility. 
Under this initiative, CBDT has made it mandatory for the tax officers to take recourse of electronic communications for all limited and complete scrutiny. 

In June, 2017, CBDT had issued the formats for issuing a notice to the taxpayers for conducting the scrutiny assessments. Now, CBDT issues an instruction for conducting the scrutiny assessments electronically. 

As per the instruction, except search related assessments, all scrutiny assessments shall be conducted only through the 'E-Proceeding' functionality available at e-filing website of Income-tax Dept.

Through this instruction, the Board has laid down the procedures to be followed by the tax officers to conduct the scrutiny assessment electronically. 

Ten-things to know about this instruction and e-Proceeding facility of Income-tax Dept. are as under.

1. All the communications with the taxpayers shall be signed digitally by the tax officer and it will be delivered to a taxpayer in his e-filling account.

2. On receipt of Dept. communication, taxpayer would be able to submit the response along with the attachments by uploading the same on e-filing portal.

3. All the submissions and replies should be made by the taxpayer till office hours on the date stipulated for compliance.

4. The response submitted by the taxpayer can be viewed by the concerned tax officer electronically in Income-tax Business Application (ITBA) Module.

5. The facility for electronic submission of documents shall be automatically closed 7 days before the time barring date.

6. Upon conclusion of hearing in assessment proceedings but before passing the final order, the concerned tax officer shall close the e-submission facility.

7. Not all proceedings shall be carried out electronically. A few proceedings can also take place manually, i.e., examining the books of accounts, examination of witness, etc.

8. The case-records and note sheets of proceedings is required to be maintained by the tax officer electronically.

9. These electronic proceedings shall be carried out by the tax officers for Limited Scrutiny (in case of CASS1), Complete Scrutiny (in case of CASS) and Compulsory Manual Scrutiny.

10. The taxpayer friendly measure would substantially reduce the compliance burden for the taxpayers as it would enable them to submit response to the Departmental queries electronically as per their convenience. 

Tuesday, February 27, 2018

CBDT Notifies Centralised Communication Scheme’ for issuing e-notices

Dear All,


The Central Board of Direct Taxes (CBDT) via Notification No 12/2018 dated 22nd February, 2018 notifies 'Centralised Communication Scheme, 2018' for centralised issuance of notices, in pursuance to Section 133C of the Income-tax Act, 1961 (Act).


Under the Scheme, the notice shall be served through e-mail, or by placing a copy in the registered account on the portal followed by an intimation by SMS (Short Message Service). The notice shall be issued under digital signature of the designated authority.


The Centralised Communication Centre may prescribe a machine readable structured format for furnishing the information or documents and the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall specify the procedure, formats and standards for furnishing response to the notices.


Further, no person shall be required to appear personally or through authorised representative before the designated authority at the Centralised Communication Centre in connection with any proceedings.


The notification is attached herewith for your reference. e

Thursday, February 22, 2018

GSTN have modified few aspects of GSTR 3B filing with effect from today

GSTN have modified few aspects of GSTR 3B filing with effect from today. While Filing the GSTR 3B , it is prompting the same.

Following Changes have been done to the GSTR 3B online filing process by GSTN,

1) User will have to Fill either CGST or SGST/UGST amount, other taxes columns will get auto filled.

2) User can now save the Form on confirming details filled in the Table. You can fill balance details later.

3) User can Preview Form or download it for cross verifying saved details in any table(s) anytime.

4) For freezing the details and to know the liability, submit option is not required now.

5) Changes in any table can be made before making payment towards liabilities.

6) Once you proceed to payment, you can also see details of existing balances in cash and credit ledgers (Table 6.1 – Payments Table).

7)  System suggested Tax Credit (ITC) is already filled for discharging liability. Be aware, it is only suggestion. You can edit the same before finalizing the Return.

8) Once you confirm ITC and cash utilization for payment of tax liability in Payments Table, system does automatic calculation for shortfall in cash ledger.

9) Once you are Ok with shortfall, System will generate pre-filled challan for shortfall and navigate to payments option.

10) Once you make online payment, system will navigate back to Payments Table.

11) You can Track Return status as well as download the Return from through Track Return Status functionality available at your dashboard.

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Tuesday, February 20, 2018

Govt may review norms for statutory auditor appointment in PSBs

PTI | Feb 19, 2018, 16:17 IST 
New Delhi, Feb 19 () Hit hard by the country's biggest bank fraud at PNB, the government is looking at tightening the norms for appointment of statutory auditors at public sector banks (PSBs) to help detect any irregularities early and take corrective actions, according to a government official. At present, PSBs appoint their own auditors and questioned have been raised in some quarters on why a USD 1.77 billion (Rs 11,400 crore) fraud could have gone undetected by the auditors of Punjab National Bank (PNB) for seven long years. A senior government official told that perhaps there is a need to bring in a membrane in banks getting to choose their own auditor and to bring in a dispassionate arm's length decision-making in such appointments. PSBs are allowed to appoint statutory central auditors on an annual basis, subject to their fulfilling the eligibility norms prescribed by the RBI. The Comptroller & Auditor General (CAG) annually empanels audit firms for PSBs that are scrutinised by the RBI for identifying the continuing, and non-continuing firms. The official said there is "disparity" in how auditors are appointed in central public sector enterprises (CPSEs) and PSBs. In case of a government company, the CAG appoints the auditor for a particular financial year. The auditor in turn submits its audit report to the CAG. "Why a scam of such magnitude has not happened in a CPSE? There should be an arm's length distance in the working of an auditor and a bank or company's board. When the management selects the auditor, then the arm's length distance might not be maintained," the official said. In what can be termed as the biggest fraud in banking sector, Punjab National Bank (PNB) last week said it has detected fraudulent transactions of more than Rs 11,300 crore in one of its branches in Mumbai. The fraud, in which diamond jewellery designer Nirav Modi allegedly acquired fraudulent letters of undertaking (LoUs) from one of its Mumbai branches for overseas credit from other Indian lenders, is being probed by CBI and Enforcement Directorate among other agencies. The official further said that a "composite audit norm" for PSU banks could be on cards which apart from financial audit would also include information technology audit. The official further said that the norms could also mention the minimum number of auditors that the banks would be mandated to appoint based on the number of branches. Currently, the RBI norms have classified PSU banks based on their size-- Category A (large), B (medium) and C (small). While the number of statutory auditors have been capped at 6 for large banks, for medium and small size banks it is 5 and 4 respectively. "The norms do not mention the minimum number of auditors that must be appointed by banks. It should be specified since the more the number of auditors, chances of oversight gets minimised," the official said. Besides, the official also suggested that there should be churning every year on appointment of auditors in a PSB. "There are auditors who have been auditing the same bank every year and that is when the sense of comfort crops in while dealing with management," he added. He said the government is committed to clean up the balance sheet of the PSU banks. "Regulation cannot be free. It must have a price attached. If regulation and supervision are same, then where is the price attached to the RBI?," the official noted. JD SA
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Thursday, February 8, 2018

Big Amendment to MSMED Act

*Big Amendment to MSMED Act*
New Delhi, Feb 7 (UNI) The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved change in the basis of classifying Micro, Small and Medium enterprises from *'investment in plant & machinery/equipment'* to *'annual turnover'*. 

This will encourage ease of doing business, make the norms of classification growth oriented and align them to the new tax regime revolving around GST (Goods & Services Tax). 

*Revised definition – based on ANNUAL TURNOVER:* 
(For both, Manufacturing and service rendering units)
> *Micro* enterprise - Turnover up to Rs 5 cr
> *Small* enterprise - Turnover Rs. 5 cr to 75 cr
> *Medium* enterprise - Turnover Rs. 75 cr to 250 cr

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Thursday, February 1, 2018

Highlights of Union Budget 2018

Dear All, 

Please find below the highlights for this years Union Budget 2018



Here are the highlights of Finance Minster Mr.  Arun Jaitley's speech



 Imported electronics, including phones and TVs, will now get more expensive as government  proposes to increase custom duty on mobiles from 15% to 20%  and some parts of TVs to 15%.

 However Education cess is being increased from 3 to 4 % to be known as *Education and Health cess*.



 No change in Tax Rate. All persons including individuals, HUF, Firms and Companies to pay same tax.


 *Standard Deduction of Rs 40,000 for salaried employees*. However benefit of transport allowance  of Rs 19,200 and Medical Reimbursement  of Rs 15,000 under Section 17(2) are being withdrawn. Thus net benefit to salaries class only Rs 5,800


 Rs 50,000 benefit to senior citizens for investment in mediclaim Premium Under Section 80D.


 *Long term Capital gain exemption* under section 10(38) in respect of *listed STT paid shares* being withdrawn. However *capital gain up to 31.1.2018 shall not be taxed* as cost of acquisition will be taken as Fair Market Value as on 31.1.2018. Tax on *STT paid long term capital Gain will be 10%* under Section 112A. Further such tax will be liable for TDS.


 *Penalty for non-filing financial return as required under section 285BA being increased to Rs 500 per day*.


 All companies irrespective of income to file return and in case it is not filed, such companies will be liable for prosecution irrespective of the fact weather it has tax liability of Rs 3,000 or not.


 100% tax exemption for the first five years to companies registered as farmer producer companies  with a turnover of Rs. 100 crore and above.


 Provision of Section 43CA, 50C and 56(2)(x) being amended to allow *5%  of sale consideration in  variation vis a vis stamp duty value*. On account of location, disadvantage etc.


 Provision of section 40(ia) and 40A(3) and 40A(3A)are being made applicable to *Charitable Trust*.

Hence expenditure incurred without deduction of tax and in cash will not be eligible as application of income under section 10(23C) and section 11(1)(a).


 However  for Domestic Companies having total turnover or  gross receipts  not exceeding  Rs 250 crores in Financial year 2016-17 shall be liable to pay *tax at 25%* as against present ceiling of Rs 50 crore in Financial year 2015-16.

 41% more returns were filed this year, which shows that more people have joined the tax net.


 Tax payer base has risen from 6.47 crore in 2014-15 to 8.27 crore in 2016-17. More payers joining  tax net but turnover not encouraging.


 Assessments to be E assessment under new section 143(3A).



 Income Computation and Disclosure Standards(ICDS) being given statutory backing in view of  decision of Delhi High Court decision. *Marked to market loss* computed as per ICDS to be allowed under section 36. Gain or loss in Foreign Exchange as per ICDS to be allowed under new section 43AA. Construction Contract income to be computed on percentage completion method as per ICDS. Valuation of Inventory including Securities  to be as per ICDS.


 Agriculture Commodity Derivates income /loss  also not to be considered as speculative under  section 43(5).


 No adjustment under section 143(1) while processing on account of mismatch with 26AS and 16A.


 Deemed dividend to be taxed in the hands of the company itself as Dividend Distribution of tax @  30%.


 *PAN to be obtained by all entities* including HUF other than individuals in case aggregate of  financial transaction in a year is Rs 2,50,000 or more. All directors, partners, members of such  entities also to obtain PAN.


 Interest on compensation, enhanced compensation. Claim or enhancement claim and subsidy, incentives to be taxed in the year of receipt only as per new Section 145B.


 *54EC benefit of investment in Bonds* to be restricted to Capital gain on land and building only. Further period of holding being increased from 3 years to 5 years.


 Conversion of stock in trade to capital asset to be charged as business income in the year of  conversion on Fair Market value on the date of conversion.






 Revised fiscal deficit estimate for 2017-18 is 3.5% of GDP, fiscal deficit of 3.3% expected for 2018-19.




 Government proposes to set up 5 lakh wifi-hotspots that will provide internet to five crore rural  citizens in 2018-19.


 Government provided Rs10,000 crore for creation and augmentation of telecom infrastructure in  2018-19.

 Government_doesn't_consider cryptocurrencies as legal tender or coins. Will take all measures to prevent use of crypto-assets to finance illegitimate activities.




 Rs 1,48,528 crore is the capital expenditure for the Indian Railways for 2018-19... All trains to be  progressively provided with WiFi, CCTV and other state-of-the-art amenities.


 All railways stations with more than 25,000 footfall to have escalators.


 12,000 wagons, 5160 coaches and 700 locomotives being procured. There is significant achievements of physical targets by Railways.


 Focus will be on safety, maintenance of railway tracks, increase in use of technology and fog safety  devices.


 Redevelopment of 600 major railway stations has been taken up; Mumbai transport system is being  expanded; suburban network of 160 km planned for Bengaluru.


 Foundation stone of the bullet train was laid in September 2017. An institute is coming up in  Vadodara to train the manpower required for the high speed railway projects.


 36,000-km of rail track renewal targeted in coming year.



 Agri-Market Development Fund with a corpus of Rs 2000 crore to be set up for developing  agricultural markets.


 Grameen Agricultural Market (GRAM) will provide farmers a means to sell directly to buyers.


 The focus is on low-cost farming, higher MSP. Emphasis is on generating farm and non-farm  employment for farmers.


 I am very happy to announce that minimum support price has been set at 1.5 times the production  cost for kharif crops: Jaitley


 The government will ensure payment of full MSP even if farmers sell below MSP.

 The Minimum Support Price of all crops shall be increased to at least 1.5 times that of the production cost.




 About 10 crore poor and vulnerable families will be targeted under healthcare protection scheme,  which will offer up to Rs 5 lakh per family. This will be the world largest government-aided programme.


 As per the national health policy 2017, health and wellness centres will be launched. Around 1.5 lakh  centres will provide free essential drugs, maternal and child services. The finance ministry allocated  Rs1200 crore for this flagship programme.


 TB patients will get Rs 500 per month for nutritional support.


 At least 24 new government medical colleges and hospitals will be set up by upgrading existing  district hospitals.


 Rs 1,200 crore for the flagship programme in health wellness centres.




 Contribution of 8.33% to EPF for new employees by the govt for three years and 12% govt

contribution to EPF in sectors employing large number of people.


 Government proposes to increase the target of providing free LPG connections to 8 crore to poor  women.





 4 new government medical colleges and hospitals to be set up by upgrading existing district hospitals.


 One medical college per every three Parliamentary constituencies.


 1,000 best BTech students to be made PM research fellows — to do PhDs in IITs and IISc. They will spend few hours every week teaching in technical institutions.


 Eighteen new schools of planning and architecure will be set up.




 Integrated B.Ed programme to be initiated for teachers, to improve quality of teachers.


 Technology will be the biggest driver in improving education.


 Budget 2018 will work with states to provide more resources to improve quality of education, says  Jaitley.




 Indian economy is on course to achieve high growth of 8%. Economy to grow at 7.2-7.5% in second half of 2018-19.

 India grew at an average of 7.5% in the first three years since 2014. It is now a $2.5 trillion economy.


 Indian economy has performed very well since our government took over in May 2014. It is now the seventh largest in the world, says finance minister Arun Jaitley.

 Government moves to remove stamp duty from financial transactions.



 To spend 14.34 trillion Indian rupees ($225.50 billion) on rural infrastructure.


 NHAI would transfer the road projects into special purpose vehicles to use innovative structures  such as infrastructure trusts for fund mobilization.



 By 2022, every block with more than 50% ST population and at least 20,000 tribal people will have 'Ekalavya'_school_at_par_with_Navodaya_Vidayalas_


 Allocation of Rs. 56,619 crore for SC welfare and Rs. 39,135 crore for ST welfare.




 Bharatmala project approved for better road connectivity at Rs 5.35 lakh crore.


 UDAN will connect 56 unserved airports in India.


 Airports Authority of India now has 124 airports, this will be expanded by 5 times. Aim of 1 billion   trips a year.



 Total 187 projects sanctioned under the Namami Gange programme.


 We aim that by 2022, all poor people have a house to live in.


 Government plans to construct 2 crore more toilets under Swachh Bharat Mission.


 Air Pollution in Delhi-NCR is a cause for concern, special scheme will be implemented to support  governments of Haryana, Punjab,Uttar Pradesh and Delhi-NCT to address it and subsidise machinery for management of crop residue.


 Proposal to develop 10 prominent tourist destinations as Iconic tourism destinations.


 AMRUT programme will focus on water supply to all households in 500 cities. Water supply contracts  for 494 projects worth 19,428 core awarded.


 Emoluments of the President to be revised to Rs 5 lakh per month & emoluments of the Vice- president to be revised to Rs 4 lakh per month.


 Government is proposing changes in refixing salaries of MPs. Law will provide automatic revision of  emoluments of the MPs every 5 years indexed to inflation.




 VCFs, angel investors to get new measures for growth and new tax rules to increase funding of  startups.

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