Charge maximum penal amount on TDS defaulters: CBDT
The Central Board of Direct Taxes (CBDT) today directed its field formation to levy the highest penal rate of tax on TDS (tax deducted at source) defaulters. Following a sharp shortfall in revenue from TDS collection, the Income Tax Department has launched a massive drive across the country to detect and inquire into TDS payments of companies — especially on payments made and salaries disbursed. Tax searches have revealed that several small and medium scale companies, deducted tax on various payments but failed to deposit the amount with the department. In such cases, it has been decided by the board that the departments can charge the highest level of penal rate of tax – that is 300 per cent. Besides, the income tax department has disallowed all expenses incurred by third party administrator companies (TPAs) across the board. The existing practice is to deduct the expenses from the total earnings before arriving at the taxable income. Department officials said the decision to disallow the expenses have been taken since they do not deduct tax while paying premium to the insurance companies. The department has raised around Rs 117 crore in TDS amount from six TPAs. The disallowance of expenses comes under section 40I(a)(i) of the Income tax Act 196 that is invoked for non payment of TDS. Officials said a similar amount has been disallowed as deduction from income. Searches have revealed that TPAs have not been deducting TDS on premium payments, even though the CBDT had come out with a separate notification to charge TDS on premium payments made by TPAs. TPAs are third party administrators who processes insurance claims and provides certain aspects of employee benefits for a separate entity. While the CBDT has collected Rs 35,510 crore from TDS in the Mumbai region this financial year (against total tax collections of Rs 98,550 crore), for the same period last year they had recovered Rs 36,312 crore (from the total regional collection of Rs 93,000 crore). The target for collection of TDS in the current financial year for the region is Rs 58,000 crore. About 40 per cent of Mumbai's total tax collections are from TDS, and the region also makes for the bulk of the all-India collections under this head. Earlier, the department had conducted a survey of all major mobile telecom companies, with the idea of taxing discounted cash cards sold to retailers. Mobile companies sell cash cards to retailers at a discounted rate but then these are sold to customers at the maximum retail rate, earning a profit. "The companies should have deducted tax before selling cash cards to retailers," said an official. – www.business-standard.com
CA institute wants flexibility to cos on depreciation rates
The CA institute favours a regime where depreciation rates for company law purposes are based on the useful life of an asset. The depreciation rates should also be indicative and not prescriptive as is the case now, Mr Amarjit Chopra, President of Institute of Chartered Accountants of India (ICAI), has said. Also, the Centre should set up working groups to decide on separate depreciation rate for regulated industry sectors such as power, oil and gas and telecom, says Mr Chopra. Currently, depreciation rates are specified under the Company Law through Schedule XIV, which is rule-based. Schedule XIV rates specify the minimum rates in the sense that companies can adopt rates higher than those prescribed, but with enough justification. However, companies today are not permitted to adopt rates lower than the Schedule XIV rates even if the bonafide technological evaluation makes a case. If indicative rates are spelt out, a company would have the flexibility to adopt either a lower or higher rate. Under the scheme of the proposed company law, the depreciation rates are to be delegated to the rules. So every time the rates are to be changed, the Government need not go for Parliament approval, sources said. Sticking to timeline Meanwhile, the ICAI President also said that the CA institute will stick to its earlier timeline of April 1, 2011 for making the accounting standards on financial instruments mandatory. The existing accounting standards AS 30, AS 31 and AS 32 are now recommendatory in nature. On international financial reporting standards (IFRS), Mr Chopra said that the CA institute will in the next three months converge its current accounting standards with the IFRS and send it to the National Advisory Council for Accounting Standards (NACAS) for its approval. India is looking to converge its Generally Accepted Accounting Principles (GAAP) with that of IFRS from April 1, 2011 over three phases. – www.thehindubusinessline.com
Tax only when interest credited to fixed deposits: CBDT
No income tax at source will be deducted if banks have only made a provision for interest on fixed deposits and not actually paid it to the depositor, the Finance Ministry has clarified. Until now, tax was supposed to be deducted by banks even if only provisioning was made for interest payment. However, this was creating problems for banks using Core-Branch Banking Solutions (CBS), which enables customers to access their accounts from any branch. The Indian Banks' Association in a representation to the Income Tax department had said that for banks using the CBS software, interest payable on fixed deposits is calculated generally on a daily or a monthly basis but is parked in the provisioning account for monitoring only. The interest is actually credited to the depositor's account either at the end of the financial year or at periodic intervals or on maturity of the deposits. The matter was considered by the Central Board of Direct Taxes to plug this loophole. According to a Finance Ministry official, CBDT clarified that since no credit is given to the depositors while calculating interest on fixed deposits on daily or monthly basis in the CBS software used by banks, tax need not be deducted at source on such provisioning of interest. "In such cases, tax shall be deducted at source on accrual of interest," the board clarified, according to a source. Income tax is charged at the rate of 10 per cent on interest income of more than Rs 10,000 in a year. – www.economictimes.indiatimes.com
FOR THE ATTENTION OF THE MEMBERS
Bank Audits for the FY ended 31.03.2010
The bank audit season is around the corner. Banking being an industry
typical in terms of its geographical and customer spread, volume of
transactions as well as the types of products and services offered
coupled with the time constraints for completing the audits, the
members face a number of issues in their bank audit assignments. To
help the members in fast resolution of those issues, the Auditing and
Assurance Standards Board of the Institute of Chartered Accountants of
India is constituting a panel of experts to address queries of the
members relating to audits of banks and bank branches for the year
ended March 31, 2010.
The expert panel would receive queries only from March 23, 2010 to April 10, 2010.
Members may send their queries during these dates at bankauditfaq@icai.org.
Members are, however, requested to note that the responses given by the
expert(s) would be the personal views and opinions of the expert(s)
concerned. The Auditing and Assurance Standards Board or the Institute
of Chartered Accountants of India may not necessarily subscribe to the
views and opinions of the expert(s) nor do they accept any
responsibility for the actions taken by the members based on the
responses of the expert(s).
CA STUDENT MISUSED STAMPS OF CHARTERED ACCOUNTANTS
Posted by: "CA. Gurdeep Singh Chawala" cagsc@yahoo.com cagsc
Mon Mar 22, 2010 10:03 pm (PDT)
n the wake of a chartered accountancy student's arrest last week for allegedly forging documents using a CA's stamps and seals, the Pune branch of the Institute of Chartered Accountants of India (ICAI), now suspects the accused may have misused stamps and seals of more chartered accountants in the city. Shahajahan Khurshid Khan allegedly made duplicates of stamps and seals of CA Sunil Shankar Yelol with Yelol's ICAI membership number for tax audit of M/S Jagtap Automobiles and duped Yelol of Rs 9.80 lakh.The incident came to light when Jagtap Automobiles decided to hand over their audit work to another CA, Vijay Anpat. Following the CA protocol, Anpat called up Yelol to obtain his no-objection certificate about the handover. Yelol realised that Jagtap was not his client, but thestamps and seals carried his membership number.According to the ICAI legal advisor, advocate VB Khatri, Khan may have used the stamps and seals for
people who had applied for bank loans to get TDS refunds and so on."Khan's police statement mentions that he has been operating for the last three years. He might have used the stamps on many other financial statements. We suspect that the fraud could run into crores of rupees," Khatri said.SB Zaware, member, central council of ICAI, said, "Considering that Khan may have misused stamps of other CAs too and to speed up the investigation in this matter, we appeal to all the chartered accountants in the city to contact the institute and record their statements with the police. Khan has been remanded in magisterial custody."We have been requesting the police to recover the duplicate stamps and seals used by Khan. We have also asked them to find the hard disk of Khan's computer," he added."The ICAI appeals that financial statements prepared with the help or advise of Shahajahan Khurshid Khan by any other person with
original documents for verification be submitted to the chairman, (Pune Branch), ICAI, fifth floor, Amber chambers, 28-A, Budhwar Peth," said a statement
-CA.RAJU SHAH, Ahmedabad
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