Registrar of Companies Compliance by CA Prashant Doshi

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The Companies Bill 2012 by CA Prashant Doshi

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TDS ON REMUNERATION PAID TO DIRECTORS u/s 194J(1)(ba) of INCOME TAX ACT,1961

The newly inserted clause (1)(ba) of 194J  reads as under:

Any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company shall liable to be deducted @10%...Read More

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Section 80TTA Income Tax

A New Section 80 TTA is  introduced to provide deduction to an individual or a Hindu undivided family in respect of interest received on deposits (not being time deposits) in a savings account banks, co-operative banks and post office. The deduction is restricted to Rs 10,000.

It is also proposed to provide that where the income referred to in this section is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.

The section is applicable with effect from April 01, 2013 and will apply from AY 2013-14 and onwards.

This Article has been posted by CA Prahsnat Doshi. He can be reached at prashantdoshi22@gmail.com

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Section 80CCG of Income Tax

Newly inserted Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment made under notified equity saving scheme. The deduction under this section is available if following conditions are satisfied:

(a) The assessee is a resident individual (may be ordinarily resident or not ordinarily resident) This scheme is not available to HUF.

(b) His gross total income does not exceed Rs. 10 lakhs;

(c) He has acquired listed shares in accordance with a notified scheme;

(d) The assessee is a new retail investor as specified in the above notified scheme;

(e) The investor is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;

(f) The assessee satisfies any other condition as may be prescribed.

Amount of deduction –The amount of deduction is at 50% of amount invested in equity shares.
However, the amount of deduction under this provision cannot exceed Rs. 25,000. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any subsequent year.

Withdrawal of deduction – If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.

After reading this proposal .Few doubts has been cleared but not all .Few point which needs clarification / details regarding actual implementation of the scheme.

This Article has been posted by CA Prahsnat Doshi. He can be reached at prashantdoshi22@gmail.com

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Tax Audit U/S 44AB

o Due date of filing Income tax return for assessees who are liable to get their books of accounts audited is 30th September.

 Who has to get his accounts audited compulsorily?

o A Person carrying on BUSINESS is required to get his books of account compulsorily audited u/s 44AB If the total sales, turnover or gross receipts in business for the previous year relevant to assessment year exceed or exceeds Rs.60 Lakhs for the Assessment year 2011-12 and 2012-13 (Rs. 1 Crore from the assessment year 2013-14).

o A person carrying on PROFESSION is required to get his books of account compulsorily audited u/s 44AB, if his gross receipts in profession for the previous year relevant to the assessment year exceeds 15 lakhs for the assessment year 2011-12 and 2012-13 (Rs. 25 lakhs from the assessment year 2013-14).

o A person covered u/s 44AE, 44BB or 44BBB is required to get his books of account compulsorily audited u/s 44AB if such person claims that the profits and gains from the business are lower than the profits and gains computed under these sections(IRRESPECTIVE OF THE TURNOVER)

 Only one condition is there i.e. if such person claims that the profits and gains from the business are lower than the profits and gains computed under these sections

o A person covered u/s 44AD is required to get his books of account compulsorily audited u/s 44AB if such person claims that the profits and gains from the business are lower than the profits and gains computed in accordance with the provisions of section 44AD (1) and if his income exceeds the maximum amount which is not changeable to tax (i.e. basic exemption limit).

 Two conditions are there

 IF such person claims that the profits and gains from the business are lower than the profits and gains computed under these sections and 
 IF his income exceeds the maximum amount which is not changeable to tax (i.e. basic exemption limit).

 Forms and due date:

o Forms No. 3CA, Form No. 3CD in case of person who carries on business or profession and who is required by or under any law to get his accounts audited and

o Form No. 3CB and Form No. 3CD, in case of a person who carries on business or profession but not being a person referred to above.

 Due date for getting the books audit and filing of return in both the above cases is the due date of furnishing return u/s 139(1) i.e. 30th September of the relevant assessment year.

 Audit under any other law:

o In case where the accounts are required to be audited by or under any other law(as in the case of companies and cooperative societies), it is sufficient if accounts are audited under such other law before September 30 of the assessment year and the assessee obtains before the said date, audit report as required under such law and also a report of audit from a chartered accountant in the audit forms under Income Tax Act i.e. Forms No. 3CA, Form No. 3CD

 No penalty u/s 271B if audit report obtained within due date but return filed after due date:

o After the introduction of new annexure less return forms, the audit report u/s 44AB is not required to be attached with the return.

o It should not be furnished separately also before or after the due date.

o However, an assessee should get the audit report before the due date of the furnishing of the return and should fill the relevant columns of return forms on the basis of such report.

o The assessee should retain the report with himself. It may be furnished at the time of assessment proceedings.

o No penalty shall be attracted for not furnishing the audit report on or before due date.

o However, if audit report is not obtained before due date, penalty u/s 271B shall be attracted.

 Quantum of Penalty for failure to get accounts audited within due date:

o If any person fails to get his accounts audited as required under the provisions of section 44AB before the due date u/s 139(1), the AO may impose penalty which may be a sum equal to one-half percent of the total sales, turnover or gross receipts subject to a maximum of Rs. 1.5 Lakh.

 Section 44AB applicable to only business Income:

o Section 44AB provisions are applicable only in the case of business /  profession income.

o It is not applicable in respect of other incomes. Thai Constructions v. State of Maharashtra [2009] 184 Taxman 52 (Bom.).

 Turnover in case of broker:

o Transactions by a share broker of sale or purchase of shares on behalf of parties cannot amount to ‘sale turnover or receipt’ of share broker himself within the meaning of section 44AB-CIT v Hasmukh M. Shah[2003] 85 ITD 99 (Ahd.)

 Work-in progress:

o Value of work in progress in case of the assessee engaged in construction of shop/flats would not constitute ‘turnover’ within the meaning of section 44AB-CIT v B.K Jhala & Associates [1999] 69 ITD 141 (Pune).

This Article has been posted by CA Prashant Doshi. He can be reached at prashantdoshi22@gmail.com

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Interest U/S 234A, 234B 234C

INTEREST U/S 234A: If a return of income is furnished after the due date or is not furnished, the assessee is liable to pay simple interest @1% P.M. or part of a month[1] on the amount of tax payable from due date till the date of filling of return, that means if the annual income tax return not filled within the stipulated time period {i.e. 30^th September for 2012-13 relevant previous year} than interest charged from the mandatory and statutory due date for filling of return till the actual date of filling of return.

IMPORTANT NOTES U/S 234A:

1.        SELF–ASSESSMENT TAX PAID BEFORE THE DUE DATE AND RETURN SUBMITTED AFTER DUE DATE: Interest would not be payable in a case where tax has been deposited prior to due date of filing of Income Tax Return even if the return of income is filed after the due date of furnishing such return.

2.       WHEN ASSESSMENT IS MADE FOR THE FIRST TIME U/S 147: A belated return cannot be submitted after the expiry of one year from the end of the assessment year. If an assessment is made for the first time u/s 147, then the assessee cannot be made liable to pay interest for the period during which it was not possible on the part of the assessee to file return till issuance of notice u/s 148.

3.       INTEREST IN THE CASE OF REASSESSMENT {SECTION 234A (3)}: If return of income is not submitted or submitted belatedly in the course of reassessment proceedings. Interest in such a case is payable by the assessee @1% P.M. for the period of default. The period of default commences on the date immediately following the expiry of time given by notice u/s 148 or 153A and ends on the date of furnishing of return (or on the date of completion of reassessment u/s 147 or 153A where no return has been furnished). Interest is payable on the amount by which the tax on the total income as reassessed exceeds the tax on the total income determined on the basis of the earlier assessment.

INTEREST U/S 234B: Under this section interest is payable as follows:

When Interest is Payable	Amount on which interest is payable	Rate of Interest	Period for which interest is payable
Assessee was liable to advance tax but has not paid.	Assessed Tax {Assessed Tax – TDS/TCS}	Simple Interest @1% P.M. or part of month.	1st day of the relevant assessment year till the date of determination of total income u/s 143 (1) or where regular assessment u/s 143 (3) is made to the date of such regular assessment.
Assessee has paid advance tax but it is less than 90% of the amount payable	Assessed Tax {Assessed Tax – TDS/TCS} – Advance Tax already paid or deposited or deducted	Simple Interest @1% P.M. or part of month.	1st day of the relevant assessment year till the date of determination of total income u/s 143 (1) or where regular assessment u/s 143 (3) is made to the date of such regular assessment.

Note: If an assessee has paid or deposited advance tax more than 90% of the tax payable {90% includes advance tax + tax deducted at source} than no interest will be charged.

INTEREST U/S 234C: Under this section interest is payable if advance tax is not payable in time. Calculation of interest payable is as follows:

For Non-Corporate Assessee {Section 234C (1) (b)}:

When interest is payable	Rate of Interest	Period of Interest	Amount on which interest is payable
If advance tax paid on or before 15th September is less than 30% of Assessed Tax (Tax Assessed – TDS/TCS)	Simple interest @1% P.M.	3 months	30% of Assessed Tax {Assessed Tax – TDS/TCS} – Advance Tax paid till 15th September.
If advance tax paid on or before 15th December is less than 60% of Assessed Tax {Assessed Tax – TDS/TCS}	Simple Interest @1% P.M.	3 months	60% of Assessed Tax {Assessed Tax – TDS/TCS} – Advance Tax paid till 15th December.
If advance tax paid on or before 15th March is less than 100% of Assessed Tax {Assessed Tax – TDS/TCS}	Simple Interest @1% P.M.	1 month	100% of Assessed Tax {Assessed Tax – TDS/TCS} – Advance Tax paid till 15th March.

For Corporate Assessee {Section 234C (1) (a)}:

When interest is payable	Rate of Interest	Period of Interest	Amount on which interest is payable
If advance tax paid on or before 15th June is less than 12% of Assessed Tax (Tax Assessed – TDS/TCS)	Simple interest @1% P.M.	3 months	15% of Assessed Tax {Assessed Tax – TDS/TCS} – Advance Tax paid till 15th June.
If advance tax paid on or before 15th September is less than 36% of Assessed Tax {Assessed Tax – TDS/TCS}	Simple Interest @1% P.M.	3 months	45% of Assessed Tax {Assessed Tax – TDS/TCS} – Advance Tax paid till 15th September.
If advance tax paid on or before 15th December is less than 75% of Assessed Tax {Assessed Tax – TDS/TCS}	Simple Interest @1% P.M.	3 months	75% of Assessed Tax {Assessed Tax – TDS/TCS} – Advance Tax paid till 15th December.
If advance tax paid on or before 15th March is less than 100% of Assessed Tax {Assessed Tax – TDS/TCS}	Simple Interest @1% P.M.	1 month	100% of Assessed Tax {Assessed Tax – TDS/TCS} – Advance Tax paid till 15th March.

INTEREST U/S 244A: Interest is receivable by the assessee on excess amount of Income Tax paid {Income Tax Refund}, @ 0.50% P.M. or part of month thereof, from the first day of the assessment year till the date of grant of the refund.

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[1]If payment made on 1^st May than the rate of interest must be charged @ 2% i.e. for two months even though on delay for one day only i.e. on 1^st May the rate of interest charged for two months instead of one month. That is called part of a month.

This Article has been posted by CA Prashant Doshi. He Can be reached at prashantdoshi22@gmail.com

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Difference Between Company VS Partnership VS LLP

Features	Company	Partnership firm	LLP
Registration	Compulsory registration required with the ROC. Certificate of Incorporation is conclusive evidence.	Not compulsory. Unregistered Partnership Firm will not have the ability to sue.	Compulsory registration required with the ROC
Name	Name of a public company to end with the word “limited” and a private company with the words “private limited”	No guidelines.	Name to end with “LLP”” Limited Liability Partnership”
Capital contribution	Private company should have a minimum paid up capital of Rs. 1 lakh and Rs.5 lakhs for a public company	Not specified	Not specified
Legal entity status	Is a separate legal entity	Not a separate legal entity	Is a separate legal entity
Liability	Limited to the extent of unpaid capital.	Unlimited, can extend to the personal assets of the partners	Limited to the extent of the contribution to the LLP.
No. of shareholders / Partners	Minimum of 2. In a private company, maximum of 50 shareholders	2- 20 partners	Minimum of 2. No maximum.
Foreign Nationals as shareholder / Partner	Foreign nationals can be shareholders.	Foreign nationals cannot form partnership firm.	Foreign nationals can be partners.
Taxability	The income is taxed at 30% + surcharge+cess	The income is taxed at 30% + surcharge+cess	Not yet notified.
Meetings	Quarterly Board of Directors meeting, annual shareholding meeting is mandatory	Not required	Not required.
Annual Return	Annual Accounts and Annual Return to be filed with ROC	No returns to be filed with the Registrar of Firms	Annual statement of accounts and solvency & Annual Return has to be filed with ROC
Audit	Compulsory, irrespective of share capital and turnover	Compulsory	Required, if the contribution is above Rs.25 lakhs or if annual turnover is above Rs. 40 lakhs.
How do the bankers view	High creditworthiness, due to stringent compliances and disclosures required	Creditworthiness depends on goodwill and credit worthiness of the partners	Perception is higher compared to that of a partnership but lesser than a company.
Dissolution	Very procedural. Voluntary or by Order of National Company Law Tribunal	By agreement of the partners, insolvency or by Court Order	Less procedural compared to company. Voluntary or by Order of National Company Law Tribunal
Whistle blowing	No such provision	No such provision	Protection provided to employees and partners who provide useful information during the investigation process.

This Article has been posted by CA Prashant Doshi. He Can be reached at prashantdoshi22@gmail.com

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