TAX REBATE U/S 87A

A new section 87A by Finance bill 2013 has been introduced for Income Tax Deduction of Rs. 2000/- for Assessment Year 2014-15.  This rebate can be availed Tax payer/Assessee under section 87A.It is necessary to read clauses 19 and 20 of the bill to make it more clear-

Clauses 19 and 20 of the Bill seek to amend section 87 and insert a new section 87A in the Income-tax Act relating to rebate of income-tax in case of certain individuals.

The proposed new section 87A seeks to provide that an assessee, being an individual resident in India, whose total income does not exceed five Lakhs, shall be entitled to a deduction(  U/s 10,16,80C and under chapter VI A), from the amount of income on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent. of such income-tax or an amount of two thousand rupees, whichever is less.

Consequential amendments have been proposed in section 87, so as to provide reference to proposed new section 87A.

Points of consideration….

These amendments will take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

Rebate is available  only to individuals

If your tax is less than 2000/- you will not get refund.

No rebate to Non Resident.

Shubhi Goel

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INPUT TAX CREDIT

INPUT TAX CREDIT

Manufacturer will be entitled to credit of tax paid on inputs used by him in manufacture. A trader (dealer) will be entitled to get credit of tax on goods which he has purchased for re-sale

No credit is available in case of inter-state purchases. 
Credit will be available of tax paid on capital goods purchased within the State. Credit will be available only in respect of capital goods used in manufacture or processing. The credit will be spread over three financial years and not in first year itself. There will be a negative list of capital goods  . Some States allow credit at one go while some allow over a period of 12 months and so on. 
Credit will be available as soon as inputs are purchased. It is not necessary to wait till these are utilised or sold [para 2.3 of White Paper on State-Level VAT). 
No credit of CST paid : Credit of Central Sales Tax (CST) paid on inputs and capital goods purchased from other States will not be available

Non-availability of input credit in certain cases : 
Credit of tax paid on inputs will be denied in following situations - No credit if final product is exempt - Credit of tax paid on inputs is available only if tax is paid on final products. Thus, when final product is exempt from tax, credit will not be availed. If availed, it will have to be reversed on pro-rata basis. 

If the final products are transferred to another State as stock transfer or branch transfer, input credit availed will have to be reversed on pro-rata basis, which is in excess of 4%. In other words, in case of goods sent on stock transfer/branch transfer out of State, 4% tax on inputs will become payable e.g. if tax paid on inputs is 12.5%, credit of 8.5% is available. If tax paid on inputs is 4%, no credit is available. Thus, the VAT as introduced is State VAT and not a national VAT. 

In following cases, the dealer is not entitled to input credit –

(a) Inputs used in exempted final products

(b) Final product not sold but given as free sample

(c) Inputs lost/damaged/stolen before use. If credit was availed, it will have to be reversed. 

Generally, in following cases, credit is not available –

 (a) Purchase of automobiles (except in case of purchase of automobiles by automobile dealers for re-sale)

(b) fuel.

There are variations between provisions of various States. 

Certain sales are ‘zero rated’ i.e. tax is not payable on final product in certain specified circumstances. In such cases, credit will be available on the inputs i.e. credit will not have to be reversed. Distinction between ‘zero rated sale’ and ‘exempt sale’ is that in case of ‘zero rated sale’, credit is available on tax paid on inputs, while in case of exempt goods, credit of tax paid on inputs is not available. 

Export sales are zero rated, i.e. though sales tax is not payable on export sales, credit will be available of tax paid on inputs. In respect of sale to EOU/SEZ, there will be either exemption of input tax or tax paid will be refunded to them within three months

SOME MORE CLARIFICATION

Where Inputs Are Partly Used For Making Taxable Goods (Or Inter-State Sales) And Partly For Making Exempt Goods, The Tax Credit Shall Be Reduced Proportionately. To Illustrate, X Purchased Machinery For Rs. 10 Lakh And Paid A Tax Of Rs. 1,25,000 On It And Used It In The Manufacture Of Taxable As Well As Exempted Goods. At That Time, He Estimated That The Share Of Taxable Goods Made By The Machinery Would Be 80 Per Cent. In This Case, His Input Tax Credit Will Be Restricted Only To 80 Per Cent Of Rs. 125,000 Or Rs. 1,00,000. 

There Is No Need For A `One To One Correlation Between Input Tax Credit And Output Tax. Quite A Number Of Small Businesses Are Under The Misconception That Input Tax Has To Be Adjusted Against Output Tax On A Bill To Bill Basis. 
The Operation Of The Input Tax Mechanism Is Simple. The Dealer Will Be Eligible To Take Credit For The Eligible Input Tax In A Tax Period As Specified On The Entire Purchases. He Will Charge VAT At The Prescribed Rate As Is Done In The Present System For Levy Of Sales Tax. The VAT Or Output Tax Payable Is Compiled On A Monthly Basis As Is Done Now. The Dealer Can Adjust The Input Tax Eligible On The Entire Purchase In The Tax Period Against The Output Tax Payable Irrespective Of Whether The Entire Goods Purchased Are Sold Or Not. For Example, If The Input Tax Credit In A Particular Month Is Rs. 1,000 And The Output Tax Payable Is Rs. 500, The Excess Input Tax Of Rs. 500 Can Be Carried Forward To The Next Tax Period. 
Assuming No Further Input Tax Credit In The Following Month And That The Output Tax Payable Is Rs. 700 The Dealer Will Pay Rs. 200 Along With The Monthly Return.

SHUBHI GOEL

Shubhigoel1989@gmail.com

*THIS ARTICLE IS COMPILED BY STUDENT OF ICAI 

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DEDUCTION U/S 80DDB UNDER INCOME TAX ACT

Deduction u/s 80DDB can be claimed by individual or HUF for medical treatment for the following diseases and should have paid the expenses on yourself, spouse, children, parent, brother or sister:

1  1 Neurological diseases

·            Dementia

·            Dystonia Musculorum Deformans

·            Motor neutron disease

·            Ataxia

·            Chorea

·            Hemiballismus

·            Aphasia

·            Parkinson’s Disease

2 Malignant Cancer

3 Full blown acquired immune deficiency syndrome (AIDS)

4 Chronic renal failures

5 Hemophilia

6 Thalssaemia

CERTAIN POINTS OF CONSIDERATION

• Maximum Deduction actual expense or 40000/- whichever is higher, if the person going under treatment is senior citizen then limit is 60000/-
• To claim deduction one has to produce certificate from specialist government doctors in Form 10-I.
• In case of Neurological diseases-obtain certificate from Oncologist.
• In case of Malignant Cancer from nephrologists.
• In case of Hemophilia from a specialist with degree in Hematology 
• You can get a certificate from a specialist even if the treatment is being undergone in a private hospital.
• No such deduction shall be allowed unless the assessee furnishes with the return of income, a certificate in such form as may be prescribed, from a neurologist, oncologist, a urologist, a hematologist, an immunologist or such other specialist, as may be prescribed, working in a Government hospital.
• The deduction under this section shall be reduced by the amount received, if any, under insurance from an insurer, or reimbursed by the employer, for the medical treatment of the person referred above.

This article is compiled by Student of ICAI SHUBHI GOEL. She can be reached at Shubhigoel1989@gmail.com

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FORMS & PROCEDURES UNDER CST

PROCEDURE:

Every dealer who effects inter-state sale is required to register with State sales tax authorities who are empowered to grant registration under CST Act. Application should be in form ‘A’. Security has to be furnished. Certificate of registration will be in form ‘B’.

PROCEDURE FOR REGISTRATION

 1. The dealer must make an application to the concerned authority in the appropriate state, in Form A within 30 days of the day when he becomes liable to pay tax. The form contains the following details.

(i) Name of the manager of business

(ii) Name and addresses of proprietor or partner of the business.

(iii) Date of establishment of business.

(iv) Date on which first inter-state sale was made.

(v) Name of the Principal place and other places of business in the appropriate state.

(vi) Particulars of any license held by the dealer.

 2. Single Place of business – If a dealer has single place of business in the appropriate State and he is registered in that state, he shall apply to the sales tax authority of that state only for obtaining registration under central sales tax Act

3. More than one place of business in the same state – If a dealer has more than one place of business in the same state , he shall select one of these places as the principal place of business and , get only one certificate of registration.

4. More than one place of business in different states. If a dealer has more than one place of Business in different states, he will get a separate certificate of registration with respect to each state.

5. Fees for Registration is Rupees twenty five to be paid in cash or court fee stamp.

6. The application has to be signed by, in case of –

• Sole proprietorship , the proprietor

• Partnership firm, any one the partner

• HUF, the karta

• Company, the director

• Government, authorized officer

Grant of Certificate of Registration sec 7 (3)

If the application is in order and assessing officer is fully satisfied with the facts contained therein, he will register the dealer under this Act and issue a certificate of Registration in Form B. If a dealer has more than one place of business then additional copies of certificate will be issued.

All items of purchase and sale must be included in CST Registration Certificate. Otherwise, these are not eligible for purchase at concessional rate.

FORMS

Form C, E-I/E-II, F, G, H, I and J have been prescribed to avail concessional rate of CST. Form C and E-I/E-II and F are required to be collected and submitted on quarterly basis. In case of forms H, I and J, no time limit has been prescribed. F form is to be obtained on monthly basis.

If C form is lost, indemnity bond in form G is to be given and then duplicate C form can be issued.

Prescribed forms under CST

Following are the forms prescribed under CST (Registration and Turnover) Rules, 1957.

Form	Description	Frequency
A	Application for registration	Once
B	Certificate of Registration	Once
C	Declaration by purchasing registered dealer to obtain goods at concessional rate	To be obtained for every quarter and submitted on quarterly basis
D	Form of certificate for making government purchases (D form cannot be issued in case of sale made to Government on or after 1-4-2007)	No question arises after 1-4-2007.
E-I/E-II	Certificates for sale in transit	To be obtained for every quarter and submitted on quarterly basis
F	Form by branch/consignment agent for goods received on stock transfer	Monthly, but to be submitted to authorities quarterly
G	Indemnity bond when C form lost	When required
H	Certificate of Export	Upto the time of assessment by first assessing authority.
I	Certificate by SEZ unit	Not specified in rules (but should be submitted before assessment).
J	Certificate to be issued by foreign diplomatic mission or consulate in India or the UN Agency	Upto the time of assessment by first assessing authority.

This article is compiled by Student of ICAI SHUBHI GOEL. She can be reached at Shubhigoel1989@gmail.com

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SECTION 44AD (PRESUMPTVE TAXATION(A\Y 2013-14)

Applicable    : Any business except plying, hiring, or leasing goods carriage referred U/s 44AE and whose turnover is less than 100 lacs. It covers manufactures, jobworkers, processing industry and wholesalers

Eligible Assessee  : Any resident Individual ,HUF, Partnership firms(excluding LLP) and who has not claimed deduction u/s 10AA or deduction under any provision of chapter VI-A under heading “C-Deduction in respect of certain incomes”

There has been insertion by finance act 2012 in section 44AD to exclude applicability of presumptive provision on following:-

· Person carrying profession as mentioned u/s 44AA(1) –legal, medical,  
  engineering, or architectural or accountancy profession or technical 
  consultancy or interior decoration or any other profession notified by the 
  board.

· Person earning commission in nature of brokerage.

· Person carrying agency business

CERTAIN OTHER POINTS OF CONSIDERATION

· An assessee opting for the above scheme shall be exempted from  
  maintenance of books of account related to such business as required under 
  section 44AA.

· The assessee can voluntarily declare a higher income in his return

· An assessee opting for the above scheme shall be exempted from payment 
  of advance tax related to such business.

· In the case of assessee being firm, the normal deduction in respect of salary 
  and interest paid to the partners shall be allowed as deduction out of such 
  presumptive income subject to conditions and limits specified in clause (b) 
  of section 40.

· In case assessee claims that he has earned income lower than specified 
  percentage and such income is more than maximum amount not chargeable    
  to tax, Ss. 44AD(5) and 44AA(2)(iv), mandates him to maintain books of 
  accounts and other documents as specified u/s 44AA, get them audited from 
  the accountant and furnish report as required u/s 44AB.

This article is compiled by Student of ICAI SHUBHI GOEL. She can be reached at Shubhigoel1989@gmail.com

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CERTAIN SECTIONS OF INCOME TAX ACT RELATED TO TDS

SECTION 194J(1)(ba)

In accordance with newly inserted clause 1(BA) in Section 194J, TDS @ 10% is to be deducted from any remuneration paid to Directors of accompany. This clause reads as follows

“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%"

This issue has been divided into 2 parts

a)  Salary: Provisions of section 192 are attracted when the payments are made in the nature of salary. It clearly means that under such situations directors are considered as an employees of the company.

b) Professional services: It may be noticed that directors’ remuneration includes payments made to Directors for services rendered in any other capacity as per the Companies Act, 1956. To further clarify this type of payments to directors the relevant sections of companies Act, 1956 i.e. section 198 and 309 can be relied upon.  This section reveals that remuneration paid to whole time director/ managing director include payments made on account of Commission, Sitting fees,any other fees paid for rendering professional services.

It is now clear that before amendment section 194J used to apply only on amount paid for professional and technical services but with above said insertion, the sitting fees and commission paid and any payment by whatever name are dragged in Section 194j

SECTION 271H

Failure to deliver statement within time prescribed u/s 200 (3) or to the proviso to sub-section (3) of section 206C may liable to penalty which shall not be less than Rs. 10,000/- but which may extend to Rs. 1,00,000/-. No penalty if payment of tax deducted or collected along with fee or interest and delivering the statement aforesaid before the expiry of 1 year from the  time prescribed for delivering the such statement. However No penalty shall be imposed u/s 271H if the person proves that there was reasonable cause for the failure.(section 273B).

Here is brief description

Sl. No	TDS Statement	Due date	Date up to which no penalty u/s 271H can be imposed
1	30th June	15th July 2013	15th July 2014
2	30th September	15th October 2013	15th October2014
3	31st December	15th January 2014	15th January 2015
4	31st March	15th May 2014.	15th May 2015

194-IA

Clause 42 of the Bill seeks to insert a new section 194-IA in the Income-tax Act relating to payment on transfer of certain immovable property other than agricultural land.

It is proposed to insert a new section 194-IA to provide that any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall deduct an amount equal to one per cent. of such sum as income-tax at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of cheque or draft or by any other mode, whichever is earlier.It is further proposed to provide that no deduction shall be made where consideration for the transfer of an immovable property is less than fifty lakh rupees.It is also proposed to provide an Explanation defining the expressions "agricultural land" and "immovable property".This amendment will take effect from 1st June, 2013.

This article is compiled by Student of ICAI SHUBHI GOEL. She can be reached at Shubhigoel1989@gmail.com

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CERTAIN CHANGES IN ITR FORMS & RETURN FILING RULES FOR A\Y 2013-14 By Shubhi Goel

Some recent amendments have been introduced by the Income Tax Department for filing Income tax Return by the assessees for the Assessment Year 2013-14. These rules have substituted many Income Tax Return Forms.

1.       SAHAJ  ITR1

Use by individual having Salary Income, house property income and  income from other sources provided if he has got any loss under the head Income from Other Sources, then such person will not be able to file Income-tax Return in Form No. SAHAJ (ITR1). Secondly, Form SAHAJ (ITR1) shall not be applicable to a person who is resident, other than not ordinarily resident in India specially if such person has assets (including financial interest in any entity) located outside India or such person has signing authority in any account located outside India. Thirdly if exempted income exceeds Rs 5000 and lastly if claiming any double taxation relief.

2.       ITR2

For individuals and HUFs not having income from business or profession.

3.       ITR3

For individuals/ HUFs being partners in firms and not carrying  out business or profession under any proprietorship.

4.       SUGAM (ITR4S)

since last year Form No. SUGAM (ITR 4S) was provided for filing Income-tax Return by the persons who are taking advantage of computing their income in terms of section 44AD or section 44AE of the Income-tax Act for computation of their business income based on a percentage of the profit. It may be noted that this return form be used only when the turnover of the business is less than Rs. 1 crore. The new amendment to Rule 12 of Income-tax Rules now provides that the provisions relating to filing of Income-tax Return in Form SUGAM (ITR 4S) will not apply to a person who is a resident, other than not ordinary resident in India and has any assets (including financial interest in any entity) located outside India or has a signing authority in any account located outside India. Likewise, the SUGAM (ITR 4 S) cannot be used by individual claiming Double Taxation Relief. Finally, the SUGAM (ITR 4 S) cannot be filed by persons having income not chargeable to tax exceeding Rs. 5,000 and such persons should file return in Form No. 4.

5.       ITR-4

For individuals and HUFs having income from proprietary business or profession.

6.       ITR-5

For firms, BOIs and AOPs

  

In the Income-tax (3rd Amendment) Rules, 2013 some amendments have been brought in which are very important to know for filing a return.

It is not required by people having PAN card whose income is not taxable to file a return.

Even if someone has not disclosed all of his bank accounts the Income Tax Department can easily find out all his bank accounts in a scrutiny.

If one has a taxable income it is not safe to neglect filing of return. An Income Tax Return is useful in case of many transactions where it is necessary to produce the return.

At present all the manual filing of returns are also processed online. Hence it is useful to file return online.

A new “Schedule AL” has been introduced in the Income Tax rules this year. It contains the details of the assets as well as liabilities of any person or HUF. It has to be filled up in cases where the income of the person or HUF is more than Rs. 25 lakhs.

Electronic filing of return in some cases:

Individuals having required filing tax audit should submit the audit report with the Income Tax Return electronically.

Tax payers claiming relief of tax under the provisions of section 90 or 90A or 91 of the Income Tax Act and are filing their Return for the Assessment Year 2013-14 and the following years are going to be required to file their Income Tax Returns electronically.

But in case of the charitable trusts and educational institutions that are to file their Returns in Form No 7 need not file the Return electronically whatever be their income.

This Article has been shared by Student of ICAI SHUBHI GOEL. She Can be reached at Shubhigoel1989@gmail.com

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