Decisions Taken On Indirect Tax Issues for Exchange of Views Between Industry Groups and Government on Tax Related Issues or Tax Related Disputes

Decisions Taken On Indirect Tax Issues by the Forum Chaired by Dr. Parthasarathi Shome, Adviser to the Finance Minister for Exchange of Views Between Industry Groups and Government on Tax Related Issues or Tax Related Disputes

Students even not registered for classes may contact for clarification of their doubts and all query will be answered in due course of time.

For Sending your query, you should follow following format so that answer can be given in minimum time:-

Zero Rate sale – Eligibility criteria under Tamilnadu VAT

Commissioner of Commercial Taxes of Tamilnadu has recently issued a circular in which he addressed & clarified some issues on zero rate sale.

Amount Received by Partner of the Firm at the time of retirement not liable to tax

Recently Honourable High Court of Bombay in the case of "CIT vs. Riyaz A. Sheikh (Bombay High Court)" (for full case law click here)  held that amount received by partner on his retirement is not chargeable to tax as capital gains.

Compulsory online payment of service tax if tax liability is Rs.One lakh

Presently, where an assessee has paid Service tax or Central Excise in Cash or through Cenvat credit of Rs. 10 lakh or more in the preceding financial year, he is required to make payment of Service tax or Central Excise electronically through internet banking.

Due date of filing Delhi VAT Return extended for IInd Quarter

Due date of filing Quarterly Return of IInd quarter for FY 2013-14 under DVAT has been extended vide Circular No. 26 of 2013-14 dated 20.11.2013 . Now it can be filed upto 25^th Nov 2013 and followed by hard copy upto 28^th Nov 2013.

Copy of circular given below for reference:-

An update on House Rent Allowance - A tool of Tax planning for employees

Few days back I posted a note on exemption from house Rent allowance (“ House Rent Allowance-A tool of Tax planning for employees” ), Original post is available for who has not read it.

On the basis of queries which I have received  I am trying to include some more questions and their answers for sharing purpose and would appreciate if I get more queries:-

House Rent paid to wife eligible for HRA exemption

Recently in one of case decided by ITAT Ahemdabad ,it has been delivered that rent actually paid to wife is eligible for claiming exemption for HRA u/s 10(13A) of the Income Tax Act,1961. however it is my personal believe that utmost care shuold be taken care while claiming exemption based on the rent paid to spouse because still department will not  apraise such transactions for tax planning. detail of case law is given below for reference:-

Due date of filing Audit Report- Tamilnadu VAT

As per Rule 16-A(1)  of TN-VAT Rules, every registered dealer who is liable to get his accounts
audited u/s 63-A(1) of the Act, shall furnish the audit report in Form-WW within seven months from the end of the year in duplicate, thus for the Financial year 2012-13 dealer was supposed to file audit report by 31st Oct 2013. however due date of filing audit report has been amended and it would be 31st December 2013. it should be noted that this has been brought by amending rule itself and now due date of filing audit report for every year would be 31st December of the next year from end of the Financial year. Notification text is given below:-

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1. Due date of AR-1 under Delhi VAT
2.

Accounting treatment of the subsidy on fertilisers from the Government under the Retention Price Scheme and Valuation of stocks of finished goods lying in transit from the plant and those at warehouses.

1. A multi-unit cooperative society is registered under the Bombay Cooperative Societies Act (Act VII of 1925) as extended to the Union Territory of Delhi. The society is governed by the provisions of Multi-State Cooperative Societies Act, 1984, and the rules framed thereunder. The society is engaged in the business of manufacturing and distribution of chemical fertilisers, viz., nitrogenous fertiliser, and complex phosphatic and potassium fertilisers (NPK/DAP).

Advisory circular to CA for Audit under DVAT

Commissioner of Delhi VAT office has issued a advisory circular for auditors conducting VAT audit under DVAT. complete circular can be read as appended below:-

Due date of filing Annul Return for FY 2012-13 in UP VAT extended up to 30-11-2013

Due date of Filing of UP VAT Audit Report has been extended up to 30th Nov 2013 from 31st Oct 2013,details notification can be read as appended below:-

Furnish PAN of Landlord to your employer if paying rent more than Rs.1.00 lakh per annum

If annual rent paid by the employee to his/her land lord exceeds Rs 1,00,000 per annum, it is mandatory for the employee to report PAN of the landlord to the employer. In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.

New procedure for import in the State of UP

Commissioner, Commercial Tax, UP assuming powers u/s 50(1) of the UP Vat has vide his Order no. 1584 dt. 4.1013 (Circular No. 1314057 dt. 7.10.13) provided new procedure for import of specified 25 class of Goods into the State of UP wef 28.10.2013 as under :

TAXATION OF NON-RESIDENTS

Who is a ‘resident’ for tax purposes? (Section 6)

1. INDIVIDUAL

1. An individual is considered as a ‘resident’ if he is

1. in India for 182 days or more in a previous year

OR

2. in India for 365 days or more in 4 years immediately preceding a previous year and 60 days or more in a previous year

Pay Self Assessment Tax to avoid getting Notice from Income Tax department

Assessees whose tax liability as per ITR is more than Rs.100/- are supposed to pay their tax liability on or before due date of filing their ITR. however it has been noticed by the Income Tax Department that some of assessee filed their ITR within due date but forget to pay tax. Now department has issued circular advising all such assessees to pay tax before getting notice to avoid penal consequences. detailed circular is appended below for reference of guest/member of the blog:-

CBDT Extends Due Date For Filing Tax Audit Report For AY 2013-14

The CBDT has issued an order dated 24.10.2013 under section 119 of the Act in continuation of the order dated 26.09.2013 directing that in cases where the ‘due date’ of furnishing reports of audit and corresponding income-tax returns was 30th September 2013 and where the same are furnished electronically on or before 31st October 2013, such reports of audit and returns of income shall be deemed to have been furnished within the ‘due date’ prescribed under section 139(1) of the Income-tax Act, 1961

source:- http://www.itatonline.org/info/index.php/cbdt-extends-due-date-for-filing-tax-audit-report-for-ay-2013-14/

Food/Beverages services provided by Canteen exempt from Service Tax

Amendment to Mega Exemption Notification - Food or Beverages Services provided by a Canteen exempt from Service TaxCBEC vide Notification No. 14/2013 - ST., Dated: October 22, 2013 has exempt the food or beverages services provided by a canteen by inserting entry no. 19A in the Mega Exemption List. The entry provides as under :"19A. Services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year."[Notification No. 14/2013 ST dated 22.10.2013]Source: www.cbec.gov.in 

Labour Cost Control

Labour is another important element of cost and for overall cost control and cost reduction, of labour cost is of paramount importance. However, for control and reduction of labour cost, it is essential to compute the labour cost in a scientific manner and hence there should be proper systems of systems and processes and documentation, which will help computation of labour cost in a scientific manner.

Attention should also be paid to the productivity aspect. Low productivity results in higher labour cost per unit while higher productivity will reduce the labour cost per unit.

Various aspects of labour cost control

The following steps will be useful in controlling and reducing the labour cost.

Guidelines for the guidance of the assesses and their representatives in Appeal under Income Tax

The Appellate Tribunal has, vide F. No. 114-Ad(AT)/69, dated 13-4-1970, laid down the following guidelines for the guidance of the assesses and their representatives:

1. In all communications addressed to the Tribunal by the parties with regard to appeals or applications or crossobjections the number thereof, or, if the number is not known, the date of filing thereof, should invariably be given. Failure to furnish the information will cause avoidable correspondence and needless delay in answering correspondence.

Service Tax -Reverse Charge Mechanism

What is charging section?

Services are chargeable for service tax as per provision under section 66B but who will pay service tax has been given in section 68 of the Finance Act,1994, sub-section (2) of Section 68 speaks out as to liability to pay by service recipient. 

Sec 68 (2) is worded as follows:-

- “In respect of such taxable services as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66B and all the provisions of this chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.

Provided that the Central Government may notify the service and the extent of service tax which shall be payable by such person and the provisions of this chapter shall apply to such person to the extent so specified and the remaining part of the service tax shall be paid by the service provider.”

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Labour Turnover

            Labour Turnover

            It is the rate of change in the labour force during a specified period measured against a suitable index.  The standard or usual labour turnover in the industry or locally or the labour turnover rate for a past period may be taken as the index or normal against which actual turnover rate is compared.  The methods of calculating labour turnover are given below :

Declaration Forms under CST Act,1956

Central Sales Tax (CST) is a tax on Sale levied by Central Government under the provisions of Central Sales Tax Act, 1957. As per the provisions of this Act, any movement of goods from one State to another on account of :-

(a)  sale/purchase, or

(b)  Transfer of document of Title to goods between two separate parties is considered as Interstate sale/purchase.

All such transactions are liable to CST.

Any movement of goods otherwise than as sale (i.e. stock transfer to Branch, Depot, Consignment Agent or for Job work etc) , sent outside the state , is exempted from levy of CST.

Any movement of goods, sent outside the country , is exempted from levy of CST. Example Exports, or Deemed Exports.

Also some of the Interstate transactions are exempted if goods are supplied to Special Economic Zones or to UN or Diplomatic missions etc.

The basic CST Rate as applicable to inter-state transactions is @2% but this basic rate or exemption from CST would apply if purchasing dealer issue the prescribed statutory forms to the selling dealer.

Some of the points relating to CST rates are as follows:

Input Tax Credit Provisions in brief- Bihar and Kerala

State	BIHAR  {Sec.16 / Rule 12,14,15,}	KERALA  {Sec.11,12,13 / Rule 12-A,12-C,13,14,15,46,47,47-A}
Full VAT Input Tax Credits - Eligibility / admissibility & purposes specified	On VAT-paid purchases upon receipt of Tax invoice; for Sale/resale of taxable goods in/from Bihar; for Capital goods for resale or manufacture of taxable goods; Use in manufacture / packing of taxable goods for sale	On ALL VAT-paid goods purchased, for purposes of Resale in/from Kerala, for use in works contracts, for use as input/capital goods in manufacture / processing of goods; for packing; for inter-State sale.

Input Tax Credit provisions in brief- Andhra Pradesh Assam

State	ANDHRA  PRADESH    {Sec.13,22,38 / Rule 16,20}	ASSAM  {Sec.11,14,15 / Rule 9,11,12}
Full VAT Input Tax Credits - Eligibility / admissibility & purposes specified	On ALL VAT-paid goods at point of purchase on receipt of Tax invoice during Tax period, if such goods are for use in business;                                 E.T. paid eligible for adjustment against output VAT.	On VAT-paid purchases in Tax period following after receipt of Tax invoice; for Sale/resale of taxable goods in/from Assam; for Capital goods for manufacture of taxable goods; Use in manufacture/packing of taxable goods for sale

Service Tax on services provided by directors to the Company

Reverse charge mechanism was introduced purposefully to cover unorganized sectors like GTA or cover small service providers because for them paying tax may not be a problem but understanding of legal provisions and then complying with those provisions could really have become difficult but now reverse charge has become fashion and government applying to any sector even those sector can understand the law and can manage as well. Reverse charge on legal service/ service by directors to the company are the best example where Government collecting tax on reverse charge basis while it should have been directly collected through these service providers themselves.

Amendment in service tax on construction , complex services

Amendment in service tax on construction , complex services

CBEC has amended Notification No. 26/2012- ST dated 20.06.2012 with a view to remove the ambiguity prevailing on the rate of abatement of service tax on construction of residential unit.

Revised ST 3 -Service Tax

è The ST- 3 return filing which was due by 25-10-2012 for the period “01-04-2012 to 30-06-2012”, but data has been provided for the period 01^st April 2012 to 30^th June 2012 (one quarter only) as per CBEC instruction vide letter F.No.137/22/2012 dated 28^th September 2012.

Karnataka Budget 2013-14

Highlights of Karnataka Budget Speech - 2013-2014 and amendments proposed in various Commercial Tax & Other Laws:

      Karnataka VAT Act, 2003:

Ø  Change in Tax Rates:

• The general rate of VAT which was increased from 5 % and 14 % to 5.5 % and 14.5 % respectively, earlier, shall continue to be  applicable up to 31.07.2013 and shall be reduced to the original rates with effect from August 2013
• VAT exemption on paddy, rice, wheat, pulses and products of rice and wheat extended for one more year from 01.04.2013

Hon'ble Delhi High Court Held CBEC Circulars ultra vires regarding CA’s liability to pay higher service tax rate on services rendered/ invoice raised before 01.04.2012 but payment received thereafter

Hon'ble Delhi High Court Held that CBEC Circular is ultra vires regarding CA’s liability to pay higher service tax rate on services rendered/ invoice raised before 01.04.2012 but payment received thereafter

Del-VAT- Extension of due date of Filing of online returns for third quarter of 2012-13

GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI
DEPARTMENT OF TRADE AND TAXES
No.F.7(420)Policy/VAT/2011/1144-1151                                              New Delhi: 23.01.2013
CIRCULAR No. 27 OF 2012-13
Subject:  Filing of online returns for third quarter of 2012-13

In order to facilitate the filling of online DVAT/CST returns, in exercise of the powers conferred under Rule 49A of the DVAT Rules, 2005, the last date of online filing of return for the third quarter of 2012-13 is extended upto 01.02.2013. The last date of filing of hard copy of the return for the above return period is also extended upto 05.02.2013.

Get Service tax Registration certificate modified as per new accotuting code

1.	Modifications in ST 1 and ST 2 and New Accounting Codes:
	1.  New Registrants: In terms of Notification No 48/2012 dated 30.11.12 ( Click here to see the Notification), Service Tax Registration Application Form (ST-1) has been modified and is available in ACES for use by the new applicants seeking registration as a Service Tax assessee.Earlier, vide Notification No 19/2012 dated 5.6.12 effective from 01.07.2012

Centralised Registration under Service Tax-List of Documents to be submitted

LIST OF DOCUMENTS AND THE CHECK-LIST FOR APPLICATION OF CENTRALISED REGISTRATION under Service Tax (As per trade Notice )