March Government has taken 'one step forward' on Retro Tax issue

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1 Serving Since 1968 Lunawat Bulletin Market Watch Sensex : : Nifty : : Inside.. Compliance Due Dates 2 Income Tax 3 Corporate Law 4 Compliance window for Black Money holders is no amnesty, Says FM Arun Jaitley Finance Minister Arun Jaitley today said the domestic black money holders being offered a limited period compliance window to come clean is not an amnesty scheme as disclosures will be charged at 45 per cent as against the normal rate of 30 per cent. "In amnesty (scheme), you just pay tax and get away with it," he said in his post-budget interaction with industry chambers. Those with undisclosed income and assets are being provided a four-month window beginning June 1 to declare their wealth, pay normal tax rate of 30 per cent plus 15 per cent in penalty and surcharge and escape prosecution. "(For) incomes which have escaped assessment, we have opened a compliance window. You pay higher (tax). It is not an amnesty scheme because you have to pay 50 per cent more than normal tax... And you have to pay it at current values, not at some old assumed value," he said. Disclosures will be charged the normal tax rate of 30 per cent plus a penalty of 7.5 per cent and a similar percentage of surcharge. The total tax and penalty for domestic black money holders is less than 60 per cent that the government had levied on foreign unaccounted asset holders last year.the government had raised Rs 10,000 crore through the last domestic black money amnesty scheme in Service Tax 5 RBI 6 Lunawat Update 7 Lunawat & Co. Chartered Accountants Government has taken 'one step forward' on Retro Tax issue The Government has taken "one step forward" to resolve the retrospective tax cases by putting in place a statutory mechanism for ending such disputes. In Budget 2016, FM has made a onetime offer to firms facing tax liability on the retrospective tax front by way of waiver of interest and penalty if they pay up principal tax. British telecom giant Vodafone is facing tax liability over its $11-billion acquisition of a 67 per cent stake in the mobile-phone business owned by Hutchison Whampoa in This seems to be one good step to end all such litigations. Tax Sops to yield Rs 7,500 crore more through Garment Exports: Industry Tax sops such as slashing of basic customs duty on specified fibres and yarns, continuation of duty free import of trimmings and embellishments announced in the budget may generate additional garment exports worth Rs 7,500 crore in , an industry body said. They said the addition of 1 per cent Free on Board (FOB) value of exports in custom duty for specified fabrics would enable garment exporters to undertake production where they were not competitive. This will prove to be a great boost to the Garment Industry. For Private Circulation Only

2 Lunawat Bulletin Compliance Due Dates Due Date Related to Particulars (Sunday) Service Tax E-payment of Service Tax for month of February 2016 for Companies (Monday ) (Monday) TDS/TCS (Income Tax) Deposit TDS for payments of Salary, Interest, Commission, Rent, Professional, etc. deducted during month of February Deposit TCS for collections made under section 206C during the month of February 2016 Deliver copy of Form 15G/15H to CCIT/CIT for forms received in the month of February DVAT/CST File Form GE II for Government Entities for the first three quarters of F Y EPF Deposit PF under Employees Provident Fund & Misc. Provision Act, 1952 deducted for the month of February DVAT/CST Deposit tax deducted at source under DVAT Act for the month of February (Monday) Income Tax ESI Deposit last installment of Advance Tax for Assessment Year for all Assessees Deposit ESI under Employees State Insurance Act, 1948 deducted for the month of February (Monday) DVAT/CST Deposit DVAT and CST for the month ended February (Friday) (Thursday) (Thursday) (Thursday) DVAT EPF Service Tax Income Tax DVAT/ CST Issue TDS certificate under DVAT Act for tax deducted and deposited for the month of February 2016 in Form DVAT-43. File monthly return under Employees Provident Fund & Misc. Provision Act, 1952 for the month of February E-payment of Service Tax for the month of March 2016 for Companies & for the quarter ending on March 2016 for other assessees. Submit Belated Income Tax Returns for the A Y for all Assessees Submit Online DVAT Form DP 1 Dealer Profile Submit Reconciliation of Form C and Other Forms for the year in Form 9 LIST OF HOLIDAYS DATE DAY HOLIDAY Monday Mahashivratri Thursday Holi Friday Good Friday Page 2

3 Income Tax Give utmost priority to and focus on collection of tax demand now: CBDT Chief to Dept. Sh. Atulesh Jindal, the Chairperson of the CBDT, has addressed a letter dated to the Principal Chief Commissioners of Income-tax in which he has stated that the growth in collection of direct tax collections is not encouraging. He has pointed out that main cause for concern is that regular tax collection has shown a decline of 10.44% as compared to a growth of 17.25% last year. He has stated that this suggests inter alia that adequate efforts are not being made to collect the arrear demand. The CBDT Chief has directed that outmost focus for the next two months should be on collection of the collectible demand, both out if current and arrear demand. The Chairperson has also directed the Principal Commissioners to give the highest priority tothe work of collection of demand and to monitor it personally. CBDT Directive regarding issue of online TDS Certificates under section 195(2) and 195(3) The CBDT has issued TDS instruction No. 51 in which important directions have been given with regard to the functionality for issue of online TDS certificates u/s 195(2) and 195(3) for lower/ no-deduction of tax at source. CBDT has clarified the meaning of the term initial assessment year in section 80-IA (5) of the Income-tax Act, 1961 The term initial assessment year would mean the first year opted for by the assessee for claiming deduction u/s 801A. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. The Assessing Officers are, therefore, directed to allow deduction u/s 801A in accordance with this clarification and after being satisfied that all the prescribed conditions applicable in a particular case are duly satisfied.. CBDT Directive on adjustment of refunds against demands u/s 245 by CPC The CBDT has issued an Office Memorandum dated to deal with the issue as to whether a refund due to the assessee can be adjusted against a demand due from him u/s 245 of the Act. The CBDT has inter alia stated that in cases where the tax payer has contested the demand, CPC would issue a reminder to the jurisdictional Assessing Officers about the contention of the taxpayer, asking them to either confirm, or make appropriate changes, to the demand, within thirty days. In case no response is received from the jurisdictional Assessing Officer, within the stipulated period of thirty days, CPC would issue the refund without any adjustment. The responsibility of non-adjustment of refund against outstanding arrears, if any, would lie with the Assessing Officer. CBDT Directs AOs to pass section 154 rectification orders in writing The CBDT has issued Instruction No. 02/2016 dated in which it has directed Assessing Officers to pass rectification orders in writing and serve a copy on the assessee and not just make an entry on the AST system. Page 3

4 Lunawat Bulletin CBDT Clarifies that shares buyback between to to taxed as capital gains u/s 46A and not as deemed dividend in view of provision of section 2(22)(iv) CBDT hereby clarifies that consideration received on buyback of shares between the period till would be taxed as capital gains in the hands of the recipient in accordance with section 46A of the Act and no such amounts hall be treated as dividend in view of provisions of section 2 (22)(iv). 5. With a view to bring about further clarity on this issue as a step towards non-adversarial tax regime, the CBDT hereby directs that as a matter of general principle, no fresh notice for assessment/reassessment/nondeduction of TDS at source shall be issued where buyback of shares has taken place prior to and the case is covered under sect ion 46A read with section 2(22)(iv) of the Act. In cases where notices have already been issued and assessment proceedings are pending, tax authorities shall complete the assessment keeping in view the above legal position. CBDT issues clarification on implementation of FATCA and CRS CBDT has issued further clarification, which provides guidance on implementation of FATCA and CRS in India. The Key issues clarified in the clarification note are as follows: Reportable currency Treatment of New Fixed Deposits Accounts as Preexisting Accounts. Due Diligence obligations in case of accounts opened with local custodian through Global Custodian (GC). HUF account shall be treated as an entity account for the purpose of FATCA/ CRS reporting. NBFC that accepts deposits in the course of a banking business or similar business will be considered as depository institution and is required to report accordingly. Procedure for furnishing the FATCA/CRS report. Corporate Laws CBDT Directs AOs to Strictly follow Section 154 rectification time limits The CBDT has issued Instruction No. 01/2016 dated in which it has directed Assessing Officers to strictly follow the time limit of six months prescribed under section 154(8) of the Income-tax Act, 1961 to pass rectification orders. The CBDT has also directed the supervisory officers to monitor the adherence to the prescribed time limit and initiate suitable administrative action where failure to adhere to the prescribed time limit is noticed. Other Notifications by CBDT CBDT issues guidelines for procedure, formats and standards for ensuring secured transmission of electronic communications with tax payers. CBDT issues instruction for disposal of Public Grievance on priority within 2 months in Centralized Public Grievances Redress and Monitoring System (CPGRMS). MCA issues notice inviting comments on the draft Reports Companies (Indian Accounting Standards) Amendment Rules, 2016 Companies (Incorporation) Second Amendment Rules, 2016 Companies (Auditor s Report) Order, 2016 Revised schedule iii to the companies act, 2013 for a company whose financial statements are drawn up in compliance of companies (Indian Accounting standards) rules 2015 and as amended from time to time. Companies (Cost Records and Audit ) Amendment Rules, Companies (Authorised to registered) Amendment Rules, Companies (Accounting Standards) Amendment Rules, Report of the Companies Law Committee Page 4

5 Service Tax Manner of claiming Refundof Swachh Bharat Cess by SEZ unit or its Developer Necessary amendment has been made to Notification no. 12/2013 to provide that the SEZunit or the Developer of SEZ can avail refund of Swach Bharat Cess: Paid on specified services on which exemption is allowed but not claimed, and The refund of amount as determined by the following formula: { Total Service Tax distributed under clause (a) x Rate of Swachh Bharat Cess} / Rate of Service Tax Refund of Service Tax on Services used Appointed Date for exclusion of Any service by Govt to Business Entity from Negative List The substitution of the word Support Service by Any service provided to any business entity (Contained in section 66D of Negative List) was proposed in section 109 of the Finance Act The same shall come into effect from 1st April Exemption from Swachh Bharat Cess for all exempted services CBEC has made necessary changes in the act to provide that all services exempted under section 93 (1)/(2)shall also be exempt from Swachh Bharat Cess.Earlier only services exempted under section 93(1) were exempted from this cess. If an Exporter of goodsreceives taxable services for export of excisable goods, which are used beyond factory or any other place or premises of production or manufacture of the said goods, the rebate shall be granted by way of refund of Service tax. Earlier the exemption was from services used beyond Place of Removal, accordingly meaning of Place of Removal has also been deleted from the said notification. Further, rate of rebate in some cases has also been changed. Rebate of Swachh Bharat Cess paid on Input Service Swachh Bharat Cess has been included in Meaning of Cess for grant of rebate of the whole of the duty paid on excisable inputs or of the service tax and cess paid on input services used in providing Services Exported in terms of rule 6A of Service Tax Rules AIR returns prescribed for RBI & Electricity Distribution/Transmission Entities CBED has notified through Service Tax and Central Excise (Furnishing of Annual Information Return) Rules, 2016 that Annual Information Returns shall have to be filed by the prescribed authorities of RBI and Electricity Distribution/ transmission entities by 31 st December every year for the Financial Year ended on 31 st March in Form AIRA-I & AIRA- II. This shall be effective w.e.f. 1 st April Exemption to any service by Govt or Local Authority to small Business Entity If Government or a Local Authority provides services to a business entity whose turnover is upto 10 Lacs in the preceding financial year will be covered under Mega Exemptions. The amendment shall come into effect from 01 st April Page 5

6 RBI RBI revises limit on Possession and retention of foreign currency or foreign coins Following are the limits for possession or retention of foreign currency or foreign coins: Retention By Retention Limit Person resident in India not exceeding US$2000 Person resident in India No limit but not permanently resient (means duration of residence does not exceed 3 years) Authorised person within No limit the scope of his authority Any Other person No limit Applicable w.e.f RBI issues know your customer KYC Direction, 2016 for banks and every entity regulated by RBI RBI issues direction known as the Reserve Bank of India (Know Your Customer (KYC)) Directions, These directions shall come into effect on the day they are placed on the official website of the Reserve Bank of India. Directions clarifies definitions, short title, commencement, risk management, customer identification procedure (CIP) related to KYC Norms to be adhered by banks & others. DVAT Amendment of Rule 28 of DVAT Rules 2005 Amendment in rule 28 sub rule 3 of DVAT tax rules 2005, provided that a dealer or class or classes of dealer to furnish return with digital signature in accordance with the provisions contained in Information technology Act Such dealers will not be required to submit the return verification form DVAT 56 for acknowledgement of the return separately. Other Notifications Returns in form GE-II for the first three quarters of the current financial year are required to be filed by 7th March, Returns in form GE-II for the first three quarters of current financial year required to be filed on 29th February, 2016 can be revised in case any discrepancy is noticed after filing the same, upto the end of financial year following the financial year of the quarterly period of the return and also indicate whether it is revised or original. All firms/companies engaged in the business of courier activities furnish an online quarterly return of details of transactions of delivering goods having value more than Rs in the format Form CR-II. Page 6

7 Lunawat Update Presentations During February 2016, our partner CA. Pramod Jain gave following presentations: PAN quoting and AIR Reporting at North Campus (CA- CPE) Study Circle. Practical aspects of audit under IT and companies Act including CARO 2016 and IFC at North Campus & CA CPE Study Circle. Conversion of company firm into LLP & its Taxation at Urban Estate CPE study circle, Faridabad. Practical aspects of audit under IT and Companies Act at Ludhiana Branch & Jalandhar Branch of NIRC of ICAI During February 2016, our partner CA. Rajesh Saluja gave following presentations: GST & Credit Risk Management for Value First Digital Media Pvt. Ltd. at Gurgaon. Finance for Non finance for Bharti Infratel Ltd. at Indore. Finance for Non finance for Bharti Infratel Ltd. at Guwahati. We may be contacted at: Daryaganj, New Delhi 54, Daryaganj, New Delhi Tel: dgoffice@lunawat.com Paschim Vihar, New Delhi A-2/132, Prateek Apartments, Paschim Vihar, New Delhi Tel: pvoffice@lunawat.com Karampura, New Delhi 109, Magnum House-1, Karampura Complex, New Delhi Tel: karampura@lunawat.com Mumbai Office No. 9, First Floor. Star Trade Centre, Chamunda Circle, Near Station, Borivali (W), Mumbai Tel: mumbai@lunawat.com Keshopur, New Delhi WZ-339, 2nd Floor, Street No. 19, Santgarh, Keshopur, Outer Ring Road, New Delhi Tel: Fax: keshopur@lunawat.com We also have ASSOCIATES at : Chennai, Kolkata, Jalandhar, Pune, Chandigarh, Udaipur, Vadodara, Bangalore, Cochin, Indore, Jodhpur, Jaipur, Bharatpur, Hyderabad, Jharsuguda, Panipat, Ranchi & Ghaziabad. Our Services Audit and Assurance International Taxation Indian Direct Tax Laws VAT/Sales Tax Service Tax Corporate Laws Limited Liability Partnership (LLP) NGOs/Societies and Trusts Compliance Audits Investigations Outsourcing Services Setting up Business in India Consulting Services Trainings Valuations XBRL Trade Marks Disclaimer 2016 Lunawat & Co. All Rights Reserved Information in this document is intended to provide only a general outline of the subjects covered. We recommend that you seek professional advice prior to initiating action on specific issues. Lunawat & Co. does not take any responsibility for any loss arising from any action taken or not taken by anyone Editorial Team: CA. Vikas Yadav, Shyam Karwa, Dishanka Khanna, Mayank Jain & Manoj Dungarwal Page 7