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Download Suggested Answers of CA IPCC May 2012

Now the Graduates can take directly admission in CA IPCC. For more info click here

Results of the Chartered Accountants Professional Competence and Integrated Professional Competence Examinations held in May, 2012 are likely to be declared tentatively on Tuesday, the 7th August, 2012 around 5.00 P.M.

Download CA Final RTP for November, 2012. Click Here

Due date of 31.07.2012 for filing Income Tax Return extended to 31-8-2012 vide CBDT order no. F.No.225/163/2012/ITA.II DT 31-7-2012

Download IPCC - SM Book from Download Section.

CA CPT & FINAL (May, 2012) result declared on 19th July, 2012. Click here to view your result

Download Suggested Answers of CA Final May 2012

5 Mistakes to avoid while filing your IT Returns!

2012-08-03T10:22:00.001+05:30

Prof. Bajaj

And now its that month of the year, when the running around starts for IT returns filing. With the advent of technology, and the initiatives taken by Income-Tax department, hopefully we will not see long queues in the Income Tax Office, for ITR filing.

You can conveniently file your IT returns online. Additionally, for those who are still not too tech-savvy, IT Department is coming up with innovative ideas like setting up kiosks in Malls, Societies etc. You can also submit your physical IT Return forms at the kiosks in your neighbourhood. What more can you ask for?

Now only thing you need to do, is to avoid some common mistakes while filing the ITR so that it saves lot of after-effort for the IT department as well as you to correct the errors.

1. Choose the correct ITR form

With a vast array of ITR forms (ITR 1, 2, 3, 4, 4S and V), people often get confused about which form to fill up. To pick up the right form for you, refer to below list:

A] ITR 1 (Sahaj): To be filled up by individuals with salary, pension, rental income from one property, tax-free capital gains and income from interest.

B] ITR 2 : To be filled by individual and HUFs with salary, pension, rental income from more than one property, taxable capital gains, income from interest and foreign assets.

C] ITR 3: To be filled by partners in a firm with interest, salary, bonus, commission, capital gains, more than one property.

D] ITR 4: To be filled up by individuals and HUFs with income from business / profession with gross receipts more than Rs. 60 Lakhs a year. (If gross receipts are less than Rs. 60 Lakhs, but the income is less than 8% of gross receipts, still ITR 4 to be used).

E] ITR 4S (Sugam): To be filled up by individuals and HUFs with income from business / profession and gross receipts upto Rs. 60 Lakhs a year.

F] ITR V: Remember this is “V” and not 5. This is an acknowledgment form and is to be filled by all the above mentioned categories.

2. Remove all TYPOs

The young generation is pretty familiar with the word “TYPO”. Any typing mistake they make, and excuse themselves by calling it a TYPO. Sorry friends, but you can't afford to make a TYPO in your ITR. There is a low chance of you getting an error at the time of filling it. But one TYPO can delay your refund by a pretty long time. So be doubly careful while filling up your information especially like PAN, Bank Details and other info too.

3. Verify tax paid data with form 26AS

Most people are only aware about Form 16 or Form 16A that they get from their employer / bank. However, it is equally important to verify the TDS details and the advance tax paid details in Form 26AS. There could be a possibility wherein, your bank / employer have deducted your TDS but it is not credited to your PAN due to some technical errors. It could be an error that the deductor has not quoted your PAN correctly in his TDS return. Also, we might forget to mention some FD interest in our return, which would be verified with 26AS.

4. Fill up the tax saving deductions with utmost care

The tax saving investments, you have done prior to 31^st March, need to be carefully mentioned in their respective sections. It is seen that while filling up information on 80C, sometimes people also include ‘employers’ contribution the PF. Remember, it's only the ‘employee’ contribution that qualifies for 80C.

Another common mistake is that some people write the entire EMI paid on home loan in 80C or 24B. Remember to put the principle in 80C and interest in 24B.

There are some other lesser known sections like 80E (payment of education loan interest), 80G (donations to charitable organisations), 80DD (expenses on a disabled dependent) etc. If you have made payments towards any of these, make sure that you mention them in your ITR, so that you get the deduction.

5. The last step

Do not forget to attach ITR V with your physical return. Chances of missing ITR V in physical return are less, as they would not accept your physical form without ITR V.

But if you are e-filing without digital signature, do not forget to send the signed ITR V to CPC Bangalore. If your ITR V does not reach CPC Bangalore within 120 days of e-filing your return, then your return is not considered to be complete.

You will observe that the way things are moving, you can be more self-dependent for filing of your returns. Taking professional help could definitely help, but now you need not depend on someone just to ‘stand in queue’ on your behalf. Filing IT returns is in your own interest. They help you for:

a. Availing any kind of loan like home, personal or education;

b. Visa and immigration processing;

c. Income proof / net worth certification;

d. Refund claims (in case of excess taxes paid); and

e. Applying for a higher insurance cover.

(The views mentioned in the article are personal opinion of the author. The Author is Chief Investment Planner with Nidhi Investments, Mumbai.)

About Revised Schedule VI

2012-04-01T09:36:00.000+05:30

By Naveen Chand Khulve

Ministry of Corporate Affairs has amended the schedule VI which is required to be implemented by the companies from Financial Year 2011-12 along with regrouping last year figures. Following are the changes in Revised Schedule VI.

1. Source of fund shall be replaced by Equity and Liabilities.

2. Application of funds shall be replaced by Assets.

3. Shareholding of more than 5% shares in the company as on balance sheet date need to be disclosed separately.

4. Profit and Loss account shall be replaced by Statement of Profit and Loss.

5. Statement of Profit and Loss (Dr. Balance) shall be disclosed under head Reserves and Surplus.

6. Share Application money pending allotment is not a part of Shareholders Fund now.

7. Sundry Debtors shall be replaced by Trade Receivables.

8. In case trade receivables outstanding for a period exceeding 6 months from the date they become due for payment then separate disclosure required.

9. Tangible assets under lease are required to be separately specified under each class of assets.

10. Current liabilities will not be shown as deduction from Current Assets.

11. Assets and liabilities shall be bifurcated into Current and Non Current portion.

12. Miscellaneous Expenditure as a separate head does not exists now.

Format of Balance Sheet in Revised Schedule VI

Equity and Liabilities	Note No.	Figures at end of current reporting period	Figures at end of previous reporting period
Shareholder’s Fund Capital Reserve and Surplus Money Reserved against share warrants
Share Application money pending allotment
Non Current Liabilities Long Term Borrowings Deferred Tax Liabilities (Net) Other long Term Liabilities Long Term Provisions
Current Liabilities Short Term Borrowings Trade Payables Other Current Liabilities Short Term Provisions

Format of Balance Sheet in Revised Schedule VI

Assets	Note No.	Figures at end of current reporting period	Figures at end of previous reporting period
Non Current Assets Fixed Assets · Tangible Assets · Intangible Assets · CWIP · Intangible Assets under development Non Current Investment Deferred Tax Assets (Net) Long terms loans and advances Other Non-Current Assets
Current Assets Current Investment Inventories Trade Receivables Cash and Cash Equivalents Short Term loans and advances Other Current Assets

Format of Statement of Profit and Loss

Particulars	Note No.	Figures at end of current reporting period	Figures at end of previous reporting period
Revenue from Operations Other Income Total Revenue
Expenses Cost of Material Consumed Purchases of Stock in Trade Changes in inventories of finished goods WIP and SIT
Employee Benefit expenses Finance Costs Depreciation and Amortization expenses Other expenses
Profit before exceptional and extraordinary items and tax
Extraordinary items
PBT
Tax Expenses Current Tax Deferred Tax
Profit (Loss) for the period from continuing operations
Profit (Loss) for the period from discontinuing operations
Tax expenses of discontinuing operations
Profit (Loss) from discontinuing operations (after tax)
Profit (Loss) for the period
EPS Basic Diluted

Distinction between term Current and Non Current:-

An item is classified as current

1. If it is involved in the entity’s operating cycle

2. Is expected to be realized / settled within 12 months.

3. If it is held primary for trading

4. Is cash or cash equivalents

5. If entity does not have unconditional right to defer settlement of liability for at least 12 months after reporting period.

All other items are non current.

Must Read : Exemption from Filing ITR

Submission of ITR-V for A.Y. 2011-12

2012-04-01T09:31:00.001+05:30

The due date for submission of ITR-V for A.Y. 2011-12 has been extended upto 31.03.2012 or 120 days from the date of upload whichever is later (with no further extension likely).

Exemption from Filing ITR

Point to be kept in mind while planning Tax u/s 80C

2012-03-12T11:42:00.002+05:30

By: Manish Negi

There are various significant points which must keep in mind while planning tax under section 80C of Income Tax Act, 1961. Following are some of them:

If assessee surrender their Life Insurance Policy within three years, then assessee has to pay the tax on the amount of deduction claimed earlier under section 80C i.e. premium paid on insurance of life.
Investment under Post Office Time Deposit Rules, 1981 and Senior Citizen Savings Scheme Rules, 2004 is a eligible deduction under section 80C but if assessee withdrawn any amount from his account under above mentioned scheme before the expiry of five years from the date of deposit, then the amount so withdrawn shall be deemed to be income and chargeable to tax.
If assessee terminates his participation in any Unit Linked Insurance Plan within five years, then assessee has to pay the tax on the amount of deduction claimed earlier under section 80C i.e. Contribution in the Unit-linked Insurance Plan 1971 or any Unit linked Insurance Plan of LIC Mutual Fund.
If assessee sell their house which was purchased through home loan within five years from the date of purchase, then assessee has to pay the tax on the amount of deduction claimed earlier under section 80C i.e. repayment of principle amount of loan.

Must Read : Exemption from Filing ITR

Free Download Tax Calculator

Taxation on negative list of services

2012-03-05T15:08:00.002+05:30

By: Venkat

Introduction:Finally the ministry of finance in India is moving ahead in reducing ambiguous and unnecessary litigation in the field of service tax.

Service tax is the major source of revenue to the government which is contributing nearly more than 9% (appr.) with a target in collection an amount of Rs.82,000 crore for financial year 2011 – 12. The concept of taxing of services based on negative list of services is not new, as the system already exists in many countries like United Kingdom, New Zealand, Singapore and Australia. Further implementation of this would give substantial increase in the revenues to the government.

The main reason behind implementation of the concept of taxing of services based on negative list would be increasing scope to tax on service industry and to have better tax administration and could be helping out successful implementation of GST.

Sushil kumar modi said service tax is imposed on 120 services at present and hoped that the negative list will help in further widening the tax base. He said a Parliamentary panel was examining the Constitutional amendment required to implement GST.

Concept of Negative List of Taxation

The concept is very simple to understand, Instead of taxing services individually and defining the scope of taxability under that category under positive list of services here only the term service would be defined in a specified manner and few services are listed as non taxable services. Thus an activity which can be called or included within the meaning of the term “Service” is taxable, and if the activity is not covered in the list of “non taxable” is also would be taxable.

Definition of service

In the proposed article issued for public debate and feedback thereupon the term “service” can be classified in three ways, lets understand in table format in detail

The term “Service includes

Means part of definition	Inclusion part of definition	Exclusion part of definition
A “service” means anything which does not constitute supply of goods, money or immovable property	A “Service” includes A. right to use an immovable property B. construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority C. temporary transfer or permitting the use or enjoyment of any intellectual property right D. obligation to refrain from an act, or to tolerate an act or a situation, or to do an act E. service in relation to lease or hire of goods F. right to enter any premises	A “Service” excludes a supply A.by an employee to an employer in the course of or in relation to the employment of the person B.by a constitutional authority under the Indian Constitution or a member of an Indian legislature or a local self-government in that capacity C.that amounts to manufacture of excisable goods or is chargeable as part of the value of goods to a duty in terms of the provisions of Central Excise Act, 1944

Explanation of some of the important terms in the definition “Goods”

According to the Sale of Goods Act 1930, “Goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

Where the contract includes both i.e supply of goods and service included in the contract then the principle of “dominant nature test” has to be applied for ascertaining the mind or intention of the parties in the contract to separate the rights arising out of the sale of goods as held in the land mark decision of Bharat Sanchar Nigam Ltd. Vs UOI [2006(2) STR 161 (SC) para 43].

“Immovable property”

According to the General Clauses Act, 1897 “Immovable property” shall include land, benefits arising out of land and things attached to the earth, or permanently fastened to anything attached to the earth.”

“Money”

The expression “Money” is meant to capture transactions where Indian legal tender is exchanged from one form to another.

Clarification on certain aspects in exclusion part of the definition

1. In case of immovable property things done before issuance of completion certificate would be construe as supply of service whereas things done after the completion of issuance of completion certificate can be constituted as sale

2. The word “Person" shall include any company or association or body of individuals, whether incorporated or not (section 2(42) of the General Clauses Act, 1897) and hence services by or to unincorporated associations and joint ventures will constitute a valid transaction.

3. For constituting as service the essential condition to be satisfied i.e not existing of employee and employer relationship. If the same is existing, then the same may not fall under the ambit of service tax.

4. Finally, any supply that amounts to manufacture or includable in the value of goods under Central Excise Act 1944 is also kept out of the purview of service tax.

Clarification on certain aspects in Inclusion part of the definition

A new definition of “service” can be called as revenue oriented definition as it uses the word “service means anything” so, the scope of this definition is more helpful in collecting more revenue to government.

1. Tax would be imposed on supply of services which took place between two persons for consideration and should be for economic activity.

2. Right to use immovable property is constituted as service. Hence is taxable (So by virtue of this new definition ambiguity and litigation on Renting is no more valid as Renting is clearly taxable activity )

3. Temporary transfer, permitting to use and enjoyment of any intellectual property will constitute supply of service.

4. The obligation of refrain from an act, or to tolerate an act or a situation, or to do an act will constitute as a service

5. Delivery of goods by way of hire purchase or installments is declared by the Constitution to be deemed sale of goods but services provided in relation to lease or hire of goods would be constituted as supply of service as held in case of Association of leasing & financial services companies VS UOI (2010-TOIL-87-SC-SERVICE TAX-LB)

6. Right to enter any premises would constitute as supply of service i.e fee collected by Museums, Art galleries, Zoos, parks and gardens would be within the meaning of this inclusive definition of service

7. Supplies of electricity, power, heat, refrigeration and ventilation would not constitute as supply of service

8. Sale of SIM card with talk time, downloadable on – site software and similar supplies through internet would construe as supply of service. The same is also confirmed in case of (Idea Mobile Communication Ltd Vs CCEC, Cochin (2011-TIOL-71-SC-ST)

9. Service element in respect of Works contract, restaurants, outdoor catering would be taxable as supply of service (in this particular aspect there can be possible scope for litigation by way of interpreting what is service element in respect of the said avenues)

Services excluded from taxation

The following are the proposed list of activities which are kept out of the purview of service tax.

Negative list	Excluding activity of service	Including activity of service
Services by government	Services provided by government without a specific charge on end user is not liable	Services are provided by government at a market rate, provided at concessional rate to compete with private agencies and services that are provided exclusively and pre – dominantly could be out of the negative list.
Services by international institutions	Services provided and received by international institutions or missions would be covered under the ambit of negative list of services under a contractual obligation
Services by financial sector	Activities relating to sale and purchase of securities and debts would be included in negative list.	However stock broking would be liable to service tax
Construction and real estate services	Services provided in relation to construction of public good dams, reservoirs and roads would be covered under negative list	Renting activity would be covered under the ambit of service tax
Services provided by health sector	Only the basic or public health services would be covered under negative list. Further, Services provided by pubic clinical establishments would be covered under negative list.	High – end medical services provided by private enterprises would be liable for service tax. Further Health checkup, weight reduction programmes and plastic surgery would be liable for service tax
Services provided by Education sector	Services provided by pre – schools and public schools would be covered under negative list	Services provided by international schools and charges recovered by them for facilitating in various field to the students would be covered under service tax
Others	1)Copyright services of original literary, dramatic, musical and artistic works. 2)Services provided by independent journalists, PTI & UNI for providing news 3)Services provided by sportspersons, as a player, coach or referee/umpire and performing artists in that capacity (excluding as brand ambassadors) 4) Religious services provided by any person. 5) Services provided by a political party recognized by Election Commission of India 6) Services provided by a trade union to its members 7) Representational services provided by an advocate to individuals 8) National or international prize/award in recognition of achievement in the field of art, literature, science, sport, economics or public life 9) Tolls except services in relation to collection of tolls 10) Betting and gambling except services in relation to promoting, marketing or organizing games of chance, including lottery services

Conclusion: The efforts of the government would be appreciated, as they are trying to streamline indirect tax basket for successful implementation of GST.

Must Read : Exemption from Filing ITR

Free Download Tax Calculator

Shares held as investment & Shares held as Stock-in-Trade

2012-03-03T22:16:00.002+05:30

By: Anooj

Distinction between shares held as stock-in-trade and shares held as investment - tests for such a distinction

1.The Income Tax Act, 1961 makes a distinction between a “capital asset” and a “trading asset”.

2. Capital asset is defined in Section 2(14) of the Act. Long-term capital assets and gains are dealt with under Section 2(29A) and Section 2(29B). Short-term capital assets and gains are dealt with under Section 2(42A) and Section 2(42B).

3. Trading asset is dealt with under Section 28 of the Act.

4. The Central Board of Direct Taxes (CBDT) through Instruction No.1827 dated August 31, 1989 had brought to the notice of the assessing officers that there is a distinction between shares held as investment (capital asset) and shares held as stock-in-trade (trading asset). In the light of a number of judicial decisions pronounced after the issue of the above instructions, it is proposed to update the above instructions for the information of assessees as well as for guidance of the assessing officers.

5. In the case of Commissioner of Income Tax (Central), Calcutta Vs Associated Industrial Development Company (P) Ltd (82 ITR 586), the Supreme Court observed that:

“Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment.”

6. In the case of Commissioner of Income Tax, Bombay Vs H. Holck Larsen (160 ITR 67), the Supreme Court observed:

“The High Court, in our opinion, made a mistake in observing whether transactions of sale and purchase of shares were trading transactions or whether these were in the nature of investment was a question of law. This was a mixed question of law and fact.”

7. The principles laid down by the Supreme Court in the above two cases afford adequate guidance to the assessing officers.

8. The Authority for Advance Rulings (AAR) (288 ITR 641), referring to the decisions of the Supreme Court in several cases, has culled out the following principles:-

“(i) Where a company purchases and sells shares, it must be shown that they were held as stock-in-trade and that existence of the power to purchase and sell shares in the memorandum of association is not decisive of the nature of transaction;

(ii) the substantial nature of transactions, the manner of maintaining books of accounts, the magnitude of purchases and sales and the ratio between purchases and sales and the holding would furnish a good guide to determine the nature of transactions;

(iii) ordinarily the purchase and sale of shares with the motive of earning a profit, would result in the transaction being in the nature of trade/adventure in the nature of trade; but where the object of the investment in shares of a company is to derive income by way of dividend etc. then the profits accruing by change in such investment (by sale of shares) will yield capital gain and not revenue receipt”.

9. Dealing with the above three principles, the AAR has observed in the case of Fidelity group as under:-

“We shall revert to the aforementioned principles. The first principle requires us to ascertain whether the purchase of shares by a FII in exercise of the power in the memorandum of association/trust deed was as stockin-trade as the mere existence of the power to purchase and sell shares will not by itself be decisive of the nature of transaction. We have to verify as to how the shares were valued/held in the books of account i.e. whether they were valued as stock-in-trade at the end of the financial year for the purpose of arriving at business income or held as investment in capital assets. The second principle furnishes a guide for determining the nature of transaction by verifying whether there are substantial transactions, their magnitude, etc., maintenance of books of account and finding the ratio between purchases and sales. It will not be out of place to mention that regulation 18 of the SEBI Regulations enjoins upon every FII to keep and maintain books of account containing true and fair accounts relating to remittance of initial corpus of buying and selling and realizing capital gains on investments and accounts of remittance to India for investment in India and realizing capital gains on investment from such remittances. The third principle suggests that ordinarily purchases and sales of shares with the motive of realizing profit would lead to inference of trade/adventure in the nature of trade; where the object of the investment in shares of companies is to derive income by way of dividends etc., the transactions of purchases and sales of shares would yield capital gains and not business profits.”

10. CBDT also wishes to emphasise that it is possible for a tax payer to have two portfolios, i.e., an investment portfolio comprising of securities which are to be treated as capital assets and a trading portfolio comprising of stock-in-trade which are to be treated as trading assets. Where an assessee has two portfolios, the assessee may have income under both heads i.e., capital gains as well as business income.

11. Assessing officers are advised that the above principles should guide them in determining whether, in a given case, the shares are held by the assessee as investment (and therefore giving rise to capital gains) or as stock-in-trade (and therefore giving rise to business profits). The assessing officers are further advised that no single principle would be decisive and the total effect of all the principles should be considered to determine whether, in a given case, the shares are held by the assessee as investment or stock-in-trade.

12. These instructions shall supplement the earlier Instruction no. 1827 dated August 31, 1989.

Must Read : Exemption from Filing ITR

Free Download Tax Calculator

XBRL-Introduction

2012-03-01T19:26:00.002+05:30

By: CS Vidhya

Over the past one year most of the practising professionals, big corporate started pronouncing the word XBRL. The word XBRL is a short form of EXTENSIVE BUSINESS REPORTING LANGUAGE. XBRL is a language for the electronic Communication of business and Financial data. XBRL is an universally preferred language for transmitting information via Internet. The main purpose of using XBRL is uniform set of accounting data available throughout the country.

It helps in comparison of performance between same type of industry throughout the world via internet. XBRL is not an accounting standard or rule and it does not change what is being reported but it changes only how it is reported. XBRL International is a not for profit making international consortium of more than 650 companies to build the XBRL Language for business reporting. XBRL is an open standard, free of license fees being developed by a non profit making international consortium. This process of developing XBRL language begins in 1998 by Charles Hoffman from Tacoma, Washington and it is digitized business reports in accordance with rules of accounting in each country.

HTML (Hypertext Markup Language) is a standard way of marking up a document so it can be published on the World Wide Web and viewed in a browser.

RELATIONSHIP OF XBRL AND XML:

XBRL is XML Based schema (Extensive Mark Up Language). It uses XML syntax and technologies. XML is a standard language maintained by the World wide Web Consortium.XML is an advanced language of HTML. XML does not replace HTML but XML allows data to be rendered on any device such as a computer, cell phone, PDA or tablet device.XML neither defines nor limits tags. XML provides a framework for defining tags (ie.,taxanomy) and the relationship between Schema.

The basis of XBRL and Bar code Reader is Tagging. Using the tags, without any human intervention the system can read the data for each item , value and description. It is a standard based way to communicate Business and Financial Information. The tools in XBRL will convert the data mode automatically by using XML Syntax. XBRL greatly increases the speed of handling of financial data and reduces the error.

WORKING OF XBRL:

XBRL has the ability to “Tag’ or code each element on a financial report such as reporting currency, Directors details in MCA, related party transactions, holding company and its subsidiary details. XBRL shows how items are related to each other. All the elements are grouped together into a collection of financial and business reporting terms called ”TAXANOMY”. Taxanomy is similar to a Dictionary. The output of financial data is known as “INSTANCE DOCUMENT”. Taxonomy is composed of an element names file(.xsd) and relationship files represented by schema.

TAXANOMY:

There are 3075 items in MCA Taxanomy. For IFRS Financials separate taxanomy is used. The main advantage of MCA Taxanomy is to identify the exact profit in all areas of industry .There are five based link bases in MCA Taxanomy such as Reference based, Presentation based, Calculation based etc., Taxanomies are different for each reporting process. Reporting is same for all the stakeholders but only the way of reporting is different.

PROCESS OF XBRL:

There are 5 steps in the process of XBRL. They are as follows:

STEP 1: MAPPING THE FINANCIAL STATEMENTS OR TAGGING

The first and foremost step is filling the financial statements of the company. There are different ways of filling the data. Mapping the financial statements is possible and also can fill the XBRL Template by entering numeric value and enter TEXT in the provided column. After completing each sheets in template there is an option Verify the sheet individually. After feeding all the relevant data in a template, there is an option “VERIFY ALL SHEETS AT ONCE”. With the help of Error locator, error can be identified easily and ratified in a fraction of seconds.

The instance document can be generated either through the software directly or by up loading the templates in the website of concerned software vendor. The software will provide two separate xml documents. One will be Balance Sheet and its schedule and the second will be Profit and Loss Account and its schedule.

STEP 2: DOWNLOAD XBRL VALIDATION TOOL FROM MCA PORTAL

MCA has developed the validation and conversion tool. The same is available in the MCA XBRL Portal. The software has to be downloaded and installed in the system. Validating the instance document is a pre requisite before filing the balance sheet and profit & loss account on MCA portal.

STEP 3: USE THE TOOL TO VALIDATE THE INSTANCE DOCUMENT

Once the tool has been downloaded, by clicking open the document we can upload the file into XBRL Validation tool after getting an alert message the document can be uploaded successfully we can proceed with next step. The next step is to validate the instance document. The following validations shall be performed by the tool-Validating that the instance document is as per the latest and correct version of taxonomy prescribed by MCA. All mandatory elements have been entered. We will get the message “Validation successful”

STEP 4: PERFORM PRE-SCRUTINY OF THE VALIDATED INSTANCE DOCUMENT THROUGH THE TOOL

Once the instance document is successfully validated from the tool, the next step is to pre-scrutinise the validated instance document with the help of the same tool. For pre-scrutinizing the instance document, a working internet connection shall be required. In the Pre-scrutiny, the server side validations (i.e. validations which are to be validated from the MCA21 system) shall be performed. Also, there shall be a feature provided in the tool to verify the appearance of the generated XBRL instance document using the built in Viewer. It is imperative that the company should use this feature to verify the accuracy of the instance document.

STEP 5: ATTACH INSTANCE DOCUMENT TO THE FORM 23AC AND FORM 23ACA

There shall be a separate set of Form 23AC and Form 23ACA available on the MCA portal for filing in XBRL form. First fill up the Form 23AC and Form 23ACA. Thereafter, attach the validated and pre-scrutinised instance document for Balance sheet to Form 23AC. Similarly, the instance document for Profit and Loss account is to be attached to Form 23ACA. Separate instance documents need to be attached w.r.t. Standalone financial statements and consolidated financial statements. The forms can be filed in MCA Portal in Annual E form Filing Link .

BENEFITS OF XBRL:

The following are the benefits of XBRL:

1. Better business reporting and analysis.

2. It saves Cost.

3. Data once entered can use infinite times.

4. It is faster and more reliable.

5. It provides accurate data and greater efficiency.

6. It gives better quality of information and decision making.

7. It avoids time consuming and manual comparison of data.

8. It avoids re entry of data.

9. It is directly used by all types of stakeholders like Bankers / Investors.

XBRL -A NEW CONCEPT IN INDIA:

Not Suddenly, in the month of March,2011 MCA has decided to mandate annual filing through XBRL. It is an old concept using for the past 3 years in different sector in India. In the year 2008 RBI launched XBRL reporting system for capital adequacy returns. In addition to RBI and Stock Exchanges, now MCA has also mandated certain companies to file their financials in XBRL Mode from financial year ended 31.03.2011 onwards.

(1).All companies listed in India and their Indian Subsidiaries;

(2) All Companies having a paid up capital of Rs.5 Crore and above.

(3) All companies having a turnover of Rs.100 crore and above.

But Banking Companies, insurance companies, power companies and NBFC are exempted for XBRL Filing, till further orders. It is expected that in a phased manner the net will be widen to cover all companies into XBRL.

CONCLUSION:

NECESSITY IS THE MOTHER OF INVENTION. Due to the recent Scams in the corporate world it has become inevitable to regulate the financial reporting system. MCA has taken initiative step and successfully completed more than 50,000 XBRL Filings in this regard through which all financial events occurred in the company being disclosed to the Ministry along with certain non-financial events.

Must Read : Exemption from Filing ITR

Exemption from Filing ITR

2012-02-29T15:33:00.003+05:30

By: Raman Aggarwal

The CBDT has exempted certain class of assesses from filing the Income Tax Return after the accomplishment of following conditions:

Ø Assessee should be an individual.

Ø Income of the assessee does not exceed Rs. 5 Lac.

Ø Income is chargeable under the head Income from Salaries.

Ø Interest income should be less than Rs.10000 from the saving bank account.

If any individual assessee has income from interest of Fixed Deposit or Rental Income from House Property or any Income from Capital Gain or Gain from Business or Profession or any Speculation Income from share transaction, then assessee will not be eligible to claim the benefit of “Exemption from filing Income Tax Return”.

There are some other conditions also for availing this benefit-

Ø Assessee has reported the Permanent Account Number (PAN) to the employer.

Ø Assessee has reported all the income & full details of deduction under section 80C to the employer and employer has deducted the TDS.

Ø Assessee has received TDS certificate in Form No. 16 from their Employer.

Ø Employer has deposited the TDS amount to the Central Government.

Ø Assessee has no claim of refund of taxes.

Ø Assessee has received Salary only from one employer and if any assessee changes their job in middle of the Financial Year, assessee has to file the return.

If any notice u/s 142(1), 148, 153A or 153C of the Income Tax Act, 1961 has been issued for filing an Income Tax Return for the relevant assessment year then the exemption from filing Income Tax Return will not available.

Download in PDF Format

What extra CA examination demands?

2012-02-29T12:37:00.000+05:30

By: Deepak Kumar Sharma

CA Examination is one of the toughest professional exams in the country. It takes a few things to crack this exam:

1. A proper mindset.

2. A sharp memory.

3. Proper time management.

4. Sincere preparation with proper revision &

5. Proper presentation of answers in examinations.

Do I need to further explain points mentioned above? I am not a rank holder and this article is not for prospective rank holders too. I am just an average ca final student and trying to help my ca student friends who study well and just need some extra marks to clear. I don’t know how to achieve merit or rank. All I know that I followed some tips which worked for me to clear Ipcc and I am sharing them all here. None of them are findings of me, I just used them. Even I don’t remember the sources, excuse me for that.

1. If you have 3 months in hand before exams, complete your study in 2 months and reserve one month for revision at least two times.

2. Solve questions like you are giving your main exams. Same completeness and seriousness apply during preparations.

3. Write more to increase speed and improve handwriting. It is not a waste of time. Clear written matter always scores well.

4. Try to solve whole paper in just 2 and half hour. So you will complete your paper before or at least on time. Use remaining half hour for corrections and final touch.

5. If you switch off your mobile during main exams then please do the same during preparations and revisions. Less or no TV. Just play light games or listen light music in gaps.

6. Maximum time to solve a question in exams = 1 mark * 1.5 minutes i.e. for 4 marks question maximum time is 6 minutes and so.

7. Write other alternate of answer if possible any.

8. In theory questions, always use first two lines impression.

9. Don’t panic to see twisted questions, stick to basics, Read questions and relate the things.

The institute’s inputs and other supports provided to students like rtps, suggested answers, practice manuals etc. are adequate to prepare themselves for and fare well in the examinations.

It is highly advisable:

1. In practical – Give proper format, working notes and assumptions with high speed.

2. In theory – (Long answer type questions) >Write brief intro, >Discuss main theme, >Write summary.

Hard study may fail but systematic never. Systematic means on proper time.

For serious study, Divorce the world during study time. It’s your parents, who waits for your results most.

During Studies:

1. Eat less, drink more.

2. Get rid of your weaknesses

3. Do chair study, don’t use bed.

4. Don’t change your study material again and again. Use good material and Scanner only.

5. Morning study and evening study is good instead of late night study.

During exam days:

1. Please never discuss with your friends, have faith in God and your knowledge.

2. Don’t tally the answer you wrote in exams with your book’s answer.

3. Do some breath exercises, take deep breaths.

Finally, it is not just an exam you are going to write; it is your fate and future. It is your last and final exam. Every mark is important in CA exam. Do as you know, even if you don’t know the answer just draw format and give headings. Complete the whole paper, it helps in scoring.

FAQ / Oltas / e-TAX Payment

2012-02-29T12:34:00.000+05:30

What is e-payment of taxes?

This is a facility provided to the taxpayers to make income tax payments through internet, using net-banking facility.

How can I use this facility to pay income tax?

You can use the facility if -

a) You have a bank account with net-banking facility, and

b) Your bank is amongst the banks that provide the e- payment facility.

Whether it is mandatory to pay tax online?

It is mandatory for the following types of assesses to pay tax online with effect from April 1,2008.

a) All the corporate assesses.

b) All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.

Whether it is mandatory to make the TDS/TCS payment (Challan 281) online?

Yes, it is mandatory for below Assessee to make the TDS/TCS payment online

a) All the corporate assesses.

b) All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.

How do I know whether my bank provide this facility?

The list of banks providing this facility is available on NSDL-TIN website. Alternatively you may get the information from your bank.

What should I do if my bank does not have an online payment facility or is not an authorized bank for etax ?

In case your bank doesnot have an online payment facility or is not an authorized bank then you can make electronic payment of tax from the account of any other person who has an account with the authorized bank having online facility. However, the challan for making such payment must clearly indicate your Permanent Account Number (PAN).

What is the procedure for entering the required data on the screen for paying tax online?

Follow the steps as under to pay tax online:-

Step 1

a) Log on to NSDL-TIN website (www.tin-nsdl.com).

b) Click on the icon e-payment: pay taxes online.

c) Click on 'Click to pay tax online'.

d) Select the required challan.

Step 2

After selecting the required challan, you will be directed to the screen for entering the following data:

a) PAN for non-TDS payments and TAN for TDS payments.

b) Address of the taxpayer.

c) Assessment Year.

d) Major Head Code.

e) Minor Head Code.

f) Type of payment.

g) Select the bank name from the drop down provided.

In case of challan no. 280, 282 and 283 the Permanent Account Number (PAN) needs to be entered. In case of challan no. 281 Tax Deduction/Collection Account Number (TAN) needs to be entered. Please ensure that you enter PAN/TAN correctly, as this is extremely important for further processing. The system will check the validity of PAN/TAN. In case PAN/TAN is not available in the database of the Income Tax Department then you cannot proceed with the payment of tax.

Step 3

After entering all the above detail, click on PROCEED button. TIN system will display the contents you have entered along with the “Name” appearing in the ITD database with respect the PAN/TAN entered by you.

Step 4

You can now verify the details entered by you. In case you have made a mistake in data entry, click on “EDIT” to correct the same. If all the detail and name as per ITD is correct, click on “SUBMIT” button. You will be directed to the net-banking site provided by your bank.

What is the procedure after being directed to the net banking site of the bank?

TIN system will direct you to net-banking facility of your bank. You will have to log on to the net banking site of your bank using your login ID and password/PIN provided by the bank. The particulars entered by you at TIN website will be displayed again.

You will now be required to enter the amount of tax you intend to pay and also select your bank account number from where you intend to pay the tax. After verifying the correctness, you can proceed with confirming the payment.

What will happen after I confirm the payment of tax at my bank’s site?

Your bank will process the transaction online by debiting the bank account indicated by you and generate a printable acknowledgment indicating the Challan Identification Number (CIN). You can verify the status of the challan in the “Challan Status Inquiry” at NSDL-TIN website using CIN after a week, after making payment.

How can I know that I have completed tax payment using this facility?

Apart from CIN given to you, you can check your online bank statement to verify the tax payment.

Do I have to attach the acknowledgment counterfoil with my return?

No, it will be considered sufficient proof if you quote your Challan Identification Number (CIN) as mentioned in your counterfoil in your return.

What is the timing for making payment through internet?

You will have to check the net-banking webpage of your bank’s website for this information.

If I encounter any problem while making payment through internet whom should I contact?

If any problem encountered at the NSDL website while entering non-financial data then contact the TIN Call Center at 022-24994650.

If any problem encountered while entering the financial details at the net-banking webpage of your bank, then you should contact your bank for assistance.

Where should I make enquiries about my tax payments through internet?

You should contact your bank for queries about your payment transaction through internet.

Whom should I contact if the counterfoil containing the CIN is not displayed on completion of the transaction and if I want duplicate counterfoil?

Your Bank provides facility for re-generation of electronic challan counterfoil kindly check the Bank website, if not then you should contact your bank request them for duplicate challan counterfoil.

If I have misplaced my counterfoil whom do I contact?

Your Bank provides facility for re-generation of electronic challan counterfoil kindly check the Bank website; if not then you should contact your bank and request them for duplicate challan counterfoil.

After making e-payment of direct tax if status of challan is not available under Challan Status Enquiry on NSDL site, what should I do?

You can verify the status of the challan in the “Challan Status Inquiry” at NSDL-TIN website after 5 to 7 days of making e-payment. In case of non availability of the challan status kindly contact your bank.

If I encountered any error on NSDL site while making e-tax payment what should I do?

If encountered any error on e-tax website kindly contact TIN call centre at 022-24994650.

If after entering challan details in NSDL site if Bank Name is not being displayed what should I do?

The problem may be encountered because of the following

Reason 1: If Assessee enters incorrect TAN / PAN in challan data entry screen.

Reason 2: If Assessee using Internet Explorer browser then temporary internet files should be deleted by following:

A. Open Internet Explorer window.

B. Go to “Tools” Menu.

C. Select “Internet Options”.

D. Delete cookies and Delete temporary Internet files on your machine.

E. Close the current Internet Explorer windows.

F. Again go to tin-nsdl site & make e-payment.

If still above raised problem not resolved then kindly contact the TIN Call Center at 022-24994650.

Account get debited more than once for the same e-tax transaction what should I do?

If during the transaction or after completing the transaction bank site encountered any error or get disconnected before generating Taxpayer counterfoil then instead of doing the same transaction again kindly check your Account, if account is being debited then contact your bank for regeneration of taxpayer counterfoil . Please note in the above case donot make the same transaction again which result in account debited more than once for same e-tax transaction.

How secure is the transmission of data to the website for e- payment?

All transmission through NSDL-TIN website is encrypted and is with Secure Socket Layer (SSL) authentication. With respect to the banks, it depends on the security measures provided by the bank for net-banking.

How does this system of payment of taxes through internet benefit me as a taxpayer?

This system is beneficial to you as you are not required to personally visit the bank to make the payments. Payment can be made electronically at your convenience from any place where an internet facility is available e.g. your office, residence, etc. Further, you get the Challan Identification Number (CIN) online, which is required by you when you file your return.

Suggestions to control black money

2012-02-29T12:30:00.000+05:30

By: Ramesh

How to control black money:

1. Ensure that even petty shop people deposit their cash sales in to a bank account (account opening should be simple & easier).

2. Integrate sub registrar office, sales tax and service tax department with income tax department, there should not be any mismatch of transactions.

3. Conduct audit for sub registrar offices for material differences in the value registered for the properties in same location.

4. Fix a limit for cash sales, receipts in cash, payments in cash for revenue transactions like restrictions for loans & advances in income tax act – 269SS.

5. Abolish higher denomination currencies like 500 & 1000 rupees notes.

6. Abolish entire present currencies and issue new currencies with chips inserted, so it can be tracked through GPS, wherever there is a bulk currency carries, transported, exchanged etc., (atleast for higher denomination notes).

7. Outsource majority of the politicians works to some good companies (companies having good corporate governance).

8. Ask politicians to submit their books of accounts to audit general of India, and Audit general can allot audit work to some chartered accountant secretly.

9. Even companies accounts can be audited in the above said manner through ICAI instead of audit general.

Why we should file the return? If salary is less than 5 Lakh

2012-02-29T12:26:00.000+05:30

By: Abhishek Ranjan Singh

Why we should file the return? If CBDT exempts return-filing for salaried having total income upto Rs 5 Lakh.

IN MY OPINION IT IS ALWAYS BETTER TO FILE THE RETURN

Some reasons:

1.The tax department has notified that individuals with salary income below Rs 5 lakh are not required to file their tax return subject to certain conditions* being met. Though this move would benefit the new entrants to employment, for others this rule is nothing but increased confusion in deciding whether to file tax return or not.

*Conditions for exemption from filing tax return under Rs 5 lakh rule:

A. Single employer income.

B. Savings account interest up to Rs 10,000.

C. PAN should be correctly declared to the employer.

D. Employer should have deducted tax on both salary & savings account interest.

Accordingly, an individual who has income from multiple employers or FD/term deposit interest or house, wherein she/he is claiming interest deduction would need to file her/his tax return.

2. How can you declare your Saving Bank Account Interest income of year ending March to your employer before year ending to deduct the TDS.

3.When you file your tax returns every year, you manage to create your financial record with the tax department.

This financial/tax history is positively viewed and favourably used by most agencies with whom you may need to interact, such as when you avail any kind of loan (home, personal, vehicle loan, etc), when you apply for VISA etc.

4.Proof of (financial) life.

Income tax return is essential for making any investment and goes to prove that you have a valid source of income to make such investment.

Considering the above points, filing your tax return seems to be a GOOD IDEA.

Future of Form 26AS

2012-02-29T12:23:00.002+05:30

By: Vignesh Killur

What will FORM 26AS appear like in Future?

At Present it is a TAX CREDIT STATEMENT meaning it displays the taxes paid by us like Advance Tax, Self Assessment Tax and Particulars of TDS made by others on our behalf.

But what if it was developed into something far more than that? Please think about it.

1) What if there existed a Nexus between all Important Organisations and the IT Department?

2) What if all our chapter VI-A Deductions like 80C deductions: LIC, PPF,Tax Saver FDs, 80CCF: Infrastructure Bonds, 80D deductions like Mediclaim etc could be viewed in Form 26AS? This would require all Organisations to perform Some Information Filing with the IT Department on Similar lines as TDS filing.

3) What if Salary Paid details like GROSS SALARY paid Profession Tax, Statutory Savings can be viewed instead of just Amount Credited and TDS?

4) What if FORM 26AS could in itself contain our Computation of total Income?

5) What if the era where we declare our own Income could be done away with and the IT Department itself determine how much tax to pay? Income from Business should be an exception because it would be impossible for them to know the profit made.

6) 26AS might be half PRE-FED and only half self declared. Where self declaration is made, adequate proof might be asked like in Case of Business, Details of Audited Report, Audited P&L Account might have to be Digitally uploaded.

7) Also if there is any minor adjustments or Corrections, an Opportunity should be given to the Assessee to make suitable corrections in Form 26AS but for every correction made, reasonable proof has to be attached.

8) This would enable the Authorities to have complete control over an individuals financials and prevent Black money and corruption.

9) As of today there is the AIR Report (Annual Information Report) which places a legal obligation on certain persons like: Banks, Mutual Funds, Sub Registrars Office, Certain Traders etc to disclose information about High Value financial transactions like:

i) A Banker is required to disclose information to the IT authorities by way of AIR Report if any customer makes a cash deposit Aggregating to more than 2 lakhs in a year

ii) A Mutual Fund is required to disclose information if any client buys or sells Mutual Funds of more than 2 lakhs

iii) A Sub Registrar is Required to file AIR about Property transactions above 30 lakhs in value.

Ever wonder why they ask for your PAN Everywhere? We are being watched.

10) Many have been brought under the purview of AIR. Bt is it really effective? I mean has anybody seen any clients information appearing in forn 26AS if he makes a cash deposit more than 2 Lakhs. I have only seen mutual fund transactions so far in AIR.

11) Likewise quoting of PAN has been made mandatory if you enter into certain transactions above certain limit like Purchase of Jewellery, Purchase or sale of shares, purchase of Motor Cars (Think twice before buying a luxury car) even buying certain bonds, taking LIC Policies, buying Real Estate etc.

12) FORM 26AS COULD GIVE INFORMATION SUCH AS HOUSE PROPERTY INCOME/LOSS, CAPITAL GAINS/LOSS MADE (Share brokers already give Gain/Loss Statements, they just have to take it one step further.

13) IS IT GOOD OR BAD? IS A QUESTION WHICH NEEDS TO BE CONTEMPLATED. THE ABOVE IS JUST MY OPINION AND FORECAST. PLEASE BE FREE TO AGREE OR DISAGREE. I INVITE COMMENTS, VIEWS AND OPINIONS.

All about Company

2012-02-29T12:20:00.000+05:30

By: Mahesh Kumar

Steps to Register a new Company

Do you want to start an Indian Company?

To register a company, you need to first apply for a Director Identification Number (DIN) which can be done by filing eForm for acquiring the DIN. You would then need to acquire your Digital Certificate and register the same on the portal. Thereafter, you need to get the company name approved by the Ministry. Once the company name is approved , you can register the company by filing the incorporation form depending on the type of company

Step 1 : Application For DIN

The concept of a Director Identification Number (DIN) has been introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006. As such, all the existing and intending Directors have to obtain DIN within the prescribed time-frame as notified. You need to file e-Form DIN-1 in order to obtain DIN. To get more information about the same click Director Identification Number

Step 2 : Acquire/ Register DSC

The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance programme are required to be filed with the use of Digital Signatures by the person authorised to sign the documents.

Acquire DSC -A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000.

Register DSC -Role check for Indian companies is to be implemented in the MCA application. Role check can be performed only after the signatories have registered their Digital signature certificates (DSC) with MCA. To know about it click Register a DSC

Step 3 : New User Registration

To file an e-Form or to avail any paid service on MCA portal, you are first required to register yourself as a user in the relevant user category, such as registered and business user. To register now click New User Registration

Step 4 : Incorporate a Company

Apply for the name of the company to be registered by filing Form1A for the same. After that depending upon the proposed company type file required incorporation forms listed below.

1. Form 1: Application or declaration for incorporation of a company.

2. Form 18: Notice of situation or change of situation of registered office.

3. Form 32: Particulars of appointment of managing director, directors, manager and secretary and the changes among them or consent of candidate to act as a managing director or director or manager or secretary of a company and/ or undertaking to take and pay for qualification shares.

Once the form has been approved by the concerned official of the Ministry, you will receive an email regarding the same and the status of the form will get changed to Approved. To know more about e-Filing process click "All About e-Filing".

Do you want to register a Part IX Company?

In order to register Part IX Company, applicant is required to file Form 1A for name availability. After approval of the same, applicant is required to file Form 37 and Form 39 along with filing e form 1, 18 and 32.

Do you want to register a Section 25 Company?

To register a section 25 company, applicant is required to file Form 1A for name availability. Once the name is approved/made available, there is a further requirement of obtaining a license for a Section 25 Company, for which Form 24 A is to be filed in order to obtain a license for such company. After obtaining license number, applicant can proceed further to incorporate a company by filing e forms 1, 18 and 32.

Do you want to start a Foreign Company?

Any foreign company can establish its place of business in India by filling Form 44 (Documents delivered for registration by a foreign company). The eForm has to be digitally signed by authorized representative of the foreign company.

There is no need to apply and obtain DIN for Directors of a foreign company but the DSC of the authorized representative is mandatory, which again is not required to be registered on MCA Application

Change Company Information

Do you want to intimate changes among managing director, directors, manager and secretary of a company?

A company can intimate changes among managing director, directors, manager and secretary of a company by filing Form 32 with ROC within 30 days from date of such change takes place.

Do you want to change Company Name?

1. In order to change company name, Form 1A is required to file for name approval.

2. After the name gets approved, applicant is required to file form 23 (necessary resolution for alteration of MOA and AOA) and form 1B to give effect to change in name.

Do you want to change Object Clause of MOA?

In case company wants to change its object clause, it can do so by filling passing necessary resolution and the same needs to be filed in Form 23.

Do you want to change registered office of the company?

In case company wants to change its registered office within local limits of the same city or place, intimation regarding the same has to be filed in Form 18.

Similarly, if company wishes to shift or change its registered office outside local limits of city, town or village, Form 23 and Form 18 are required to be filed to ROC to give effect to such change.

In case, company wants to shift the registered office from one state to another state, it needs to file following forms to give effect to such change. These forms are:

1) Form 23

2) File petition with CLB and intimate ROC in Form 61

3) Form 21 (Notice of the court or the company law board order)

4) Form 18 ( Notice of situation or change of situation of registered office)

If there is a change of registered office of the company within the state from the jurisdiction of one Registrar to the jurisdiction of another Registrar, Form 23, Form 1AD and Form 18 is required to file in this case.

Do you want to increase authorized capital of the company?

A company can increase its authorized capital by filing Form 5. Similarly, subscribed capital and paid up capital of the company gets increased on filing and approval of Form 2 (Return of allotment of shares).

Do you want to convert a Public company into a Private company?

A public company can convert itself in to a private company by filing Form 23 (Alteration of MOA and AOA) and approval of Form 1B (Application for approval of the Central Government for conversion of a public company into a private company)

Do you want to convert a Private company into a Public company?

A Private company can convert itself in to a Public company by filing Form 23 for registration of such resolution passed by the company (Alteration of MOA and AOA) and filing of Form 62 (Prospectus as per Schedule II or Statement in lieu of prospectus as per Schedule IV)

Do you want to register a charge or make modification in registered charges (other than those related to debentures?

In case you want to register a charge or make modification in registered charges (other than those related to debentures),you need to file Form 8 for registration or for modification of a registered charge.

Do you want to register a charge or make modification in registered charges (related to debentures)?

In case you want to register a charge or make modification in registered charges (related to debentures), you need to file Form 10 for registration or modification of a registered charge.

Do you want to report repayment or satisfaction of registered charges?

In case you want to report repayment or satisfaction of registered charges, you need to file Form 17 (satisfaction of charge). This form is applicable for both the type of charges as per point 8 and 9 above.

Do you want to change information of a Foreign Company?

A foreign company can change its information by filing Form 49 and Form 52.

Form 49 is required when there is -

1. Alteration in the charter, statute or memorandum and articles of association,

2. Alteration in Address of the registered or principal office

3. Alteration in directors and secretary of a foreign company.

Similarly, Form 52 is required to give notice in case of -

(A) Alteration in names and addresses of persons resident in India authorized to accept service on behalf of a foreign company

(B) Alteration in the address of principal place of business in India of a foreign company

(D) Cessation to have a place of business in India.

Compliance Related Filing

Do you want to do Annual e-filing?

Companies incorporated under the Companies Act 1956, are required to file the following Forms with the Registrar of Companies (ROC) every year:

S. No.	Document	e-Form
1	Balance-Sheet	Form 23AC to be filed by all Companies
2	Profit & Loss Account	Form 23ACA to be filed by all Companies
3	Annual Return	Form 20B to be filed by Companies having share capital
4	Annual Return	Form 21A to be filed by companies without share capital
5	Compliance Certificate	Form 66 to be filed by Companies having paid up capital of Rs.10 lakh to Rs. 5 crore

How to do the Filing

Companies can do e-Filing in following ways:-

The Company representative can upload the e-Forms on the MCA portal through the ‘Annual Filing Corner’ link (after registering oneself as a user of the portal) at his convenience from his office/ home. This is the most convenient way of e-Filing.

The Company representative can prepare the e-Forms as per guidelines, get them digitally signed by the authorized signatory, copy them in a CD or a pen drive and visit the nearest “Registrar’s Front Office” (RFO). RFO staff will assist in uploading of e Forms on MCA portal.

Other points to be remembered:

1) Balance Sheet and Profit & Loss Accounts are to be filed as two separate documents with different e-Forms;

2) Each e-Form along with the relevant attachment(s) should be less than 2.5 MB.

3) The Balance Sheet, Profit & Loss Account and Annual Return are filed as attachments to the respective e-Forms. A scanned copy considerably increases the size of the document besides being more expensive. You are therefore, advised to convert the Text file/ Excel sheets by using the PDF converter software (PDF conversion facility is also available on the MCA portal for business users) and upload these attachments as PDF documents.

Do you want to do other compliance related filing?

Forms under other compliances are as under:-

1. Form 2 (Return of allotment)

2. Form 3 (Particulars of contract relating to shares allotted as fully or partly paid-up otherwise than in cash)

3. Form 4 (Statement of amount or rate percent of the commission payable in respect of shares or debentures and the number of shares or debentures for which persons have agreed for a commission to subscribe for absolutely or conditionally)

4. Form 4C (Return in respect of buy Back of Shares)

5. Form 22 (Statutory Report)

6. Form 23 (Registration of resolution(s) and agreement(s)

7. Form 23B (Information by Auditor to Registrar)

8. Form 25C(Return of appointment of managing director or whole time director or manager)

9. Form 62(Form for submission of documents with Registrar of Companies)

10. Form DD-B (Report by a public company)

11. Form 1(Statement of amounts credited to investor education and protection fund)

Approval Related Filing

Do you want to do HQ approval related filing?

1. Form 23AAA (Application to Central Government for modification in the matters to be stated in the company's balance sheet or profit and loss account)

2. Form 23AAB(Application for exemption from attaching the annual accounts of the subsidiary companies)

3. Form 23AAC(Application to Central Government for not providing depreciation)

4. Form 23C (Form of application to the Central Government for appointment of cost auditor)

5. Form 24AB(Form for filing application for giving loan, providing security or guarantee in connection with a loan)

6. Form 24B(Form of application to the Central Government for obtaining prior consent for holding of any office or place of profit in the company by certain persons)

7. Form 63 (Form for filing application for declaration as Nidhi Company)

8. Form 65 (Form for filing application or documents with Central Government)

9. Form (Form of application for approval for declaration of dividend out of reserves)

10. Form DD-C (Form of application for removal of disqualification of directors)

11. Form I (Form of application for approval of the Central Government for the appointment of sole selling agents by the company)

12. Form II (Form of application for approval of the Central Government for the appointment of sole buying agent by a company)

Do you want to do RD approval related filing?

1. Form 1AD (Application for confirmation by Regional Director for change of registered office of the company within the state from the jurisdiction of one Registrar to the jurisdiction of another Registrar). This is applicable only for the companies registered in the states of Maharashtra and Tamilnadu, as both these states have two RoC offices.

2. Form 24A (Form for filing application to Regional Director)

3. Form 64 (Form for filing application for opening branch(s) by a nidhi company)

Do you want to do ROC approval related filing?

1. Form 1B (Application for approval of the Central Government for change of name or conversion of a public company into a private company)

2. Form 61 (Form for filing an application with Registrar of Companies)

Close a Company

Do you want to close a Company?

A company can be closed by adopting the following ways:-

(A) Strike off a company under Section 560 :

Section 560, of the Companies Act, 1956, deals with strike off provisions of a defunct company. Any defunct company desirous to strike off its name from the register of Registrar of company can apply in Form FTE for strike off its name from the register maintained by ROC as per Guidelines for ‘FAST TRACK EXIT MODE’ issued vide General Circular No. 36/2011 dated 7.6.2011. Similarly, ROC has also power to strike off any defunct company after satisfying himself of the need to strike off a defunct company and has reasonable cause. But before passing any order in this regard, an opportunity of being heard must be provided to the defunct company by following the due procedure u/s 560.

(B) WINDING UP

Section 425, of Companies Act, 1956, deals with modes of winding up.

The winding up of a company may be either -

(a) By the Tribunal (also known as compulsory winding up).

(b) Voluntary winding up.

Overview of Winding up

You can get a general picture from the following steps of winding up which are summarized below (except Voluntary winding up)

1. Firstly, issuing a written demand for debt payments to the target company.

2. Secondly, present a winding up petition to the court and the company

3. Thirdly, Court hearing for the petition

4. Fourthly, granting of winding up order by the court

5. Fifthly, meeting of creditors and other relevant parties

6. Sixthly, appointment of liquidator.

7. Seventhly, realization and distribution of company’s assets to the creditors

8. Eighthly, realize of duties for liquidator

9. Lastly, dissolution of the company.

For more details please visit Company Liquidators website (http://www.companyliquidator.gov.in/)

Voluntary Winding up

Voluntary winding up which may be:

i) Member’s Voluntary winding up.

ii) Creditor’s Voluntary winding up.

In case of voluntary winding up, the entire process is done without court supervision. When the winding up is complete, relevant documents are filed before the court for obtaining the order of dissolution. A Voluntary winding up can be done by members or creditors. The circumstances in which company may be wound up voluntarily are:

a) When the period fixed for the duration of the company in its articles has expired.

b) When an event on the happening of which the company is to be dissolved as per its articles happen.

c) The company resolves by special resolution at any general meeting to be voluntary winding up.

Do you want to convert the existing Company to LLP?

In case company wants to convert the existing company to LLP, it has to comply with the requirements of LLP Act, 2008 (File Form 18 under LLP Act, 2008). For details, please visit the link http://www.llp.gov.in/ available on MCA portal. After it gets approved, intimation regarding this can be given in Form 14 - LLP {Form for intimating to Registrar of Companies of conversion of the company into limited liability partnership (LLP)} with ROC.

5 Mistakes to avoid while saving tax!

2012-02-29T12:17:00.000+05:30

By: Prof. Bajaj

Its March knocking on the door and the same mad rush is seen everywhere. For what? To save tax of course.

Be it businessman or salaried or professionals, there is still a huge chunk who are yet to make their tax saving investments and while doing so at the last moment, are likely to make a lot of mistakes. What could be those mistakes and why should one avoid them, lets have a look:

1. Making long term commitments without considering all factors

Last year, Mr. Sunil had made a contribution of Rs. 36,000 towards PF deducted by his employer. So he bought a 15 year policy with an annual premium of Rs. 64,000 so that his Rs. 1 Lakh limit is achieved. However, this year, due to increase in his salary, his PF contribution has increased to Rs. 48,000 p.a. But still he has to pay Rs. 64,000 premium towards his policy. So, in effect, he is paying Rs. 1,12,000 this year towards 80C, however, he would be entitled for deduction of only Rs. 1 Lakh. This problem could continue further, as his salary is expected to increase every year and so would his PF contribution.

Similar story has occurred with Mr. Pramod. He had availed a home loan and was paying an EMI of Rs. 25,000 p.m. As per the repayment schedule, out of the total Rs. 3 Lakhs paid, only Rs. 71,000 was the principle and balance was interest. Thus, he purchased a ULIP with an annual premium of Rs. 29,000 and 5 years payment commitment. As we know, that every year, the principle component increases and interest component decreases, next year, he will have the principle component increased to Rs. 96,000 and will still have to pay Rs. 29,000 towards the ULIP premium.

If they had invested the balance amount of Rs. 64,000 and Rs. 29,000 in an avenue which does not compulsorily requires annual investment (Example ELSS, PPF, NSC etc) then this problem would not arise.

So its better to be careful while choosing long term commitment amount. You might be required to pay them for long, but wont be able to avail tax benefit on the same.

2. Thinking that all life insurance policies qualify for tax deduction

It is a general myth (mostly propagated by insurance agents) that a life insurance policy is the best thing for saving tax. Before agreeing or disagreeing to the same, I would like to draw your attention to something more important.

Not all life insurance policies would qualify for tax benefit u/s 80C. If you want to avail this benefit, you will have to ensure that the life risk cover is at least 5 times the premium paid by you. (This is as per the current tax laws. It could increase to 10-20 times the premium in DTC). Thus, if you think of following the first point and your agent starts pushing you for a single premium plan, first check if the plan is giving you a life risk cover of 5 times the premium or not. In most cases, single premium plans do not have this feature and would, therefore, not qualify u/s 80C.

There is another breed of products (of course insurance-cum-investment plan), which requires annual payments, gives 5 times life risk cover in the first year, but the cover drops to 1.25 times the premium paid from the second year. You need to be cautious while buying these plans, because, they will give you tax benefit in the current year. But the next year premium will not be eligible for tax deduction, but you still will have to pay the premium.

3. Not considering the other items that qualify for tax deduction

Before arriving at the amount you need to invest for tax saving, make sure you have accounted for few other less-known items which qualify u/s 80C. One of the most important amongst them is the tuition fees paid towards your children’s education. Also, if you are salaried, don’t forget to deduct the HRA, Conveyance Allowance (within the prescribed limits) before you arrive at your amount required to be invested to save tax. Seeking professional help for the same could be of great help.

4. Investing Blindly for just Tax saving

This tax saving season, many fly-by-night organisations (claiming themselves as NGOs) call and request you to donate them to save tax u/s 80G. While it is always good to do charity, it is also important that it is done for the right purpose and it is being used for the right purpose. Remember that out of the amount donated to such NGOs, only 50% would qualify for tax saving. Just to give an example, if you still have a taxable income of Rs. 10,000 on which you want to save tax. Suppose You are in a 20% tax slab. If you donate this amount to the NGO, Rs. 5000 will qualify for tax saving. So in effect, you will pay tax on the balance Rs. 5,000 i.e. Rs. 1000. Which means your tax saving is Rs. 1000 and total money going from your pocket is Rs. 11,000 (Rs.10000 Donation + Rs. 1000 tax)

As against this, if you do not donate, you just require to pay Rs. 2000 as tax. There is no tax saving, but the total money going from your pocket is only Rs. 2000. We are nowhere suggesting that you should not donate. But while donating,

[A] Don’t do it just to save tax.

[B] Check the credibility of the organisation if they are putting your money to the right purpose.

5. Not Being realistic with your expectations

You have several options like PPF, LIP, NSC, ELSS, Bank FD etc for saving tax u/s 80C. Having said that, each of them have some merits and demerits over others. While choosing the investment product, take your overall financial planning into account and then make the investment. I have seen some people having expectations like, “Advise me a product for tax saving which will give me guaranteed tax-free returns of 15%. Also, there should be no lock-in for this product.”

Alas! If there existed such product, then maybe no other products were needed at all. But as on date such product does not exist, which will satisfy all these conditions. Some product will fulfil the ‘guaranteed’ part of it, and some other will fulfill the tax-free 15% part of it. So unless you are reasonable with your expectations, you will not find the right product for tax saving.

Old Schedule VI vs Revised Schedule VI - Related issues

2012-02-27T17:00:00.000+05:30

By: G S Rao

Introduction:

Section 211 provides that every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and shall be in the form set out in Part I of Schedule VI, or as near thereto as circumstances admit or in such other form as may be approved by the Central Government either generally or in any particular case. Section 211(2) provides that “every profit and loss account” of a company shall give a true and fair view of the profit or loss for the financial year and comply with the requirements of Part-II of Schedule VI. Thus Schedule VI assumes significance in preparation of not only of balance sheet but also in preparation of profit and loss account. This article focuses on the history of Schedule VI, newly introduced format of Schedule VI and its comparison with the old format.

History of Schedule VI: The companies (Amendment) Act,1960 substituted Part-I, i.e., horizontal form of balance sheet of Schedule VI. It also amended Part-II and Part-II by making certain insertions or substitutions in Paras 3 and 4. Subsequently some amendments were made in sixties and mid seventies. The significant amendment is through notification dated 12.03.1979 which permitted companies to prepare balance sheets either in horizontal form or vertical form. Schedule VI thus remained unchanged for a longer time excepting for minor changes with regard to disclosure of unutilized moneys out of new issues and amounts due to micro small medium enterprises.

Background to introduction of revised Schedule VI:

The converged accounting standards and revised Schedule VI and Schedule XIV have been finalized by National Advisory Committee on Accounting Standards (NACAS)and recommended to the Government for notification. MCA has already laid a road map for such convergence in a phased manner with effect 1^st April, 2011.Amended Schedule VI is a step in that direction and certainly facilitate convergence of Indian Accounting Standards with International Financial reporting standards as the revised Schedule VI format attempts to align itself with the existing Accounting standards.

Applicability of Revised Schedule VI:

Ministry of Corporate Affairs(MCA) initially announced on its website that the revised Schedule VI will be applicable from the financial year 2010-11 onwards which created some confusion. However on 25^th March 2011, MCA has changed this note on its website to state that the revised Schedule VI will be applicable to all companies for preparation of Financial statements beginning on or from 1^stApril 2011 and Notification no. F.No.2/6/2008-C.L-V dated 30-3-2011 has been issued to that effect. The requirements of the Revised Schedule VI however, do not apply to insurance or banking company, or any company engaged in the generation or supply of electricity or to any other class of company.

As per the Roadmaps, the first phase of convergence is applicable for following companies:-

i. Companies which are part of NSE – Nifty 50.

ii. Companies which are part of BSE - Sensex 30.

iii. Companies whose shares or other securities are listed on stock exchanges outside India.

iv. Companies, whether listed or not, which have a net worth in excess of Rs.1,000 crores.

Why new format is welcome?

Revised schedule VI notes itself indicate that the disclosure requirements specified in Schedule VI are in addition to the disclosure requirements of the companies Act as well as the Accounting standards. Hence it gives little room for divergent practices unlike in the past. Schedule VI establishes direct communication with stake holders and elimination of conflict between Indian Accounting Standards and Schedule VI gives a true and fair view of the Balance sheet and Profit and Loss to the stakeholders.

Structure of Revised Schedule VI: The Revised Schedule VI is structured as shown below:

i. General Instructions.

ii. Part I – Form of Balance Sheet.

iii. General Instructions for Preparation of Balance Sheet.

iv. Part II – Form of Statement of Profit and Loss.

v. General Instructions for Preparation of Statement of Profit and Loss.

What changes are in ?

Key changes made in Revised Schedule VI

1. Introduction of new heads/classification: New format brought in new classification heads in the balance sheet. All items of assets and liabilities are to be bifurcated between current and non-current portions and presented separately on the face of the Balance Sheet. Such classification was not required by the Old Schedule VI.

2. Format for P& L a/c: In the old format there is no format for P& L account although Part II specifies the manner of disclosure of items. Revised Schedule VI provides a specific format and it is titled as “Statement of Profit and loss for the year ended ______”

3. Notes replace schedules: In the Old Schedule VI, break-up of amounts disclosed in the main Balance Sheet and Profit and Loss Account were given in the Schedules. Additional information was furnished in the Notes to Account. The Revised Schedule VI has eliminated the concept of ‘Schedule’ and such information is now required to be furnished in the Notes to Accounts.

4. Primacy to Accounting Standards and ACT: The terms used in the Revised Schedule VI will carry the meaning as defined by the applicable Accounting Standards. Thus primacy is given to Accounting standards and the provisions in case of conflict.

5. No option for Horizontal presentation: The Revised Schedule VI prescribes only the vertical format for presentation of Financial Statements. Thus, a company will no longer have an option to use horizontal format for the presentation of Financial Statements.

6. Opening balances: The Financial Statements prepared for the year 2011-12 (1st April 2011 to 31^st March 2012), corresponding amounts need to be given for the financial year 2010-11.

7. Uniformity in figure reporting: once a unit of measurement is used, it should be uniformly followed through out in the financial statements and notes thereon. Moreover, rounding off requirements is limited to the nearest lakhs, millions or crores, if turnover exceeds 100 crores.

8. Classification of assets into Current & Non current: Assets and liabilities are to be segregated into their current and non-current portions. This classification helps in ascertaining the liquidity. For eg. current maturities of a long term borrowings will have to be classified under the head “Other current liabilities.”

9. Share capital related changes:

i. Share application money pending allotment details have to be disclosed. The amount in excess of subscription or if the requirements of minimum subscription are not met will be shown under “Other current liabilities.”

ii. Reconciliation of number of shares at the beginning and at the end of reporting period has to be made.

iii. Names of each shareholder holding more than 5% shareholding as on the balance sheet have to be disclosed.

a. Details of aggregate number and class of shares allotted for consideration other than cash, bonus shares and shares bought back will now are required to be disclosed only for a period of five years immediately preceding the Balance Sheet date including the current year.

b. Rights and restriction attached each class of shares as to repayment of capital or dividend have to be disclosed separately.

c. Under the head shareholders Funds money received against share warrants has to be shown separately.

10. Reserves and Surplus: Any debit balance in the Statement of Profit and Loss will have to be disclosed under the head “Reserves and surplus.” Earlier, any debit balance in Profit and Loss Account carried forward after deduction from uncommitted reserves was shown as the last item on the Assets side of the Balance Sheet. Share option account has to be shown under reserves and surplus

11. Borrowings related: Borrowings have to be bifurcated into interim and short term borrowings. Long term borrowings have to be shown under non current liabilities. Short term borrowings have to be shown as current liabilities with further sub classification of secured and unsecured. Current maturing long term debts, interest accrued and due on borrowings have to be shown under current liabilities. The details such as terms of repayments, interest and any defaults as on the balance sheet date shall be given. Any related party transactions in loans and advance should be shown separately

12. Fixed assets: Fixed assets shall be shown under non current assets and they are further bifurcated into tangible, intangible and intangible assets under developments. Further the assets under lease shall be shown separately under each head.

13. Current /non current assets

a. Investments : Investments shall be classified into current and non current investments. A separate disclosure has to made indicating aggregate provision for diminution in value of investments separately for current and long-term investments;

b. Trade receivables: they are defined as dues arising only from goods sold or services rendered in the normal course of business. Aggregate of trade receivables outstanding for more than 6 months from the date they became due have to be shown separately as against old disclosure of Sundry debtors due for more than 6 months form the invoice date

c. Non current assets: Long term trade receivables are to be shown under other non current assets.

d. Short term Loans and advances: Loans and advances given to Related parties have to be disclosed under this head.

e. Secured deposits : These have to be disclosed under non current assets under the head long term loans and advances

14. Capital advances : “Capital advances” are specifically required to be presented separately under the head “Loans & advances” rather than including elsewhere.

15. Capital commitments: In the Old Schedule VI, details of only capital commitments were required to be disclosed. Under the Revised Schedule VI, other commitments also need to be disclosed.

16. Stock in Trade: Stock-in-trade held for trading purposes has to be disclosed separately from other finished goods. Goods in transit to be shown under the relevant subhead of inventories

17. Materiality criteria for separate head: Any item of income or expense which exceeds 1% of the revenue from operations or Rs. 100,000.Previously 1% of total revenue or Rs.5,000 whichever is higher was the criteria for separate disclosure of income/expenses.

18. Revenue recognition: Dividends declared after the balance sheet date( even if they relate to period prior to the balance sheet date) need not be considered in the revised format. Revenue recognition is to be as per AS 9 .

19. Defaults in payments of loans and interest: The Revised Schedule VI requires disclosure of all defaults in repayment of loans and interest to be specified in each case. Earlier, no such disclosure was required in the Financial Statements. However, disclosures pertaining to defaults in repayment of dues to a financial institution, bank and debenture holders continue to be required in the report under Companies

What is out?

It may be noted that the Revised Schedule VI has removed a number of disclosure requirements. These are :-

i. Disclosure as required under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is dropped. However it is desirable to show this disclosure as MSMED act mandates buyers of goods to give such information.

ii. Disclosure relating to managerial remuneration is also omitted. However the exercise for ascertaining the managerial remuneration will continue.

iii. Disclosures of information relating to licensed capacity, installed capacity and actual production as per old Schedule VI are not required now. This is a welcome omission as companies can block this information keeping their rivals in dark.

iv. Disclosure of Information on investments purchased and sold during the year is not required as per new Schedule VI.

v. Disclosure under heads Investments, sundry debtors and loans & advances pertaining to companies under the same management.

vi. Maximum amounts due on account of loans and advances from directors or officers of the company.

vii. Commission, brokerage and non-trade discounts, tax deducted at source on interest, Royalty received etc.

What is not changed?

Other than the new additional disclosures or specific omissions, rest of information as per old format will continue to be disclosed. Information such as value of imports calculated on CIF basis, earnings/expenditure in foreign currency, etc have to disclosed as per previous disclosure pattern

Conclusion: Financial year 2011-12 will be the first year for implementation of new revised Schedule VI and a lot of practical difficulties will surface only at the time of preparation of financial statements. Companies and Auditors will have to be guided by the Guidance note issued by the Institute of Charted Accountant of India for any ambiguity faced while preparing the financial statements.

Foreign Contribution Regulation Act 2010 - Critical Issues

2012-02-22T20:01:00.001+05:30

By: CA Yogesh Agarwal

The Foreign Contribution Regulation Act 1976 is repealed with the enactment of Foreign Contribution Regulation Act 2010 (FCRA 2010). The new FCRA 2010 imposes restrictions on investment in Mutual Funds. The restriction is imposed by virtue of section 8. Section 8 of the act basically deals with the manner of utilization of foreign contribution received. (Please refer act for definition of foreign contribution). Section 8 is reproduced below as:

“(1) Every person, who is registered and granted a certificate or given prior permission under this Act and receives any foreign contribution,—

(a) shall utilize such contribution for the purposes for which the contribution has been received:

Provided that any foreign contribution or any income arising out of it shall not be used for speculative business:

Provided further that the Central Government shall, by rules, specify the activities or business which shall be construed as speculative business for the purpose of this section;

(b) shall not defray as far as possible such sum, not exceeding fifty per cent of such contribution, received in a financial year, to meet administrative expenses:

Provided that administrative expenses exceeding fifty per cent of such contribution may be defrayed with prior approval of the Central Government.

(2) The Central Government may prescribe the elements which shall be included in administrative expenses and the manner in which administrative expenses referred to in sub-section (1) shall be calculated.”

From the first proviso to clause (a) of sub-section (1) of section 8 it is clear that the foreign contribution shall not be utilized for speculative business. Interestingly the definition of the term Speculative Business is different from what is defined in Income Tax Act 1961 and also from the proposed Direct Tax Code.

For the purpose of this section Speculative Business is defined under rule 4 of the Foreign Contribution Regulation Rules 2011. The rule 4 is reproduced below:

“Speculative activities. - (1) The following activities shall be treated as speculative activities:-

(a) any activity or investment that has an element of risk of appreciation or depreciation of the original investment, linked to market forces, including investment in mutual funds or in shares;

(b) participation in any scheme that promises high returns like investment in chits or land or similar assets not directly linked to the declared aims and objectives of the organization or association.

(2) A debt-based secure investment shall not be treated as speculative investment.

(3) ……………

(4)…………….”

Now also there is a difference in the definition of Speculative Business as defined in I T Act and FCRA 2010 and DTC 2010.

Section 43(5) of the I T Act covers the definition of the Speculative Business as reproduced below:

“speculative transaction” means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrip:

Provided that for the purposes of this clause—

(a) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him; or

(b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or

(c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member;

[(d) an eligible transaction in respect of trading in derivatives referred to in clause 19 [(ac)] of section 2 20 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognized stock exchange;]

shall not be deemed to be a speculative transaction.

[Explanation.—For the purposes of this clause, the expressions—

(i) “eligible transaction” means any transaction,—

(A) carried out electronically on screen-based systems through a stock broker or sub-broker or such other intermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made or directions issued under those Acts or by banks or mutual funds on a recognised stock exchange; and

(B) which is supported by a time stamped contract note issued by such stock broker or sub-broker or such other intermediary to every client indicating in the contract note the unique client identity number allotted under any Act referred to in sub-clause (A) and permanent account number allotted under this Act;

(ii) “recognised stock exchange” means a recognised stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified 23 by the Central Government for this purpose;]

Nowhere restriction is imposed on investment in Mutual Funds and shares. That means Clear distinction from the definition given in FCRA 2010.

Section 314 the Direct Tax Code 2010 is in line with the definition of section 43(5) of I T Act. I am not reproducing the content of the section.

If we talk specifically about a charitable society or trust this provision is in contradiction with section 11(5) of Income Tax Act 1961. This very section of Income Tax Act allows Society or Trust to invest in Mutual Fund but now this will jeopardize the activity of the society with the enactment of FCRA 2010 as it does not allow to do so. The investment in mutual fund is very much famous amongst the societies as the same is treated safe (up to great extent), beneficial under taxation law, good return.

There are some other provisions also enacted which may be considered for rethinking by the legislature. Such as

a) Rule 3(iii) provides that “an organization can be declared of political nature if it has objectives of political nature or comments upon or participates in political activity.”

My observation is restriction on speech interferes with the fundamental right of Indians given under the constitution.

b) Rule 6 provides that foreign contribution, received from relatives, in excess of 1,00,000/- in one financial year should be intimated to the Central Government in Form FC-1 within 30days of such receipt.

My observation is it would hamper the speediness of the work of the organizations as it is not feasible every time to intimate. Also it is in contravention of the section 4(e) of FCRA 2010 wherein FC received from relative is exempt in totality.

And many more observations are there which require amendment.

I think ministry of Home Affairs should think once again to bring the amendment in this inclusion. Last but not least it is also doubtful that if the investment is made in debt based mutual fund then it will be in contravention with the provisions of section 8 of FCRA 2010 ? Because as per rule 4(2) exclusion is given based on “Investment in debt based secured fund”.

Hope you will appreciate and suggest some more clarity on the issue.

Are you ready to do CA ?

2012-02-15T17:43:00.002+05:30

By: Renu

CPT the beginning of the studies of CA. So let’s first understand it's structure:-

Accounts:50 marks.

Law:50 marks.

Economics:50 marks.

Maths:50 marks.

Passing criteria:100 marks.

Negetive marking:25 per question.

Normally people think,its not a subjective exam so they can easily dealt with it. But opposite happens with some. And the worse thing is,it happens again and again.The real question arise is why it happen again and again.

Let’s take an example:-

accounts-7	correct -10	incorrect-12
laws-12.25	correct -16	incorrect-15
economics-(-3.25)	correct -0	incorrect-13
quantitative aptitude-(-0.25)	correct -0	incorrect-1

In the above case, we can easily see that accounts and law are just fine.Literally not.

But economics and maths are more than worse totally terrible.To achieve min 50%,the one should focus to get average % first.

So the gist is People don’t lose because they can’t score 50 %.But they lose because they can’t save themselves from negative marking.So what could be the real solution:-

1.If you are smart,CA fraternity is smartest.They gonna focus those points which people overlook.

2.So atleast one reading of Institute material is compulsory.

3.No matter how perfect person you are,you can still commit mistakes.I am assuming that while attempting 10 question, your mistakes are 2/10.

4.In short you can even lose marks where you are perfect.

5.Where you are already weak, your mistake will be 6/10.Means you lost more than you gain.

6.So where you are good,make yourself perfect.But where you are weak,make your at least performance satisfactory.

Analyzing part :-

Now it’s time to analyze your mistakes. I am talking about those questions for which you need to guess about answering them. Part them into three categories:-

1.Where you think that chances of this question to be right is 80%

2.Where you think that chances of this question to be right is 50%

3.Where you think that chances of this question to be right below 50%

Result part:-

If yourright answer belongs to just category,then only answer those question whom you are atleast 80% sure.If your right answer consists upto category 2,then you can answer questions where you are guessing upto 50%in the required question.

If you need to guess and your inner conscience doesn’t agree with your answer and you disagree with your answer and fall in third category.Then You don’t even dare to attempt that question.

Note:-

1.This formula prevents you from negative marking.

2.You can easily check what questions you should not answer.

3.Taking test on regularly basis is necessary.

4.You have to study first of every subject to apply this rule.

Books :-

1.Study material is wide enough. It covers each and every prospect of the question.

2.Use cds and model test papers as must and do as many as you can.

3.For economics,I.C.Dhingra is best book which is really simple in reading.You might have referred the same in graduation. I did it so I can say,It gives an idea atleast.

4.Otherwise class 11 and 12 books really provide a good backup.

5.A must solution book of maths to practice maths.

6.Keep formulas in paper till you can’t keep them in your mind.

7.Even if you are weak in maths,you can save 20% from statistics part.Which is relatively easy.

8.You can prefer King Champion guide also,in case you don’t find I.C.Dhingra.Atleast this is available from every Delhi university student.

9.For law undoubtedly refer P.C.Tulsian.The best book for self study.

10.In Accounts,you can also refer P.C.tulsian.

Lastly,I can say,

If I studied with the intention to be a failure and still passed,then you must remember that you are at least more dedicated than me towards your study.

Excise Duty on Branded Readymade Garments

2012-02-14T18:47:00.000+05:30

By: CA Ankit Gulgulia

In Recent times the Rollback of Excise Duty Exemption on Branded Readymade Garments has been a Subject Matter of big protest from Industry. Despite all the efforts and rows the government looks in no mood to give any relaxation on the same. Excise duty at the rate of 10% shall now apply to ready-made garments and made-up articles of textiles falling under Chapters 61, 62 and 63 of the Central Excise Tariff when they bear or are sold under a brand name. The duty shall be applicable from 01.03.2011.

What is Excise Duty?

Excise Duty is a tax attracted by the event of manufacture but collected at some convenient stage which may be after the said event, which is only for administrative convenience. It is a duty levied up on goods manufactured and not up on sales or the proceeds of sale of goods.

From the above definition it can be said that excise duty shall be levied only when the activity is a manufacture and only when it is leviable the same shall be collected at the time of sale.

Major Issues

This article aims to discuss several issues that require clarity for the industry and are presented as hereunder:

a. Why and how is Excise Duty Calculated on Retail Sale Price in case of Branded Readymade Garments when the excise duty is leviable on manufacture?

If Ideally the excise duty is leviable on event of manufacture then the base for computing the tax shall be manufacturing cost instead of retail sale price. Why is that in case of Branded Readymade Garments the calculation of excise is based on retail sale price?

Retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and the price is the sole consideration of such sale.

As Per Section 3(2) of Central Excise Act,1944, the Government may notify such categories of goods to which the revised principle of excise valuation would apply. The revised principle would require payment of excise duty on the basis of the said tariff value. Thus the goods, which are coved under this new principle, would be required to discharge excise duty on the basis of the tariff value as notified instead of the basis of the wholesale selling price. Readymade Garments valuation is covered by this principle only. Duty is to be paid on a tariff value equal to 45% of the retail sale price.

Based on the Same the Computation of Value for Excise shall be As Follows:

Particulars	Amount
Retail Sale Price	100/-
Tariff Value Notified (45%)	45/-
Excise Duty Payable at the Rate of 10.3% (45 x 10.3%)	4.64/-

b. What are the exempted Categories?

Articles not bearing a Brand Name

The Articles not bearing a brand name are exempted from the applicability of excise duty. The exemption is based on the condition that no CENVAT credit shall be taken.

Thus readymade garments, not bearing a brand name are exempted from payment of Central Excise duty. Further, the manufacture has an option to pay duty @ 5% on cotton items and 10% on others and take CENVAT credit.

Brand name or Trade name : means a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person.

SSI Exemption

For evaluating the eligibility of a Small Scale Industry, under Central Excise Act, the following conditions must be satisfied:

a. The turnover of the Unit must not exceed rupees One Hundred and Fifty Lakhs made on or after the 1st day of April in any financial year and

b. The turnover of the Unit must not exceed rupees Four Hundred Lakhs in the preceding financial year.

For the Purpose of Computing the Exemption limit it is very pertinent to know the finance minster’s statement on the floor of the house as Quoted hereunder:

“While initiating debate on the Finance Bill-2011 the Finance Minister said that the garment traders had criticised the proposed 10 per cent excise duty on readymade garments saying it would hurt the small business. He added

1) “To address this concern, I propose to enhance the abatement of 40 per cent to 55 per cent on the retail sale price.

2) With this relief a unit will continue to be eligible for SSI exemption in 2011-12 even if it had a turnover based on retail sale price of Rs 8.90 crore in the current year”, the Minister said. (Current year means 31-03-2011)”

Many persons thought that there is no excise duty now until you reach a turnover of Rs. 8.90 Crores instead of Rs. 1.50 Crores presently available to SSI. It is not the case. Let us See how

At present under the scheme of excise for SSI, an SSI which does not have a turnover of Rs. 4.00 Crores during the year ending 31-03-2011 will not be liable to excise duty until he reaches a turnover of Rs. 1.50 Crores during the period ending 31-03-2012. If at any moment during the period ending 31-03-2012 the turnover crosses Rs.1.50 Crores, his liability to excise starts notwithstanding the fact that his turnover during the year ending 31-03-2012 is less than Rs. 4.00 Crores. However he would become eligible to the SSI benefit for the year ending 31-03-2013 if the turnover was less than Rs. 4.00 Crore for 31-03-2012.

Illustration:

(The Important Jinx in the statement of finance minister was “retail sale price”(as bolded above). No Doubt finance minister knows the correct words to put at correct place to be politically superior.)

Other Conditions for availing SSI benefit

a. The SSI scheme is Optional.

i.Option 1: Pay the normal rate of duty on the goods cleared and avail CENVAT credit on the inputs.

ii.Option 2: Avail the exemption scheme and forgo the claim of CENVAT Credit on inputs till you reach the turnover of Rs. 150 Lakhs.

iii.In both the cases the option shall be exercised before effecting the first clearances at the normal rate of duty. Such option shall not be withdrawn during the remaining part of the financial year.

iv.However the manufacturer can take the credit on capital goods and use the same for payment of normal duty after he crosses the basic exemption limit of Rs. 150 Lakhs.

Provisions for Clubbing of Turnover

i.Sales by the same manufacturer from different factories: Where goods are cleared from one or more factories by the same manufacturer, the turnover of the factories will be clubbed to determine the exemption limit of Rs. 400 Lakhs/150 Lakhs and not separately for each factory.

ii. Sales by different manufacturers from the same factory: Where the specified goods are cleared by one or more manufacturers from the same factory, the exemption shall apply to the aggregate value of clearances of all the manufacturers from that factory.

Where one factory is used by one manufacturer for some part of the year and by another manufacturer for the remaining part of the year then their turnover will be clubbed to determine their SSI status.

Exemption to Job Worker:

Job worker is exempted from payment of duty and following Central Excise duty procedure if duty liability is being discharged by the principal manufacturer. However, the job worker may be authorized to follow central excise procedure and pay duty.

Exemption On Uniforms, Blankets Etc.

No excise duty on uniforms or made-up articles like quilt, blankets, towels, linen etc bearing the name or logo of a school, security agency, company, hotel or airline etc., it is clarified that such products would not merit treatment as “branded” products merely because the name of the school, institution or company or their logo is either printed, embroidered or etched on them. This is equally true of made ups such as towels, linen etc bearing the name of a hotel, restaurant or airlines. In all these cases, there is no nexus between such a name or logo & the product at the time of its sale which is essential ingredient in the definition of the term “brand name”. Unless such garments/made- ups also bear a brand name in addition to the name or logo of the school, security agency, hotels, airlines and company, such goods would not attract the excise duty.

It is also gathered that in some cases, apart from the name or logo of such organisations, the name of the tailor or manufacturer is affixed on such garments. However, mere affixing of name of the tailor or manufacturer would not constitute a brand name.

Another related issue is the applicability of the mandatory excise duty to blankets which are supplied to the defence establishment, armed forces, police forces etc against tenders that stipulate that the name of the manufacturer should be clearly indicated or marked on the product. As pointed out above, affixing the name of the manufacturer on such goods would not, by itself, bring them within the ambit of branded goods.

c. Whether the Service tax Input received on various services can be claimed as CENVAT Credit against the Excise Duty Payable?

As per Cenvat Credit Rules -“input service” means any service,—

(i) used by a provider of taxable service for providing an output service; or

(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal but excludes services certain service when used in some specific instances.

Since there is no one to one Correlation required in CENVAT utilisation, So if nature of input service falls within definition ambit the CENVAT of input service can be very much utilised against excise amount payable, thereby reducing the funds (PLA) outflow.

Tax benefit differently able

2012-02-13T21:21:00.000+05:30

Tax benefits to individual who are differently able, Parents who have dependents who are differently able including minor and certain benefits to private sector for providing employment opportunities to differently able

As per recent estimate there are more than 70 million people in India who are differently able. The challenges and hardship which they face are enormous form getting basic education, rehabilitation, continuous cost of medical requirements and getting job or practising a profession or vocation. The government of India has provided various concessions and reservations to empower differently able person and their families.

There are many differently able people and families who are tax payers and there are many individuals who have dependents who are differently able but are not aware of the provision of the various Acts which provides various benefits and concession in tax. Further government has also provided concession to private sector to encourage them to appoint differently able person.

The article highlights the benefits government provides in Income Tax Act, Professional Tax and a scheme to encourage private sector to provide employment opportunities to differently able.

The deduction under section 80U, 80DD, 80DDB and 10(14) under Income Tax Act and Professional Tax Act are direct deduction were as through proper tax planning one can claim benefit under section 64(1) of Income Tax Act. There is also one scheme introduce by Government to encourage private sector to employee person who are differently able. Lets us go through in details all 7 different benefits.

1. Income Tax Act, Section 80U – Deduction in case of person with disability

Who can claim the benefit: Individual who is resident during previous year and is certified by Medical Authority to be a person with Disability.

Deduction allowed: In case of Person with Disability(at least 40%)Rs 50,000 /- is allowed. In case of Person with Severe Disability (80% of one or more disabilities) \Rs. 1,00,000/- is allowed.

Important Definitions:

A. “disability” shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996), and includes “autism”, “cerebral palsy” and “multiple disabilities” referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999)

B. “medical authority” means the medical authority as referred to in clause (p) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996), or such other medical authority as may, by notification, be specified by the Central Government for certifying “autism”, “cerebral palsy”, “multiple disabilities”, “person with disability” and “severe disability” referred to in clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999)

C. “person with disability” means a person referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996), or clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999)

D. “person with severe disability” means—(i) a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or

(ii)a person with severe disability referred to in clause (i) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).

Important Points to be noted:

A. In few cases medical certificate will be valid up to a limited period, say five years and requires individual to reassess himself with the medical authority for fresh certificate. The deduction can only be claimed were the medical certificate is live, in case it is expired new certificate is required to claim the deduction.

B. Individual whose income is from salary, Tax is Deducted from Source (TDS) by employer from monthly salary. The tax is computed after considering estimated gross total income of the individual for the entire year and divided by 12 months. Individuals can inform the employer regarding the benefit under this section, which can be reduce from gross total income and hence TDS is deducted on the lesser amount

C. For prescribed Forms, see Form No. 10-IA and Forms prescribed under Persons with Disabilities (Equal Opportunities, Protection of Rights & Full Participation) Act, 1995. Medical certificate can be issued by Neurologist having a degree of Doctor of Medicine (MD) in Neurology (or, in case of children, a Pediatric Neurologist having an equivalent degree) or A Civil Surgeon or Chief Medical Officer (CMO) of a government hospital.

2. Income Tax Act, Section 80DD – Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability

Who can claim the benefit: Individual or Hindu Undivided Family (HUF) who is resident during previous year, and has incurred expenditure in relation to maintenance or treatment of depended disable or has invested in a particular scheme of LIC for benefit of the depended disable.

Deduction allowed:

A. Rs 50,000/- for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability. Or Rs 1,00,000/- for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with Severe disability having medical certificate granted by prescribed Medical Authority

B. Any amount paid or deposited under a scheme framed by the Life Insurance Corporation or any other insurer or the Administrator or the specified company for the maintenance of a dependant, being a person with disability or person with Severe disability (subject to over all limit of Rs 50,000/- or 1,00,000/- as applicable)

Important Definitions:

A. “dependant” means—(i)in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;(ii)in the case of a Hindu undivided family, a member of the Hindu undivided family dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year

Other definitions of “disability”, “medical authority”, “person with disability” & “person with severe disability” will be same as mention in section 80 U.

Important Points to be noted:

A. In the case of an individual the deduction is available to spouse, children, parents, brothers or sisters of the individual. In the case of HUF the deduction is available to any member of the HUF

B. Currently LIC is offering Jeevan Aadhar Plan for claiming benefit under this section.

C. The nomination in case of insurance taken should be in favour of dependent for receiving the benefit in lump sum or annuity in event of death of individual or Members of the HUF in whose name subscription of the scheme is taken. Alternatively nomination can be in favour of trust for the benefit of dependent

D. In case the dependent predeceases the individual or the member of the Hindu undivided an amount equal to the amount paid or deposited under the insurance scheme shall be deemed to be the income of the Individual or HUF in the year in which such amount is received and shall accordingly be chargeable to tax as the income of that year.

E. In few cases medical certificate will be valid up to a limited period, say five years and requires individual to reassess himself with the medical authority for fresh certificate. The deduction can only be claimed were the medical certificate is live, in case it is expired new certificate is required to claim the deduction.

F. Individual whose income is from salary, Tax is Deducted from Source (TDS) by employer from monthly salary. The tax is computed after considering estimated gross total income of the individual for the entire year and divided by 12 months. Individuals can inform the employer regarding the benefit, which can be reduce from gross total income computation and hence TDS is deducted on the lesser amount

G. For prescribed Forms, see Form No. 10-IA and Forms prescribed under Persons with Disabilities (Equal Opportunities, Protection of Rights & Full Participation) Act, 1995. Medical certificate can be issued by Neurologist having a degree of Doctor of Medicine (MD) in Neurology (or, in case of children, a Pediatric Neurologist having an equivalent degree) or A Civil Surgeon or Chief Medical Officer (CMO) of a government hospital.

H. The benefit under this section will be not be available in cases were dependent has avail benefit us 80 U.

3. Income Tax Act Section 80DDB Deduction in respect of medical treatment, etc

Who can claim the benefit: Individual or Hindu Undivided Family (HUF) who is resident during previous year, and has paid any amount for the medical treatment of such disease or ailment, for himself or dependent in case of individual or any member of HUF in case of HUF

Deduction allowed: Rs 40,000/- deduction shall be allowed or amount actually paid, whichever is less. In case any of the above is a senior citizen (Above 65 years), an additional deduction of Rs. 20,000 shall be allowed towards payment of the senior citizen. i.e. in case of senior citizens the above limit of 40,000 shall be upgraded to Rs.60000.

Important Definitions:

B. “Government hospital” includes a departmental dispensary whether full-time or part-time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants

C. “senior citizen” means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.

Important Points to be noted:

A. The deduction shall be reduced by the amount received, if any, under the insurance from the insurer or reimbursed by the employer

B. For availing the deduction a certificate in the prescribed form from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other prescribed specialists, working in a Government hospital, has to be submitted.

C. For the purposes of section the following shall be the eligible diseases or ailments :

(1)Neurological Diseases where the disability level has been certified to be of 40% and above,—

(2)Dementia ;

(3)Dystonia Musculorum Deformans ;

(4)Motor Neuron Disease ;

(5)Ataxia ;

(6)Chorea ;

(7)Hemiballismus ;

(8)Aphasia ;

(9)Parkinsons Disease ;

(10) Malignant Cancers ;

(11) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(12) Chronic Renal failure ;

(13) Hematological disorders :

(14)Hemophilia ;

4. Income Tax Act Section 10(14) Rule 2BB Transport Allowance

Who can claim the benefit: Salaried Individual

Deduction allowed: Rs 1600 Per Month

Important Points to be noted:

A. Transport allowance is granted to an employee, to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty. Most of employers pay Rs 800/- Per Month as the same is exempted. However for employee, who is blind or orthopaedically handicapped with disability of lower extremities, the exempted amount is Rs 1600/- Per Month

B. Employee can request employer to structure their pay in such a manner that they receive Rs 1600/- as monthly transport allowance to claim the benefit

C. Tax Exempt is irrespective of actual expense. (No bills/receipts needed)

5. Income Tax Act Section 64 Income of individual to include income of spouse, minor child, etc.

Who can claim the benefit: Individual who has a minor child suffering from any disability of the nature specified in section 80 U.

Deduction allowed: There is no direct deduction, but the income generated by minor child who is disable will not be clubbed with individual

Important Points to be noted:

A. As the income of the child is not clubbed the child is treated as a separate entity and can file an independent return with all its benefits. For example, Individual can transfer their revenue generating asset like fix deposits in the name of disable child and the interest earned will not be clubbed with the income of individual but will be assessed separately, which provides significant scope for tax savings.

B. Further the disable child while filing its own return can claim benefit under section 80U

6. Profession Tax Act, State Maharashtra Section 27A Exemptions

Who can claim the benefit: Any person suffering from a permanent physical disability (including blindness), being a permanent physical disability specified in the rules made in this behalf by the State Government, which is certified by a physician, a surgeon or an oculist, as the case may be, working in a Government Hospital

Deduction allowed: Complete amount of professional tax payable

Important Definitions:

"Government Hospital" includes a departmental dispensary whether full time or part time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants

Important Points to be noted:

A. The individual shall forward the certificate to employer who will produces the aforesaid certificate before the prescribed authority in respect of the first assessment year for which he claims deduction

B. As the professional tax is subject matter of state, which is responsible for collection, making rules and provide exemption, individual need to check with respective states for rules if any for exemption.(the above exemption is in relation to Maharashtra State). In most states the Professional tax is exempted for disable person.

7. Scheme For Providing Employment To Persons With Disabilities In The Private Sector

Who can claim the benefit: Private Sector Employers who are employing person with disability on or after 01-April-2008

Deduction / Benefits: Payment of the employer's contribution to the Employees Provident Fund and Employees State Insurance for the first three years by Government.

Important Points to be noted:

A. Employees with disabilities, with monthly wage up to Rs.25000/- per month, working in the private sector would be covered. Those earning above 25000/- per month will not be eligible

B. The scheme will be applicable to the employees with disabilities employed covered under the Persons with Disabilities (Equal Opportunities. Protection of Rights and Full Participation) Act. 1995 and the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple disabilities Act. 1999.

C. The employers would submit a copy of the disability certificate including statement, issued to the disabled employee by the Competent Authority, first time when such benefit under EPF and ESI is claimed.

D. The Government will directly provide employer's contribution for the schemes covered under the Employees Provident Fund & Miscellaneous Provisions Act. 1952 and the employment State Insurance Act 1948. This will be done in respect of employees for a maximum period of 3 years.

Though the government has provide some relief in tax, however much can be done to further empower the differently able people. The exemption under 80U and deduction for expenditure incurred for medical treatment under 80DD should be increased to Rs. 2,00,000/- , considering rising cost of living and increasing cost of medicine supplies and rehabilitation. One of the major problem person with disability faces is in travelling, most of them spend huge amount on commuting to work places as public mode of transport is not accessible for wheelchair users and for most other users, considering this government should increase the limit of transport allowance exemption for salaried class upto Rs. 4000/- Pm. The introduction of scheme to encourage private sector to employee differently able person is good step by government. As per annual report 2009-10 by ministry of social justice and empowerment, under the scheme, 144 and 261 persons have been registered by Employees Provident Fund Organization (EPFO) and Employees State Insurance Corporation (ESIC) respectively till 30.09.2009.though the initially target was to create 1 Lakh job every year. Though the response has been dreadful, government needs to increase the incentive for further participation by private sector. For example, government should link incentive for private sector to create work places accessible, increase the limit from 3 years contribution to life long, etc. with budget and election coming we can hope some more promises from government.

To support the differently able community not only the efforts from the government are required but there should be willingness from the corporate world, to provide them equal opportunity and level playing field. Most of the corporate offices are not accessible to the person who is on wheelchair. However slowly the environment is changing and corporate have realised that providing employment is not just part of CSR but the differentlyential able people are itself great resource which can contribute equally for the objectives and goals of the organisation and society at a large.

Disclaimer:The information is as per laws applicable in country India. The information provided above is in good faith and with bonafide intention to benefit individuals, parents and person with disability including children. Kindly consult your insurance agent/ legal adviser/ tax consultant prior to any tax or finance decision. The convoluted legal language has been simplified for easy understanding. No liability lies with author for misinterpretation or decision or the outcome of the information presented above.

About the author: The author CA Chirag Chauhan is member (Membership Number 131194) of the Institute of Chartered Accountant of India. He himself is paraplegic, wheelchair bound.

Source : Research - Ministry of Finance, Ministry of Social Justice and Empowerment

No tax relief for Infy’s payment to police: HC

2012-02-06T22:19:00.000+05:30

Can an establishment seek a deduction under the Income-Tax Act with regard to a donation/ contribution made to police for regulating traffic? No way, says the Karnataka High Court.

The division bench comprising late Justice V G Sabhahit and Justice Ravi Malimath in a recent judgment held that IT giant Infosys cannot claim deduction of income under Section 37 of the Income-Tax Act with regard to its payment to the Bangalore city police for regulating traffic near its premises on Hosur Road. "It is the duty of police to regulate traffic and the amount paid towards the same by the company cannot qualify as deduction under the Income-Tax Act. For anything to be qualified for business expenditure in terms of the Act, it has to wholly for the purpose of the business of the company," the bench observed while setting aside the finding of the Income-Tax Appellate Tribunal (ITAT) on this issue.

The ITAT in its March 31, 2005 verdict held that the Rs 6.93 lakh payment made by Infosys in 1996-97 to traffic police to regulate traffic on Hosur was a "business expenditure " and therefore it's entitled for tax deduction.

Originally ,the assessing officer of the I-T department held the payment cannot be considered fordeduction and is taxable. However, Infosys challenged this in the ITAT and the tribunal reversed it. The I-T department had filed an appeal before the high court. (Times of India)

Eight simple way to plan your tax

2012-02-01T16:24:00.001+05:30

By Ramalingam K

Eight Simple Ways to Plan your taxes. You have got only a few more months to complete this financial year. Very soon you will get a call from your company to submit the proofs for tax saving investments. So why don’t you spend some time on organising your tax plan?

1. Proper Allocation of Annual compensation

Restructuring your salary with some additional components can reduce your tax liability. This restructuring doesn’t require any additional cash outflow. The following components can be efficiently used to reduce your income tax liability.

a. Transport allowance to the extend of Rs.800 is exempt

b. Medical expenses which are reimbursed by the employer are exempt to the tune of Rs.15000

c. Food coupons like sodexo or ticket restaurant are exempt from tax up to Rs.60000

d. Individuals who are all living in a rented accommodation can include House Rent Allowance(HRA) as a part of their salary

e. Leave Travel Allowance(LTA) can be part of your salary as this can be claimed twice in a block of 4 years.

2. Effective Utilization of Tax Exemption

As far as possible utilize the maximum exemptions available under section 80 C, 80 CCF and 80 D. The maximum exemption available under section 80 C is Rs. 100000.

Under this section Rs.100000 investment or contribution can be made in PPF, NSC, Life insurance premium, 5 year FD with banks and Post offices, Mutual Fund ELSS, Principal Repayment of housing loan, and the tuition fees paid for children’s education.

Under Section 80 CCF, you can invest up to Rs.20000 in infrastructure bonds.

Under Sec 80 D, the premium paid towards the mediclaim policies are exempt. The maximum limit of exemption is Rs.15000 and for senior citizens the limit is Rs.20000 and for covering senior citizen parents there is an additional exemption to the extend of Rs.15000.

3. Properly Structure your Housing Loan

The Principal repayment of a housing loan is eligible for a deduction up to Rs.100000 u/s 80C. The interest paid on a housing loan is eligible for a deduction up to Rs.150000 u/s 24B. If the housing loan is for a sizeable amount, then it is possible that the principal repayment and interest may exceed the specified tax exemption limit. To utilise the maximum tax benefit, an individual can consider going for a joint home loan with his/her spouse or parent or sibling. This will make sure that both the co-owners can claim tax deductions in the proportion of their holding in the loan.

4. Tax Plan in Sync with Overall Financial Plan

You should not do your tax plan in isolation. You need to do it in sync with your overall financial plan. So a tax plan is not only to just save taxes and also it should assist you in achieving your other financial goals like children’s higher education, buying a home or retirement.

5. Avoid Last Minute Rush

In fact the right time to do the tax plan is the beginning of the financial year. If you postpone your tax planning even now and do it in the last minute, then you will not be able to choose the right investment. In the last minute rush, you will be forced to choose a scheme which gives the proof immediately. Is the investment sound and profitable? Is there any other better options? You will not be able to choose the best scheme and you may settle with a mediocre one.

6.Invest Some Quality Time

Before investing your money, you need to invest your time. You need to take some quality time to understand the various tax saving options and compare their benefits and limitations.

7. Check for Future Commitments

Some tax saving options like NSC or ELSS need only onetime investment. Some other tax saving options like PPF, Ulips need periodical investments year after year. You need to be careful in choosing a tax saving scheme where you need to commit for periodical future payments. You need to check on a few things like; do you need such a future commitment? Will you be able to meet the future commitments at ease? The law may change and you may not get any tax exemption for your future payments. Would you consider the scheme irrespective of tax benefit for the future payments?

8. Changed Your Job; Redo your Tax Plan

Did you switch your job in the middle of the financial year? Then you need to redo your tax plan with consolidating the income from both the companies. It is advisable to inform the new company about the income during the particular financial year from the old company. So that your new company will deduct the right amount of TDS. Otherwise you may need to pay extra tax at the end of the financial year.

Whenever you change your job, you need to have a sitting with your financial planner or tax advisor. So that the required changes in your tax plan can be done proactively.

With proper tax planning you can reduce your tax liability; save more; invest better and become wealthier.

On-line Submission of Application for Verification of Answer Books

2012-01-30T11:17:00.004+05:30

Candidates of November 2011 CA examinations Final, IPCE and PCE can submit their application for verification of answer books and also make payment of verification fees, on-line at http://icaiexam.icai.org.

This facility will be in addition to the existing option for submission of application for verification of answer books, physically by Speed/Registered Post, along with a demand draft.

They can log on to the above mentioned site and click on the “Verification” tab for submitting a verification application.

Verification fees will be the same, in both the modes of submission, i.e physical or on-line.

The on-line window for submission of verification application will be open for a period of one month from the date of declaration of results.

Candidates can visit the Frequently Asked Questions (FAQs) section of www.icai.org for more details.

Basic methodology to succeed in CA exams

2012-01-28T16:59:00.003+05:30

By: Rohit Gupta

One thing that CA students love to discuss the most is – “How to clear CA Exams?” Everyone seems to have the best answer but considering the pass percentage, I think the success mantra is yet to be unearthed. I shall now share some tips that worked for me.

For subjects for whom you are taking coaching, try finishing one-time in depth study during the coaching tenure itself.

Ensure that you go through the following publications of the Institute:

a. Revision Test Papers (RTPs)

b. Practice Manual

c. Modules (For subjects like Management Accounting and ISCA)

No wonder if you find the same or almost the same question in your exam. Do pay attention on the content and presentation of answers.

Make Study Plan:

1. Calculate the time (in terms of months) available with you before the attempt.

2. Assess time requirement (in terms of days) for each subject according to your expertise and interests in each of them. Unless you are hard-pressed on time, keep around 12-15 days (of 10-12 hours each) for each subject. Allocate the time according to the “Leaves period” and “Office-going” period.

3. Keep around 5 days for revision before exams. This also acts as a cushion in case you are unable to meet your study timelines.

[I shall be putting another article soon on which books one can refer for self-study]

4. Now make a study plan comprising of the following:

a. Individual Subjects

b. Study Period (From and To)

c. Revision Period

d. Contents to be studied (For example- Study Module, Amendments, Notes etc.)

e. Status (Studied thoroughly/ briefly/ not studied)

The objective here is to ensure that each subject gets due share of time. Also those contents which could not be studied thoroughly may be given adequate importance at the time of revision.

You may either study single subject at a time or take a theoretical and a practical subject together.

Learn but don’t waste time cramming theory subjects:Every time you are studying a theory subject, keep in mind that cram-learning is not required. You only need understanding of the topic along with memorizing only headings (could be in the form of Mnemonics). This way you can save some time.

Focus on all subjects not just few:It is the tendency of few students to focus more on few subjects like Accounts or Financial Management more than anything. They practice numerical problems day in, day out. Rather the objective should be to first take all subjects to a level of say 60 marks. This is because each subject carries equal weightage of 100 marks and each one subject is capable to deny you the successful result. Only once you attain this, you may work to attain expertise in particular subject(s).

Take Power Naps throughout the day: Some people prefer studying till late and some prefer starting early in the morning. Both have their share of merits and demerits. We all would agree that almost throughout the entire day we have numerous thoughts running in our mind which spoils our concentration. But after every sleep, we find ourselves at peace, with our mind calm and relax, not having such multiple thoughts. Here comes the biggest key to my success. I shall sleep six hours at a stretch in night and take 15 minutes power naps- four times a day. I would take these naps whenever I felt lack of concentration.

Utilize Brahma Mahurat:As they say, 4 o’clock to 6 o’clock (morning as well evening) has been called “Brahma Mahurat. Ensure that you plan your study timings accordingly to ensure you utilize this part of the day to enjoy best concentration.

Energize yourself during unproductive hours:Ensure that you do routine chores like bathing, eating etc. only after a study session. This way you can utilize this time to recreate yourself (say by listening music) and get ready for the next study session.

Want a rank? Here’s how:We all desire to get a rank, but how many of us deserve it? Well, my formula has been to study with the following approach:

First Reading- Rough reading to get familiar with the content(including numerical sums) in terms of length and difficulty.

Second Reading- Detailed reading while highlighting important points for learning. Solve practical questions (with proper presentation) on your own. Mark questions with special adjustments(with difficulty/ tricks)for next reading. Make separate notes, if required.

Third Reading- Learning the contents as highlighted, Practice sums with special adjustments. No need for using proper formats as it takes time. List down relevant topics in order of priority for final reading based on their importance and difficulty.

Final Reading-During the exam days, revise the topics as per the attached priority.