Budget Proposals 2017- Provisions relating to Direct Taxes at glance


mmLooking to the Budget Proposals there are no major changes taken place in case of Indirect taxes due to GST implementation. Following are the major changes in direct taxes:

I

 Rates of income-tax in respect of income liable to tax for the assessment year 2017-18

A. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person.
(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under:—

Upto Rs. 2,50,000                            Nil.
Rs. 2,50,001 to Rs. 5,00,000         5 per cent.
Rs. 5,00,001 to Rs. 10,00,000       20 per cent.
Above Rs. 10,00,000                        30 per cent.

(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,—

Upto Rs.3,00,000                                  Nil.
Rs. 3,00,001 to Rs. 5,00,000              5 per cent.
Rs. 5,00,001 to Rs. 10,00,000           20 per cent.
Above Rs. 10,00,000                           30 per cent.

(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at anytime during the previous year,—

Upto Rs. 5,00,000                                    Nil.
Rs. 5,00,001 to Rs. 10,00,000              20 per cent.
Above Rs. 10,00,000                               30 per cent.

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge at the rate of,—

(i) ten per cent. of such income-tax in case of a person having a total income exceeding fifty lakh rupees but not exceeding one crore rupees; and
(ii) fifteen per cent. of such income-tax in case of a person having a total income exceeding one crore rupees.

However, in case of (i) above, the total amount payable as income-tax and surcharge on total income exceeding fifty lakh rupees but not exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees.

Further, in case of (ii) above, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

B. Co-operative Societies: No Change
C. Firms: No Change
D. Local authorities: No Change

E. Companies
The rates of income-tax in the case of companies have been specified in Paragraph E of Part III of the First Schedule to the Bill. In case of domestic company, the rate of income-tax shall be twenty five per cent. of the total income if the total turnover or gross receipts of the previous year 2015-16 does not exceed fifty crore rupees and in all other cases the rate of Income-tax shall be thirty per cent. of the total income. In the case of company other than domestic company, the rates of tax are the same as those specified for the financial year 2016-17.

Surcharge at the rate of seven per cent shall continue to be levied in case of a domestic company if the total income of the domestic company exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of twelve per cent shall continue to be levied if the total income of the domestic company exceeds ten crore rupees. In case of companies other than domestic companies, the existing surcharge of two per cent. shall continue to be levied if the total income exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of five per cent shall continue to be levied if the total income of the company other than domestic company exceeds ten crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees but not exceeding ten crore rupees, shall not exceed the total amount payable as income-tax on a total income of one crore rupees, by more than the amount of income that exceeds one crore rupees. The total amount payable as income-tax and surcharge on total income exceeding ten crore rupees, shall not exceed the total amount payable as income-tax and surcharge on a total income of ten crore rupees, by more than the amount of income that exceeds ten crore rupees.

In other cases (including sections 115-O, 115QA, 115R, 115TA or 115TD), the surcharge shall be levied at the rate of twelve per cent.

For financial year 2017-18, additional surcharge called the “Education Cess on income-tax” and “Secondary and Higher Education Cess on income-tax” shall continue to be levied at the rate of two per cent. and one per cent. respectively, on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such Cesses.

II.

Changes in Capital gain Provisions

  1. Shifting base year from 1981 to 2001 for computation of capital gains
  2. Long term Capital gain period reduces from 3 years to 2 years in case of Land and Property.
  3. Expanding the scope of long term bonds under 54EC

III

Changes in Business and Profession Provisions

  1. Presumptive tax for small traders with turnover upto 2 crore under 44AD now 6% instead of 8 % for full non cash turnover.
  2. 44AD turnover limit increased to 2 crores for business. For profession – 50 Lakhs
  3. Professionals can pay advance tax in 1 installments if below 50 lac
  4. Cash expenditure now allowed only upto 10,000 instead of 20,000 per day per transaction.
  5.  No transaction above 3 lac will be allowed in cash
  6. Simple 1 page income tax return for persons having non-business income upto Rs. 5 lac.

IV.Major Change for Co-operative Banks

  1. Extension of scope of section 43D to Co-operative Banks

The benefit of this provision is presently available to scheduled banks, public financial institutions, State financial corporations, State industrial investment corporations and certain public companies like Housing Finance companies. With a view to provide a level playing field to co-operative banks vis-à-vis scheduled banks and to rationalise the scope of the section 43D, it is proposed to amend section 43D of the Act so as to include co-operative banks other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank.

Consequentially, as per matching principle in taxation, if the interest income on bad or doubtful debts is chargeable to tax on receipt basis, the interest payable on such bad or doubtful debts need to be allowed on actual payment. In view of this, it is proposed
to amend section 43B of the Act to provide that any sum payable by the assessee as interest on any loan or advances from a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank shall be allowed as deduction if it is actually paid on or before the due date of furnishing the return of income of the relevant previous year.

These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.

2. Increase in deduction limit in respect of provision for bad and doubtful debts

The existing provisions of sub-clause (a) of section 36(1)(viia) of the Act, inter-alia provides that a scheduled bank (not being a bank incorporated by or under the laws of a country outside India) or a non-scheduled bank or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, can claim deduction in respect of provision for bad and doubtful debts. The amount of such deduction is limited to seven and one-half per cent. of the total income (computed before making any deduction under that clause and Chapter VIA) and an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner at the end of the previous year.

In order to strengthen the financial position of the entities specified in the sub-clause (a) of section 36(1) (viia) of the Act, it is proposed to amend the said sub-clause to enhance the present limit from seven and one-half per cent. to eight and one-half per cent of the amount of the total income (computed before making any deduction under that clause and Chapter VIA).

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.

V. Changes in Dedections;

  1. 80G:

Restricting cash donations Under the existing provisions of section 80G, deduction is not allowed in respect of donation made of any sum exceeding Rs.10,000, if the same is not paid by any mode other than cash.

In order to provide cash less economy and transparency, it is proposed to amend section 80G so as to provide that no deduction shall be allowed under the section 80G in respect of donation of any sum exceeding two thousand rupees unless such sum is paid by any mode other than cash.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.

2. 80CCD

Rationalisation of deduction under section 80CCD for self-employed individual The existing provisions of section 80CCD provides that employee or other individuals shall be allowed a deduction for amount deposited in National Pension System trusts (NPS). The deduction under section 80CCD (1) cannot exceed 10% of salary in case of an employee or 10% of gross total income in case of other individuals. However, under the provisions of section 80CCD (2) of the Act, further deduction to an employee in respect of contribution made by his employer is allowed up to 10% of salary of the employee. Thus, in case of an employee, the deduction allowed under section 80CCD adds up to 20% of salary whereas in case of other individuals, the total deduction under section 80CCD is limited to 10% of gross total income.

In order to provide parity between an individual who is an employee and an individual who is self-employed, it is proposed to amend section 80CCD so as to increase the upper limit of ten per cent of gross total income to twenty per cent in case of individual other than employee.

This amendment will take effect from 1st April, 2018 and, will accordingly, apply in relation to assessment year 2018-19 and subsequent years.

VII. Changes in TDS Provisions 

  1. No TDS on insurance agents if 15 G/H filed
  2. it is proposed to insert a new section 194-IB in the Act to provide that Individuals or a HUF (other than those covered under 44AB of the Act), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of month during the previous year, shall deduct an amount equal to five
    per cent. of such income as income-tax thereon.

 

Amendment in Rule 114B for compulsory quoting of pan in case of cash deposit exceeding Rs. 50000 in a single day or aggregating to more then Rs. 2.5 lakh during the period from 09.11.2016 till 30.12.2016.


GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES

NOTIFICATION No. 104/2016-Income Tax

New Delhi, the 15th November, 2016

G.S.R 1068(E).- In exercise of the powers conferred by section 285BA, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income–tax (30th Amendment) Rules, 2016.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 114B, in the Table, for serial number 10 and entries relating thereto the following serial number and entries shall be substituted, namely:-

Nature of transaction
Deposit with,-
(i) a banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Office.
Value of transaction

Cash deposits,-
(i) exceeding fifty thousand rupees during any one day; or
(ii) aggregating to more than two lakh fifty thousand rupees during the period 09th November, 2016 to 30th December,
2016.”.

3. In the said rules, in rule 114E, ̶
(i) in sub-rule (2), in the Table, after serial number 11 and entries relating thereto the
following serial number and entries shall be inserted, namely:-

Nature and value of transaction

Cash deposits during the period 09th November, 2016 to 30th December, 2016 aggregating to ̶
(i) twelve lakh fifty thousand rupees or more, in one or more current account of a person; or

ii) two lakh fifty thousand rupees or more, in one or more accounts (other than a current account) of a person.

Class of person (reporting person)

(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).”;

(ii) in sub-rule (5), the following proviso shall be inserted, namely:-
“Provided the statement of financial transaction in respect of the transactions listed at
serial number (12) in the Table under sub-rule (2), shall be furnished on or before the 31st
day of January, 2017.”.

(Dr. T.S. Mapwal)
Under Secretary to the Government of India

Note:- The principal rules were published vide notification S.O. 969 (E), dated the 26th
March, 1962 and last amended vide notification S.O.3399(E), dated 07th November, 2016.

 

Goods and Services Tax (GST)


Question 1.What is GST? How does it work?

Answer: GST is one indirect tax for the whole nation, which will make India one unified common market.

GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with setoff benefits at all the previous stages.

Question 2. What are the benefits of GST?

Answer: The benefits of GST can be summarized as under:

 For business and industry

o Easy compliance:

A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent.

o Uniformity of tax rates and structures:

GST will ensure that indirect tax rates and structures are common across the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business.

o Removal of cascading:

A system of seamless taxcredits throughout the valuechain, and across boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce hidden costs of doing business.

o Improved competitiveness:

Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.

o Gain to manufacturers and exporters:

The subsuming of major Central and State taxes in GST, complete and comprehensive setoff of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.

 

 

 For Central and State Governments

o Simple and easy to administer: Multiple indirect taxes at the Central and State levels are being replaced by GST. Backed with a robust endtoend IT system, GST would be simpler and easier to administer than all other indirect taxes of the Centre and State levied so far.

o Better controls on leakage: GST will result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an inbuilt mechanism in the design of GST that would incentivize tax compliance by traders.

o Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues of the Government, and will therefore, lead to higher revenue efficiency.

 For the consumer

o Single and transparent tax proportionate to the value of goods and services: Due to multiple indirect taxes being levied by the Centre and State, with incomplete or no input tax credits available at progressive stages of value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer.

o Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers.

Question 3. Which taxes at the Centre and State level are being subsumed into GST?

Answer:

At the Central level, the following taxes are being subsumed:

  1. Central Excise Duty,
  2. Additional Excise Duty,
  3. Service Tax,
  4. Additional Customs Duty commonly known as Countervailing Duty, and
  5. Special Additional Duty of Customs.

At the State level, the following taxes are being subsumed:

  1. Subsuming of State Value Added Tax/Sales Tax,
  2. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
  3. Octroi and Entry tax,
  4. Purchase Tax,
  5. Luxury tax, and
  6. Taxes on lottery, betting and gambling.

Question 4. What are the major chronological events that have led to the introduction of GST?

Answer: GST is being introduced in the country after a 13 year long journey since it was first discussed in the report of the Kelkar Task Force on indirect taxes. A brief chronology outlining the major milestones on the proposal for introduction of GST in India is as follows:

  1. In 2003, the Kelkar Task Force on indirect tax had suggested a comprehensive Goods and Services Tax (GST) based on VAT principle.
  2. A proposal to introduce a National level Goods and Services Tax (GST) by April 1, 2010 was first mooted in the Budget Speech for the financial year 2006-07.
  3. Since the proposal involved reform/ restructuring of not only indirect taxes levied by the Centre but also the States, the responsibility of preparing a Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State Finance Ministers (EC).
  4. Based on inputs from Govt of India and States, the EC released its First Discussion Paper on Goods and Services Tax in India in November, 2009.
  5. In order to take the GST related work further, a Joint Working Group consisting of officers from Central as well as State Government was constituted in September, 2009.
  6. In order to amend the Constitution to enable introduction of GST, the Constitution (115th Amendment) Bill was introduced in the Lok Sabha in March 2011. As per the prescribed procedure, the Bill was referred to the Standing Committee on Finance of the Parliament for examination and report.
  7. Meanwhile, in pursuance of the decision taken in a meeting between the Union Finance Minister and the Empowered Committee of State Finance Ministers on 8th November, 2012, a ‘Committee on GST Design’, consisting of the officials of the Government of India, State Governments and the Empowered Committee was constituted.
  8. This Committee did a detailed discussion on GST design including the Constitution (115th) Amendment Bill and submitted its report in January, 2013. Based on this Report, the EC recommended certain changes in the Constitution Amendment Bill in their meeting at Bhubaneswar in January 2013.
  9. The Empowered Committee in the Bhubaneswar meeting also decided to constitute three committees of officers to discuss and report on various aspects of GST as follows:

(a) Committee on Place of Supply Rules and Revenue Neutral Rates;

(b) Committee on dual control, threshold and exemptions;

(c) Committee on IGST and GST on imports.

  1. The Parliamentary Standing Committee submitted its Report in August, 2013 to the Lok Sabha. The recommendations of the Empowered Committee and the recommendations of the Parliamentary Standing Committee were examined in the Ministry in consultation with the Legislative Department. Most of the recommendations made by the Empowered Committee and the Parliamentary Standing Committee were accepted and the draft Amendment Bill was suitably revised.
  2. The final draft Constitutional Amendment Bill incorporating the above stated changes were sent to the Empowered Committee for consideration in September 2013.
  3. The EC once again made certain recommendations on the Bill after its meeting in Shillong in November 2013. Certain recommendations of the Empowered Committee were incorporated in the draft Constitution (115th Amendment) Bill. The revised draft was sent for consideration of the Empowered Committee in March, 2014.
  4. The 115th Constitutional (Amendment) Bill, 2011, for the introduction of GST introduced in the Lok Sabha in March 2011 lapsed with the dissolution of the 15th Lok Sabha.
  5. In June 2014, the draft Constitution Amendment Bill was sent to the Empowered Committee after approval of the new Government.
  6. Based on a broad consensus reached with the Empowered Committee on the contours of the Bill, the Cabinet on 17.12.2014 approved the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of Goods and Services Tax (GST) in the country. The Bill was introduced in the Lok Sabha on 19.12.2014, and was passed by the Lok Sabha on 06.05.2015. It was then referred to the Select Committee of Rajya Sabha, which submitted its report on 22.07.2015.

Question 5.How would GST be administered in India?

Answer:Keeping in mind the federal structure of India, there will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

Question 6.How would a particular transaction of goods and services be taxed simultaneously under Central GST (CGST) and State GST (SGST)?

Answer :The Central GST and the State GST would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. Further, both would be levied on the same price or value unlike State VAT which is levied on the value of the goods inclusive of Central Excise.

 

Question 7.Will cross utilization of credits between goods and services be allowed under GST regime?

Answer :Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST would not be allowed except in the case of interstate supply of goods and services under the IGST model which is explained in answer to the next question.

Question 8.How will be InterState Transactions of Goods and Services be taxed under GST in terms of IGST method?

Answer:In case of interstate transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all interstate supplies of goods and services under Article 269A (1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another. The interstate seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST.Since GST is a destinationbased tax, all SGST on the final product will ordinarily accrue to the consuming State.

Question 9.How will IT be used for the implementation of GST?

Answer:For the implementation of GST in the country, the Central and State Governments have jointly registered Goods and Services Tax Network (GSTN) as a not for profit, non Government Company to provide shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders. The key objectives of GSTN are to provide a standard and uniform interface to the taxpayers, and shared infrastructure and services to Central and State/UT governments. GSTN is working on developing a state of the art comprehensive IT infrastructure including the common GST portal providing frontend services of registration, returns and payments to all taxpayers, as well as the backend IT modules for certain States that include processing of returns, registrations, audits, assessments, appeals, etc. All States, accounting authorities, RBI and banks, are also preparing their IT infrastructure for the administration of GST. There would no manual filing of returns. All taxes can also be paid online. All mismatched returns would be autogenerated, and there would be no need for manual interventions. Most returns would be selfassessed.

Question 10.How will imports be taxed under GST?

Answer :The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods.

 

Question 11.What are the major features of the Constitution (122nd Amendment) Bill, 2014?

Answer :The salient features of the Bill are as follows:

  1. Conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax;
  2. Subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs;
  3. Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling;
  4. Dispensing with the concept of ‘declared goods of special importance’ under the Constitution;
  5. Levy of Integrated Goods and Services Tax on interstate transactions of goods and services;
  6. GST to be levied on all goods and services, except alcoholic liquor for human consumption. Petroleum and petroleum products shall be subject to the levy of GST on a later date notified on the recommendation of the Goods and Services Tax Council;
  7. Compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years;
  8. Creation of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST laws, etc. The Council shall function under the Chairmanship of the Union Finance Minister and will have all the State Governments as Members.

Question 12.What are the major features of the proposed registration procedures under GST?

Answer:The major features of the proposed registration procedures under GST are as follows:

  1. Existing dealers: Existing VAT/Central excise/Service Tax payers will not have to apply afresh for registration under GST.
  2. New dealers: Single application to be filed online for registration under GST.

iii. The registration number will be PAN based and will serve the purpose for Centre and State.

  1. Unified application to both tax authorities.
  2. Each dealer to be given unique ID GSTIN.
  3. Deemed approval within three days.

vii. Post registration verification in risk based cases only.

Question 13.What are the major features of the proposed returns filing procedures under GST?

Answer:The major features of the proposed returns filing procedures under GST are as follows:

  1. Common return would serve the purpose of both Centre and State Government.
  2. There are eight forms provided for in the GST business processes for filing for returns. Most of the average tax payers would be using only four forms for filing their returns. These are return for supplies, return for purchases, monthly returns and annual return.
  3. Small taxpayers: Small taxpayers who have opted composition scheme shall have to file return on quarterly basis.
  4. Filing of returns shall be completely online. All taxes can also be paid online.

Question 14.What are the major features of the proposed payment procedures under GST?

Answer:The major features of the proposed payments procedures under GST are as follows:

  1. Electronic payment process no generation of paper at any stage
  2. Single point interface for challan generation GSTN

3. Ease of payment – payment can be made through online banking, Credit Card/Debit Card, NEFT/RTGS and through cheque/cash at the bank

4.Common challan form with autopopulation features

5.Use of single challan and single payment instrument

6.Common set of authorized banks

7.Common Accounting Codes

TDS Statement due date changes with effect from 1.6.2016


Sub Rule 2 of Rule 31A of Income Tax Rules specifies the due date for filing of

(a) Statement of deduction of tax under section 192 in Form No. 24Q;

(b)  Statement of deduction of tax under sections 193 to 196D in—

(i) Form No. 27Q in respect of the deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident; and

(ii)  Form No. 26Q in respect of all other deductees.

The Due date as per rule are different for Government deductors and non Government deductors , which is as under:-

Sl. No. Date of ending of quarter of financial year Due date wef 01.06.2016 for Government and Non-Government Deductors.
(1) (2) (3)
1. 30th June 31st July of the financial year
2. 30th September 31st October of the financial year
3. 31st December 31st January of the financial year
4. 31st March 31st May of the financial year immediately following the financial year in which the deduction is made”.

TDS Chart Change for A.Y.2016-17


mm

Dear All,

With regard to changes in TDS Provision i have prepare small chart for change in rate and limit for TDS.

Rationalization of tax deduction at Source (TDS) provisions

Under the scheme of deduction of tax at source as provided in the Act, every person responsible for payment of any specified sum to any person is required to deduct tax at source at the prescribed rate and deposit it with the Central Government within specified time. However, no deduction is required to be made if the payments do not exceed prescribed threshold limit.

In order to rationalise the rates and base for TDS provisions, the existing threshold limit for deduction of tax at source and the rates of deduction of tax at source are proposed to be revised as mentioned in table 3 and table 4 respectively.

 Increase in threshold limit of deduction of tax at source on various payments mentioned in the relevant sections of the Act

Present Section Heads Existing Threshold Limit(Rs.) Proposed Threshold Limit(Rs.)
192A Payment of accumulated balance due to an employee 30,000 50,000
194BB Winnings from Horse Race 5,000 10,000
194C Payments to Contractors Aggregate annual limit of

75,000

Aggregate

annual limit of

1,00,000

194LA Payment of Compensation on acquisition of certain

Immovable Property

2,00,000 2,50,000
194D Insurance commission 20,000 15,000
194G Commission on sale of lottery tickets 1,000 15,000
194H Commission or brokerage 5,000 15,000

Revision in rates of deduction of tax at source on various payments mentioned in the relevant sections of the Act:

Present Section Heads Existing Rate of TDS

(%)

Proposed Rate of TDS (%)
194DA Payment in respect of Life Insurance Policy 2% 1%
194EE Payments in respect of NSS Deposits 20% 10%
194D Insurance commission Rate in force

(10%)

5%
194G Commission on sale of lottery tickets 10% 5%
194H Commission or brokerage 10% 5%

 

Enabling of Filing of Form 15G/15H for rental payments

The provision of sub-section 194-I of the Act, inter alia, provides for tax deduction at source (TDS) for payments in the nature of rent beyond a threshold limit. The existing provisions provide threshold of Rs. 1,80,000 per financial year for deduction of tax under this section. In spite of providing higher threshold for deduction tax under this section, there may be cases where the tax payable on recipient’s total income, including rental payments , will be nil. The existing provisions of section 197A of the Income-tax Act, inter alia provide that tax shall not be deducted, if the recipient of certain payments on which tax is deductible furnishes to the payer a self- declaration in prescribed Form.No. 15G/15H declaring that the tax on his estimated total income of the relevant previous year would be nil. In order to reduce compliance burden in such cases, it is proposed to amend the provisions of section 197A for making the recipients of payments referred to in section 194-I also eligible for filing self-declaration in Form no 15G/15H for non-deduction of tax at source in accordance with the provisions of section 197A.

This amendment will take effect from 1st June, 2016.

Key Features of Budget 2016-2017


arun jetliDear All,

 

I have just giving Highlights of Budget -2016-17 on Taxation part which is relevant to common men of India.

Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person.

Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:-

(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided

family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person

referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part

III applies) are as under:-

Slab for A.Y.2017-18

Upto Rs. 2,50,000 Nil.

Rs. 2,50,001 to Rs. 5,00,000 10 per cent.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.

Above Rs. 10,00,000 30 per cent.

(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years

at any time during the previous year,-

Upto Rs.3,00,000 Nil.

Rs. 3,00,001 to Rs. 5,00,000 10 per cent.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.

Above Rs. 10,00,000 30 per cent.

(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at anytime during the

previous year,-

Upto Rs. 5,00,000 Nil.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.

Above Rs. 10,00,000 30 per cent.

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a

surcharge at the rate of fifteen percent. of such income-tax in case of a person having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed

the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds

one crore rupees.

RELIEF TO SMALL TAX PAYERS

  • Raise the ceiling of tax rebate under section 87A from `2000 to `5000

to lessen tax burden on individuals with income upto `5 laks.

  • Increase the limit of deduction of rent paid under section 80GG from

`24000 per annum to `60000, to provide relief to those who live in

rented houses.

BOOST EMPLOYMENT AND GROWTH

  • Increase the turnover limit under Presumptive taxation scheme under

section 44AD of the Income Tax Act to ` 2 crores to bring big relief to a

large number of assessees in the MSME category.

  • Extend the presumptive taxation scheme with profit deemed to be 50%,

to professionals with gross receipts up to `50 lakh.

  • Phasing out deduction under Income Tax:
  • Accelerated depreciation wherever provided in IT Act will be

limited to maximum 40% from 1.4.2017

  • Benefit of deductions for Research would be limited to 150% from

1.4.2017 and 100% from 1.4.2020

  • Benefit of section 10AA to new SEZ units will be available to those

units which commence activity before 31.3.2020.

  • The weighted deduction under section 35CCD for skill development

will continue up to 1.4.2020

  • Corporate Tax rate proposals:
  • New manufacturing companies incorporated on or after 1.3.2016

to be given an option to be taxed at 25% + surcharge and cess

provided they do not claim profit linked or investment linked

deductions and do not avail of investment allowance and

accelerated depreciation.

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  • Lower the corporate tax rate for the next financial year for

relatively small enterprises i.e companies with turnover not

exceeding ` 5 crore (in the financial year ending March 2015), to

29% plus surcharge and cess.

  • 100% deduction of profits for 3 out of 5 years for startups setup during

April, 2016 to March, 2019. MAT will apply in such cases.

  • 10% rate of tax on income from worldwide exploitation of patents

developed and registered in India by a resident.

  • Complete pass through of income-tax to securitization trusts including

trusts of ARCs. Securitisation trusts required to deduct tax at source.

  • Period for getting benefit of long term capital gain regime in case of

unlisted companies is proposed to be reduced from three to two years.

  • Non-banking financial companies shall be eligible for deduction to the

extent of 5% of its income in respect of provision for bad and doubtful

debts.

  • Determination of residency of foreign company on the basis of Place of

Effective Management (POEM) is proposed to be deferred by one year.

  • Commitment to implement General Anti Avoidance Rules (GAAR) from

1.4.2017.

  • Exemption of service tax on services provided under Deen Dayal

Upadhyay Grameen Kaushalya Yojana and services provided by

Assessing Bodies empanelled by Ministry of Skill Development &

Entrepreneurship.

  • Exemption of Service tax on general insurance services provided under

‘Niramaya’ Health Insurance Scheme launched by National Trust for the

Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and

Multiple Disability.

  • Basic custom and excise duty on refrigerated containers reduced to 5%

and 6%.

MAKE IN INDIA

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  • Changes in customs and excise duty rates on certain inputs to reduce

costs and improve competitiveness of domestic industry in sectors like

Information technology hardware, capital goods, defence production,

textiles, mineral fuels & mineral oils, chemicals & petrochemicals,

paper, paperboard & newsprint, Maintenance repair and overhauling

[MRO] of aircrafts and ship repair.

MOVING TOWARDS A PENSIONED SOCIETY

  • Withdrawal up to 40% of the corpus at the time of retirement to be tax

exempt in the case of National Pension Scheme (NPS). Annuity fund

which goes to legal heir will not be taxable.

  • In case of superannuation funds and recognized provident funds,

including EPF, the same norm of 40% of corpus to be tax free will apply

in respect of corpus created out of contributions made on or from

1.4.2016.

  • Limit for contribution of employer in recognized Provident and

Superannuation Fund of ` 1.5 lakh per annum for taking tax benefit.

Exemption from service tax for Annuity services provided by NPS and

Services provided by EPFO to employees.

  • Reduce service tax on Single premium Annuity (Insurance) Policies from

3.5% to 1.4% of the premium paid in certain cases.

PROMOTING AFFORDABLE HOUSING

  • 100% deduction for profits to an undertaking in housing project for flats

upto 30 sq. metres in four metro cities and 60 sq. metres in other cities,

approved during June 2016 to March 2019 and completed in three

years. MAT to apply.

  • Deduction for additional interest of `50,000 per annum for loans up to

`35 lakh sanctioned in 2016-17 for first time home buyers, where

house cost does not exceed ` 50 lakh.

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  • Distribution made out of income of SPV to the REITs and INVITs having

specified shareholding will not be subjected to Dividend Distribution

Tax, in respect of dividend distributed after the specified date.

  • Exemption from service tax on construction of affordable houses up to

60 square metres under any scheme of the Central or State

Government including PPP Schemes.

  • Extend excise duty exemption, presently available to Concrete Mix

manufactured at site for use in construction work to Ready Mix

Concrete.

RESOURCE MOBILIZATION FOR AGRICULTURE, RURAL ECONOMY AND

CLEAN ENVIRONMENT

  • Additional tax at the rate of 10% of gross amount of dividend will be

payable by the recipients receiving dividend in excess of ` 10 lakh per

annum.

  • Surcharge to be raised from 12% to 15% on persons, other than

companies, firms and cooperative societies having income above ` 1

crore.

  • Tax to be deducted at source at the rate of 1 % on purchase of luxury

cars exceeding value of ` ten lakh and purchase of goods and services in

cash exceeding ` two lakh.

  • Securities Transaction tax in case of ‘Options’ is proposed to be

increased from .017% to .05%.

  • Equalization levy of 6% of gross amount for payment made to nonresidents

exceeding ` 1 lakh a year in case of B2B transactions.

  • Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016.

Proceeds would be exclusively used for financing initiatives for

improvement of agriculture and welfare of farmers. Input tax credit of

this cess will be available for payment of this cess.

  • Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel

cars of certain capacity and 4% on other higher engine capacity vehicles

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and SUVs. No credit of this cess will be available nor credit of any other

tax or duty be utilized for paying this cess.

  • Excise duty of ‘1% without input tax credit or 12.5% with input tax

credit’ on articles of jewellery [excluding silver jewellery, other than

studded with diamonds and some other precious stones], with a higher

exemption and eligibility limits of ` 6 crores and ` 12 crores

respectively.

  • Excise on readymade garments with retail price of ` 1000 or more

raised to 2% without input tax credit or 12.5% with input tax credit.

  • ‘Clean Energy Cess’ levied on coal, lignite and peat renamed to ‘Clean

Environment Cess’ and rate increased from `200 per tonne to `400 per

tonne.

  • Excise duties on various tobacco products other than beedi raised by

about 10 to 15%.

  • Assignment of right to use the spectrum and its transfers has been

deducted as a service leviable to service tax and not sale of intangible

goods.

PROVIDING CERTAINITY IN TAXATION

  • Committed to providing a stable and predictable taxation regime and

reduce black money.

  • Domestic taxpayers can declare undisclosed income or such income

represented in the form of any asset by paying tax at 30%, and

surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the

undisclosed income. Declarants will have immunity from prosecution.

  • Surcharge levied at 7.5% of undisclosed income will be called Krishi

Kalyan surcharge to be used for agriculture and rural economy.

  • New Dispute Resolution Scheme to be introduced. No penalty in

respect of cases with disputed tax up to ` 10 lakh. Cases with disputed

tax exceeding ` 10 lakh to be subjected to 25% of the minimum of the

imposable penalty. Any pending appeal against a penalty order can also

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be settled by paying 25% of the minimum of the imposable penalty and

tax interest on quantum addition.

  • High Level Committee chaired by Revenue Secretary to oversee fresh

cases where assessing officer applies the retrospective amendment.

  • One-time scheme of Dispute Resolution for ongoing cases under

retrospective amendment.

  • Penalty rates to be 50% of tax in case of underreporting of income and

200% of tax where there is misreporting of facts.

  • Disallowance will be limited to 1% of the average monthly value of

investments yielding exempt income, but not exceeding the actual

expenditure claimed under rule 8D of Section 14A of Income Tax Act.

  • Time limit of one year for disposing petitions of the tax payers seeking

waiver of interest and penalty.

  • Mandatory for the assessing officer to grant stay of demand once the

assesse pays 15% of the disputed demand, while the appeal is pending

before Commissioner of Income-tax (Appeals).

  • Monetary limit for deciding an appeal by a single member Bench of

ITAT enhanced from ` 15 lakhs to ` 50 lakhs.

  • 11 new benches of Customs, Excise and Service Tax Appellate Tribunal

(CESTAT).

SIMPLIFICATION AND RATIONALIZATION OF TAXES

  • 13 cesses, levied by various Ministries in which revenue collection is

less than ` 50 crore in a year to be abolished.

  • For non-residents providing alternative documents to PAN card, higher

TDS not to apply.

  • Revision of return extended to Central Excise assesses.
  • Additional options to banking companies and financial institutions,

including NBFCs, for reversal of input tax credits with respect to nontaxable

services.

  • Customs Act to provide for deferred payment of customs duties for

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importers and exporters with proven track record.

  • Customs Single Window Project to be implemented at major ports and

airports starting from beginning of next financial year.

  • Increase in free baggage allowance for international passengers. Filing

of baggage only for those carrying dutiable goods.

TECHNOLOGY FOR ACCOUNTABILITY

  • Expansion in the scope of e-assessments to all assessees in 7 mega

cities in the coming years.

  • Interest at the rate of 9% p.a against normal rate of 6% p.a for delay in

giving effect to Appellate order beyond ninety days.

  • ‘e-Sahyog’ to be expanded to reduce compliance cost, especially for

small taxpayers.

Railway Budget-2016/17 Highlights


prabhu

Highlights of the Railway Budget 2016-17

Dear All, I have just highlights the points of railway budget which is for passenger of all class and skip all other points.

Customer Interface
 Interaction and feedback through social media & dedicated IVRS system.

 Making travel comfortable by generating over 65,000 additional berths, installing
2,500 water vending machines; introducing ‘Mahamana Express’ with modern
refurbished coaches; 17,000 bio-toilets in trains; world’s first Bio-Vacuum toilet
developed.

 Improving punctuality – operations audit for Ghaziabad to Mughalsarai section.

 Ticketing: Introduced 1,780 Automatic Ticket Vending Machines, mobile apps &
GoIndia smartcard for cashless purchase of UTS and PRS tickets, enhanced capacity
of e-ticketing system from 2,000 tickets per minute to 7,200 tickets per minute and to
support 1,20,000 concurrent users as against only 40,000 earlier.

 Social initiatives: One-time registration for availing concessions while booking
tickets online, online booking of wheelchairs & Braille enabled new coaches
introduced for the Divyang, increased quota of lower berths for senior citizens and
women, middle bays reserved in coaches for women.

 Wi-Fi provided in 100 stations, to be provided in 400 more.
 Stations being redeveloped – financial bid received for Habibganj, Bhopal; Cabinet
approval for stations to be taken up under PPP.
 Security through helplines & CCTVs.
 Safety – 350 manned level crossings closed, eliminated 1,000 unmanned level
crossings, 820 ROB/RUB completed in the current year and work going on in 1,350
of them.

Other major achievements
 Energy: annualized savings of Rs. 3,000 crore to be achieved in the next financial
year itself, a year earlier than announced; achieved by procuring power directly at
competitive rates using IR’s status as Deemed Distribution Licensee.
 Rail University – initially identified the National Academy of Indian Railways at
Vadodara.

 Digital India: application of Track Management System (TMS) launched, inventory
management module of TMS has resulted in inventory reduction by 27,000 MT
resulting in saving of Rs.64 crore and scrap identification of 22,000 MT equivalent to
Rs.53 crore.
The Way Ahead
Improving quality of travel
For the unreserved passenger –
 Antyodaya Express unreserved, superfast service.
 Deen Dayalu coaches – unreserved coaches with potable water and higher number of
mobile charging points.
For the reserved passenger –
 Humsafar – fully air-conditioned third AC service with an optional service for meals
 Tejas – will showcase the future of train travel in India. Will operate at speeds of 130
kmph and above.Will offer onboard services such as entertainment, local cuisine, Wi-
Fi, etc. through one service provider for ensuring accountability and improved
customer satisfaction
 Humsafar and Tejas to ensure cost recovery through tariff and non-tariff measures
 UDAY – overnight double-decker, Utkrisht Double-Decker Air-conditioned Yatri
Express on the busiest routes, has the potential to increase carrying capacity by almost
40%.
Ticketing: Sale of tickets through hand held terminals; e- ticketing facility to foreign
debit/credit cards; bar coded tickets, scanners and access control on a pilot basis. Expansion
of Vikalp – train on demand to provide choice of accommodation in specific trains to waitPage
4 of 8
listed passengers. E-booking of tickets facility on the concessional passes available to
journalists; facility of cancellation through the 139 helpline post verification using ‘One
Time Password’ sent on registered phone number, to improve tatkaal services CCTV
cameras on windows and periodic audit of PRS website.
Cleanliness -‘Clean my Coach’ service through SMS, ranking of A1 and A stations based on
periodic third party audit and passenger feedback; waste segregation and recycling centres;
‘Awareness campaigns’; additional 30,000 bio-toilets; providing portable structures with biotoilets
at all platforms of select stations for senior citizens, Divyang and women travellers,
plan to explore innovative means of providing and maintaining toilets such as advertisement
rights, CSR, voluntary support from social organizations.
Catering and stalls at stations -IRCTC to manage catering services in a phased manner;
explore possibility of making catering services optional, adding 10 more IRCTC operated
base kitchens; to build local ownership and empowerment, weightage will be given to district
domicile holders for commercial licenses at stations.
Stoppages: convert all operational halts into commercial halts for the benefit of the common
man.
Rail Mitra Sewa: expanding Sarathi Seva in Konkan Railway to help the old and disabled
passengers, strengthening the existing services for enabling passengers to book battery
operated cars, porter services, etc. on a paid basis in addition to the existing pick up and drop,
and wheel chair services.
Measures for Divyang: all stations under redevelopment accessible by Divyang; to provide
at least one Divyang friendly toilet at each platform in A1 class stations during the next
financial year and also ensure availability of wheelchairs in sufficient numbers at these
stations.
Travel Insurance to passengers – to offer optional travel insurance for rail journeys at the
time of booking.
Hourly booking of retiring rooms – will be handed over to IRCTC.
Janani sewa: children’s menu items on trains, baby foods, hot milk and hot water would be
made available.
SMART (Specially Modified Aesthetic Refreshing Travel) Coaches – design and layout of
our coaches to ensure higher carrying capacity and provision of new amenities including
automatic doors, bar-code readers, bio-vacuum toilets, water-level indicators, accessible
dustbins, ergonomic seating, improved aesthetics, vending machines, entertainment screens,
LED lit boards for advertising, PA system.
Mobile Apps – integrate all facilities into two mobile apps dealing with ticketing issues and
for receipt and redressal of complaints and suggestions.
Improving customer interface- skilling our front-end staff and those we employ through our
service providers, information boards in trains enumerating the on-board services and also
GPS based digital displays inside coaches to provide real time information regarding
upcoming halts. Work underway on installation of a high-tech centralized network of 20,000
screens across 2000 stations for enabling real time flow of information to passengers and also
unlock huge advertising potential. All A1 class stations will be manned with duly empowered
Station Directors supported by cross functional teams; to make one person accountable for all
facilities on trains.

 Pilgrimage centres: to take up on priority the provision of passenger amenities and
beautification on stations at pilgrimage centres including Ajmer, Amritsar, Bihar
Sharif, Chengannur, Dwarka, Gaya, Haridwar, Mathura, Nagapattinam, Nanded,
Nasik, Pali, Parasnath, Puri, Tirupati, Vailankanni, Varanasi and Vasco; also intend to
run Aastha circuit trains to connect important pilgrim centres.
 Porters- intend providing them with new uniforms and train them in soft skills,
henceforth, to be called sahayak.
 High Speed Rail: passenger corridor from Ahmedabad to Mumbai being undertaken
with the assistance of the Government of Japan. SPV for implementing high speed
projects will be registered this month. Prime benefit would be providing IR with
technology advancements and new manufacturing capability.
 Entertainment: propose to invite FM Radio stations for providing train borne
entertainment; extend ‘Rail Bandhu’ to all reserved classes of travelers and in all
regional languages.

Thanking you,

CA Mayur Modha

M-9904876279

E-mayurhmodha@gmail.com