Friday 27 May 2016

Amendments in TDS and TCS w.e.f 01st June, 2016

      A.      Amendments in rates of TDS mentioned in in relevant section of Income Tax Act, 1961 w.e.f 01st June, 2016

Relevant Section
Particulars of Heads
Rates before
01st June, 2016
Rates after
01st June, 2016
Amended by Finance Act, 2016
Payment in respect of Life Insurance Policy
Clause 74
Payments in respect of NSS Deposits
Clause 75
Commission on sale of Lottery Tickets
Clause 76
Commission or Brokerage
Clasue 77

       B.      Amendments in TDS threshold limit of TDS on various payments in relevant section of Income Tax Act, 1961 w.e.f 01st June, 2016

Relevant Section
Particulars of Heads
Threshold Limit before
01st June, 2016
(in Rs.)
Threshold Limit after
01st June, 2016
(in Rs.)
Amended by Finance Act, 2016
Payment of accumulated balance due to an Employee
Clause 70
Winnings from Horse Race
Clause 71
Payment t Contractors (Annual Limit)
Clause 72
Insurance Commission
Clause 73
Commission on sale of lottery tickets
Clause 76
Commission on brokerage
Clause 77
Payment of Compensation on acquisition of certain Immovable Property
Clause 79

      C.      Amendments in TCS w.e.f 01st June, 2016
Clause 86 of Finance Bill, 2016 has amend the Section 206C of Income Tax Act, 1961, TCS are required to be collected @1% on the following provisions.
       a.       Now Seller required to collect TCS @1% on Sale of Motor Vehicle more than Rs. 10 lakhs.
     b.      Sales in goods/services in cash more than 2 lakhs other than bullion  and jewelery and other than payments on which TDS made.


Sunday 15 May 2016

FAQs on Micro, Small, Medium Enterprise (MSME)

FAQ 1: What is MSME?
MSME stands for Mico, Small and Medium Enterprise. As per Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the MSME are classified in two classes:-

Nature of Enterprise
Manufacturing Sector
(Investment in Plant & Machinery excluding Land and Building)
Service Sector
(Investment in Equipment excluding Land and Building)
does not exceed Rs. 25 lakh
does not exceed Rs. 10 lakh
more than Rs. 25 lakh but does not exceed Rs. 5 crore
more than Rs.10 lakh but does not exceed Rs. 2 crore
is more than Rs.5 crore but does not exceed Rs.10 crore
more than Rs. 2 crore but does not exceed Rs. 5 crore

FAQ 2: Why we get registration under MSMED Act, 2006?
Benefits for MSME (Micro, Small & Medium Enterprise)

1.       Up to 1% Reduction in rate of Interest on Overdraft Facility from banks
2.       Preference in procuring Government tenders
3.       Easy finance availability from Banks, without collateral requirement
4.       2% concession on Interest rate of term loan
5.       Easier to get registrations, Licenses, permissions & approvals
6.       15% CLCSS (Credit linked capital subsidy scheme) subsidy on fully automatic machine brought under bank term loan
7.       Manufacturers will be eligible for IPS Subsidy.
8.       All new industrial units will be exempt from payment of Stamp duty, registration fees, in C, D, D+ areas
9.       80-90% refund of Octori under B, C, D, D+ areas
10.   Electricity duty exemption for 15 years under  C, D, D+ areas
11.   Subsidy on ISO Certifications
12.   Subsidy on NSIC Performance and Credit ratings
13.   Protection against delay in payment from Buyers and right of interest on delayed payment
14.   Special consideration in International Trade fairs & exhibitions
15.   50% subsidy on the expenses incurred for patent registration.
16.   Reservation policies to manufacturing / production sector enterprises
17.   Time-bound resolution of disputes with Buyers through conciliation and arbitration
18.   Tax subsidies, power tariff subsidies, capital investment subsidies 
19.   Credit prescription (Priority sector lending), differential rates of interest etc.
20.   Excise Exemption Scheme
21.   Exemption under Direct Tax Laws.
22.   Reimbursement of ISO Certification Expenses
23.   Statutory support such as reservation and the Interest on Delayed Payments Act.
24.  Participation in Government Purchase registrations

FAQ 3: Who are eligible to get registration under MSMED Act, 2006?
        a)      Proprietorship enterprises,
        b)      Enterprises managed by Hindu undivided family,
        c)       Enterprises run by association of individuals,
        d)      Co-operative societies,
        e)      Partnership firms and
        f)       Enterprises managed by companies or undertakings etc.

FAQ 4: What is the procedure to get MSME Registration?
There are two stages of registration
        a)      Provisional Registration
        An enterprise is granted provisional registration when it is at a pre-investment stage.

        b)      Permanent Registration
        After getting Provisional registration, an enterprise can apply for permanent registration just before launching its production facilities. However, an enterprise that is already functioning can apply for permanent registration directly.

FAQ 5: What is the validity of Provisional registration?
Provisional registration is valid for a period of 2 years from the date of its Issue. In case Unit is not set up during two years, applicant may apply afresh and obtain a new provisional registration.

FAQ 6: Can MSME registration be revoked?
If MSME violate the regulations of MSMED Act, 2006 then the registration may be revoked. The following are the ways which will make it liable for de-registration: 

a)      If it starts manufacturing of any new item that require an other kind of statutory license.
b)      If it crosses the specified investment limits. 
c)      It does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.

Tuesday 3 May 2016

Submission of evidences of Claiming Deduction from Salary and Revised due dates of filing of TDS Returns

Income Tax (11th Amendment Rules) 2016
Notification no 30/2016 dated 29th April, 2016
Changes w.e.f 1st June, 2016
Amendment 1: Submit Evidences of Tax Saving to Employer in from 12BB.
Before the Income Tax (11th Amendment) Rules, 2016, employees are required to file self-declarations of tax savings/deductions to employer along with the evidences of such tax savings for every financial year and the employer was liable to deduct tax at sources on the estimated income of employees after considering such self-declarations of tax savings.
Now the CBDT has inserted the Rule 26C after rule 26B of the Income Tax Rules, 1962 and notified new form no. 12BB. Now Employees are required to submit evidences/particulars of tax savings to employer in Form no. 12BB.

Rule 26C of Income Tax Rules, 1962 - Furnishing of evidence of claims by employee for deduction of tax under section 192.-
(1) The assessee shall furnish to the person responsible for making payment under sub-section (1) of section 192, the evidence or the particulars of the claims referred to in sub-rule (2), in Form No.12BB for the purpose of estimating his income or computing the tax deduction at source.
(2) The assessee shall furnish the evidence or the particulars specified in column (3), of the Table below, of the claim specified in the corresponding entry in column(2) of the said Table:-

Sl. No.
Nature of Claims
Evidence or Particulars
House Rent Allowance
Name, address and permanent account number of the landlord/landlords where the aggregate rent paid during the previous year exceeds rupees one lakh.

Leave travel concession or assistance
Evidence of expenditure.

Deduction of interest under the head “Income from house property”.
Name, address and permanent account number of the lender.

Deduction under Chapter VI-A.
Evidence of investment or expenditure.

Amendment 2: Revised due dates for filing of quarterly TDS returns.
The CBDT has also notified revised due dates for filing of quarterly TDS returns by persons (other than government).
Sl. No.
Due date of Ending of quarter of financial year
Old Due Date
Revised Due date
30th June
15th July of the financial year
31st July of the financial year
30th September
15th October of the financial year
31st October of the financial year
31st December
15th January of the financial year
31st January of the financial year
31st March
15th May of the financial year immediately following the financial year in which the deduction is made
31st May of the financial year immediately following the financial year in which the deduction is made

Amendment 3: Change in due date of payment of TDS deducted u/s 194IA.
Any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of thirty days seven days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QB.

FAQs on Annual Information Report (AIR) caused Sending of Notices by Income Tax Department

FAQ 1: How Income Tax Department get to know about our transactions?

Every one want to keep distance from Income Tax Department but due to the following expenses and investments, which at any point of time performed by you may invite undue attention of the Income tax Department.

S. No.
Cash Deposits in Saving Bank Account
Aggregating to Rs. 10 Lakhs P.a.
Cash Deposits or withdrawals in one or more current account.
Aggregating to Rs. 50 Lakhs or more
Receipt of Cash Payment for sale of any goods/ services
Exceeding Rs. 2 Lakhs
Purchase / Sale of any Immovable Property
Exceeding Rs. 30 Lakhs
Making Credit Card Payments
More than Rs.2 Lakhs p.a.
Investment in Shares
More than Rs. 1 Lakh
Investment in RBI Bonds
More than Rs. 5 Lakhs
Investment in Mutual Fund Units
More than Rs. 2 Lakhs
Investment in Debentures/ Bonds
More than Rs. 5 Lakhs
Investment in Gold ETF
More than Rs. 1 Lakh

FAQ 2: How does the Income Tax Department get to know about all these activities?

The IT Department has developed a statement of financial transactions called Annual Information Report (AIR) through which they get to know about all the transactions entered by you and on the basis of this report, the Income Tax Department shortlists their targets and further sends them a notice.

FAQ 3: What do you mean by Annual Information Report?

Annual Information Return (now called as statement of financial transaction or reportable account) of ‘high value financial transactions’ is required to be furnished under section 285 BA of the Income-tax Act, 1961 by ‘specified persons’ in respect of ‘specified transactions’ registered or recorded by them during the financial year.

FAQ 4: Who furnished Annual Information Return to the Income tax Department?

Sr. No.
Class of Person
Nature and Value of Transaction
A Banking Company
a)   A Cash deposit aggregating to Rs. 10 Lakh or more in a year in any saving account
b)   Cash deposits or withdrawals aggregating to Rs 50 lakh or more in a financial year in one or more Current Account.
Any Institution issuing Credit Card
Payment made by any person against bill raised in respect of credit card issued to that person, aggregating Rs. 2 Lakh or more in the year
A Trustee of a Mutual Fund
Receipt of Rs. 2 Lakh or more for acquiring units of that fund.
A Company or Institution issuing Bonds or Debenture
Receipt from any person of an amount of Rs. 5 lakh or more for acquiring bonds or debentures issued.
A Company issuing shares through public or right issue
Receipt from any person of an amount of Rs. 1 lakh or more for acquiring shares issued by the company.
Registrar or Sub- Registrar appointed under the Registration Act
Purchase and sale by any person of immovable property valued at Rs. 30 Lakh or More
Any person being an officer of RBI
Receipt from any person of an amounts aggregating to Rs. 5 lakh or more in a year for bond issued by Reserve Bank of India
Any other Person
a)   Receipt of Cash Payment exceeding Rs.2 Lacs for sale of any goods/ services.
b)   Investment in Gold ETF worth more than Rs. 1 Lakh.

FAQ 5: How can I trace my High Value Transactions reported under AIR?

The assesse can trace his/ her high value transactions reported under AIR, in their 26AS Report under Part E - AIR Transactions. Any transaction of the assessee which has been categorized as a High Value Transaction, will be reflected therein.

FAQ 6: How to avoid receiving a notice from the IT department?
      1)      File your Income Tax returns on time and correctly.
      2)      Always re-check your Tax Credit with the 26AS statement.
      3)      Disclose all your Taxable as well as Exempt income under the right head in the income tax return.