Lump sum scheme for payment of service tax in works contract introduced

0 comments Tuesday, March 20, 2012
In works contract service lump sum scheme for payment of service tax in a works contract has been introduced by amendment in Rule 2A of the  Service Tax (Determination of Value) Rules, 2006 vide Notification No. 11/2012 - Service Tax dated 17-03-2012. In works contract service there were two types of schemes which were earlier available i.e payment of service tax on actual service involved and the composite scheme.

In the composite scheme service tax @ 4.8% is required to be paid on the total value of the whole contract including material part, while in the other case service tax is required to be paid on the actual value of labour and services incorporated in works contract(which can be possible where proper books of accounts are being maintained).
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Rate of tax in composite scheme under works contract service enhanced to 4.8%

Rate of tax in composite scheme in Works contract service has been changed w.e.f 01-04-2012. The earlier rate of tax in the composite scheme was 4% which now has been enhanced to 4.8%.

Rule 3 of  the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, has been suitably amended whereby  for the words ―four per cent, the figures and words ―4.8 per cent has been substituted.
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Reverse Charge Mechanism in service tax-more clarifications in works contract service required


 In the Budget-2012-13 under the new Reverse Charge Mechanism in certain services the receipient of the service has been made liable to pay tax instead of service provider. In three of services namely  hiring of means of transport, construction and man power supply both service receiver and service providers have been made liable to tax in the prescribed percentages.

Section 68(2) of the Finance Act, 1994 has been suitably amended in the budget of 2012-13 whereby a proviso has been added to the said section authorising Central Government to notify the service and extent of service tax payable by such person and extent of service tax payable by service receiver.
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Proposed income tax amendments in Budget 2012-13-Part-2

0 comments Monday, March 19, 2012

Consideration in excess of F.M.V of shares to be treated as income from other source if consideration received is in excess of Face Value of shares: It is proposed to insert a new clause (viib) in the  aforesaid sub-section so as to provide that where a company, not being a company in which the public are substantially interested, receives, in any previous year,  from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be chargeable to income-tax under the head “Income  from other sources”. However, the said new clause  shall not apply where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or a venture capital fund.

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Proposed amendments in Budget 2012-13 in Taxation-Part 1

0 comments Saturday, March 17, 2012

RATES OF INCOME-TAX after Budget 2012 presented on 16.03.2012

A. Normal Rates of tax:

   1.  Where the total income does not exceed Rs. 2,00,000/-.
   2.  Where the total income exceeds Rs. 2,00,000 but does not exceed Rs. 5,00,000/-
10 per cent of the amount by which the total income exceeds Rs.2,00,000/-
   3.  Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-.
Rs. 30,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-.
   4.  Where the total income exceeds Rs. 10,00,000/-.
Rs. 130,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-.
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Fair Market Value assessed by DVO to be adopted even if its lower than stamp duty valuation

0 comments Wednesday, March 14, 2012

Kolkata ITAT has held in the following case that Where fair market value assessed by DVO is lower than stamp duty valuation, value adopted by DVO has to be adopted for computing LTCG.

In this case during the relevant assessment year, the assessee sold certain property and disclosed sale consideration in the sale deed for her half share at Rs. 20 lakhs and computed long-term capital gains at nil by taking indexed cost of acquisition at Rs. 30.81 lakhs. The Assessing Officer noticed from the sale deed that the stamp valuation of the property was at Rs. 1.3 crores. The Assessing Officer adopted valuation by Stamp Duty Authorities and computed the long-term capital gain at Rs. 50.70 lakhs. On appeal, the Commissioner (Appeals) referred the matter to the DVO for ascertaining the fair market value of the said property. The Commissioner (Appeals) directed the Assessing Officer to adopt the value as per DVO's report for the purpose of computing the capital gains. The DVO valued the property at Rs. 30.87 lakhs.
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Decision of any High Court is binding on all the subordinate authorities and Tribunals through out India untill contrary view is taken by other High Court

0 comments Thursday, March 8, 2012

I have found an old judgement but very usefull one namely CIT vs. Godavari Saraf which I want to share for the readers of the blog. It has been held in this judgment by Bombay High Court that until contrary decision is given by any other competent High Court, which is binding on a Tribunal in the relevant State, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land.
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Plea of alternative remedy not acceptable against writ petition if there is jurisdictional error


It is well known that when an alternative remedy is available to a person then the writ petition in the High Court may not be acceptable. Punjab & Haryana High Court in the following case has held that plea of alternative remedy cannot be invoked where the question involved is of lack of jurisdiction on admitted facts.

It means that where an order of an authority suffers from error of lack of jurisdiction on admitted facts then in such case writ petition challenging such order can be filed and such writ should be accepted irrespective of the fact that the petitioner had the alternative remedy of filing an appeal against such order and he has not exhausted it before filing writ petition.
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Capital gains exemption u/s 54EC of Income tax Act, 1961

2 comments Sunday, March 4, 2012

Section 54EC of Income Tax Act, 1961 provides an option to save tax on capital gain arising from transfer of long term capital asset subject to fulfillment of certain conditions. Provisions of section 54EC are being discussed hereinbelow for the benefit of all concerneds.

Circumstances under which deduction u/s 54EC is available: The deduction u/s 54EC will be available subject to the following conditions:

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No denial of exemption u/s 54F merely because sale deed not registered or construction of house not completed within statutory period

0 comments Friday, March 2, 2012
High court of Karnataka in a very important following case has held that Condition precedent for claiming benefit under section 54F is that capital gains realized from sale of capital asset has been parted with by assessee and invested either in purchasing a residential house or in constructing a residential house.

If after making entire payment, merely because a registered sale deed has not been executed and registered in favour of assessee before period stipulated, assessee cannot be denied benefit under section 54F.

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Income from towers/antennas on roof, or from display of signage/parking space rent not income from house property but from other sources


Delhi ITAT has held in the following case that Income from installation of towers/antennas on roof top/from display of signage/parking space rent is not income from house property but income from other sources.

In this case the assessee claimed income from parking rent, terrace rent, signage rent and licence fee as income under the head house property and consequently claimed deduction u/s 24(1). The AO took the view that such incomes are income from Business and not from house property. However the CIT(A) considered such incomes as income from other sources. On appeal to Tribunal the order of CIT(A) is upheld.
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Income Tax Scrutiny criterias for F.Y. 2011-12/A.Y. 2012-13

1 comments Thursday, March 1, 2012
1. Where value of international transaction as defined u/s. 92B exceeds Rs.15 Crore.

2. Cases where there was addition of Rs.10 Lacs or more in earlier assessment year and question of law or fact is confirmed in appeal or pending before appellate authority.

3. Cases in which addition of Rs.10 Crore or more was made in earlier assessment year on the issue of transfer pricing.
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No Scrutiny for senior citizens and small tax payers having income upto 10 lakhs

No.402/92/2006-MC (07 of 2011)
Government of India / Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi dated the 14th March 2011
Streamlining procedure for scrutiny of income-tax returns
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