Help guide for applying Import-Export code0 comments Saturday, February 12, 2011IEC code can be now applied online at the site http://dgft.gov.in/ I have received a file which explains how to apply IEC code online as well as mannual.I am sharing it for benefit of visitors to my blog. For helpguide on how to apply Import-Export code(IEC code) click on the following link Help Guide on IEC Share | Monetory limits for filing appeals by Income Tax Department before Appellate Tribunal, HCs, SC raised.0 commentsMonetory Limits for filing of appeals on merits by department before Appellate Tribunal, High Courts and Supreme Court have been raised by CBDT vide its instruction no. 3/2011 [F. NO. 279/MISC. 142/2007-ITJ], DATED 9-2-2011. Earlier the monetory limits for filing appeals by Department were as follows: Existing monetary limits for assigning cases of Income Tax to ITOs and DCs/ACs, raised by CBDT0 commentsThe limits for assigning cases to Deputy Commissioners/Assistant Commissioners and ITOs have been revised by CBDT w.e.f 01-04-2011. The changes has been done with a view to remove that was caused to taxpayers in mofussil(i.e. small stations/cities other than metro cities) areas because of existing monetary limits which results in transfer of their cases to Deputy Commissioners/Assistant Commissioners which are located in some other station. The relevant circular is produced herebelow for ready reference of readers: Due date for submission of ITR-V for A.Y 2010-11 extended to 31st July 20110 commentsThe due date for submission of ITR-V form relating to Income Tax Returns for A.Y 2010-11 has been extended to 31st July 2011 or within 120 days from the date of uploading of electronic return data, whichever is later by CBDT vide its circular dated 10-02-2011. The relevant circular and press release is produced herebelow for ready reference. A brief on exemptions available to SEZ unit or SEZ developer from CST under CST Act 19560 comments Friday, February 11, 2011Section 8(6),8(7) and 8(8) of the CST Act deals with the exemptions available to a SEZ unit or SEZ developer from CST. When goods are sold to a SEZ unit or SEZ developer then no CST is payable by such unit or developer as per the above sub sections subject to fulfillment of certain conditions. The conditions and forms relating to such exemption are provided as follows for the benefit of all concerned. What is SEZ: Before discussing the relevant provisions one need to understand what SEZ means. Full form of SEZ is Special Economic Zone. These are designated areas in countries that possess special economic regulations that are different from other areas in the same country. Moreover, these regulations tend to contain measures that are conducive to foreign direct investment. Conducting business in a SEZ usually means that a company will receive tax incentives and the opportunity to pay lower tariffs. Provisions of section 40(b) of Income Tax Act 19611 comments Monday, February 7, 2011Section 40(b) of Income Tax Act places some restrictions and conditions on the deductions of expenses available to an assessee assessable as a partnership firm in relation to the remuneration and interest payable to the partners of such firm. The deductions regarding salary to partners and any payment of interest to partners cannot exceed the monetory limits specified u/s 40(b) and are available subject to the fulfillment of conditions mentioned therein. The following conditions must be satisfied before claiming any deduction in respect of salary/remuneration or interest payable to partners by a partnership firm. Tax Payable in works contracts under Punjab VAT Act 20050 comments Friday, February 4, 2011Here in this article the tax payable in case of works contracts is concentrated on in view of the addition of new provisions in this regards u/s 8 of the PVAT Act 2005. Section 8 of PVAT Act 2005 which deals with the rates of tax has been amended w.ef. 21/10/2010 to provide for sub section 2-A explaining the tax payable in works contracts which runs as under: “(2-A) Every person executing works contracts shall pay tax on the value of goods at the time of incorporation of such goods in the works executed at the rates applicable to the goods under this Act: SUMMARY OF PROVISIONS RELATING TO REFUNDS UNDER PUNJAB VAT ACT 20050 comments Tuesday, February 1, 2011For the successfull administration of any tax law refund of tax to the assessee is as much importance as ensuring tax payment from the assessee. Refund in tax laws whether (indirect or direct) arises primarily due to the reason of excess tax paid than actual due, secondary reasons may be like refund arising out of a judgement of a court or an order of an authority. Here in this article refund provisions under Punjab VAT Act 2005 are concentrated on. When Refund may arise under Punjab VAT Act 2005: Refund under Punjab VAT Act 2005 may arise due to many reasons. VAT Refund ussualy arises to the exporters or the person doing penultimate export i.e sales against H forms, due to the fact that the export of goods outside India is considered as zero rated sales i.e not liable for any vat liability and the tax paid on purchase of goods which are to be exported is refunded to the exporters as per provisions of section 18(2) of PVAT act 2005. Tax deduction from Works contracts only to be on the taxable turnover involved in the works contract under Punjab VAT Act 20050 comments Friday, January 14, 2011Almost all States under their respective VAT laws have made provisions for deduction of VAT from payment to be made to the works contractors at the time of the payment (popularly known as works contract tax or VAT TDS on works contract). The Punjab VAT Act is no exception in this regard. Section 27 of PVAT Act deals with the provisions relating to tax deductions from payments to be made under a works contract. Here in this article the provisions of section 27 of PVAT Act 2005 are concentrated on in view of the latest decision of Hon’ble Punjab & Haryana High court in Larsen and Tourbo v State of Haryana case. What is Works Contract: Before proceeding with the topic it is necessary to give a brief meaning of works contract. Works contract has been defined inclusively u/s2(zu) of Punjab VAT Act 2005 to mean as including any agreement for carrying out, for cash, deferred payment or other valuable consideration, building, construction, manufacturing, processing, fabrication, erection, installation, fitting out, improvement, modification, repairs or commissioning of any movable or immovable property. In general terms works contract can be defined as a contract of some work for valuable consideration which includes both supply of goods as well as labour/services. Construction of buildings, roads, bridges, making of lifts, sign boards etc are some examples of works contracts. Deduction of tax from payment made to works contractors under PVAT Act: Section 27(1) of PVAT Act 2005 which deals with deduction of tax from payments made to works contractors, runs as under: Notwithstanding anything contained in any of the provisions of this Act, every contractee responsible for making payment to any person (hereinafter in this section referred to as the contractor) for discharge of any liability on account of valuable consideration, exceeding rupees five lac in a single contract payable for the transfer of property in goods (whether as goods or in some other form) in pursuance of a works contract, shall, at the time of making such payment to the contractor either in cash or in any other manner, deduct an amount equal to two per cent of such sum towards the tax payable under this Act on account of such contract: Provided that any individual or Hindu undivided family not registered under this Act, shall not be liable for deduction of such tax. Section 27(1) starts with the words “Nothwithstanding anything contained in any of the provisions of this act” which shows that the provision is a non abstante clause which means section 27(1) will be applicable irrespective of anything contrary to it contained in the other provisions of the Act. On which amount the tax is to be deducted?: The first question that comes to mind while deducting tax under section 27 of PVAT Act 2005 is on which value of works contract Tax should be deducted i.e whether on the whole value of works contract including service component and interstate sales if any etc or only on that part of works contract on which the contractor is liable to pay tax under the relevant state VAT act. Section 27(1) doesnot provide specific answer to it clearly. Although it is written in the said section that deduction is to be made for the amount payable for transfer of Property in Goods( whether in goods or in some other form) made in pursuance of works contract. Section 27(1) doesnot specify clearly whether the labour part included in the works contract or the value of the works contract involving interstate sales or sales in the cource of import are to be excluded or not while making tax deductions from the works contract payments by the contractee. Hon’ble Supreme court in Steel Authority of India v. State of Orissa [2000] 118 STC 297(SC), Nathpa fhakri ft. Venture v. State of Himachal Pardesh[2000] 118 STC 306 (SC) and Rapti commission Agency v. State of U.P.{2006] 147 STC 566(SC), has taken a view that if a person is not liable for payment of tax at all, at any time, the collection of tax from him, with a possible contingency of refund at a later stage, will not make the original levy valid. Labour component involved in the value of a works contract is not liable for any tax under Punjab VAT Act as also the interstate sales or sales outside the state and sales in the cource of import. If there is no levy of tax on a turnover then there cannot be collection of tax on it by the authorities. If we consider the above view of the Supreme court then tax u/s 27 should be deducted only on the taxable turnover part of works contract that is to say tax should be deducted only on that part of works contract on which the contractor would be liable to pay tax under the relevant VAT Act. The Hon’ble Punjab & Haryana High court in a latest case Larsen & Toubro Limited Vs.The State of Haryana and others CWP No.14797 of 2010 Decided on 26.10.2010 wherein validity of statutory provisions in Sales Tax law in Punjab and Haryana for deduction of tax at source out of payment made to contractors for execution of works contracts involving transfer of property in goods at specified rate was challenged, has held considering the view of Supreme court in the cases referred above that the impugned provisions i.e section 27 of PVAT Act 2005 and section 24 of Haryana VAT act 2003 as ultra vires as it did not provide any mechanism for the exclusion of labour component or interstate sales or sales outside the sate or sales in the cource of imports from the value of works contract while deduction of tax, but instead of striking down the impugned provisions the Hon’ble court has decided on the proposal of the petitioners in that case that the provisions of section 27 of PVAT Act and u/s 24 of HVAT Act 2003 will be applicable only to the taxable turnover i.e. after deducting service component and turnover relating to sales outside State, in the course of inter-State sales or in the course of import. The petitioner (Contractor) will give declaration in respect of such payments to the persons making the payment(Contractee) with a copy to the concerned assessing authority. The relevant portion of the said Judgment is produced herebelow: “After due consideration of the rival stands, we find that the proposal made on behalf of the petitioners as an alternative to striking down statutory provisions being in consonance with the judgments of the Hon’ble Supreme Court has to be accepted. This is so as the States propose to do their duty of providing an appropriate mechanism to give effect to the law laid down by the Hon’ble Supreme Court. Accordingly, we hold that impugned provisions for deduction of tax at source will apply only to the taxable turnover i.e. after deducting service component and turnover relating to sales outside State, in the course of inter-State sales or in the course of import. The petitioner will give declaration in respect of such payments to the persons making the payment with a copy to the concerned assessing authority. This will be without prejudice to the provisions of assessment, levy of interest, penalty, recovery and all other statutory provisions. This arrangement will continue till any other appropriate arrangement is worked out by the States of Punjab and Haryana. We further direct that pending assessments upto the year 2009-10, may be finalized within six months from the date of receipt of a copy of this order and with regard to assessment for the year 2010-11, a provisional assessment be made relating to TDS amounts within the same period.” Thus tax u/s 27 of PVAT Act 2005 and u/s 24 of Haryana Vat Act 2003 tax on works contract needs to be deducted only on the taxable turnover of the works contract after the said judgment as explained above. Rates on certain goods changed under Punjab VAT Act 20050 comments Wednesday, January 12, 2011Punjab Government has changed vat rates on certain goods w.e.f 07-01-2011. Relevant Public Notice and notification is produced herebelow for ready reference of readers:
Some Views on Penal actions under Punjab VAT act 20050 comments Saturday, January 8, 2011Rules of natural justice are important part of fundamental rights as enshirined in our constitution. Rules of natural justice means fair play in action i.e. to save the citizens from arbitrariness in administrative or quasi judicial action. Rules of natural justice are part of Rule of law as ensured under article 14 of our constitution. Violation of rules of natural justice result in arbitrariness and violation of fundamental rights as provided by our constitution to the citizens of India. The rules of natural justice ensures that any person is not subjected to arbitrariness and justice not only appear to have been done with him but manifestly have been done. UNDERSTANDING E1 AND E2 SALES UNDER CST ACT30 comments Thursday, December 16, 2010Central Sales Tax Act 1956 envisages single point of taxation i.e tax at the first point of sales. Subsequent sales during the movement of the goods from one state to another have been exempted under section 6(2) of CST Act. Before proceeding to understand which sale is exempted under section 6(2) and the conditions for exemption, one should understand some relevant concepts relating to it. What is sales by transfer of documents of title: Section 3(b) provides that a sale or purchase effected by transfer of documents of title to the goods during their movement from one state to another shall be deemed to take place in the cource of interstate trade or commerce. CBDT'S INSTRUCTIONS ON IT REFUNDS FOR A.Y 2009-100 comments Tuesday, December 14, 2010INSTRUCTION INCOME TAX ACT Section 143 of the Income-tax Act, 1961 - Assessment - General - Clarification regarding processing of ITR-1 and ITR-2 returns - Credit for tax deducted at source for A.Y. 2009-10 INSTRUCTION NO. 9/2010 [F. NO. 225/25/2010/IT (A-II)], DATED 9-12-2010 1. Reference may be made to Board’s Instruction No. 7, dated 16-8-2010 in which it has been stated, inter alia, that in cases where the return is filed in ITR-1 and ITR-2 for the A.Y. 2009-10, and where the TDS claim does not exceed Rs. three lakh and where the refund computed does not exceed Rs. Twenty five thousand, the TDS claim of the taxpayer shall be accepted at the time of processing of the returns provided the TDS payment reported in AS-26 is more than Rs. zero. F forms under CST Act 195616 comments Sunday, December 5, 2010To constitute interstate sales one of the basic requirement is that there should be sale. If a person sends goods outside from its state to its branch office in another state then it is not sale because you cannot sell goods to oneself. Similarly if a dealer sends goods to its agent in another state who stocks and sells goods on behalf of the dealer, such agent is called consignment agent and such stock transfer is also not considered as interstate sales since there is no sales involved in it, sales will take place when such agent will sell goods. But to prove such stock/branch transfer, F form is required to be produced as proof. WHETHER HIGHER STOCK THAN ACTUAL DECLARED TO BANK ATTRACTS ADDITIONS U/S 69 OF INCOME TAX ACT 19610 comments Tuesday, November 30, 2010Section 69 of Income Tax Act deals with the cases of unexplained investments which have been made by the assessee but not accounted for in his books of accounts if any maintained and for which no satisfactory explanation is offered by the assessee. I have seen some cases where higher stock than actual is declared by assesses to their bankers for availing more credit and at the time of assessment u/s 143(3) of Income Tax Act such assesses face difficulties to explain such higher stock declared to their bankers, if the assessing officer summons such stock statements from the bankers for the purpose of making assessment. INPUT TAX CREDIT ON GROSS LOSS ARISING, IF ANY FROM SALES WILL BE REVERSED UNDER PUNJAB VAT ACT 20050 comments Saturday, November 13, 2010The Excise and Taxation Department, Government of Punjab has amended rule 21 of Punjab VAT rules to add sub rule 2-A in the said rule to provide for that ITC shall be allowed to a taxable person to the extent of tax payable on the resale value of goods or sale value of manufactured/processed goods where such goods are sold below the purchase price in case of resale or cost price in case of manufactured/processed goods. The balance ITC shall be reversed. Implications of the ammendment: The implications that follow from this amendment are that now if a person sells goods below the purchase price in case of traded goods and below the cost price in case of manufactured goods then the resultant excess ITC that will arise due to loss that arises will have to be reversed. In other words ITC will be available only upto the sale or resale value of the goods in question. SOME VIEWS ON SECURITY FOR REGISTRATION UNDER PUNJAB VAT ACT 20050 comments Monday, November 8, 2010For registration under the Punjab VAT Act 2005 one of the requirement u/s 25(1) is furnishing of security for securing the payment of tax under PVAT Act 2005. This requirement is compulsory as per the wording of section 25(1) of PVAT Act 2005 which runs as under: Every person applying for registration under this Act, shall furnish a security of rupees fifty thousand in the manner, prescribed for securing proper and timely payments of tax or any other sum, payable by him under this Act: No Input Tax Credit under PVAT Act on Purchase of Diesel used for capitve generation of electric power - Punjab and Haryana High Court0 comments Saturday, October 16, 2010The Honourable Punjab and Haryana High court has held in an important decision in the case of State of Punjab & others. Vs. M/s Malwa Cotton & Spinning Mills Ltd.(decided on 24/08/2010) reversing the decision of the Punjab VAT Tribunal that no input tax credit will be available on the purchase of Diesel used in generation of electric power for capitve use in the factory under clause (i) of section 13(5). No penalty u/s 271B, If the audit report is obtained within the due date, but return is filed after the due date.0 comments Tuesday, September 28, 2010I have had a discussion lately on the topic whether penalty u/s 271B is imposable in case the audit report u/s 44AB is obtained within the due date of filing the ITR u/s 139 but the ITR is filed after such due date? I have tried to examine such situation out of my Legal conscience as follows:
The due date for filing Income Tax Return for corporate and those assessees who are required to get their accounts audited is 30th september every year. But it has been extended to 15th October this year. The Due date for furnishing Audit report u/s 44AB to the Income Tax Department is also 30th september every year which also has been extended to 15th october this year. Earlier before the introduction of annexure less forms the audit report was required to be submitted with the department before the due date of return of Income, otherwise it attracted penal provisions u/s 271B. Penalty under section 271 B is a sum equal to half per cent of the total sales, turnover or gross receipts from business or profession as the case may be , in such financial year or one lakh rupees, whichever is less. But after the introduction of annexure less forms i.e ITR4, ITR5, ITR6 etc., the Tax Audit Report is not required to be submitted along with the Return of Income nor it is to be submitted separately any time before or after the due date. But one should get the Tax Audit Report from his CA before the due date of submitting the Return of Income and fill the relevant columns of the Return of Income on the basis of such report. The Tax Audit Report is required to be submitted if it is called for by the Income Tax Officer during the Assessment proceedings. This has also been explained in CBDT's circular No 3 of 2009. The relevant portion of the said circular is reprduced herebelow: "7. Following clarifications are also issued in respect of certain issues arising from furnishingthe returns in the above mentioned forms: (i) An assessee should obtain the report of audit from an accountant under section 44AB of the Act on or before the due date of the furnishing of the return and should fill out the relevant columns of the return forms on the basis of such report. However, the report of audit should not be attached with the return or furnished separately any time before or after the due date. The assessee should retain the report with himself. If called for by any income-tax authority during any proceeding under the Act, it shall be incumbent upon the assessee to furnish/produce the same in original. No penalty under section 271B shall be initiated or levied for not furnishing the tax audit report on or before the due date. However, if the audit report has not been obtained before the due date, provisions of section 271B shall continue to be attracted." As per the above circular You are not in contravention of any provisions if tax audit report is obtained before due date. There is no Penalty attracted if the Tax Audit Report is not submitted along with the Income Tax Return on or before the due date. However , if the Tax Audit report has not been obtained from the CA on or before the due date of filing return of Income, Penalty under section 271 B shall be attracted. Although section 234A is attracted for late filing of return .There was one view expressed by someone to me that filing up the ITR ( particularly tax audit columns) is furnishing of the tax audit report and if that is not done before due date , penalty can be levied . In my view circular asks the assessee to fill up the relevant tax audit columns in the return of Income and file the return . It no where mentions that fill up the columns and file the ITR before due date. Moreover section 271B should be read with section 44AB and not with section 139. Penalty u/s 271B is imposed on two grounds i.e for not getting the books of accounts audited within due date and for not furnishing the audit report within due date of filling of return of income. Now as per above circular furnishing of audit report has been done away with after the introduction of annexureless forms. The only thing that is required is to obtain the audit report within due date and fill the relavant audit columns of the ITR, if it is done no penalty can be initiated u/s 271B. Therefore in my view if you have got the audit report from your C.A. on or before the due date of furnishing the Return of Income, there is no penalty u/s 271B attracted even if you file return after the due date. Please Note: The views expressed are my Personal Views only. Due date of auditable Income Tax Returns extended from 30th september to 15th october0 comments Monday, September 27, 2010F.No. 225/72/2010-ITA.II Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Dated : September 27, 2010 Order under Section 119 of the Income Tax Act, 1961 On consideration of the reports of disturbance of general life caused due to floods and heavy rains, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the due date of filing of returns of income for the Assessment Year 2010-11 from 30.09.2010 to 15th October 2010. Accordingly the due date for Tax Audit report u/s. 44AB of the Income Tax Act is also extended to 15th October, 2010. (Ajay Goyal) Director (ITA. II)
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