Corruption : Black Money

On Aug 2015, the PM stated that so far the govt. has received Rs. 6500 crore under the compliance window of the recent by notified Black Money Act.

Starting 01.07.2015, if tax over dues (on overseas assets) declare their unaccounted assets within 3 months, they will pay tax and penalty amounting to 60% of value of their assets. If they do not declare, they will have to pay tax and penalty amounting to 120 of value of their assets, and a final term of 10 years.

From now on, any person flying into India and carrying more than Rs 25,000, will have to declare the same at Immigration.

The next budget will have a special head under RECEIPTS for Black Money.

As a result of the moves by Governments to chase undeclared wealth overseas, Bankers in havens like Singapore, Switzerland are feeling the pressure of having to divulge details of such Assets. Singapore has committed to automatically start sharing information from 2017.

India estimates that there is an estimated $340 Billion of undeclared Assets held by Indians overseas.

Yuan Depreciation :

The Surprise depreciation of the Yuan will put a pressure on Indian exports and also provide an input to the exports of China. Steel, infra projects will be hit by dumping from China.

It remains to be seen how the INR will react and how the RBI will respond.

Chinese shares have slumped further by 6% on fears of further Yuan depreciation.$ 125

Billion have flown out of Chinese markets in July and August alone.The Infrastructure

Index fell by 8.4%, the Energy Index by 6.1% and the Real estate Index by 7.3%.

Strong “macros’’ of the Indian economy may keep the INR out of a very unsettling exchange rates. Exports are less reliant on China, Current Account deficit is in a comfortable position and the forex reserves are growing.

TAXATION ASSESSMENT UPDATES

Compulsory manual selection of cases for scrutiny during the Financial

Year 2015-2016:

1. In supersession of earlier Instructions on the above subject, the Board hereby lays down

the following procedure and criteria for manual selection of returns/cases for scrutiny during the financial-year 2015-2016:-

a) Cases involving addition in an earlier assessment year in excess of Rs. 10 lacs on a substantial and recurring question of law or fact which is either confirmed in appeal or is pending before an appellate authority.

b) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs. 10 crore or more on a substantial and recurring question of law or fact which is either confirmed in appeal or is pending before an appellate authority.

c) All assessments pertaining to Survey under section 133A of the Income-tax Act, 1961

('Act') excluding those cases where books of accounts, documents etc. were not impounded and returned income (excluding any disclosure made during the Survey) is not less than returned income of preceding assessment year. However, where assessee retracts the disclosure made during the Survey, such cases will not be covered by this exclusion.

d) Assessments in search and seizure cases to be made under section(s) 158B, 158BC,

158BD, 153A & 153C read with section 143(3) of the Act and also for the returns filed for the assessment year relevant to the previous year in which authorization for search and seizure was executed u/s 132 or 132A of the Act.

e) Returns filed in response to notice under section 148 of the Act.

f) Cases where registration u/s 12M of the IT Act has not been granted or has been cancelled by the CIT/DIT concerned, yet the assessee has been found to be claiming tax-exemption under section 11 of the Act. However, where such orders of the CIT/DIT have been reversed/set-aside in appellate proceedings, those cases will not be selected under this clause.

g) Cases where the approval already granted u/s 1O(23C)/35(1)(ii)/35(1)(iii)/10(46) of the

Act has been withdrawn by the Competent Authority, yet the assessee has been found claiming tax-exemption/benefit under the aforesaid provisions.

h) Cases in respect of which specific and verifiable information pointing out tax-evasion is given by Government Departments/Authorities. The Assessing Officer shall record reasons and take prior approval from jurisdictional Pro CCIT/CCIT/Pr. DGIT/DGIT concerned before selecting such a case for scrutiny.

2. Computer Aided Scrutiny Selection (CASS): Cases are also being selected under CASS on the basis of broad based selection filters. List of such cases shall be separately intimated in due course by the Pr.DGIT (Systems) to the jurisdictional authorities concerned.

3. It is reiterated that the targets for completion of scrutiny assessments and strategy of framing quality assessments as contained in Central Action Plan document for Financial-Year2015-2016 have to be complied with and it must be ensured that all scrutiny assessment orders including the cases selected under the manual criterion are completed through the AST system software only.

Further, in order to ensure the quality of assessments being framed, Pro CCsIT/CCsIT/Pr.

DsGIT/DsGIT should evolve a suitable monitoring mechanism and by 30th April, 2016, such authorities shall send a report to the respective Zonal Member with a copy to Member (IT) containing details of at least 50 quality assessment orders from their respective charges. In this regard, IT Authorities concerned must ensure that cases selected for publication in 'Let us

Share' are picked up only from the quality assessments as reported.

Goods & Service Tax

The introduction of GST will be a game changer and will result in –

• Reducing cascading effect of taxes

Manufacturing = Excise + Vat………….replaced by single Tax

Restaurant = Vat + Service tax…………replaced by single tax

• Shorter turnaround time for deliveries by removal of check posts.

• Uniform rates of taxes all over India.

• Reduction in prices due to operational efficiency.

• Reduction in transport rates due to reduction in stop over time at check posts

• Disruption in the existing distribution system, with the removal of intermediaries like CNF and the setting up of large distribution with central warehouses.

• Increase in working capital of the manufactures due to delay in receiving input, after sale to final retailer.

• Input would be allowed only if the seller has paid in and deposited his taxes and filed his returns ( e.g. Form 26AS)

• All subsidies like excise etc. may be replaced with refund, on evidence of manufacture.

A. Central Indirect Taxes: - central excise duty, additional excise duty, service tax, countervailing duty special additional duty of customs, central surcharge and excesses – will be subsumed

B. State Indirect Tax: - Sale tax, entertainment tax, central sale tax (levied by central and collected by the state) Octroi, entry tax, purchase tax, luxury tax, states surcharges and Cesses –will be subsumed.

C. Taxes that will remain and will not be subsumed:

1. Taxes levied by municipality, Panchayat on entertainment etc

2. Stamp duties

3. Basic custom duty- will remain

D. Entire value claim will need to be registered to get complete benefit of GST.

1. Reduction in overlapping taxation

2. Efficient log sticks

3. Efficient transportation

4. Efficient warehousing

5. Introduction of new technology

6. Doing away with C&F

7. Reduction in hardening and transportation time

8. Lower product cost

9. Larger collection of tax

10. Cashier compliance

11. Easier administration

Income Tax

• INCOME TAX RETURNS

It is mandatory to give the Account nos. and IFSC codes of all your accounts.

When filing the Returns, the Return can either be linked to Aadhar nos. and filed, or OTP can be generated on registered mobile nos. and Return can be filed.

Bank transactions and Bank turnover must be considered when computing Income for assessment

MOST IMPORTANT Deposits and balances in Overseas Bank accounts have to be disclosed

Exempt income is now disclosed separately on the ITR acknowledgement

• Accounting Standards have been adopted by the Department for Income tax assessment ( CBDT)

• AO cannot make estimated additions without showing comparable case to justify higher rate of net profit.

- H.C of Rajasthan – CIV Vs Gupta K.N Construction Company (2015) 59 Tax man 293.

• Disallowance u/s 40(a)(ia) : Disallowance on the ground that tax was deducted under the wrong section of chapter XVII-B of the Act….in a recent judgment, the Hon’able Kerala High court held that if deduction is made and filed under the wrong section (e.g. 194J instead of 194C) such a deduction at source would not satisfy the provisions of Sec 40(a)(ia) – hence, deduction under a wrong provision of law will not give relief to an assesse.

• Computation of Period of Stay in India for an individual, being a citizen of India and a member of the crew of ship, the no. of days computed will not include the following period- beginning on the date entered in the continuous Discharge Certificate, in respect of joining the ship by the said individual for the eligible voyage and ending on the date, entered in the continuous Discharge Certificate, in respect of signing off by the individual from the ship in respect of such voyage. This amendment will have retrospective effect from 01.04.2015.

• The nos. of cases relating to Direct Taxes pending before various High Courts is more than 34,000 and involve amount of more than Rs. 37,600 Crores.

• Notified Backward areas in Bihar are now eligible for 15% Additional Depreciation and 15% Investment Allowance, under the Income Tax Act. In the Cost of Plant & Machinery, acquired and installed during the period 01.04.2015 to 31.03.2020.

• Cost of Inflation Index-

Cost Inflation Index for FY 2015-16 is 1081.

Central Excise

• Performance bonus received after clearance of goods is not includable in assessable value.

• Excise duty is not payable on sample drawn for quality control in the absence of any evidence of clearance of such sample from the factory.

• Physicians sample cleared to principals was liable to duty under Sec. 4 and not under MRP based assessment.

• Indirect Tax provisional revenue collections have increased by 39% over the last 12 months, from Rs. 40,800 Crores to Rs. 56,700 Crores. Service Tax registered an increase of 30% and Custom of 23% and Central Excise by 68%.

Company Law

W.e.f.1st July 2015, every Company has to comply with Secretarial Standard 1 and 2.

Summary of action points regarding compliance of these standards are that:

If there is no Company Secretary:

(A).WHO WILL DECIDE BOARD APPROVAL FOR:

• Who will be authorized to issue notices & convene Board meetings?

• Receive communication from Directors regarding participates

• Facilitate inspection of Register, Minutes.

• Authenticate entries in attendance register.

• Shall have custody of Register, Books.

• Record entries of Minutes.

• Issue certified copies of Resolutions.

1. Decide Policy on holding of meetings.

2. Decide list that cannot be taken up their video conferencing.

3. Decide on video conferencing infra structure.

4. Approve templates for agenda notes, internal system for drafting, decide tentative meeting calendar etc.

(B) GENERAL MEETING POINTS

Who will obtain declarations from directors regarding dispatch of notice, addresses for dispatch, maintains of registers, ensure presence of directors, updating of website etc

(C) ACTIONS REGARDING SHAREHOLDRS APPROVAL

Who will be responsible for alterations in Articles of Association etc.

(D) NEW VERSION OF FORMS : 20B, 23AC, 23ACA, 66 etc have been modified wef 01.08.2015.