Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include audit, management consultancy, tax consultancy, accounting services, secretarial services, etc.

Friday, August 26, 2016

The Payment of Bonus (Amendment) Act, 2015 - Whether retrospective for Financial Year 2014-15

The Payment of Bonus (Amendment) Act, 2015 received presidential assent on 31 December 2015. The Amendment Act provides for major changes in the eligibility limit and increase in ceiling for calculation of bonus of employees under the Payment of Bonus Act,1965. These amendments are made on the requests of trade unions but making it effective retrospective is very harsh and burdensome for employers.
The payment of Bonus (Amendment) Act, 2015 has three significant changes which have affected employers’ budgets for payment of salaries for financial year 15-16
1.       This Act may be called The Payment of Bonus (Amendment) Act, 2015. It shall be deemed to have come into force on the 1st day of April, 2014.
The provisions of the Payment of Bonus (Amendment) Act, 2015 shall be deemed to have come into force on the 1st day of April, 2014. 

2.       The Amendment in Section 2 for Increase in the Eligibility Limit :
 In section 2 of the Payment of Bonus Act, 1965 in clause (13), for the words ‘‘ten thousand rupees’’, the words ‘‘twenty-one thousand rupees’’ shall be substituted.

Effect  : The Payment of Bonus (Amendment) Act, 2015 has enhanced the eligibility limit under section 2(13) from Rs.10,000/- per month to Rs.21,000/- per month.
3.       Amendment in Section 12 for increase in Calculation Ceiling :

 In section 12 of the principal Act,—
(i) for the words ‘‘three thousand and five hundred rupees’’ at both the places where they occur, the words ‘‘seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher’’ shall respectively be substituted;

(ii) the following Explanation shall be inserted at the end, namely: ‘Explanation.—For the purposes of this section, the expression ‘‘scheduled employment’’ shall have the same meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act, 1948.’.

The Calculation Ceiling under section 12 from Rs. 3500 to Rs.7000 or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher. 

Key amendments by the Payment of Bonus (Amendment) Act, 2015:
  1. Eligibility Wage Ceiling increased - under the provisions of the previous Act, an employee was eligible to receiving statutory bonus if he had worked for at least 30 days in an accounting year and drew a salary of  Rs.10,000/-  per month,.
 The amendment increases this eligibility limit to a salary threshold of  Rs 21,000/-per month.
  1. The Ceiling for Bonus Calculation increased - under the previous Act, if an eligible employee’s salary were more than Rs3,500/-  per month, for the purposes of calculation of bonus, the salary would be assumed to be limited to Rs.3,500 per month.
 The amendment increased  this wage ceiling from Rs.3500/- to Rs.7,000/- per month or the minimum wage notified for the employment under the Minimum Wages Act, 1948, whichever is higher.
  1. A Retrospective amendment - the amendment has been deemed to be enforced from April 1, 2014.
Old Provisions as per The Bonus Act , 1965 were as under:-
-The bonus payable is to be determined on the basis of profits or on the basis of production or productivity of the establishment.
-The Act is applicable to factories and establishments employing at least 20 persons, although in some Indian states, the Government has extended the applicability of the law by reducing the threshold to factories and establishments employing at least 10 persons.
-The Act requires an employer to pay to an eligible employee a minimum bonus at the rate of 8.33% of the salary earned by the employee during the accounting year.
- As per law, the maximum statutory bonus can be limited to 20% of the employee’s salary.
Reactions from various Industrial Associations on Retrospective Effect from Fin Year 2014-15
-          The retrospective amendments were opposed on the reasoning that the adequate time was not given to employers to plan for such increase in their salary costs. The major issue for retrospective amendment was that employers would not have provided for this expense in the previous financial year (2014-2015) for which the books of accounts were already closed and taxes also paid.
-          Such retrospective application from Financial year 14-15 would lead to financial stress, to the manufacturing sector where the number of workers is high or in case of  Micro, Small and Medium Enterprises.
Stay on Retrospective Effect from April 1, 2014
Upon representations from various industry bodies by way of writ petitions in various State High Courts challenging the retrospective effect from Fin Year 2014-15, several high courts have stayed the retrospective operation i.e Kerala High Court, Karnataka High Court, Madhya Pradesh High Court, Allahabad High Court, Gujarat High Court and Punjab & Haryana High Court have passed interim stay order in January and February, 2016. Thus, within a period of six months more than six states in India have already obtained a stay on the retrospective operation of the amendment from Fin Year 2014-15. In light of the above stay orders it may be taken that the amendment would take effect from the financial year 2015-16 onwards, and not 2014-15 as earlier stipulated. With the financial management of even private companies till date wait and watch policy is being followed but should be sorted out by the Central Government.
In the past history if we see whenever certain provisions were made applicable with retrospective effect in favor of labours, the employers could not succeed in challenging the same on various reasons and issues. Since the matter is currently sub judice, it is yet with the judiciary to balance the amendment. As for future the ceiling and amount of bonus has been increased but for retrospective how Central Govt will balance the welfare of employees with the interests of employers whereas in the past the Central Government has never decided in favour of employers and stay of court seems to the postponement of establishment of retrospective amendment this time too. The history repeats itself so may be this time again may repeat and favour the labour.
Accounting Treatment in Finalisation of Financial Statements for Financial Year 2015-16
1. Make additional provision of Bonus Due for Financial Year 2014-15
2. Make Provision for bonus for Financial Year 2015-16
3. Pay additional bonus if Central Govt decides in favour of labour and establishes the retrospective applicability from 01.04.2015
4. For the companies where they pay bonus @8.33% without considering the ceiling of salary or minimum wage they need not to provide for as such change is not effecting at all as they must have paid more than what is actually required to pay and no additional liability remains unpaid. 


Saturday, August 6, 2016

Statutory Due Dates Calendar for August 2016

Date
Statutory Act
Applicable Form
Obligation
05/08/2016

Income Tax
ITR Forms
Extended due date for filing of Income Tax Return for Assessees not subjected to audit (where due date was 31.07.2016)
06/08/2016
Service Tax
Challan No.GAR-7
Last date for payment of Service Tax in case of companies for the month  July 2016
06/08/2016
Central Excise
Challan No.GAR-7
Monthly-payment of Central Excise Duties for the previous month –For non SUI units
07/08/2016
Income Tax
Challan No.-281
Payment of TDS/TCS deducted/collected in July,2016
07/08/2016
Income Tax
Form No.15G,15H, 27C
Submission of Forms received in July to IT Commissioner
10/08/2016
Excise
ER-1  & ER-2
Return for Non SSI assessees for June , Return for EOUs for June
15/08/2016
D-VAT
DVAT-20
Deposit of DVAT TDS for June for monthly tax payers
15/08/2016
Provident Fund
Electronic Challan Cum Return(ECR)
E-Payment of PF for June (Cheques to be cleared by 20th)
21/08/2016
D-VAT
D-VAT-20 & Central
Deposit of VAT & CST for the quarter ended June,2016
21/08/2016
ESI

Payment of ESI Liability for June
22/08/2016
D-VAT
DVAT – 43
Issue of DVAT certificate for deduction made in June
30/08/2016
Income Tax
Form 26QB
Filing of form 26QB for purchase of property in July,2016
31/08/2016
D-VAT
DVAT-16
Extended Due Date for D- VAT/CST Return online for Quarter ended June,2016
31/08/2016
Income Tax
ITR-V
Receipt of ITR-V  or E Verification through EVC of ITR –V (from Asst Year 2009-10 to Asst Year 2014-15)

Saturday, July 30, 2016

Extension of last date of filing AOC-4 (Non XBRL,XBRL & CFS) and MGT-7 under the Companies Act, 2013 up to 29.10.2016

Relaxation of additional Fees and extension of last date of filing AOC-4 (Non XBRL,XBRL & CFS) and MGT-7 under the Companies Act, 2013 up to 29.10.2016
MCA vide General Circular No. 08/2016 Dated: 29.07.2016 has announces the extension of last date to 29.10.2016 without payment of additional fee. It has been decided due to revision of AOC-4 (XBRL,Non XBRL and CFS ) and such Forms will be made available by the end of August 2016.
MCA has allowed companies to file financial statements and Annual Returns on or before 29.10.2016 without payment of additional filing fee where due date for holding of the Annual General Meeting is on or after 01.04.2016,
As per the relevant provisions of the Companies Act, 2013, the financial statements and Annual Returns will have to be filed by the Companies within 30 days and 60 days of conclusion of AGM or the last day by which AGM ought to have been held. Due to Non availability of required forms  it has been decided to allow companies to file financial statements and Annual Returns on or before 29.10.2016 where due date for holding of the Annual General Meeting is on or after 01.04.2016, without payment of additional filing fee.

Friday, July 29, 2016

Due Dates extended by DVAT for DVAT Quarter 1 for FY 2016-17 & CBDT for Income Tax Returns for Asst Year 2016-17

Due Date Extended from 31 July 2016 to 5th August 2016 for filing of Income Tax Return (ITR)  of Asst Year 2016-17
The Income Tax Deptt. has extended the due date for filing of Income Tax Return (ITR) for the assesses for AY 2016-17 from 31st July to 5th August, 2016 for the assesses not subjected to audit.
DVAT has extended the due date of filing of return for 1st quarter of Financial Year 2016-17  from 25th July 2016 to 31st August 2016

DVAT has extended the last date for filing of Online/ hard copy of First Quarter return for the Financial Year 2016-17 from 25.07.2016 to 31.08.2016

Wednesday, July 27, 2016

Filing of Income Tax Return for Asst Year 2016-17 :Due dates, whether mandatory and additional disclosures

Filing of Income Tax Return for Asst Year 2016-17
Whether Mandatory or not 
Due dates for filing of Income Tax Returns
Benefits of filing ITR before due dates
Additional Disclosures

Mandatory Filing:
-          For Companies and partnership firms.
-          For Individuals, HUFs and association of persons income tax return filing is mandatory if gross total income is exceeds the minimum exemption limit. The gross total income is income without giving effect of section 10 for exemption of income from tax or deductions under chapter VI of the Income Tax Act. So in case of Individuals return filing is not mandatory if gross income is less than maximum exemption limit.
-          For resident senior citizen aged 60 years and above but less than 80 years if income is above Rs.300000/-
-          For resident super senior citizen aged 80 years or above if income is above Rs.500000/-
-          For any other individual or HUF ( Not Senior Citizen or Super Senior) if income is above Rs.250000/-
-          It is mandatory to file income-tax return by newly inserted provision to section 139(1) if assessee is resident and having
a)      Assets located outside India
b)      Signing Authority in any bank account outside India
c)      Financial interest in any entity located outside India
d)     Income from any source outside India.

The assessee is required to provide details in income tax return for Assessment Year 2016-17 particulars of such foreign assets, banks accounts where in having signing authority and other financial interests in entities outside India.
Rates of Income Tax for Asst Year 2016-17
Class of persons
Tax slab (Amount)
Tax rate
Resident senior citizen above the age of 60 years but below the age of 80 years
Up to Rs. 3,00,000
Nil
Rs. 3,00,000 to Rs. 5,00,000
10%
Rs. 5,00,000 to Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
Resident super senior citizen with age of 80 years or above
Up to Rs. 5,00,000
Nil
Rs. 5,00,000 to Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
Any other individual or HUF other than senior citizen or super senior
Up to Rs. 2,50,000
Nil
Rs. 2,50,000 to Rs. 5,00,000
10%
Rs. 5,00,000 to Rs. 10,00,000
20%
Above Rs. 10,00,000
30%

Less: Rebate under Section 87A [see Note]
Add: Surcharge and Education Cess [see Note]
 a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).
 b) Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.
 c) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.
 d) Rebate under Section 87A: The rebate is available to a resident individual if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 2,000, whichever is less.

Due Dates of Income Tax Returns for Assessment Year 2016-17
Category of Assessee
Due date of filing of Income Tax return
All Assessees not subjected to audit under any Section of Income Tax Act,1961

All Company Assessees and all other assessees subjected to Tax audit under section 44AB including Co-operative Societies
31st July 2016


September 30, 2016

All assessees subjected to  transfer pricing audit for furnishing report in Form No. 3CEB
November 30, 2016
Benefits of filing of Income Tax Returns before due dates
Right to revise:
The assessee  gets the right to revise the return if it is filed before the due date and later on want o revise the return due to some mistake or any income has escaped or some TDS has not been claimed in Original Return. The belated return can not be revised.
Right to interest on refund due from 1st April till refund is processed by the Income Tax Authorities
The Assessee is entitled for interest @6% per annum for any refund due to assessee for the period from 1st April till the refund is processed by the Income Tax authorities.
In case of belated return the Assessee is not entitled for the period from 1st April till date of filing of return.
Carry forward and set off of losses
The assessee gets the right of carry forward of losses to be set off against incomes of nextyears but if fails to file before the due date he has the right for carry forward of losses under head a) Income from House property and Depreciation loss under the head business and profession income and losses the right to carry forward of losses under the head a) business or profession b) Capital gain.
File before 31st March of the relevant financial year if miss the due date
Penalty if Assessee does not file Income Tax return before 31st March

If assesee does not file the Income Tax Return even by 31st March of the relavant financial year i.e immediately after the financial year for which return is to be filed a penalty of Rs.5000/- may be imposed by the tax authorities even if no tax is due and assessee is not able to provide a reasonable cause for such delay. 

Additional disclosures in Form ITR 1 and ITR 2 for Asst Year 16-17

Earlier Statement of Assets and liabilities was required to be disclose for the assessees having income above Rs.25 lacs but for Asst Year 2016-17 this threshold limit for disclosure of assets and liabilities has been increased from Rs.25 Lacs to Rs.50 Lacs.

For the assessees having income above Rs.50 Lacs  and filing ITR 1 and 2 it is mandatory to disclose :
1. Immovable Assets a) Land b) Building
2. Movable Assets a) Cash in Hand b) Jewellery, Bullion etc c) Vehicles

3. Any Liability in relation to above assets only