Saturday, June 25, 2016

CBDT reduces burden by limiting 1% TCS to cash receipts in transactions over Rs.2 Lacs- Circular 23/2016 on 24.06.16

CBDT has provided major relief by issuing a Circular No.23/2016 on 24.06.2016 with respect to further amendment to amended Section 206C.
As per the amended Section 206C of Income Tax Act where as Section 206C(1D) was added to it, it was provided that the seller shall collect tax @1% from the purchaser on sale in cash of certain goods or provision of services exceeding Rs.2 Lacs.
Now CBDT has clarified the applicability of the provisions wrt TCS where sale consideration is partly in cash and partly in cheque. CBDT has given a relief by issuing a circular which provides a under:
ü  Tax collection at source will not be levied if the cash receipt does not exceed Rs.2 Lacs even if sale consideration is for than Rs.2 Lac.
ü  The TCS shall be levied only on cash component of the sale consideration and not on total consideration.
Example: Goods worth Rs.5 Lacs sold but cash consideration is Rs.1 Lac then no TCS and if Cash consideration is Rs.2.5 Lacs then TCS will be applicable on Rs.2.5 Lacs and not on Rs.5 Lacs.

Secretarial Audit Scope & Applicablity

Secretarial Audit is basically an audit to check the compliance of various laws applicable to the Company. Through Secretarial Audit it is ensured that whether there exist proper and adequate systems and process in the Company commensurate with the size and operation of the Company to monitor and ensure compliances with applicable laws, rules, regulation. It is a tool to improve effectiveness of  risk management, control, Corporate practices by the Company.
Applicability of Secretarial Audit:
As per Sub-Section 1 of Section 204 of the Companies Act,2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules, 2014:-
        i.            Every Listed Company,
      ii.            Every Public Company having a paid share capital of 50 Crore or more,
    iii.            Every Public Company having a turnover of 250 Crore or more.
Companies not covered under the ambit of Section 204(1) of the Companies Act, 2013 may voluntarily opt for Secretarial Audit, as it provides an independent assurance of the compliances in the Company.

Secretarial Audit Report:
Ø  Section 204(1) of the Companies Act, 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014, provides that every listed company and every prescribed company shall annex with its Board Report, a Secretarial Audit Report, given by a Practicing Company Secretary in format prescribed in Form MR-3.
Ø  Details of specific events and actions occurred during the reporting period having major bearing on the affairs of the Company in pursuant to laws, rules and regulation applicable on the company for the time being in force must be stated in the Secretarial Audit Report.
Ø  Only a Practicing Company Secretary, engaged by company to conduct Secretarial Audit and holding a valid certificate of practice number can sign the Secretarial Audit Report.
Ø  And in case of firm of Company Secretaries, the partner of the firm under whose supervision the Secretarial Audit was conducted can sign the Secretarial Audit Report.   
Secretarial Auditor and his Appointment:
i.            Only a member of the Institute Of Company Secretaries of India holding Certificate of practice can conduct Secretarial Audit.
ii.            Secretarial Auditor is required to be appointed by means of a resolution passed at a duly convened Board Meeting as provided in rule 8 of the Companies (Meetings of Board and its powers) Rules, 2014.Secretarial Auditor should formally accept the letter of engagement.
iii.            Secretarial Auditor is required to get the notice of Annual General Meeting in which his report
is to be laid before the members.
iv.        Section 143 of the Companies Act, 2013 deals with powers and duties of Auditors. Further sub-section (14) of the section provides that the provisions of this section shall mutatis mutandis apply to the Company Secretary in Practice conducting Secretarial Audit under section 204.
v.        Practicing company secretary, appointed as Secretarial Auditor in place of the existing Secretarial Auditor, he/she should communicate the appointment to the earlier incumbent in writing, in view of the provisions of clause (8) of Part I of the First Schedule to the Company Secretaries Act, 1980 and the relevant pronounced judgments.

Scope of Secretarial Audit:
Basically scope of Secretarial Audit includes reporting compliance of following five specific laws and other laws:
i.            The Companies Act, 2013 and the rules made there under.
ii.            The Securities Contracts (Regulation) Act, 1956 and rules made there under.
iii.            The Depositories Act, 1996 and the Regulation and Bye-laws framed there under.
iv.            Foreign Exchange Management Act, 1999 and the rules and regulation made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowing.
v.            The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act,1992:-
a)      The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
b)      The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992;
c)      The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
d)      The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999;
e)      The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
f)       The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations,1993 regarding the Companies Act and dealing with client;
g)      The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and
h)      The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;

 In addition to above following other laws as may be applicable specifically to the Company:
·         Reporting on compliance of secretarial standards issued by the Institute of Company· Secretaries of India;
·         Reporting on Compliances with the Listing Agreement;
·         Reporting on compliance of ‘Other laws as may be applicable specifically to the company’· which shall include all the laws which are applicable to specific industry, for example for Banks all laws applicable to Banking Industry; for insurance company all laws applicable to insurance industry; likewise for a company in petroleum sector all laws applicable to petroleum industry; similarly for companies in pharmaceutical sector, cement industry etc.
·         Examining and reporting whether the adequate systems and processes are in place to· monitor and ensure compliance with general laws like labour laws, competition law, environmental laws.
·         Examining and reporting specific observations / qualification, reservation or adverse· remarks in respect of the Board Structures/system and processes relating to the Audit period.
·         In case of financial laws like tax laws and Customs Act etc., Secretarial Auditor may rely on· the Reports given by statutory auditors or other designated professionals. Secretarial Auditor needs to examine and report on the compliance with the applicable clauses of the following:
·         (i) Secretarial Standards issued by The Institute of Company Secretaries of India and approved by the Central Government.
·         (ii) The Listing Agreements entered into by the Company with Stock Exchange(s), if applicable;
         Contributed by Mohd Sharjeel Awasi ( Company Secretary and CA Finalist)

Tuesday, June 14, 2016

Krishi Kalyan Cess

There are some of the points which should be considered by the Assessee regarding  Krishi Kalyan Cess:
1.       Krishi Kalyan Cess is a new cess introduced by Government of India through Finance bill 2016. It is to be levied at rate of 0.5% on value of all Taxable services. As stated by the Finance Minister , collection from Krishi Kalyan Cess (abbreviated as KKC),  is to be "exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers".
2.       KKC is leviable on the taxable value of services at the rate of 0.5%, with effect from 01.06.2016 as provided in Chapter VI, clause 158 of Finance Act, 2016.
3.       It should be noted that determination of value of service in respect of KKC will be done in accordance with the service Tax Valuation Rules i.e.  Service Tax Valuation Rules are equally applicable in relation to  KKC.
4.       Cenvat credit in respect of KKC is available as per Notification No.: 28/2016 dated 28.05.2016. As per this Notification Cenvat Credit shall be utilized only for the payment of KKC. As the cenvat credit on KKC can only be utilized only for the payment of KKC, therefore separate accounts needs to be maintained.
5.       KKC  shall be levied only on taxable services . As per the Notification no. 28/2016 dated 26.05.2016, which provides that KKC shall not be leviable on service which are exempt or Non-Taxable and not even on services mentioned in Negative List.
6.       It must be noted that KKC is to be calculated on the value of taxable service after availing the benefit of abatement.
7.       A separate Accounting head is provided for Krishi Kalyan Cess, which is as follows:
KKC (Minor Head)
Tax Collection
Other Receipt (Interest) 
Deduct Refunds

8.       In case of Reverse Charge Mechanism, the recipient of services shall pay KKC  at rate of 0.5% along with service Tax payable by him as it is done in case of Swachh Bharat Cess.
9.       The Assessee must note that KKC shall be disclosed on the invoice separately, in the same manner as Swachh Bharat Cess is disclosed.   
    Contributed by Mohd Sharjeel Awasi ( CA Finalist and Licentiate Company Secretary)

Saturday, June 11, 2016

CBDT has notified Separate due dates for uploading 15G and 15H by the payer

CBDT vide Notification dated 09.06.16 has clarified the due date of quarterly  uploading by the payer 15G /15H declarations received from the payee in the given format and procedure on income tax portal
- For the period after 01.04.2016
- For the period from 01.10.15 to 31.03.16  
Earlier TDS returns were required to be filed or uploaded on income tax portal by the end of the next month after the end of the quarter i.e 30.06.16 up to 31.07.2016. Now separate dates are notified for uploading Form 15G/15H on income tax portal. The dates are given as under:
Quarters Fin Year 15-16 & 16-17
Due date of Filing 15G/15H
Due date furnishing TDS Statements
From 1st Oct 15 to 31st Dec,15
30th June 2016
Already Filed ( 15.01.16)
From 1st Jan 16 to 31st Mar,16
30th June 2016
Already Filed  (15.05.16)
From 1st Apr 16 to 30th June 2016
15th July 2016
31st July 2016
From 1st July 16 to 30th Sep, 2016
15th October 2016
31st October 2016
From 1st Oct 16 to 31st Dec, 2016
15TH January 2017
31st January 2017
From 1st Jan 17 to 31st Mar, 2017
30th April 2017
31st May 2017

Thursday, June 9, 2016

Rate of Interest on Service Tax on Slab Basis, Simple Interest on days basis

There has been different rates of interest on service tax dues on different periods. Here under given Interest rates applicable from 01.04.2011 on wards

Effective Date
Period of delay
Rate of simple interest
In Case Service Provider has turnover exceeding 60Lacs
18% on the days of delay calculated on daily basis
In all other cases
15% on the days of delay calculated on daily basis

Upto 6 months
18% on the days of delay calculated on daily basis
More than 6 months upto 1 year
18% for first 6 months and on balance period of delay upto 1 year @24%
Delay for more than 1 year
18% for first 6 months and on balance period of delay upto 1 year @24% and on balance delayed period after 1 year @30%
Collection of Service Tax but not deposited to Govt Account before the due date
24% on days of delay after the due date
Other than above situation
15% on days of delay after the due date
Notes :
1. As per Section 75 of Finance Act 1994 in case the Service Tax provider has turnover not exceeding  60 lacs in any financial year under notice or preceding Fin Year is given rebate of 3%  and effective rate of interest will be 12%
2. As per Service Tax Act interest payments are mandatory in nature and such interest demands on delay can not be waived.
3. The Provisions of Section 75 Finance Act 94 the interest provisions for delay in payment of service tax is applicable in case of reverse charge mechanism also for the service receiver to pay interest on delay in payment of dues of service tax.

Monthly Statutory Obligations Due Dates

Statutory Act
Applicable Form
Service Tax
Challan No.GAR-7
Last date for payment of Service Tax in case of companies for the month  May 2016
Central Excise
Challan No.GAR-7
Monthly-payment of Central Excise Duties for the previous month –For non SUI units
Income Tax
Challan No.-281
Payment of TDS/TCS deducted/collected in May,2016
Income Tax
Form No.15G,15H, 27C
Submission of Forms received in May to IT Commissioner
ER-1  & ER-2
Return for Non SSI assessees for May , Return for EOUs for May
Return by units paying duty > 1 crore (CENVAT + PLA) for May
Deposit of DVAT TDS for May
Provident Fund
Electronic Challan Cum Return(ECR)
E-Payment of PF for May (Cheques to be cleared by 20th)
Income Tax
Challan No.ITNS-280
Payment Of Advance Income Tax for all assesses ( where tax liability after TDS is more than Rs.10000/- ) @15% of total tax liability
D-VAT-20 & Central
Deposit of VAT & CST for May

Payment of ESI Liability for May
DVAT – 43
Issue of DVAT certificate for deduction made in May
DP-1 to be filed online & to update DP1 if filed earlier along with signatures of authorised signatories.