Friday, March 31, 2017

Due date for Migration to GST has been extended to 30th April, 2017

Due Date of Migration to GST for all state VAT, Service Tax and Excise Duty registrations which was 31st March 2017 has been extended to 30th April, 2017 due to delay in rolling out laws and lack of preparation in industry.
Govt has extended the deadline to migrate to GST from 31st March, 2017 to 30th April 2017 for all existing registrations to be migrated across state and centre.

Tuesday, March 28, 2017

How to pay tax and file declaration under The Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016

The Pradhan Mantri Garib Kalyan Yojana (PMGKY) is available from 17-12-2016 to 31.03.2017.
The Steps for making payment of tax and deposit under PMGKY,2016 and file declaration under the scheme are as under:
Step 1: Pay Tax has to be paid @ 50 % in Challan 287 and link is :
Step 2 : Deposit using Form 2 to pay 25% of the amount declared in a non-interest bearing deposit called Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 for 4 years in any authorised bank and such deposit will be transferable to nominee or the legal heir of the declarant only in the event of death of the declarant.
Step 3 : Fill Form 1 either online or offline.
Step 4: The Tax Department will issue a certificate to the declarant within 30 days from the end of the month in which a valid declaration has been furnished.
 There are two forms, Form 1 & Form 2 for filing of declaration u/s 199C in respect of the Taxation and Investment Regime for PMGKY.
Form 1 (PMGKY) is a declaration of amount held in cash or deposit in an account maintained with bank/post office etc.
Form 2 (PMGKY) is an Acknowledgement issued to the declarant by the Principal Commissioner or Commissioner.
Steps for Uploading Form 1 (PMGKY)  
Ø  User should have a valid PAN and should be registered in e-Filing portal to upload Form1 (PMGKY)
Ø  Form1 (PMGKY) can be filed online same as ITR by DSC or by EVC on E- Filing Portal
Ø  User has to enter either Office or Residence address is mandatory with PIN Code.
Ø  PAN shall be auto-populated from the login profile.
Ø  Aadhaar Number can be entered by the user and if already linked in the profile it will be pre-filled.
Ø  Status of the declarant can be selected by the user whether Original or revised and in case of revised – Receipt number and date of Original declaration with reason for revision are to be entered.
Ø  Total amount of undisclosed income declared is displayed in Rupees and in Words. The Amount held in cash is to be entered absolute figure and no decimal.
Ø  Details of amount deposited in bank account/ post office the following details are to be entered:
S.No.                             Account Type                       Account Number Institution Type    IFSC

Ø  Tax, Surcharge, Penalty and total are displayed based on the data entered by the user @ 30% Tax, 33% Surcharge & 10% Penalty respectively.
For Example if Declaration is for Rs.20 Lac
Then Tax will be @30% of Rs. 20 Lac                     Rs. 600000
Surcharge (PMGK Cess) @33% of Rs. 6 Lacs         Rs. 198000
Penalty @10% of Declared amount Rs.20Lacs    Rs. 200000

Ø  Details of amount paid on or before the date of declaration are to be given as under:
BSR Code                     Date of payment                  Amount Paid                         Challan No.

Ø  Detail of amount deposited in Pradhan Mantri Garib Kalyan Deposit Scheme,2016 the proof has to be attached and following information to be entered:
-      Amount Deposited @25% of the amount Declared
-      Date of deposit
-      Acknowledgement Reference Number
-      Name and details of Branch of the entity in which deposit is made
-      IFSC Code and name of branch of the institution.

Ø  Verification with PAN with or without DSC and scanned copies of Proof of payment of Total Taxes and Proof of deposit in Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 are to be attached and uploaded.
Ø  At the time of uploading either attach signatures generated through DSC or code has to be generated.
-      Attachments cannot exceed 50MB.
-      Attachments must be in pdf or zip format.
-      Attachments should be scanned with minimum 300dpi.

-      Wherever there is a requirement in the Form to submit a signed copy of documents by an Assessee/CA as an attachment, upload the scanned copy of the same documents.

Saturday, March 25, 2017

CBDT has clarified the taxability of compensation on compulsory acquisition of Agriculture & Non Agriculture land

CBDT Issued a Circular No.36/2016 [F.NO.225/88/2016-ITA.II], dated 25-10-2016 to clarify taxability of compensation and enhanced compensation received by Land Owners for agriculture and non agriculture land acquired under RFCTLARR Act.
According to the provisions of the Income-tax Act, 1961, agricultural land not situated in specified urban area is not regarded as a capital asset. Therefore, Capital Gain arising from transfer or compulsory acquisition of such agricultural land is not taxable.
However, as per section 10(37), Capital Gain arising from transfer of agricultural land would not be taxable in case of an individual or HUF subject to fulfillment of following conditions:
         i.            Such land is situated:
        ii.            (a)     in any area which is comprised within the jurisdiction of a municipality (whether known as a municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or
(b)    in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette.”
      iii.            Such land during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by such Hindu undivided family or Individual or a parent of his;
(iii) Such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India;
(iv)  Such income has arisen from the compensation received by such assessee on or after the 1st day of April, 2004.
The RFCTLAAR Act was brought into force in 2014 but Income Tax Act for Agriculture Land was amended in 2004. As per Section 96 of the RFCTLARR Act income-tax shall not be levied on any award or agreement made (except those made under section 46) so compensation received for compulsory acquisition of land except those made under section 46 of RFCTLARR Act, is exempted from the levy of income-tax. Since no distinction has been made between compensation received for compulsory acquisition of agricultural land and non-agricultural land, the CBDT has issued this circular to clarify the uncertainty created by RFCTLAAR by providing exemption of tax under section 96 of the RFCTLARR Act.

CBDT has clarified that compensation received in respect of award or agreement which has been exempted from levy of income-tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of Income-tax Act, 1961 even if there is no specific provision of exemption for such compensation in the Income-tax Act, 1961.

Tuesday, March 7, 2017

Loans and Deposits from Members or Directors in a Private Company

Loan From Members

Apart from share capital of company, loans are major source of finance for company. A company can raise its funds from various sources like accepting public deposits, loan from financial institutions or banks. However Companies Act 2013 strictly prohibits Private Companies accepting funds by way of public deposits. 

In Companies Act 1956 a private company was allowed to accept loan from Director, Shareholders or Relatives of Directors but Companies Act 2013 specifically defines any Loans taken are regarded as 'deposits'. As per the definition of the term 'deposit' under section 2(31) : "deposit" includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India;"

However, as per Rule 2(c)(viii) of the Companies (Acceptance of Deposits) Rules, 2014 (the "Deposit Rules") the term 'deposit' shall not include any amount received from a person who, at the time of the receipt of the amount, was a director of the company, provided that the director from whom money is received, furnishes a declaration in writing to the company at the time of giving the money, to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others.

Loan or an amount received by the company from its director is not regarded as a 'deposit' if the following conditions are fulfilled:

(a) At the time of receipt of the amount by the company, the lender was a director of the Company. This doesn’t state that the exemption applies "as long as the payer is a director”. The loan will continue to be exempt even after the person concerned ceases to be a director on any account whatsoever.

(b) The Director furnishes to the Company a declaration in writing.

(c) Director at the time of giving money should give declaration  that amount so advanced is not given out of the funs acquired by the director from others as loan or deposit or out of borrowing. The declaration is to be given before the loan transaction is complete. 

This Exception to Deposits rules 2014 is applicable to both Private as well as Public Companies.

As per MCA notification dated 05/06/2015 section 180 of companies act 2015 is no more applicable on Private Limited Companies. 

Hence there is no requirement to file a special resolution in AGM for authorization where  the money to be borrowed, together with the money already borrowed by the company even if it exceeds aggregate of its paid-up share capital and free reserves.

Deposit From Members

Any Loans taken are regarded as 'deposits' under the Companies Act, 2013. As per the definition of the term 'deposit' under section 2(31) : "deposit" includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India;"

According to provisions of Section 73, a company whether private or public can accept deposits from its members only subject to compliance of the Deposit Rules. But deposits from persons other than members can now be accepted by "Eligible Companies" only. 

Rule 2(1)(e) of the Rules Eligible Company is a public company having a net worth of Rs. 100 crores or more or turnover of Rs. 500 crores or more can accept deposits from persons other than members. The eligible company should obtain the prior consent of the company in general meeting by way of special resolution and also filed the said resolution with the Registrar of Companies before making any invitation to the public for acceptance of deposits. 

Thus, all private limited companies and "Non-eligible companies" can accept deposits only from members.

Quantum of deposit that can be accepted by a Private Limited company

As per notification MCA GSR 464(E), dated 5th June, 2015, a private limited company can accept deposits only from its members up to 100% of its paid up capital and Free Reserves & Securities Premium account provided it files with the Registrar information about such acceptance.

The above limit of 100% of paid up share capital & free reserve should be calculated based on the last audited Financial Statements adopted by the members.

The pre-condition for acceptance of deposits from members

Deposits can be accepted from persons, whose name appears on the Register of Members of the Company. However where a person whose name appears in the Register of members has transferred his shares but the transfer is pending for registration, then the Company should repay deposits which it has accepted from such members.

The company should pass an ordinary resolution preferably at each AGM seeking authorization for acceptance of deposits and such resolution is to be filed with ROC within 30 days of passing the resolution.

The deposits should be subject to such rules as may be prescribed in consultation with the Reserve Bank of India. 

Secretarial steps for private limited companies and non-eligible companies for acceptance of deposits

The following are the various steps which a private limited company and non-eligible company have to fulfill in order to comply with the provision for acceptance of deposits from the members.

  • Hold a Board Meeting for proposing acceptance of fixed deposit. In the said Board Meeting itself, approve the Notice for holding general meeting of the company for obtaining the approval of the shareholders for the said proposal.
  • Hold the general meeting of the company and obtain the approval of the shareholders by means of special or ordinary resolution for authorizing the Board of Directors to accept the deposits.
  • To file a copy of such resolution within 30 days of date of passing the resolution with the Registrar of Companies in e-form MGT 14.

  • To open a separate a bank account called ‘Deposit Repayment Reserve Account’ with Schedule Commercial Bank and depositing amount not less than 15% of the deposit maturing during the Financial Year. Certifying that the company has not committed any default in repayment of deposit and interest thereon.
  • To hold one more Board Meeting to obtain the approval for the draft Circular in Form DPT-1 of the Deposit Rules. The said Draft Circular should be signed by majority of the Directors of the company.
  • To file a copy of such signed circular with the Registrar of Companies in Form GNL-2 for registration.

  • Points to remember in the procedure of acceptance of deposits

  • To ensure that the Circular which is to be issued for acceptance of deposits is sent either by electronic mail or registered post AD or by speed post to the members of the company only and not to public or other persons.
  • To appoint Deposit Trustees for creating security for the secured deposits, if any by executing a  Deposit Trust Deed in Form DPT-2 at least 7 days before issuing the Circular.
  • To enter into contract with Deposit Insurance services providers at least 30 days before the issue of the Circular.
  • To issue deposit receipts in the prescribed format and under the signature of an officer duly authorized by the Board within a period of two weeks from the date of receipt of money or realization of the cheque
  • To make entries in the Register of Deposits accepted Rules within 7 days from the date of issuance of the deposit receipt and arrange to get such entries authenticated by a Director or Secretary of the Company or by any other officer authorized by the Board
  • To file the return of deposit in Form DPT-3 by furnishing the requisite information contained thereon as on 31st day of March each year duly audited by the Auditors before 30th June every year.

Contributed by Anita Kanwar

Friday, March 3, 2017

Due Dates and Statutory Calendar for March 2017

Statutory Act
Applicable Form
0 6/03/2017
Service Tax
Payment of service tax electronically for the month of Feb 2017 for corporate assessee
Income Tax
Challan No.-281
Payment of TDS/TCS deducted/collected in January 2017.
Income Tax
Form No. 27C(TCS)
Submission of Forms received in Jan to IT Commissioner
Form 56
Extended Due date of DVAT Return for Quarter Ended on 31.12.16
ER-1  -ER-2 & Er-6
Return for i) Non SSI assessees for January ii) for EOUs iii) Units paying Cenvat + PLA > One Crore respectively
Return of TDS for Dec quarter in DVAT-48.
Income Tax
Advance Tax Last Installment
Due date for payment of Advance Tax last Installment of Asst Year 2017-18
Payment of DVAT TDS for Feb,2017
Provident Fund
Electronic Challan Return (ECR)
E Payment of PF for Feb,2017
ESI Challan
Payment of ESI of Feb,2017 (Applicable for Salary upto Rs. 21,000 instead of Rs. 15000 earlier)
DVAT20 &
E Payment of DVAT & CST Tax for month ended Feb
Issue of DVAT Certificate for deduction made in Jan
Income Tax Return
ITR-1,2,2A,3 -7
Income Tax return for Asst Year 2016-17
Income Tax Return
ITR-1,2,2A,3 -7
Income Tax return for asst Year 2015-16 ( Time Barred after that)
Service Tax
Payment of Service Tax for the month of March for Corporate and for the quarter ended on 31.03.17 for Non- Corporate

Thursday, March 2, 2017

Steps to be followed after uploading of Income Tax Returns & problems in Verification of ITRs

Nowadays people use technology and send their documents to Chartered Accountants or consultants to file their Income Tax Returns. Companies sometimes also arrange for a virtual office or agent for filing of ITRs. These accountants then file the tax returns electronically for the assessees, however, the work is not over with simply filing the returns. There are certain steps to be followed after uploading the ITRs online which can be summarized as follows:
1.       Obtaining receipt of an acknowledgment of filing of ITR in Form ITR-V.
ITR-V is a one page document pdf file which is generated as an acknowledgement email from the Income Tax Department when you file your ITR without using a Digital Signature Certificate (DSC).

2.       Verification of the ITR-V.
This can be done in the following two ways:
i.                     By sending the ITR-V to CPC Bangalore.
ii.                   By opting for e-verification in cases when the ITR has not been filed with DSC (Digital Signature Certificate).
Further, the following methods can be used for e-verification of ITRs:
·         Through generation of Electronic Verification Code (EVC) on registered mobile number and email of the assessee.
·         Through EVC via Bank Account, Demat Account and AT
·         Through OTP sent on mobile number mentioned on the Aadhar card of the assessee.
·         Through Net Banking log in.

3.       Wait for intimation from Income Tax Department under section 143(1).
Once your income tax return is processed, an email is sent to the tax payer to intimate them about any tax or interest payable/refundable and can be treated as completion of assessment. It is also sent via Post before the expiry of one year from the end of the assessment year in which the income was assessable. If there is no difference between the income tax computed as per ITR and as computed u/s 143(1), then this notice will serve as final assessment of the return, otherwise it serves as a notice of demand or intimation of refund.

A number of problems are faced by the people during the verification process as a result of which the returns are just uploaded but not accepted. Some of the issues are mentioned as under:
1.       Verification Method – Dispatching ITR-V to CPC Bangalore:

This is one of the most commonly used methods of verification.
The address of CPC is given on Verification form along with clear instructions that the verification form should be sent to CPC either through Ordinary Post or Speed Post.
·         Sending through Ordinary post generally takes multiple attempts until the post is shown as accepted and is also difficult to keep track of whether the same has been received or not, especially by elderly people.
·         Sending through Speed post on the other hand proves to be a more costly alternative and more over number of ITR –V sent and accepted differ and rejected one are not intimated timely.
·         Moreover, there is no way to prove that the Tax Payer has already sent the ITR as there is no PAN reference.

2.       Verification Method – E-Verification

·         E-verification by using an EVC has to be done within 72 hours of generating the code after which the code expires. The code is sent to the email address and phone number entered for filing the return and assessees who are not tech-savvy such as the elderly face problems in such a case. Also, this method can only be used if the total income of the assessee as per ITR is less than Rs. 5 lacs and there is no refund claim.
·         The upper limit on a phone number or a single email address usage is 10 assessees only and so accountants filing these returns face problems in case their clients do not use emailing services.
·         If the message regarding non receipt of such verification form is then sent on such email and phone number, they fail to get noticed by people who are not active tech-users such as the elderly or the uneducated.
·         If the verification is done through Aadhar based OTP, as it is commonly done, the same issues present themselves, especially if the phone number of the assessee is no longer the one mentioned on their Aadhar Card or no phone number mentioned on aadhar card.
·         EVC generated through Bank Account/Demat Account/ATM/Net Banking is not preferred by the tax payers since they require personal information to be shared online which exposes them to high risks online.
It is for the assessee to take following steps in time:
ü  Either E verify with Linked Aadhar
-          No discrepancy in Aadhar and PAN
-          Mobile mentioned on Aadhar
ü  Send speed post of ITR –V to CPC timely and see the message of receipt/ Non receipt on their mobile from ITD.
ü  Check the status of ITR receipt on Income Tax site on the link

Contributed by : Kashika Ahuja